-----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, LN5hgdGqHPNJgaD8QGAiwG9mr8aRQfDqfmKhkY51Ry9qcUc4wtldqM6tN+KIuRAF VocjdBalGZtr+HCVURYTbg== 0000078890-97-000021.txt : 19970725 0000078890-97-000021.hdr.sgml : 19970725 ACCESSION NUMBER: 0000078890-97-000021 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970630 ITEM INFORMATION: Other events FILED AS OF DATE: 19970724 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PITTSTON CO CENTRAL INDEX KEY: 0000078890 STANDARD INDUSTRIAL CLASSIFICATION: BITUMINOUS COAL & LIGNITE MINING [1220] IRS NUMBER: 541317776 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09148 FILM NUMBER: 97644826 BUSINESS ADDRESS: STREET 1: 100 FIRST STAMFORD PLACE STREET 2: PO BOX 120070 CITY: STAMFORD STATE: CT ZIP: 06912-0070 BUSINESS PHONE: 2039785200 MAIL ADDRESS: STREET 1: P O BOX 120070 CITY: STAMFORD STATE: CT ZIP: 06912-0070 8-K 1 PITTSTON 2ND QUARTER 1997 EARNINGS ANNOUNCEMENT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 24, 1997 THE PITTSTON COMPANY (Exact Name of registrant as specified in its charter) Virginia 1-9148 54-1317776 (State or other (Commission (I.R.S. Employer jurisdiction File Number) Identification No.) of Incorporation) 1000 Virginia Center Parkway P. O. Box 4229 Glen Allen, VA 23058-4229 (Address of principal (Zip Code) executive offices) (804)553-3600 (Registrant's telephone number, including area code) Item 5. Other Events The Pittston Company has announced earnings for the second quarter of 1997 for its Brink's Group, Burlington Group and Minerals Group. Press releases dated July 24, 1997, are filed as exhibits to this report and are incorporated herein by reference. EXHIBITS 99(a) Registrant's Brink's Group press release dated July 24, 1997. 99(b) Registrant's Burlington Group press release dated July 24, 1997. 99(c) Registrant's Minerals Group press release dated July 24, 1997. SIGNATURE 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 hereunto duly authorized. THE PITTSTON COMPANY (Registrant) By /s/ James B. Hartough Vice President - Corporate Finance and Treasurer Dated: July 24, 1997 EXHIBITS Exhibit Description 99(a) Registrant's Brink's Group press release dated July 24, 1997 99(b) Registrant's Burlington Group press release dated July 24, 1997 99(c) Registrant's Minerals Group press release dated July 24, 1997 EX-99 2 99(A) BRINK'S GROUP PRESS RELEASE Pittston Brink's Group Earns $.46 Per Share in the Second Quarter Richmond, VA - July 24, 1997 - Pittston Brink's Group reported net income of $17.7 million, or $.46 per share, in the second quarter ended June 30, 1997, a 26% improvement over the $14.0 million, or $.37 per share, earned in the second quarter of 1996. Combined second quarter revenues of Brink's, Incorporated and Brink's Home Security, Inc. increased 21% to $268.8 million compared to $222.1 million a year earlier. For the first six months of 1997, Pittston Brink's Group generated net income of $33.0 million ($.86 per share) compared to $25.9 million ($.68 per share) for the comparable period in 1996. Combined revenues for the first six months were up 20% to $520.2 million. Brink's, Incorporated (Brink's) Brink's worldwide consolidated revenues increased 22% to $224.6 million in the quarter. Operating profits amounted to $19.1 million in the quarter, 53% greater than recorded in the prior year's quarter due to improvements in both the North American and international operations. For the first six months of 1997, Brink's worldwide revenues increased 21% to $433.7 million and operating profits climbed 60% to $34.9 million. Revenues from North American operations (United States and Canada) amounted to $117.6 million in the quarter, 13% higher than in the comparable period in 1996. Operating profits for the quarter increased 18% to $9.7 million primarily due to the improved results achieved by armored car operations, which includes ATM servicing. For the first six months of 1997, North American operating profits were $17.4 million, a 24% increase over the comparable 1996 period. Consolidated international subsidiaries recorded revenues of $106.9 million in the quarter, 34% higher than the $79.5 million generated in the prior year's quarter. More than one-half of the increase in revenues reflects the acquisition, in the first quarter of 1997, of a majority interest in Brink's Venezuelan affiliate, in which Brink's previously owned a 15% interest. Brink's now owns 61% of this affiliate. Operating profits from international subsidiaries and affiliates amounted to $9.5 million, 116% higher than the $4.4 million earned in the prior year's quarter. The strong improvement in operating profits was largely attributable to increased ownership positions in the Venezuelan and Peru affiliates and improved operations in Colombia and Chile, somewhat offset by lower results in Brazil. Interest expense and minority interest associated with the acquisitions offset more than half of the higher operating profits. Europe's results were better as improvements in Belgium, Israel, United Kingdom and several other countries were largely offset by lower results from the 38% owned affiliate in France. For the first six months of 1997, operating profits from international subsidiaries and affiliates totaled $17.5 million, 124% higher than the $7.8 million earned in the first six months of 1996 due in large part to the increased ownership of affiliates in Venezuela and Peru. Interest expense and minority interest associated with the acquisitions offset more than half of the higher operating profits. Brink's Home Security, Inc. (BHS) Brink's Home Security's revenues totaled $44.2 million in the second quarter 1997, a 14% increase over the comparable period in 1996. Operating profits increased 16% to $13.3 million. For the six months ended June 30, 1997, revenues and operating profits increased 15% and 16% to $86.4 million and $26.1 million, respectively. Brink's Home Security installed approximately 26,800 new subscribers during the quarter and the subscriber base now exceeds 482,000 customers, a 17% increase compared to a year ago. As a result, annualized service revenues increased 22% to $142.0 million as of June 30, 1997. BHS's disconnect rate for the first six months was 7%, which BHS believes may be the lowest rate in the industry. Based on demonstrated retention of customers, BHS adjusted its annual depreciation rate for capitalized subscribers' installation costs beginning in 1997. This change more accurately matches depreciation expense with monthly recurring revenue generated from customers. This change in accounting estimate reduced depreciation expense for capitalized installation costs for the quarter and six months ended June 30, 1997 by approximately $2.1 million and $4.2 million, respectively. As a result of aggressive pricing and marketing by competitors, BHS is experiencing lower installation fees and higher marketing and sales costs. Although as the quarter progressed, industry pricing appeared to be stabilizing. As a result, operating profit was negatively impacted approximately $1.9 million from 1996's second quarter. Monitoring revenues increased as a result of a greater number of subscribers and higher monitoring fees per subscriber. Brink's Home Security is on schedule to occupy its new state-of-the-art national monitoring, customer service, and corporate center in Irving, Texas in the fourth quarter of 1997. This custom designed 93,000 sq. ft. facility will allow BHS to consolidate its operations from three buildings into one resulting in greater operating efficiencies. BHS opened the Greenville, South Carolina market during the quarter. Financial - Consolidated The Pittston Company reported net income of $14.7 million in the second quarter compared to $25.4 million in the second quarter of 1996. For the first six months of 1997, net income totaled $36.0 million compared to $44.0 million in 1996. Consolidated cash flow from operating activities totaled $85.5 million for the six months ended June 30, 1997. Total debt at June 30, 1997 was $297.4 million. The Pittston Company's credit rating was recently raised to 'BBB' by Standard & Poor's Corporation. * * * * * * * * * * Pittston Brink's Group Common Stock (NYSE-PZB), Pittston Burlington Group Common Stock (NYSE-PZX) and Pittston Minerals Group Common Stock (NYSE- PZM) represent the three classes of common stock of The Pittston Company, a diversified company with interest in security services through Brink's, Incorporated and Brink's Home Security, Inc. (Pittston Brink's Group), global freight transportation and logistics management services through Burlington Air Express Inc. (Pittston Burlington Group) and mining and minerals exploration through Pittston Coal Company and Pittston Mineral Ventures (Pittston Minerals Group). Copies of the Pittston Burlington Group and Pittston Minerals Group earnings releases are available upon request. Pittston Brink's Group Supplemental Financial Data (Unaudited) BRINK'S, INCORPORATED
Three Months Ended June 30 Six Months Ended June 30 (In thousands) 1997 1996 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATING REVENUES North America (United States & Canada) $ 117,616 103,935 228,388 202,115 International subsidiaries 106,934 79,476 205,361 157,150 - ------------------------------------------------------------------------------------------------------------------------------------ Total operating revenues $ 224,550 183,411 433,749 359,265 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATING PROFIT North America (United States & Canada) $ 9,657 8,161 17,411 14,091 International operations 9,486 4,363 17,533 7,811 - ------------------------------------------------------------------------------------------------------------------------------------ Total operating profit $ 19,143 12,524 34,944 21,902 - ------------------------------------------------------------------------------------------------------------------------------------ Depreciation and amortization $ 6,811 5,708 14,358 11,737 - ------------------------------------------------------------------------------------------------------------------------------------
BRINK'S HOME SECURITY, INC.
Three Months Ended June 30 Six Months Ended June 30 (Dollars in thousands) 1997 1996 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATING REVENUES $ 44,225 38,644 86,410 75,350 - ------------------ OPERATING PROFIT $ 13,273 11,401 26,052 22,503 - ---------------- DEPRECIATION AND AMORTIZATION $ 7,116 7,422 13,782 14,244 - ----------------------------- Annualized recurring revenues* $ 142,005 116,509 Number of Subscribers: Beginning of period 464,007 395,676 446,505 378,659 Installations 26,798 24,447 52,388 48,703 Disconnects (8,740) (7,532) (16,828) (14,771) - ------------------------------------------------------------------------------------------------------------------------------------ End of period 482,065 412,591 482,065 412,591 - ------------------------------------------------------------------------------------------------------------------------------------
- ------------ * Annualized recurring revenues are calculated based on the number of subscribers at period end multiplied by the average fee per subscriber received in the last month of the period for monitoring, maintenance and related services. Pittston Brink's Group STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except Three Months Ended June 30 Six Months Ended June 30 per share data) 1997 1996 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Operating revenues $ 268,775 222,055 520,159 434,615 - ------------------------------------------------------------------------------------------------------------------------------------ Operating expenses 197,741 169,443 385,649 332,009 Selling, general and administrative expenses 40,296 30,784 76,359 61,359 - ------------------------------------------------------------------------------------------------------------------------------------ Total costs and expenses 238,037 200,227 462,008 393,368 - ------------------------------------------------------------------------------------------------------------------------------------ Other operating income (expense), net 117 325 (504) (169) - ------------------------------------------------------------------------------------------------------------------------------------ Operating profit 30,855 22,153 57,647 41,078 Interest income 553 755 1,206 989 Interest expense (2,664) (518) (4,903) (985) Other expense, net (1,447) (1,155) (3,105) (2,172) - ------------------------------------------------------------------------------------------------------------------------------------ Income before income taxes 27,297 21,235 50,845 38,910 Provision for income taxes 9,558 7,200 17,800 13,036 - ------------------------------------------------------------------------------------------------------------------------------------ Net income $ 17,739 14,035 33,045 25,874 - ------------------------------------------------------------------------------------------------------------------------------------ Net income per common share $ .46 .37 .86 .68 - ------------------------------------------------------------------------------------------------------------------------------------ Average common shares outstanding 38,230 38,152 38,209 38,105 - ------------------------------------------------------------------------------------------------------------------------------------ SEGMENT INFORMATION Operating revenues: Brink's $ 224,550 183,411 433,749 359,265 BHS 44,225 38,644 86,410 75,350 - ------------------------------------------------------------------------------------------------------------------------------------ Total operating revenues $ 268,775 222,055 520,159 434,615 - ------------------------------------------------------------------------------------------------------------------------------------ Operating profit: Brink's $ 19,143 12,524 34,944 21,902 BHS 13,273 11,401 26,052 22,503 - ------------------------------------------------------------------------------------------------------------------------------------ Segment operating profit 32,416 23,925 60,996 44,405 General corporate expense (1,561) (1,772) (3,349) (3,327) - ------------------------------------------------------------------------------------------------------------------------------------ Total operating profit $ 30,855 22,153 57,647 41,078 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. Pittston Brink's Group CONDENSED BALANCE SHEETS
June 30 December 31 (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ (Unaudited) Assets Current assets: Cash and cash equivalents $ 25,969 20,012 Accounts receivable, net of estimated amounts uncollectible 145,474 124,928 Inventories and other current assets 41,180 45,117 - ------------------------------------------------------------------------------------------------------------------------------------ Total current assets 212,623 190,057 Property, plant and equipment, at cost, net of accumulated depreciation and amortization 315,297 256,759 Intangibles, net of amortization 16,586 28,162 Other assets 82,695 76,687 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets $ 627,201 551,665 - ------------------------------------------------------------------------------------------------------------------------------------ Liabilities and Shareholder's Equity Current liabilities $ 144,433 139,392 Long-term debt, less current maturities 46,491 5,542 Other liabilities 94,675 93,353 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 285,599 238,287 Shareholder's equity 341,602 313,378 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholder's equity $ 627,201 551,665 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. Pittston Brink's Group STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30 (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from operating activities: Net income $ 33,045 25,874 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 28,218 26,051 Other, net 9,589 4,185 Changes in operating assets and liabilities: Increase in receivables (5,852) (3,852) Increase in inventories and other current assets (5,038) (3,360) (Decrease) increase in current liabilities (3,432) 1,295 Other, net (1,789) (2,141) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 54,741 48,052 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Additions to property, plant and equipment (54,234) (47,472) Proceeds from disposal of property, plant and equipment 1,209 475 Acquisitions, net of cash acquired (53,303) -- Other, net 6,834 1,180 - ------------------------------------------------------------------------------------------------------------------------------------ Net cash used by investing activities (99,494) (45,817) - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Net additions to (reductions of) debt 40,502 (5,031) Payments from - Minerals Group 14,770 2,670 Share and other equity activity (4,562) (2,234) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided (used) by financing activities 50,710 (4,595) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash and cash equivalents 5,957 (2,360) Cash and cash equivalents at beginning of period 20,012 21,977 - ------------------------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents at end of period $ 25,969 19,617 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except Three Months Ended June 30 Six Months Ended June 30 per share amounts) 1997 1996 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Net sales $ 157,812 175,268 316,695 345,520 Operating revenues 668,342 582,119 1,291,135 1,142,774 - ------------------------------------------------------------------------------------------------------------------------------------ Net sales and operating revenues 826,154 757,387 1,607,830 1,488,294 - ------------------------------------------------------------------------------------------------------------------------------------ Cost of sales 153,836 169,444 307,248 365,329 Operating expenses 553,434 483,250 1,072,253 956,316 Restructuring and other credits, including litigation accrual - - - (37,758) Selling, general and administrative expenses 94,455 71,026 170,098 143,322 - ------------------------------------------------------------------------------------------------------------------------------------ Total costs and expenses 801,725 723,720 1,549,599 1,427,209 - ------------------------------------------------------------------------------------------------------------------------------------ Other operating income 2,875 7,243 6,451 10,058 - ------------------------------------------------------------------------------------------------------------------------------------ Operating profit 27,304 40,910 64,682 71,143 Interest income 991 811 2,010 1,336 Interest expense (6,422) (3,379) (11,986) (7,124) Other expense, net (1,899) (2,009) (4,288) (4,406) - ------------------------------------------------------------------------------------------------------------------------------------ Income before income taxes 19,974 36,333 50,418 60,949 Provision for income taxes 5,311 10,908 14,414 16,904 - ------------------------------------------------------------------------------------------------------------------------------------ Net income 14,663 25,425 36,004 44,045 Preferred stock dividends, net (902) 146 (1,803) (919) - ------------------------------------------------------------------------------------------------------------------------------------ Net income attributed to common shares $ 13,761 25,571 34,201 43,126 - ------------------------------------------------------------------------------------------------------------------------------------ Pittston Brink's Group: Net income attributed to common shares $ 17,739 14,035 33,045 25,874 - ------------------------------------------------------------------------------------------------------------------------------------ Net income per common share $ .46 .37 .86 .68 - ------------------------------------------------------------------------------------------------------------------------------------ Average common shares outstanding 38,230 38,152 38,209 38,105 - ------------------------------------------------------------------------------------------------------------------------------------ Pittston Burlington Group: Net (loss) income attributed to common shares $ (1,913) 8,746 3,175 12,507 - ------------------------------------------------------------------------------------------------------------------------------------ Net (loss) income per common share: Primary $ (.10) .46 .16 .65 Fully diluted (.10)(a) .46 (a) .16 (a) .65 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Average common shares outstanding: Primary 19,471 19,161 19,439 19,100 Fully diluted 20,164 19,161 20,128 19,100 - ------------------------------------------------------------------------------------------------------------------------------------ Pittston Minerals Group: Net (loss) income attributed to common shares: $ (2,065) 2,790 (2,019) 4,745 - ------------------------------------------------------------------------------------------------------------------------------------ Net (loss) income per common share: Primary $ (.26) .35 (.25) .60 Fully diluted (.26)(b) .27 (.25)(b) .57 - ------------------------------------------------------------------------------------------------------------------------------------ Average common shares outstanding: Primary 8,068 7,866 8,035 7,844 Fully diluted 9,903 9,947 9,878 9,969 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. (a) Fully diluted net income per share is considered to be the same as primary since the effect of common stock equivalents was either antidilutive or insignificant. (b) Fully diluted net income per share is considered to be the same as primary since the effect of common stock equivalents and the assumed conversion of preferred stock was either antidilutive or insignificant. The Pittston Company and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS
June 30 December 31 (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ (Unaudited) Assets Current assets: Cash and cash equivalents $ 59,997 41,217 Accounts receivable, net of estimated amounts uncollectible 504,628 475,859 Inventories and other current assets 145,729 121,338 - ------------------------------------------------------------------------------------------------------------------------------------ Total current assets 710,354 638,414 Property, plant and equipment, at cost, net of accumulated depreciation, depletion and amortization 604,007 540,851 Intangibles, net of amortization 300,266 317,062 Other assets 342,519 336,276 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets $ 1,957,146 1,832,603 - ------------------------------------------------------------------------------------------------------------------------------------ Liabilities and Shareholders' Equity Current liabilities $ 592,043 588,691 Long-term debt, less current maturities 254,965 158,837 Postretirement benefits other than pensions 229,913 226,697 Workers' compensation and other claims 112,747 116,893 Other liabilities 136,863 134,778 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 1,326,531 1,225,896 Shareholders' equity 630,615 606,707 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $ 1,957,146 1,832,603 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30 (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from operating activities: Net income $ 36,004 44,045 Adjustments to reconcile net income to net cash provided by operating activities: Noncash charges and other write-offs - 29,948 Depreciation, depletion and amortization 60,824 55,035 Provision for aircraft heavy maintenance 16,382 16,067 Provision for deferred income taxes 5,117 9,362 Other, net 10,469 6,528 Changes in operating assets and liabilities net of effects of acquisitions and dispositions: Increase in receivables (15,870) (17,999) Increase in inventories and other current assets (24,067) (5,103) Increase (decrease) in current liabilities 490 (22,710) Other, net (3,807) (47,346) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 85,542 67,827 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Additions to property, plant and equipment (82,236) (78,004) Proceeds from disposal of property, plant and equipment 3,698 8,262 Aircraft heavy maintenance (19,350) (9,713) Acquisitions and related contingent payments, net of cash acquired (54,094) (971) Other, net 6,996 4,181 - ------------------------------------------------------------------------------------------------------------------------------------ Net cash used by investing activities (144,986) (76,245) - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Additions to debt 99,082 21,643 Reductions of debt (8,263) (8,550) Share and other equity activity (12,595) (12,910) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by financing activities 78,224 183 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash and cash equivalents 18,780 (8,235) Cash and cash equivalents at beginning of period 41,217 52,823 - ------------------------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents at end of period $ 59,997 44,588 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries Pittston Brink's Group NOTES TO FINANCIAL INFORMATION (1) The Company has three classes of common stock: Pittston Brink's Group Common Stock ("Brink's Stock"), Pittston Burlington Group Common Stock ("Burlington Stock") and Pittston Minerals Group Common Stock ("Minerals Stock"), which were designed to provide shareholders with separate securities reflecting the performance of the Pittston Brink's Group (the "Brink's Group"), Pittston Burlington Group (the "Burlington Group") and Pittston Minerals Group (the "Minerals Group"), respectively, without diminishing the benefits of remaining a single corporation or precluding future transactions affecting any of the Groups. The financial information for the Brink's Group includes the results of the Company's Brink's, Incorporated ("Brink's") and Brink's Home Security, Inc. ("BHS") businesses. It is prepared using the amounts included in the Company's consolidated financial statements. Accordingly, the Company's consolidated financial statements must be read in connection with the Brink's Group's financial data. (2) In 1988, the trustees of certain pension and benefit trust funds (the "Trust Funds") established under collective bargaining agreements with the United Mine Workers of America ("UMWA") brought an action (the "Evergreen Case") against the Company and a number of its coal subsidiaries, claiming that the defendants were obligated to contribute to such Trust Funds in accordance with the provisions of the 1988 and subsequent National Bituminous Coal Wage Agreements, to which neither the Company nor any of its subsidiaries were a signatory. In 1993, the Company recognized in its consolidated financial statements the potential liability that might have resulted from an ultimate adverse judgement in the Evergreen Case. In March 1996, a settlement was reached in the Evergreen Case. Under the terms of the settlement, the coal subsidiaries which had been signatories to earlier National Bituminous Coal Wage Agreements agreed to make various lump sum payments in full satisfaction of all amounts allegedly due to the Trust Funds through January 31, 1996, to be paid over time as follows: approximately $25.8 million upon dismissal of the Evergreen Case and the remainder of $24 million in installments of $7.0 million in 1996 and $8.5 million in each of 1997 and 1998. The first payment was entirely funded through an escrow account previously established by the Company. The second payment of $7.0 million was paid in 1996 and was funded from cash provided by operating activities. The third payment of $7.0 million is expected to be paid in August, 1997 and will be funded from cash provided by operating activities. In addition, the coal subsidiaries agreed to future participation in the UMWA 1974 Pension Plan. As a result of the settlement of the Evergreen Case at an amount lower than previously accrued, the Company recorded a pretax gain of $35.7 million ($23.2 million after tax) in the first quarter of 1996 in its consolidated financial statements. (3) In 1996, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies to review assets for impairment whenever circumstances indicate that the carrying amount of an asset may not be recoverable. SFAS No. 121, resulted in a pretax charge to earnings in the first quarter of 1996 for the Company and the Minerals Group of $29.9 million ($19.5 million after- tax), of which $26.3 million was included in cost of sales and $3.6 million was included in selling, general and administrative expenses. SFAS No. 121 had no impact on the Brink's Group. (4) Based on demonstrated retention of customers, BHS adjusted its annual depreciation rate for capitalized subscribers' installation costs beginning in 1997. This change more accurately matches depreciation expense with monthly recurring revenue generated from customers. This change in accounting estimate reduced depreciation expense for capitalized installation costs by $2.1 million and $4.2 million in the quarter and six months ended June 30, 1997, respectively. (5) During the three months ended June 30, 1997 and 1996, the Company purchased 13,000 shares (at a cost of $0.4 million) and no shares, respectively, of Brink's Stock; no shares and 5,000 shares (at a cost of $0.1 million), respectively, of Burlington Stock; and no shares of Minerals Stock under the share repurchase program authorized by the Board of Directors of the Company (the "Board"). During the six months ended June 30, 1997 and 1996, the Company purchased 166,000 shares (at a cost of $4.3 million) and no shares, respectively, of Brink's Stock; 132,100 shares (at a cost of $2.6 million) and 5,000 shares (at a cost of $0.1 million), respectively, of Burlington Stock; and no shares of Minerals Stock under the share repurchase program. (6) There were no Series C Cumulative Convertible Preferred Stock (the "Convertible Preferred Stock") repurchases during the quarter and six months ended June 30, 1997. During the quarter and six months ended June 30, 1996, the Company purchased 10,600 shares of the Convertible Preferred Stock. Preferred dividends included on the Company's Statement of Operations for the quarter and six months ended June 30, 1996, are net of $1.1 million which is the excess of the carrying amount of the Convertible Preferred Stock over the cash paid to holders of the stock. (7) Certain prior period amounts have been reclassified to conform to the current period's financial statement presentation. (8) Financial information for the Minerals Group, which includes the results of the Pittston Coal Company and Pittston Mineral Ventures operations, and the Burlington Group which includes the results of the Company's Burlington Air Express Inc. business, is available upon request. EX-99 3 99(B) BURLINGTON GROUP PRESS RELEASE Pittston Burlington Group Reports Second Quarter Results Richmond, VA -- July 24, 1997. Pittston Burlington Group reported a net loss of $1.9 million, or $.10 cents per share (primary and fully diluted), in the second quarter ended June 30, 1997, including special consulting expenses of $12.5 million (pre-tax), or $.40 per share, related to the redesign of the Burlington Air Express, Inc. ("Burlington") global business processes and new information systems architecture. A year ago, net income was $8.7 million, or $.46 per share. Consolidated worldwide revenues totaled $399.6 million, an 11% increase over the $360.1 million reported in the prior year's quarter. For the first six months of 1997, worldwide revenues increased 9% to $771.0 million compared to $708.2 million for the comparable period in 1996. Net income was $3.2 million, or $.16 per share (primary and fully diluted), including the special consulting expenses of $.41 per share, for the first six months of 1997. A year ago, net income was $12.5 million, or $.65 per share. International Burlington's international revenues rose 13% in the second quarter to $253.0 million from $224.7 million in the comparable 1996 period due primarily to strong growth in Asia/Pacific markets. International expedited freight services revenues increased 12% to $192.7 million, reflecting higher volumes and higher average yields. Other international revenues, primarily customs clearance and ocean services, rose 16% to $60.3 million in the second quarter as compared to $52.2 million in the prior year quarter. International operating profits, excluding any impact of the aforementioned special consulting expenses, amounted to $8.4 million in the second quarter, a 33% increase over the $6.3 million earned in the second quarter of 1996. For the first six months of 1997, international operating profits totaled $15.1 million, a 34% increase over the $11.3 million recorded a year earlier. Burlington recently announced the acquisition of Cleton & Company, one of The Netherlands' leading logistics providers. Cleton & Company employs over 170 logistics professionals and currently operates over 500,000 sq. ft. of logistics/distribution facilities. Cleton generated annual gross revenues equivalent to U.S.$17 million in 1996. Domestic In the second quarter, Burlington's domestic expedited freight services revenues increased 8% to $144.7 million, reflecting higher volumes and higher average yields. Domestic operating profits, excluding any impact of the aforementioned special consulting expenses, were $3.5 million in the second quarter compared to $10.0 million in the same period a year ago. The 1996 second quarter benefitted from a reduction in Federal excise tax liabilities of approximately $3 million. In the current quarter, transportation costs were higher as a results of additional capacity designed to improve on time customer service and meet rising demand in high growth markets such as the aerospace and electronics industries. In addition, transportation costs included certain costs associated with Burlington's strategy of establishing a certificated airline carrier operation. Second quarter domestic expedited freight services average yield (revenue per pound) increased by 5% while weight shipped, which was impacted by declining shipments in the automotive sector, increased 3%. For the first six months of 1997, domestic operating profits, excluding any impact of the second quarter special consulting expenses, were $7.6 million compared to $13.7 million a year earlier. During the second quarter, Burlington announced major new contracts with Wal-Mart, TRW, General Instrument and Epson America, Inc. Giant retailer Wal-Mart selected Burlington to be its primary carrier for heavy-weight international air shipments. The TRW contract is for two years as the preferred, heavy-weight air carrier worldwide. Burlington will handle General Instrument's domestic heavy-weight air freight for both overnight and second day deliveries. The contract with Epson America, Inc. is for worldwide air and ocean freight services. As previously indicated, Burlington has formed a Global Innovation Team to redesign Burlington's global business processes and further enhance service quality and improve efficiencies. A key component of this process was a review of current information systems and technology needs on a global basis. The innovation team is responsible for optimizing Burlington's investment in technology to assure delivery of "state of the art" information systems for both customer and operations requirements. Other cost and service improvement programs have been identified through this process and are being implemented during the balance of 1997. Annualized cost savings from these initiatives are currently projected at a minimum of $5-10 million. Special expenses incurred in the second quarter represent most of the consulting fees and other project expenses expected to be incurred in the planning stage of this redesign program. Joseph C. Farrell, Chairman and CEO of Burlington, stated "We are optimistic about the outlook for Burlington's business for the balance of 1997 and beyond. We expect full year results to be in line with current estimates of $1.90-$2.00 per share exclusive of any special expenses." A number of new contracts for Burlington's logistics and transportation services have been concluded this year which are expected to further improve international and domestic volumes during the second half. The recently completed acquisition of Cleton & Co. will also enhance international revenue growth. Some of the initial benefits of the process redesign program are also expected to benefit second half results. The recent FAA proposal to limit payloads of converted Boeing 727 aircraft is not expected to materially impact Burlington's second half transportation costs. Financial - Consolidated The Pittston Company reported net income of $14.7 million in the second quarter compared to $25.4 million in the second quarter of 1996. For the first six months of 1997, net income totaled $36.0 million compared to $44.0 million in 1996. Consolidated cash flow from operating activities totaled $85.5 million for the six months ended June 30, 1997. Total debt at June 30, 1997 was $297.4 million. The Pittston Company's credit rating was recently raised to 'BBB' by Standard & Poor's Corporation. This release contains both historical and forward looking information. In particular statements herein regarding the benefits from the redesign initiatives and the impact of the automotive market, new business contracts and implementation of recent acquisitions on second half results are subject to known and unknown risks, uncertainties and contingencies, many of which are beyond the control of Burlington, which may cause actual results, performance or achievements to differ materially from those which are anticipated. Factors that might affect such forward looking statements include, among others, overall economic and business conditions, the demand for Burlington's services, pricing and other competitive factors in the industry, new government regulations, and uncertainty about the implementation of systems initiatives and the integration of acquisitions. * * * * * * * * * * Pittston Burlington Group Common Stock (NYSE-PZX), Pittston Brink's Group Common Stock (NYSE-PZB) and Pittston Minerals Group Common Stock (NYSE-PZM) represent the three classes of common stock of The Pittston Company. Pittston is a diversified company with interests in global freight transportation and logistics management services through Burlington Air Express Inc. (Pittston Burlington Group), security services through Brink's, Incorporated and Brink's Home Security, Inc. (Pittston Brink's Group), and in coal through Pittston Coal Company and in gold mining and metals exploration through Pittston Mineral Ventures Company (Pittston Minerals Group). Copies of the Pittston Brink's Group and Pittston Minerals Group earnings releases are available upon request. Pittston Burlington Group Supplemental Financial Data (Unaudited) BURLINGTON AIR EXPRESS INC.
(In thousands, except Three Months Ended June 30 Six Months Ended June 30 per pound/shipment amounts) 1997 1996 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- OPERATING REVENUES Domestic U.S. Expedited freight services $ 144,668 133,952 281,340 262,732 Other 1,890 1,434 3,612 2,102 - -------------------------------------------------------------------------------------------------------------------------- Total Domestic U.S. 146,558 135,386 284,952 264,834 International Expedited freight services $ 192,731 172,461 373,622 342,176 Customs clearances 31,663 30,362 59,300 58,776 Ocean and other 28,615 21,855 53,102 42,373 - -------------------------------------------------------------------------------------------------------------------------- Total International 253,009 224,678 486,024 443,325 Total operating revenues $ 399,567 360,064 770,976 708,159 - -------------------------------------------------------------------------------------------------------------------------- OPERATING PROFIT (LOSS) Domestic U.S. $ 3,498 10,029 7,615 13,737 International 8,437 6,298 15,076 11,276 Other (a) (12,500) - (12,500) - - -------------------------------------------------------------------------------------------------------------------------- Total operating (loss) profit $ (565) 16,327 10,191 25,013 - -------------------------------------------------------------------------------------------------------------------------- Expedited freight services shipment growth rate 0.6% 3.4% (0.6)% 4.4% Expedited freight services weight growth rate: Domestic U.S. 3.1% 5.3% 2.0% 4.1% International 7.9% 6.5% 5.2% 7.9% Worldwide 5.7% 5.9% 3.7% 6.1% - -------------------------------------------------------------------------------------------------------------------------- Expedited freight services weight (millions of pounds) 372.6 352.6 723.1 697.2 Expedited freight services shipments (thousands) 1,330 1,322 2,605 2,620 - -------------------------------------------------------------------------------------------------------------------------- Expedited freight services average: Yield (revenue per pound) $ .906 .869 .906 .868 Revenue per shipment $ 254 232 251 231 Weight per shipment (pounds) 280 267 278 266 - --------------------------------------------------------------------------------------------------------------------------
(a) Consulting expenses related to the redesign of Burlington's business processes and new information systems architecture. Pittston Burlington Group STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except Three Months Ended June 30 Six Months Ended June 30 per share amounts) 1997 1996 1997 1996 - -------------------------------------------------------------------------------------------------------------------------- Operating revenues $ 399,567 360,064 770,976 708,159 - -------------------------------------------------------------------------------------------------------------------------- Operating expenses 355,693 313,807 686,604 624,307 Selling, general and administrative expenses 46,852 32,219 79,023 62,906 - -------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 402,545 346,026 765,627 687,213 - -------------------------------------------------------------------------------------------------------------------------- Other operating income 859 518 1,508 741 - -------------------------------------------------------------------------------------------------------------------------- Operating (loss) profit (2,119) 14,556 6,857 21,687 Interest income 145 657 475 1,549 Interest expense (1,066) (988) (2,012) (2,040) Other expense, net - (337) (281) (1,344) - -------------------------------------------------------------------------------------------------------------------------- (Loss) income before income taxes (3,040) 13,888 5,039 19,852 (Credit) provision for income taxes (1,127) 5,142 1,864 7,345 - -------------------------------------------------------------------------------------------------------------------------- Net (loss) income $ (1,913) 8,746 3,175 12,507 - -------------------------------------------------------------------------------------------------------------------------- Net (loss) income per common share: Primary $ (.10) .46 .16 .65 Fully diluted (.10) (a) .46 (a) .16 (a) .65 (a) - -------------------------------------------------------------------------------------------------------------------------- Average common shares outstanding: Primary 19,471 19,161 19,439 19,100 Fully diluted 20,164 19,161 20,128 19,100 - -------------------------------------------------------------------------------------------------------------------------- SEGMENT INFORMATION Operating revenues: Burlington $ 399,567 360,064 770,976 708,159 - -------------------------------------------------------------------------------------------------------------------------- Operating (loss) profit: Burlington $ (565) 16,327 10,191 25,013 General corporate expense (1,554) (1,771) (3,334) (3,326) - -------------------------------------------------------------------------------------------------------------------------- Operating (loss) profit $ (2,119) 14,556 6,857 21,687 - --------------------------------------------------------------------------------------------------------------------------
See accompanying notes. (a) Fully diluted net income per share is considered to be the same as primary since the effect of common stock equivalents was either antidilutive or insignificant. Pittston Burlington Group CONDENSED BALANCE SHEETS
June 30 December 31 (In thousands) 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- (Unaudited) Assets Current assets: Cash and cash equivalents $ 29,913 17,818 Accounts receivable, net of estimated amounts uncollectible 274,233 262,378 Inventories and other current assets 25,227 22,557 - --------------------------------------------------------------------------------------------------------------------------- Total current assets 329,373 302,753 Property, plant and equipment, at cost, net of accumulated depreciation and amortization 111,698 113,283 Intangibles, net of amortization 174,082 177,797 Other assets 50,993 41,565 - --------------------------------------------------------------------------------------------------------------------------- Total assets $ 666,146 635,398 - --------------------------------------------------------------------------------------------------------------------------- Liabilities and Shareholder's Equity Current liabilities $ 310,629 278,601 Long-term debt, less current maturities 27,350 28,723 Other liabilities 23,286 23,085 - --------------------------------------------------------------------------------------------------------------------------- Total liabilities 361,265 330,409 Shareholder's equity 304,881 304,989 - --------------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholder's equity $ 666,146 635,398 - ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes. Pittston Burlington Group STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30 (In thousands) 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 3,175 12,507 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 14,122 10,891 Provision for aircraft heavy maintenance 16,382 16,067 Other, net 3,705 1,758 Changes in operating assets and liabilities: (Increase) decrease in receivables (13,493) 4,535 Increase in inventories and other current assets (3,563) (228) Increase (decrease) in current liabilities 5,873 (16,854) Other, net 1,380 (847) - --------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 27,581 27,829 - --------------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Additions to property, plant and equipment (10,973) (16,533) Proceeds from disposal of property, plant and equipment 315 5,265 Aircraft heavy maintenance (19,350) (9,713) Other, net 658 738 - --------------------------------------------------------------------------------------------------------------------------- Net cash used by investing activities (29,350) (20,243) - --------------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Net (reductions of) additions to debt (5,708) 393 Payments from (to) Minerals Group 23,304 (11,419) Share and other equity activity (3,732) (2,194) - --------------------------------------------------------------------------------------------------------------------------- Net cash provided (used) by financing activities 13,864 (13,220) - --------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 12,095 (5,634) Cash and cash equivalents at beginning of period 17,818 25,847 - --------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 29,913 20,213 - ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except Three Months Ended June 30 Six Months Ended June 30 per share amounts) 1997 1996 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Net sales $ 157,812 175,268 316,695 345,520 Operating revenues 668,342 582,119 1,291,135 1,142,774 - ------------------------------------------------------------------------------------------------------------------------------------ Net sales and operating revenues 826,154 757,387 1,607,830 1,488,294 - ------------------------------------------------------------------------------------------------------------------------------------ Cost of sales 153,836 169,444 307,248 365,329 Operating expenses 553,434 483,250 1,072,253 956,316 Restructuring and other credits, including litigation accrual - - - (37,758) Selling, general and administrative expenses 94,455 71,026 170,098 143,322 - ------------------------------------------------------------------------------------------------------------------------------------ Total costs and expenses 801,725 723,720 1,549,599 1,427,209 - ------------------------------------------------------------------------------------------------------------------------------------ Other operating income 2,875 7,243 6,451 10,058 - ------------------------------------------------------------------------------------------------------------------------------------ Operating profit 27,304 40,910 64,682 71,143 Interest income 991 811 2,010 1,336 Interest expense (6,422) (3,379) (11,986) (7,124) Other expense, net (1,899) (2,009) (4,288) (4,406) - ------------------------------------------------------------------------------------------------------------------------------------ Income before income taxes 19,974 36,333 50,418 60,949 Provision for income taxes 5,311 10,908 14,414 16,904 - ------------------------------------------------------------------------------------------------------------------------------------ Net income 14,663 25,425 36,004 44,045 Preferred stock dividends, net (902) 146 (1,803) (919) - ------------------------------------------------------------------------------------------------------------------------------------ Net income attributed to common shares $ 13,761 25,571 34,201 43,126 - ------------------------------------------------------------------------------------------------------------------------------------ Pittston Brink's Group: Net income attributed to common shares $ 17,739 14,035 33,045 25,874 - ------------------------------------------------------------------------------------------------------------------------------------ Net income per common share $ .46 .37 .86 .68 - ------------------------------------------------------------------------------------------------------------------------------------ Average common shares outstanding 38,230 38,152 38,209 38,105 - ------------------------------------------------------------------------------------------------------------------------------------ Pittston Burlington Group: Net (loss) income attributed to common shares $ (1,913) 8,746 3,175 12,507 - ------------------------------------------------------------------------------------------------------------------------------------ Net (loss) income per common share: Primary $ (.10) .46 .16 .65 Fully diluted (.10)(a) .46 (a) .16 (a) .65 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Average common shares outstanding: Primary 19,471 19,161 19,439 19,100 Fully diluted 20,164 19,161 20,128 19,100 - ------------------------------------------------------------------------------------------------------------------------------------ Pittston Minerals Group: Net (loss) income attributed to common shares: $ (2,065) 2,790 (2,019) 4,745 - ------------------------------------------------------------------------------------------------------------------------------------ Net (loss) income per common share: Primary $ (.26) .35 (.25) .60 Fully diluted (.26)(b) .27 (.25)(b) .57 - ------------------------------------------------------------------------------------------------------------------------------------ Average common shares outstanding: Primary 8,068 7,866 8,035 7,844 Fully diluted 9,903 9,947 9,878 9,969 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. (a) Fully diluted net income per share is considered to be the same as primary since the effect of common stock equivalents was either antidilutive or insignificant. (b) Fully diluted net income per share is considered to be the same as primary since the effect of common stock equivalents and the assumed conversion of preferred stock was either antidilutive or insignificant. The Pittston Company and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS
June 30 December 31 (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ (Unaudited) Assets Current assets: Cash and cash equivalents $ 59,997 41,217 Accounts receivable, net of estimated amounts uncollectible 504,628 475,859 Inventories and other current assets 145,729 121,338 - ------------------------------------------------------------------------------------------------------------------------------------ Total current assets 710,354 638,414 Property, plant and equipment, at cost, net of accumulated depreciation, depletion and amortization 604,007 540,851 Intangibles, net of amortization 300,266 317,062 Other assets 342,519 336,276 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets $ 1,957,146 1,832,603 - ------------------------------------------------------------------------------------------------------------------------------------ Liabilities and Shareholders' Equity Current liabilities $ 592,043 588,691 Long-term debt, less current maturities 254,965 158,837 Postretirement benefits other than pensions 229,913 226,697 Workers' compensation and other claims 112,747 116,893 Other liabilities 136,863 134,778 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 1,326,531 1,225,896 Shareholders' equity 630,615 606,707 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $ 1,957,146 1,832,603 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30 (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from operating activities: Net income $ 36,004 44,045 Adjustments to reconcile net income to net cash provided by operating activities: Noncash charges and other write-offs - 29,948 Depreciation, depletion and amortization 60,824 55,035 Provision for aircraft heavy maintenance 16,382 16,067 Provision for deferred income taxes 5,117 9,362 Other, net 10,469 6,528 Changes in operating assets and liabilities net of effects of acquisitions and dispositions: Increase in receivables (15,870) (17,999) Increase in inventories and other current assets (24,067) (5,103) Increase (decrease) in current liabilities 490 (22,710) Other, net (3,807) (47,346) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 85,542 67,827 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Additions to property, plant and equipment (82,236) (78,004) Proceeds from disposal of property, plant and equipment 3,698 8,262 Aircraft heavy maintenance (19,350) (9,713) Acquisitions and related contingent payments, net of cash acquired (54,094) (971) Other, net 6,996 4,181 - ------------------------------------------------------------------------------------------------------------------------------------ Net cash used by investing activities (144,986) (76,245) - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Additions to debt 99,082 21,643 Reductions of debt (8,263) (8,550) Share and other equity activity (12,595) (12,910) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by financing activities 78,224 183 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash and cash equivalents 18,780 (8,235) Cash and cash equivalents at beginning of period 41,217 52,823 - ------------------------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents at end of period $ 59,997 44,588 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries Pittston Burlington Group NOTES TO FINANCIAL INFORMATION (1) The Company has three classes of common stock: Pittston Brink's Group Common Stock ("Brink's Stock"), Pittston Burlington Group Common Stock ("Burlington Stock") and Pittston Minerals Group Common Stock ("Minerals Stock"), which were designed to provide shareholders with separate securities reflecting the performance of the Pittston Brink's Group (the "Brink's Group"), Pittston Burlington Group (the "Burlington Group") and Pittston Minerals Group (the "Minerals Group"), respectively, without diminishing the benefits of remaining a single corporation or precluding future transactions affecting any of the Groups. The financial information for the Burlington Group includes the results of the Company's Burlington Air Express Inc. business. It is prepared using the amounts included in the Company's consolidated financial statements. Accordingly, the Company's consolidated financial statements must be read in connection with the Burlington Group's financial data. (2) In 1988, the trustees of certain pension and benefit trust funds (the "Trust Funds") established under collective bargaining agreements with the United Mine Workers of America ("UMWA") brought an action (the "Evergreen Case") against the Company and a number of its coal subsidiaries, claiming that the defendants were obligated to contribute to such Trust Funds in accordance with the provisions of the 1988 and subsequent National Bituminous Coal Wage Agreements, to which neither the Company nor any of its subsidiaries were a signatory. In 1993, the Company recognized in its consolidated financial statements the potential liability that might have resulted from an ultimate adverse judgement in the Evergreen Case. In March 1996, a settlement was reached in the Evergreen Case. Under the terms of the settlement, the coal subsidiaries which had been signatories to earlier National Bituminous Coal Wage Agreements agreed to make various lump sum payments in full satisfaction of all amounts allegedly due to the Trust Funds through January 31, 1996, to be paid over time as follows: approximately $25.8 million upon dismissal of the Evergreen Case and the remainder of $24 million in installments of $7.0 million in 1996 and $8.5 million in each of 1997 and 1998. The first payment was entirely funded through an escrow account previously established by the Company. The second payment of $7.0 million was paid in 1996 and was funded from cash provided by operating activities. The third payment of $7.0 million is expected to be paid in August, 1997 and will be funded from cash provided by operating activities. In addition, the coal subsidiaries agreed to future participation in the UMWA 1974 Pension Plan. As a result of the settlement of the Evergreen Case at an amount lower than previously accrued, the Company recorded a pretax gain of $35.7 million ($23.2 million after tax) in the first quarter of 1996 in its consolidated financial statements. (3) In 1996, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies to review assets for impairment whenever circumstances indicate that the carrying amount of an asset may not be recoverable. SFAS No. 121, resulted in a pretax charge to earnings in the first quarter of 1996 for the Company and the Minerals Group of $29.9 million ($19.5 million after-tax), of which $26.3 million was included in cost of sales and $3.6 million was included in selling, general and administrative expenses. SFAS No. 121 had no impact on the Burlington Group. (4) During the three months ended June 30, 1997 and 1996, the Company purchased 13,000 shares (at a cost of $0.4 million) and no shares, respectively, of Brink's Stock; no shares and 5,000 shares (at a cost of $0.1 million), respectively, of Burlington Stock; and no shares of Minerals Stock under the share repurchase program authorized by the Board of Directors of the Company (the "Board"). During the six months ended June 30, 1997 and 1996, the Company purchased 166,000 shares (at a cost of $4.3 million) and no shares, respectively, of Brink's Stock; 132,100 shares (at a cost of $2.6 million) and 5,000 shares (at a cost of $0.1 million), respectively, of Burlington Stock; and no shares of Minerals Stock under the share repurchase program. (5) There were no Series C Cumulative Convertible Preferred Stock (the "Convertible Preferred Stock") repurchases during the quarter and six months ended June 30, 1997. During the quarter and six months ended June 30, 1996, the Company purchased 10,600 shares of the Convertible Preferred Stock. Preferred dividends included on the Company's Statement of Operations for the quarter and six months ended June 30, 1996, are net of $1.1 million which is the excess of the carrying amount of the Convertible Preferred Stock over the cash paid to holders of the stock. (6) Certain prior period amounts have been reclassified to conform to the current period's financial statement presentation. (7) Financial information for the Minerals Group, which includes the results of the Company's Coal and Mineral Ventures operations, and the Brink's Group, which includes the results of the Company's Brink's, Incorporated and Brink's Home Security, Inc. businesses, is available upon request. EX-99 4 99(C) MINERALS GROUP PRESS RELEASE Pittston Minerals Group Reports Second Quarter Results Richmond, VA - July 24, 1997 - Pittston Minerals Group reported a net loss of $1.2 million, or $.26 per share (primary and fully diluted), in the second quarter ended June 30, 1997. A year earlier, net income was $2.6 million, or $.35 per share ($.27 fully diluted). Through six months, the net loss was $.2 million, $.25 per share (primary and fully diluted), compared to net income of $5.7 million, or $.60 per share ($.57 fully diluted), in the 1996 period. Pittston Coal Company The coal segment's operating profit was $1.2 million in the second quarter compared to $5.2 million in the same period in 1996. Operating profit a year-ago included $4.0 million of a one-time benefit related to litigation settlements and additional Virginia tax credits. Second quarter coal sales volume was 5.1 million tons compared to 5.8 million tons in the prior year quarter. Steam and metallurgical coal sales amounted to 3.3 million and 1.8 million tons compared to 3.8 million and 2.0 million tons, respectively, in last year's second quarter. Coal production totaled 4.4 million tons in the quarter, up from 4.3 million tons a year earlier. Surface production accounted for 63% of total production compared to 68% in the second quarter of 1996. The second quarter 1997 coal margin per ton increased slightly from last year, although last year's production costs benefitted from additional Virginia tax credits. The decrease in other operating income of $4.0 million is primarily the result of the inclusion in 1996 of $3.0 million of litigation settlements and $.7 million of additional gains on asset sales. Selling, general and administrative costs improved while costs associated with inactive employees and idle facilities were unchanged. Both the steam and metallurgical coal markets remain weak and the company is reviewing its operating plans to reflect the realities of the current market. Pittston Mineral Ventures Pittston Mineral Ventures (PMV) reported a $1.3 million operating loss in the second quarter compared to a $0.6 million operating profit a year earlier. The Stawell gold mine in western Victoria, Australia, in which PMV has a 67% direct and indirect interest, produced 18,600 ounces of gold in the second quarter compared to 23,700 ounces in the prior year quarter. The average cash cost per ounce sold was US $370 in the second quarter of 1997 compared to US $304 in the prior year quarter. PMV's year-to-date operating loss was $1.8 million compared to an operating profit of $1.7 million for the first six months of 1996. The poor performance at the Stawell Gold mine was caused by lower production and higher costs associated with the collapse of a new ventilation shaft during its construction. No injuries were associated with the collapse, however, lower production and remedial work had a significant negative impact on costs. The potential for rehabilitating the shaft is currently being evaluated. While operations at Stawell have returned to near normal levels, the collapse of the shaft and the substantial decline of gold prices during the second quarter have prompted a comprehensive review of Stawell's operating plan in order to improve near-term results. Early in July, PMV closed a gold forward sale hedge position resulting in a gain of $3.4 million, which will be recognized over the next 18,000 ounces of gold sales. The initial mining and commissioning of the Silver Swan nickel project has proceeded according to expectations and the complex is now fully operational. The initial shipment of nickel concentrate is expected to take place in the third quarter with subsequent ramp up to full production by mid-1998. PMV is continuing gold exploration projects in Nevada and Australia with its joint venture partner. Financial - Consolidated The Pittston Company reported net income of $14.7 million in the second quarter compared to $25.4 million in the second quarter of 1996. For the first six months of 1997, net income totaled $36.0 million compared to $44.0 million in 1996. Consolidated cash flow from operating activities totaled $85.5 million for the six months ended June 30, 1997. Total debt at June 30, 1997 was $297.4 million. The Pittston Company's credit rating was recently raised to 'BBB' by Standard & Poor's Corporation. ********** Pittston Minerals Group Common Stock (NYSE-PZM), Pittston Brink's Group Common Stock (NYSE-PZB) and Pittston Burlington Group Common Stock (NYSE-PZX) represent the three classes of common stock of The Pittston Company, a diversified company with interests in mining and minerals exploration through Pittston Coal Company and Pittston Mineral Ventures (Pittston Minerals Group), security services through Brink's, Incorporated and Brink's Home Security, Inc. (Pittston Brink's Group) and global freight transportation and logistics management services through Burlington Air Express Inc. (Pittston Burlington Group). Copies of the Pittston Brink's Group and Pittston Burlington Group earnings releases are available upon request. Pittston Minerals Group Supplemental Financial Data (Unaudited) PITTSTON COAL COMPANY
Three Months Ended June 30 Six Months Ended June 30 (In thousands) 1997 1996 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- Net sales $ 154,073 169,896 308,666 335,364 Operating profit $ 1,232 5,190 4,855 9,567 COAL SALES (Tons) Metallurgical 1,823 1,954 3,714 3,999 Utility and industrial 3,294 3,831 6,523 7,403 - --------------------------------------------------------------------------------------------------------------------------- Total coal sales 5,117 5,785 10,237 11,402 - --------------------------------------------------------------------------------------------------------------------------- PRODUCTION/PURCHASED (Tons) Deep 1,324 991 2,426 2,053 Surface 2,739 2,870 5,398 5,586 Contract 373 459 736 854 - --------------------------------------------------------------------------------------------------------------------------- 4,436 4,320 8,560 8,493 Purchased 963 1,376 2,303 2,984 - --------------------------------------------------------------------------------------------------------------------------- Total 5,399 5,696 10,863 11,477 - ---------------------------------------------------------------------------------------------------------------------------
Three Months Ended June 30 Six Months Ended June 30 (In thousands) 1997 1996 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- Net coal sales (a) $ 151,303 168,551 304,001 332,459 Current production cost of coal sold (a) 140,554 156,947 282,126 314,918 - --------------------------------------------------------------------------------------------------------------------------- Coal margin 10,749 11,604 21,875 17,541 Non-coal margin 527 249 1,245 857 Other operating income, net 2,078 6,109 5,783 9,050 - --------------------------------------------------------------------------------------------------------------------------- Margin and other income 13,354 17,962 28,903 27,448 - --------------------------------------------------------------------------------------------------------------------------- Other costs and expenses: Idle equipment and closed mines 250 200 557 459 Inactive employee cost 7,097 7,063 13,780 14,487 Selling, general and administrative expenses 4,775 5,509 9,711 10,745 - --------------------------------------------------------------------------------------------------------------------------- Total other costs and expenses 12,122 12,772 24,048 25,691 - --------------------------------------------------------------------------------------------------------------------------- Operating profit (loss) (before restructuring and other credits and SFAS 121) (b) $ 1,232 5,190 4,855 1,757 - --------------------------------------------------------------------------------------------------------------------------- Coal margin per ton: Realization $ 29.57 29.14 29.70 29.16 Current production costs 27.47 27.13 27.56 27.62 - --------------------------------------------------------------------------------------------------------------------------- Coal margin $ 2.10 2.01 2.14 1.54 - ---------------------------------------------------------------------------------------------------------------------------
(a) Excludes non-coal components. (b) Restructuring and other credits in the six months ended June 30, 1996 consist of an impairment loss related to the adoption of SFAS No. 121 of $29,948 ($26,312 in cost of sales and $3,636 in selling, general and administrative expenses), a gain from the settlement of the Evergreen Case of $35,650 and a benefit from excess restructuring liabilities of $2,108. Both the gain from the Evergreen Case and the benefit from excess restructuring liabilities are included in the operating profit of the Pittston Coal Company as "Restructuring and other credits, including litigation accrual". PITTSTON MINERAL VENTURES COMPANY (Unaudited)
(In thousands, except Three Months Ended June 30 Six Months Ended June 30 ounce data) 1997 1996 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- Stawell Gold Mine: Gold sales $ 3,718 5,404 7,999 10,106 Other revenue (expense) 20 (32) 29 50 - -------------------------------------------------------------------------------------------------------------------------- Net sales 3,738 5,372 8,028 10,156 Cost of sales (a) 3,666 4,139 7,297 7,105 Selling, general and administrative expenses (a) 381 272 679 534 - -------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 4,047 4,411 7,976 7,639 - -------------------------------------------------------------------------------------------------------------------------- Operating profit (loss)-Stawell Gold Mine (309) 961 52 2,517 Other operating expense, net (1,001) (386) (1,817) (768) - -------------------------------------------------------------------------------------------------------------------------- Operating (loss) profit $ (1,310) 575 (1,765) 1,749 - -------------------------------------------------------------------------------------------------------------------------- Stawell Gold Mine: Mineral Ventures' 50% direct share: Ounces sold 9,665 12,841 20,241 24,600 Ounces produced 9,315 11,868 20,266 23,982 Average per ounce sold (US$): Realization $ 385 421 395 411 Cash cost 370 304 348 275 - --------------------------------------------------------------------------------------------------------------------------
(a) Excludes $26 and $797, and $68 and $1,414, of non-Stawell related cost of sales and selling, general and administrative expenses for the quarter and six months ended June 30, 1997, respectively. Excludes $678 and $1,204, of non-Stawell related selling, general and administrative expenses for the quarter and six months ended June 30, 1996, respectively. Such costs are reclassified to cost of sales and selling, general and administrative expenses in the Minerals Group income statement. Pittston Minerals Group STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except Three Months Ended June 30 Six Months Ended June 30 per share data) 1997 1996 1997 1996 - -------------------------------------------------------------------------------------------------------------------------- Net sales $ 157,812 175,268 316,695 345,520 - -------------------------------------------------------------------------------------------------------------------------- Cost of sales 153,836 169,444 307,248 365,329 Restructuring and other credits, including litigation accrual - - - (37,758) Selling, general and administrative expenses 7,307 8,023 14,716 19,057 - -------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 161,143 177,467 321,964 346,628 Other operating income, net 1,899 6,400 5,447 9,486 - -------------------------------------------------------------------------------------------------------------------------- Operating (loss) profit (1,432) 4,201 178 8,378 Interest income 335 197 617 322 Interest expense (2,734) (2,671) (5,359) (5,623) Other expense, net (452) (517) (902) (890) - -------------------------------------------------------------------------------------------------------------------------- (Loss) income before income taxes (4,283) 1,210 (5,466) 2,187 Credit for income taxes (3,120) (1,434) (5,250) (3,477) - -------------------------------------------------------------------------------------------------------------------------- Net (loss) income (1,163) 2,644 (216) 5,664 Preferred stock dividends, net (902) 146 (1,803) (919) - -------------------------------------------------------------------------------------------------------------------------- Net (loss) income attributed to common shares $ (2,065) 2,790 (2,019) 4,745 - -------------------------------------------------------------------------------------------------------------------------- Net (loss) income per common share: Primary $ (.26) .35 (.25) .60 Fully diluted $ (.26) (a) .27 (.25) (a) .57 - -------------------------------------------------------------------------------------------------------------------------- Average common shares outstanding: Primary 8,068 7,866 8,035 7,844 Fully diluted 9,903 9,947 9,878 9,969 - -------------------------------------------------------------------------------------------------------------------------- SEGMENT INFORMATION Net sales: Coal Operations $ 154,073 169,896 308,666 335,364 Mineral Ventures 3,739 5,372 8,029 10,156 - -------------------------------------------------------------------------------------------------------------------------- Net sales $ 157,812 175,268 316,695 345,520 - -------------------------------------------------------------------------------------------------------------------------- Operating (loss) profit: Coal Operations $ 1,232 5,190 4,855 9,567 Mineral Ventures (1,310) 575 (1,765) 1,749 - -------------------------------------------------------------------------------------------------------------------------- Segment operating (loss) profit (78) 5,765 3,090 11,316 General corporate expense (1,354) (1,564) (2,912) (2,938) - -------------------------------------------------------------------------------------------------------------------------- Operating (loss) profit $ (1,432) 4,201 178 8,378 - --------------------------------------------------------------------------------------------------------------------------
See accompanying notes. (a) Fully diluted net income per share is considered to be the same as primary since the effect of common stock equivalents and the assumed conversion of preferred stock was either antidilutive or insignificant. Pittston Minerals Group CONDENSED BALANCE SHEETS
June 30 December 31 (In thousands) 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- (Unaudited) Assets Current assets: Cash and cash equivalents $ 4,115 3,387 Accounts receivable, net of estimated amounts uncollectible 84,921 88,552 Inventories and other current assets 106,952 67,691 - -------------------------------------------------------------------------------------------------------------------------- Total current assets 195,988 159,630 Property, plant and equipment, at cost, net of accumulated depreciation, depletion and amortization 177,012 170,809 Coal supply contracts, net of amortization 47,075 52,696 Intangibles, net of amortization 109,598 111,103 Other assets 207,431 212,743 - -------------------------------------------------------------------------------------------------------------------------- Total assets $ 737,104 706,981 - -------------------------------------------------------------------------------------------------------------------------- Liabilities and Shareholder's Equity Current liabilities $ 164,611 184,725 Long-term debt, less current maturities 181,124 124,572 Postretirement benefits other than pensions 222,554 219,717 Workers' compensation and other claims 101,350 105,837 Other liabilities 83,333 83,790 - -------------------------------------------------------------------------------------------------------------------------- Total liabilities 752,972 718,641 Shareholder's equity (15,868) (11,660) - -------------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholder's equity $ 737,104 706,981 - --------------------------------------------------------------------------------------------------------------------------
See accompanying notes. Pittston Minerals Group STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30 (In thousands) 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net (loss) income $ (216) 5,664 Adjustments to reconcile net (loss) income to net cash provided (used) by operating activities: Noncash charges and other write-offs - 29,948 Depreciation, depletion and amortization 18,484 18,093 Provision for deferred income taxes 4,075 11,120 Other, net (1,783) (1,173) Changes in operating assets and liabilities net of effects of acquisitions and dispositions: Decrease (increase) in receivables 3,475 (18,682) Increase in inventories and other current assets (15,466) (1,515) Decrease in current liabilities (1,951) (7,151) Other, net (3,398) (44,358) - --------------------------------------------------------------------------------------------------------------------------- Net cash provided (used) by operating activities 3,220 (8,054) - --------------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Additions to property, plant and equipment (17,029) (13,999) Proceeds from disposal of property, plant and equipment 2,174 2,522 Acquisitions including related contingent payments (791) (746) Other, net (496) 2,038 - --------------------------------------------------------------------------------------------------------------------------- Net cash used by investing activities (16,142) (10,185) - --------------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Net additions to debt 56,025 17,731 Payments (to) from - Burlington Group/Brink's Group (38,074) 8,749 Other share activity (4,301) (8,482) - --------------------------------------------------------------------------------------------------------------------------- Net cash provided by financing activities 13,650 17,998 - --------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 728 (241) Cash and cash equivalents at beginning of period 3,387 4,999 - --------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 4,115 4,758 - ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except Three Months Ended June 30 Six Months Ended June 30 per share amounts) 1997 1996 1997 1996 - ----------------------------------------------------------------------------------------------------------------------------------- Net sales $ 157,812 175,268 316,695 345,520 Operating revenues 668,342 582,119 1,291,135 1,142,774 - ----------------------------------------------------------------------------------------------------------------------------------- Net sales and operating revenues 826,154 757,387 1,607,830 1,488,294 - ----------------------------------------------------------------------------------------------------------------------------------- Cost of sales 153,836 169,444 307,248 365,329 Operating expenses 553,434 483,250 1,072,253 956,316 Restructuring and other credits, including litigation accrual - - - (37,758) Selling, general and administrative expenses 94,455 71,026 170,098 143,322 - ----------------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 801,725 723,720 1,549,599 1,427,209 - ----------------------------------------------------------------------------------------------------------------------------------- Other operating income 2,875 7,243 6,451 10,058 - ----------------------------------------------------------------------------------------------------------------------------------- Operating profit 27,304 40,910 64,682 71,143 Interest income 991 811 2,010 1,336 Interest expense (6,422) (3,379) (11,986) (7,124) Other expense, net (1,899) (2,009) (4,288) (4,406) - ----------------------------------------------------------------------------------------------------------------------------------- Income before income taxes 19,974 36,333 50,418 60,949 Provision for income taxes 5,311 10,908 14,414 16,904 - ----------------------------------------------------------------------------------------------------------------------------------- Net income 14,663 25,425 36,004 44,045 Preferred stock dividends, net (902) 146 (1,803) (919) - ----------------------------------------------------------------------------------------------------------------------------------- Net income attributed to common shares $ 13,761 25,571 34,201 43,126 - ----------------------------------------------------------------------------------------------------------------------------------- Pittston Brink's Group: Net income attributed to common shares $ 17,739 14,035 33,045 25,874 - ----------------------------------------------------------------------------------------------------------------------------------- Net income per common share $ .46 .37 .86 .68 - ----------------------------------------------------------------------------------------------------------------------------------- Average common shares outstanding 38,230 38,152 38,209 38,105 - ----------------------------------------------------------------------------------------------------------------------------------- Pittston Burlington Group: Net (loss) income attributed to common shares $ (1,913) 8,746 3,175 12,507 - ----------------------------------------------------------------------------------------------------------------------------------- Net (loss) income per common share: Primary $ (.10) .46 .16 .65 Fully diluted (.10)(a) .46 (a) .16 (a) .65 (a) - ----------------------------------------------------------------------------------------------------------------------------------- Average common shares outstanding: Primary 19,471 19,161 19,439 19,100 Fully diluted 20,164 19,161 20,128 19,100 - ----------------------------------------------------------------------------------------------------------------------------------- Pittston Minerals Group: Net (loss) income attributed to common shares: $ (2,065) 2,790 (2,019) 4,745 - ----------------------------------------------------------------------------------------------------------------------------------- Net (loss) income per common share: Primary $ (.26) .35 (.25) .60 Fully diluted (.26)(b) .27 (.25)(b) .57 - ----------------------------------------------------------------------------------------------------------------------------------- Average common shares outstanding: Primary 8,068 7,866 8,035 7,844 Fully diluted 9,903 9,947 9,878 9,969 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. (a) Fully diluted net income per share is considered to be the same as primary since the effect of common stock equivalents was either antidilutive or insignificant. (b) Fully diluted net income per share is considered to be the same as primary since the effect of common stock equivalents and the assumed conversion of preferred stock was either antidilutive or insignificant. The Pittston Company and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS
June 30 December 31 (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ (Unaudited) Assets Current assets: Cash and cash equivalents $ 59,997 41,217 Accounts receivable, net of estimated amounts uncollectible 504,628 475,859 Inventories and other current assets 145,729 121,338 - ------------------------------------------------------------------------------------------------------------------------------------ Total current assets 710,354 638,414 Property, plant and equipment, at cost, net of accumulated depreciation, depletion and amortization 604,007 540,851 Intangibles, net of amortization 300,266 317,062 Other assets 342,519 336,276 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets $ 1,957,146 1,832,603 - ------------------------------------------------------------------------------------------------------------------------------------ Liabilities and Shareholders' Equity Current liabilities $ 592,043 588,691 Long-term debt, less current maturities 254,965 158,837 Postretirement benefits other than pensions 229,913 226,697 Workers' compensation and other claims 112,747 116,893 Other liabilities 136,863 134,778 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 1,326,531 1,225,896 Shareholders' equity 630,615 606,707 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $ 1,957,146 1,832,603 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30 (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from operating activities: Net income $ 36,004 44,045 Adjustments to reconcile net income to net cash provided by operating activities: Noncash charges and other write-offs - 29,948 Depreciation, depletion and amortization 60,824 55,035 Provision for aircraft heavy maintenance 16,382 16,067 Provision for deferred income taxes 5,117 9,362 Other, net 10,469 6,528 Changes in operating assets and liabilities net of effects of acquisitions and dispositions: Increase in receivables (15,870) (17,999) Increase in inventories and other current assets (24,067) (5,103) Increase (decrease) in current liabilities 490 (22,710) Other, net (3,807) (47,346) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 85,542 67,827 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Additions to property, plant and equipment (82,236) (78,004) Proceeds from disposal of property, plant and equipment 3,698 8,262 Aircraft heavy maintenance (19,350) (9,713) Acquisitions and related contingent payments, net of cash acquired (54,094) (971) Other, net 6,996 4,181 - ------------------------------------------------------------------------------------------------------------------------------------ Net cash used by investing activities (144,986) (76,245) - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Additions to debt 99,082 21,643 Reductions of debt (8,263) (8,550) Share and other equity activity (12,595) (12,910) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by financing activities 78,224 183 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash and cash equivalents 18,780 (8,235) Cash and cash equivalents at beginning of period 41,217 52,823 - ------------------------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents at end of period $ 59,997 44,588 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries Pittston Minerals Group NOTES TO FINANCIAL INFORMATION (1) The Company has three classes of common stock: Pittston Brink's Group Common Stock ("Brink's Stock"), Pittston Burlington Group Common Stock ("Burlington Stock") and Pittston Minerals Group Common Stock ("Minerals Stock"), which were designed to provide shareholders with separate securities reflecting the performance of the Pittston Brink's Group (the "Brink's Group"), Pittston Burlington Group (the "Burlington Group") and Pittston Minerals Group (the "Minerals Group"), respectively, without diminishing the benefits of remaining a single corporation or precluding future transactions affecting any of the Groups. The financial information for the Minerals Group includes the results of the Coal and Minerals Ventures operations of the Company. It is prepared using the amounts included in the Company's consolidated financial statements. Accordingly, the Company's consolidated financial statements must be read in connection with the Minerals Group's financial data. (2) In 1988, the trustees of certain pension and benefit trust funds (the "Trust Funds") established under collective bargaining agreements with the United Mine Workers of America ("UMWA") brought an action (the "Evergreen Case") against the Company and a number of its coal subsidiaries, claiming that the defendants were obligated to contribute to such Trust Funds in accordance with the provisions of the 1988 and subsequent National Bituminous Coal Wage Agreements, to which neither the Company nor any of its subsidiaries were a signatory. In 1993, the Company recognized in its consolidated financial statements the potential liability that might have resulted from an ultimate adverse judgement in the Evergreen Case. In March 1996, a settlement was reached in the Evergreen Case. Under the terms of the settlement, the coal subsidiaries which had been signatories to earlier National Bituminous Coal Wage Agreements agreed to make various lump sum payments in full satisfaction of all amounts allegedly due to the Trust Funds through January 31, 1996, to be paid over time as follows: approximately $25.8 million upon dismissal of the Evergreen Case and the remainder of $24 million in installments of $7.0 million in 1996 and $8.5 million in each of 1997 and 1998. The first payment was entirely funded through an escrow account previously established by the Company. The second payment of $7.0 million was paid in 1996 and was funded from cash provided by operating activities. The third payment of $7.0 million is expected to be paid in August, 1997 and will be funded from cash provided by operating activities. In addition, the coal subsidiaries agreed to future participation in the UMWA 1974 Pension Plan. As a result of the settlement of the Evergreen Case at an amount lower than previously accrued, the Company recorded a pretax gain of $35.7 million ($23.2 million after tax) in the first quarter of 1996 in its consolidated financial statements and the financial statements of the Minerals Group. (3) In 1996, the Minerals Group implemented a new accounting standard, Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long- Lived Assets and for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies to review assets for impairment whenever circumstances indicate that the carrying amount of an asset may not be recoverable. SFAS No. 121 resulted in a pretax charge to earnings in the first quarter of 1996 for the Minerals Group's Coal operations of $29.9 million ($19.5 million after tax) , of which $26.3 million was included in cost of sales and $3.6 million was included in selling, general and administrative expenses. Assets for which the impairment loss was recognized consisted of property, plant and equipment, advanced royalties and goodwill. (4) During the three months ended June 30, 1997 and 1996, the Company purchased 13,000 shares (at a cost of $0.4 million) and no shares, respectively, of Brink's Stock; no shares and 5,000 shares (at a cost of $0.1 million), respectively, of Burlington Stock; and no shares of Minerals Stock under the share repurchase program authorized by the Board of Directors of the Company (the "Board"). During the six months ended June 30, 1997 and 1996, the Company purchased 166,000 shares (at a cost of $4.3 million) and no shares, respectively, of Brink's Stock; 132,100 shares (at a cost of $2.6 million) and 5,000 shares (at a cost of $0.1 million), respectively, of Burlington Stock; and no shares of Minerals Stock under the share repurchase program. (5) There were no Series C Cumulative Convertible Preferred Stock (the "Convertible Preferred Stock") repurchases during the quarter and six months ended June 30, 1997. During the quarter and six months ended June 30, 1996, the Company purchased 10,600 shares of the Convertible Preferred Stock. Preferred dividends included on the Company's Statement of Operations for the quarter and six months ended June 30, 1996, are net of $1.1 million which is the excess of the carrying amount of the Convertible Preferred Stock over the cash paid to holders of the stock. (6) Certain prior period amounts have been reclassified to conform to the current period's financial statement presentation. (7) Financial information for the Brink's Group, which includes the results of the Company's Brink's, Incorporated and Brink's Home Security, Inc. businesses, and the Burlington Group, which includes the results of the Company's Burlington Air Express Inc. business, is available upon request. -----END PRIVACY-ENHANCED MESSAGE-----