-----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, DA7hhshOVoWU0q2FZ41aZO3jQglmYRNJ9bQN1wrfaCFFEC9fo0ITwR16SHvwTynh mxdXtCRa8KHwmCWmkAffgQ== 0000078890-98-000002.txt : 19980129 0000078890-98-000002.hdr.sgml : 19980129 ACCESSION NUMBER: 0000078890-98-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980128 ITEM INFORMATION: FILED AS OF DATE: 19980128 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: SEC FILE NUMBER: 001-09148 FILM NUMBER: 98515561 BUSINESS ADDRESS: STREET 1: 1000 VIRGINIA CENTER PKWY STREET 2: PO BOX 4229 CITY: RICHMOND STATE: VA ZIP: 23058-4229 BUSINESS PHONE: 8045533600 MAIL ADDRESS: STREET 1: P O BOX 120070 CITY: STAMFORD STATE: CT ZIP: 06912-0070 8-K 1 8-K 4QTR. PRESS RELEASES 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): January 28, 1998 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) 1 Item 5. Other Events - ------- ------------ The Pittston Company has announced earnings for the fourth quarter of 1997 for its Brink's Group, Burlington Group and Minerals Group. Press releases dated January 28, 1998, are filed as exhibits to this report and are incorporated herein by reference. EXHIBITS 99(a) Registrant's Brink's Group press release dated January 28, 1998. 99(b) Registrant's Burlington Group press release dated January 28, 1998. 99(c) Registrant's Minerals Group press release dated January 28, 1998. 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/ AUSTIN F. REED Vice President, General Counsel and Secretary Dated: January 28, 1998 2 EXHIBITS Exhibit Description - ------- ----------- 99(a) Registrant's Brink's Group press release dated January 28, 1998 99(b) Registrant's Burlington Group press release dated January 28, 1998 99(c) Registrant's Minerals Group press release dated January 28, 1998 3 EX-99 2 EX-99 (A) BKS4QPR Pittston Brink's Group Earns $.55 Per Share in the Fourth Quarter Richmond, VA - January 28, 1998 - Pittston Brink's Group reported net income of $21.2 million, or $.55 per share ($.54 diluted), in the fourth quarter ended December 31, 1997, an 18% increase over the $18.0 million, or $.47 per share ($.46 diluted), earned in the fourth quarter of 1996. Combined fourth quarter revenues of Brink's, Incorporated and Brink's Home Security, Inc. increased 24% to $301.2 million. For the full year 1997, Pittston Brink's Group net income increased 23% to $73.6 million or $1.92 per share ($1.90 diluted) compared to $59.7 million or $1.56 per share ($1.54 diluted) for the comparable period in 1996. Combined revenues for the full year 1997 were up 21% to $1.1 billion. Brink's, Incorporated (Brink's) Brink's worldwide consolidated revenues increased 26% to $254.1 million in the quarter. Operating profits amounted to $25.8 million, 37% greater than recorded in the prior year's quarter due to improvements in North American, European and Latin American operations. For the full year 1997, Brink's worldwide consolidated revenues increased 22% to a record $921.9 million and operating profits climbed 44% to a record $81.6 million, the thirteenth consecutive year of improved operating profits. Revenues from North American operations (United States and Canada) amounted to $130.4 million in the quarter, 18% higher than in the comparable period in 1996. Operating profits for the quarter increased 13% to $12.4 million primarily due to improved results achieved by armored car operations, which include ATM services, and money processing operations. For the full year 1997, North American revenues and operating profits were $482.2 million and $40.6 million, respectively, representing increases of 15% and 18% over the full year 1996. Revenues and operating profits from European operations and affiliates amounted to $45.1 million and $5.0 million, respectively, in the quarter, 28% and 82% higher than in the comparable 1996 periods. The increase in operating profits reflects improved results from most operating units, particularly in the Netherlands and France. For the full year 1997, revenues increased 14% to $146.5 million and operating profits increased 112% to $10.0 million. Europe's operating profits in 1997 were much improved in most countries but were partially offset by lower results from the 38% owned affiliate in France. Yesterday, Brink's announced that its subsidiary had acquired, for payments over three years totaling the equivalent of approximately US $39 million, nearly all of the remaining shares of its affiliate in France, which had revenues of approximately US $220 million in 1997. Revenues and operating profits from Latin American operations and affiliates amounted to $71.9 million and $7.8 million, respectively, in the quarter, 45% and 98% higher than in the comparable 1996 periods. 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 company. The improvement in Latin American operating profits was also attributable to the increased ownership position in the Venezuelan affiliate. Interest and minority interest expenses associated with the acquisition partially offset the profits generated by the Venezuelan operations. Revenues and operating profits from Asia/Pacific operations and affiliates amounted to $6.6 million and $0.6 million, respectively, in the quarter. Revenues were essentially unchanged over the comparable 1996 period and operating profits decreased $0.6 million. Brink's Home Security, Inc. (BHS) Brink's Home Security's revenues totaled $47.1 million in the fourth quarter 1997, a 15% increase over the year earlier period. Operating profits increased 23% to $13.4 million. For the full year ended December 31, 1997, revenues and operating profits increased 15% and 18%, respectively, to $179.6 million and $52.8 million. Brink's Home Security's subscriber base increased by 15% in 1997 and now exceeds 511,000 customers. Installations exceeded 105,000 in 1997, a 7% increase over the prior year. In the fourth quarter, Brink's Home Security installed over 25,000 new subscribers, slightly less than a year earlier. A major factor in the fourth quarter decrease was lower responses to advertising early in the quarter. Annualized recurring revenues increased 21% to $154.7 million as of December 31, 1997 due to a greater number of subscribers and higher average monitoring fees per subscriber. Brink's Home Security's disconnect rate for the full year 1997 was 7.5%, excluding the discontinuance in the fourth quarter of about 4,300 special, limited service contracts for a large homeowners' association. Over 95% of fourth quarter installations included up front cash payments. The company believes this cash commitment from the customer is key to maintaining a low disconnect rate and maximizing long term economic value. Efforts are on-going to maximize installation revenues and reduce the already industry low disconnect rate. Based on demonstrated retention of customers, Brink's Home Security 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 estimate reduced depreciation expense for capitalized installation costs for the quarter and full year ended December 31, 1997 by approximately $2.4 million and $8.9 million, respectively. Brink's Home Security occupied a new state-of-the-art national monitoring, customer service and corporate center in Irving, Texas, in November, 1997. This 91,000 square foot facility allowed Brink's Home Security to consolidate its operations from three buildings into one, which is expected to result in greater operating efficiencies. Brink's Home Security opened operations in Salt Lake City and the New York metropolitan area during the fourth quarter, bringing to seven the total number of new markets opened in 1997. Financial - Consolidated The Pittston Company (the "Company") reported consolidated revenues of $912.1 million in the fourth quarter ended December 31, 1997 compared to $820.5 million for the comparable period in 1996. Net income was $37.9 million compared to $31.1 million in the prior year's quarter. For the full year 1997, consolidated revenues were $3.4 billion and net income was $110.2 million. A year ago, consolidated revenues for the full year 1996 were $3.1 billion and net income was $104.2 million. Consolidated cash flow from operating activities totaled $268.1 million for the full year ended December 31, 1997. Total debt at December 31, 1997 was $243.3 million. During 1997 the Company purchased 1,515 shares of its Series C Convertible Preferred Stock, 166,000 shares of Pittston Brink's Group Common Stock and 332,300 shares of Pittston Burlington Group Common Stock at a total cost of $.6 million, $4.3 million and $7.4 million respectively. As of December 31, 1997 the Company had remaining authority to purchase over time 1 million shares of Pittston Minerals Group Common Stock, 1.1 million shares of Pittston Brink's Common Stock, 1.1 million shares of Pittston Burlington Group Common Stock and an additional $24.4 million of its Series C Convertible Preferred Stock. The aggregate purchase price limitation for all common stock purchases was $24.9 million at December 31, 1997. * * * * * * * * * * 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 interests 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 BAX Global 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 BRINK'S, INCORPORATED
Three Months Twelve Months Ended December 31 Ended December 31 (In thousands) 1997 1996 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ (Unaudited) OPERATING REVENUES North America (United States & Canada) $ 130,430 110,670 482,182 418,941 Europe 45,133 35,253 146,464 128,848 Latin America 71,923 49,657 266,445 182,481 Asia/Pacific 6,612 6,675 26,760 23,741 - ------------------------------------------------------------------------------------------------------------------------------------ Total operating revenues $ 254,098 202,255 921,851 754,011 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATING PROFIT North America (United States & Canada) $ 12,417 11,004 40,612 34,387 Europe 4,981 2,738 10,039 4,734 Latin America 7,764 3,923 28,711 15,243 Asia/Pacific 624 1,223 2,229 2,459 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Total operating profit $ 25,786 18,888 81,591 56,823 - ------------------------------------------------------------------------------------------------------------------------------------ DEPRECIATION AND AMORTIZATION $ 5,990 6,072 30,758 24,293 - ------------------------------------------------------------------------------------------------------------------------------------
BRINK'S HOME SECURITY, INC.
Three Months Twelve Months Ended December 31 Ended December 31 (Dollars in thousands) 1997 1996 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ (Unaudited) OPERATING REVENUES $ 47,102 40,921 179,583 155,802 - ------------------ OPERATING PROFIT $ 13,390 10,860 52,844 44,872 - ---------------- DEPRECIATION AND AMORTIZATION $ 8,682 8,032 30,344 30,115 - ----------------------------- Annualized recurring revenues (a) 154,718 128,106 Number of Subscribers: Beginning of period 500,374 427,793 446,505 378,659 Installations 25,242 26,511 105,630 98,541 Disconnects (9,803) (7,799) (36,322) (30,695) Discontinued limited service contracts (b) (4,281) - (4,281) - - ------------------------------------------------------------------------------------------------------------------------------------ End of period 511,532 446,505 511,532 446,505 - ------------------------------------------------------------------------------------------------------------------------------------
- ------------ (a) 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. (b) Special limited service contracts for a large homeowners' association that were discontinued as of December 31, 1997. Pittston Brink's Group STATEMENTS OF OPERATIONS
Three Months Twelve Months (In thousands Ended December 31 Ended December 31 except per share amounts) 1997 1996 1997 1996 - -------------------------------------------------------------------------------------------------------------------------------- (Unaudited) Operating revenues $ 301,200 243,176 1,101,434 909,813 - -------------------------------------------------------------------------------------------------------------------------------- Operating expenses 221,474 180,188 815,005 687,175 Selling, general and administrative expenses 44,030 35,768 160,676 130,833 - -------------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 265,504 215,956 975,681 818,008 - -------------------------------------------------------------------------------------------------------------------------------- Other operating income, net 1,670 955 1,811 2,433 - -------------------------------------------------------------------------------------------------------------------------------- Operating profit 37,366 28,175 127,564 94,238 Interest income 915 1,037 2,760 2,745 Interest expense (3,604) (400) (11,478) (1,810) Other expense, net (2,044) (1,773) (5,571) (5,407) - -------------------------------------------------------------------------------------------------------------------------------- Income before income taxes 32,633 27,039 113,275 89,766 Provision for income taxes 11,428 9,058 39,653 30,071 - -------------------------------------------------------------------------------------------------------------------------------- Net income $ 21,205 17,981 73,622 59,695 - -------------------------------------------------------------------------------------------------------------------------------- Net income per common share: Basic $ .55 .47 1.92 1.56 Diluted .54 .46 1.90 1.54 - -------------------------------------------------------------------------------------------------------------------------------- Average common shares outstanding: Basic 38,362 38,326 38,273 38,200 Diluted 38,963 38,784 38,791 38,682 - -------------------------------------------------------------------------------------------------------------------------------- SEGMENT INFORMATION Operating revenues: Brink's $ 254,098 202,255 921,851 754,011 BHS 47,102 40,921 179,583 155,802 - -------------------------------------------------------------------------------------------------------------------------------- Total operating revenues $ 301,200 243,176 1,101,434 909,813 - -------------------------------------------------------------------------------------------------------------------------------- Operating profit: Brink's $ 25,786 18,888 81,591 56,823 BHS 13,390 10,860 52,844 44,872 - -------------------------------------------------------------------------------------------------------------------------------- Segment operating profit 39,176 29,748 134,435 101,695 General corporate expense (1,810) (1,573) (6,871) (7,457) - -------------------------------------------------------------------------------------------------------------------------------- Total operating profit $ 37,366 28,175 127,564 94,238 - --------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. Pittston Brink's Group CONDENSED BALANCE SHEETS
December 31 December 31 (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Assets Current assets: Cash and cash equivalents $ 37,694 20,012 Accounts receivable, net of estimated amounts uncollectible 160,912 124,928 Inventories and other current assets 48,518 45,117 - ------------------------------------------------------------------------------------------------------------------------------------ Total current assets 247,124 190,057 Property, plant and equipment, at cost, net of accumulated depreciation and amortization 346,672 256,759 Intangibles, net of accumulated amortization 18,510 28,162 Other assets 80,024 76,687 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets $ 692,330 551,665 - ------------------------------------------------------------------------------------------------------------------------------------ Liabilities and Shareholder's Equity Current liabilities $ 178,348 139,392 Long-term debt, less current maturities 38,682 5,542 Other liabilities 94,820 93,353 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 311,850 238,287 Shareholder's equity 380,480 313,378 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholder's equity $ 692,330 551,665 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. Pittston Brink's Group STATEMENTS OF CASH FLOWS
Twelve Months Ended December 31 (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from operating activities: Net income $ 73,622 59,695 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 61,766 54,566 Other, net 19,359 10,877 Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: Increase in receivables (25,259) (15,556) Increase in inventories and other current assets (316) (1,576) Increase in current liabilities 19,341 12,989 Other, net (1,473) (7,212) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 147,040 113,783 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Additions to property, plant and equipment (116,270) (95,754) Proceeds from disposal of property, plant and equipment 1,007 2,798 Acquisitions, net of cash acquired (55,349) (90) Other, net 5,455 933 - ------------------------------------------------------------------------------------------------------------------------------------ Net cash used by investing activities (165,157) (92,113) - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Net additions to (reductions of) debt 44,394 (7,533) Payments to Minerals Group (2,977) (6,082) Share and other equity activity, net (5,618) (10,020) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided (used) by financing activities 35,799 (23,635) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash and cash equivalents 17,682 (1,965) Cash and cash equivalents at beginning of period 20,012 21,977 - ------------------------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents at end of period $ 37,694 20,012 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries Pittston Brink's Group NOTES TO FINANCIAL INFORMATION (1) The Pittston Company (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 and third payments of $7.0 million and $8.5 million were paid in 1996 and 1997, respectively, and were 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 $2.4 million and $8.9 million in the quarter and year ended December 31, 1997, respectively. (5) Under the share repurchase program authorized by the Board of Directors of the Company (the "Board"), the Company purchased shares in the periods presented as follows:
Quarter Ended Quarter Ended Year Ended Year Ended December 31 December 31 December 31 December 31 1997 1996 1997 1996 - -------------------------------------------------------------------------------------------------------------------------------- Brink's Stock: Shares - 278,000 166,000 278,000 Cost (in millions) $ - 6.9 4.3 6.9 Burlington Stock: Shares - 55,300 332,300 75,600 Cost (in millions) $ - 1.0 7.4 1.4 Convertible Preferred Stock: Shares - - 1,515 20,920 Cost (in millions) $ - - 0.6 7.9 Excess carrying amount (a) $ - - 0.1 2.1
(a) The excess of the carrying amount of the Convertible Preferred Stock over the cash paid to holders for repurchases made during the years. This amount is deducted from preferred dividends in the Company's Statement of Operations. (6) In the fourth quarter of 1997, the Company implemented a new accounting standard, Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." SFAS No. 128 replaced the calculation of primary and fully diluted net income per share with basic and diluted net income per share. Unlike primary net income per share, basic net income per share excludes any dilutive effects of options, warrants and convertible securities. Diluted net income per share is very similar to the previous fully diluted net income per share. All prior-period net income per share data have been restated to conform with the provisions of SFAS No. 128. (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 BAX Global Inc. business, is available upon request. The Pittston Company and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Twelve Months (In thousands, except Ended December 31 Ended December 31 per share amounts) 1997 1996 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ (Unaudited) Net sales $ 162,933 173,798 630,626 696,513 Operating revenues 749,186 646,709 2,763,772 2,394,682 - ------------------------------------------------------------------------------------------------------------------------------------ Net sales and operating revenues 912,119 820,507 3,394,398 3,091,195 - ------------------------------------------------------------------------------------------------------------------------------------ Cost of sales 157,439 174,261 609,025 707,497 Operating expenses 611,113 535,091 2,270,341 1,989,149 Restructuring and other credits, including litigation accrual (3,104) (9,541) (3,104) (47,299) Selling, general and administrative expenses 88,432 74,685 344,008 292,718 - ------------------------------------------------------------------------------------------------------------------------------------ Total costs and expenses 853,880 774,496 3,220,270 2,942,065 - ------------------------------------------------------------------------------------------------------------------------------------ Other operating income, net 4,651 3,635 14,000 17,377 - ------------------------------------------------------------------------------------------------------------------------------------ Operating profit 62,890 49,646 188,128 166,507 Interest income 1,317 1,271 4,394 3,487 Interest expense (7,851) (3,541) (27,119) (14,074) Other expense, net (2,050) (2,312) (7,148) (9,224) - ------------------------------------------------------------------------------------------------------------------------------------ Income before income taxes 54,306 45,064 158,255 146,696 Provision for income taxes 16,449 14,000 48,057 42,542 - ------------------------------------------------------------------------------------------------------------------------------------ Net income 37,857 31,064 110,198 104,154 Preferred stock dividends, net (889) (902) (3,481) (1,675) - ------------------------------------------------------------------------------------------------------------------------------------ Net income attributed to common shares $ 36,968 30,162 106,717 102,479 - ------------------------------------------------------------------------------------------------------------------------------------ Pittston Brink's Group: Net income attributed to common shares $ 21,205 17,981 73,622 59,695 - ------------------------------------------------------------------------------------------------------------------------------------ Net income per common share: Basic $ .55 .47 1.92 1.56 Diluted .54 .46 1.90 1.54 - ------------------------------------------------------------------------------------------------------------------------------------ Average common shares outstanding: Basic 38,362 38,326 38,273 38,200 Diluted 38,963 38,784 38,791 38,682 - ------------------------------------------------------------------------------------------------------------------------------------ Pittston Burlington Group: Net income attributed to common shares $ 13,180 10,587 32,348 33,801 - ------------------------------------------------------------------------------------------------------------------------------------ Net income per common share: Basic $ .68 .55 1.66 1.76 Diluted .66 .53 1.62 1.72 - ------------------------------------------------------------------------------------------------------------------------------------ Average common shares outstanding: Basic 19,443 19,408 19,448 19,223 Diluted 20,054 19,828 19,993 19,681 - ------------------------------------------------------------------------------------------------------------------------------------ Pittston Minerals Group: Net income attributed to common shares: $ 2,583 1,594 747 8,983 - ------------------------------------------------------------------------------------------------------------------------------------ Net income per common share: Basic $ .32 .20 .09 1.14 Diluted .32 .20 .09 1.08 - ------------------------------------------------------------------------------------------------------------------------------------ Average common shares outstanding: Basic 8,136 7,970 8,076 7,897 Diluted 8,136 8,010 8,102 9,884 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS
December 31 December 31 (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Assets Current assets: Cash and cash equivalents $ 69,878 41,217 Accounts receivable, net of estimated amounts uncollectible 531,317 475,859 Inventories and other current assets 125,610 121,338 - ------------------------------------------------------------------------------------------------------------------------------------ Total current assets 726,805 638,414 Property, plant and equipment, at cost, net of accumulated depreciation, depletion and amortization 647,642 540,851 Intangibles, net of accumulated amortization 301,395 317,062 Other assets 320,102 336,276 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets $ 1,995,944 1,832,603 - ------------------------------------------------------------------------------------------------------------------------------------ Liabilities and Shareholders' Equity Current liabilities $ 643,673 588,691 Long-term debt, less current maturities 191,812 158,837 Postretirement benefits other than pensions 231,452 226,697 Workers' compensation and other claims 106,377 116,893 Other liabilities 137,012 134,778 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 1,310,326 1,225,896 Shareholders' equity 685,618 606,707 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $ 1,995,944 1,832,603 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Months Ended December 31 (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from operating activities: Net income $ 110,198 104,154 Adjustments to reconcile net income to net cash provided by operating activities: Noncash charges and other write-offs 830 29,948 Depreciation, depletion and amortization 129,186 114,617 Provision for aircraft heavy maintenance 34,057 32,057 Provision for deferred income taxes 10,611 19,320 Other, net 21,750 14,972 Changes in operating assets and liabilities net of effects of acquisitions and dispositions: Increase in receivables (39,697) (53,885) (Increase) decrease in inventories and other current assets (2,638) 7,402 Increase in current liabilities 32,562 382 Other, net (28,750) (72,296) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 268,109 196,671 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Additions to property, plant and equipment (173,768) (180,651) Proceeds from disposal of property, plant and equipment 4,064 11,309 Aircraft heavy maintenance (29,748) (23,373) Acquisitions and related contingent payments, net of cash acquired (65,494) (4,168) Other, net 7,589 5,272 - ------------------------------------------------------------------------------------------------------------------------------------ Net cash used by investing activities (257,357) (191,611) - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Net additions to debt 41,991 14,000 Share and other equity activity, net (24,082) (30,666) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided (used) by financing activities 17,909 (16,666) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash and cash equivalents 28,661 (11,606) Cash and cash equivalents at beginning of period 41,217 52,823 - ------------------------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents at end of period $ 69,878 41,217 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. EX-99 3 EX-99 (B) BAX4QPR Pittston Burlington Group Earns $.68 Per Share in the Fourth Quarter Richmond, VA - January 28, 1998 - Pittston Burlington Group reported net income of $13.2 million, or $.68 per share ($.66 diluted), in the fourth quarter ended December 31, 1997, a 25% increase over the $10.6 million, or $.55 per share ($.53 diluted) earned in the fourth quarter of 1996. Consolidated worldwide revenues totaled $448.0 million, an 11% increase over the $403.5 million reported in the prior year's quarter. For the full year 1997, consolidated worldwide revenues increased 13% to $1.7 billion compared to $1.5 billion for the full year 1996. Net income for the full year was $40.2 million, or $2.06 per share ($2.01 diluted), excluding special second quarter consulting expenses of $.40 per share ($.39 diluted). A year ago, net income was $33.8 million, or $1.76 per share ($1.72 diluted). International BAX Global's international revenues rose 10% in the fourth quarter to $282.6 million from $257.5 million in the comparable 1996 period reflecting growth in all major geographic regions. International expedited freight services revenues increased 9% to $214.3 million due to higher volumes. Other international revenues, which consist primarily of customs clearances and ocean services, rose 11% to $68.3 million. International operating profits amounted to $11.8 million in the fourth quarter, a 39% increase over the $8.5 million earned in the fourth quarter of 1996. The increase was due in large part to continued improvement in U.S. export operating margins. For the full year 1997, international revenues increased 11% to $1.03 billion from $930.3 million for full year 1996. In 1997, excluding the special second quarter consulting expenses, international operating profits totaled $38.9 million, a 36% increase over the $28.5 million recorded a year earlier. The increase reflects the improvement in U.S. export operating margins and continued expansion of ocean freight services. BAX Global and the privately held Distribution Services Limited ("DSL") have mutually agreed not to complete the acquisition of DSL by BAX Global. While the preliminary purchase agreement that was announced December 17, 1997 has been terminated, the companies continue to look for alternative ways to cooperate for mutual benefit. Intra-U.S. In the fourth quarter, BAX Global's intra-U.S. expedited freight services revenues increased 15% to $163.2 million, mainly reflecting higher volumes. Intra- U.S. operating profits were $12.3 million in the fourth quarter, a 16% increase compared to the $10.6 million earned in the same period a year ago. Fourth quarter intra-U.S. expedited freight services average yield (revenue per pound) increased slightly while weight shipped increased 14% over the 1996 fourth quarter. For the full year 1997, intra-U.S. revenues increased 13% to $628.4 million compared to $554.6 million for full year 1996. In full year 1997, excluding the special second quarter consulting expenses, intra-U.S. operating profits were $36.9 million compared to $36.1 million a year earlier. During 1997, BAX Global began a Business Process Innovation ("BPI") program comprised of an extensive review of all aspects of the company's operations. Senior management from around the world, working with a major consulting firm, reviewed all areas of the business including sales, operations, finance, logistics and information technology. The result, which was customer- driven, was the development of a master plan for performance improvements which, when fully implemented, is intended to deliver the highest level of customer service in the logistics management and freight transportation industries. The plan details improvements in BAX Global's worldwide business through development of information systems that are intended to enhance productivity, improve the company's competitive position and make it easy for customers to do business with BAX Global. BAX Global recently initiated the detailed design phase with an expenditure commitment of approximately $50 million over the next six months largely in the form of capital expenditures. This detailed design phase is planned to be completed in mid-1998. This phase is intended to detail significant earnings enhancements achievable as a result of this process, following which the implementation phase would be authorized. A further incremental investment in technology, business improvements and employee training of up to $150 million, depending on the scope of benefits and enhancements, could be required over the next two to three years. When fully implemented, BAX Global will have a fully integrated global information management system which is expected to help create significant sustainable competitive advantages, substantially enhance customer service and facilitate major improvements in employee productivity, market share and profitability. Financial - Consolidated The Pittston Company (the "Company") reported consolidated revenues of $912.1 million in the fourth quarter ended December 31, 1997 compared to $820.5 million for the comparable period in 1996. Net income was $37.9 million compared to $31.1 million in the prior year's quarter. For the full year 1997, consolidated revenues were $3.4 billion and net income was $110.2 million. Consolidated revenues for full year 1996 were $3.1 billion and net income was $104.2 million. Consolidated cash flow from operating activities totaled $268.1 million for the full year ended December 31, 1997. Total debt at December 31, 1997 was $243.3 million. During 1997 the Company purchased 1,515 shares of its Series C Cumulative Convertible Preferred Stock and 166,000 shares of Pittston Brink's Group Common Stock and 332,300 shares of Pittston Burlington Group Common Stock at a total cost of $.6 million, $4.3 million and $7.4 million, respectively. As of December 31, 1997 the Company had remaining authority to purchase over time 1 million shares of Pittston Minerals Group Common Stock; 1.1 million shares of Pittston Brink's Common Stock; 1.1 million shares of Pittston Burlington Group Common Stock and an additional $24.4 million of its Series C Convertible Preferred Stock. The aggregate purchase price limitation for all common stock was $24.9 million at December 31, 1997. This release contains both historical and forward looking information. In particular, statements herein regarding BPI capital investment projections and the benefits from the redesign initiatives are subject to known and unknown risks, uncertainties and contingencies, many of which are beyond the control of BAX Global and 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, changes in the scope of BPI, delays in the design and implementation of BPI, overall economic and business conditions, the demand for BAX Global's services, pricing and other competitive factors in the industry, new government regulations, and uncertainty about the implementation of systems initiatives. * * * * * * * * * * 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, a diversified company with interests in global freight transportation and logistics management services through BAX Global Inc. (Pittston Burlington Group), security services through Brink's, Incorporated and Brink's Home Security, Inc. (Pittston Brink's Group), and in mining and minerals exploration through Pittston Coal Company and Pittston Mineral Ventures (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 BAX GLOBAL INC.
Three Months Twelve Months (In thousands, Ended December 31 Ended December 31 except per pound/shipment amounts) 1997 1996 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- (Unaudited) OPERATING REVENUES Intra-U.S.: Expedited freight services $ 163,167 142,409 620,839 547,647 Other 2,207 3,588 7,579 6,906 - --------------------------------------------------------------------------------------------------------------------------- Total Intra-U.S. 165,374 145,997 628,418 554,553 International: Expedited freight services $ 214,279 196,142 784,730 713,834 Customs clearances 32,749 31,645 124,145 120,438 Ocean and other 35,584 29,749 125,045 96,044 - --------------------------------------------------------------------------------------------------------------------------- Total International 282,612 257,536 1,033,920 930,316 - -------------------------------------------------------------------------------------------------------------------- Total operating revenues $ 447,986 403,533 1,662,338 1,484,869 - ------------------------------------------------------------------------------------------------------------------- OPERATING PROFIT Intra-U.S. $ 12,305 10,623 36,858 36,143 International 11,842 8,503 38,906 28,461 Other (a) - - (12,500) - - ------------------------------------------------------------------------------------------------------------------- Total operating profit $ 24,147 19,126 63,264 64,604 - ------------------------------------------------------------------------------------------------------------------- Expedited freight services shipment growth rate 7.3% (3.0%) 12.0% 1.3% Expedited freight services weight growth rate: Intra-U.S. 13.6% (1.6%) 8.7% 3.3% International 10.7% (2.6%) 9.0% 2.5% Worldwide 12.1% (2.2%) 8.9% 2.9% - ------------------------------------------------------------------------------------------------------------------- Expedited freight services weight(millions of pounds) 415.4 370.8 1,556.6 1,430.0 Expedited freight services shipments(thousands) 1,357 1,265 5,798 5,179 - ------------------------------------------------------------------------------------------------------------------- Expedited freight services average: Yield (revenue per pound) $ .908 .913 .903 .882 Revenue per shipment $ 278 268 242 244 Weight per shipment (pounds) 306 293 268 276 - -------------------------------------------------------------------------------------------------------------------
(a) Consulting expenses related to the redesign of BAX Global Inc.'s business processes and new information systems architecture. Pittston Burlington Group STATEMENTS OF OPERATIONS
Three Months Twelve Months (In thousands, except Ended December 31 Ended December 31 per share amounts) 1997 1996 1997 1996 - -------------------------------------------------------------------------------------------------------------------------------- (Unaudited) Operating revenues $ 447,986 403,533 1,662,338 1,484,869 - -------------------------------------------------------------------------------------------------------------------------------- Operating expenses 389,639 354,903 1,455,336 1,301,974 Selling, general and administrative expenses 36,658 31,618 153,104 127,254 - -------------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 426,297 386,521 1,608,440 1,429,228 - -------------------------------------------------------------------------------------------------------------------------------- Other operating income, net 648 564 2,507 1,530 - -------------------------------------------------------------------------------------------------------------------------------- Operating profit 22,337 17,576 56,405 57,171 Interest income 221 286 820 2,463 Interest expense (1,641) (1,113) (5,211) (4,097) Other expense, net (8) (89) (679) (2,028) - -------------------------------------------------------------------------------------------------------------------------------- Income before income taxes 20,909 16,660 51,335 53,509 Provision for income taxes 7,729 6,073 18,987 19,708 - -------------------------------------------------------------------------------------------------------------------------------- Net income $ 13,180 10,587 32,348 33,801 - -------------------------------------------------------------------------------------------------------------------------------- Net income per common share: Basic $ .68 .55 1.66 1.76 Diluted .66 .53 1.62 1.72 - -------------------------------------------------------------------------------------------------------------------------------- Average common shares outstanding: Basic 19,443 19,408 19,448 19,223 Diluted 20,054 19,828 19,993 19,681 - -------------------------------------------------------------------------------------------------------------------------------- SEGMENT INFORMATION Operating revenues: BAX Global $ 447,986 403,533 1,662,338 1,484,869 - -------------------------------------------------------------------------------------------------------------------------------- Operating profit: BAX Global $ 24,147 19,126 63,264 64,604 General corporate expense (1,810) (1,550) (6,859) (7,433) - -------------------------------------------------------------------------------------------------------------------------------- Operating profit $ 22,337 17,576 56,405 57,171 - --------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. Pittston Burlington Group CONDENSED BALANCE SHEETS
December 31 December 31 (In thousands) 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 28,790 17,818 Accounts receivable, net of estimated amounts uncollectible 306,806 262,378 Inventories and other current assets 19,568 22,557 - --------------------------------------------------------------------------------------------------------------------------- Total current assets 355,164 302,753 Property, plant and equipment, at cost, net of accumulated depreciation and amortization 128,632 113,283 Intangibles, net of accumulated amortization 174,791 177,797 Other assets 42,856 41,565 - --------------------------------------------------------------------------------------------------------------------------- Total assets $ 701,443 635,398 - --------------------------------------------------------------------------------------------------------------------------- Liabilities and Shareholder's Equity Current liabilities $ 312,065 278,601 Long-term debt, less current maturities 37,016 28,723 Other liabilities 28,652 23,085 - --------------------------------------------------------------------------------------------------------------------------- Total liabilities 377,733 330,409 Shareholder's equity 323,710 304,989 - --------------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholder's equity $ 701,443 635,398 - ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes. Pittston Burlington Group STATEMENTS OF CASH FLOWS
Twelve Months Ended December 31 (In thousands) 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 32,348 33,801 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 29,905 23,427 Provision for aircraft heavy maintenance 34,057 32,057 Other, net 4,730 3,556 Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: Increase in receivables (43,012) (33,875) Decrease in inventories and other current assets 2,531 680 Increase in current liabilities 13,534 5,300 Other, net (2,585) (1,857) - --------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 71,508 63,089 - --------------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Additions to property, plant and equipment (31,064) (61,321) Proceeds from disposal of property, plant and equipment 75 3,898 Acquisitions and related contingent payments, net of cash acquired (9,131) (2,944) Aircraft heavy maintenance (29,748) (23,373) Other, net 4,857 4,757 - --------------------------------------------------------------------------------------------------------------------------- Net cash used by investing activities (65,011) (78,983) - --------------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Net additions to (reductions of) debt 6,346 (364) Payments from Minerals Group 7,696 12,179 Share and other equity activity, net (9,567) (3,950) - --------------------------------------------------------------------------------------------------------------------------- Net cash provided by financing activities 4,475 7,865 - --------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 10,972 (8,029) Cash and cash equivalents at beginning of period 17,818 25,847 - --------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 28,790 17,818 - ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries Pittston Burlington Group NOTES TO FINANCIAL INFORMATION (1) The Pittston Company (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 BAX Global 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 and third payments of $7.0 million and $8.5 million were paid in 1996 and 1997, respectively, and were 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) Under the share repurchase program authorized by the Board of Directors of the Company (the "Board"), the Company purchased shares in the periods presented as follows:
Quarter Ended Quarter Ended Year Ended Year Ended December 31 December 31 December 31 December 31 1997 1996 1997 1996 - -------------------------------------------------------------------------------------------------------------------------------- Brink's Stock: Shares - 278,000 166,000 278,000 Cost (in millions) $ - 6.9 4.3 6.9 Burlington Stock: Shares - 55,300 332,300 75,600 Cost (in millions) $ - 1.0 7.4 1.4 Convertible Preferred Stock: Shares - - 1,515 20,920 Cost (in millions) $ - - 0.6 7.9 Excess carrying amount (a) $ - - 0.1 2.1
(a) The excess of the carrying amount of the Convertible Preferred Stock over the cash paid to holders for repurchases made during the years. This amount is deducted from preferred dividends in the Company's Statement of Operations. (5) In the fourth quarter of 1997, the Company implemented a new accounting standard, Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." SFAS No. 128 replaced the calculation of primary and fully diluted net income per share with basic and diluted net income per share. Unlike primary net income per share, basic net income per share excludes any dilutive effects of options, warrants and convertible securities. Diluted net income per share is very similar to the previous fully diluted net income per share. All prior-period net income per share data have been restated to conform with the provisions of SFAS No. 128. (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 Pittston Coal Company and Pittston 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. The Pittston Company and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Twelve Months (In thousands, except Ended December 31 Ended December 31 per share amounts) 1997 1996 1997 1996 - ----------------------------------------------------------------------------------------------------------------------------------- (Unaudited) Net sales $ 162,933 173,798 630,626 696,513 Operating revenues 749,186 646,709 2,763,772 2,394,682 - ---------------------------------------------------------------------------------------------------------------------------------- Net sales and operating revenues 912,119 820,507 3,394,398 3,091,195 - ----------------------------------------------------------------------------------------------------------------------------------- Cost of sales 157,439 174,261 609,025 707,497 Operating expenses 611,113 535,091 2,270,341 1,989,149 Restructuring and other credits, including litigation accrual (3,104) (9,541) (3,104) (47,299) Selling, general and administrative expenses 88,432 74,685 344,008 292,718 - ----------------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 853,880 774,496 3,220,270 2,942,065 - ----------------------------------------------------------------------------------------------------------------------------------- Other operating income, net 4,651 3,635 14,000 17,377 - ----------------------------------------------------------------------------------------------------------------------------------- Operating profit 62,890 49,646 188,128 166,507 Interest income 1,317 1,271 4,394 3,487 Interest expense (7,851) (3,541) (27,119) (14,074) Other expense, net (2,050) (2,312) (7,148) (9,224) - ----------------------------------------------------------------------------------------------------------------------------------- Income before income taxes 54,306 45,064 158,255 146,696 Provision for income taxes 16,449 14,000 48,057 42,542 - ----------------------------------------------------------------------------------------------------------------------------------- Net income 37,857 31,064 110,198 104,154 Preferred stock dividends, net (889) (902) (3,481) (1,675) - ----------------------------------------------------------------------------------------------------------------------------------- Net income attributed to common shares $ 36,968 30,162 106,717 102,479 - ----------------------------------------------------------------------------------------------------------------------------------- Pittston Brink's Group: Net income attributed to common shares $ 21,205 17,981 73,622 59,695 - ----------------------------------------------------------------------------------------------------------------------------------- Net income per common share: Basic $ .55 .47 1.92 1.56 Diluted .54 .46 1.90 1.54 - ----------------------------------------------------------------------------------------------------------------------------------- Average common shares outstanding: Basic 38,362 38,326 38,273 38,200 Diluted 38,963 38,784 38,791 38,682 - ----------------------------------------------------------------------------------------------------------------------------------- Pittston Burlington Group: Net income attributed to common shares $ 13,180 10,587 32,348 33,801 - ----------------------------------------------------------------------------------------------------------------------------------- Net income per common share: Basic $ .68 .55 1.66 1.76 Diluted .66 .53 1.62 1.72 - ----------------------------------------------------------------------------------------------------------------------------------- Average common shares outstanding: Basic 19,443 19,408 19,448 19,223 Diluted 20,054 19,828 19,993 19,681 - ----------------------------------------------------------------------------------------------------------------------------------- Pittston Minerals Group: Net income attributed to common shares: $ 2,583 1,594 747 8,983 - ----------------------------------------------------------------------------------------------------------------------------------- Net income per common share: Basic $ .32 .20 .09 1.14 Diluted .32 .20 .09 1.08 - ----------------------------------------------------------------------------------------------------------------------------------- Average common shares outstanding: Basic 8,136 7,970 8,076 7,897 Diluted 8,136 8,010 8,102 9,884 - -----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS
December 31 December 31 (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Assets Current assets: Cash and cash equivalents $ 69,878 41,217 Accounts receivable, net of estimated amounts uncollectible 531,317 475,859 Inventories and other current assets 125,610 121,338 - ------------------------------------------------------------------------------------------------------------------------------------ Total current assets 726,805 638,414 Property, plant and equipment, at cost, net of accumulated depreciation, depletion and amortization 647,642 540,851 Intangibles, net of accumulated amortization 301,395 317,062 Other assets 320,102 336,276 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets $ 1,995,944 1,832,603 - ------------------------------------------------------------------------------------------------------------------------------------ Liabilities and Shareholders' Equity Current liabilities $ 643,673 588,691 Long-term debt, less current maturities 191,812 158,837 Postretirement benefits other than pensions 231,452 226,697 Workers' compensation and other claims 106,377 116,893 Other liabilities 137,012 134,778 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 1,310,326 1,225,896 Shareholders' equity 685,618 606,707 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $ 1,995,944 1,832,603 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Months Ended December 31 (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from operating activities: Net income $ 110,198 104,154 Adjustments to reconcile net income to net cash provided by operating activities: Noncash charges and other write-offs 830 29,948 Depreciation, depletion and amortization 129,186 114,617 Provision for aircraft heavy maintenance 34,057 32,057 Provision for deferred income taxes 10,611 19,320 Other, net 21,750 14,972 Changes in operating assets and liabilities net of effects of acquisitions and dispositions: Increase in receivables (39,697) (53,885) (Increase) decrease in inventories and other current assets (2,638) 7,402 Increase in current liabilities 32,562 382 Other, net (28,750) (72,296) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 268,109 196,671 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Additions to property, plant and equipment (173,768) (180,651) Proceeds from disposal of property, plant and equipment 4,064 11,309 Aircraft heavy maintenance (29,748) (23,373) Acquisitions and related contingent payments, net of cash acquired (65,494) (4,168) Other, net 7,589 5,272 - ------------------------------------------------------------------------------------------------------------------------------------ Net cash used by investing activities (257,357) (191,611) - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Net additions to debt 41,991 14,000 Share and other equity activity, net (24,082) (30,666) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided (used) by financing activities 17,909 (16,666) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash and cash equivalents 28,661 (11,606) Cash and cash equivalents at beginning of period 41,217 52,823 - ------------------------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents at end of period $ 69,878 41,217 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. EX-99 4 EX-99 (C) PZM4QPR Pittston Minerals Group Earns $.32 per Share in the Fourth Quarter Richmond, VA - January 28, 1998 - Pittston Minerals Group reported net income of $3.5 million, or $.32 per share in the fourth quarter ended December 31, 1997. A year earlier, net income was $2.5 million, or $.20 per share. For the full year 1997, net income was $4.2 million, compared to $10.7 million a year ago. The 1997 net income per share was $.09 compared to earnings of $1.14 per share ($1.08 diluted) for the full year 1996. The Minerals Group generated $49.6 million of cash flow from operations in 1997 compared to $19.8 million in 1996. Coal inventories were reduced by approximately 500 thousand tons in the fourth quarter as problems at nuclear power plants and transportation issues in the western U.S. tightened the steam coal market. Pittston Coal Company Fourth quarter coal sales volume was 5.3 million tons compared to 5.8 million tons in the prior year quarter. Steam and metallurgical coal sales amounted to 3.2 million and 2.1 million tons compared to 3.6 million and 2.2 million tons, respectively, in last year's fourth quarter. Coal production totaled 3.8 million tons in the quarter, compared to 4.1 million tons a year earlier. Surface production accounted for 60% of total production compared to 69% in the fourth quarter of 1996. The coal segment's operating profit was $4.7 million in the fourth quarter compared to $5.1 million in the same period in 1996. Operating profit in the 1997 and 1996 fourth quarters included a benefit from excess restructuring liabilities of $3.1 million and $9.5 million respectively. Coal margins for the quarter and full year were $2.11 and $2.23 per ton, respectively, compared to $.62 and $1.54 per ton in 1996. Fourth quarter 1996 production costs were negatively impacted by increases in employee benefits and reclamation costs. Pittston Mineral Ventures Pittston Mineral Ventures (PMV) reported a $.04 million operating profit in the fourth quarter compared to $0.2 million in the same period a year earlier. The Stawell gold mine in western Victoria, Australia, in which PMV has a combined 67% direct and indirect interest, produced approximately 21,000 ounces of gold in the fourth quarter compared to approximately 21,400 ounces in the prior year quarter. The average cash cost per ounce sold was US $256 in the fourth quarter of 1997 compared to US $280 in the prior year quarter due in large part to lower mining expenses. PMV's full year 1997 operating loss was $2.1 million compared to an operating profit of $1.6 million for the full year 1996. The 1997 results include the impact of a write-off of $1.0 million (PMV's share) of the capital cost of a new ventilation shaft which collapsed, during construction, in the second quarter. Operations at Stawell returned to normal levels in the fourth quarter. The Silver Swan nickel mine is currently at full production with production costs in line with expectations at approximately US $2.22 lb. However, the financial crisis in Asia has depressed worldwide nickel prices significantly, resulting in reduced profitability from this operation. PMV is continuing gold exploration projects in Nevada and Australia with its joint venture partner. Karl Kindig, President and CEO of the Pittston Minerals Group noted that "while profits for 1997 were unsatisfactory, strong operating cash flow enabled the company to meet its legacy cost burden, pay dividends, reduce debt and invest $26 million in the mineral operations." Financial - Consolidated The Pittston Company (the "Company") reported consolidated revenues of $912.1 million in the fourth quarter ended December 31, 1997 compared to $820.5 million for the comparable period in 1996. Net income was $37.9 million compared to $31.1 million in the prior year's quarter. For the full year 1997, consolidated revenues were $3.4 billion and net income was $110.2 million. A year ago, consolidated revenues for the full year 1996 were $3.1 billion and net income was $104.2 million. Consolidated cash flow from operating activities totaled $268.1 million for the full year ended December 31, 1997. Total debt at December 31, 1997 was $243.3 million. During 1997, the Company purchased 1,515 shares of its Series C Convertible Preferred Stock and 166,000 shares of Pittston Brink's Group Common Stock and 332,300 shares of Pittston Burlington Group Common Stock at a total cost of $.6 million, $4.3 million and $7.4 million respectively. As of December 31, 1997 the Company had remaining authority to purchase over time 1 million shares of Pittston Minerals Group Common Stock, 1.1 million shares of Pittston Brink's Common Stock, 1.1 million shares of Pittston Burlington Group Common Stock and an additional $24.4 million of its Series C Convertible Preferred Stock. The aggregate purchase price limitation for all common stock purchases was $24.9 million at December 31, 1997. * * * * * * * * * * 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 BAX Global 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 PITTSTON COAL COMPANY
Three Months Twelve Months Ended December 31 Ended December 31 (In thousands) 1997 1996 1997 1996 - ----------------------------------------------------------------------------------------------------------------------------------- (Unaudited) Net sales $ 158,625 169,426 612,907 677,393 Operating profit $ 4,722 5,075 12,217 20,034 COAL SALES (Tons): Metallurgical 2,078 2,145 7,655 8,124 Utility and industrial 3,244 3,607 12,813 14,847 - ----------------------------------------------------------------------------------------------------------------------------------- Total coal sales 5,322 5,752 20,468 22,971 - ----------------------------------------------------------------------------------------------------------------------------------- PRODUCTION/PURCHASED (Tons): Deep 1,229 953 4,975 3,930 Surface 2,247 2,801 10,238 11,151 Contract 343 360 1,433 1,621 - ----------------------------------------------------------------------------------------------------------------------------------- 3,819 4,114 16,646 16,702 Purchased 1,003 1,397 4,075 5,762 - ----------------------------------------------------------------------------------------------------------------------------------- Total 4,822 5,511 20,721 22,464 - ----------------------------------------------------------------------------------------------------------------------------------- Three Months Twelve Months Ended December 31 Ended December 31 (In thousands, except per ton data) 1997 1996 1997 1996 - ----------------------------------------------------------------------------------------------------------------------------------- (Unaudited) Net coal sales (a) $ 156,181 167,361 604,140 670,121 Current production cost of coal sold (a) 144,941 163,809 558,658 634,754 - ----------------------------------------------------------------------------------------------------------------------------------- Coal margin 11,240 3,552 45,482 35,367 Non-coal margin 784 701 2,465 2,177 Other operating income, net 2,248 2,032 10,351 13,108 - ----------------------------------------------------------------------------------------------------------------------------------- Margin and other income 14,272 6,285 58,298 50,652 - ----------------------------------------------------------------------------------------------------------------------------------- Other costs and expenses: Idle equipment and closed mines 1,129 315 2,309 1,044 Inactive employee cost 6,788 5,542 27,419 26,300 Selling, general and administrative expenses 4,737 4,894 19,457 20,625 - ----------------------------------------------------------------------------------------------------------------------------------- Total other costs and expenses 12,654 10,751 49,185 47,969 - ----------------------------------------------------------------------------------------------------------------------------------- Operating profit (loss) (before restructuring and other credits and SFAS 121) (b) $ 1,618 (4,466) 9,113 2,683 - ----------------------------------------------------------------------------------------------------------------------------------- Coal margin per ton: Realization $ 29.35 29.10 29.52 29.17 Current production costs 27.24 28.48 27.29 27.63 - ----------------------------------------------------------------------------------------------------------------------------------- Coal margin $ 2.11 .62 2.23 1.54 - -----------------------------------------------------------------------------------------------------------------------------------
(a) Excludes non-coal components. (b) Restructuring and other credits in the quarter and twelve months ended December 31, 1997, consist of a benefit from excess restructuring liabilities of $3,104. Restructuring and other credits in the twelve months ended December 31, 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 $11,649. Restructuring and other credits in the quarter ended December 31, 1996 consist of a benefit from excess restructuring liabilities of $9,541. 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
Three Months Twelve Months (In thousands, except Ended December 31 Ended December 31 ounce and per ounce data) 1997 1996 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- (Unaudited) Stawell Gold Mine: Gold sales $ 4,319 4,399 17,714 19,071 Other (expense) revenue (11) (27) 5 49 - --------------------------------------------------------------------------------------------------------------------------- Net sales 4,308 4,372 17,719 19,120 Cost of sales (a) 2,923 3,136 14,242 13,898 Selling, general and administrative expenses (a) 232 267 1,242 1,124 - --------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 3,155 3,403 15,484 15,022 - --------------------------------------------------------------------------------------------------------------------------- Operating profit - Stawell Gold Mine 1,153 969 2,235 4,098 Other operating expense, net (1,111) (776) (4,305) (2,479) - --------------------------------------------------------------------------------------------------------------------------- Operating profit (loss) $ 42 193 (2,070) 1,619 - ------------------------------------------------------------------------------------------------------------------- Stawell Gold Mine: Mineral Ventures' 50% direct share: Ounces sold 10,607 10,582 42,024 45,957 Ounces produced 10,519 10,705 42,301 45,443 Average per ounce sold (US$): Realization 407 (b) 416 422 (b) 415 Cash cost 256 280 302 287 - ---------------------------------------------------------------------------------------------------------------------------
(a) Excludes ($4) and $1,200, and $93 and $3,543, of non-Stawell related cost of sales and selling, general and administrative expenses for the quarter and twelve months ended December 31, 1997, respectively. Excludes $94 and $765, and $94 and $2,691, of non-Stawell related cost of sales and selling, general and administrative expenses for the quarter and twelve months ended December 31, 1996, respectively. Such costs are reclassified to cost of sales and selling, general and administrative expenses in the Minerals Group statement of operations. (b) Includes allocation of the proceeds from the liquidation of a gold forward sale hedge position in July 1997. The allocation of those proceeds is complete as of December 31, 1997. Pittston Minerals Group STATEMENTS OF OPERATIONS
Three Months Twelve Months (In thousands, except Ended December 31 Ended December 31 per share amounts) 1997 1996 1997 1996 - -------------------------------------------------------------------------------------------------------------------------------- (Unaudited) Net sales $ 162,933 173,798 630,626 696,513 - -------------------------------------------------------------------------------------------------------------------------------- Cost of sales 157,439 174,261 609,025 707,497 Restructuring and other credits including litigation accrual (3,104) (9,541) (3,104) (47,299) Selling, general and administrative expenses 7,744 7,299 30,228 34,631 - -------------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 162,079 172,019 636,149 694,829 Other operating income, net 2,333 2,116 9,682 13,414 - -------------------------------------------------------------------------------------------------------------------------------- Operating profit 3,187 3,895 4,159 15,098 Interest income 352 328 1,330 835 Interest expense (2,777) (2,408) (10,946) (10,723) Other income (expense), net 2 (450) (898) (1,789) - -------------------------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes 764 1,365 (6,355) 3,421 Credit for income taxes (2,708) (1,131) (10,583) (7,237) - -------------------------------------------------------------------------------------------------------------------------------- Net income 3,472 2,496 4,228 10,658 Preferred stock dividends, net (889) (902) (3,481) (1,675) - -------------------------------------------------------------------------------------------------------------------------------- Net income attributed to common shares $ 2,583 1,594 747 8,983 - -------------------------------------------------------------------------------------------------------------------------------- Net income per common share: Basic $ .32 .20 .09 1.14 Diluted .32 .20 .09 1.08 - -------------------------------------------------------------------------------------------------------------------------------- Average common shares outstanding: Basic 8,136 7,970 8,076 7,897 Diluted 8,136 8,010 8,102 9,884 - -------------------------------------------------------------------------------------------------------------------------------- SEGMENT INFORMATION Net sales: Coal Operations $ 158,625 169,426 612,907 677,393 Mineral Ventures 4,308 4,372 17,719 19,120 - -------------------------------------------------------------------------------------------------------------------------------- Net sales $ 162,933 173,798 630,626 696,513 - -------------------------------------------------------------------------------------------------------------------------------- Operating profit (loss): Coal Operations $ 4,722 5,075 12,217 20,034 Mineral Ventures 42 193 (2,070) 1,619 - -------------------------------------------------------------------------------------------------------------------------------- Segment operating profit 4,764 5,268 10,147 21,653 General corporate expense (1,577) (1,373) (5,988) (6,555) - -------------------------------------------------------------------------------------------------------------------------------- Operating profit $ 3,187 3,895 4,159 15,098 - --------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. Pittston Minerals Group CONDENSED BALANCE SHEETS
December 31 December 31 (In thousands) 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 3,394 3,387 Accounts receivable, net of estimated amounts uncollectible 63,599 88,552 Inventories and other current assets 65,527 67,691 - --------------------------------------------------------------------------------------------------------------------------- Total current assets 132,520 159,630 Property, plant and equipment, at cost, net of accumulated depreciation, depletion and amortization 172,338 170,809 Coal supply contracts, net of accumulated amortization 41,703 52,696 Intangibles, net of accumulated amortization 108,094 111,103 Other assets 199,527 212,743 - --------------------------------------------------------------------------------------------------------------------------- Total assets $ 654,182 706,981 - --------------------------------------------------------------------------------------------------------------------------- Liabilities and Shareholder's Equity Current liabilities $ 161,264 184,725 Long-term debt, less current maturities 116,114 124,572 Postretirement benefits other than pensions 223,836 219,717 Workers' compensation and other claims 92,857 105,837 Other liabilities 78,683 83,790 - --------------------------------------------------------------------------------------------------------------------------- Total liabilities 672,754 718,641 Shareholder's equity (18,572) (11,660) - --------------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholder's equity $ 654,182 706,981 - ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes. Pittston Minerals Group STATEMENTS OF CASH FLOWS
Twelve Months Ended December 31 (In thousands) 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 4,228 10,658 Adjustments to reconcile net income to net cash provided by operating activities: Noncash charges and write-offs 830 29,948 Depreciation, depletion and amortization 37,515 36,624 Provision for deferred income taxes 11,052 22,088 Other, net (2,780) (2,229) Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: Decrease (increase) in receivables 28,574 (4,454) (Increase) decrease in inventories and other current assets (4,853) 8,298 Decrease in current liabilities (313) (17,907) Other, net (24,692) (63,227) - --------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 49,561 19,799 - --------------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Additions to property, plant and equipment (26,434) (23,575) Proceeds from disposal of property, plant and equipment 2,982 4,613 Acquisitions and related contingent payments (1,014) (1,134) Other, net (2,723) (419) - --------------------------------------------------------------------------------------------------------------------------- Net cash used by investing activities (27,189) (20,515) - --------------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Net (reductions of) additions to debt (8,749) 21,897 Payments to Burlington Group/Brink Group, net (4,719) (6,097) Share and other equity activity, net (8,897) (16,696) - --------------------------------------------------------------------------------------------------------------------------- Net cash used by financing activities (22,365) (896) - --------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 7 (1,612) Cash and cash equivalents at beginning of period 3,387 4,999 - --------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 3,394 3,387 - ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries Pittston Minerals Group NOTES TO FINANCIAL INFORMATION (1) The Pittston Company (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 Pittston Coal Company and Pittston Mineral 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 Mineral 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 and third payments of $7.0 million and $8.5 million were paid in 1996 and 1997, respectively, and were 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 implemented 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 Operation 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) Under the share repurchase program authorized by the Board of Directors of the Company (the "Board"), the Company purchased shares in the periods presented as follows:
Quarter Ended Quarter Ended Year Ended Year Ended December 31 December 31 December 31 December 31 1997 1996 1997 1996 - -------------------------------------------------------------------------------------------------------------------------------- Brink's Stock: Shares - 278,000 166,000 278,000 Cost (in millions) $ - 6.9 4.3 6.9 Burlington Stock: Shares - 55,300 332,300 75,600 Cost (in millions) $ - 1.0 7.4 1.4 Convertible Preferred Stock: Shares - - 1,515 20,920 Cost (in millions) $ - - 0.6 7.9 Excess carrying amount (a) $ - - 0.1 2.1
(a) The excess of the carrying amount of the Convertible Preferred Stock over the cash paid to holders for repurchases made during the years. This amount is deducted from preferred dividends in the Company's Statement of Operations. (5) In the fourth quarter of 1997, the Company implemented a new accounting standard, Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." SFAS No. 128 replaced the calculation of primary and fully diluted net income per share with basic and diluted net income per share. Unlike primary net income per share, basic net income per share excludes any dilutive effects of options, warrants and convertible securities. Diluted net income per share is very similar to the previous fully diluted net income per share. All prior-period net income per share data have been restated to conform with the provisions of SFAS No. 128. (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 BAX Global Inc. business, is available upon request. The Pittston Company and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Twelve Months (In thousands, except Ended December 31 Ended December 31 per share amounts) 1997 1996 1997 1996 - ----------------------------------------------------------------------------------------------------------------------------------- (Unaudited) Net sales $ 162,933 173,798 630,626 696,513 Operating revenues 749,186 646,709 2,763,772 2,394,682 - ----------------------------------------------------------------------------------------------------------------------------------- Net sales and operating revenues 912,119 820,507 3,394,398 3,091,195 - ----------------------------------------------------------------------------------------------------------------------------------- Cost of sales 157,439 174,261 609,025 707,497 Operating expenses 611,113 535,091 2,270,341 1,989,149 Restructuring and other credits, including litigation accrual (3,104) (9,541) (3,104) (47,299) Selling, general and administrative expenses 88,432 74,685 344,008 292,718 - ----------------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 853,880 774,496 3,220,270 2,942,065 - ----------------------------------------------------------------------------------------------------------------------------------- Other operating income, net 4,651 3,635 14,000 17,377 - ----------------------------------------------------------------------------------------------------------------------------------- Operating profit 62,890 49,646 188,128 166,507 Interest income 1,317 1,271 4,394 3,487 Interest expense (7,851) (3,541) (27,119) (14,074) Other expense, net (2,050) (2,312) (7,148) (9,224) - ----------------------------------------------------------------------------------------------------------------------------------- Income before income taxes 54,306 45,064 158,255 146,696 Provision for income taxes 16,449 14,000 48,057 42,542 - ----------------------------------------------------------------------------------------------------------------------------------- Net income 37,857 31,064 110,198 104,154 Preferred stock dividends, net (889) (902) (3,481) (1,675) - ----------------------------------------------------------------------------------------------------------------------------------- Net income attributed to common shares $ 36,968 30,162 106,717 102,479 - ----------------------------------------------------------------------------------------------------------------------------------- Pittston Brink's Group: Net income attributed to common shares $ 21,205 17,981 73,622 59,695 - ----------------------------------------------------------------------------------------------------------------------------------- Net income per common share: Basic $ .55 .47 1.92 1.56 Diluted .54 .46 1.90 1.54 - ----------------------------------------------------------------------------------------------------------------------------------- Average common shares outstanding: Basic 38,362 38,326 38,273 38,200 Diluted 38,963 38,784 38,791 38,682 - ----------------------------------------------------------------------------------------------------------------------------------- Pittston Burlington Group: Net income attributed to common shares $ 13,180 10,587 32,348 33,801 - ----------------------------------------------------------------------------------------------------------------------------------- Net income per common share: Basic $ .68 .55 1.66 1.76 Diluted .66 .53 1.62 1.72 - ----------------------------------------------------------------------------------------------------------------------------------- Average common shares outstanding: Basic 19,443 19,408 19,448 19,223 Diluted 20,054 19,828 19,993 19,681 - ----------------------------------------------------------------------------------------------------------------------------------- Pittston Minerals Group: Net income attributed to common shares: $ 2,583 1,594 747 8,983 - ----------------------------------------------------------------------------------------------------------------------------------- Net income per common share: Basic $ .32 .20 .09 1.14 Diluted .32 .20 .09 1.08 - ----------------------------------------------------------------------------------------------------------------------------------- Average common shares outstanding: Basic 8,136 7,970 8,076 7,897 Diluted 8,136 8,010 8,102 9,884 - -----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS
December 31 December 31 (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Assets Current assets: Cash and cash equivalents $ 69,878 41,217 Accounts receivable, net of estimated amounts uncollectible 531,317 475,859 Inventories and other current assets 125,610 121,338 - ------------------------------------------------------------------------------------------------------------------------------------ Total current assets 726,805 638,414 Property, plant and equipment, at cost, net of accumulated depreciation, depletion and amortization 647,642 540,851 Intangibles, net of accumulated amortization 301,395 317,062 Other assets 320,102 336,276 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets $ 1,995,944 1,832,603 - ------------------------------------------------------------------------------------------------------------------------------------ Liabilities and Shareholders' Equity Current liabilities $ 643,673 588,691 Long-term debt, less current maturities 191,812 158,837 Postretirement benefits other than pensions 231,452 226,697 Workers' compensation and other claims 106,377 116,893 Other liabilities 137,012 134,778 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 1,310,326 1,225,896 Shareholders' equity 685,618 606,707 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $ 1,995,944 1,832,603 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. The Pittston Company and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Months Ended December 31 (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from operating activities: Net income $ 110,198 104,154 Adjustments to reconcile net income to net cash provided by operating activities: Noncash charges and other write-offs 830 29,948 Depreciation, depletion and amortization 129,186 114,617 Provision for aircraft heavy maintenance 34,057 32,057 Provision for deferred income taxes 10,611 19,320 Other, net 21,750 14,972 Changes in operating assets and liabilities net of effects of acquisitions and dispositions: Increase in receivables (39,697) (53,885) (Increase) decrease in inventories and other current assets (2,638) 7,402 Increase in current liabilities 32,562 382 Other, net (28,750) (72,296) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 268,109 196,671 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Additions to property, plant and equipment (173,768) (180,651) Proceeds from disposal of property, plant and equipment 4,064 11,309 Aircraft heavy maintenance (29,748) (23,373) Acquisitions and related contingent payments, net of cash acquired (65,494) (4,168) Other, net 7,589 5,272 - ------------------------------------------------------------------------------------------------------------------------------------ Net cash used by investing activities (257,357) (191,611) - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Net additions to debt 41,991 14,000 Share and other equity activity, net (24,082) (30,666) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided (used) by financing activities 17,909 (16,666) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash and cash equivalents 28,661 (11,606) Cash and cash equivalents at beginning of period 41,217 52,823 - ------------------------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents at end of period $ 69,878 41,217 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes. -----END PRIVACY-ENHANCED MESSAGE-----