UNITED STATES
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):
APRIL 30, 2003
THE PITTSTON COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VIRGINIA 1-9148 54-1317776
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
P. O. BOX 18100
1801 BAYBERRY COURT
RICHMOND, VA 23226-8100
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(804) 289-9600
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
ITEM 9. REGULATION FD DISCLOSURE
This Current Report on Form 8-K and the earnings press release attached hereto
are being furnished by The Pittston Company (the "Company") pursuant to Item 12
of Form 8-K, in accordance with SEC Release Nos. 33-8216; 34-47583, insofar as
they disclose historical information regarding the Company's results of
operations or financial condition for the quarter ended March 31, 2003.
On April 30, 2003 the Company issued a press release regarding its earnings for
the first quarter ended March 31, 2003. A copy of this release is being
furnished as Exhibit 99.1 to this Current Report on Form 8-K.
In accordance with General Instruction B.6 of Form 8-K, the information in this
Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed "filed"
for the purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or otherwise subject to the liability of that section, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933,
as amended, except as shall be expressly set forth by specific reference in such
a filing.
EXHIBIT
99.1 Press Release dated April 30, 2003 issued by The Pittston Company.
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/ Robert T. Ritter
--------------------------------
Robert T. Ritter
Vice President and Chief Financial Officer
Dated: April 30, 2003
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
99.1 Press Release dated April 30, 2003 issued by The Pittston Company.
The Pittston Company
1801 Bayberry Court
P.O. Box 18100
Richmond, VA 23226-8100 USA
Tel. 804.289.9600
Fax 804.289.9760
Contact: IMMEDIATE RELEASE
Investor Relations
804.289.9709
THE PITTSTON COMPANY
REPORTS FIRST QUARTER RESULTS
Company Makes Contribution in April to VEBA
RICHMOND, VA. (APRIL 30, 2003) - The Pittston Company reported a net loss of
$1.7 million, or $(0.03) per share for the quarter ended March 31, 2003. For the
same period one year ago, net income was $8.1 million, or $0.15 per share.
Revenue in the first quarter of 2003 increased 5% over last year's first
quarter to $941 million. Higher revenue at BAX Global and Brink's Home Security
was partially offset by a decline at Brink's, Incorporated.
Operating profit in the quarter just ended was $3.1 million after deducting
$17.3 million of costs associated with the former coal operations. Costs related
to the former coal operations were recorded within discontinued operations in
2002 and, accordingly, were not deducted in arriving at operating profit last
year. In addition, increased operating profits at Brink's Home Security, and
slight improvements in BAX Global and Other Operations, were more than offset by
lower operating profit at Brink's. Operating profit was $37.1 million in the
first quarter of 2002.
CONTRIBUTION MADE TO VEBA
In April 2003, the Company made a $32 million contribution to its Voluntary
Employees' Beneficiary Association (VEBA) bringing its current value to about
$50 million. The VEBA is intended to tax efficiently fund certain retiree
medical liabilities primarily for retired coal miners and their dependents. The
Company expects to make additional contributions to the VEBA using a portion of
the proceeds from future asset sales and cash generated from operations.
FIRST QUARTER BUSINESS UNIT PERFORMANCE
Brink's, Incorporated ("Brink's")
Worldwide revenue of $391 million declined 4% during the first quarter as
compared with the prior year's period. International revenue declined nearly 10%
when compared with the prior year's strong first quarter due in large part to
the one-time benefit of euro distribution revenue included in the first quarter
of 2002. The positive effect on revenue of the weaker U.S. dollar versus
European currencies was more than offset by the effect of the continuing decline
of currency values in South America. North American revenue increased 4% over
the first quarter of 2002.
Brink's operating profit of $13.1 million in the quarter ended March 31,
2003 declined due to lower international profits when compared to the strong
first quarter 2002 results. In 2002, Brink's international performance benefited
from the special one-time euro distribution and retired currency return work. In
2003 North American profits essentially matched those of a year earlier.
International performance in 2003 was also adversely impacted by the effects of
economic and political issues in certain South
2
American countries as well as the effects of the generally sluggish performance
of European economies and severance payments made to lower future operating
costs.
Brink's Home Security
Revenue increased 10% to $73.9 million in the first quarter as compared to the
same period last year due primarily to growth in the subscriber base. Record
operating profits of $16.7 million in the first quarter were 10% higher than
those recorded in the prior year's quarter. An increase in operating profit from
recurring services resulted primarily from the growth of the subscriber base and
a lower disconnect rate. The annualized disconnect rate for the current year's
quarter improved to 6.5% compared to 6.7% a year earlier. The Company added over
27,000 new subscribers during the quarter, a 9% increase over the first quarter
last year. At March 31, 2003, Brink's Home Security had more than 780,000
subscribers.
BAX Global
Worldwide revenue increased to $463.6 million in the first quarter, 12% higher
than the same period last year. Revenue increased 2% in the Americas region on
modestly higher volume compared to last year, and international revenue
increased 23% primarily reflecting strong Asia Pacific activity. The effect of
higher revenue was offset by the impact of higher costs as carriers reduced
service, raised rates and increased surcharges. BAX Global reported an operating
loss of $5.5 million this quarter compared to an operating loss of $6.7 million
in the same period in 2002.
3
Other Operations
Other Operations, which reflects the Company's interests in natural gas, timber
and gold mining operations, reported revenue of $12.4 million in the first
quarter as compared to $10.0 million a year ago. The operating profit for the
quarter was $3.3 million, up from $2.4 million a year earlier.
Former Coal Operations
The former coal operations recorded $17.3 million (before tax) of net expenses
in the quarter ended March 31, 2003, primarily related to retiree benefits of
former coal employees. In the first quarter of 2002 charges related to former
coal operations of $15 million ($11 million after tax) were classified within
discontinued operations and included adjustments to the Company's estimated loss
on sale of this business. The Company completed its planned exit from the coal
business in the fourth quarter of 2002.
SUMMARY
Michael T. Dan, Chairman, President and Chief Executive Officer, commented:
"The first quarter results were disappointing as the impact of soft economies
around the world overshadowed some of the positive steps we have taken. At
Brink's, Incorporated our people are working diligently to minimize the negative
effects of challenging economic and political climates in South America and weak
economies in Europe. They are actively working to reduce cost structures in line
with current and projected market opportunities, while ensuring strong security
performance worldwide. Performance in
4
the United States and Asia Pacific was solid once again and, with a second
positive quarter, operating performance in Latin America showed signs of having
bottomed.
"Brink's Home Security turned in another record quarter. The 9%
year-over-year increase in the rate of new installations and continued improved
performance in customer service and retention resulted in good growth in value
generation.
"At BAX Global, soft United States and European economies, and high costs
stemming from carrier cutbacks and surcharges, kept us from showing real
year-over-year improvement.
"Looking ahead, we will continue to focus on growing and improving the
financial performance of our core businesses, and to search for new ways to
improve operating effectiveness. At Brink's, Incorporated we will continue to
develop new business opportunities, reduce costs, and effectively manage the
risks inherent in the business. Brink's Home Security will continue to increase
the cash generating capacity of its business while adhering to its traditional
operating, service and value creation standards. We expect both Brink's
organizations to continue to position themselves for favorable long-term growth
in profitability and cash flow. We expect BAX Global to post solid returns when
global economic conditions improve.
"Subject to the uncertainties clouding the outlook for the world's
economies, the impact of sales of non-strategic operations and the effects of
any actions we may take to align resources to business needs, we now believe our
full-year earnings per share from continuing operations will come in near the
low end of the range that we have discussed previously of $1.10 to $1.30.
5
"Finally, we were pleased to have taken a significant step towards
increasing the funding of the VEBA. This is an important step in expanding the
Company's flexibility."
* * * * *
This release contains both historical and forward-looking information.
Statements regarding additional contributions to the VEBA, Brink's performance
in Latin America, Brink's development of new business opportunities, reduction
of costs and management of the risks inherent in its business, potential
increases in Brink's Home Security's cash generating capacity based upon its
traditional standards, the positioning of Brink's and Brink's Home Security for
favorable long-term growth in profitability and cash flow, BAX Global's ability
to post solid returns when global economic conditions improve, and earnings
expectations, among others, involve forward-looking information which is subject
to known and unknown risks, uncertainties and contingencies, which could cause
actual results, performance or achievements to differ materially from those that
are anticipated. Such risks, uncertainties and contingencies, many of which are
beyond the control of The Pittston Company and its subsidiaries, include, but
are not limited to, the ability to capitalize on tax efficiencies in funding the
VEBA, the availability of cash to fund the VEBA, pension plan contribution
obligations, changes in the economic and political condition of countries in
Latin America served by Brink's, fluctuations in crime rates, fluctuations in
the number of homes being built or purchased, the willingness of law enforcement
to respond to calls from alarm monitoring services, the continued outsourcing of
services by banking institutions, the increased use of global freight
transportation and supply chain management services once global economic
conditions improve, BAX Global's ability to pass cost increases on to its
customers, BAX Global's opportunities to flex its fleet in response to market
changes, global health issues, dispositions of non-strategic operations, labor
relations, new government regulations and legislative initiatives, overall
domestic and international economic, political, social and business conditions,
capital markets performance, increases in insurance costs and limitations on the
availability of various types of insurance, the strength of the U.S. dollar
relative to foreign currencies, interest rates, inflation, domestic and
international demand for services of the subsidiaries of The Pittston Company,
pricing and other competitive factors, variations in costs or expenses and
performance delays of any public or private sector supplier, service provider or
customer. The information included in this release is representative only as of
the date of this release, and The Pittston Company undertakes no obligation to
update any information contained in this release.
* * * * *
ABOUT THE PITTSTON COMPANY
The Pittston Company (NYSE: PZB) is a business and security services company
with interests in security services through Brink's, Incorporated and Brink's
Home Security, Inc., global freight transportation and supply chain management
services through BAX Global Inc. and mining and minerals exploration through
Other Operations. Press releases are available on the World Wide Web at
www.pittston.com, or by calling toll free (877) 275-7488.
CONFERENCE CALL
The Company will host a conference call today, April 30, at 11:00 A.M. eastern
time to discuss this press release. Interested parties can listen to the
conference call by dialing (800) 818-5264 within North America or (913) 981-4910
from outside North America, or via live webcast at www.pittston.com. Please
dial-in at least five minutes prior to the start of the call. Dial-in replay
will be available through May 9, 2003 by calling (888) 203-1112 within North
America or (719) 457-0820 outside North America and entering conference
identification number 701334. A webcast replay will be available at
www.pittston.com through May 16, 2003.
6
THE PITTSTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended March 31
2003 2002
- ---------------------------------------------------------------------------------------------
REVENUES $ 941.3 899.5
EXPENSES:
Operating expenses 818.7 759.9
Selling, general and administrative expenses 124.0 106.4
- ---------------------------------------------------------------------------------------------
Total expenses 942.7 866.3
Other operating income, net 4.5 3.9
- ---------------------------------------------------------------------------------------------
OPERATING PROFIT 3.1 37.1
Interest expense, net (4.5) (5.1)
Minority interest (0.8) (1.1)
Other income (expense), net 0.1 (1.3)
- ---------------------------------------------------------------------------------------------
Income (loss) from continuing operations before income taxes (2.1) 29.6
Provision (benefit) for income taxes (0.8) 10.5
- ---------------------------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS (1.3) 19.1
Loss from discontinued operations, net of tax (0.4) (11.0)
- ---------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ (1.7) 8.1
=============================================================================================
BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE:
Continuing operations $ (0.02) 0.37
Discontinued operations (0.01) (0.22)
- ---------------------------------------------------------------------------------------------
$ (0.03) 0.15
=============================================================================================
See accompanying notes.
7
THE PITTSTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
March 31 December 31
2003 2002
- ----------------------------------------------------------------------------
(Unaudited)
ASSETS
Current assets $ 786.1 782.0
Property and equipment, net 877.3 871.2
Goodwill, net 230.3 227.9
Other assets 581.0 578.8
- ----------------------------------------------------------------------------
Total assets $ 2,474.7 2,459.9
============================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 789.8 793.3
Long-term debt 296.6 304.2
Accrued pension costs 129.1 122.6
Other liabilities 869.1 858.6
- ----------------------------------------------------------------------------
Total liabilities 2,084.6 2,078.7
Shareholders' equity 390.1 381.2
- ----------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 2,474.7 2,459.9
============================================================================
See accompanying notes.
THE PITTSTON COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(IN MILLIONS)
(UNAUDITED)
Three Months Ended March 31
2003 2002
- ----------------------------------------------------------------------------
REVENUES:
Brink's $ 391.4 406.7
Brink's Home Security 73.9 67.2
BAX Global 463.6 415.6
- ----------------------------------------------------------------------------
Business and Security Services 928.9 889.5
Other Operations 12.4 10.0
- ----------------------------------------------------------------------------
Revenues $ 941.3 899.5
============================================================================
OPERATING PROFIT (LOSS):
Brink's $ 13.1 31.7
Brink's Home Security 16.7 15.2
BAX Global (5.5) (6.7)
- ----------------------------------------------------------------------------
Business and Security Services 24.3 40.2
Other Operations 3.3 2.4
Former coal operations (17.3) -
General corporate expense (7.2) (5.5)
- ----------------------------------------------------------------------------
Operating profit $ 3.1 37.1
============================================================================
See accompanying notes.
8
THE PITTSTON COMPANY AND SUBSIDIARIES
OTHER FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT AS OTHERWISE NOTED)
(UNAUDITED)
Three Months Ended March 31
2003 2002
- --------------------------------------------------------------------------------------------------
BRINK'S:
Revenues:
North America $ 175.8 168.3
International 215.6 238.4
- --------------------------------------------------------------------------------------------------
Revenues $ 391.4 406.7
==================================================================================================
Operating profit:
North America $ 10.8 10.7
International 2.3 21.0
- --------------------------------------------------------------------------------------------------
Segment operating profit $ 13.1 31.7
==================================================================================================
BRINK'S HOME SECURITY:
Revenues $ 73.9 67.2
==================================================================================================
Operating profit:
Recurring services $ 30.3 26.9
Investment in new subscribers (13.6) (11.7)
- --------------------------------------------------------------------------------------------------
Segment operating profit $ 16.7 15.2
==================================================================================================
Monthly recurring revenues (Note 5) $ 21.6 19.6
Annualized disconnect rate 6.5% 6.7%
Number of subscribers (in thousands):
Beginning of period 766.7 713.5
Installations 27.4 25.1
Disconnects (12.6) (12.1)
- --------------------------------------------------------------------------------------------------
End of period 781.5 726.5
Average number of subscribers 774.0 719.6
==================================================================================================
BAX GLOBAL:
Revenues:
Americas $ 236.6 232.0
International 244.3 199.0
Eliminations/other (17.3) (15.4)
- --------------------------------------------------------------------------------------------------
Revenues $ 463.6 415.6
==================================================================================================
Operating profit (loss):
Americas $ (9.7) (10.5)
International 7.1 6.5
Other (2.9) (2.7)
- --------------------------------------------------------------------------------------------------
Segment operating loss $ (5.5) (6.7)
==================================================================================================
Intra-U.S. revenue $ 110.9 108.7
Worldwide expedited freight services:
Revenues $ 354.0 320.4
Weight in pounds 374.4 348.7
==================================================================================================
See accompanying notes.
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THE PITTSTON COMPANY AND SUBSIDIARIES
OTHER FINANCIAL INFORMATION
(IN MILLIONS)
(UNAUDITED)
Three Months Ended March 31
2003 2002
- ----------------------------------------------------------------------------------------------------------------------
DEPRECIATION AND AMORTIZATION:
Brink's $ 15.6 14.4
Brink's Home Security 11.6 10.2
BAX Global 12.2 10.8
- ----------------------------------------------------------------------------------------------------------------------
Business and Security Services 39.4 35.4
- ----------------------------------------------------------------------------------------------------------------------
Other Operations 2.0 1.2
General corporate 0.1 -
- ----------------------------------------------------------------------------------------------------------------------
Depreciation and amortization $ 41.5 36.6
======================================================================================================================
OTHER BHS INFORMATION:
Impairment charges from subscriber disconnects $ 7.5 7.3
Amortization of deferred revenue (5.8) (5.7)
Deferred subscriber acquisition costs (current year payments) (4.3) (4.1)
Deferred revenue from new subscribers (current year receipts) 6.5 6.7
CAPITAL EXPENDITURES:
Brink's $ 16.4 14.8
Brink's Home Security 23.1 20.1
BAX Global 5.8 4.6
- ----------------------------------------------------------------------------------------------------------------------
Business and Security Services 45.3 39.5
- ----------------------------------------------------------------------------------------------------------------------
Other Operations 2.0 1.6
General corporate 0.1 -
- ----------------------------------------------------------------------------------------------------------------------
Capital expenditures $ 47.4 41.1
======================================================================================================================
See accompanying notes.
10
THE PITTSTON COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL INFORMATION
(UNAUDITED)
(1) The Pittston Company (together with its subsidiaries, the "Company")
has three operating segments within its "Business and Security
Services" businesses: Brink's, Incorporated ("Brink's"), Brink's Home
Security, Inc. ("BHS") and BAX Global Inc. ("BAX Global"). The fourth
operating segment is Other Operations, which consists of the Company's
gold, timber and natural gas operations. The Company also has
significant assets and liabilities associated with its former coal
operations and expects to have significant ongoing expenses and cash
outflows related to former coal operations.
(2) During the fourth quarter of 2002, the Company completed its planned
exit of the coal business by selling or shutting down its remaining
coal operations. In the first quarter of 2003 the Company began
recognizing certain expenses related to its former coal operations as a
part of the Company's continuing operations. Prior to 2003, these
expenses were classified as part of the Company's loss from
discontinued operations.
Expenses included in continuing operations in the first quarter of 2003
related to the Company's former coal operations were as follows:
Three Months
Ended March 31
(In millions) 2003
- --------------------------------------------------------------------------------
Former coal operations:
Company-sponsored postretirement
benefits other than pensions $ 12.2
Black lung 1.5
Pension 0.1
Administrative, legal and other expenses, net 3.5
- --------------------------------------------------------------------------------
$ 17.3
- --------------------------------------------------------------------------------
The Company will continue to record adjustments to coal-related
contingent liabilities within discontinued operations. In the first
quarter of 2003, the Company recorded in discontinued operations a
charge reflecting its current estimate of the value of certain
contingent liabilities of the former coal operations.
(3) In April 2003, the Company accepted $19.8 million in full settlement of
the notes receivable and royalty obligations received as part of the
consideration in the sale of its former Virginia coal operations. The
Company will recognize a $2.6 million pretax gain on the settlement in
the second quarter of 2003.
11
(4)
Three Months Ended March 31
(In millions) 2003 2002
- -------------------------------------------------------------------------------
Weighted average common shares outstanding:
Basic 52.6 51.7
Diluted 52.6 52.0
- -------------------------------------------------------------------------------
(5) A reconciliation of monthly recurring revenues to reported BHS revenues
follows:
Three Months Ended March 31
(In millions) 2003 2002
- --------------------------------------------------------------------------------
March:
Monthly recurring revenues ("MRR") $ 21.6 19.6
Amounts excluded from MRR:
Amortization of deferred revenue 2.0 1.9
Other revenues (a) 1.3 1.2
- --------------------------------------------------------------------------------
Revenues on a GAAP basis 24.9 22.7
- --------------------------------------------------------------------------------
Revenues (GAAP basis):
March 24.9 22.7
January - February 49.0 44.5
- --------------------------------------------------------------------------------
January - March $ 73.9 67.2
- --------------------------------------------------------------------------------
(a) Revenues that are not pursuant to monthly contractual billings.
The Company believes the presentation of MRR is useful to investors
because the measure is used to assess the amount of recurring revenues
a home security business produces.
(6) Certain prior period amounts have been reclassified to conform to the
current period's financial statement presentation.
12