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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
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
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Total operating revenues $ 254,098 202,255 921,851 754,011
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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
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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
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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
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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.
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.
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
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(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
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Total coal sales 5,322 5,752 20,468 22,971
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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
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3,819 4,114 16,646 16,702
Purchased 1,003 1,397 4,075 5,762
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Total 4,822 5,511 20,721 22,464
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Three Months Twelve Months
Ended December 31 Ended December 31
(In thousands, except per ton data) 1997 1996 1997 1996
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(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
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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
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Margin and other income 14,272 6,285 58,298 50,652
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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
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Total other costs and expenses 12,654 10,751 49,185 47,969
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Operating profit (loss) (before
restructuring and other credits
and SFAS 121) (b) $ 1,618 (4,466) 9,113 2,683
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Coal margin per ton:
Realization $ 29.35 29.10 29.52 29.17
Current production costs 27.24 28.48 27.29 27.63
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Coal margin $ 2.11 .62 2.23 1.54
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(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
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(Unaudited)
Stawell Gold Mine:
Gold sales $ 4,319 4,399 17,714 19,071
Other (expense) revenue (11) (27) 5 49
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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
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Total costs and expenses 3,155 3,403 15,484 15,022
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Operating profit - Stawell Gold Mine 1,153 969 2,235 4,098
Other operating expense, net (1,111) (776) (4,305) (2,479)
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Operating profit (loss) $ 42 193 (2,070) 1,619
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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
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(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
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(Unaudited)
Net sales $ 162,933 173,798 630,626 696,513
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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
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Total costs and expenses 162,079 172,019 636,149 694,829
Other operating income, net 2,333 2,116 9,682 13,414
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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)
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Income (loss) before income taxes 764 1,365 (6,355) 3,421
Credit for income taxes (2,708) (1,131) (10,583) (7,237)
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Net income 3,472 2,496 4,228 10,658
Preferred stock dividends, net (889) (902) (3,481) (1,675)
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Net income attributed to
common shares $ 2,583 1,594 747 8,983
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Net income per common share:
Basic $ .32 .20 .09 1.14
Diluted .32 .20 .09 1.08
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Average common shares outstanding:
Basic 8,136 7,970 8,076 7,897
Diluted 8,136 8,010 8,102 9,884
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SEGMENT INFORMATION
Net sales:
Coal Operations $ 158,625 169,426 612,907 677,393
Mineral Ventures 4,308 4,372 17,719 19,120
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Net sales $ 162,933 173,798 630,626 696,513
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Operating profit (loss):
Coal Operations $ 4,722 5,075 12,217 20,034
Mineral Ventures 42 193 (2,070) 1,619
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Segment operating profit 4,764 5,268 10,147 21,653
General corporate expense (1,577) (1,373) (5,988) (6,555)
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Operating profit $ 3,187 3,895 4,159 15,098
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See accompanying notes.
Pittston Minerals Group
CONDENSED BALANCE SHEETS
December 31 December 31
(In thousands) 1997 1996
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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
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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
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Total assets $ 654,182 706,981
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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)
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Total liabilities and shareholder's equity $ 654,182 706,981
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See accompanying notes.
Pittston Minerals Group
STATEMENTS OF CASH FLOWS
Twelve Months Ended December 31
(In thousands) 1997 1996
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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
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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)
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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
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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
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(Unaudited)
Net sales $ 162,933 173,798 630,626 696,513
Operating revenues 749,186 646,709 2,763,772 2,394,682
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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
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Total costs and expenses 853,880 774,496 3,220,270 2,942,065
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Other operating income, net 4,651 3,635 14,000 17,377
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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)
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Income before income taxes 54,306 45,064 158,255 146,696
Provision for income taxes 16,449 14,000 48,057 42,542
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Net income 37,857 31,064 110,198 104,154
Preferred stock dividends, net (889) (902) (3,481) (1,675)
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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
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Net income per common share:
Basic $ .55 .47 1.92 1.56
Diluted .54 .46 1.90 1.54
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Average common shares outstanding:
Basic 38,362 38,326 38,273 38,200
Diluted 38,963 38,784 38,791 38,682
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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
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Average common shares outstanding:
Basic 19,443 19,408 19,448 19,223
Diluted 20,054 19,828 19,993 19,681
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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
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See accompanying notes.
The Pittston Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31 December 31
(In thousands) 1997 1996
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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
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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
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Total assets $ 1,995,944 1,832,603
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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
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Total liabilities 1,310,326 1,225,896
Shareholders' equity 685,618 606,707
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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.