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):
December 6, 1999
THE PITTSTON COMPANY
(Exact Name of registrant as specified in its charter)
Virginia 1-9148 54-1317776
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of Incorporation)
1000 Virginia Center Parkway
P. O. Box 4229
Glen Allen, VA 23058-4229
(Address of principal (Zip Code)
executive offices)
(804)553-3600
(Registrant's telephone number, including area code)
Item 5. Other Events
The Registrant announced today its intent to focus on
business and security services, to exit the coal business and to
eliminate its tracking stock structure. The Registrant's press
release dated December 6, 1999, is attached as an exhibit to this
report and incorporated herein by reference.
Also today, Michael T. Dan, Chairman, President and
Chief Executive Officer of the Registrant, reported at a
teleconference with analysts, subject to the forward-looking
statement disclaimer contained in the above-referenced press
release, that (i) the Registrant's cash flow, as defined by
EBITDA, is expected to be about $400 million for the year 2000,
an increase of about 20% over 1999, and (ii) estimated earnings
of approximately $2.00 per share for the year 2000 referred to in
the attached press release should be considered to reflect a
similar percentage increase over 1999.
EXHIBITS
99(a) Registrant's press release dated December 6, 1999.
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/ Frank T. Lennon
Vice President - Human Resources
and Administration
Dated: December 6, 1999
EXHIBITS
Exhibit Description
99(a) Registrant's press release dated December 6, 1999.
[PITTSTON LOGO] The Pittston Company
1000 Virginia Center Parkway
PRESS RELEASE P. O. Box 4229
Glen Allen, VA 23058-4229
Tel 804.553.3600
Fax 804.553.3760
Contact: IMMEDIATE RELEASE
Investor Relations
804.553.3708
PITTSTON TO FOCUS ON BUSINESS AND SECURITY SERVICES
Company to Exit Coal Business
Company to Eliminate Tracking Stock Structure
Richmond, Va., (December 6, 1999) The Pittston Company announced
today that its Board of Directors approved a strategic plan
designed to improve shareholder value by focusing the Company on
the growth of its successful services businesses, exiting the
coal business, and eliminating its tracking stock structure. The
plan approved by the Board consists of the following:
- - Focus The Pittston Company resources on profitably growing
the Brink's, Incorporated, Brink's Home Security and BAX
Global services businesses.
- - Exit the coal business in an orderly manner through the
disposition of the Company's operations and reserves.
- - Establish a Voluntary Employees' Beneficiary Association
(VEBA) to tax-efficiently fund certain retiree medical
liabilities primarily for retired coal miners and their
dependents. The VEBA will receive funding from the proceeds
of the disposition of the coal assets.
- - Eliminate the Company's tracking stock structure by
exchanging each share of Pittston BAX Group Common Stock
(NYSE: PZX) for 0.4848 shares of Pittston Brink's Group
Common Stock (NYSE: PZB) and each share of Pittston Minerals
Group Common Stock (NYSE: PZM) for 0.0817 shares of Pittston
Brink's Group Common Stock. Following the exchange, which
will occur on January 14, 2000, Pittston Brink's Group
Common Stock will be the only outstanding common stock of
The Pittston Company.
Michael T. Dan, Chairman, President and Chief Executive Officer
of Pittston, commented, "Today's announcement represents a
significant first step in repositioning Pittston as a company
focused on providing high quality business and security services
to its growing customer base. The performance of the coal
business and its related liabilities have cast a shadow on these
healthy and growing businesses. Exiting the coal business and
establishing a mechanism to fund coal legacy liabilities will
enable the Company to redirect capital resources and management
attention to deliver greater growth and profitability to our
shareholders. Our future is in global business and security
services where Brink's, Incorporated, Brink's Home Security and
BAX Global have superior products and services, strong market
positions, and robust growth prospects."
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"Our plan is to invest in and build our successful services
businesses," Mr. Dan continued. "In the past year we have
strengthened the management in all three strategic businesses.
We see significant opportunities to expand these businesses and
further improve their profitability and returns on capital. The
strategy announced today will allow us to focus on these
opportunities while simultaneously simplifying Pittston's capital
structure and beginning to resolve the issues related to our coal
history."
Financial Goals
The financial goals for The Pittston Company are to increase
shareholder value by providing consistent and predictable
performance with continuing margin improvement while adhering to
a discipline of creating economic value. The Company anticipates
double-digit revenue and profit growth going forward with
estimated earnings in the year 2000 of approximately $2.00 per
share, excluding any special charges or credits.
Sale of Coal Business
The Company announced its intention to exit the coal business
through the sale of the Company's coal mining operations and
reserves. Pittston Coal Company is a producer and marketer of
low sulphur steam coal and high quality metallurgical coal. In
addition, Pittston owns timber and natural gas operations and
reserves in the Eastern U.S. and has interests in gold mining and
exploration properties in the U.S. and Australia.
Mr. Dan commented, "The management of Pittston Coal Company has
done an excellent job improving operations and cash flow under
extremely difficult market conditions. Although our coal
business is solidly profitable before expenses related to its
legacy liabilities, it does not have sufficient production and
sales volumes to generate consistently attractive returns after
these charges. We shall seek the maximum value for these assets.
John T. Boyd Company, an international mining consulting firm,
has completed an evaluation of these assets and will assist in
their sale. An investment banking firm will also be retained."
Establishment of a Voluntary Employees' Beneficiary Association (VEBA)
After nearly seventy-years in the coal business, Pittston is
obligated for substantial legacy costs, consisting primarily of
certain retiree medical liabilities, black lung medical expenses,
workers' compensation and reclamation expenses. In order to
address these legacy costs and to manage their impact on the
Company, the VEBA has been established to fund certain retiree
medical liabilities.
"The establishment of the VEBA is an important first step in
containing the impact of our coal retiree liabilities on
Pittston. While proceeds from the sale of our coal business will
provide partial funding, additional funding will be required over
time. We intend to actively manage these liabilities in order to
minimize future cash costs," Mr. Dan noted.
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Exchange of Shares
Currently Pittston has three tracking stocks representing
Pittston Brink's Group, Pittston BAX Group, and Pittston
Minerals Group. The tracking stock structure will be eliminated
through the exchange of each share of Pittston BAX Group Common
Stock for 0.4848 shares of Pittston Brink's Group Common Stock,
and each share of Pittston Minerals Group Common Stock for
0.0817 shares of Pittston Brink's Group Common Stock. After the
completion of the exchange on January 14, 2000, Pittston Brink's
Group Common Stock will be the only outstanding common stock of
The Pittston Company. The Company does not expect this exchange
to be taxable to shareholders. Shareholders of Pittston Brink's
Group Common Stock will continue to hold their existing shares.
Mr. Dan continued his comments saying, "The exit from the coal
business, the establishment of the VEBA, and the return to a
single Pittston stock will give us the flexibility to more
effectively allocate resources and manage liabilities. This will
enable Pittston to better grow its services businesses and
increase overall shareholder value. The historically strong
earnings position of Brink's, Incorporated and Brink's Home
Security combined with the turnaround in progress at BAX Global
will form the foundation for very attractive earnings growth for
Pittston in the future. Pittston's tracking stock structure was
very successful in enhancing shareholder value when it was first
introduced in 1993 and expanded in 1996. However, given our
substantial legacy costs, as coal market conditions have
continued to weaken and the profitability of our coal business
has deteriorated, the tracking stock structure has not resulted
in appropriate valuations of our three stocks."
The exchange ratios for the Pittston BAX Group Common Stock and
the Pittston Minerals Group Common Stock have been calculated
pursuant to the formula fixed and approved by shareholders of the
Company at the creation of the tracking stocks in 1993 and 1996.
The pre-established formula provides that holders of Pittston
BAX Group Common Stock and Pittston Minerals Group Common Stock
will receive Pittston Brink's Group Common Stock with a Fair
Market Value equal to 115 percent of the Fair Market Value of
their respective stocks. The "Fair Market Value" of each class
of common stock is determined by taking the average of the
closing prices of that class of common stock on the New York
Stock Exchange composite tape for the 10 trading days beginning
30 trading days prior to this announcement, which is the period
October 22, 1999 through November 4, 1999.
The Company plans to continue to pay dividends on Pittston
Brink's Group Common Stock at the current annual rate of 10 cents
per share.
Formal notification to shareholders of the exchange will be
mailed on or about December 10, 1999. No regulatory or
shareholder approvals are required to effect the exchange. After
the exchange is complete, total shares of Pittston Brink's Group
Common Stock (for purposes of calculating E.P.S.) will increase
from approximately 39 million shares to approximately 49 million
shares.
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The Pittston Company is a diversified business and security
services company with interests in four businesses: Brink's,
Incorporated, the world's largest and the premier provider of
cash management and transportation services; Brink's Home
Security, a U.S. leader in residential security with about
650,000 subscribers; BAX Global, a worldwide provider of
specialized transportation and supply chain management services;
and Pittston Minerals Group, with interests in coal, gold and
other natural resources.
This release contains both historical and forward-looking information.
Statements regarding expected performance and progress, shareholder
value, financial performance, including profit and earnings growth,
earnings per share, EBITDA, margins, revenues, profitability, return
on capital and creation of economic value, prospects to grow the
Company, investment grade ratings, new products and services, customer
retention, cash flow and availability, the turnaround at BAX Global,
investment in the Company's services businesses, allocation of
resources, dividends, disposition of the Company's coal mining
operations and reserves, management and funding of the coal legacy
costs and future cash costs involve forward-looking information which
is subject to known and unknown risks, uncertainties and
contingencies, which could cause actual results, performance or
achievements to differ materially from those which are anticipated.
Such risks, uncertainties and contingencies, many of which are beyond
the control of The Pittston Company, include, but are not limited to,
overall domestic and international economic and business conditions,
currency exchange rates, the domestic and international demand for the
Company's services, pricing and other competitive factors in the
industry, government regulations and/or legislative initiatives,
required permits and approvals, judicial decisions, customer service,
inflation rates, interest rates, variations in costs or expenses, fuel
prices, delays or problems in the implementation of Year 2000
initiatives by the Company and/or any public or private sector
supplier, service provider or customer, contractual disputes, the
ultimate outcome of efforts to sell certain assets, the cost of
providing certain welfare benefits to eligible employees, retirees,
and their dependents, reclamation costs, and other coal legacy costs.
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Contact:
Investor Relations
(804) 553-3708