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 7, 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
Michael T. Dan, Chairman, President and Chief Executive
Officer of the Registrant, and Robert T. Ritter, Chief Financial
Officer of the Registrant, met with members of the investment
community today to discuss the Registrant's announcement
yesterday of its intent to focus on business and security
services, to exit the coal business and to eliminate its tracking
stock structure. Messrs. Dan and Ritter delivered a presentation
at the meeting substantially in the form attached as an exhibit to
this report and incorporated herein by reference.
EXHIBITS
99(a) Investment Community Meeting presentation.
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 7, 1999
EXHIBITS
Exhibit Description
99(a) Investment Community Meeting presentation.
INVESTMENT COMMUNITY MEETING Michael T. Dan Chairman, President and CEO Robert T. Ritter Chief Financial Officer December 7, 1999FORWARD-LOOKING STATEMENTS This presentation 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 cost, and other coal legacy costs.
OVERVIEW - - New Pittston strategy - - Overview of strategic businesses - - 2000 Objectives
NEW PITTSTON STRATEGY OBJECTIVES - - Maximize shareholder value - - Focus on growing service businesses - Brink's, Incorporated - Brink's Home Security - BAX Global - - Deliver double digit earnings growth - - Grow EVA
IMMEDIATE ACTIONS TO ACCOMPLISH OBJECTIVES - - Exit Coal business - - Contain "legacy" costs - Establish VEBA - - Simplify capital structure
NEW PITTSTON - - Global business and security services company - Brink's, Incorporated - Brink's Home Security - BAX Global - - Strong market positions in growth industries - - High quality service provider to large customer base - - EVA driving management decisions
PITTSTON REVENUES Twelve months ending 9/30/99 Actual [GRAPH] BAX Brink's BHS Minerals 1,963 1,360 224 413 Total $ 4.0 billion Pro Forma Without Minerals [GRAPH] BAX Brink's BHS 1,963 1,360 224 Total $ 3.6 billion
PITTSTON REVENUE GROWTH Pro Forma Without Minerals [GRAPH] ($ millions) 1996 1997 1998 1999E Brink's 754 922 1,248 1,356 BHS 156 179 203 229 BAX 1,485 1,662 1,777 2,020 Compound Annual Growth Rate 15%
PITTSTON OPERATING PROFIT GROWTH Pro Forma Without Minerals (before corp. expense and special charges) [GRAPH] ($ millions) 1996 1997 1998 1999E Brink's 57 82 98 101 BHS 45 53 53 53 BAX 65 63 35 58 Compound Annual Growth Rate 8%
BRINK'S, INCORPORATED OVERVIEW - - World's premier security company - - The largest provider of cash management and transportation services - - Strong global brand - - Geographic strength and diversity - - Premium price for premium services - - $1.4 billion annual revenue - - Consistent positive EVA
BRINK'S, INCORPORATED FACTORS DRIVING GROWTH - - Growing market - Worldwide ATM proliferation - Cash management outsourcing - Value added data management - CompuSafe services - - Broadest service offerings - - Risk management expertise
BRINK'S HOME SECURITY OVERVIEW - - A leading residential security provider - - 650,000 subscribers/$17 million MRR - - Strong brand - - $225 million annual revenue - - Loyal subscriber base - - 20%+ operating margins
BRINK'S HOME SECURITY FACTORS DRIVING GROWTH - - Market opportunities - Less than 25% market penetration - Expanded geographical presence - New products and services - - High quality customer service - - Long-term customer retention - - Competitive environment
BAX GLOBAL OVERVIEW - - Worldwide provider of specialized transportation and supply chain management services - - Strong brand - - $2 billion annual revenue - - Top tier multi-national customer base - - Turnaround well underway
BAX GLOBAL FACTORS DRIVING GROWTH - - New operating management - - Mode-neutral capabilities - - High quality services - - Rapid global market growth - Value-added supply chain management services - Increased time-definite service requirements - Global customers/global needs - - Premium services/improving prices
STRATEGY IMPLEMENTATION - - Exit Coal business - Evaluation assessment completed - Retaining advisors - - Contain "legacy" costs - VEBA established - Funding from asset sales - - Simplify capital structure - One stock - "PZB" - represents the New Pittston
NEW PITTSTON - - Leading positions in attractive growth markets - - Strong global franchises developed through high quality customer service - - Strong EVA discipline - - Positioned to deliver attractive financial returns
OVERVIEW - - Tracking stock elimination - Terms - Exchange mechanism - - Coal "legacy" liabilities - Sizing - VEBA - - Pro forma financials - - Financial expectations/goals
TRACKING STOCK EXCHANGE - - Pre-established formula approved by shareholders in 1993 and 1996 - - PZX and PZM holders receive PZB stock at 115% of Fair Market Value - - Fair Market Value calculated during 10 day trading period starting 30 trading days prior to announcement - - PZB shares increase from about 39MM to about 49MM after exchange (for EPS)
TRACKING STOCK EXCHANGE Brink's BAX Minerals (PZB) (PZX) (PZM) Ten day average price* $18.92 $7.98 $1.34 15% premium $1.19 $0.20 Exchange price $9.17 $1.54 Exchange ratio .4848 .0817 *(Oct. 22 - Nov. 4, 1999)
COAL "LEGACY" LIABILITIES - - Retiree medical benefits - - Black lung benefits costs - - Workers' compensation - - Reclamation expenses
COAL "LEGACY" LIABILITIES ESTIMATES (PRE-TAX) ($ millions) Year end 1999 $575-$625 Annual expenses $40-$45 Annual cash flow requirement $55-$60
COAL "LEGACY" LIABILITIES PLANS FOR CONTAINMENT - - Transfer appropriate liabilities - - Fund through VEBA - - Continue to manage aggressively
VEBA - - Voluntary Employees' Beneficiary Association - - Tax-efficient funding vehicle, IRS qualified - - Initial funding in Q4 1999 - - Additional funding from asset sales - - Incremental funding required over time
PITTSTON BALANCE SHEET ($ millions) Cash and equivalents $ 80 Total debt $ 485 Shareholders' equity $ 764 Investment grade credit BBB/Baa3
HISTORICAL PERFORMANCE ($ millions) Actual Estimate 1996 1997 1998 1999 Revenues Services 2,400 2,760 3,230 3,600 Minerals 700 630 520 400 Total $3,100 $3,390 $3,750 $4,000 Operating profit (before corp. expenses and 1998 special charges) Services 167 198 187 212 Minerals 21 10 2 (37) Total $ 188 $ 208 $ 189 $ 175 EBITDA $ 281 $ 317 $ 315 $ 330 Pro forma EPS $2.10 $2.15 $1.75 $1.70
FINANCIAL EXPECTATIONS ($ millions) Estimate Forecast 3-5 Year 1999 2000 Growth Rate Revenues Services 3,600 3,950 10-12% Minerals 400 400 Total $4,000 $4,350 Operating profit (before corp. expenses and special charges) Services 212 250 12-15% Minerals (37) (35) Total $ 175 $ 215 EBITDA $ 330 $ 400 Pro forma EPS $1.70 $2.00
FINANCIAL GOALS - - Double-digit revenue and profit growth - - Consistent and predictable performance - - Margin improvement - - Investment grade credit rating - - Improved EVA Increase Shareholder Value