SEC Filing - Brink's Company

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number 1-9148 THE PITTSTON COMPANY ------------------------------------------------------ (Exact name of registrant as specified in its charter) Virginia 54-1317776 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1000 Virginia Center Parkway, Glen Allen, Virginia 23058-4229 ------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (804) 553-3600 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of August 7, 1998, 40,961,415 shares of $1 par value Pittston Brink's Group Common Stock, 19,827,610 shares of $1 par value Pittston BAX Group Common Stock and 8,386,434 shares of $1 par value Pittston Minerals Group Common Stock were outstanding.

PART I - FINANCIAL INFORMATION THE PITTSTON COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) June 30 December 31 1998 1997 - ------------------------------------------------------------------------------------------------------------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 70,290 69,878 Short-term investments, at lower of cost or market 2,086 2,227 Accounts receivable (net of estimated amount uncollectible: 1998 - $26,008; 1997 - $21,985) 594,773 531,317 Inventories, at lower of cost or market 42,190 40,174 Prepaid expenses 42,363 32,767 Deferred income taxes 48,619 50,442 - ------------------------------------------------------------------------------------------------------------------- Total current assets 800,321 726,805 Property, plant and equipment, at cost (net of accumulated depreciation, depletion and amortization: 1998 - $531,914; 1997 - $519,658) 798,953 647,642 Intangibles, net of accumulated amortization 344,469 301,395 Deferred pension assets 122,410 123,138 Deferred income taxes 44,825 47,826 Other assets 131,667 149,138 - ------------------------------------------------------------------------------------------------------------------- Total assets $ 2,242,645 1,995,944 =================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term borrowings $ 63,059 40,144 Current maturities of long-term debt 34,146 11,299 Accounts payable 271,549 281,411 Accrued liabilities 374,070 310,819 - ------------------------------------------------------------------------------------------------------------------- Total current liabilities 742,824 643,673 Long-term debt, less current maturities 328,984 191,812 Postretirement benefits other than pensions 235,385 231,451 Workers' compensation and other claims 99,480 106,378 Deferred income taxes 20,602 17,157 Other liabilities 106,694 119,855 Shareholders' equity: Preferred stock, par value $10 per share: Authorized: 2,000 shares $31.25 Series C Cumulative Convertible Preferred Stock; Issued and outstanding: 1998 - 113 shares; 1997 - 114 shares 1,134 1,138 Pittston Brink's Group Common Stock, par value $1 per share: Authorized: 100,000 shares; Issued and outstanding: 1998 - 40,997 shares; 1997 - 41,130 shares 40,997 41,130 Pittston BAX Group Common Stock, par value $1 per share: Authorized: 50,000 shares; Issued and outstanding: 1998 - 19,967 shares; 1997 - 20,378 shares 19,967 20,378 Pittston Minerals Group Common Stock, par value $1 per share: Authorized: 20,000 shares; Issued and outstanding: 1998 - 8,387 shares; 1997 - 8,406 shares 8,387 8,406 Capital in excess of par value 398,280 430,970 Retained earnings 378,796 359,940 Accumulated other comprehensive income - foreign currency translation (46,416) (41,762) - ------------------------------------------------------------------------------------------------------------------- Employee benefits trust, at market value (92,469) (134,582) - ------------------------------------------------------------------------------------------------------------------- Total shareholders' equity 708,676 685,618 - ------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 2,242,645 1,995,944 =================================================================================================================== See accompanying notes to consolidated financial statements. --- 2

THE PITTSTON COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (Unaudited) Three Months Ended June 30 Six Months Ended June 30 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Net sales $ 134,408 157,812 284,306 316,695 Operating revenues 792,696 668,342 1,505,462 1,291,135 - ------------------------------------------------------------------------------------------------------------------- Net sales and operating revenues 927,104 826,154 1,789,768 1,607,830 Costs and expenses: Cost of sales 133,278 153,836 277,442 307,248 Operating expenses 658,680 553,434 1,254,451 1,072,253 Selling, general and administrative expenses 102,732 94,455 201,988 170,098 - ------------------------------------------------------------------------------------------------------------------- Total costs and expenses 894,690 801,725 1,733,881 1,549,599 Other operating income, net 3,089 2,875 6,116 6,451 - ------------------------------------------------------------------------------------------------------------------- Operating profit 35,503 27,304 62,003 64,682 Interest income 1,067 991 2,248 2,010 Interest expense (9,527) (6,422) (16,911) (11,986) Other income (expense), net 1,017 (1,899) (418) (4,288) - ------------------------------------------------------------------------------------------------------------------- Income before income taxes 28,060 19,974 46,922 50,418 Provision for income taxes 7,298 5,311 13,332 14,414 - ------------------------------------------------------------------------------------------------------------------- Net income 20,762 14,663 33,590 36,004 Preferred stock dividends, net (887) (902) (1,751) (1,803) - ------------------------------------------------------------------------------------------------------------------- Net income attributed to common shares $ 19,875 13,761 31,839 34,201 =================================================================================================================== Pittston Brink's Group: Net income attributed to common shares $ 20,570 17,739 37,607 33,045 - ------------------------------------------------------------------------------------------------------------------- Net income per common share: Basic $ .53 .46 .97 .86 Diluted .52 .46 .96 .85 - ------------------------------------------------------------------------------------------------------------------- Cash dividend per common share $ .025 .025 .05 .05 - ------------------------------------------------------------------------------------------------------------------- Pittston BAX Group: Net income (loss) attributed to common shares $ 989 (1,913) (1,977) 3,175 - ------------------------------------------------------------------------------------------------------------------- Net income (loss) per common share: Basic $ .05 (.10) (.10) .16 Diluted .05 (.10) (.10) .16 - ------------------------------------------------------------------------------------------------------------------- Cash dividends per common share $ .06 .06 .12 .12 - ------------------------------------------------------------------------------------------------------------------- Pittston Minerals Group: Net loss attributed to common shares $ (1,684) (2,065) (3,791) (2,019) - ------------------------------------------------------------------------------------------------------------------- Net loss per common share: Basic $ (.20) (.26) (.46) (.25) Diluted (.20) (.26) (.46) (.25) - ------------------------------------------------------------------------------------------------------------------- Cash dividends per common share $ .025 .1625 .1875 .3250 =================================================================================================================== See accompanying notes to consolidated financial statements. --- 3

THE PITTSTON COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (Unaudited) Six Months Ended June 30 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 33,590 36,004 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 73,318 60,824 Provision for aircraft heavy maintenance 18,580 16,382 Provision for deferred income taxes 6,201 5,117 Provision for uncollectible accounts receivable 5,500 3,849 Other operating, net 7,694 6,621 Change in operating assets and liabilities, net of effects of acquisitions and dispositions: Decrease (increase) in accounts receivable 701 (15,870) Increase in inventories (411) (11,677) Increase in prepaid expenses (5,939) (12,390) (Decrease) increase in accounts payable and accrued liabilities (40,735) 490 Increase in other assets (3,885) (2,202) (Decrease) increase in other liabilities (2,794) 2,210 Decrease in workers' compensation and other claims, noncurrent (4,218) (4,145) Other, net (5,434) 329 - ------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 82,168 85,542 - ------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Additions to property, plant and equipment (122,660) (82,236) Aircraft heavy maintenance expenditures (20,524) (19,350) Proceeds from disposal of property, plant and equipment 14,711 3,698 Acquisitions, net of cash acquired, and related contingency payments (34,361) (54,094) Dispositions of other assets and investments 8,482 -- Other, net (4,539) 6,996 - ------------------------------------------------------------------------------------------------------------------- Net cash used by investing activities (158,891) (144,986) - ------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Additions to debt 132,033 109,082 Reductions of debt (41,221) (18,263) Repurchase of stock of the Company (12,694) (6,897) Proceeds from exercise of stock options 6,308 2,691 Dividends paid (7,291) (8,389) - ------------------------------------------------------------------------------------------------------------------- Net cash provided by financing activities 77,135 78,224 - ------------------------------------------------------------------------------------------------------------------- Net increase in cash and cash equivalents 412 18,780 Cash and cash equivalents at beginning of period 69,878 41,217 - ------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 70,290 59,997 =================================================================================================================== See accompanying notes to consolidated financial statements. --- 4

THE PITTSTON COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (Unaudited) (1) The Pittston Company (the "Company") prepares consolidated financial statements in addition to separate financial statements for the Pittston Brink's Group (the "Brink's Group"), the Pittston BAX Group (the "BAX Group") and the Pittston Minerals Group (the "Minerals Group"). The Brink's Group consists of the Brink's, Incorporated ("Brink's") and Brink's Home Security, Inc. ("BHS") operations of the Company. The BAX Group consists of the BAX Global Inc. ("BAX Global") operations of the Company. The Minerals Group consists of the Pittston Coal Company ("Coal Operations") and Pittston Mineral Ventures ("Mineral Ventures") operations of the Company. The Company's capital structure includes three issues of common stock: Pittston Brink's Group Common Stock ("Brink's Stock"), Pittston BAX Group Common Stock ("BAX Stock") and Pittston Minerals Group Common Stock ("Minerals Stock") which were designed to provide shareholders with separate securities reflecting the performance of the Brink's Group, BAX Group and Minerals Group, respectively, without diminishing the benefits of remaining a single corporation or precluding future transactions affecting any Group or the Company as a whole. Holders of Brink's Stock, BAX Stock and Minerals Stock are shareholders of the Company, which is responsible for all liabilities. Financial developments affecting the Brink's Group, the BAX Group or the Minerals Group that affect the Company's financial condition could affect the results of operations and financial condition of each of the Groups. Effective May 4, 1998, the designation of Pittston Burlington Group Common Stock and the name of the Pittston Burlington Group were changed to Pittston BAX Group Common Stock and Pittston BAX Group, respectively. All rights and privileges of the holders of such Stock are otherwise unaffected by such changes. The stock continues to trade on the New York Stock Exchange under the symbol "PZX". (2) The following are reconciliations between the calculation of basic and diluted net income (loss) per share by Group: Three Months Ended June 30 Six Months Ended June 30 Brink's Group 1998 1997 1998 1997 - ----------------------------------------------------------------------------------------- Numerator: Net income - Basic and diluted net income per share numerator $ 20,570 17,739 37,607 33,045 Denominator: Basic weighted average common shares outstanding 38,713 38,230 38,596 38,209 Effect of dilutive securities: Employee stock options 493 473 547 450 - ----------------------------------------------------------------------------------------- Diluted weighted average common shares outstanding 39,206 38,703 39,143 38,659 ========================================================================================= Options to purchase 25 shares of Brink's Stock at prices between $39.42 and $39.56 per share were outstanding for both the three and six months ended June 30, 1998, but were not included in the computation of diluted net income per share because the options' exercise price was greater than the average market price of the common shares and, therefore, the effect would be antidilutive. --- 5

Options to purchase 391 shares of Brink's Stock at $31.56 per share and options to purchase 400 shares of Brink's Stock at prices between $29.50 and $31.56 were outstanding for the three and six months ended June 30, 1997, respectively, but were not included in the computation of diluted net income per share because the options' exercise price was greater than the average market price of the common shares and, therefore, the effect would be antidilutive. Three Months Ended June 30 Six Months Ended June 30 BAX Group 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------ Numerator: Net income (loss) - Basic and diluted net income (loss) per share numerator $ 989 (1,913) (1,977) 3,175 Denominator: Basic weighted average common shares outstanding 19,524 19,471 19,501 19,439 Effect of dilutive securities: Employee stock options 169 -- -- 503 - ------------------------------------------------------------------------------------------ Diluted weighted average common shares outstanding 19,693 19,471 19,501 19,942 ========================================================================================== Options to purchase 1,018 shares of BAX Stock, at prices between $17.94 and $27.91 were outstanding for the three months ended June 30, 1998, but were not included in the computation of diluted net income per share because the options' exercise price was greater than the average market price of the common shares and, therefore, the effect would be antidilutive. Options to purchase 2,381 shares of BAX Stock, at prices between $5.78 and $27.91 per share, were outstanding for the six months ended June 30, 1998, but were not included in the computation of diluted net loss per share because the effect of all options would be antidilutive. Options to purchase 2,498 shares of BAX Stock, at prices between $5.00 and $24.19 per share, were outstanding for the three months ended June 30, 1997, but were not included in the computation of diluted net loss per share because the effect of all options would be antidilutive. Options to purchase 499 shares of BAX Stock, at $24.19 per share, were outstanding for the six months ended June 30, 1997 but were not included in the computation of diluted net income per share because the options' exercise price was greater than the average market price of the common shares and, therefore, the effect would be antidilutive. Three Months Ended June 30 Six Months Ended June 30 Minerals Group 1998 1997 1998 1997 - ---------------------------------------------------------------------------------------- Numerator: Net loss $ (797) (1,163) (2,040) (216) Convertible Preferred Stock dividends, net (887) (902) (1,751) (1,803) - ---------------------------------------------------------------------------------------- Net loss - Basic and diluted net loss per share numerator (1,684) (2,065) (3,791) (2,019) Denominator: Basic and diluted weighted average common shares outstanding 8,309 8,068 8,267 8,035 ======================================================================================== --- 6

Options to purchase 677 and 679 shares of Minerals Stock, at prices between $6.53 and $25.74 per share, were outstanding for the three and six months ended June 30, 1998, respectively. Options to purchase 713 and 714 shares of Minerals Stock, at prices between $8.64 and $25.74 per share, were outstanding for the three and six months ended June 30, 1997, respectively. None of these options were included in the computation of diluted net loss per share because the effect of all options would be antidilutive. The conversion of the Convertible Preferred Stock to 1,764 and 1,793 shares of Minerals Stock has been excluded in the computation of diluted net loss per share in 1998 and 1997, respectively, because the effect of the assumed conversion would be antidilutive. (3) Depreciation, depletion and amortization of property, plant and equipment totaled $33,474 and $62,160 in the second quarter and six month periods of 1998, respectively, compared to $24,837 and $48,498 in the second quarter and six month periods of 1997, respectively. (4) Cash payments made for interest and income taxes, net of refunds received, were as follows: Three Months Ended June 30 Six Months Ended June 30 1998 1997 1998 1997 - ---------------------------------------------------------------------------------------- Interest $ 8,787 6,839 16,315 12,278 ======================================================================================== Income taxes $ 14,081 13,034 19,084 17,564 ======================================================================================== During the first quarter of 1998, Brink's recorded the following noncash items in connection with the acquisition of substantially all of the remaining shares of its affiliate in France: seller financing of the equivalent of US $27,500 and the assumption of borrowings of approximately US $19,000 and capital leases of approximately US $30,000. See further discussion below. (5) In the first quarter of 1998, the Company purchased 62% (representing nearly all the remaining shares) of its Brink's affiliate in France ("Brink's S.A.") for payments aggregating US $39,000 over three years. The acquisition was funded through an initial payment made at closing of $8,789, a note to the seller for a principal amount of approximately the equivalent of US $27,500 payable in annual installments plus interest through 2001. The acquisition has been accounted for as a purchase and accordingly, the purchase price is being allocated to the underlying assets and liabilities based on their estimated fair value at date of acquisition. Based on a preliminary evaluation which is subject to additional review, the estimated fair value of the additional assets recorded, including goodwill, approximated US $161,800 and included $9,200 in cash. Estimated liabilities assumed of US $125,700 included previously existing debt of approximately US $49,000, which includes borrowings of US $19,000 and capital leases of US $30,000. The excess of the purchase price over the fair value of assets acquired and liabilities assumed is being amortized over 40 years. Brink's S.A. had annual 1997 revenues approximating the equivalent of US $220,000. (6) During the second quarter of 1998, the Company's Coal Operations disposed of certain assets of its Elkay mining operation in West Virginia. The assets were sold for cash of approximately $18,000, resulting in a pre-tax loss of approximately $2,200. In addition, in July 1998, the Company's Coal Operations completed the sale of two idle properties in West Virginia and a loading dock in Kentucky for an expected pre-tax gain of approximately $5,000. (7) On April 30, 1998, the Company acquired the privately held Air Transport International LLC ("ATI") for a purchase price of approximately $29,000. The acquisition was funded through the revolving credit portion of the Company's bank credit agreement and was accounted for as a purchase. Based on a preliminary evaluation which is subject to additional review, the estimated fair value of the assets acquired and liabilities assumed approximated $33,000 and $4,000, respectively. The pro forma impact on the Company's total revenues, net income and earnings per share had the ATI acquisition occurred as of the beginning of 1998 and 1997 was not material. --- 7

(8) As of January 1, 1992, BHS elected to capitalize categories of costs not previously capitalized for home security installations. The additional costs not previously capitalized consisted of costs for installation labor and related benefits for supervisory, installation scheduling, equipment testing and other support personnel and costs incurred in maintaining facilities and vehicles dedicated to the installation process. The effect of this change in accounting principle was to increase operating profit for the Brink's Group and the BHS segment for the three and six months ended June 30, 1998 by $1,495 and $2,911, respectively, and by $1,190 and $2,368, respectively, for the same periods of 1997. The effect of this change increased diluted net income per common share of the Brink's Group by $.02 and $.05 in the three and six month periods ended June 30, 1998, respectively, and by $.02 and $.04, respectively, in the comparable periods of 1997. (9) Under the share repurchase programs authorized by the Board of Directors, the Company purchased shares in the periods presented as follows: Three Months Ended June 30 Six Months Ended June 30 (Dollars in millions) 1998 1997 1998 1997 ---------------------------------------------------------------------------------------------------------- Brink's Stock: Shares 114,100 13,000 114,100 166,000 Cost $ 4.4 0.3 4.4 4.3 BAX Stock: Shares 227,400 -- 404,932 132,100 Cost $ 3.7 -- 7.2 2.6 Convertible Preferred Stock: Shares -- -- 355 -- Cost $ -- -- 0.1 -- Excess carrying amount (a) $ -- -- 0.02 -- ========================================================================================================== (a) The excess of the carrying amount of the Series C Cumulative Convertible Preferred Stock (the "Convertible Preferred Stock") over the cash paid to holders for repurchases made during the periods. This amount is deducted from preferred dividends in the Company's Statement of Operations. At June 30, 1998, the Company had the remaining authority to purchase over time 1,000 shares of Minerals Stock; 942 shares of Brink's Stock; 688 shares of BAX Stock and an additional $24,236 of its Convertible Preferred Stock. The remaining aggregate purchase cost limitation for all common stock was $13,351 at June 30, 1998. (10) The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," in the first quarter of 1998. SFAS No. 130 established standards for the reporting and display of comprehensive income and its components in financial statements. Comprehensive income generally represents all changes in shareholders' equity except those resulting from investments by or distributions to shareholders. Total comprehensive income, which is composed of net income attributable to common shares and foreign currency translation adjustments, for the three months ended June 30, 1998 and 1997 was $16,267 and $12,878, respectively, and for the first six months ended June 30, 1998 and 1997 was $27,185 and $27,561, respectively. Effective January 1, 1998, the Company implemented AICPA Statement of Position ("SOP") No. 98-1 "Accounting for the Costs of Computer Software Developed for Internal Use". SOP No. 98-1 requires that certain costs related to the development or purchase of internal-use software be capitalized and amortized over the estimated useful life of the software. --- 8

(11) The Company will adopt a new accounting standard, SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," in the financial statements for the year ended December 31, 1998. SFAS No. 131 requires publicly-held companies to report financial and descriptive information about operating segments in financial statements issued to shareholders for interim and annual periods. SFAS No. 131 also requires additional disclosures with respect to products and services, geographic areas of operation, and major customers. The adoption of this SFAS is not expected to have a material impact on the financial statements of the Company. In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This statement is effective for The Pittston Company for the year beginning January 1, 2000, with early adoption allowed. The Company is currently evaluating the timing of adoption and the effect that implementation of the new standard will have on its results of operations and financial position. In April 1998, the AICPA issued SOP No. 98-5, "Reporting on the Costs of Start-Up Activities." SOP No. 98-5, which provides guidance on the reporting of start-up costs and organization costs, requires that such costs be expensed as incurred. This SOP is effective for The Pittston Company for the year beginning January 1, 1999, with early application encouraged. Initial application of the SOP is required to be reported as a cumulative effect of a change in accounting principle as of the beginning of the year of adoption. The Company is currently evaluating the effect that implementation of the new statement will have on its results of operations and financial position. (12) Certain prior period amounts have been reclassified to conform to the current period's financial statement presentation. (13) In the opinion of management, all adjustments have been made which are necessary for a fair presentation of results of operations and financial condition for the periods reported herein. All such adjustments are of a normal recurring nature. --- 9

The Pittston Company and Subsidiaries MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The financial statements of The Pittston Company (the "Company") include balance sheets, results of operations and cash flows of the Brink's, Incorporated ("Brink's"), Brink's Home Security, Inc. ("BHS"), BAX Global Inc. ("BAX Global"), Pittston Coal Company ("Coal Operations") and Pittston Mineral Ventures ("Mineral Ventures") operations of the Company as well as the Company's corporate assets and liabilities and related transactions which are not separately identified with operations of a specific segment. The following discussion is a summary of the key factors management considers necessary in reviewing the Company's results of operations, liquidity and capital resources. RESULTS OF OPERATIONS Three Months Ended June 30 Six Months Ended June 30 (In thousands) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Net sales and operating revenues: Brink's $ 309,751 224,550 571,674 433,749 BHS 50,061 44,225 98,471 86,410 BAX Global 432,884 399,567 835,317 770,976 Coal Operations 130,176 154,073 276,096 308,666 Mineral Ventures 4,232 3,739 8,210 8,029 - ------------------------------------------------------------------------------------------------------------------- Net sales and operating revenues $ 927,104 826,154 1,789,768 1,607,830 =================================================================================================================== Operating profit (loss): Brink's $ 24,047 19,143 45,966 34,944 BHS 13,895 13,273 27,397 26,052 BAX Global 6,279 (565) 6,709 10,191 Coal Operations (1,714) 1,232 788 4,855 Mineral Ventures (278) (1,310) (325) (1,765) - ------------------------------------------------------------------------------------------------------------------- Segment operating profit 42,229 31,773 80,535 74,277 General corporate expense (6,726) (4,469) (18,532) (9,595) - ------------------------------------------------------------------------------------------------------------------- Total operating profit $ 35,503 27,304 62,003 64,682 =================================================================================================================== In the second quarter of 1998, the Company reported net income of $20.8 million compared with $14.7 million in the second quarter of 1997. Operating profit totaled $35.5 million in the 1998 second quarter compared with $27.3 million in the prior year second quarter. Increased operating results at Brink's ($4.9 million), BHS ($0.6 million), BAX Global ($6.8 million) and Mineral Ventures ($1.0 million) were offset by a decrease in operating results at Coal Operations ($2.9 million) combined with higher general corporate expenses ($2.3 million). In the first six months of 1998, the Company reported net income of $33.6 million compared with $36.0 million in the first six months of 1997. Operating profit totaled $62.0 million in the first six months of 1998 compared with $64.7 million in the prior year period. Increased operating results in the first six months of 1998 at Brink's ($11.0 million), BHS ($1.3 million) and Mineral Ventures ($1.4 million) were offset by lower operating profits at BAX Global ($3.5 million), and Coal Operations ($4.1 million), combined with higher general corporate expenses ($8.9 million). --- 10

BRINK'S The following is a table of selected financial data for Brink's on a comparative basis: Three Months Ended June 30 Six Months Ended June 30 (In thousands) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Operating revenues: North America (United States & Canada) $ 135,687 117,616 265,054 228,388 Latin America 76,348 66,163 152,840 125,859 Europe 90,909 33,727 140,722 66,355 Asia/Pacific 6,807 7,044 13,058 13,147 - ------------------------------------------------------------------------------------------------------------------- Total operating revenues 309,751 224,550 571,674 433,749 Operating expenses 247,899 175,441 457,285 342,497 Selling, general and administrative expenses 37,809 30,083 69,413 55,804 - ------------------------------------------------------------------------------------------------------------------- Total costs and expenses 285,708 205,524 526,698 398,301 Other operating income (expense), net 4 117 990 (504) - ------------------------------------------------------------------------------------------------------------------- Operating profit: North America (United States & Canada) 11,865 9,657 21,932 17,411 Latin America 5,354 7,445 16,031 14,882 Europe 6,388 1,291 7,213 1,667 Asia/Pacific 440 750 790 984 - ------------------------------------------------------------------------------------------------------------------- Total operating profit $ 24,047 19,143 45,966 34,944 =================================================================================================================== Depreciation and amortization $ 12,255 6,811 20,674 14,358 =================================================================================================================== Cash capital expenditures $ 14,407 10,291 27,710 20,105 =================================================================================================================== Brink's consolidated revenues totaled $309.8 million in the second quarter of 1998 compared with $224.6 million in the second quarter of 1997. The revenue increase of $85.2 million (38%) was offset, in part, by increases in total costs and expenses of $80.2 million. Brink's operating profit of $24.0 million in the second quarter of 1998 represented a $4.9 million (26%) increase over the $19.1 million operating profit reported in the prior year quarter. The increases in revenue and operating profit were largely attributable to operations in both North America and Europe. Revenues from North American operations (United States and Canada) increased $18.1 million (15%) to $135.7 million in the 1998 second quarter from $117.6 million in the prior year quarter. North American operating profit increased $2.2 million (23%) to $11.9 million in the current year quarter. The revenue and operating profit increases for 1998 primarily resulted from improved results across most product lines, particularly armored car operations, which include ATM services. In Latin America, revenues increased 15% to $76.3 million, while operating profits decreased from $7.4 million in the second quarter of 1997 to $5.4 million in the second quarter of 1998. While both revenues and operating profits reflected strong results in Venezuela, these improved results were more than offset by expenses associated with start-up operations in Argentina and by equity losses from Brink's 20% owned affiliate in Mexico. --- 11

Revenues and operating profit from European operations amounted to $90.9 million and $6.4 million, respectively, in the second quarter of 1998. These amounts represented increases of $57.2 million and $5.1 million from the comparable quarter of 1997. The increase in revenues was due to the acquisition of nearly all of the remaining shares of Brink's affiliate in France in the first quarter of 1998 (discussed in more detail below). The increase in operating profits reflects improved results from operations in France, as well as the increased ownership. Revenues and operating profit from Asia/Pacific operations in the second quarter of 1998 were $6.8 million and $0.4 million, respectively. Revenues were essentially unchanged over the comparable 1997 period and operating profit decreased $0.3 million. Brink's consolidated revenues totaled $571.7 million in the first six months of 1998 compared with $433.7 million in the first six months of 1997. The revenue increase of $137.9 million (32%) in the first half of 1998 was offset, in part, by an increase in total costs and expenses of $128.4 million. Brink's operating profit of $46.0 million in the first six months of 1998 represented a 32% increase over the $34.9 million operating profit reported in the prior year period. Revenues from North American operations increased $36.7 million (16%) to $265.1 million in the first six months of 1998 from $228.4 million in the same period of 1997. North American operating profit increased $4.5 million (26%) to $21.9 million in the current year period from $17.4 million in the same period of 1997. The revenues and operating profit improvement for the six months of 1998 primarily resulted from improved armored car operations, which include ATM services. In Latin America, revenues and operating profits increased 21% to $152.8 million and 8% to $16.0 million, respectively, from the first six months of 1997 to the comparable 1998 period. The increase in revenues and operating profits includes the impact of a full six months of consolidated results from the acquired operation in Venezuela, while the 1997 period included only five months of consolidated results. In addition, strong results in Venezuela and in Colombia were offset, in part, by costs associated with start-up operations in Argentina and equity losses from Brink's affiliate in Mexico. Revenues and operating profit from European operations amounted to $140.7 million and $7.2 million, respectively, in the first six months of 1998. These amounts represented increases of $74.4 million and $5.5 million from the comparable period of 1997. The increase in revenue was due to the acquisition of nearly all the remaining shares of the Brink's affiliate in France in the first quarter of 1998. The increase in operating profits reflects improved results from operations in France, as well as the increased ownership. This improvement was partially offset by lower results in Belgium caused by industry-wide labor unrest in the armored car industry in that country which was resolved in the first quarter of 1998. Revenues and operating profit from Asia/Pacific operations in the first six months of 1998 were $13.1 million and $0.8 million, respectively, compared to $13.1 million and $1.0 million, respectively, in the first six months of 1997. Brink's continued its international strategy of gaining control of affiliated operations or exiting certain markets. During the second quarter, Brink's increased its ownership to 100% from 50% in its German affiliate, increased its majority ownership in its Colombian affiliate by 7.5% to 58% and divested its 24.5% interest in its Italian affiliate. --- 12

BHS The following is a table of selected financial data for BHS on a comparative basis: Three Months Ended June 30 Six Months Ended June 30 (Dollars in thousands) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Operating revenues $ 50,061 44,225 98,471 86,410 Operating expenses 25,624 22,300 49,670 43,152 Selling, general and administrative expenses 10,542 8,652 21,404 17,206 - ------------------------------------------------------------------------------------------------------------------- Total costs and expenses 36,166 30,952 71,074 60,358 Operating profit: Monitoring and service 18,152 15,944 35,334 30,534 Net marketing, sales and installation (4,257) (2,671) (7,937) (4,482) - ------------------------------------------------------------------------------------------------------------------- Total operating profit $ 13,895 13,273 27,397 26,052 =================================================================================================================== Depreciation and amortization $ 9,103 7,116 17,905 13,782 =================================================================================================================== Cash capital expenditures $ 19,043 17,559 37,502 34,079 =================================================================================================================== Monthly recurring revenues (a) $ 13,976 11,834 =================================================================================================================== Number of subscribers: Beginning of period 528,607 464,007 511,532 446,505 Installations 28,557 26,798 55,307 52,388 Disconnects (9,506) (8,740) (19,181) (16,828) - ------------------------------------------------------------------------------------------------------------------- End of period 547,658 482,065 547,658 482,065 =================================================================================================================== (a) Monthly 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. Annualized recurring revenues as of June 30, 1998 and 1997 were $167,715 and $142,005, respectively. Revenues for BHS increased by 13% to $50.1 million in the second quarter of 1998 from $44.2 million in the 1997 quarter. In the first six months of 1998, revenues for BHS increased by $12.1 million (14%) to $98.5 million from $86.4 million in the first six months of 1997. The increase in revenues was due to higher ongoing monitoring and service revenues, reflecting a 14% increase in the subscriber base as well as higher average monitoring fees. As a result of such growth, monthly recurring revenues at June 30, 1998 grew 18% over the amount in effect at the end of June 30, 1997. Installation revenue for the second quarter and first six months of 1998 decreased 4% and 5%, respectively, over the same 1997 periods. While the number of new security system installations increased, the revenue per installation decreased in both the three and six month periods ended June 30, 1998, as compared to the 1997 periods, in response to continuing aggressive installation marketing and pricing by competitors. --- 13

BAX GLOBAL The following is a table of selected financial data for BAX Global on a comparative basis: (In thousands - except per Three Months Ended June 30 Six Months Ended June 30 pound/shipment amounts) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Operating revenues: Intra-U.S.: Expedited freight services $ 151,642 144,668 299,040 281,340 Other 1,294 1,890 2,239 3,612 - ------------------------------------------------------------------------------------------------------------------- Total Intra-U.S. 152,936 146,558 301,279 284,952 International: Expedited freight services (a) 219,436 213,321 425,888 411,450 Other (a) 60,512 39,688 108,150 74,574 - ------------------------------------------------------------------------------------------------------------------- Total International 279,948 253,009 534,038 486,024 - ------------------------------------------------------------------------------------------------------------------- Total operating revenues 432,884 399,567 835,317 770,976 Operating expenses 385,157 355,693 747,496 686,604 Selling, general and administrative expenses 41,922 45,298 81,453 75,689 - ------------------------------------------------------------------------------------------------------------------- Total costs and expenses 427,079 400,991 828,949 762,293 Other operating income, net 474 859 341 1,508 - ------------------------------------------------------------------------------------------------------------------- Operating profit (loss): Intra-U.S. (b) 2,082 (1,252) (2,895) 2,865 International (b) 4,197 687 9,604 7,326 - ------------------------------------------------------------------------------------------------------------------- Total operating profit (loss) $ 6,279 (565) 6,709 10,191 =================================================================================================================== Depreciation and amortization $ 8,785 7,091 16,394 13,999 =================================================================================================================== Cash capital expenditures $ 20,135 4,748 44,410 10,923 =================================================================================================================== Expedited freight services shipment growth rate (c) 1.1% 0.6% 1.2% (0.6%) Expedited freight services weight growth rate (c): Intra-U.S. 8.0% 3.1% 8.5% 2.0% International 8.0% 7.9% 8.4% 5.2% Worldwide 8.0% 5.7% 8.4% 3.7% =================================================================================================================== Expedited freight services weight (millions of pounds) 402.5 372.6 784.0 723.1 Expedited freight services shipments (thousands) 1,345 1,330 2,635 2,605 =================================================================================================================== Worldwide expedited freight services: Yield (revenue per pound) (a) $ .922 .961 .925 .958 Revenue per shipment (a) $ 276 269 275 266 Weight per shipment (pounds) 299 280 298 278 =================================================================================================================== (a) Prior period's international expedited freight revenues have been reclassified to conform to the current period classification. (b)The three and six month periods ended June 30, 1997 include $12.5 million of consulting expenses related to the redesign of BAX Global's business processes and new information system architecture of which $4.75 million and $7.75 million was attributed to Intra-U.S.and International, respectively. (c) Compared to the same period in the prior year. --- 15

BAX Global's second quarter 1998 operating profit amounted to $6.3 million, an increase of $6.9 million from the operating loss of $0.6 million reported in the second quarter of 1997, which included the $12.5 million charge for special consulting expenses. Worldwide revenues increased 8% to $432.9 million from $399.6 million in the 1997 quarter. The $33.3 million growth in revenues reflects an 8% increase in worldwide expedited freight services pounds shipped, which reached 402.5 million pounds in the second quarter of 1998, partially offset by a 4% decrease in average yield on this volume. In addition, non-expedited freight services revenues, increased $20.2 million (49%) during the second quarter of 1998 as compared to the same quarter in 1997 reflecting increases in ocean freight services, logistics revenues and revenues from the recently acquired Air Transport International LLC ("ATI") discussed in further detail below. Worldwide expenses amounted to $427.1 million, $26.1 million (7%) higher than in the second quarter of 1997. In the second quarter of 1998, BAX Global's intra-U.S. revenues increased from $146.6 million to $152.9 million. This $6.3 million (4%) increase was primarily due to an increase of $7.0 million (5%) in intra-U.S. expedited freight services revenues. The higher level of intra-U.S. expedited freight services revenues in 1998 was due to an 8% increase in weight shipped offset, in part, by a 3% decrease in average yield. The decrease in the average yield was due to the combination of a shift in product mix to lower yielding second day freight along with lower average pricing on both overnight and second day traffic. Intra-U.S. operating results during the second quarter of 1998 increased $3.3 million from the $1.3 million operating loss recorded in the second quarter of 1997. However, intra-U.S. operating results in the 1998 quarter included $1.0 million of expenses related to Year 2000 and information technology initiatives, while operating results in the 1997 quarter included $4.8 million relating to the special consulting charge. Adjusted for these items, intra-U.S. profits decreased $0.5 million from $3.5 million to $3.0 million. While expedited freight gross margin as a percentage of revenue remained consistent between the quarters, other operating expenses increased relative to increases in station operating costs associated with efforts to enhance service levels. International revenues in the second quarter of 1998 increased $26.9 million (11%) to $279.9 million from the $253.0 million recorded in the second quarter of 1997. International expedited freight services revenues increased $6.1 million (3%) due to an 8% increase in weight shipped, partially offset by a 5% decrease in average yield. The decrease in yield reflects a change in mix with less export traffic to higher yielding Asian markets, combined with the absence of third party carrier surcharges which existed in the second quarter of 1997. In addition, international non-expedited freight services revenue increased $20.8 million (52%) in the second quarter of 1998 as compared to the same period in 1997 due to growth in ocean freight services, logistics revenues and revenues from the recently acquired ATI business. International operating profit in the second quarter of 1998 increased $3.5 million from the $0.7 million recorded in the second quarter of 1997. However, international operating results in the second quarter of 1998 included $1.8 million of expenses relating to Year 2000 and information technology initiatives, while operating results in the second quarter of 1997 included $7.8 million relating to the special consulting charge. After adjusting for these items, international operating profits decreased $2.5 million from $8.5 million to $6.0 million primarily due to the inclusion of ATI results along with increased provisions for bad debt expense in Asia. BAX Global's operating profit for the first six months of 1998 amounted to $6.7 million, a decrease of $3.5 million from the $10.2 million reported in the first six months of 1997, which included the $12.5 million charge. Worldwide revenues in the 1998 period increased 8% to $835.3 million from $771.0 million in the 1997 period. The $64.3 million growth in revenues reflects an 8% increase in worldwide expedited freight services pounds shipped, which reached 784.0 million pounds in the first half of 1998, offset by a 3% decrease in yield on this volume. In addition, non-expedited freight services revenues increased $32.2 million (41%) during the first six months of 1998 as compared to 1997. Worldwide expenses in the 1998 period amounted to $828.9 million, $66.7 million (9%) higher than the 1997 period. --- 16

In the first six months of 1998, BAX Global's intra-U.S. revenues increased from $285.0 million to $301.3 million. This $16.3 million (6%) increase was primarily due to an increase of $17.7 million (6%) in intra-U.S. expedited freight services revenues. The higher level of expedited freight services revenues in 1998 was due to a 9% increase in weight shipped, offset by a 2% decrease in the average yield. Intra-U.S. operating loss during the first six months of 1998 was $2.9 million compared to a $2.9 operating profit in the first six months of 1997. However, intra-U.S. operating results in the first half of 1998 included $2.6 million of expenses related to Year 2000 and information technology initiatives partially offset by several non-recurring items, while the first half of 1997 included $4.8 million relating to the $12.5 million special consulting expenses. After adjusting for these items, intra-U.S. operating profit decreased $8.0 million from the first half of 1997 to the first half of 1998. The decrease is due to lower than expected volume combined with higher fixed operating and transportation costs. Transportation costs as a percentage of expedited freight services revenues increased during late 1997 and early 1998 due, in part, to efforts to enhance service levels. In addition, transportation costs during the first quarter of 1998 were also unfavorably impacted by service disruptions mainly caused by equipment problems which were resolved during the first quarter. International revenues in the first six months of 1998 increased $48.0 million (10%) to $534.0 million from the $486.0 million recorded in the comparable period of 1997. International expedited freight services revenue increased $14.4 million (4%) due to an 8% increase in weight shipped offset by a 5% decrease in the average yield. The decrease in yield reflects a change in mix with less export traffic to higher yielding Asian markets, combined with the absence of third party carrier surcharges which existed in the 1997 period. International non-expedited freight services revenue increased $33.6 million (45%) in the first six months of 1998 as compared to the same period in 1997. The increase primarily relates to growth in ocean freight services, logistics revenues and revenues from the recently acquired ATI. International operating profit in the first six months of 1998 increased $2.3 million (31%) from the $7.3 million recorded in the comparable period of 1997. However, international operating results in the first half of 1998 included $3.7 million related to Year 2000 and information technology initiatives, while the first half of 1997 included $7.8 million relating to the special consulting charge. After adjusting for these items, international operating profits decreased $1.8 million from $15.1 million in the first half of 1997 to $13.3 million in the first half of 1998. The decrease is primarily due to the inclusion of ATI results along with increased provisions for bad debt expense in Asia. During June 1998, C. Robert Campbell joined BAX Global as President and Chief Executive Officer. New management's priorities for the remainder of the year will include reviewing the current organizational structure, the adequacy and utilization of resources, the initiatives relating to margin improvement and service enhancements, as well as the continuation of certain information technology initiatives. Although the outcome of these reviews has not been determined, future earnings may be impacted. --- 17

COAL OPERATIONS The following are tables of selected financial data for Coal Operations on a comparative basis: Three Months Ended June 30 Six Months Ended June 30 (In thousands) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Net sales $ 130,176 154,073 276,096 308,666 - ------------------------------------------------------------------------------------------------------------------- Cost of sales 130,209 150,144 271,702 299,883 Selling, general and administrative expenses 4,423 4,775 8,677 9,711 - ------------------------------------------------------------------------------------------------------------------- Total costs and expenses 134,632 154,919 280,379 309,594 Other operating income, net 2,742 2,078 5,071 5,783 - ------------------------------------------------------------------------------------------------------------------- Operating (loss) profit $ (1,714) 1,232 788 4,855 =================================================================================================================== Coal sales (tons): Metallurgical 1,995 1,823 3,926 3,714 Steam 2,312 3,294 5,235 6,523 - ------------------------------------------------------------------------------------------------------------------- Total coal sales 4,307 5,117 9,161 10,237 =================================================================================================================== Production/purchased (tons): Deep 1,368 1,324 2,757 2,426 Surface 1,841 2,739 3,810 5,398 Contract 200 373 442 736 - ------------------------------------------------------------------------------------------------------------------- 3,409 4,436 7,009 8,560 Purchased 1,046 963 2,011 2,303 - ------------------------------------------------------------------------------------------------------------------- Total 4,455 5,399 9,020 10,863 =================================================================================================================== (In thousands, Three Months Ended June 30 Six Months Ended June 30 except per ton amounts) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Net coal sales (a) $ 128,053 151,303 272,029 304,001 Current production costs of coal sold (a) 119,387 140,554 251,894 282,126 - ------------------------------------------------------------------------------------------------------------------- Coal margin 8,666 10,749 20,135 21,875 Non-coal margin 623 527 1,239 1,245 Other operating income, net 2,742 2,078 5,071 5,783 - ------------------------------------------------------------------------------------------------------------------- Margin and other income 12,031 13,354 26,445 28,903 - ------------------------------------------------------------------------------------------------------------------- Other costs and expenses: Idle equipment and closed mines 2,582 250 3,285 557 Inactive employee cost 6,740 7,097 13,695 13,780 Selling, general and administrative expenses 4,423 4,775 8,677 9,711 - ------------------------------------------------------------------------------------------------------------------- Total other costs and expenses 13,745 12,122 25,657 24,048 - ------------------------------------------------------------------------------------------------------------------- Operating (loss) profit $ (1,714) 1,232 788 4,855 =================================================================================================================== Coal margin per ton: Realization $ 29.73 29.57 29.69 29.70 Current production costs 27.72 27.47 27.49 27.56 - ------------------------------------------------------------------------------------------------------------------- Coal margin $ 2.01 2.10 2.20 2.14 =================================================================================================================== (a) Excludes non-coal components. --- 18

Coal Operations generated an operating loss of $1.7 million (including a $2.2 million loss on the sale of certain coal assets at its Elkay mining operation in West Virginia ("Elkay Assets")) in the second quarter of 1998, compared to an operating profit of $1.2 million recorded in the 1997 second quarter. Sales volume of 4.3 million tons in the second quarter of 1998 was 16% less than the 5.1 million tons sold in the prior year quarter. Compared to the second quarter of 1997, steam coal sales in 1998 decreased by 1.0 million tons (30%), to 2.3 million tons, while metallurgical coal sales increased 0.2 million tons (9%), to 2.0 million tons. The steam sales volume reduction was primarily due to the reduced production by and subsequent sale of certain Elkay Assets (discussed below) along with reduced sales in the spot market. Steam coal sales represented 54% of total volume in 1998 and 64% in 1997. Total coal margin of $8.7 million for the second quarter of 1998 represented a decrease of $2.1 million from the comparable 1997 period. The decrease in total coal margin reflects lower sales volume combined with a 4% decrease ($0.09 per ton) in coal margin per ton. The overall change in coal margin per ton during the 1998 quarter was impacted by decreases in metallurgical coal margins, partially offset by increases in steam coal margins. Metallurgical margins were negatively impacted in the three months ended June 30, 1998 by lower realizations per ton resulting from lower negotiated pricing with metallurgical customers for the new contract year which began April 1, 1998. Steam coal margins improved in the 1998 second quarter due to higher realizations. In addition to these factors, total coal margin per ton was impacted by a change in both the production and sales mix. Despite the decreases in metallurgical coal realization per ton, overall realization per ton of coal sold increased $0.16 per ton as a greater proportion of coal sales came from the higher priced metallurgical coal. In addition, the current production cost of coal sold increased $0.25 per ton to $27.72 in the second quarter of 1998 from the second quarter of 1997 due to a higher proportion of deep mine production which is more costly. Production in the 1998 second quarter decreased 1.0 million tons over the 1997 second quarter to 3.4 million tons due to the reduced production by and subsequent sale of certain Elkay Assets (discussed below). Purchased coal remained constant at 1.0 million tons. Surface production accounted for 55% and 63% of the total production in the 1998 and 1997 second quarters, respectively. Productivity of 35.3 tons per man day in the 1998 second quarter decreased from the 37.7 tons per man day in the 1997 second quarter primarily attributable to an increased percentage of deep mine production. Non-coal margin, which reflects earnings from the oil, gas and timber businesses, amounted to $0.6 million in the second quarter of 1998, which was $0.1 million higher than in the second quarter of 1997. Other operating income, which primarily includes gains and losses on sales of property and equipment and third party royalties, amounted to $2.7 million in the second quarter of 1998 as compared to $2.1 million in the comparable period of 1997. This increase was due to higher levels of dividend and royalty income. Net gains on sales of property and equipment during the quarter included $0.2 million of the total $2.2 million loss associated with the sale of certain Elkay Assets (discussed below). Idle equipment and closed mine costs increased $2.3 million to $2.6 million in the 1998 second quarter from the comparable 1997 quarter largely due to inventory writedowns of $2.0 million associated with the sale of certain Elkay Assets (discussed below). Inactive employee costs, which represent long-term employee liabilities for pension and retiree medical costs, decreased from $7.1 million to $6.7 million for the second quarter of 1998 resulting from lower premiums from the Coal Industry Retiree Health Benefit Act of 1992, partially offset by the use of a lower long-term discount rate to calculate the present value of the liabilities. Selling, general and administrative expenses decreased $0.4 million (7%) in the second quarter of 1998 from the 1997 second quarter due to continued Coal Operations cost control efforts. --- 19

During the second quarter of 1998, Coal Operations disposed of certain assets, including a surface mine, coal supply contracts and limited coal reserves, of its Elkay mining operation in West Virginia. The referenced surface mine produced approximately 1 million tons of steam coal from January 1, 1998 through the end of April 1998, at which point coal production ceased. Total cash proceeds from the sale amounted to approximately $18 million, resulting in a pre-tax loss of approximately $2.2 million. This pre-tax book loss includes approximately $2.0 million of inventory writedowns related to coal which can no longer be blended with other coals produced from these disposed assets. This writedown has been included in Coal Operations cost of sales. During the first six months of 1998, Coal Operations generated an operating profit of $0.8 million compared to $4.9 million in the corresponding 1997 period. Sales volume of 9.2 million tons in the first half of 1998 was 1.1 million tons less than the 1997 period. Metallurgical coal sales increased by 0.2 million tons (6%) to 3.9 million tons and steam coal sales decreased by 1.3 million tons (20%) to 5.2 million tons compared to the prior year primarily due to the reduced production by and subsequent sale of certain Elkay Assets. Steam coal sales represented 57% of the total 1998 sales volume, as compared to 64% in 1997. For the first six months of 1998, coal margin was $20.1 million, a decrease of $1.7 million over the 1997 period. Coal margin per ton increased to $2.20 per ton in the first six months of 1998 from $2.14 per ton for the same period of 1997. This overall change in coal margin per ton during the first six months of 1998 was due to the change in sales and production mix which occurred in the second quarter and an increase in steam coal margins partially offset by a decrease in metallurgical coal margins. Steam coal margins increased for the first six months of 1998 due to higher realizations during the period. During the same period, metallurgical margins decreased due to the negative impact of lower realization amounts which began with the new contract year in the second quarter of 1998. This was partially offset by lower production costs, which included the Harbor Maintenance Tax benefit discussed below. The current production cost of coal sold for the first half of 1998 was $27.49 per ton as compared to $27.56 per ton for the first half of 1997. While production cost per ton increased due to a larger proportion of the higher cost deep mine production, these increases were more than offset by a $1.3 million benefit ($0.14 per ton) related to a favorable ruling issued by the U.S. Supreme Court on the unconstitutionality of the Harbor Maintenance Tax. Production for the year-to-date 1998 period totaled 7.0 million tons, a decrease from the 1997 period production of 8.6 million tons, due in large part to the reduced production by and subsequent sale of certain Elkay Assets. Surface production accounted for 55% and 64% of the total production in the 1998 and 1997 periods, respectively. Productivity of 35.1 tons per man day in period decreased from the 37.1 tons per man day in 1997 due to the increased percentage of deep mine production. The non-coal margin was $1.2 million for the first half of both 1998 and 1997. Other operating income decreased $0.7 million for the 1998 period due to the inclusion in 1997 of a favorable insurance settlement. Idle equipment and closed mine costs increased $2.7 million in the first half of 1998 as compared to 1997, primarily due to inventory writedowns of $2.0 million associated with the sale of certain Elkay Assets along with costs relating to mines which went idle in the third quarter of 1997. Inactive employee costs, which primarily represent long-term employee liabilities for pension and retiree medical costs, decreased slightly by $0.1 million to $13.7 million in the 1998 six months. This favorable change reflects lower premiums from the Coal Industry Retiree Health Benefit Act of 1992, offset by the use of a lower long-term interest rate to calculate the present value of the long-term liabilities during 1998 compared to the rate used in 1997. Selling, general and administrative expenses declined by $1.0 million (11%) in the six months of 1998 as compared to the 1997 period, as a result of Coal Operations cost control efforts. --- 20

In July 1998, Coal Operations completed the sale of two idle properties in West Virginia and a loading dock in Sandlick, Kentucky for an expected pre-tax gain of approximately $5 million. These asset disposals continue the Coal Operations' strategy of disposing of idle and under-performing assets, while focusing on its core metallurgical and steam coal operations. Later this year Coal Operations plans to begin to develop a major underground metallurgical coal mine on reserves owned by the company in Virginia. At full production, scheduled for sometime in 2001, this mine is expected to produce average annual production of approximately 1.3 million tons from a proven and probable reserve of approximately 15.0 million tons. Coal Operations continues cash funding for charges recorded in prior years for facility closure costs recorded as restructuring and other charges in the Statement of Operations. The following table analyzes the changes in liabilities during the first six months of 1998 for such costs: Employee Mine Termination, and Medical Plant and Closure Severance (In thousands) Costs Costs Total - ------------------------------------------------------------------------------------------------------------------- Balance as of December 31, 1997 $ 11,143 19,703 30,846 Payments 521 1,013 1,534 Other reductions 16 -- 16 - ------------------------------------------------------------------------------------------------------------------- Balance as of June 30, 1998 $ 10,606 18,690 29,296 =================================================================================================================== MINERAL VENTURES The following is a table of selected financial data for Mineral Ventures on a comparative basis: (Dollars in thousands, except Three Months Ended June 30 Six Months Ended June 30 per ounce data) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Stawell Gold Mine: Gold sales $ 4,217 3,719 8,173 8,000 Other revenue 15 20 37 29 - ------------------------------------------------------------------------------------------------------------------- Net sales 4,232 3,739 8,210 8,029 Cost of sales (a) 3,071 3,666 5,742 7,297 Selling, general and administrative expenses (a) 248 381 539 679 - ------------------------------------------------------------------------------------------------------------------- Total costs and expenses 3,319 4,047 6,281 7,976 - ------------------------------------------------------------------------------------------------------------------- Operating profit - Stawell Gold Mine 913 (308) 1,929 53 Other operating expense, net (1,191) (1,002) (2,254) (1,818) - ------------------------------------------------------------------------------------------------------------------- Operating loss $ (278) (1,310) (325) (1,765) =================================================================================================================== Stawell Gold Mine: Mineral Ventures' 50% direct share: Ounces sold 11,809 9,665 22,955 20,241 Ounces produced 11,743 9,315 22,899 20,266 Average per ounce sold (US$): Realization $ 357 385 356 395 Cash cost 219 370 213 348 =================================================================================================================== (a) Excludes $1,062 and $1,970 of non-Stawell related selling, general and administrative expenses for the three months and six months ended June 30, 1998. Excludes $26 and $797, and $68 and $1,414 of non-Stawell related cost of sales and selling, general and administrative expenses, respectively, for the three months and six months ended June 30, 1997. Such costs are reclassified to cost of sales and selling, general and administrative expenses in the Minerals Group Statement of Operations. --- 21

Mineral Ventures, which primarily consists of a 50% direct and a 17% indirect interest in the Stawell gold mine ("Stawell") in western Victoria, Australia, generated an operating loss of $0.3 million in the second quarter of 1998, an improvement of $1.0 million as compared to the loss of $1.3 million in the second quarter of 1997. Mineral Ventures' 50% direct interest in Stawell's operations generated net sales of $4.2 million in the second quarter of 1998 compared to $3.7 million in the 1997 period due to an increase in ounces of gold sold from 9.7 thousand ounces to 11.8 thousand ounces, partially offset by lower gold realizations due to declining market prices. The second quarter operating profit at Stawell of $0.9 million increased $1.2 million over the prior year quarter reflecting a $151.0 per ounce decrease (41%) in the cash cost of gold sold partially offset by a $28.0 per ounce decrease (7%) in average realization. Production costs were lower in the 1998 quarter due to a weaker Australian dollar as well as lower operating costs than the 1997 quarter which was adversely impacted by the collapse of a ventilation shaft during its construction which caused production delays. During the first six months of 1998, Mineral Ventures generated an operating loss of $0.3 million as compared to an operating loss of $1.8 million in the 1997 period. Mineral Ventures' 50% direct interest in Stawell's operations generated net sales of $8.2 million in the first half of 1998 compared to $8.0 million in the 1997 period as the ounces of gold sold increased from 20.2 thousand ounces to 23.0 thousand ounces (13%). The operating profit at Stawell of $1.9 million was $1.9 million higher than operating profit in the first half of 1997 and was affected by a $135 per ounce decrease (39%) in the cash cost of gold sold offset by a $39 per ounce decrease (10%) in the selling price of gold. Production costs were lower in 1998 due to a weaker Australian dollar. In addition, Stawell's costs in the first half of 1997 were negatively impacted by temporary unfavorable ground conditions and the collapse of a new ventilation shaft during its construction resulting in lower production and higher costs. As of June 30, 1998, approximately 17% of Mineral Ventures' share of the total proven and probable reserves had been sold forward under forward sales contracts that mature periodically through mid-1999. Based on contracts in place and current market conditions, full year 1998 average realizations are expected to be between $325 and $330 per ounce of gold sold. At June 30, 1998, remaining proven and probable gold reserves at the Stawell mine were estimated at 392.2 thousand ounces. Other operating expense, net, includes equity earnings from joint ventures, primarily consisting of Mineral Ventures' 17% indirect interest in Stawell's operations and gold exploration costs for all operations excluding Stawell. In addition to its interest in Stawell, Mineral Ventures has a 17% indirect interest in the Silver Swan base metals property in Western Australia. Operating results at Silver Swan have been below expectations due to the impact of depressed nickel prices, though production volumes and costs at the mine are in line with expectations. FOREIGN OPERATIONS A portion of the Company's financial results is derived from activities in foreign countries, each with a local currency other than the U.S. dollar. Because the financial results of the Company are reported in U.S. dollars, they are affected by the changes in the value of the various foreign currencies in relation to the U.S. dollar. The Company's international activity is not concentrated in any single currency, which mitigates the risks of foreign currency rate fluctuation. In addition, these rate fluctuations may adversely affect transactions which are denominated in currencies other than the functional currency. The Company routinely enters into such transactions in the normal course of its business. Although the diversity of its foreign operations limits the risks associated with such transactions, the Company uses foreign currency forward contracts to hedge the currency risks associated with such transactions. Realized and unrealized gains and losses on these contracts are deferred and recognized as part of the specific transaction hedged. In addition, translation adjustments relating to operations in countries with highly inflationary economies are included in net income, along with all transaction gains or losses for the period. A subsidiary in Venezuela and affiliates in Mexico operate in such highly inflationary economies. Prior to January 1, 1998, the economy in Brazil, in which the Company has subsidiaries, was considered highly inflationary. --- 22

The Company is also subject to other risks customarily associated with doing business in foreign countries, including labor and economic conditions, controls on repatriation of earnings and capital, nationalization, political instability, expropriation and other forms of restrictive action by local governments. The future effects, if any, of such risks on the Company cannot be predicted. CORPORATE EXPENSES In the second quarter of 1998, corporate expenses totaled $6.7 million compared with $4.5 million in the 1997 second quarter. The increase in corporate expenses over the second quarter of 1997 was primarily due to costs associated with a severance agreement with a former member of the Company's senior management. In the first six months of 1998, corporate expenses increased $8.9 million from $9.6 million to $18.5 million. Corporate expenses in the first six months of 1998 also included $5.8 million of additional expenses relating to a retirement agreement between the Company and its former Chairman and CEO. OTHER OPERATING INCOME, NET Other operating income, net, includes the Company's share of net earnings or losses of unconsolidated affiliates, primarily Brink's equity affiliates, royalty income from Coal Operations, foreign currency exchange gains and gains and losses from sales of coal assets. Other operating income, net, increased $0.2 million and decreased $0.3 million in the three and six month periods ended June 30, 1998, respectively, as compared to the same periods in 1997. The increase in the quarter is due primarily to higher levels of royalty and dividend income from Coal Operations. The year-to-date decrease is the result of lower net gains on asset sales and foreign currency exchange gains, partially offset by improvements from Brink's equity affiliates. NET INTEREST EXPENSE Net interest expense increased $3.0 million and $4.7 million in the three and six month periods ended June 30, 1998, respectively, as compared to the same periods in 1997. This increase is predominantly due to higher average borrowings related to capital expenditures and acquisitions, as well as higher average interest rates largely attributed to foreign borrowings. OTHER INCOME/EXPENSE, NET Other income/expense, net for the second quarter of 1998 was income of $1.0 million versus expense of $1.9 million in the second quarter of 1997. Other expense, net was $0.4 million in the first six months of 1998 as compared to $4.3 million in the 1997 corresponding period. The lower level of other expense, net in both the three and six month periods was due to higher foreign translation gains, lower minority interest expense for Brink's consolidated affiliates and higher gains on sales of assets. INCOME TAXES In both the 1998 and 1997 periods presented, the provision for income taxes was less than the statutory federal income tax rate of 35% due to the tax benefits of percentage depletion on Coal Operations and lower taxes on foreign income, partially offset by provisions for goodwill amortization and state income taxes. FINANCIAL CONDITION CASH FLOW REQUIREMENTS Cash provided by operating activities during the first six months of 1998 totaled $82.2 million compared with $85.5 million in the first six months of 1997. This decrease resulted from lower net income and increased funding for working capital, partially offset by higher noncash charges in the first six months of 1998. Cash generated from operations was not sufficient to fund investing activities, which primarily include capital expenditures, aircraft heavy maintenance and acquisitions. As a result of these items and funds used for share activities, the Company required net borrowings of $90.8 million, resulting in an increase in cash and cash equivalents of $0.4 million compared to December 31, 1997. --- 23

In the first quarter of 1998, Brink's purchased 62% (representing nearly all the remaining shares) of its French affiliate ("Brink's S.A.") for payments aggregating US $39 million over three years. The acquisition was funded through an initial payment made at closing of $8.8 million and a note to the seller for a principal amount of US $27.5 million payable in annual installments plus interest through 2001. In addition, borrowings of approximately US $19,000 and capital leases of approximately US $30,000 were assumed. On April 30, 1998, the Company acquired the privately held ATI for a purchase price of approximately $29 million. The acquisition was funded through the revolving credit portion of the Company's bank credit agreement and was accounted for as a purchase. During the second quarter of 1998, the Company's Coal Operations disposed of certain assets of its Elkay mining operation in West Virginia. The assets were sold for cash of approximately $18 million, resulting in a pre-tax loss of $2.2 million. CAPITAL EXPENDITURES Cash capital expenditures for the first six months of 1998 totaled $122.7 million, $40.4 million higher than in the comparable period in 1997. Of the 1998 amount of cash capital expenditures, $27.7 million was spent by Brink's, $37.5 million was spent by BHS, $44.4 million was spent by BAX Global, $11.2 million was spent by Coal Operations and $1.4 million was spent by Mineral Ventures. For the remainder of 1998, company-wide cash capital expenditures are projected to range between $120.0 and $130.0 million. The foregoing amounts exclude expenditures that have been or are expected to be financed through capital and operating leases, and any acquisition expenditures. FINANCING The Company intends to fund cash capital expenditures through cash flow from operating activities or through operating leases if the latter are financially attractive. Shortfalls, if any, will be financed through the Company's revolving credit agreements or other borrowing arrangements. Total outstanding debt amounted to $426.2 million at June 30, 1998, up from the $243.3 million at year-end 1997. The $182.9 million increase reflects debt associated with both the Brink's France and BAX Global's ATI acquisitions (as previously discussed), as well as additional cash required to fund capital expenditures. The Company has a $350.0 million credit agreement with a syndicate of banks (the "Facility"). The Facility includes a $100.0 million term loan and also permits additional borrowings, repayments and reborrowings of up to an aggregate of $250.0 million. As of June 30, 1998 and December 31, 1997 borrowings of $100.0 million were outstanding under the term loan portion of the Facility and $101.8 million and $25.9 million, respectively, of additional borrowings were outstanding under the remainder of the Facility. OFF-BALANCE SHEET INSTRUMENTS Fuel Contracts - The Company, on behalf of the BAX Group, enters into commodity option transactions that are intended to protect against significant changes in jet fuel prices. As of June 30, 1998, these transactions aggregated 53.6 million gallons and mature periodically throughout the remainder of 1998 and mid-1999. The fair value of these fuel hedge transactions may fluctuate over the course of the contract period due to changes in the supply and demand for oil and refined products. Thus, the economic gain or loss, if any, upon settlement of the contracts may differ from the fair value of the contracts at an interim date. At June 30, 1998, the fair value adjustment of all outstanding contracts to hedge jet fuel requirements was ($2.0) million. Interest rate contracts - In the second quarter of 1998, the Company entered into three interest rate swap agreements. These three agreements effectively convert a portion of the interest on its $100.0 million variable rate term loan to fixed rates. The first fixes the interest rate at 5.84% on $20.0 million in face amount of debt, the second fixes the interest rate at 5.86% on $20.0 million in face amount of debt, and the third fixes the interest rate at 5.80% on $20.0 million in face amount of debt. The first two agreements mature in May 2001, while the third agreement matures in May 2000. As of June 30, 1998 the fair value adjustment of all of these agreements was not significant. --- 24

Foreign currency forward contracts - The Company, on behalf of the Minerals Group, enters into foreign currency forward contracts, from time to time, with a duration of up to two years as a hedge against liabilities denominated in the Australian dollar. These contracts minimize the Minerals Group's exposure to exchange rate movements related to cash requirements of Australian operations denominated in Australian dollars. At June 30, 1998, the notional value of foreign currency forward contracts outstanding was $17.6 million and the fair value adjustment approximated ($1.7) million. Gold contracts - In order to protect itself against downward movements in gold prices, the Company, on behalf of the Minerals Group, hedges a portion of its share of gold sales from the Stawell gold mine primarily through forward sales contracts. At June 30, 1998, 32,973 ounces of gold, representing approximately 17% of the Minerals Group's share of Stawell's proven and probable reserves, were sold forward under forward sales contracts that mature periodically through mid-1999. Because only a portion of its future production is currently sold forward, the Minerals Group can take advantage of increases and is exposed to decreases in the spot price of gold. At June 30, 1998, the fair value adjustment of the Minerals Group's forward sales contracts was ($.2) million. READINESS FOR YEAR 2000 The Company has taken actions to understand the nature and extent of work required to make its systems, products, services and infrastructure Year 2000 compliant. The Company is currently preparing its financial, information and other computer-based systems for the Year 2000, including replacing and/or updating existing systems. The Company continues to evaluate the total estimated costs associated with these efforts, which it currently estimates to be between $40-$45 million. Based on actual experience and available information, the Company believes that it will be able to manage its Year 2000 transition without any material adverse effect on its business operations, services or financial condition. However, if the applicable modifications and conversions are not made, or are not completed on a timely basis, the Year 2000 issue could have a material adverse impact on the operations of the Company. Further, management is currently evaluating the extent to which the Company's interface systems are vulnerable to its suppliers' and customers' failure to remediate their own Year 2000 issues as there is no guarantee that the systems of other companies on which the Company's systems rely will be timely and adequately converted. CAPITALIZATION The Company has three classes of common stock: Pittston Brink's Group Common Stock ("Brink's Stock"), Pittston BAX Group Common Stock ("BAX 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 ("Brink's Group"), the Pittston BAX Group ("BAX Group") and the Pittston Minerals Group ("Minerals Group"), respectively, without diminishing the benefits of remaining a single corporation or precluding future transactions affecting any of the Groups. The Brink's Group consists of the Brink's and BHS operations of the Company. The BAX Group consists of the BAX Global operations of the Company. The Minerals Group consists of the Coal Operations and Mineral Ventures operations of the Company. The Company prepares separate financial statements for the Brink's, BAX and Minerals Groups in addition to consolidated financial information of the Company. Effective May 4, 1998, the designation of Pittston Burlington Group Common Stock and the name of the Pittston Burlington Group were changed to Pittston BAX Group Common Stock and Pittston BAX Group, respectively. All rights and privileges of the holders of such Stock are otherwise unaffected by such changes. The stock continues to trade on the New York Stock Exchange under the symbol "PZX". --- 25

Under the share repurchase programs authorized by the Board of Directors (the "Board"), the Company purchased shares in the periods presented: Three Months Ended June 30 Six Months Ended June 30 (Dollars in millions) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Brink's Stock: Shares 114,100 13,000 114,100 166,000 Cost $ 4.4 0.3 4.4 4.3 BAX Stock: Shares 227,400 -- 404,932 132,100 Cost $ 3.7 -- 7.2 2.6 Convertible Preferred Stock: Shares -- -- 355 -- Cost $ -- -- 0.1 -- Excess carrying amount (a) $ -- -- 0.02 -- =================================================================================================================== (a) The excess of the carrying amount of the Series C Cumulative Convertible Preferred Stock (the "Convertible Preferred Stock") over the cash paid to holders for repurchases made during the periods. This amount is deducted from preferred dividends in the Company's Statement of Operations. The Company's remaining repurchase authority with respect to the Convertible Preferred Stock as of June 30, 1998 was $24.2 million. As of June 30, 1998, the Company had remaining authority to purchase over time 0.9 million shares of Brink's Stock; 0.7 million shares of BAX Stock; and 1.0 million shares of Minerals Stock. The remaining aggregate purchase cost limitation for all common stock was $13.4 million as of June 30, 1998. DIVIDENDS The Board intends to declare and pay dividends, if any, on Brink's Stock, BAX Stock and Minerals Stock based on the earnings, financial condition, cash flow and business requirements of the Brink's Group, BAX Group and the Minerals Group, respectively. Since the Company remains subject to Virginia law limitations on dividends, losses by one Group could affect the Company's ability to pay dividends in respect of stock relating to the other Group. Dividends on Minerals Stock are also limited by the Available Minerals Dividend Amount as defined in the Company's Articles of Incorporation. The Available Minerals Dividend Amount may be reduced by activity that reduces shareholder's equity or the fair value of net assets of the Minerals Group. Such activity includes net losses by the Minerals Group, dividends paid on the Minerals Stock and the Convertible Preferred Stock, repurchases of Minerals Stock and the Convertible Preferred Stock, and foreign currency translation losses. At June 30, 1998, the Available Minerals Dividend Amount was at least $10.1 million. During the first six months of 1998 and 1997, the Board declared and the Company paid cash dividends of 5.00 cents per share of Brink's Stock and 12.00 cents per share of BAX Stock, as well as 18.75 cents and 32.50 cents per share, respectively, of Minerals Stock. Dividends paid on the Convertible Preferred Stock in each of the first six months of 1998 and 1997 were $1.8 million. In May 1998, the Company reduced the dividend rate on Minerals Stock to 10.00 cents per year per share for shareholders as of the May 15, 1998 record date. Cash made available, if any, from this lower dividend rate will be used to either reinvest, as suitable opportunities arise, in the Minerals Group companies or to pay down debt, with a view towards maximizing long-term shareholder value. --- 26

ACCOUNTING CHANGES The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income", in the first quarter of 1998. SFAS No. 130 establishes standards for the reporting and display of comprehensive income and its components in financial statements. Comprehensive income generally represents all changes in shareholders' equity except those resulting from investments by or distributions to shareholders. Total comprehensive income, which is composed of net income attributable to common shares and foreign currency translation adjustments, for the quarters ended June 30, 1998 and 1997 was $16.3 million and $12.9 million, respectively, and for the six months ended June 30, 1998 and 1997 was $27.2 million and $27.6 million, respectively. Effective January 1, 1998, the Company implemented AICPA Statement of Position ("SOP") No. 98-1 "Accounting for the Costs of Computer Software Developed for Internal Use". SOP No. 98-1 requires that certain costs related to the development or purchase of internal-use software be capitalized and amortized over the estimated useful life of the software. PENDING ACCOUNTING CHANGES The Company will implement SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information", in the financial statements for the year ended December 31, 1998. SFAS No. 131 requires publicly-held companies to report financial and descriptive information about operating segments in financial statements issued to shareholders for interim and annual periods. The SFAS also requires additional disclosures with respect to products and services, geographic areas of operation, and major customers. The adoption of this SFAS is not expected to have a material impact on the financial statements of the Company. In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This statement is effective for The Pittston Company for the year beginning January 1, 2000, with early adoption allowed. The Company is currently evaluating the timing of adoption and the effect that implementation of the new standard will have on its results of operations and financial position. In April 1998, the AICPA issued SOP No. 98-5, "Reporting on the Costs of Start-Up Activities." SOP No. 98-5, which provides guidance on the reporting of start-up costs and organization costs, requires that such costs be expensed as incurred. This SOP is effective for The Pittston Company for the year beginning January 1, 1999, with early application encouraged. Initial application of the SOP is required to be reported as a cumulative effect of a change in accounting principle as of the beginning of the year of adoption. The Company is currently evaluating the effect that implementation of the new statement will have on its results of operations and financial position. FORWARD LOOKING INFORMATION Certain of the matters discussed herein, including statements regarding information technology and related outlay projections, projected capital spending, the impact of management's review of certain BAX Global initiatives on future operating results, expectations with regard to future realizations from metallurgical coal mine development, coal and gold sales and the readiness for Year 2000, 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 Company, include, but are not limited to, overall economic and business conditions, the demand for the Company's products and services, pricing and other competitive factors in the industry, geological conditions, new government regulations and/or legislative initiatives, variations in costs or expenses, variations in the spot prices of coal and gold, the successful integration of the ATI acquisition, the ability of counter parties to perform, changes in the scope of improvements to information systems and Year 2000 initiatives, delays or problems in the implementation of Year 2000 initiatives by the Company and/or its suppliers and customers, and delays or problems in the design and implementation of improvements to information systems. --- 27

PITTSTON BRINK'S GROUP BALANCE SHEETS (IN THOUSANDS) June 30 December 31 1998 1997 - ------------------------------------------------------------------------------------------------------------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 42,293 37,694 Short-term investments, at lower of cost or market 2,086 2,227 Accounts receivable (net of estimated amount uncollectible: 1998 - $12,793; 1997 - $9,660) 225,582 160,912 Receivable - Pittston Minerals Group -- 8,003 Inventories, at lower of cost or market 9,185 3,469 Prepaid expenses 26,460 16,672 Deferred income taxes 18,121 18,147 - ------------------------------------------------------------------------------------------------------------------- Total current assets 323,727 247,124 Property, plant and equipment, at cost (net of accumulated depreciation and amortization: 1998 - $290,158; 1997 - $276,457) 442,743 346,672 Intangibles, net of accumulated amortization 59,884 18,510 Investment in and advances to unconsolidated affiliates 19,074 28,169 Deferred pension assets 30,870 31,713 Deferred income taxes 4,141 3,612 Other assets 19,548 16,530 - ------------------------------------------------------------------------------------------------------------------- Total assets $ 899,987 692,330 =================================================================================================================== LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities: Short-term borrowings $ 19,507 9,073 Current maturities of long-term debt 30,645 7,576 Accounts payable 49,005 36,337 Accrued liabilities 186,950 125,362 Payable - Pittston Minerals Group 1,696 - - ------------------------------------------------------------------------------------------------------------------- Total current liabilities 287,803 178,348 Long-term debt, less current maturities 94,564 38,682 Postretirement benefits other than pensions 4,226 4,097 Workers' compensation and other claims 11,228 11,277 Deferred income taxes 53,039 45,324 Payable - Pittston Minerals Group 79 391 Other liabilities 7,126 8,929 Minority interests 25,832 24,802 Shareholder's equity 416,090 380,480 - ------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholder's equity $ 899,987 692,330 =================================================================================================================== See accompanying notes to financial statements. --- 28

PITTSTON BRINK'S GROUP STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (Unaudited) Three Months Ended June 30 Six Months Ended June 30 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Operating revenues $ 359,812 268,775 670,145 520,159 Costs and expenses: Operating expenses 273,523 197,741 506,955 385,649 Selling, general and administrative expenses 50,705 40,296 97,260 76,359 - ------------------------------------------------------------------------------------------------------------------- Total costs and expenses 324,228 238,037 604,215 462,008 Other operating income (expense), net 4 117 990 (504) - ------------------------------------------------------------------------------------------------------------------- Operating profit 35,588 30,855 66,920 57,647 Interest income 624 553 1,488 1,206 Interest expense (5,050) (2,664) (8,865) (4,903) Other income (expense), net 1,484 (1,447) 147 (3,105) - ------------------------------------------------------------------------------------------------------------------- Income before income taxes 32,646 27,297 59,690 50,845 Provision for income taxes 12,076 9,558 22,083 17,800 - ------------------------------------------------------------------------------------------------------------------- Net income $ 20,570 17,739 37,607 33,045 =================================================================================================================== Net income per common share: Basic $ .53 .46 .97 .86 Diluted .52 .46 .96 .85 =================================================================================================================== Cash dividends per common share $ .025 .025 .05 .05 =================================================================================================================== Weighted average common shares outstanding: Basic 38,713 38,230 38,596 38,209 Diluted 39,206 38,703 39,143 38,659 =================================================================================================================== See accompanying notes to financial statements. --- 29

PITTSTON BRINK'S GROUP STATEMENTS OF CASH FLOWS (IN THOUSANDS) (Unaudited) Six Months Ended June 30 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 37,607 33,045 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 38,693 28,218 Provision for deferred income taxes 5,683 1,184 Provision for pensions, noncurrent 1,563 790 Provision for uncollectible accounts receivable 3,133 2,124 Other operating, net 2,696 5,491 Change in operating assets and liabilities, net of effects of acquisitions and dispositions: Increase in accounts receivable (8,754) (5,852) (Increase) decrease in inventories (3,207) 391 Increase in prepaid expenses (5,734) (5,429) Decrease in accounts payable and accrued liabilities (6,290) (3,745) Increase in other assets (2,656) (2,008) (Decrease) increase in other liabilities (2,544) 672 Other, net (4,071) (453) - ------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 56,119 54,428 - ------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Additions to property, plant and equipment (65,373) (54,234) Proceeds from disposal of property, plant and equipment 1,368 1,209 Acquisitions, net of cash acquired, and related contingent payments (5,526) (53,303) Other, net (993) 6,834 - ------------------------------------------------------------------------------------------------------------------- Net cash used by investing activities (70,524) (99,494) - ------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Additions to debt 8,915 52,380 Reductions of debt (4,288) (11,878) Payments from Minerals Group 16,700 15,083 Proceeds from exercise of stock options 4,566 1,613 Dividends paid (1,807) (1,828) Repurchase of common stock (5,082) (4,347) - ------------------------------------------------------------------------------------------------------------------- Net cash provided by financing activities 19,004 51,023 - ------------------------------------------------------------------------------------------------------------------- Net increase in cash and cash equivalents 4,599 5,957 Cash and cash equivalents at beginning of period 37,694 20,012 - ------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 42,293 25,969 =================================================================================================================== See accompanying notes to financial statements. --- 30

PITTSTON BRINK'S GROUP NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (Unaudited) (1) The financial statements of the Pittston Brink's Group (the "Brink's Group") include the balance sheets, results of operations and cash flows of the Brink's, Incorporated ("Brink's") and Brink's Home Security, Inc. ("BHS") operations of The Pittston Company (the "Company"), and a portion of the Company's corporate assets and liabilities and related transactions which are not separately identified with operations of a specific segment. The Brink's Group's financial statements are prepared using the amounts included in the Company's consolidated financial statements. Corporate amounts reflected in these financial statements are determined based upon methods which management believes to be a reasonable and an equitable estimate of the cost attributable to the Brink's Group. The Company provides holders of Pittston Brink's Group Common Stock ("Brink's Stock") separate financial statements, financial reviews, descriptions of business and other relevant information for the Brink's Group, in addition to consolidated financial information of the Company. Holders of Brink's Stock are shareholders of the Company, which is responsible for all liabilities. Therefore, financial developments affecting the Brink's Group, the Pittston BAX Group (the "BAX Group" formerly the Pittston Burlington Group) or the Pittston Minerals Group (the "Minerals Group") that affect the Company's financial condition could affect the results of operations and financial condition of each of the Groups. Accordingly, the Company's consolidated financial statements must be read in connection with the Brink's Group's financial statements. (2) The following is a reconciliation between the calculation of basic and diluted net income per share: Three Months Ended June 30 Six Months Ended June 30 Brink's Group 1998 1997 1998 1997 - ----------------------------------------------------------------------------------------- Numerator: Net income - Basic and diluted net income per share numerator $ 20,570 17,739 37,607 33,045 Denominator: Basic weighted average common shares outstanding 38,713 38,230 38,596 38,209 Effect of dilutive securities: Employee stock options 493 473 547 450 - ----------------------------------------------------------------------------------------- Diluted weighted average common shares outstanding 39,206 38,703 39,143 38,659 ========================================================================================= Options to purchase 25 shares of Brink's Stock at prices between $39.42 and $39.56 per share were outstanding for both the three and six months ended June 30, 1998, but were not included in the computation of diluted net income per share because the options' exercise price was greater than the average market price of the common shares and, therefore, the effect would be antidilutive. Options to purchase 391 shares of Brink's Stock at $31.56 per share and options to purchase 400 shares of Brink's Stock at prices between $29.50 and $31.56 were outstanding for the three and six months ended June 30, 1997, respectively, but were not included in the computation of diluted net income per share because the options' exercise price was greater than the average market price of the common shares and, therefore, the effect would be antidilutive. (3) As of January 1, 1992, BHS elected to capitalize categories of costs not previously capitalized for home security installations. The additional costs not previously capitalized consisted of costs for installation labor and related benefits for supervisory, installation scheduling, equipment testing and --- 31

other support personnel and costs incurred in maintaining facilities and vehicles dedicated to the installation process. The effect of this change in accounting principle was to increase operating profit for the Brink's Group and the BHS segment for the three and six months ended June 30, 1998 by $1,495 and $2,911, respectively, and by $1,190 and $2,368, respectively, for the same periods of 1997. The effect of this change increased diluted net income per common share of the Brink's Group by $.02 and $.05 in the three and six month periods ended June 30, 1998, respectively, and by $.02 and $.04, respectively, in the comparable periods of 1997. (4) Depreciation and amortization of property, plant and equipment totaled $20,850 and $37,791 in the second quarter and six month periods of 1998, respectively, compared to $13,411 and $26,308 in the second quarter and six month periods of 1997, respectively. (5) Cash payments made for interest and income taxes, net of refunds received, were as follows: Three Months Ended June 30 Six Months Ended June 30 1998 1997 1998 1997 - ----------------------------------------------------------------------------------------- Interest $ 4,985 2,715 8,463 4,931 ========================================================================================= Income taxes $ 23,756 16,935 25,035 20,585 ========================================================================================= During the first quarter of 1998, Brink's recorded the following noncash items in connection with the acquisition of substantially all of the remaining shares of its affiliate in France: the seller financing of the equivalent of US $27,500 and the assumption of borrowings of approximately US $19,000 and capital leases of approximately US $30,000. See further discussion below. (6) In the first quarter of 1998, the Brink's Group purchased 62% (representing nearly all the remaining shares) of its Brink's affiliate in France ("Brink's S.A.") for payments aggregating US $39,000 over three years. The acquisition was funded through an initial payment made at closing of $8,789 and a note to the seller for a principal amount of approximately the equivalent of US $27,500 payable in annual installments plus interest through 2001. The acquisition has been accounted for as a purchase and accordingly, the purchase price is being allocated to the underlying assets and liabilities based on their estimated fair value at date of acquisition. Based on a preliminary evaluation which is subject to additional review, the estimated fair value of the additional assets recorded, including goodwill, approximated US $161,800 and included $9,200 in cash. Estimated liabilities assumed of US $125,700 included previously existing debt of approximately US $49,000, which includes borrowings of US $19,000 and capital leases of US $30,000. The excess of the purchase price over the fair value of assets acquired and liabilities assumed is being amortized over 40 years. Brink's S.A. had annual 1997 revenues approximating the equivalent of US $220,000. (7) Under the share repurchase programs authorized by the Board of Directors, the Company purchased shares in the periods presented as follows: Three Months Ended June 30 Six Months Ended June 30 (Dollars in millions) 1998 1997 1998 1997 ---------------------------------------------------------------------------------------------------------- Brink's Stock: Shares 114,100 13,000 114,100 166,000 Cost $ 4.4 0.3 4.4 4.3 Convertible Preferred Stock: Shares -- -- 355 -- Cost $ -- -- 0.1 -- Excess carrying amount (a) $ -- -- 0.02 -- ---------------------------------------------------------------------------------------------------------- (a) The excess of the carrying amount of the Series C Cumulative Convertible Preferred Stock (the "Convertible Preferred Stock") over the cash paid to holders for repurchases made during the periods. This amount is deducted from preferred dividends in the Company's Statement of Operations. --- 32

At June 30, 1998, the Company had the remaining authority to purchase over time 942 shares of Brink's Stock and an additional $24,236 of its Convertible Preferred Stock. The remaining aggregate purchase cost limitation for all common stock was $13,351 at June 30, 1998. (8) The Brink's Group adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," in the first quarter of 1998. SFAS No. 130 established standards for the reporting and display of comprehensive income and its components in financial statements. Comprehensive income generally represents all changes in shareholders' equity except those resulting from investments by or distributions to shareholders. Total comprehensive income, which is composed of net income and foreign currency translation adjustments, for the three months ended June 30, 1998 and 1997 was $18,539 and $17,854, respectively. Total comprehensive income for the six months ended June 30, 1998 and 1997 was $33,801 and $29,056, respectively. Effective January 1, 1998, the Brink's Group implemented AICPA Statement of Position ("SOP") No. 98-1 "Accounting for the Costs of Computer Software Developed for Internal Use". SOP No. 98-1 requires that certain costs related to the development or purchase of internal-use software be capitalized and amortized over the estimated useful life of the software. (9) The Brink's Group will adopt a new accounting standard, SFAS No. 131, "Disclosures and Segments of an Enterprise and Related Information," in the financial statements for the year ended December 31, 1998. SFAS No. 131 requires publicly-held companies to report financial and descriptive information about operating segments in financial statements issued to shareholders for interim and annual periods. SFAS No. 131 also requires additional disclosures with respect to products and services, geographic areas of operation, and major customers. The adoption of this SFAS is not expected to have a material impact on the financial statements of the Brink's Group. In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This statement is effective for the Brink's Group for the year beginning January 1, 2000, with early adoption allowed. The Brink's Group is currently evaluating the timing of adoption and the effect that implementation of the new standard will have on its results of operations and financial position. In April 1998, the AICPA issued SOP No. 98-5, "Reporting on the Costs of Start-Up Activities." SOP No. 98-5, which provides guidance on the reporting of start-up costs and organization costs, requires that such costs be expensed as incurred. This SOP is effective for the Brink's Group for the year beginning January 1, 1999, with early application encouraged. Initial application of the SOP is required to be reported as a cumulative effect of a change in accounting principle as of the beginning of the year of adoption. The Brink's Group is currently evaluating the effect that implementation of the new statement will have on its results of operations and financial position. (10) Certain prior period amounts have been reclassified to conform to the current period's financial statement presentation. (11) In the opinion of management, all adjustments have been made which are necessary for a fair presentation of results of operations and financial condition for the periods reported herein. All such adjustments are of a normal recurring nature. --- 33

PITTSTON BRINK'S GROUP MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The financial statements of the Pittston Brink's Group (the "Brink's Group") include the balance sheets, results of operations and cash flows of the Brink's, Incorporated ("Brink's") and Brink's Home Security, Inc. ("BHS") operations of The Pittston Company (the "Company"), and a portion of the Company's corporate assets and liabilities and related transactions which are not separately identified with operations of a specific segment. The Brink's Group's financial statements are prepared using the amounts included in the Company's consolidated financial statements. Corporate amounts reflected in these financial statements are determined based upon methods which management believes to be a reasonable and an equitable estimate of the cost attributable to the Brink's Group. The Company provides holders of Pittston Brink's Group Common Stock ("Brink's Stock") separate financial statements, financial reviews, descriptions of business and other relevant information for the Brink's Group, in addition to consolidated financial information of the Company. Holders of Brink's Stock are shareholders of the Company, which is responsible for all liabilities. Therefore, financial developments affecting the Brink's Group, the Pittston BAX Group (the "BAX Group", formerly the Pittston Burlington Group) or the Pittston Minerals Group (the "Minerals Group") that affect the Company's financial condition could affect the results of operations and financial condition of each of the Groups. Accordingly, the Company's consolidated financial statements must be read in connection with the Brink's Group's financial statements. The following discussion is a summary of the key factors management considers necessary in reviewing the Brink's Group's results of operations, liquidity and capital resources. This discussion must be read in conjunction with the financial statements and related notes of the Brink's Group and the Company. RESULTS OF OPERATIONS Three Months Ended June 30 Six Months Ended June 30 (In thousands) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Operating revenues: Brink's $ 309,751 224,550 571,674 433,749 BHS 50,061 44,225 98,471 86,410 - ------------------------------------------------------------------------------------------------------------------- Total operating revenues $ 359,812 268,775 670,145 520,159 =================================================================================================================== Operating profit: Brink's $ 24,047 19,143 45,966 34,944 BHS 13,895 13,273 27,397 26,052 - ------------------------------------------------------------------------------------------------------------------- Segment operating profit 37,942 32,416 73,363 60,996 General corporate expense (2,354) (1,561) (6,443) (3,349) - ------------------------------------------------------------------------------------------------------------------- Total operating profit $ 35,588 30,855 66,920 57,647 =================================================================================================================== --- 34

The Brink's Group net income totaled $20.6 million ($0.52 per share) in the second quarter of 1998 compared with $17.7 million ($0.46 per share) in the second quarter of 1997. Operating profit for the 1998 second quarter increased to $35.6 million from $30.9 million in the second quarter of 1997. Both Brink's and BHS contributed to the increases in net income and operating profit for the 1998 second quarter compared with the same period of 1997. Revenues for the 1998 second quarter increased $91.0 million or 34% compared with the 1997 second quarter, of which $85.2 million was from Brink's and $5.8 million was from BHS. Total costs and expenses for the 1998 second quarter increased $86.2 million or 36% compared with the same period last year, of which $80.2 million was from Brink's and $5.2 million was from BHS. Net interest expense during the second quarter of 1998 increased $2.3 million due largely to higher average borrowings related to the acquisition of nearly all the remaining shares of Brink's affiliate in France (discussed in more detail below), as well as higher average interest rates largely attributable to foreign borrowings. In the first six months of 1998, net income totaled $37.6 million ($0.96 per share) compared with $33.0 million ($0.85 per share) in the first six months of 1997. Operating profit for the first six months of 1998 increased to $66.9 million from $57.6 million in the same period of 1997. Both Brink's and BHS contributed to the increases in net income and operating profit for the first six months of 1998 compared with the same period of 1997. Revenues for the first six months of 1998 increased $150.0 million or 29% compared with the first six months of 1997, of which $137.9 million was from Brink's and $12.1 million was from BHS. Total costs and expenses for the first six months of 1998 increased $142.2 million or 31% compared with the same period last year, of which $128.4 million was from Brink's and $10.7 million was from BHS. Net interest expense increased $3.7 million during the first six months of 1998 as compared to 1997 due largely to higher average borrowings related to the acquisitions of Brink's affiliates in Venezuela and France in early 1997 and 1998, respectively, as well as higher average interest rates attributable to these borrowings. BRINK'S The following is a table of selected financial data for Brink's on a comparative basis: Three Months Ended June 30 Six Months Ended June 30 (In thousands) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Operating revenues: North America (United States & Canada) $ 135,687 117,616 265,054 228,388 Latin America 76,348 66,163 152,840 125,859 Europe 90,909 33,727 140,722 66,355 Asia/Pacific 6,807 7,044 13,058 13,147 - ------------------------------------------------------------------------------------------------------------------- Total operating revenues 309,751 224,550 571,674 433,749 Operating expenses 247,899 175,441 457,285 342,497 Selling, general and administrative expenses 37,809 30,083 69,413 55,804 - ------------------------------------------------------------------------------------------------------------------- Total costs and expenses 285,708 205,524 526,698 398,301 Other operating income (expense), net 4 117 990 (504) - ------------------------------------------------------------------------------------------------------------------- Operating profit: North America (United States & Canada) 11,865 9,657 21,932 17,411 Latin America 5,354 7,445 16,031 14,882 Europe 6,388 1,291 7,213 1,667 Asia/Pacific 440 750 790 984 - ------------------------------------------------------------------------------------------------------------------- Total operating profit $ 24,047 19,143 45,966 34,944 =================================================================================================================== Depreciation and amortization $ 12,255 6,811 20,674 14,358 =================================================================================================================== Cash capital expenditures $ 14,407 10,291 27,710 20,105 =================================================================================================================== --- 35

Brink's consolidated revenues totaled $309.8 million in the second quarter of 1998 compared with $224.6 million in the second quarter of 1997. The revenue increase of $85.2 million (38%) was offset, in part, by increases in total costs and expenses of $80.2 million. Brink's operating profit of $24.0 million in the second quarter of 1998 represented a $4.9 million (26%) increase over the $19.1 million operating profit reported in the prior year quarter. The increases in revenue and operating profit were largely attributable to operations in both North America and Europe. Revenues from North American operations (United States and Canada) increased $18.1 million (15%) to $135.7 million in the 1998 second quarter from $117.6 million in the prior year quarter. North American operating profit increased $2.2 million (23%) to $11.9 million in the current year quarter. The revenue and operating profit increases for 1998 primarily resulted from improved results across most product lines, particularly armored car operations, which include ATM services. In Latin America, revenues increased 15% to $76.3 million, while operating profits decreased from $7.4 million in the second quarter of 1997 to $5.4 million in the second quarter of 1998. While both revenues and operating profits reflected strong results in Venezuela, these improved results were more than offset by expenses associated with start-up operations in Argentina and by equity losses from Brink's 20% owned affiliate in Mexico. Revenues and operating profit from European operations amounted to $90.9 million and $6.4 million, respectively, in the second quarter of 1998. These amounts represented increases of $57.2 million and $5.1 million from the comparable quarter of 1997. The increase in revenues was due to the acquisition of nearly all of the remaining shares of Brink's affiliate in France in the first quarter of 1998 (discussed in more detail below). The increase in operating profits reflects improved results from operations in France, as well as the increased ownership. Revenues and operating profit from Asia/Pacific operations in the second quarter of 1998 were $6.8 million and $0.4 million, respectively. Revenues were essentially unchanged over the comparable 1997 period and operating profit decreased $0.3 million. Brink's consolidated revenues totaled $571.7 million in the first six months of 1998 compared with $433.7 million in the first six months of 1997. The revenue increase of $137.9 million (32%) in the first half of 1998 was offset, in part, by an increase in total costs and expenses of $128.4 million. Brink's operating profit of $46.0 million in the first six months of 1998 represented a 32% increase over the $34.9 million operating profit reported in the prior year period. Revenues from North American operations increased $36.7 million (16%) to $265.1 million in the first six months of 1998 from $228.4 million in the same period of 1997. North American operating profit increased $4.5 million (26%) to $21.9 million in the current year period from $17.4 million in the same period of 1997. The revenues and operating profit improvement for the six months of 1998 primarily resulted from improved armored car operations, which include ATM services. In Latin America, revenues and operating profits increased 21% to $152.8 million and 8% to $16.0 million, respectively, from the first six months of 1997 to the comparable 1998 period. The increase in revenues and operating profits includes the impact of a full six months of consolidated results from the acquired operation in Venezuela, while the 1997 period included only five months of consolidated results. In addition, strong results in Venezuela and in Colombia were offset, in part, by costs associated with start-up operations in Argentina and equity losses from Brink's affiliate in Mexico. Revenues and operating profit from European operations amounted to $140.7 million and $7.2 million, respectively, in the first six months of 1998. These amounts represented increases of $74.4 million and $5.5 million from the comparable period of 1997. The increase in revenue was due to the acquisition of nearly all the remaining shares of the Brink's affiliate in France in the first quarter of 1998. The increase in operating profits reflects improved results from operations in France, as well as the increased ownership. This improvement was partially offset by lower results in Belgium caused by industry-wide labor unrest in the armored car industry in that country which was resolved in the first quarter of 1998. --- 36

Revenues and operating profit from Asia/Pacific operations in the first six months of 1998 were $13.1 million and $0.8 million, respectively, compared to $13.1 million and $1.0 million, respectively, in the first six months of 1997. Brink's continued its international strategy of gaining control of affiliated operations or exiting certain markets. During the second quarter, Brink's increased its ownership to 100% from 50% in its German affiliate, increased its majority ownership in its Colombian affiliate by 7.5% to 58% and divested its 24.5% interest in its Italian affiliate. BHS The following is a table of selected financial data for BHS on a comparative basis: Three Months Ended June 30 Six Months Ended June 30 (Dollars in thousands) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Operating revenues $ 50,061 44,225 98,471 86,410 Operating expenses 25,624 22,300 49,670 43,152 Selling, general and administrative expenses 10,542 8,652 21,404 17,206 - ------------------------------------------------------------------------------------------------------------------- Total costs and expenses 36,166 30,952 71,074 60,358 Operating profit: Monitoring and service 18,152 15,944 35,334 30,534 Net marketing, sales and installation (4,257) (2,671) (7,937) (4,482) - ------------------------------------------------------------------------------------------------------------------- Total operating profit $ 13,895 13,273 27,397 26,052 =================================================================================================================== Depreciation and amortization $ 9,103 7,116 17,905 13,782 =================================================================================================================== Cash capital expenditures $ 19,043 17,559 37,502 34,079 =================================================================================================================== Monthly recurring revenues (a) $ 13,976 11,834 =================================================================================================================== Number of subscribers: Beginning of period 528,607 464,007 511,532 446,505 Installations 28,557 26,798 55,307 52,388 Disconnects (9,506) (8,740) (19,181) (16,828) - ------------------------------------------------------------------------------------------------------------------- End of period 547,658 482,065 547,658 482,065 =================================================================================================================== (a) Monthly 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. Annualized recurring revenues as of June 30, 1998 and 1997 were $167,715 and $142,005, respectively. Revenues for BHS increased by 13% to $50.1 million in the second quarter of 1998 from $44.2 million in the 1997 quarter. In the first six months of 1998, revenues for BHS increased by $12.1 million (14%) to $98.5 million from $86.4 million in the first six months of 1997. The increase in revenues was due to higher ongoing monitoring and service revenues, reflecting a 14% increase in the subscriber base as well as higher average monitoring fees. As a result of such growth, monthly recurring revenues at June 30, 1998 grew 18% over the amount in effect at the end of June 30, 1997. Installation revenue for the second quarter and first six months of 1998 decreased 4% and 5%, respectively, over the same 1997 periods. While the number of new security system installations increased, the revenue per installation decreased in both the three and six month periods ended June 30, 1998, as compared to the 1997 periods, in response to continuing aggressive installation marketing and pricing by competitors. --- 37

Operating profit of $13.9 million in the second quarter of 1998 represented an increase of $0.6 million (5%) compared to the $13.3 million earned in the 1997 second quarter. In the first six months of 1998, operating profit increased $1.3 million (5%) to $27.4 million from $26.1 million earned in the first six months of 1997. Operating profit generated from monitoring and service activities increased $2.2 million (14%) and $4.8 million (16%) for the quarter and six months ended June 30, 1998, respectively. Operating profit during both of those periods was favorably impacted by the growth in the subscriber base combined with the higher average monitoring fees. Cash margins per subscriber resulting from this portion of the business increased from the same respective periods of 1997. Operating losses from marketing, sales and installation activities increased $1.6 million and $3.5 million during the second quarter and first six months of 1998, respectively, as compared to the same periods of 1997. This increase in both the quarter and year-to-date periods is due to higher levels of sales and marketing costs incurred and expensed combined with lower levels of installation revenue. Both of these factors are a consequence of the continuing competitive environment in the residential security market. As of January 1, 1992, BHS elected to capitalize categories of costs not previously capitalized for home security installations. The additional costs not previously capitalized consisted of costs for installation labor and related benefits for supervisory, installation scheduling, equipment testing and other support personnel and costs incurred in maintaining facilities and vehicles dedicated to the installation process. The effect of this change in accounting principle was to increase operating profit for the Brink's Group and the BHS segment for the three and six months ended June 30, 1998 by $1.5 million and $2.9 million, respectively, and by $1.2 million and $2.4 million, respectively, for the same periods of 1997. The effect of this change increased diluted net income per common share of the Brink's Group by $.02 and $.05 in the three and six month periods ended June 30, 1998, respectively, and by $.02 and $.04 in the comparable periods of 1997, respectively. FOREIGN OPERATIONS A portion of the Brink's Group's financial results is derived from activities in foreign countries, each with a local currency other than the U.S. dollar. Because the financial results of the Brink's Group are reported in U.S. dollars, they are affected by the changes in the value of the various foreign currencies in relation to the U.S. dollar. The Brink's Group's international activity is not concentrated in any single currency, which mitigates the risks of foreign currency rate fluctuations. In addition, these rate fluctuations may adversely affect transactions which are denominated in currencies other than the functional currency. The Brink's Group routinely enters into such transactions in the normal course of its business. Although the diversity of its foreign operations limits the risks associated with such transactions, the Company, on behalf of the Brink's Group, from time to time, uses foreign currency forward contracts to hedge the risks associated with such transactions. Realized and unrealized gains and losses on these contracts are deferred and recognized as part of the specific transaction hedged. In addition, translation adjustments relating to operations in countries with highly inflationary economies are included in net income, along with all transaction gains or losses for the period. A subsidiary in Venezuela and an affiliate in Mexico operate in such highly inflationary economies. Prior to January 1, 1998, the economy in Brazil, in which the Brink's Group has a subsidiary, was considered highly inflationary. The Brink's Group is also subject to other risks customarily associated with doing business in foreign countries, including labor and economic conditions, controls on repatriation of earnings and capital, nationalization, political instability, expropriation and other forms of restrictive action by local governments. The future effects, if any, of such risks on the Brink's Group cannot be predicted. CORPORATE EXPENSES A portion of the Company's corporate general and administrative expenses and other shared services has been allocated to the Brink's Group based on utilization and other methods and criteria which management believes to be an equitable and a reasonable estimate of the costs attributable to the Brink's Group. These attributions were $2.4 million and $1.6 million for the second quarter of 1998 and 1997, respectively and $6.4 million and $3.3 million for the first six months of 1998 and 1997, respectively. The increase in the second quarter of 1998 is primarily due to costs associated with a severance agreement with a former member of the Company's senior management. The first six months of 1998 also includes additional expenses of approximately $5.8 million related to a retirement agreement between the Company and its former Chairman and CEO. Approximately $2.0 million of this $5.8 million of expenses have been attributed to the Brink's Group. --- 38

OTHER OPERATING INCOME AND EXPENSE, NET Other operating income and expense, net consists primarily of net equity earnings of Brink's foreign affiliates. These net equity earnings amounted to expense of $0.1 million and $0 for the second quarters of 1998 and 1997, respectively, and income of $0.8 million and expense of $0.7 million in the first six months of 1998 and 1997, respectively. Due to the acquisition of the remaining shares of Brink's affiliate in France (discussed in more detail below), second quarter 1998 equity earnings do not include the results of this now consolidated subsidiary, which contributed a substantial portion of equity losses in the comparable 1997 quarter. The favorable impact of this change was mostly offset by equity losses of Brink's 20% owned affiliate in Mexico (versus equity earnings in the prior year). The increase in equity earnings for the first six months of 1998 as compared to the corresponding 1997 period was also impacted by the acquisition in France, along with improvements in that affiliates' operating results. Again, this favorable impact was largely offset by equity losses of Brink's affiliate in Mexico (versus equity earnings in the prior year). NET INTEREST EXPENSE Net interest expense increased $2.3 million and $3.7 million during the three and six month periods ended June 30, 1998, respectively. These increases are predominantly due to higher average borrowings related to acquisitions, as well as higher average interest rates largely attributed to foreign borrowings. OTHER INCOME/EXPENSE, NET Other income/expense, net which generally includes foreign translation gains and losses and minority interest earnings or losses of Brink's subsidiaries, increased for the second quarter and six month periods of 1998 by $2.9 million and $3.3 million, respectively. The 1998 periods reflect higher foreign translation gains, lower minority ownership expense and higher gains on sale of assets. INCOME TAXES The effective tax rate in the second quarter and first six months of 1998 was 37%. This is an increase from the comparable periods in 1997 which had an effective tax rate of 35%. The 1997 rate was lower due to lower taxes on foreign income. FINANCIAL CONDITION A portion of the Company's corporate assets and liabilities has been attributed to the Brink's Group based upon utilization of the shared services from which assets and liabilities are generated. Management believes this attribution to be an equitable and a reasonable estimate of the cost attributable to the Brink's Group. CASH FLOW REQUIREMENTS Cash provided by operating activities amounted to $56.1 million in the first six months of 1998, which is $1.7 million higher than the 1997 level of $54.4 million. Significant sources of cash flow primarily include net income and noncash charges offset by funds used to finance working capital. Cash generated from operating activities was not sufficient to fund investing activities, primarily capital expenditures. However, additional borrowings and repayments from the Minerals Group resulted in an increase of $4.6 million in cash and cash equivalents in the first six months of 1998. In the first quarter of 1998, Brink's purchased 62% (representing nearly all the remaining shares) of its French affiliate ("Brink's S.A.") for payments aggregating US $39 million over three years. The acquisition was funded through an initial payment made at closing of $8.8 million and a note to the seller for a principal amount of US $27.5 million payable in annual installments plus interest through 2001. In addition, borrowings of approximately US $19,000 and capital leases of approximately US $30,000 were assumed. CAPITAL EXPENDITURES Cash capital expenditures for the six months of 1998 totaled $65.4 million, of which $37.5 million was spent by BHS and $27.7 million was spent by Brink's. Cash capital expenditures totaled $54.2 million in the first six months of 1997. Expenditures incurred by BHS in 1998 were primarily for customer installations, representing the expansion in the subscriber base, while expenditures incurred by Brink's were primarily for expansion, replacement or maintenance of ongoing business operations. For the remainder of 1998, cash capital expenditures are expected to range between $75 million and $80 million. --- 39

FINANCING The Brink's Group intends to fund cash capital expenditures through cash flow from operating activities or through operating leases if the latter are financially attractive. Shortfalls, if any, will be financed through the Company's revolving credit agreements or other borrowing arrangements or repayments from the Minerals Group. Total outstanding debt at June 30, 1998 was $144.7 million, $89.4 million higher than the $55.3 million reported at December 31, 1997. The increase in debt is primarily attributable to debt associated with the acquisition of Brink's affiliate in France as previously discussed. The Company has a $350.0 million credit agreement with a syndicate of banks (the "Facility"). The Facility includes a $100.0 million term loan and permits additional borrowings, repayments and reborrowings of up to an aggregate of $250.0 million. As of June 30, 1998 and December 31, 1997, borrowings of $100.0 million were outstanding under the term loan portion of the Facility and $101.8 million and $25.9 million, respectively, of additional borrowings were outstanding under the remainder of the Facility. No portion of the total amount outstanding under the Facility at June 30, 1998 or December 31, 1997, was attributable to the Brink's Group. RELATED PARTY TRANSACTIONS At June 30, 1998, under an interest bearing borrowing arrangement, the Minerals Group owed the Brink's Group $10.3 million, a decrease of $16.7 million from the $27.0 million owed at December 31, 1997. At June 30, 1998, the Brink's Group owed the Minerals Group $12.1 million compared to the $19.4 million owed at December 31, 1997 for tax payments representing the Minerals Group's tax benefits utilized by the Brink's Group in accordance with the Company's tax sharing policy. Of the total tax benefits owed to the Minerals Group at June 30, 1998, $12.0 million is expected to be paid within one year. READINESS FOR YEAR 2000 The Brink's Group has taken actions to understand the nature and extent of work required to make its systems, services and infrastructure Year 2000 compliant. The Brink's Group is currently preparing its financial, information and other computer-based systems for the Year 2000, including replacing and/or updating existing systems. As these efforts progress, the Brink's Group continues to evaluate the associated costs. Based upon its most recent estimates and its anticipated capital spending, the Brink's Group does not anticipate that it will incur any material costs in preparing for the Year 2000. The Brink's Group believes, based on available information, that it will be able to manage its Year 2000 transition without material adverse effect on its business operations, services or financial condition. However, if the applicable modifications and conversions are not made, or are not completed on a timely basis, the Year 2000 issue could have a material adverse impact on the operations of the Brink's Group. Further, management is currently evaluating the extent to which the Brink's Group's interface systems are vulnerable to its suppliers' and customers' failure to remediate their own Year 2000 issues as there is no guarantee that the systems of other companies on which the Brink's Group's systems rely will be timely and adequately converted. CAPITALIZATION The Company has three classes of common stock: Brink's Stock, Pittston BAX Group Common Stock ("BAX Stock") and Pittston Minerals Group Common Stock ("Minerals Stock") which were designed to provide shareholders with separate securities reflecting the performance of the Brink's Group, BAX Group and Minerals Group, respectively, without diminishing the benefits of remaining a single corporation or precluding future transactions affecting any of the Groups. The Brink's Group consists of the Brink's and BHS operations of the Company. The BAX Group consists of the BAX Global Inc. ("BAX Global") operations of the Company. The Minerals Group consists of the Pittston Coal Company ("Coal Operations") and Pittston Mineral Ventures ("Mineral Ventures") operations of the Company. The Company prepares separate financial statements for the Brink's, BAX and Minerals Groups, in addition to consolidated financial information of the Company. Effective May 4, 1998, the designation of Pittston Burlington Group Common Stock and the name of the Pittston Burlington Group were changed to Pittston BAX Group Common Stock and Pittston BAX Group, respectively. All rights and privileges of the holders of such Stock are otherwise unaffected by such changes. The stock continues to trade on the New York Stock Exchange under the symbol "PZX". --- 40

Under the share repurchase programs authorized by the Board of Directors (the "Board"), the Company purchased the following shares in the periods presented: Three Months Ended June 30 Six Months Ended June 30 (Dollars in millions) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Brink's Stock: Shares 114,100 13,000 114,100 166,000 Cost $ 4.4 0.3 4.4 4.3 Convertible Preferred Stock: Shares -- -- 355 -- Cost $ -- -- 0.1 -- Excess carrying amount (a) $ -- -- 0.02 -- =================================================================================================================== (a) The excess of the carrying amount of the Series C Cumulative Convertible Preferred Stock (the "Convertible Preferred Stock") over the cash paid to holders for repurchases made during the periods. This amount is deducted from preferred dividends in the Company's Statement of Operations. The Company's remaining repurchase authority with respect to the Convertible Preferred Stock as of June 30, 1998 was $24.2 million. As of June 30, 1998, the Company had remaining authority to purchase over time 0.9 million shares of Brink's Stock. The remaining aggregate purchase cost limitation for all common stock was $13.4 million as of June 30, 1998. DIVIDENDS The Board intends to declare and pay dividends, if any, on Brink's Stock based on the earnings, financial condition, cash flow and business requirements of the Brink's Group. Since the Company remains subject to Virginia law limitations on dividends, losses by the Minerals Group or the BAX Group could affect the Company's ability to pay dividends in respect of stock relating to the Brink's Group. During the first six months of 1998 and 1997, the Board declared and the Company paid cash dividends of 5.00 cents per share of Brink's Stock. Dividends paid on the Convertible Preferred Stock in each of the first six month periods of 1998 and 1997 were $1.8 million. ACCOUNTING CHANGES The Brink's Group adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income", in the first quarter of 1998. SFAS No. 130 establishes standards for the reporting and display of comprehensive income and its components in financial statements. Comprehensive income generally represents all changes in shareholders' equity except those resulting from investments by or distributions to shareholders. Total comprehensive income, which is composed of net income and foreign currency translation adjustments, for the three months ended June 30, 1998 and 1997 was $18.5 million and $17.9 million, respectively, and for the six months ended June 30, 1998 and 1997 was $33.8 million and $29.1 million, respectively. Effective January 1, 1998, the Brink's Group implemented AICPA Statement of Position ("SOP") No. 98-1 "Accounting for the Costs of Computer Software Developed for Internal Use". SOP No. 98-1 requires that certain costs related to the development or purchase of internal-use software be capitalized and amortized over the estimated useful life of the software. PENDING ACCOUNTING CHANGES The Brink's Group will implement SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information", in the financial statements for the year ended December 31, 1998. SFAS No. 131 requires publicly-held companies to report financial and descriptive information about operating segments in financial statements issued to shareholders for interim and annual periods. The SFAS also requires additional disclosures with respect to products and services, geographic areas of operation, and major customers. The adoption of this SFAS is not expected to have a material impact on the financial statements of the Brink's Group. --- 41

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This statement is effective for the Brink's Group for the year beginning January 1, 2000, with early adoption allowed. The Brink's Group is currently evaluating the timing of adoption and the effect that implementation of the new standard will have on its results of operations and financial position. In April 1998, the AICPA issued SOP No. 98-5, "Reporting on the Costs of Start-Up Activities." SOP No. 98-5, which provides guidance on the reporting of start-up costs and organization costs, requires that such costs be expensed as incurred. This SOP is effective for the Brink's Group for the year beginning January 1, 1999, with early application encouraged. Initial application of the SOP is required to be reported as a cumulative effect of a change in accounting principle as of the beginning of the year of adoption. The Brink's Group is currently evaluating the effect that implementation of the new statement will have on its results of operations and financial position. FORWARD LOOKING INFORMATION Certain of the matters discussed herein, including statements regarding the readiness for Year 2000, and projected capital spending, 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 Brink's Group and the Company, include, but are not limited to, overall economic and business conditions, the demand for the Brink's Group's services, pricing and other competitive factors in the industry, new government regulations and/or legislative initiatives, variations in costs or expenses, changes in the scope of Year 2000 initiatives, and delays or problems in the implementation of Year 2000 initiatives by the Brink's Group and/or its suppliers and customers. --- 42

PITTSTON BAX GROUP BALANCE SHEETS (IN THOUSANDS) June 30 December 31 1998 1997 - ------------------------------------------------------------------------------------------------------------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 24,406 28,790 Accounts receivable (net of estimated amount uncollectible: 1998 - $10,941; 1997 -$10,110) 294,430 306,806 Inventories, at lower of cost or market 3,080 1,359 Prepaid expenses 11,666 11,050 Deferred income taxes 6,982 7,159 - ------------------------------------------------------------------------------------------------------------------- Total current assets 340,564 355,164 Property, plant and equipment, at cost (net of accumulated depreciation and amortization: 1998 - $87,405; 1997 - $78,815) 200,064 128,632 Intangibles, net of accumulated amortization 177,995 174,791 Deferred pension assets 6,162 7,600 Deferred income taxes 20,075 19,814 Other assets 15,269 15,442 - ------------------------------------------------------------------------------------------------------------------- Total assets $ 760,129 701,443 =================================================================================================================== LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities: Short-term borrowings $ 43,552 31,071 Current maturities of long-term debt 3,081 3,176 Accounts payable 180,475 194,489 Payable - Pittston Minerals Group 9,000 4,966 Accrued liabilities 83,877 78,363 - ------------------------------------------------------------------------------------------------------------------- Total current liabilities 319,985 312,065 Long-term debt, less current maturities 99,290 37,016 Postretirement benefits other than pensions 3,741 3,518 Deferred income taxes 2,027 1,447 Payable - Pittston Minerals Group 12,579 13,239 Other liabilities 6,234 10,448 Shareholder's equity 316,273 323,710 - ------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholder's equity $ 760,129 701,443 =================================================================================================================== See accompanying notes to financial statements. --- 43

PITTSTON BAX GROUP STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (Unaudited) Three Months Ended June 30 Six Months Ended June 30 1998 1997 1998 1997 - -------------------------------------------------------------------------------------------------------------------- Operating revenues $ 432,884 399,567 835,317 770,976 Costs and expenses: Operating expenses 385,157 355,693 747,496 686,604 Selling, general and administrative expenses 44,263 46,852 87,877 79,023 - -------------------------------------------------------------------------------------------------------------------- Total costs and expenses 429,420 402,545 835,373 765,627 - -------------------------------------------------------------------------------------------------------------------- Other operating income, net 474 859 341 1,508 - -------------------------------------------------------------------------------------------------------------------- Operating profit (loss) 3,938 (2,119) 285 6,857 Interest income 224 145 483 475 Interest expense (2,122) (1,066) (3,340) (2,012) Other expense, net (468) -- (566) (281) - -------------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes 1,572 (3,040) (3,138) 5,039 Provision (credit) for income taxes 583 (1,127) (1,161) 1,864 - -------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 989 (1,913) (1,977) 3,175 ==================================================================================================================== Net income (loss) per common share: Basic $ .05 (.10) (.10) .16 Diluted .05 (.10) (.10) .16 ==================================================================================================================== Cash dividends per common share $ .06 .06 .12 .12 ==================================================================================================================== Weighted average common shares outstanding: Basic 19,524 19,471 19,501 19,439 Diluted 19,693 19,471 19,501 19,942 ==================================================================================================================== See accompanying notes to financial statements. --- 44

PITTSTON BAX GROUP STATEMENTS OF CASH FLOWS (IN THOUSANDS) (Unaudited) Six Months Ended June 30 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net (loss) income $ (1,977) 3,175 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 16,511 14,122 Provision for aircraft heavy maintenance 18,580 16,382 Provision (credit) for deferred income taxes 80 (142) (Credit) provision for pensions, noncurrent (42) 968 Provision for uncollectible accounts receivable 2,308 1,637 Other operating, net 2,186 1,242 Change in operating assets and liabilities, net of effects of acquisitions and dispositions: Decrease (increase) in accounts receivable 20,401 (13,493) (Increase) decrease in inventories (587) 273 Increase in prepaid expenses (874) (3,836) (Decrease) increase in accounts payable and accrued liabilities (25,581) 5,873 Decrease (increase) in other assets 1,039 (263) (Decrease) increase in other liabilities (780) 816 Other, net (1,067) 827 - ------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 30,197 27,581 - ------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Additions to property, plant and equipment (44,536) (10,973) Aircraft heavy maintenance expenditures (20,524) (19,350) Acquisitions, net of cash acquired, and related contingency payments (28,835) -- Other, net (644) 973 - ------------------------------------------------------------------------------------------------------------------- Net cash used by investing activities (94,539) (29,350) - ------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Additions to debt 73,769 15,996 Reductions of debt (5,855) (6,130) Payments from Minerals Group -- 7,730 Proceeds from exercise of stock options 1,742 1,064 Dividends paid (2,393) (2,246) Repurchase of common stock (7,305) (2,550) - ------------------------------------------------------------------------------------------------------------------- Net cash provided by financing activities 59,958 13,864 - ------------------------------------------------------------------------------------------------------------------- Net (decrease) increase in cash and cash equivalents (4,384) 12,095 Cash and cash equivalents at beginning of period 28,790 17,818 - ------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 24,406 29,913 =================================================================================================================== See accompanying notes to financial statements. --- 45

PITTSTON BAX GROUP NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (Unaudited) (1) The financial statements of the Pittston BAX Group (the "BAX Group") include the balance sheets, results of operations and cash flows of the BAX Global Inc. ("BAX Global") operations of The Pittston Company (the "Company"), and a portion of the Company's corporate assets and liabilities and related transactions which are not separately identified with operations of a specific segment. The BAX Group's financial statements are prepared using the amounts included in the Company's consolidated financial statements. Corporate amounts reflected in these financial statements are determined based upon methods which management believes to be a reasonable and an equitable estimate of the cost attributable to the BAX Group. The Company provides holders of Pittston BAX Group Common Stock ("BAX Stock") separate financial statements, financial reviews, descriptions of business and other relevant information for the BAX Group, in addition to consolidated financial information of the Company. Holders of BAX Stock are shareholders of the Company, which is responsible for all liabilities. Therefore, financial developments affecting the BAX Group, the Pittston Brink's Group (the "Brink's Group") and the Pittston Minerals Group (the "Minerals Group") that affect the Company's financial condition could affect the results of operations and financial condition of each of the Groups. Accordingly, the Company's consolidated financial statements must be read in connection with the BAX Group's financial statements. Effective May 4, 1998, the designation of Pittston Burlington Group Common Stock and the name of the Pittston Burlington Group were changed to Pittston BAX Group Common Stock and Pittston BAX Group, respectively. All rights and privileges of the holders of such Stock are otherwise unaffected by such changes. The stock continues to trade on the New York Stock Exchange under the symbol "PZX". (2) The following is a reconciliation between the calculation of basic and diluted net income (loss) per share: Three Months Ended June 30 Six Months Ended June 30 BAX Group 1998 1997 1998 1997 - ---------------------------------------------------------------------------------------- Numerator: Net income (loss) - Basic and diluted net income (loss) per share numerator 989 (1,913) (1,977) 3,175 Denominator: Basic weighted average common shares outstanding 19,524 19,471 19,501 19,439 Effect of dilutive securities: Employee stock options 169 -- -- 503 - ---------------------------------------------------------------------------------------- Diluted weighted average common shares outstanding 19,693 19,471 19,501 19,942 ======================================================================================== Options to purchase 1,018 shares of BAX Stock, at prices between $17.94 and $27.91 were outstanding for the three months ended June 30, 1998, but were not included in the computation of diluted net income per share because the options' exercise price was greater than the average market price of the common shares and, therefore, the effect would be antidilutive. Options to purchase 2,381 shares of BAX Stock, at prices between $5.78 and $27.91 per share, were outstanding for the six months ended June 30, 1998, but were not included in the computation of diluted net loss per share because the effect of all options would be antidilutive. --- 46

Options to purchase 2,498 shares of BAX Stock, at prices between $5.00 and $24.19 per share, were outstanding for the three months ended June 30, 1997, but were not included in the computation of diluted net loss per share because the effect of all options would be antidilutive. Options to purchase 499 shares of BAX Stock, at $24.19 per share, were outstanding for the six months ended June 30, 1997 but were not included in the computation of diluted net income per share because the options' exercise price was greater than the average market price of the common shares and, therefore, the effect would be antidilutive. (3) Depreciation and amortization of property, plant and equipment totaled $7,020 and $13,026 in the second quarter and six month periods of 1998, respectively, compared to $5,517 and $10,832 in the second quarter and six month periods of 1997, respectively. (4) Cash payments made for interest and income taxes, net of refunds received, were as follows: Three Months Ended June 30 Six Months Ended June 30 1998 1997 1998 1997 - ---------------------------------------------------------------------------------------- Interest $ 2,052 1,423 2,878 2,252 ======================================================================================== Income taxes $ 2,292 7,872 6,038 8,739 ======================================================================================== (5) On April 30, 1998, the Company acquired the privately held Air Transport International LLC ("ATI") for a purchase price of approximately $29 million. The acquisition was funded through the revolving credit portion of the Company's bank credit agreement and was accounted for as a purchase. Based on a preliminary evaluation which is subject to additional review, the estimated fair value of the assets acquired and liabilities assumed approximated $33 million and $4 million, respectively. The pro forma impact on the BAX Group's total revenues, net income and earnings per share had the ATI acquisition occurred as of the beginning of 1998 and 1997 was not material. (6) Under the share repurchase programs authorized by the Board of Directors, the Company purchased shares in the periods presented as follows: Three Months Ended June 30 Six Months Ended June 30 (Dollars in millions) 1998 1997 1998 1997 ---------------------------------------------------------------------------------------------------------- BAX Stock: Shares 227,400 -- 404,932 132,100 Cost $ 3.7 -- 7.2 2.6 Convertible Preferred Stock: Shares -- -- 355 -- Cost $ -- -- 0.1 -- Excess carrying amount (a) $ -- -- 0.02 -- ---------------------------------------------------------------------------------------------------------- (a) The excess of the carrying amount of the Series C Cumulative Convertible Preferred Stock (the "Convertible Preferred Stock") over the cash paid to holders for repurchases made during the periods. This amount is deducted from preferred dividends in the Company's Statement of Operations. At June 30, 1998, the Company had the remaining authority to purchase over time 688 shares of BAX Stock and an additional $24,236 of its Convertible Preferred Stock. The remaining aggregate purchase cost limitation for all common stock was $13,351 at June 30, 1998. (7) The BAX Group adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," in the first quarter of 1998. SFAS No. 130 established standards for the reporting and display of comprehensive income and its components in financial statements. Comprehensive income generally represents all changes in shareholders' equity except those --- 47

resulting from investments by or distributions to shareholders. Total comprehensive income (loss), which is composed of net income (loss) and foreign currency translation adjustments, for the three months ended June 30, 1998 and 1997 was $580 and ($2,111), respectively. Total comprehensive (loss) income for the six months ended June 30, 1998 and 1997 was ($1,986) and $1,542, respectively. Effective January 1, 1998, the BAX Group implemented AICPA Statement of Position ("SOP") No. 98-1 "Accounting for the Costs of Computer Software Developed for Internal Use". SOP No. 98-1 requires that certain costs related to the development or purchase of internal-use software be capitalized and amortized over the estimated useful life of the software. As a result of the implementation of SOP No. 98-1, net income for the three months ended June 30, 1998, included a benefit of $648 or $.03 per share and the net loss for the six months ended June 30, 1998, included a benefit of approximately $1,440 or $.07 per share for costs capitalized during those periods which would have been expensed prior to the implementation of SOP No. 98-1. (8) The BAX Group will adopt a new accounting standard, SFAS No. 131, "Disclosures and Segments of an Enterprise and Related Information," in the financial statements for the year ended December 31, 1998. SFAS No. 131 requires publicly-held companies to report financial and descriptive information about operating segments in financial statements issued to shareholders for interim and annual periods. SFAS No. 131 also requires additional disclosures with respect to products and services, geographic areas of operation, and major customers. The adoption of this SFAS is not expected to have a material impact on the financial statements of the BAX Group. In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This statement is effective for the BAX Group for the year beginning January 1, 2000 with early adoption allowed. The BAX Group is currently evaluating the timing of adoption and the effect that implementation of the new standard will have on its results of operations and financial position. In April 1998, the AICPA issued SOP No. 98-5, "Reporting on the Costs of Start-Up Activities." SOP No. 98-5, which provides guidance on the reporting of start-up costs and organization costs, requires that such costs be expensed as incurred. This SOP is effective for the BAX Group for the year beginning January 1, 1999, with early application encouraged. Initial application of the SOP is required to be reported as a cumulative effect of a change in accounting principle as of the beginning of the year of adoption. The BAX Group is currently evaluating the effect that implementation of the new statement will have on its results of operations and financial position. (9) Certain prior period amounts have been reclassified to conform to the current period's financial statement presentation. (10) In the opinion of management, all adjustments have been made which are necessary for a fair presentation of results of operations and financial condition for the periods reported herein. All such adjustments are of a normal recurring nature. --- 48

PITTSTON BAX GROUP MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The financial statements of the Pittston BAX Group (the "BAX Group") include the balance sheets, results of operations and cash flows of BAX Global Inc. ("BAX Global") operations of The Pittston Company (the "Company") and a portion of the Company's corporate assets and liabilities and related transactions which are not separately identified with operations of a specific segment. The BAX Group's financial statements are prepared using the amounts included in the Company's consolidated financial statements. Corporate amounts reflected in these financial statements are determined based upon methods which management believes to be a reasonable and an equitable estimate of the cost attributable to the BAX Group. Effective May 4, 1998, the designation of Pittston Burlington Group Common Stock and the name of the Pittston Burlington Group were changed to Pittston BAX Group Common Stock and Pittston BAX Group, respectively. All rights and privileges of the holders of such Stock are otherwise unaffected by such changes. The stock continues to trade on the New York Stock Exchange under the symbol "PZX". The Company provides holders of Pittston BAX Group Common Stock ("BAX Stock") separate financial statements, financial reviews, descriptions of business and other relevant information for the BAX Group in addition to consolidated financial information of the Company. Holders of BAX Stock are shareholders of the Company, which continues to be responsible for all liabilities. Therefore, financial developments affecting the BAX Group, the Pittston Brink's Group (the "Brink's Group") or the Pittston Minerals Group (the "Minerals Group") that affect the Company's financial condition could affect the results of operations and financial condition of each of the Groups. Accordingly, the Company's consolidated financial statements must be read in connection with the BAX Group's financial statements. The following discussion is a summary of the key factors management considers necessary in reviewing the BAX Group's results of operations, liquidity and capital resources. This discussion must be read in conjunction with the financial statements and related notes of the BAX Group and the Company. BAX Global's freight business has tended to be seasonal, with a significantly higher volume of shipments generally experienced during March, June and the period August through November than during the other periods of the year. The lowest volume of shipments has generally occurred in January and February. RESULTS OF OPERATIONS Three Months Ended June 30 Six Months Ended June 30 (In thousands) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Operating revenues: BAX Global $ 432,884 399,567 835,317 770,976 =================================================================================================================== Operating profit (loss): BAX Global $ 6,279 (565) 6,709 10,191 General corporate expense (2,341) (1,554) (6,424) (3,334) - -------------------------------------------------------------------------------------------------------------------------------- Operating profit (loss) $ 3,938 (2,119) 285 6,857 =================================================================================================================== In the second quarter of 1998, the BAX Group reported net income of $1.0 million ($0.05 per share) as compared to a net loss of $1.9 million ($0.10 per share) in the second quarter of 1997, which included a pre-tax charge of $12.5 million ($7.9 after-tax, $0.40 per share) for special consulting expenses. Revenues increased $33.3 million or 8% compared with the 1997 second quarter. Operating expenses and selling, general and administrative expenses for the 1998 quarter increased $26.9 million (7%) compared with the same quarter last year. Operating profit in the second quarter 1998 totaled $3.9 million compared to operating loss of $2.1 million in the prior year quarter, which included the $12.5 million charge. --- 49

In the first six months of 1998, the BAX Group reported a net loss of $2.0 million ($0.10 per share) compared to net income in the 1997 period of $3.2 million ($0.16 per share), which included the $12.5 million pre-tax charge. Operating expenses and selling, general and administrative expenses for the six months ended June 30, 1998 increased $69.7 million (9%) from the comparable 1997 period. Operating profit in the 1998 six month period totaled $0.3 million compared to $6.9 million in 1997, including the $12.5 million charge. BAX GLOBAL The following is a table of selected financial data for BAX Global on a comparative basis: (In thousands - except per Three Months Ended June 30 Six Months Ended June 30 pound/shipment amounts) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Operating revenues: Intra-U.S.: Expedited freight services $ 151,642 144,668 299,040 281,340 Other 1,294 1,890 2,239 3,612 - ------------------------------------------------------------------------------------------------------------------- Total Intra-U.S. 152,936 146,558 301,279 284,952 International: Expedited freight services (a) 219,436 213,321 425,888 411,450 Other (a) 60,512 39,688 108,150 74,574 - ------------------------------------------------------------------------------------------------------------------- Total International 279,948 253,009 534,038 486,024 - ------------------------------------------------------------------------------------------------------------------- Total operating revenues 432,884 399,567 835,317 770,976 Operating expenses 385,157 355,693 747,496 686,604 Selling, general and administrative expenses 41,922 45,298 81,453 75,689 - ------------------------------------------------------------------------------------------------------------------- Total costs and expenses 427,079 400,991 828,949 762,293 Other operating income, net 474 859 341 1,508 - ------------------------------------------------------------------------------------------------------------------- Operating profit (loss): Intra-U.S. (b) 2,082 (1,252) (2,895) 2,865 International (b) 4,197 687 9,604 7,326 - ------------------------------------------------------------------------------------------------------------------- Total operating profit (loss) $ 6,279 (565) 6,709 10,191 =================================================================================================================== Depreciation and amortization $ 8,785 7,091 16,394 13,999 =================================================================================================================== Cash capital expenditures $ 20,135 4,748 44,410 10,923 =================================================================================================================== Expedited freight services shipment growth rate (c) 1.1% 0.6% 1.2% (0.6%) Expedited freight services weight growth rate (c): Intra-U.S. 8.0% 3.1% 8.5% 2.0% International 8.0% 7.9% 8.4% 5.2% Worldwide 8.0% 5.7% 8.4% 3.7% =================================================================================================================== Expedited freight services weight (millions of pounds) 402.5 372.6 784.0 723.1 Expedited freight services shipments (thousands) 1,345 1,330 2,635 2,605 =================================================================================================================== Worldwide expedited freight services: Yield (revenue per pound) (a) $ .922 .961 .925 .958 Revenue per shipment (a) $ 276 269 275 266 Weight per shipment (pounds) 299 280 298 278 =================================================================================================================== (a) Prior period's international expedited freight revenues have been reclassified to conform to the current period classification. (b)The three and six month periods ended June 30, 1997 include $12.5 million of consulting expenses related to the redesign of BAX Global's business processes and new information system architecture of which $4.75 million and $7.75 million was attributed to Intra-U.S. and International, respectively. (c) Compared to the same period in the prior year. --- 50

first half of 1997 included $4.8 million relating to the $12.5 million special consulting expenses. After adjusting for these items, intra-U.S. operating profit decreased $8.0 million from the first half of 1997 to the first half of 1998. The decrease is due to lower than expected volume combined with higher fixed operating and transportation costs. Transportation costs as a percentage of expedited freight services revenues increased during late 1997 and early 1998 due, in part, to efforts to enhance service levels. In addition, transportation costs during the first quarter of 1998 were also unfavorably impacted by service disruptions mainly caused by equipment problems which were resolved during the first quarter. International revenues in the first six months of 1998 increased $48.0 million (10%) to $534.0 million from the $486.0 million recorded in the comparable period of 1997. International expedited freight services revenue increased $14.4 million (4%) due to an 8% increase in weight shipped offset by a 5% decrease in the average yield. The decrease in yield reflects a change in mix with less export traffic to higher yielding Asian markets, combined with the absence of third party carrier surcharges which existed in the 1997 period. International non-expedited freight services revenue increased $33.6 million (45%) in the first six months of 1998 as compared to the same period in 1997. The increase primarily relates to growth in ocean freight services, logistics revenues and revenues from the recently acquired ATI. International operating profit in the first six months of 1998 increased $2.3 million (31%) from the $7.3 million recorded in the comparable period of 1997. However, international operating results in the first half of 1998 included $3.7 million related to Year 2000 and information technology initiatives, while the first half of 1997 included $7.8 million relating to the special consulting charge. After adjusting for these items, international operating profits decreased $1.8 million from $15.1 million in the first half of 1997 to $13.3 million in the first half of 1998. The decrease is primarily due to the inclusion of ATI results along with increased provisions for bad debt expense in Asia. During June 1998, C. Robert Campbell joined BAX Global as President and Chief Executive Officer. New management's priorities for the remainder of the year will include reviewing the current organizational structure, the adequacy and utilization of resources, the initiatives relating to margin improvement and service enhancements, as well as the continuation of certain information technology initiatives. Although the outcome of these reviews has not been determined, future earnings may be impacted. FOREIGN OPERATIONS A portion of the BAX Group's financial results is derived from activities in foreign countries, each with a local currency other than the U.S. dollar. Because the financial results of the BAX Group are reported in U.S. dollars, they are affected by the changes in the value of the various foreign currencies in relation to the U.S. dollar. The BAX Group's international activity is not concentrated in any single currency, which mitigates the risks of foreign currency rate fluctuations. In addition, these rate fluctuations may adversely affect transactions which are denominated in currencies other than the functional currency. The BAX Group routinely enters into such transactions in the normal course of its business. Although the diversity of its foreign operations limits the risks associated with such transactions, the Company, on behalf of the BAX Group, uses foreign currency forward contracts to hedge the risks associated with such transactions. Realized and unrealized gains and losses on these contracts are deferred and recognized as part of the specific transaction hedged. In addition, translation adjustments relating to operations in countries with highly inflationary economies are included in net income, along with all transaction gains or losses for the period. A subsidiary in Mexico operates in such a highly inflationary economy. Prior to January 1, 1998, the economy in Brazil, in which the BAX Group has a subsidiary, was considered highly inflationary. The BAX Group is also subject to other risks customarily associated with doing business in foreign countries, including labor and economic conditions, controls on repatriation of earnings and capital, nationalization, political instability, expropriation and other forms of restrictive action by local governments. The future effects, if any, of such risks on the BAX Group cannot be predicted. CORPORATE EXPENSES A portion of the Company's corporate general and administrative expenses and other shared services has been allocated to the BAX Group based on utilization and other methods and criteria which management believes to be an equitable and a reasonable estimate of the costs attributable to the BAX Group. These attributions were $2.3 million and $1.6 million for the second quarter of 1998 and 1997, respectively and $6.4 million and $3.3 million for the first six months of 1998 and 1997, respectively. The increase in the second quarter of 1998 is primarily due to costs associated with a severance agreement with a former member of the --- 52

Company's senior management. The first six months of 1998 also includes additional expenses of approximately $5.8 million related to a retirement agreement between the Company and its former Chairman and CEO. Approximately $2.0 million of this $5.8 million of expenses have been attributed to the BAX Group. OTHER OPERATING INCOME, NET Other operating income, net decreased $0.4 million and $1.2 million in the three and six month periods ended June 30, 1998, respectively, as compared to the same periods in 1997. Other operating income, net principally includes foreign exchange transaction gains and losses, and the changes for the comparable periods are due to normal fluctuations in such gains and losses. INTEREST EXPENSE, NET Net interest expense increased $1.0 million and $1.3 million in the three month and six month periods ended June 30, 1998, respectively, as compared to the same periods in 1997. The increase is due primarily to higher levels of debt associated with recent acquisitions and information technology initiatives. INCOME TAXES In both the 1998 and 1997 periods presented, the provision (credit) for income taxes exceeded the statutory federal income tax rate of 35% primarily due to provisions for state income taxes and goodwill amortization, partially offset by lower taxes on foreign income. FINANCIAL CONDITION A portion of the Company's corporate assets and liabilities has been attributed to the BAX Group based upon utilization of the shared services from which assets and liabilities are generated. Management believes this attribution to be an equitable and a reasonable estimate of the cost attributable to the BAX Group. CASH FLOW REQUIREMENTS Cash provided by operating activities during the first six months of 1998 totaled $30.2 million as compared to the $27.6 million generated in the first six months of 1997. The higher level of cash generated from operating activities was due to a decrease in the funding requirements for net operating assets and liabilities. Cash generated from operating activities was not sufficient to fund investing activities, which primarily include capital expenditures, aircraft heavy maintenance and payments for the ATI acquisition discussed above. Although additional net borrowings of $67.9 million were incurred, cash and cash equivalents decreased $4.4 million. On April 30, 1998, the Company acquired the privately held ATI for a purchase price of approximately $29 million. The acquisition was funded through the revolving credit portion of the Company's bank credit agreement and was accounted for as a purchase. CAPITAL EXPENDITURES Cash capital expenditures for the first six months of 1998 and 1997 totaled $44.5 million and $11.0 million, respectively, reflecting higher levels of investment in information technology systems. For the remainder of 1998, cash capital expenditures are expected to range between $35.0 million and $40.0 million. These projected expenditures include those related to BAX Global's information technology initiatives, as well as those related to planned expansion for new facilities. FINANCING The BAX Group intends to fund its cash capital expenditure requirements through anticipated cash flows from operating activities or through operating leases if the latter are financially attractive. Shortfalls, if any, will be financed through the Company's revolving credit agreements or other borrowing arrangements. Total outstanding debt was $145.9 million at June 30, 1998, an increase of $74.6 million from the $71.3 million reported at December 31, 1997. The net increase in debt primarily reflects borrowings to fund the acquisition of ATI, as well as incremental information technology expenditures, including those relating to Year 2000 compliance initiatives. --- 53

The Company has a $350.0 million credit agreement with a syndicate of banks (the "Facility"). The Facility includes a $100.0 million term loan and also permits additional borrowings, repayments and reborrowings of up to an aggregate of $250.0 million. As of June 30, 1998 and December 31, 1997, borrowings of $100.0 million were outstanding under the term loan portion of the Facility and $101.8 million and $25.9 million, respectively, of additional borrowings were outstanding under the remainder of the Facility. Of the total outstanding amount under the Facility at June 30, 1998 and December 31, 1997, $67.8 million and $10.9 million, respectively, was attributed to the BAX Group. RELATED PARTY TRANSACTIONS At June 30, 1998 and December 31, 1997, the Minerals Group had no borrowings from the BAX Group. At June 30, 1998, the BAX Group owed the Minerals Group $21.6 million versus $18.2 million at December 31, 1997 for tax payments representing Minerals Group's tax benefits utilized by the BAX Group in accordance with the Company's tax sharing policy. Of the total tax benefits owed to the Minerals Group at June 30, 1998, $9.0 million is expected to be paid within one year. OFF-BALANCE SHEET INSTRUMENTS Fuel contracts - The Company, on behalf of the BAX Group, has hedged a portion of its jet fuel requirements through several commodity option transactions that are intended to protect against significant changes in jet fuel prices. As of June 30, 1998, these transactions aggregated 53.6 million gallons and mature periodically throughout the remainder of 1998 and mid-1999. The fair value of these fuel hedge transactions may fluctuate over the course of the contract period due to changes in the supply and demand for oil and refined products. Thus, the economic gain or loss, if any, upon settlement of the contracts may differ from the fair value of the contracts at an interim date. At June 30, 1998, the fair value adjustment for all outstanding contracts to hedge jet fuel requirements was ($2.0) million. Interest rate contracts - In the second quarter of 1998, the Company entered into three interest rate swap agreements. These three agreements effectively convert a portion of the interest on its $100.0 million variable rate term loan to fixed rates. The first fixes the interest rate at 5.84% on $20.0 million in face amount of debt, the second fixes the interest rate at 5.86% on $20.0 million in face amount of debt, and the third fixes the interest rate at 5.80% on $20.0 million in face amount of debt. The first two agreements mature in May 2001, while the third agreement matures in May 2000. As of June 30, 1998 the fair value adjustment of all of these agreements was not significant. Foreign currency forward contracts - The Company, on behalf of the BAX Group, enters into foreign currency forward contracts with a duration of up to one year as a hedge against liabilities denominated in various currencies. These contracts minimize the BAX Group's exposure to exchange rate movements related to cash requirements of foreign operations denominated in various currencies. At June 30, 1998, the total notional value of foreign currency forward contracts outstanding was $3.9 million. As of such date, the fair value of the foreign currency forward contracts approximated notional value. READINESS FOR YEAR 2000 The BAX Group has taken actions to understand the nature and extent of the work required to make its systems, services and infrastructure Year 2000 compliant. The BAX Group is currently preparing its financial, information and other computer-based systems for the Year 2000, including replacing and/or updating existing systems. The BAX Group continues to evaluate the total estimated costs associated with these efforts, which it currently estimates to be between $30-$35 million. Based on actual experience and available information, the BAX Group believes that it will be able to manage its Year 2000 transition without any material adverse effect on its business operations, services or financial condition. However, if the applicable modifications and conversions are not made, or are not completed on a timely basis, the Year 2000 issue could have material adverse impact on the operations of the BAX Group. Further, management is currently evaluating the extent to which the BAX Group's interface systems are vulnerable to its suppliers' and customers' failure to remediate their own Year 2000 issues as there is no guarantee that the systems of other companies on which the BAX Group's systems rely will be timely and adequately converted. --- 54

CAPITALIZATION The Company has three classes of common stock: BAX Stock, Pittston Brink's Group Common Stock ("Brink's Stock"), and Pittston Minerals Group Common Stock ("Minerals Stock") which were designed to provide shareholders with separate securities reflecting the performance of the BAX Group, Brink's Group and Minerals Group, respectively, without diminishing the benefits of remaining a single corporation or precluding future transactions affecting any of the Groups. The BAX Group consists of the BAX Global operations of the Company. The Brink's Group consists of the Brink's, Incorporated ("Brink's") and Brink's Home Security, Inc. ("BHS") operations of the Company. The Minerals Group consists of the Pittston Coal Company ("Coal Operations") and Pittston Mineral Ventures ("Mineral Ventures") operations of the Company. The Company prepares separate financial statements for the BAX, Brink's and Minerals Groups in addition to consolidated financial information of the Company. As previously mentioned, effective May 4, 1998, the designation of Pittston Burlington Group Common Stock and the name of the Pittston Burlington Group were changed to Pittston BAX Group Common Stock and Pittston BAX Group, respectively. All rights and privileges of the holders of such Stock are otherwise unaffected by such changes. The stock continues to trade on the New York Stock Exchange under the symbol "PZX". Under the share repurchase programs authorized by the Board of Directors (the "Board"), the Company purchased the following shares in the periods presented: Three Months Ended June 30 Six Months Ended June 30 (Dollars in millions) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- BAX Stock: Shares 227,400 -- 404,932 132,100 Cost $ 3.7 -- 7.2 2.6 Convertible Preferred Stock: Shares -- -- 355 -- Cost $ -- -- 0.1 -- Excess carrying amount (a) $ -- -- 0.02 -- =================================================================================================================== (a) The excess of the carrying amount of the Series C Cumulative Convertible Preferred Stock (the "Convertible Preferred Stock") over the cash paid to holders for repurchases made during the periods. This amount is deducted from preferred dividends in the Company's Statement of Operations. The Company's remaining repurchase authority with respect to the Convertible Preferred Stock as of June 30, 1998 was $24.2 million. As of June 30, 1998, the Company had remaining authority to purchase over time 0.7 million shares of BAX Stock. The remaining aggregate purchase cost limitation for all common stock was $13.4 million as of June 30, 1998. DIVIDENDS The Board intends to declare and pay dividends, if any, on BAX Stock based on earnings, financial condition, cash flow and business requirements of the BAX Group. Since the Company remains subject to Virginia law limitations on dividends, losses by the Minerals Group and/or the Brink's Group could affect the Company's ability to pay dividends in respect to stock relating to the BAX Group. During the six months of 1998 and 1997, the Board declared and the Company paid cash dividends of 12.00 cents per share of BAX Stock. Dividends paid on the Convertible Preferred Stock in the first six months of both 1998 and 1997 were $1.8 million. ACCOUNTING CHANGES The BAX Group adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income", in the first quarter of 1998. SFAS No. 130 establishes standards for the reporting and display of comprehensive income and its components in financial statements. Comprehensive income generally represents all changes in shareholders' equity except those resulting from investments by or distributions to shareholders. Total comprehensive income (loss) which is composed of net income (loss) and --- 55

foreign currency translation adjustments, for the three months ended June 30, 1998 and 1997 was $0.6 million and ($2.2) million, respectively, and ($2.0) million and $1.5 million for the six months ended June 30, 1998 and 1997, respectively. Effective January 1, 1998, the BAX Group implemented AICPA Statement of Position ("SOP") No. 98-1 "Accounting for the Costs of Computer Software Developed for Internal Use." SOP No. 98-1 requires that certain costs related to the development or purchase of internal-use software be capitalized and amortized over the estimated useful life of the software. As a result of the implementation of SOP No. 98-1, net income for the three months ended June 30, 1998, included a benefit of approximately $0.6 million ($.03 per share) and the net loss for the six months ended June 30, 1998, included a benefit of approximately $1.4 million ($.07 per share) for costs capitalized during those periods which would have been expensed prior to the implementation of SOP No. 98-1. PENDING ACCOUNTING CHANGES The Company will implement SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information", in the financial statements for the year ended December 31, 1998. SFAS No. 131 requires publicly-held companies to report financial and descriptive information about operating segments in financial statements issued to shareholders for interim and annual periods. The SFAS also requires additional disclosures with respect to products and services, geographic areas of operation, and major customers. The adoption of this SFAS is not expected to have a material impact on the financial statements of the Company. In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This statement is effective for the BAX Group for the year beginning January 1, 2000, with early adoption allowed. The BAX Group is currently evaluating the timing of adoption and the effect that implementation of the new standard will have on its results of operations and financial position. In April 1998, the AICPA issued SOP No. 98-5, "Reporting on the Costs of Start-Up Activities." SOP No. 98-5, which provides guidance on the reporting of start-up costs and organization costs, requires that such costs be expensed as incurred. This SOP is effective for the BAX Group for the year beginning January 1, 1999, with early application encouraged. Initial application of the SOP is required to be reported as a cumulative effect of a change in accounting principle as of the beginning of the year of adoption. The BAX Group is currently evaluating the effect that implementation of the new statement will have on its results of operations and financial position. FORWARD LOOKING INFORMATION Certain of the matters discussed herein, including statements regarding information technology and related outlay projections, the impact of management's review of certain BAX Global initiatives on future operating results, projected capital spending and the readiness for Year 2000, 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 BAX Group and the Company, include, but are not limited to, overall economic and business conditions, the demand for BAX Global's services, pricing and other competitive factors in the industry, new government regulations and/or legislative initiatives, the successful integration of the ATI acquisition, variations in costs or expenses, changes in the scope of improvements to information systems and Year 2000 initiatives, delays or problems in the implementation of Year 2000 initiatives by the BAX Group and/or its suppliers and customers, and delays or problems in the design and implementation of improvements to information systems. --- 56

PITTSTON MINERALS GROUP BALANCE SHEETS (IN THOUSANDS) June 30 December 31 1998 1997 - ------------------------------------------------------------------------------------------------------------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 3,591 3,394 Accounts receivable (net of estimated amount uncollectible: 1998 - $2,274; 1997 - $2,215) 74,761 63,599 Inventories, at lower of cost or market: Coal inventory 26,229 31,644 Other inventory 3,696 3,702 - ------------------------------------------------------------------------------------------------------------------- 29,925 35,346 Receivable - Pittston Brink's Group/BAX Group, net 10,696 -- Prepaid expenses 4,237 5,045 Deferred income taxes 23,516 25,136 - ------------------------------------------------------------------------------------------------------------------- Total current assets 146,726 132,520 Property, plant and equipment, at cost (net of accumulated depreciation, depletion and amortization: 1998 - $154,351; 1997 - $164,386) 156,146 172,338 Deferred pension assets 85,378 83,825 Deferred income taxes 55,995 54,778 Coal supply contracts, net of accumulated amortization 27,749 41,703 Intangibles, net of accumulated amortization 106,590 108,094 Receivable - Pittston Brink's Group/BAX Group, net 12,658 13,630 Other assets 50,027 47,294 - ------------------------------------------------------------------------------------------------------------------- Total assets $ 641,269 654,182 =================================================================================================================== LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities: Current maturities of long-term debt $ 420 547 Accounts payable 42,069 50,585 Payable - Pittston Brink's Group/BAX Group, net -- 3,038 Accrued liabilities 103,243 107,094 - ------------------------------------------------------------------------------------------------------------------- Total current liabilities 145,732 161,264 Long-term debt, less current maturities 135,130 116,114 Postretirement benefits other than pensions 227,418 223,836 Workers' compensation and other claims 85,724 92,857 Mine closing and reclamation 40,797 47,546 Other liabilities 30,155 31,137 Shareholder's equity (23,687) (18,572) - ------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholder's equity $ 641,269 654,182 =================================================================================================================== See accompanying notes to financial statements. --- 57

PITTSTON MINERALS GROUP STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (Unaudited) Three Months Ended June 30 Six Months Ended June 30 1998 1997 1998 1997 - -------------------------------------------------------------------------------------------------------------------- Net sales $ 134,408 157,812 284,306 316,695 Cost and expenses: Cost of sales 133,278 153,836 277,442 307,248 Selling, general and administrative expenses 7,764 7,307 16,851 14,716 - -------------------------------------------------------------------------------------------------------------------- Total costs and expenses 141,042 161,143 294,293 321,964 Other operating income, net 2,611 1,899 4,785 5,447 - -------------------------------------------------------------------------------------------------------------------- Operating (loss) profit (4,023) (1,432) (5,202) 178 Interest income 313 335 614 617 Interest expense (2,449) (2,734) (5,043) (5,359) Other income (expense), net 1 (452) 1 (902) - -------------------------------------------------------------------------------------------------------------------- Loss before income taxes (6,158) (4,283) (9,630) (5,466) Credit for income taxes (5,361) (3,120) (7,590) (5,250) - -------------------------------------------------------------------------------------------------------------------- Net loss (797) (1,163) (2,040) (216) Preferred stock dividends, net (887) (902) (1,751) (1,803) - -------------------------------------------------------------------------------------------------------------------- Net loss attributed to common shares $ (1,684) (2,065) (3,791) (2,019) ==================================================================================================================== Net loss per common share: Basic $ (.20) (.26) (.46) (.25) Diluted (.20) (.26) (.46) (.25) ==================================================================================================================== Cash dividends per common share $ .025 .1625 .1875 .3250 ==================================================================================================================== Weighted average common shares outstanding: Basic 8,309 8,068 8,267 8,035 Diluted 8,309 8,068 8,267 8,035 ==================================================================================================================== See accompanying notes to financial statements. --- 58

PITTSTON MINERALS GROUP STATEMENTS OF CASH FLOWS (IN THOUSANDS) (Unaudited) Six Months Ended June 30 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net loss $ (2,040) (216) Adjustments to reconcile net loss to net cash (used) provided by operating activities: Depreciation, depletion and amortization 18,114 18,484 Provision for deferred income taxes 438 4,075 Credit for pensions, noncurrent (1,538) (1,686) Loss (gain) on sale of property, plant and equipment and other assets 1,388 (1,093) Other operating, net 1,500 996 Change in operating assets and liabilities, net of effects of acquisitions and dispositions: (Increase) decrease in accounts receivable (10,946) 3,475 Decrease (increase) in inventories 3,383 (12,341) Decrease (increase) in prepaid expenses 669 (3,125) Decrease in accounts payable and accrued liabilities (8,864) (1,638) (Increase) decrease in other assets (2,268) 69 Increase in other liabilities 530 722 Decrease in workers' compensation and other claims, noncurrent (4,455) (4,487) Other, net (59) 298 - ------------------------------------------------------------------------------------------------------------------- Net cash (used) provided by operating activities (4,148) 3,533 - ------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Additions to property, plant and equipment (12,751) (17,029) Proceeds from disposal of property, plant and equipment 13,056 2,174 Proceeds from disposition of assets 6,772 -- Acquisitions, net of cash acquired, and related contingency payments -- (791) Other, net (905) (496) - ------------------------------------------------------------------------------------------------------------------- Net cash provided (used) by investing activities 6,172 (16,142) - ------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Additions to debt 49,349 40,706 Reductions of debt (31,078) (255) Payments to Brink's Group (16,700) (15,083) Payments to BAX Group -- (7,730) Repurchase of stock (307) -- Proceeds from exercise of stock options -- 14 Dividends paid (3,091) (4,315) - ------------------------------------------------------------------------------------------------------------------- Net cash (used) provided by financing activities (1,827) 13,337 - ------------------------------------------------------------------------------------------------------------------- Net increase in cash and cash equivalents 197 728 Cash and cash equivalents at beginning of period 3,394 3,387 - ------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 3,591 4,115 =================================================================================================================== See accompanying notes to financial statements. --- 59

PITTSTON MINERALS GROUP NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (Unaudited) (1) The financial statements of the Pittston Minerals Group (the "Minerals Group") include the balance sheets, results of operations and cash flows of the Pittston Coal Company ("Coal Operations") and Pittston Mineral Ventures ("Mineral Ventures") operations of The Pittston Company (the "Company"), and a portion of the Company's corporate assets and liabilities and related transactions which are not separately identified with operations of a specific segment. The Minerals Group's financial statements are prepared using the amounts included in the Company's consolidated financial statements. Corporate amounts reflected in these financial statements are determined based upon methods which management believes to be a reasonable and an equitable estimate of the cost attributable to the Minerals Group. The Company provides holders of Pittston Minerals Group Common Stock ("Minerals Stock") separate financial statements, financial reviews, descriptions of business and other relevant information for the Minerals Group, in addition to consolidated financial information of the Company. Holders of Minerals Stock are shareholders of the Company, which is responsible for all liabilities. Therefore, financial developments affecting the Minerals Group, the Pittston Brink's Group (the "Brink's Group") or the Pittston BAX Group (the "BAX Group" formerly the Pittston Burlington Group) that affect the Company's financial condition could affect the results of operations and financial condition of each of the Groups. Accordingly, the Company's consolidated financial statements must be read in connection with the Minerals Group's financial statements. (2) The following is a reconciliation between the calculation of basic and diluted net loss per share: Three Months Ended June 30 Six Months Ended June 30 Minerals Group 1998 1997 1998 1997 - ---------------------------------------------------------------------------------------- Numerator: Net loss $ (797) (1,163) (2,040) (216) Convertible Preferred Stock dividends (887) (902) (1,751) (1,803) - ---------------------------------------------------------------------------------------- Net loss - Basic and diluted net loss per share numerator (1,684) (2,065) (3,791) (2,019) Denominator: Basic and diluted weighted average common shares outstanding 8,309 8,068 8,267 8,035 ======================================================================================== Options to purchase 677 and 679 shares of Minerals Stock, at prices between $6.53 and $25.74 per share, were outstanding for the three and six months ended June 30, 1998, respectively. Options to purchase 713 and 714 shares of Minerals Stock, at prices between $8.64 and $25.74 per share, were outstanding for the three and six months ended June 30, 1997, respectively. None of these options were included in the computation of diluted net loss per share because the effect of all options would be antidilutive. The conversion of the Convertible Preferred Stock to 1,764 and 1,793 shares of Minerals Stock has been excluded in the computation of diluted net loss per share in 1998 and 1997, respectively, because the effect of the assumed conversion would be antidilutive. (3) Depreciation, depletion and amortization of property, plant and equipment totaled $5,604 and $11,343 in the second quarter and six month period of 1998, respectively, compared to $5,909 and $11,358 in the second quarter and six month period of 1997, respectively. --- 60

(4) Cash payments made for interest and income taxes, net of refunds received, were as follows: Three Months Ended June 30 Six Months Ended June 30 1998 1997 1998 1997 - ---------------------------------------------------------------------------------------- Interest $ 1,845 2,742 5,311 5,383 ======================================================================================== Income taxes $ (11,967) (11,773) (11,989) (11,760) ======================================================================================== (5) During the second quarter of 1998, Coal Operations disposed of certain assets of its Elkay mining operation in West Virginia. The assets were sold for cash of approximately $18,000, resulting in a pre-tax loss of approximately $2,200. In addition, in July 1998, Coal Operations completed the sale of two idle properties in West Virginia and a loading dock in Kentucky for an expected pre-tax gain of approximately $5,000. (6) Under the share repurchase programs authorized by the Board of Directors, the Company purchased shares in the periods presented as follows: Three Months Ended June 30 Six Months Ended June 30 (Dollars in millions) 1998 1997 1998 1997 ---------------------------------------------------------------------------------------------------------- Convertible Preferred Stock: Shares -- -- 355 -- Cost $ -- -- 0.1 -- Excess carrying amount (a) $ -- -- 0.02 -- ========================================================================================================== (a) The excess of the carrying amount of the Series C Cumulative Convertible Preferred Stock (the "Convertible Preferred Stock") over the cash paid to holders for repurchases made during the periods. This amount is deducted from preferred dividends in the Minerals Group and the Company's Statement of Operations. At June 30, 1998, the Company had the remaining authority to purchase over time 1,000 shares of Minerals Stock and an additional $24,236 of its Convertible Preferred Stock. The remaining aggregate purchase cost limitation for all common stock was $13,351. (7) The Minerals Group adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," in the first quarter of 1998. SFAS No. 130 established standards for the reporting and display of comprehensive income and its components in financial statements. Comprehensive income generally represents all changes in shareholders' equity except those resulting from investments by or distributions to shareholders. Total comprehensive loss, which is composed of net loss attributable to common shares and foreign currency translation adjustments, for the three months ended June 30, 1998 and 1997 was $2,852 and $2,865, respectively. Total comprehensive loss for the six months ended June 30, 1998 and 1997 was $4,630 and $3,037, respectively. Effective January 1, 1998, the Company implemented AICPA Statement of Position ("SOP") No. 98-1 "Accounting for the Costs of Computer Software Developed for Internal Use". SOP No. 98-1 requires that certain costs related to the development or purchase of internal-use software be capitalized and amortized over the estimated useful life of the software. --- 61

(8) The Minerals Group will adopt a new accounting standard, SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information", in the financial statements for the year ended December 31, 1998. SFAS No. 131 requires publicly-held companies to report financial and descriptive information about operating segments in financial statements issued to shareholders for interim and annual periods. SFAS No. 131 also requires additional disclosures with respect to products and services, geographic areas of operation, and major customers. The adoption of this SFAS is not expected to have a material impact on the financial statements of the Minerals Group. In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This statement is effective for the Minerals Group for the year beginning January 1, 2000, with early adoption allowed. The Minerals Group is currently evaluating the timing of adoption and the effect that implementation of the new standard will have on its results of operations and financial position. In April 1998, the AICPA issued SOP No. 98-5, "Reporting on the Costs of Start-Up Activities." SOP No. 98-5, which provides guidance on the reporting of start-up costs and organization costs, requires that such costs be expensed as incurred. This SOP is effective for the Minerals Group for the year beginning January 1, 1999, with early application encouraged. Initial application of the SOP is required to be reported as a cumulative effect of a change in accounting principle as of the beginning of the year of adoption. The Minerals Group is currently evaluating the effect that implementation of the new statement will have on its results of operations and financial position. (9) Certain prior period amounts have been reclassified to conform to the current period's financial statement presentation. (10) In the opinion of management, all adjustments have been made which are necessary for a fair presentation of results of operations and financial condition for the periods reported herein. All such adjustments are of a normal recurring nature. --- 62

PITTSTON MINERALS GROUP MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The financial statements of the Pittston Minerals Group ("Minerals Group") include the balance sheets, results of operations and cash flows of the Pittston Coal Company ("Coal Operations") and Pittston Mineral Ventures ("Mineral Ventures") operations of The Pittston Company (the "Company"), and a portion of the Company's corporate assets and liabilities and related transactions which are not separately identified with operations of a specific segment. The Minerals Group's financial statements are prepared using the amounts included in the Company's consolidated financial statements. Corporate amounts reflected in these financial statements are determined based upon methods which management believes to be a reasonable and an equitable estimate of the cost attributable to the Minerals Group. The Company provides to holders of the Pittston Minerals Group Common Stock ("Minerals Stock") separate financial statements, financial reviews, descriptions of business and other relevant information for the Minerals Group, in addition to consolidated financial information of the Company. Holders of Minerals Stock are shareholders of the Company, which is responsible for all liabilities. Therefore, financial developments affecting the Minerals Group, the Pittston Brink's Group (the "Brink's Group") or the Pittston BAX Group (the "BAX Group" formerly the Pittston Burlington Group) that affect the Company's financial condition could affect the results of operations and financial condition of each of the Groups. Accordingly, the Company's consolidated financial statements must be read in connection with the Minerals Group's financial statements. The following discussion is a summary of the key factors management considers necessary in reviewing the Minerals Group's results of operations, liquidity and capital resources. This discussion must be read in conjunction with the financial statements and related notes of the Minerals Group and the Company. RESULTS OF OPERATIONS Three Months Ended June 30 Six Months Ended June 30 (In thousands) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Net Sales: Coal Operations $ 130,176 154,073 276,096 308,666 Mineral Ventures 4,232 3,739 8,210 8,029 - ------------------------------------------------------------------------------------------------------------------- Net sales $ 134,408 157,812 284,306 316,695 =================================================================================================================== Operating (loss) profit: Coal Operations $ (1,714) 1,232 788 4,855 Mineral Ventures (278) (1,310) (325) (1,765) - ------------------------------------------------------------------------------------------------------------------- Segment operating (loss) profit (1,992) (78) 463 3,090 General corporate expense (2,031) (1,354) (5,665) (2,912) - ------------------------------------------------------------------------------------------------------------------- Operating (loss) profit $ (4,023) (1,432) (5,202) 178 =================================================================================================================== --- 63

In the second quarter of 1998, the Minerals Group reported a net loss of $0.8 million ($0.20 per share) compared to a net loss of $1.2 million ($0.26 per share) in the second quarter of 1997. The operating loss in the second quarter of 1998 totaled $4.0 million (including a $2.2 million loss on sale of certain coal assets at its Elkay mining operation in West Virginia ("Elkay Assets")) as compared to an operating loss of $1.4 million in the 1997 quarter. Net sales during the second quarter of 1998 decreased $23.4 million (15%) compared to the corresponding 1997 quarter. In the first six months of 1998, the Minerals Group reported a net loss of $2.0 million ($0.46 per share) compared to a net loss of $0.2 million ($0.25 per share) during 1997. The operating loss in the six months ended June 30, 1998 was $5.2 million (including a $2.2 million loss on sale of certain Elkay Assets) compared to an operating profit of $0.2 million in the corresponding 1997 period. Net sales during the six month period of 1998 decreased $32.4 million (10%) compared to the 1997 period. COAL OPERATIONS The following are tables of selected financial data for Coal Operations on a comparative basis: Three Months Ended June 30 Six Months Ended June 30 (In thousands) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Net sales $ 130,176 154,073 276,096 308,666 - ------------------------------------------------------------------------------------------------------------------- Cost of sales 130,209 150,144 271,702 299,883 Selling, general and administrative expenses 4,423 4,775 8,677 9,711 - ------------------------------------------------------------------------------------------------------------------- Total costs and expenses 134,632 154,919 280,379 309,594 Other operating income, net 2,742 2,078 5,071 5,783 - ------------------------------------------------------------------------------------------------------------------- Operating (loss) profit $ (1,714) 1,232 788 4,855 =================================================================================================================== Coal sales (tons): Metallurgical 1,995 1,823 3,926 3,714 Steam 2,312 3,294 5,235 6,523 - ------------------------------------------------------------------------------------------------------------------- Total coal sales 4,307 5,117 9,161 10,237 =================================================================================================================== Production/purchased (tons): Deep 1,368 1,324 2,757 2,426 Surface 1,841 2,739 3,810 5,398 Contract 200 373 442 736 - ------------------------------------------------------------------------------------------------------------------- 3,409 4,436 7,009 8,560 Purchased 1,046 963 2,011 2,303 - ------------------------------------------------------------------------------------------------------------------- Total 4,455 5,399 9,020 10,863 =================================================================================================================== --- 64

(In thousands, Three Months Ended June 30 Six Months Ended June 30 except per ton amounts) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Net coal sales (a) $ 128,053 151,303 272,029 304,001 Current production costs of coal sold (a) 119,387 140,554 251,894 282,126 - ------------------------------------------------------------------------------------------------------------------- Coal margin 8,666 10,749 20,135 21,875 Non-coal margin 623 527 1,239 1,245 Other operating income, net 2,742 2,078 5,071 5,783 - ------------------------------------------------------------------------------------------------------------------- Margin and other income 12,031 13,354 26,445 28,903 - ------------------------------------------------------------------------------------------------------------------- Other costs and expenses: Idle equipment and closed mines 2,582 250 3,285 557 Inactive employee cost 6,740 7,097 13,695 13,780 Selling, general and administrative expenses 4,423 4,775 8,677 9,711 - ------------------------------------------------------------------------------------------------------------------- Total other costs and expenses 13,745 12,122 25,657 24,048 - ------------------------------------------------------------------------------------------------------------------- Operating (loss) profit $ (1,714) 1,232 788 4,855 =================================================================================================================== Coal margin per ton: Realization $ 29.73 29.57 29.69 29.70 Current production costs 27.72 27.47 27.49 27.56 - ------------------------------------------------------------------------------------------------------------------- Coal margin $ 2.01 2.10 2.20 2.14 =================================================================================================================== (a) Excludes non-coal components. Coal Operations generated an operating loss of $1.7 million (including a $2.2 million loss on the sale of certain Elkay Assets) in the second quarter of 1998, compared to an operating profit of $1.2 million recorded in the 1997 second quarter. Sales volume of 4.3 million tons in the second quarter of 1998 was 16% less than the 5.1 million tons sold in the prior year quarter. Compared to the second quarter of 1997, steam coal sales in 1998 decreased by 1.0 million tons (30%), to 2.3 million tons, while metallurgical coal sales increased 0.2 million tons (9%), to 2.0 million tons. The steam sales volume reduction was primarily due to the reduced production by and subsequent sale of certain Elkay Assets (discussed below) along with reduced sales in the spot market. Steam coal sales represented 54% of total volume in 1998 and 64% in 1997. Total coal margin of $8.7 million for the second quarter of 1998 represented a decrease of $2.1 million from the comparable 1997 period. The decrease in total coal margin reflects lower sales volume combined with a 4% decrease ($0.09 per ton) in coal margin per ton. The overall change in coal margin per ton during the 1998 quarter was impacted by decreases in metallurgical coal margins, partially offset by increases in steam coal margins. Metallurgical margins were negatively impacted in the three months ended June 30, 1998 by lower realizations per ton resulting from lower negotiated pricing with metallurgical customers for the new contract year which began April 1, 1998. Steam coal margins improved in the 1998 second quarter due to higher realizations. In addition to these factors, total coal margin per ton was impacted by a change in both the production and sales mix. Despite the decreases in metallurgical coal realization per ton, overall realization per ton of coal sold increased $0.16 per ton as a greater proportion of coal sales came from the higher priced metallurgical coal. In addition, the current production cost of coal sold increased $0.25 per ton to $27.72 in the second quarter of 1998 from the second quarter of 1997 due to a higher proportion of deep mine production which is more costly. --- 65

Production in the 1998 second quarter decreased 1.0 million tons over the 1997 second quarter to 3.4 million tons due to the reduced production by and subsequent sale of certain Elkay Assets (discussed below). Purchased coal remained constant at 1.0 million tons. Surface production accounted for 55% and 63% of the total production in the 1998 and 1997 second quarters, respectively. Productivity of 35.3 tons per man day in the 1998 second quarter decreased from the 37.7 tons per man day in the 1997 second quarter primarily attributable to an increased percentage of deep mine production. Non-coal margin, which reflects earnings from the oil, gas and timber businesses, amounted to $0.6 million in the second quarter of 1998, which was $0.1 million higher than in the second quarter of 1997. Other operating income, which primarily includes gains and losses on sales of property and equipment and third party royalties, amounted to $2.7 million in the second quarter of 1998 as compared to $2.1 million in the comparable period of 1997. This increase was due to higher levels of dividend and royalty income. Net gains on sales of property and equipment during the quarter included $0.2 million of the total $2.2 million loss associated with the sale of certain Elkay Assets (discussed below). Idle equipment and closed mine costs increased $2.3 million to $2.6 million in the 1998 second quarter from the comparable 1997 quarter largely due to inventory writedowns of $2.0 million associated with the sale of certain Elkay Assets (discussed below). Inactive employee costs, which represent long-term employee liabilities for pension and retiree medical costs, decreased from $7.1 million to $6.7 million for the second quarter of 1998 resulting from lower premiums from the Coal Industry Retiree Health Benefit Act of 1992, partially offset by the use of a lower long-term discount rate to calculate the present value of the liabilities. Selling, general and administrative expenses decreased $0.4 million (7%) in the second quarter of 1998 from the 1997 second quarter due to continued Coal Operations cost control efforts. During the second quarter of 1998, Coal Operations disposed of certain assets, including a surface mine, coal supply contracts and limited coal reserves, of its Elkay mining operation in West Virginia. The referenced surface mine produced approximately 1 million tons of steam coal from January 1, 1998 through the end of April 1998, at which point coal production ceased. Total cash proceeds from the sale amounted to approximately $18 million, resulting in a pre-tax loss of approximately $2.2 million. This pre-tax book loss includes approximately $2.0 million of inventory writedowns related to coal which can no longer be blended with other coals produced from these disposed assets. This writedown has been included in Coal Operations cost of sales. During the first six months of 1998, Coal Operations generated an operating profit of $0.8 million compared to $4.9 million in the corresponding 1997 period. Sales volume of 9.2 million tons in the first half of 1998 was 1.1 million tons less than the 1997 period. Metallurgical coal sales increased by 0.2 million tons (6%) to 3.9 million tons and steam coal sales decreased by 1.3 million tons (20%) to 5.2 million tons compared to the prior year primarily due to the reduced production by and subsequent sale of certain Elkay Assets. Steam coal sales represented 57% of the total 1998 sales volume, as compared to 64% in 1997. For the first six months of 1998, coal margin was $20.1 million, a decrease of $1.7 million over the 1997 period. Coal margin per ton increased to $2.20 per ton in the first six months of 1998 from $2.14 per ton for the same period of 1997. This overall change in coal margin per ton during the first six months of 1998 was due to the change in sales and production mix which occurred in the second quarter and an increase in steam coal margins partially offset by a decrease in metallurgical coal margins. Steam coal margins increased for the first six months of 1998 due to higher realizations during the period. During the same period, metallurgical margins decreased due to the negative impact of lower realization amounts which began with the new contract year in the second quarter of 1998. This was partially offset by lower production costs, which included the Harbor Maintenance Tax benefit discussed below. --- 66

The current production cost of coal sold for the first half of 1998 was $27.49 per ton as compared to $27.56 per ton for the first half of 1997. While production cost per ton increased due to a larger proportion of the higher cost deep mine production, these increases were more than offset by a $1.3 million benefit ($0.14 per ton) related to a favorable ruling issued by the U.S. Supreme Court on the unconstitutionality of the Harbor Maintenance Tax. Production for the year-to-date 1998 period totaled 7.0 million tons, a decrease from the 1997 period production of 8.6 million tons, due in large part to the reduced production by and subsequent sale of certain Elkay Assets. Surface production accounted for 55% and 64% of the total production in the 1998 and 1997 periods, respectively. Productivity of 35.1 tons per man day in period decreased from the 37.1 tons per man day in 1997 due to the increased percentage of deep mine production. The non-coal margin was $1.2 million for the first half of both 1998 and 1997. Other operating income decreased $0.7 million for the 1998 period due to the inclusion in 1997 of a favorable insurance settlement. Idle equipment and closed mine costs increased $2.7 million in the first half of 1998 as compared to 1997, primarily due to inventory writedowns of $2.0 million associated with the sale of certain Elkay Assets along with costs relating to mines which went idle in the third quarter of 1997. Inactive employee costs, which primarily represent long-term employee liabilities for pension and retiree medical costs, decreased slightly by $0.1 million to $13.7 million in the 1998 six months. This favorable change reflects lower premiums from the Coal Industry Retiree Health Benefit Act of 1992, offset by the use of a lower long-term interest rate to calculate the present value of the long-term liabilities during 1998 compared to the rate used in 1997. Selling, general and administrative expenses declined by $1.0 million (11%) in the six months of 1998 as compared to the 1997 period, as a result of Coal Operations cost control efforts. In July 1998, Coal Operations completed the sale of two idle properties in West Virginia and a loading dock in Sandlick, Kentucky for an expected pre-tax gain of approximately $5 million. These asset disposals continue the Coal Operations' strategy of disposing of idle and under-performing assets, while focusing on its core metallurgical and steam coal operations. Later this year Coal Operations plans to begin to develop a major underground metallurgical coal mine on reserves owned by the company in Virginia. At full production, scheduled for sometime in 2001, this mine is expected to produce average annual production of approximately 1.3 million tons from a proven and probable reserve of approximately 15.0 million tons. Coal Operations continues cash funding for charges recorded in prior years for facility closure costs recorded as restructuring and other charges in the Statement of Operations. The following table analyzes the changes in liabilities during the first six months of 1998 for such costs: Employee Mine Termination, and Medical Plant and Closure Severance (In thousands) Costs Costs Total - ------------------------------------------------------------------------------------------------------------------- Balance as of December 31, 1997 $ 11,143 19,703 30,846 Payments 521 1,013 1,534 Other reductions 16 -- 16 - ------------------------------------------------------------------------------------------------------------------- Balance as of June 30, 1998 $ 10,606 18,690 29,296 =================================================================================================================== --- 67

MINERAL VENTURES The following is a table of selected financial data for Mineral Ventures on a comparative basis: (Dollars in thousands, except Three Months Ended June 30 Six Months Ended June 30 per ounce data) 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Stawell Gold Mine: Gold sales $ 4,217 3,719 8,173 8,000 Other revenue 15 20 37 29 - ------------------------------------------------------------------------------------------------------------------- Net sales 4,232 3,739 8,210 8,029 Cost of sales (a) 3,071 3,666 5,742 7,297 Selling, general and administrative expenses (a) 248 381 539 679 - ------------------------------------------------------------------------------------------------------------------- Total costs and expenses 3,319 4,047 6,281 7,976 - ------------------------------------------------------------------------------------------------------------------- Operating profit - Stawell Gold Mine 913 (308) 1,929 53 Other operating expense, net (1,191) (1,002) (2,254) (1,818) - ------------------------------------------------------------------------------------------------------------------- Operating loss $ (278) (1,310) (325) (1,765) =================================================================================================================== Stawell Gold Mine: Mineral Ventures' 50% direct share: Ounces sold 11,809 9,665 22,955 20,241 Ounces produced 11,743 9,315 22,899 20,266 Average per ounce sold (US$): Realization $ 357 385 356 395 Cash cost 219 370 213 348 =================================================================================================================== (a) Excludes $1,062 and $1,970 of non-Stawell related selling, general and administrative expenses for the three months and six months ended June 30, 1998. Excludes $26 and $797, and $68 and $1,414 of non-Stawell related cost of sales and selling, general and administrative expenses, respectively, for the three months and six months ended June 30, 1997. Such costs are reclassified to cost of sales and selling, general and administrative expenses in the Minerals Group Statement of Operations. Mineral Ventures, which primarily consists of a 50% direct and a 17% indirect interest in the Stawell gold mine ("Stawell") in western Victoria, Australia, generated an operating loss of $0.3 million in the second quarter of 1998, an improvement of $1.0 million as compared to the loss of $1.3 million in the second quarter of 1997. Mineral Ventures' 50% direct interest in Stawell's operations generated net sales of $4.2 million in the second quarter of 1998 compared to $3.7 million in the 1997 period due to an increase in ounces of gold sold from 9.7 thousand ounces to 11.8 thousand ounces, partially offset by lower gold realizations due to declining market prices. The second quarter operating profit at Stawell of $0.9 million increased $1.2 million over the prior year quarter reflecting a $151.0 per ounce decrease (41%) in the cash cost of gold sold partially offset by a $28.0 per ounce decrease (7%) in average realization. Production costs were lower in the 1998 quarter due to a weaker Australian dollar as well as lower operating costs than the 1997 quarter which was adversely impacted by the collapse of a ventilation shaft during its construction which caused production delays. During the first six months of 1998, Mineral Ventures generated an operating loss of $0.3 million as compared to an operating loss of $1.8 million in the 1997 period. Mineral Ventures' 50% direct interest in Stawell's operations generated net sales of $8.2 million in the first half of 1998 compared to $8.0 million in the 1997 period as the ounces of gold sold increased from 20.2 thousand ounces to 23.0 thousand ounces (13%). The operating profit at Stawell of $1.9 million was $1.9 million higher than operating profit in the first half of 1997 and was affected by a $135 per ounce decrease (39%) in the cash cost of gold sold offset by a $39 per ounce decrease (10%) in the selling price of gold. Production costs were lower in 1998 due to a weaker Australian dollar. In addition, Stawell's costs in the first half of 1997 were negatively impacted by temporary unfavorable ground conditions and the collapse of a new ventilation shaft during its construction resulting in lower production and higher costs. --- 68

As of June 30, 1998, approximately 17% of Mineral Ventures' share of the total proven and probable reserves had been sold forward under forward sales contracts that mature periodically through mid-1999. Based on contracts in place and current market conditions, full year 1998 average realizations are expected to be between $325 and $330 per ounce of gold sold. At June 30, 1998, remaining proven and probable gold reserves at the Stawell mine were estimated at 392.2 thousand ounces. Other operating expense, net, includes equity earnings from joint ventures, primarily consisting of Mineral Ventures' 17% indirect interest in Stawell's operations and gold exploration costs for all operations excluding Stawell. In addition to its interest in Stawell, Mineral Ventures has a 17% indirect interest in the Silver Swan base metals property in Western Australia. Operating results at Silver Swan have been below expectations due to the impact of depressed nickel prices, though production volumes and costs at the mine are in line with expectations. FOREIGN OPERATIONS A portion of the Minerals Group's financial results is derived from activities in Australia, which has a local currency other than the U.S. dollar. Because the financial results of the Minerals Group are reported in U.S. dollars, they are affected by the changes in the value of the foreign currency in relation to the U.S. dollar. Rate fluctuations may adversely affect transactions which are denominated in the Australian dollar. The Minerals Group routinely enters into such transactions in the normal course of its business. The Company, on behalf of the Minerals Group, from time to time, uses foreign currency forward contracts to hedge the currency risks associated with certain transactions. Similarly, a 34% owned affiliate of Mineral Ventures primarily utilizes forward sales contracts to hedge certain currency and gold price exposures related to its operations. Realized and unrealized gains and losses on these contracts are deferred and recognized as part of the specific transaction hedged. The Minerals Group is also subject to other risks customarily associated with doing business in foreign countries, including labor and economic conditions. CORPORATE EXPENSES A portion of the Company's corporate general and administrative expenses and other shared services has been allocated to the Minerals Group based on utilization and other methods and criteria which management believes to be an equitable and a reasonable estimate of the cost attributable to the Minerals Group. These attributions were $2.0 million and $1.4 million for the second quarter of 1998 and 1997, respectively and $5.7 million and $2.9 million for the first six months of 1998 and 1997, respectively. The increase in the second quarter of 1998 is primarily due to costs associated with a severance agreement with a former member of the Company's senior management. The first six months of 1998 also includes additional expenses of approximately $5.8 million related to a retirement agreement between the Company and its former Chairman and CEO. Approximately $1.8 million of this $5.8 million of expenses have been attributed to the Minerals Group. OTHER OPERATING INCOME, NET Other operating income, net increased $0.7 million and decreased $0.7 million for the three and six month periods ended June 30, 1998, respectively. Other operating income, net principally includes equity in earnings of unconsolidated affiliates, royalty income and gains and losses from sales of coal property and equipment. The increase in the second quarter of 1998 relates to higher levels of royalty and dividend income. The decrease in the six month period of 1998 is due to the inclusion in 1997 of a favorable insurance settlement, along with higher gains on asset sales during that period. NET INTEREST EXPENSE Net interest expense decreased $0.3 million in both the three and six month periods ended June 30, 1998. The decrease is due to lower average borrowings during the 1998 periods. INCOME TAXES In both the 1998 and 1997 periods presented, a credit for income taxes was recorded, due to pre-tax losses as well as tax benefits of percentage depletion which can be used by the Company. --- 69

FINANCIAL CONDITION A portion of the Company's corporate assets and liabilities has been attributed to the Minerals Group based upon utilization of the shared services from which assets and liabilities are generated. Management believes this attribution to be an equitable and a reasonable estimate of the cost attributable to the Minerals Group. CASH FLOW REQUIREMENTS Operating activities for the first six months of 1998 used cash of $4.1 million, compared to $3.5 million of cash provided in 1997. In the 1998 period, cash flow from operations declined due to lower earnings combined with an increase in the amount required to fund operating assets and liabilities. Offsetting these operating cost requirements was approximately $18 million in cash proceeds from the sale of Elkay Assets discussed previously. Additional requirements for capital expenditures and other investing activities, repayments to the Brink's Group and net costs of share activity were offset with additional net borrowings, resulting in an increase in cash and cash equivalents of $0.2 million. During the second quarter of 1998, Coal Operations disposed of certain Elkay Assets, including coal supply contracts and limited coal reserves. Total cash proceeds from the sale amounted to approximately $18 million, resulting in a pre-tax loss of $2.2 million. CAPITAL EXPENDITURES Cash capital expenditures for the first six months of 1998 and 1997 totaled $12.8 million and $17.0 million, respectively. During the 1998 period, Coal Operations and Mineral Ventures spent $11.2 million and $1.4 million, respectively. For the remainder of 1998, the Minerals Group's cash capital expenditures are expected to approximate $10 million, including expenditures related to the new underground metallurgical coal mine previously discussed. FINANCING The Minerals Group intends to fund cash capital expenditures through anticipated cash flow from operating activities or through operating leases if the latter are financially attractive. Shortfalls, if any, will be financed through the Company's revolving credit agreements, other borrowing arrangements or borrowings from the Brink's Group. Total debt outstanding at June 30, 1998 was $135.6 million, an increase of $18.9 million from the $116.7 million outstanding at December 31, 1997. These increased borrowings, which funded cash flow requirements including repayment of amounts owed to the Brink's Group, were made primarily under the credit agreement discussed below. The Company has a $350.0 million credit agreement with a syndicate of banks (the "Facility"). The Facility includes a $100.0 million term loan and also permits additional borrowings, repayments and reborrowings of up to an aggregate of $250.0 million. As of June 30, 1998 and December 31, 1997, borrowings of $100.0 million were outstanding under the term loan portion of the Facility and $101.8 million and $25.9 million, respectively, of additional borrowings were outstanding under the remainder of the Facility. Of the outstanding amounts under the Facility at June 30, 1998, and December 31, 1997, $134.0 million and $115.0 million, respectively, was attributed to the Minerals Group. RELATED PARTY TRANSACTIONS At June 30, 1998, under interest bearing borrowing arrangements, the Minerals Group owed the Brink's Group $10.3 million, a decrease of $16.7 million from the $27.0 million owed at December 31, 1997. The Minerals Group did not owe any amounts to the BAX Group at June 30, 1998 or December 31, 1997. At June 30, 1998, the Brink's Group owed the Minerals Group $12.1 million versus $19.4 million at December 31, 1997 for tax benefits. Approximately $12.0 million is expected to be paid within one year. Also at June 30, 1998, the BAX Group owed the Minerals Group $21.6 million versus $18.2 million at December 31, 1997 for tax benefits, of which $9.0 million is expected to be paid within one year. --- 70

OFF-BALANCE SHEET INSTRUMENTS Interest rate contracts - In the second quarter of 1998, the Company entered into three interest swap agreements. These three agreements effectively convert a portion of the interest on its $100.0 million variable rate term loan to fixed rates. The first fixes the interest rate at 5.84% on $20.0 million in face amount of debt, the second fixes the interest rate at 5.86% on $20.0 million in face amount of debt, and the third fixes the interest rate at 5.80% on $20.0 million in face amount of debt. The first two agreements mature in May 2001, while the third agreement matures in May 2000. As of June 30, 1998 the fair value adjustment of all of these agreements was not significant. Foreign currency forward contracts - The Company, on behalf of the Minerals Group, enters into foreign currency forward contracts, from time to time, with a duration of up to two years as a hedge against liabilities denominated in the Australian dollar. These contracts minimize the Minerals Group's exposure to exchange rate movements related to cash requirements of Australian operations denominated in Australian dollars. At June 30, 1998, the notional value of foreign currency forward contracts outstanding was $17.6 million and the fair value adjustment approximated ($1.7) million. Gold contracts - In order to protect itself against downward movements in gold prices, the Company, on behalf of the Minerals Group, hedges a portion of its share of gold sales from the Stawell gold mine primarily through forward sales contracts. At June 30, 1998, 32,973 ounces of gold, representing approximately 17% of the Minerals Group's share of Stawell's proven and probable reserves, were sold forward under forward sales contracts that mature periodically through mid-1999. Because only a portion of its future production is currently sold forward, the Minerals Group can take advantage of increases and is exposed to decreases in the spot price of gold. At June 30, 1998, the fair value of the Minerals Group's forward sales contracts was ($.2) million. READINESS FOR YEAR 2000 The Minerals Group has taken actions to understand the nature and extent of the work required to make its systems, products and infrastructures Year 2000 compliant. As these efforts progress, the Minerals Group continues to evaluate the estimated costs associated with these efforts. Based upon its most recent estimates and its anticipated capital spending, the Minerals Group does not anticipate that it will incur any material costs in preparing for the Year 2000. The Minerals Group believes, based on available information, that it will be able to manage its Year 2000 transition without any material adverse effect on its business operations, products or financial condition. However, if the applicable modifications and conversions are not made, or are not completed on a timely basis, the Year 2000 issue could have a material adverse impact on the operations of the Minerals Group. Further, management is currently evaluating the extent to which the Minerals Group's interface systems are vulnerable to its suppliers' and customers' failure to remediate their own Year 2000 issues as there is no guarantee that the systems of other companies on which the Minerals Group's systems rely will be timely and adequately converted. CAPITALIZATION The Company has three classes of common stock: Minerals Stock; Pittston Brink's Group Common Stock ("Brink's Stock") and Pittston BAX Group Common Stock ("BAX Stock") which were designed to provide shareholders with separate securities reflecting the performance of the Minerals Group, Brink's Group and BAX Group, respectively, without diminishing the benefits of remaining a single corporation or precluding future transactions affecting any of the Groups. The Minerals Group consists of the Coal Operations and Mineral Ventures operations of the Company. The Brink's Group consists of the Brink's, Incorporated ("Brink's") and the Brink's Home Security, Inc. ("BHS") operations of the Company. The BAX Group consists of the BAX Global Inc. ("BAX Global") operations of the Company. The Company prepares separate financial statements for the Minerals, Brink's and BAX Groups in addition to consolidated financial information of the Company. As previously mentioned, effective May 4, 1998, the designation of Pittston Burlington Group Common Stock and the name of the Pittston Burlington Group were changed to Pittston BAX Group Common Stock and Pittston BAX Group, respectively. All rights and privileges of the holders of such Stock are otherwise unaffected by such changes. The stock continues to trade on the New York Stock Exchange under the symbol "PZX". --- 71

Under the share repurchase programs authorized by the Board of Directors (the "Board"), the Company purchased shares in the periods presented as follows: Three Months Ended June 30 Six Months Ended June 30 (Dollars in millions) 1998 1997 1998 1997 - ---------------------------------------------------------------------------------------------------------------- Convertible Preferred Stock: Shares -- -- 355 -- Cost $ -- -- 0.1 -- Excess carrying amount (a) $ -- -- 0.02 -- (a) The excess of the carrying amount of the Series C Convertible Preferred Stock (the "Convertible Preferred Stock") over the cash paid to holders for repurchases made during the periods. This amount is deducted from preferred dividends in the Company's Statement of Operations. The Company's remaining repurchase authority with respect to the Convertible Preferred Stock as of June 30, 1998 was $24.2 million. As of June 30, 1998, the Company had remaining authority to purchase over time 1.0 million shares of Minerals Stock. The remaining aggregate purchase cost limitation for all common stock was $13.4 million as of June 30, 1998. DIVIDENDS The Board intends to declare and pay dividends, if any, on Minerals Stock based on the earnings, financial condition, cash flow and business requirements of the Minerals Group. Since the Company remains subject to Virginia law limitations on dividends, losses by the Brink's or the BAX Group could affect the Company's ability to pay dividends in respect of stock relating to the Minerals Group. Dividends on Minerals Stock are also limited by the Available Minerals Dividend Amount as defined in the Company's Articles of Incorporation. The Available Minerals Dividend Amount may be reduced by activity that reduces shareholder's equity or the fair value of net assets of the Minerals Group. Such activity includes net losses by the Minerals Group, dividends paid on the Minerals Stock and the Convertible Preferred Stock, repurchases of Minerals Stock and the Convertible Preferred Stock, and foreign currency translation losses. At June 30, 1998, the Available Minerals Dividend Amount was at least $10.1 million. During the first six months of 1998 and 1997, the Board declared and the Company paid cash dividends of 18.75 cents and 32.50 cents, respectively, per share of Minerals Stock. Dividends paid on the Convertible Preferred Stock in each of the 1998 and 1997 second quarters totaled $1.8 million. In May 1998, the Company reduced the annual dividend rate on Minerals Stock to 10.00 cents per year per share for shareholders as of the May 15, 1998 record date. Cash made available, if any, from this lower dividend rate will be used to either reinvest, as suitable opportunities arise, in the Minerals Group companies or to pay down debt, with a view towards maximizing long-term shareholder value. ACCOUNTING CHANGES The Minerals Group adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income", in the first quarter of 1998. SFAS No. 130 establishes standards for the reporting and display of comprehensive income and its components in financial statements. Comprehensive income generally represents all changes in shareholders' equity except those resulting from investments by or distributions to shareholders. Total comprehensive loss, which is composed of net loss attributable to common shares and foreign currency translation adjustments, for both the quarter ended June 30, 1998 and 1997 was $2.8 million and for the six months ended June 30, 1998 and 1997 was $4.6 million and $3.0 million, respectively. Effective January 1, 1998, the Minerals Group implemented AICPA Statement of Position ("SOP") No. 98-1 "Accounting for the Costs of Computer Software Developed for Internal Use". SOP No. 98-1 requires that certain costs related to the development or purchase of internal-use software be capitalized and amortized over the estimated useful life of the software. --- 72

PENDING ACCOUNTING CHANGES The Minerals Group will adopt a new accounting standard, SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information", in the financial statements for the year ended December 31, 1998. SFAS No. 131 requires publicly-held companies to report financial and descriptive information about operating segments in financial statements issued to shareholders for interim and annual periods. SFAS No. 131 also requires additional disclosures with respect to products and services, geographic areas of operation, and major customers. The adoption of this SFAS is not expected to have a material impact on the financial statements of the Minerals Group. In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This statement is effective for the Minerals Group for the year beginning January 1, 2000, with early adoption allowed. The Minerals Group is currently evaluating the timing of adoption and the effect that implementation of the new standard will have on its results of operations and financial position. In April 1998, the AICPA issued SOP No. 98-5, "Reporting on the Costs of Start-Up Activities." SOP No. 98-5, which provides guidance on the reporting of start-up costs and organization costs, requires that such costs be expensed as incurred. This SOP is effective for the Minerals Group for the year beginning January 1, 1999, with early application encouraged. Initial application of the SOP is required to be reported as a cumulative effect of a change in accounting principle as of the beginning of the year of adoption. The Minerals Group is currently evaluating the effect that implementation of the new statement will have on its results of operations and financial position. FORWARD LOOKING INFORMATION Certain of the matters discussed herein, including statements regarding projected capital spending, readiness for Year 2000, repayment of borrowings to the Minerals Group and expectations with regard to future realizations from metallurgical coal mine development and coal and gold sales involve forward looking information which is subject to known and unknown risks, uncertainties and contingencies which could cause actual results, performance and achievements, to differ materially from those which are anticipated. Such risks, uncertainties and contingencies, many of which are beyond the control of the Minerals Group and the Company, include, but are not limited to, overall economic and business conditions, the demand for the Minerals Group's products, geological conditions, pricing, and other competitive factors in the industry, new government regulations and/or legislative initiatives, variations in the spot prices of coal and gold, the ability of counter parties to perform, changes in the scope of Year 2000 initiatives and delays or problems in the implementation of Year 2000 initiatives by the Minerals Group and/or its suppliers and customers. --- 73

PART II - OTHER INFORMATION Item 5. Other Information - ------- ----------------- The Company's bylaws prescribe the procedures a shareholder must follow to nominate a director or directors or to bring other business before annual meetings. For a shareholder to nominate a director or directors at the 1999 annual meeting or bring any business (including any proposal intended for inclusion in the Company's proxy materials) before the 1999 annual meeting, notice must be given to the Secretary of the Company between September 28, 1998, and November 27, 1998, for the Company's Annual Meeting of Shareholders tentatively scheduled for May 7, 1999. The written notice to nominate a director or directors must satisfy all conditions specified in the Company's bylaws, including, without limitation, the qualifications of such nominee(s) for consideration. The written notice to bring any other business before the meeting must satisfy all conditions specified in the Company's bylaws, including, without limitation, a description of the proposed business, the reason for it, the complete text of any resolution and other specified matters. Any shareholder desiring a copy of the Company's bylaws will be furnished one without charge upon written request to the Secretary. Item 6. Exhibits and Reports on Form 8-K - ------- -------------------------------- (a) Exhibits: Exhibit Number ------- 27 Financial Data Schedules (b) The following reports on Form 8-K were filed during the second quarter of 1998: (i) Report on Form 8-K filed on April 29, 1998, with respect to first quarter 1998 earnings for each of Pittston Brink's Group Common Stock, Pittston Burlington Group Common Stock and Pittston Minerals Group Common Stock; and (ii) Report on Form 8-K filed on May 14, 1998, with respect to BAX Global's acquisition of Air Transport International LLC. --- 74

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, thereunto duly authorized. THE PITTSTON COMPANY August 13, 1998 By /s/ Robert T. Ritter ---------------------------- Robert T. Ritter (Vice President - Chief Financial Officer) --- 75

5 This schedule contains summary financial information from The Pittston Company Form 10Q for the six month ended June 30, 1998, and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS DEC-31-1998 JUN-30-1998 70,290 2,086 578,007 26,008 42,190 800,321 1,330,867 531,914 2,242,645 742,824 328,984 69,351 0 1,134 638,191 2,242,645 284,306 1,789,768 277,442 1,733,881 0 5,500 16,911 46,922 13,332 33,590 0 0 0 33,590 0

0 Pittston Brink's Group - Basic - .97 Pittston BAX Group - Basic - (.10) Pittston Minerals Group - Basic - (.46) Pittston Brink's Group - Diluted - .96 Pittston BAX Group - Diluted - (.10) Pittston Minerals Group - Diluted - (.46)

5 This schedule contains summary financial information from The Pittston Company Form 10Q for the six months ended June 30, 1997, and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS DEC-31-1997 JUN-30-1997 59,997 1,712 488,061 17,617 48,888 710,354 1,092,840 488,833 1,957,146 581,343 265,665 0 1,154 70,113 559,348 1,957,146 316,695 1,607,830 307,248 1,549,599 0 3,849 11,986 50,418 14,414 36,004 0 0 0 36,004 0

0 Pittston Brink's Group - Basic - .86 Pittston BAX Group - Basic - .16 Pittston Minerals Group - Basic - (.25) Pittston Brink's Group - Diluted - .85 Pittston BAX Group - Diluted - .16 Pittston Minerals Group - Diluted - (.25)

5 This schedule contains summary financial information from The Pittston Company Form 10Q for the quarter ended March 31, 1997, and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1997 MAR-31-1997 50,827 1,173 456,205 16,925 44,442 674,494 1,048,508 473,011 1,899,080 568,903 234,711 70,126 0 1,154 546,688 1,899,080 158,883 781,676 153,412 747,874 0 1,768 5,564 30,444 9,103 21,341 0 0 0 21,341 0

0 Pittston Brink's Group - Basic - .40 Pittston BAX Group - Basic - .26 Pittston Minerals Group - Basic - .01 Pittston Brink's Group - Diluted - .40 Pittston BAX Group - Diluted - .26 Pittston Minerals Group - Diluted - .01