SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K

(Mark One)

 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1996

                                       OR

 [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED] 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.)

            P.O. Box 4229,
    1000 Virginia Center Parkway
          Richmond, Virginia                                     23058-4229
(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code             (804) 553-3600 
Securities registered pursuant to Section 12(b) of the Act:

                                                        Name of each exchange on
           Title of each class                             which registered
           -------------------                          ------------------------
Pittston Brink's Group Common Stock, Par Value $1       New York Stock Exchange
Pittston Burlington Group Common Stock, Par Value $1    New York Stock Exchange
Pittston Minerals Group Common Stock, Par Value $1      New York Stock Exchange
4% Subordinated Debentures Due July 1, 1997             New York Stock Exchange
Rights to Purchase Series A Participating 
  Cumulative Preferred Stock                            New York Stock Exchange
Rights to Purchase Series B Participating 
  Cumulative Preferred Stock                            New York Stock Exchange
Rights to Purchase Series D Participating 
  Cumulative Preferred Stock                            New York Stock Exchange
Securities registered pursuant to Section 
  12(g) of the Act:                                             None

         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 [_]

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

      As of March 3, 1997, there were issued and outstanding 41,203,179 shares
of Pittston Brink's Group common stock, 20,588,700 shares of Pittston Burlington
Group common stock and 8,405,908 shares of Pittston Minerals Group common stock.
The aggregate market value of such stocks held by nonaffiliates, as of that
date, was $982,937,858, $375,102,248 and $114,944,556, respectively.

      Documents incorporated by reference: Portions of the Registrant's
definitive Proxy Statement to be filed pursuant to Regulation 14A(Part III).

- --------------------------------------------------------------------------------
PART I
- --------------------------------------------------------------------------------

ITEMS 1 AND 2. BUSINESS AND PROPERTIES
- --------------------------------------------------------------------------------

As used herein, the "Company" includes The Pittston Company and its direct and
indirect subsidiaries, except as otherwise indicated by the context. The Company
is a diversified firm with three separate groups - Pittston Brink's Group,
Pittston Burlington Group, and Pittston Minerals Group. Within these three
groups, the Company maintains five separately reportable industry segments -
Brink's, BHS, Burlington, Coal Operations and Mineral Ventures. Financial
information on the Company's segments for the three fiscal periods ended
December 31, 1996, if included, is presented in Note 16 of the Notes to
Consolidated Financial Statements (see Item 8). The information set forth with
respect to "Business and Properties" is as of December 31, 1996 except where an
earlier or later date is expressly stated. Nothing herein should be considered
as implying that such information is correct as of any date other than December
31, 1996, except as so stated or indicated by the context.

Activities relating to the Burlington segment are carried on by Burlington Air
Express Inc. and its subsidiaries and certain affiliates and associated
companies in foreign countries (together, "Burlington"). Activities relating to
the Brink's segment are carried on by Brink's, Incorporated and its subsidiaries
and certain affiliates and associated companies in foreign countries (together,
"Brink's"). Activities relating to the BHS segment are carried on by Brink's
Home Security, Inc. ("BHS"). Activities relating to Coal Operations are carried
on by the Pittston Coal Company and its subsidiaries (together "Coal
Operations"). Activities relating to Mineral Ventures are carried on by Pittston
Mineral Ventures Company and its subsidiaries (together "Mineral Ventures").
During 1996, The Company relocated its headquarters to Richmond, Virginia. The
Company owns the land and building where the headquarters are located.

The Company has a total of approximately 27,000 employees.

PITTSTON BRINK'S GROUP

Pittston Brink's Group (the "Brink's Group") consists of the armored car, air
courier and related services of Brink's, and the home security business of BHS.

Brink's

General

The major activities of Brink's are contract-carrier armored car, automated
teller machine ("ATM"), air courier, coin wrapping, and currency and deposit
processing services. Brink's serves customers through 144 branches in the United
States and 39 branches in Canada. Service is also provided through subsidiaries,
affiliates and associated companies in 47 countries outside the United States
and Canada. These international operations contributed approximately 39% of
Brink's total reported 1996 operating profit. Brink's ownership interest in
these companies ranges from approximately 20% to 100%; in some instances local
laws limit the extent of Brink's interest.

Representative customers include banks, commercial establishments, industrial
facilities, investment banking and brokerage firms and government agencies.
Brink's provides its individualized services under separate contracts designed
to meet the distinct transportation and security requirements of its customers.
These contracts are usually for an initial term of one year or less, but
generally continue in effect thereafter until canceled by either party.

Brink's armored car services include transportation of money from industrial and
commercial establishments to banks for deposit, and transportation of money,
securities and other negotiable items and valuables between commercial banks,
Federal Reserve Banks and their branches and correspondents, and brokerage
firms. Brink's also transports new currency, coins and precious metals for the
United States Mint, the Federal Reserve System and the Bank of Canada. For
transporting money and other valuables over long distances, Brink's offers a
combined armored car and air courier service linking many cities in the United
States and abroad. Except for a subsidiary in Venezuela, Brink's does not own or
operate any aircraft, but uses regularly scheduled or chartered aircraft in
connection with its air courier services.

In addition to its armored car pickup and delivery services, Brink's provides
change services, coin wrapping services, currency and deposit processing
services, ATM services, safes and safe control services, check cashing and
pickup and

                                       1

delivery of valuable air cargo shipments. In certain geographic areas, Brink's
transports canceled checks between banks or between a clearing house and its
member banks. Brink's has developed and is marketing a product called
CompuSafe('tm') designed to streamline the handling and management of cash
receipts for the convenience store and gas station market. Pilot tests are under
way in several test markets in the United States.

Brink's operates a worldwide specialized diamond and jewelry transportation
business and has offices in the major diamond and jewelry centers of the world,
including Antwerp, Tel Aviv, Hong Kong, New York, Bombay, Bangkok, Tokyo and
Arrezzo, Italy.

Brink's has a wholly owned subsidiary that develops highly flexible deposit
processing and vault management software systems for the financial services
industry as well as Brink's own locations. Brink's offers a total processing
package and the ability to tie together a full range of cash vault, ATM,
transportation, storage, processing, inventory management and reporting
services. Brink's believes that its processing and information capabilities
differentiate its currency and deposit processing services from its competitors
and enable Brink's to take advantage of the trend by banks, retail business
establishments and others to outsource vaulting and cash room operations.

Brink's non-North American operations which accounted for approximately 44% of
its revenues in 1996, are organized into three regions: Europe, Latin America
and Asia/Pacific. In Europe, wholly owned subsidiaries of Brink's operate in the
United Kingdom and in the diamond and jewelry business, in Belgium, Italy,
Russia and the United Kingdom. Also, in January 1997, Brink's purchased the
remaining outstanding shares of its subsidiary in the Netherlands. Brink's has a
70% interest in a subsidiary in Israel and a majority interest in subsidiaries
in Greece and Switzerland. Brink's also has ownership interests ranging from
24.5% to 50% in affiliates operating in Belgium, France, Germany, Ireland,
Italy, Jordan and Luxembourg. In Africa, a wholly owned subsidiary operates in
South Africa. In Latin America, a wholly owned subsidiary operates in Brazil.
Brink's owns a 60% interest in a subsidiary in Chile, a 88.8% interest in a
subsidiary in Bolivia, a 51% ownership interest in a subsidiary in Argentina, a
50.5% interest in a subsidiary in Colombia and a 20% interest in a Mexican
company, Servicio Pan Americano de Proteccion, S.A., which operates one of the
world's largest security transportation services with over 1,700 armored
vehicles. Brink's also has 49% and 36% ownership interests in affiliates
operating in Panama and Peru, respectively. Additionally, in January 1997,
Brink's increased its ownership from 15% to 61% of its subsidiary in Venezuela
(see Item 7). In the Asia/Pacific region, wholly owned subsidiaries of Brink's
operate in Australia and China, and majority owned subsidiaries operate in Japan
and Singapore. Brink's also has minority interests in affiliates in India,
Pakistan and Thailand and a 50% ownership interest in an affiliate in Taiwan.
Additionally, in February 1997, Brink's purchased the remaining outstanding
shares of its majority owned subsidiary in Hong Kong.

Because the financial results of Brink's 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. Brink's international activity is not concentrated
in any single currency, which limits the risks of foreign rate fluctuation. In
addition, foreign currency rate fluctuations may adversely affect transactions
which are denominated in currencies other than the functional currency. Brink's
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, Brink's, from time to time, uses foreign exchange
forward contracts to hedge the risk associated with certain transactions
denominated in currencies other than the functional currency. In addition,
Brink's is subject to the risks customarily attendant upon operations owned by
United States companies in countries outside the United States, including local
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 of such risks on
Brink's cannot be predicted.

Competition
Brink's is the oldest and largest armored car service company in the United
States as well as market leaders in most of the countries in which it operates.
The foreign subsidiaries, affiliates and associates of Brink's compete with
numerous armored car and courier service companies in many areas of operation.
In the United States, Brink's presently competes nationally with two companies
and regionally and locally with many smaller companies. Brink's believes that
its service, high quality insurance coverage and company reputation (including
the name "Brink's") are important competitive advantages. However, the cost of
service is, in many instances, the controlling factor in obtaining and retaining
customers. While Brink's cost structure is generally competitive, certain
competitors of Brink's have lower costs primarily as a result of lower wage and
benefit levels.

See also "Government Regulation" below.

Service Mark, Patents and Copyrights
Brink's is a registered service mark of Brink's, Incorporated in the United
States and in certain foreign countries. The Brink's mark and name are of
material significance to Brink's business. Brink's owns patents with respect to
certain coin sorting and counting machines and armored truck design. Brink's
holds

                                       2

copyrights on certain software systems developed by Brink's. In addition,
Brink's has filed for patents relating to a new product called CompuSafe('tm')
which has been designed to streamline the handling and management of cash
receipts.

Insurance
Brink's carries insurance coverage for losses. Insurance policies cover
liability for loss of various types of property entrusted to Brink's from any
cause except war and nuclear risk. The various layers of insurance are covered
by different groups of participating underwriters. Such insurance is obtained by
Brink's at rates and upon terms negotiated periodically with the underwriters.
The loss experience of Brink's and, to a limited extent, other armored carriers
affects premium rates charged to Brink's. A significant hardening of the
insurance market coupled with industry loss experience in recent years has
resulted in premium increases. The availability of quality and reliable
insurance coverage is an important factor in the ability of Brink's to obtain
and retain customers. Quality insurance is available to Brink's in major markets
although the premiums charged are subject to fluctuations depending on market
conditions. Less expensive armored car and air courier all-risk insurance is
available, but these policies typically contain unacceptable operating
warranties and limited customer protection.

Government Regulation
In 1996, the operations of Brink's were subject to regulation by the United
States Department of Transportation with respect to safety of operation and
equipment and financial responsibility. Intrastate, in the United States, and
intraprovince and interprovince operations in Canada are subject to regulation
by state and by Canadian Dominion and provincial regulatory authorities,
respectively.

Employee Relations
Brink's and its subsidiaries have approximately 8,900 employees in North
America, of whom approximately 3,300 are classified as part-time employees.
Brink's has approximately 8,100 employees outside North America. In the United
States, two locations (13 employees) are covered by collective bargaining
agreements. At December 31, 1996, Brink's was a party to two United States and
nine Canadian collective bargaining agreements with various local unions
covering approximately 1,430 employees, most of whom are employees in Canada and
members of unions affiliated with the International Brotherhood of Teamsters.
Negotiations are continuing on three agreements that expire in 1997. The
remaining agreements will expire after 1997. Brink's believes that its employee
relations are generally satisfactory.

Properties
Brink's owns 25 branch offices and holds under lease an additional 180 branch
offices, located in 38 states, the District of Columbia, the Commonwealth of
Puerto Rico and nine Canadian provinces. Such branches generally include office
space and garage or vehicle terminals, and serve not only the city in which they
are located but also nearby cities. Brink's corporate headquarters in Darien,
Connecticut, is held under a lease expiring in 2000, with an option to renew for
an additional five-year period. The leased branches include 86 facilities held
under long-term leases, while the remaining 94 branches are held under
short-term leases or month-to-month tenancies.

Brink's owns or leases, in the United States and Canada, approximately 1,940
armored vehicles, 330 panel trucks and 240 other vehicles which are primarily
service cars. In addition, approximately 3,000 Brink's-owned safes are located
on customers' premises. The armored vehicles are of bullet-resistant
construction and are specially designed and equipped to afford security for crew
and cargo. Brink's subsidiaries and affiliated and associated companies located
outside the United States and Canada operate approximately 4,600 armored
vehicles.

BHS

General
BHS is engaged in the business of installing, servicing and monitoring
electronic security systems primarily in owner-occupied, single-family
residences. At December 31, 1996, BHS was monitoring approximately 446,500
systems, including 98,500 new subscribers since December 31, 1995, and was
servicing 59 metropolitan areas in 31 states, the District of Columbia and
Canada. Seven of these areas were added during 1996.

BHS markets its alarm systems primarily through advertising, inbound
telemarketing and a direct sales force. BHS also markets its systems directly to
home builders and has entered into several contracts which extend through 1997.
BHS employees install and service the systems from local BHS branches.
Subcontractors are utilized in some service areas. BHS does not manufacture any
of the equipment used in its security systems; instead, it purchases such
equipment from a small number of suppliers. Equipment inventories are maintained
at each branch office.

BHS's security system consists of sensors and other devices which are installed
at a customer's premises. The equipment is designed to signal intrusion, fire
and medical alerts. When an alarm is triggered, a signal is sent by telephone
line to BHS's central monitoring station near Dallas, Texas. The monitoring
station has been designed and constructed to meet the specifications of
Underwriters' Laboratories, Inc. ("UL") and is UL listed for residential
monitoring. A backup monitoring center in Arlington, Texas, protects against a
catastrophic event at the primary monitoring center. In the event of an
emergency, such

                                       3

as fire, flood, major interruption in telephone service, or any other calamity
affecting the primary facility, monitoring operations can be transferred to the
backup facility.

BHS's alarm service contracts contain provisions limiting BHS's liability to its
customers. Courts have, from time to time, upheld such provisions, but there can
be no assurance that the limitations contained in BHS's agreements will be
enforced according to their terms in any or all cases. The nature of the service
provided by BHS potentially exposes it to greater risks of liability than may be
borne by other service businesses. However, BHS has not experienced any major
liability losses. BHS carries insurance of various types, including general
liability and errors and omissions insurance, to protect it from product
deficiencies and negligent acts of its employees. Certain of BHS's insurance
policies and the laws of some states limit or prohibit insurance coverage for
punitive or certain other kinds of damages arising from employees' misconduct.

Regulation
BHS and its personnel are subject to various Federal, state and local consumer
protection, licensing and other laws and regulations. BHS's business relies upon
the use of telephone lines to communicate signals, and telephone companies are
currently regulated by both the Federal and state governments. BHS's wholly
owned Canadian subsidiary, Brink's Home Security Canada Limited, is subject to
the laws of Canada, British Columbia and Vancouver. The alarm service industry
continues to experience a high incidence of false alarms in some communities,
including communities in which BHS operates. This has caused some local
governments to impose assessments, fines and penalties on subscribers of alarm
companies (including BHS) based upon the number of false alarms reported. There
is a possibility that at some point some police departments may refuse to
respond to calls from alarm companies which would necessitate that private
response forces be used to respond to alarm signals. Since these false alarms
are generally not attributable to equipment failures, BHS does not anticipate
any significant capital expenditures will be required as a result thereof.
Additionally, some communities are considering requiring alarm companies to call
a toll number in order to request police dispatch. BHS believes its alarm
service contracts will allow BHS to pass these charges on to the appropriate
customers. Regulation of installation and monitoring of fire detection devices
has also increased in several markets.

Competition
BHS competes in many of its markets with numerous small local companies,
regional companies and several large national firms. BHS believes that it is one
of the leading firms engaged in the business of installing, servicing and
monitoring electronic security systems in the single-family home marketplace.
Competitive pressure on installation fees increased in 1996. Several significant
competitors offer installation prices which match or are less than BHS prices;
however, many of the small local competitors in BHS markets continue to charge
significantly more for installation. In February 1996, a Federal
telecommunications reform bill was enacted which contained provisions specific
to the alarm industry. The key provisions include a five year waiting period
prior to entry for the six regional Bell operating companies ("RBOCs") not
already providing alarm service, a prohibition against further purchases of
alarm companies by one RBOC, Ameritech, which has already become a significant
competitor in the industry, a prohibition against cross-subsidiarization by an
RBOC of any alarm subsidiaries, a prohibition against any RBOC's accessing lists
of alarm company customers and an expedited complaint process. Consequently,
RBOC's could become significant competitors in the home security business in the
near future. However, BHS believes that the quality of its service compares
favorably with that provided by current competitors and that the Brink's name
and reputation will continue to provide an important competitive advantage
subsequent to the completion of the five year waiting period.

Employees
BHS has approximately 1,900 employees, none of whom is covered by a collective
bargaining agreement. BHS believes that its employee relations are satisfactory.

Properties
BHS operates from 44 leased offices and warehouse facilities across the United
States and one leased office in Canada. All premises protected by BHS alarm
systems are monitored from its central monitoring station near Dallas which is
held by BHS under a lease expiring in 1997. The adjacent National Support
Center, where administrative, technical, and marketing services are performed to
support branch operations, is also held under a lease expiring in 1997. BHS
management anticipates moving its monitoring center and National Support Center
to a new facility in the Dallas area. The new facility, which will be leased by
the Company, will be sub-leased by BHS. This move, which is contingent upon
completion of the building's construction, is scheduled to occur in late 1997.
The lease for the backup monitoring center in Arlington, Texas, expires in 1998.
BHS retains ownership of nearly all the approximately 446,500 systems currently
being monitored. When a current customer cancels the monitoring service and does
not move, it is BHS's policy to temporarily disable the system and not incur the
cost of retrieving it (at which point any remaining book value of the equipment
is written off). Retaining ownership prevents another alarm company from
providing services using BHS security equipment. On the other hand, when a
current customer cancels the monitoring service because of a move, the retention
of ownership of the equipment facilitates the marketing of the monitoring
service to the new homeowner. BHS leases all the vehicles used for installation
and servicing of its security systems.

                                       4

PITTSTON BURLINGTON GROUP

Pittston Burlington Group (the "Burlington Group") consists of the expedited
freight services, logistics management, freight forwarding and customs brokerage
services business of Burlington.

Burlington

General
Burlington is primarily engaged in North American overnight and second day
freight, and international time definite air and sea transportation, freight
forwarding and logistics management services and international customs
brokerage. In conducting its forwarding business, Burlington generally picks up
or receives freight shipments from its customers, consolidates the freight of
various customers into shipments for common destinations, arranges for the
transportation of the consolidated freight to such destinations (using either
commercial carriers or, in the case of most of its domestic, Canadian and
Mexican shipments, its own aircraft fleet and hub sorting facility) and, at the
destinations, distributes the consolidated shipments and effects delivery to
consignees. For international shipments, Burlington also frequently acts as
customs broker facilitating the clearance of goods through customs at
international points of entry. Burlington provides transportation customers with
logistics services and operates warehouse and distribution facilities in several
countries.

Burlington specializes in highly customized global freight forwarding and
logistics services. It has concentrated on providing service to customers with
significant logistics needs, such as manufacturers of computer and electronics
equipment. Burlington offers its customers a variety of service and pricing
alternatives for their shipments, such as overnight delivery, second-day
delivery or deferred service in North America . A variety of ancillary services,
such as shipment tracking, inventory control and management reports are also
provided. Internationally, Burlington offers a similar variety of services
including ocean forwarding, door-to-door delivery and standard and expedited
freight services.

Burlington provides freight service to all North American business communities
as well as most foreign countries through its network of company-operated
stations and agent locations in 118 countries. Burlington markets its services
primarily through its direct sales force and also employs other marketing
methods, including print media advertising and direct mail campaigns. The pickup
and delivery of freight are accomplished principally by independent contractors.

Burlington's computer system, ARGUS+, is a satellite-based, worldwide
communications system which, among other things, provides continuous worldwide
tracking and tracing of shipments and various data for management information
reports, enabling customers to improve efficiency and control costs. Burlington
also utilizes an image processing system to centralize domestic airbill and
related document storage in Burlington's computer for automated retrieval by any
Burlington office. Burlington is implementing a positive tracking system called
BAXTRAX, which uses bar code technology and hand-held scanners.

Burlington'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.

Aircraft Operations
Burlington utilizes a fleet of 28 leased or contracted and 5 owned aircraft
providing regularly scheduled service throughout the United States and certain
destinations in Canada and Mexico from its freight sorting hub in Toledo, Ohio.
Burlington's fleet is also used for charters and to serve other international
markets from time to time. The fleet and hub are primarily dedicated to
providing reliable next-day service for domestic, Canadian and Mexican air cargo
customers. Burlington owns 3 DC-8 and 2 B727-100 aircraft. At December 31, 1996,
Burlington utilized 13 DC8's (including 11 DC8-71 aircraft) under leases for
terms expiring between 1997 and 2003. Fifteen additional 727 cargo aircraft were
under contract at December 31, 1996, for terms of less than two years. Based on
the current state of the aircraft leasing market, Burlington believes that it
should be able to renew these leases or enter into new leases on terms
reasonably comparable to those currently in effect. Pittston has guaranteed
Burlington's obligations under one lease covering one aircraft. The actual
operation and routine maintenance of the aircraft owned or held under long-term
lease by Burlington is contracted out, normally for two- to three-year terms, to
federally certificated operators which supply the pilots and other flight
services.

The nightly lift capacity in operation at December 31, 1996, was approximately
2.4 million pounds, calculated on an average freight density of 7.5 pounds per
cubic foot. Burlington's nightly lift capacity varies depending upon the number
and type of planes operated by Burlington at any particular time. Including
trucking capacity available to Burlington, the aggregate daily cargo capacity
through the hub at December 31, 1996, was approximately 3.3 million pounds.

For aircraft owned or held under long-term lease, Burlington is generally
responsible for all the costs of operating and maintaining the aircraft,
including any special maintenance or modifications which may be required by
Federal Aviation Administration ("FAA") regulations or orders (see "Government
Regulation" below). In 1996 Burlington had cash outlays totaling approximately
$23 million on routine heavy maintenance of its

                                       5

aircraft fleet. Burlington has made provision in its financial statements for
the expected costs associated with aircraft operations and maintenance which it
believes to be adequate; however, unanticipated maintenance costs or required
aircraft modifications could adversely affect Burlington's profitability.

The average airframe age of the fleet leased by Burlington under leases with
terms longer than two years is 29 years, although factors other than age, such
as cycles (numbers of takeoffs or landings) can have a significant impact on an
aircraft's serviceability. Generally, cargo aircraft tend to have fewer cycles
than passenger aircraft over comparable time periods because they have fewer
flights per day and longer flight segments.

Fuel costs are a significant element of the total costs of operating
Burlington's aircraft fleet. For each one cent per gallon increase or decrease
in the price of jet fuel, Burlington's airline operating costs may increase or
decrease approximately $60,000 per month. In order to protect against price
increases in jet fuel, from time to time Burlington enters into hedging and
other agreements, including swap contracts, options and collars.

Fuel prices are subject to world, as well as local, market conditions. It is not
possible to predict the impact of future conditions on fuel prices and fuel
availability. Competition in the airfreight industry is such that no assurance
can be given that any future increases in fuel costs (including taxes relating
thereto) will be recoverable in whole or in part from customers.

Burlington has a lease expiring in October 2013, with the Toledo-Lucas County
Port Authority covering its freight sorting hub and related facilities (the
"Hub") at Toledo Express Airport in Ohio. The Hub consists of various
facilities, including a technologically advanced material handling system which
is capable of sorting approximately one million pounds of freight per hour.

Customers
Burlington's domestic and foreign customer base includes thousands of industrial
and commercial shippers, both large and small. Burlington's customer base
includes major companies in the automotive, computer, electronics, fashion,
pharmaceutical and other industries where rapid delivery of high-value products
is required. In 1996, no single customer accounted for more than 3% of
Burlington's total worldwide revenues. Burlington does not have long-term,
noncancellable contracts with any of its customers.

Competition
The air and sea freight forwarding and logistics industries have been and are
expected to remain highly competitive. The principal competitive factors in both
domestic and international markets are price, the ability to provide
consistently fast and reliable delivery of shipments and the ability to provide
ancillary services such as warehousing, distribution, shipment tracking and
sophisticated information systems and reports. There is aggressive price
competition in the domestic air freight market, particularly for the business of
high volume shippers. Burlington competes with other integrated air freight
companies that operate their own aircraft, as well as with air freight
forwarders, express delivery services, passenger airlines and other
transportation companies. Domestically, Burlington also competes with package
delivery services provided by ground transportation companies, including
trucking firms and surface freight forwarders, which offer specialized overnight
services within limited geographical areas. As a freight forwarder to, from and
within international markets, Burlington also competes with government-owned or
subsidized passenger airlines and ocean shipping companies. In logistics
services, Burlington competes with many third party logistics providers.

Government Regulation
The air transportation industry is subject to Federal regulation under the
Federal Aviation Act of 1958, as amended, and pursuant to that statute, the
Department of Transportation ("DOT") may exercise regulatory authority over
Burlington. Although Burlington itself is exempt from most DOT economic
regulations because it is an air freight forwarder, the operation of its
aircraft is subject directly or indirectly to FAA airworthiness, directives and
other safety regulations and its Toledo, Ohio, hub operations are directly
affected by the FAA.

Federal statutes authorize the FAA, with the assistance of the Environmental
Protection Agency ("EPA"), to establish aircraft noise standards. Under the
National Emissions Standards Act of 1967, as amended by the Clean Air Act
Amendments of 1970, and the Airport Noise and Capacity Act of 1990 (the "Noise
Act"), the administrator of the EPA is authorized to issue regulations setting
forth standards for aircraft emissions. Although the Federal government
generally regulates aircraft noise, local airport operators may, under certain
circumstances, regulate airport operations based on aircraft noise
considerations. If airport operators were to restrict arrivals or departures
during certain nighttime hours to reduce or eliminate air traffic noise for
surrounding home areas at airports where Burlington's activities are centered,
Burlington would be required to serve those airports with Stage III equipment.

The Noise Act requires that aircraft not complying with Stage III noise limits
be phased out by December 31, 1999. The Secretary of Transportation may grant a
waiver if it is in the public interest and if the carrier has at least 85% of
its aircraft in compliance with Stage III noise levels by July 1, 1999, and has
a plan with firm orders for making all of its aircraft comply with such noise
levels no later than December 31, 2003. No waiver may permit the operation of
Stage II aircraft in the United States after December 31, 2003.

                                       6

The Noise Act requires the FAA to promulgate regulations setting forth a
schedule for the gradual phase-out of Stage II aircraft. The FAA has adopted
rules requiring each "U.S. operator" to reduce the number of its Stage II
aircraft by 25% by the end of 1994, by 50% by the end of 1996, and by 75% by the
end of 1998.

The Noise Act imposes certain conditions and limitations on an airport's right
to impose new noise or access restrictions on Stage II and Stage III aircraft
but exempts present and certain proposed regulations from those requirements.

Fourteen of the 18 aircraft in Burlington's fleet held under long-term leases or
owned now comply with the Stage III limits. Through 1999, Burlington anticipates
hush-kitting one DC8-63 aircraft which currently does not comply with Stage III
limits, leasing additional aircraft that do not meet Stage III limits and
hush-kitting such planes as required, or acquiring aircraft that meet Stage III
noise standards. Burlington has acquired, but not yet installed, one additional
DC-8 Stage III hush-kit. In the event that additional expenditures would be
required or costs were to be incurred at a rate faster than expected, Burlington
could be adversely affected. Eleven of the DC8 cargo aircraft leased by
Burlington have been reengined with CFM 56-2C1 engines which comply with Stage
III noise standards.

Burlington is subject to various requirements and regulations in connection with
the operation of its motor vehicles, including certain safety regulations
promulgated by DOT and state agencies.

International Operations
Burlington's international operations accounted for approximately 63% of its
revenues in 1996. Included in international operations are export shipments from
the United States.

Burlington is continuing to develop import/export and logistics business between
shippers and consignees in countries other than the United States. Burlington
currently serves most foreign countries, 118 of which are served by Burlington's
network of company-operated stations and agent locations. Burlington has agents
and sales representatives in many overseas locations, although such agents and
representatives are not subject to long-term, noncancellable contracts.

A significant portion of Burlington's financial results is derived from
activities in several foreign countries, each with a local currency other than
the U.S. dollar. Because the financial results of Burlington 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. Burlington's international
activity is not concentrated in any single currency, which limits the risks of
foreign rate fluctuation. In addition, foreign currency rate fluctuations may
adversely affect transactions which are denominated in currencies other than the
functional currency. Burlington 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, Burlington uses foreign
exchange forward contracts to hedge the risk associated with certain
transactions denominated in currencies other than the functional currency. In
addition, Burlington is subject to the risks customarily attendant upon
operations owned by United States companies in countries outside the United
States, 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 of
such risks on Burlington cannot be predicted.

Employee Relations
Burlington and its subsidiaries have approximately 6,300 employees worldwide, of
whom about 1,700 are classified as part-time. Approximately 140 of these
employees (principally customer service, clerical and/or dock workers) in
Burlington's stations at John F. Kennedy Airport, New York; Secaucus, New
Jersey; and Toronto, Canada are represented by labor unions, which in most cases
are affiliated with the International Brotherhood of Teamsters. The collective
bargaining agreement for Toronto, Canada expired in 1996 and is currently being
negotiated. Burlington did not experience any significant strike or work
stoppage in 1996 and considers its employee relations satisfactory.

Substantially all of Burlington's cartage operations are conducted by
independent contractors, and the flight crews for its aircraft are employees of
the independent airline companies which operate such aircraft.

Properties
Burlington operates 267 (117 domestic and 150 international) stations with
Burlington personnel, and has agency agreements at an additional 242 (54
domestic and 188 international) stations. These stations are located near
primary shipping areas, generally at or near airports. Burlington-operated
domestic stations, which generally include office space and warehousing
facilities, are located in 46 states and Puerto Rico. Burlington-operated
international facilities are located in 27 countries. Most stations serve not
only the city in which they are located, but also nearby cities and towns.
Nearly all Burlington-operated stations are held under lease. The Hub in Toledo,
Ohio, is held under a lease expiring in 2013, with rights of renewal for three
five-year periods. Other facilities, including the corporate headquarters in
Irvine, California, are held under leases having terms of one to ten years.

                                       7

Burlington owns or leases, in the United States and Canada, a fleet of
approximately 33 automobiles as well as 159 vans and trucks utilized in station
work or for hauling freight between airport facilities and Burlington's
stations.

PITTSTON MINERALS GROUP

Pittston Minerals Group (the "Minerals Group") is primarily engaged in the
mining, preparation and marketing of coal, the purchase of coal for resale and
the sale or leasing of coal lands to others through its Coal Operations. The
Minerals Group also explores for and acquires mineral assets other than coal
through its Mineral Ventures operations. Revenues from such activities currently
represent approximately 3% of Minerals Group revenues.

Coal Operations

General
Coal Operations produces coal from approximately 22 company-operated surface and
deep mines located in Virginia, West Virginia and eastern Kentucky for
consumption in the steam and metallurgical markets. Steam coal is sold primarily
to utilities and industrial customers located in the eastern United States.
Metallurgical coal is sold to steel and coke producers primarily located in
Japan, Korea, the United States, Europe, the Mediterranean basin and Brazil.
Coal Operations' strategy is to continue to develop its business as a low-cost
producer of low sulphur steam coal and to increase its significant presence in
the high-quality metallurgical coal markets.

Coal Operations has substantial reserves of low sulphur coal, much of which can
be produced from lower cost surface mines. Moreover, it has a significant share
of the medium volatile metallurgical coal reserves in the United States, along
with other high quality feed stock seams in demand by the coke and steel-making
industry.

Steam coal is sold primarily to domestic utility customers through long-term
contracts (contracts in excess of one year) which have the effect of moderating
the impact of short-term market conditions, thereby reducing one element of risk
in new or expanded projects. Most of the steam coal consumed in the United
States is used to generate electricity. Coal fuels approximately 500 of the
nation's 3,000 electric power plants, with larger facilities consuming more than
10,000 tons of coal daily. Through September 1996, coal accounted for
approximately 55% of the electricity generated by the electric utility industry.
Coal Operations believes that it is well-positioned to take advantage of any
increased demand for low sulfur steam coal. Such increased demand could result
from factors such as regulatory requirements mandating lower emissions of sulfur
dioxide and utility deregulation which should favor coal as the lowest cost
energy source for power plants. In addition, the ongoing reduction in
governmental subsidies for coal production in Europe may provide opportunities
for Coal Operations to utilize its export infrastructure to penetrate the export
thermal coal market as well.

In contrast, the market for metallurgical coal, for most of the past fifteen
years, has been characterized by a weakening demand from primary steel
producers, a move to non-metallurgical coal and/or weak metallurgical coal in
coke and steel making and intense competition from foreign coal producers,
especially those in Australia and Canada who benefited over this period from a
declining currency value versus the U.S. dollar (coal sales contracts are
denominated in U.S. dollars). Metallurgical coal sales contracts typically are
subject to annual price renegotiation, which increases the exposure to market
forces. Nonetheless, since late 1994, the supply/demand balance for
metallurgical coal appears to have been in equilibrium. This is particularly
true for the higher grades of coking coal.

During 1996, favorable conditions including a state tax credit for coal produced
in Virginia, favorable labor negotiations and improved metallurgical market
conditions for medium volatile coal, led management to make new investments in
metallurgical coal mines. In late 1996, three new underground mines were opened,
one mine and one coal preparation and loading facility previously scheduled for
closure, continued to operate, and one coal preparation and loading facility was
reopened. When in full production in early 1997, the three new mines will
produce one million tons of medium volatile coal.

Production
The following table indicates the approximate tonnage of coal purchased and
produced by the Coal Operations for the years ended 1996, 1995 and 1994:

                                                   Years Ended December 31
(In thousands of tons)                      1996            1995            1994
================================================================================
Produced:
Deep                                       3,930           3,982           4,857
Surface                                   11,151          12,934          15,107
Contract                                   1,621           1,941           2,364
- --------------------------------------------------------------------------------
                                          16,702          18,857          22,328
Purchased                                  5,762           6,047           5,826
- --------------------------------------------------------------------------------
Total                                     22,464          24,904          28,154
================================================================================

During 1996, Coal Operations' three large surface mines in Logan County, West
Virginia (Tower Mountain, Bandmill and Boardtree) encountered operating
difficulties which significantly impaired the profitability of these operations.
As a result, a new operating plan will be adopted for these operations.
Boardtree will close in mid-1997 at the end of its reserve life and Bandmill

                                       8

was idled at the end of 1996. The remaining mine, Tower Mountain, will ship all
of its production, estimated to be 2.9 million tons annually, on a direct basis.

Of the coal production in 1996, approximately 26% was produced for sale as
metallurgical coal and 74% was produced for sale as steam coal.

Sales
The following table indicates the approximate tonnage of coal sold by Coal
Operations in the years ended December 31, 1996, 1995 and 1994 in the domestic
(United States and Canada) and export markets and by categories of customers:

(In thousands,                                         Years Ended December 31
except per ton amounts)                             1996        1995        1994
================================================================================
Domestic:
  Steel and coke producers                           139         736         769
  Utility, industrial and other                   14,794      15,846      18,198
- --------------------------------------------------------------------------------
                                                  14,933      16,582      18,967
Export:
  Utility, industrial and other                      217         102        --
  Steel and coke producers                         7,821       7,712       9,115
- --------------------------------------------------------------------------------
Total sold                                        22,971      24,396      28,082
================================================================================
Average selling price per ton                     $29.17       28.81       27.70
================================================================================

For the year ended December 31, 1996, Coal Operations sold approximately 23.0
million tons of coal, of which approximately 14.9 million tons were sold under
long-term contracts. In 1995, Coal Operations sold approximately 24.4 million
tons of coal, of which approximately 17.4 million tons were sold under long-term
contracts. At December 31, 1996, approximately 58.6 million tons were committed
for sale under long-term contracts expiring at various times through July 2007.
Contracts relating to a certain portion of this tonnage are subject to periodic
price renegotiation, which can result in termination by the purchaser or the
seller prior to contract expiration in case the parties should fail to agree
upon price.

During 1996, the ten largest domestic customers purchased 12.0 million tons of
coal (52% of total coal sales and 81% of domestic coal sales, by tonnage). The
three largest domestic customers purchased 7.6 million tons of coal for the year
ended December 31, 1996 (33% of total coal sales and 51% of domestic coal sales,
by tonnage). The largest single customer, American Electric Power Company,
purchased 5.0 million tons of coal, accounting for 22% of total coal sales and
34% of domestic coal sales, by tonnage. In 1995, the ten largest domestic
customers purchased 11.9 million tons of coal (49% of total coal sales and 71%
of domestic coal sales, by tonnage). The three largest domestic customers
purchased 6.8 million tons of coal in 1995 (28% of total coal sales and 41% of
domestic coal sales, by tonnage). In 1995, American Electric Power Company
purchased 4.1 million tons of coal, accounting for 17% of total coal sales and
25% of domestic coal sales, by tonnage.

Of the 8.0 million tons of coal sold in the export market in 1996, the ten
largest customers accounted for 4.6 million tons (20% of total coal sales and
57% of export coal sales, by tonnage) and the three largest customers purchased
2.1 million tons (9% of total coal sales and 26% of export coal sales, by
tonnage). Of the 7.8 million tons of coal sold in the export market in 1995, the
ten largest customers accounted for 5.0 million tons (20% of total coal sales
and 64% of export coal sales, by tonnage) and the three largest customers
purchased 2.2 million tons (9% of total coal sales and 29% of export coal sales,
by tonnage). Export coal sales are made principally under annual contracts or
long-term contracts that are subject to annual price renegotiation. Under these
export contracts, the price for coal is expressed and paid in United States
dollars.

Virtually all coal sales in the domestic utility market pursuant to long-term
contracts are subject to periodic price adjustments on the basis of provisions
which permit an increase or decrease periodically in the price to reflect
increases and decreases in certain price indices. In certain cases, price
adjustments are permitted when there are changes in taxes other than income
taxes, when the coal is sold other than FOB the mine and when there are changes
in railroad and barge freight rates. The provisions, however, are not identical
in all of such contracts, and the selling price of the coal does not necessarily
reflect every change in production cost incurred by the seller.

Contracts for the sale of metallurgical coal in the domestic and export markets
are generally subject to price renegotiation on an annual basis. Approximately
2.0 million tons, or 26%, of Coal Operations' export coal sales of metallurgical
coal in 1996 were made to Far East customers under contracts which continue in
effect through various dates, the latest of which is March 31, 1997, in each
case subject to annual negotiation of price and other terms. Negotiations with
Far East customers have concluded for 1997 and basically mirror those of 1996
with respect to price. Export tonnages to Far East customers are expected to be
lower in 1997, than in 1996. Coal Operations steam coal business for 1997 is
substantially committed to contracts which will escalate in price according to
governmental indices or preset escalation rates or, in certain cases, will be
priced by agreement in negotiation.

Competition
The bituminous coal industry is highly competitive. Coal Operations competes
with many other large coal producers and with hundreds of small producers in the
United States and abroad.

                                       9

In the export market, many foreign competitors, particularly Australian, South
African and Canadian coal producers, benefit from certain competitive advantages
existing in the countries in which they operate, such as less difficult mining
conditions, lower transportation costs, less severe government regulation and
lower labor and health benefit costs, as well as currencies which have generally
depreciated against the United States dollar, although the Australian dollar has
appreciated relative to the U.S. dollar in 1996. The metallurgical coal produced
by Coal Operations is generally of higher quality, and is often used by foreign
steel producers to blend with coals from other sources to improve the quality of
coke and coke oven efficiency. However, in recent years, steel producers have
developed facilities and techniques which, to some extent, enable them to accept
lower quality metallurgical coal in their coke ovens. Moreover, new technologies
for steel production which utilize pulverized coal injection, direct reduction
iron and the electric arc furnace have reduced the demand for all types of
metallurgical coal. However, the use of lesser quality coals and less coke in
the blast furnace has increased the importance of coke strength and the
importance of medium volatile coal.

Coal Operations competes domestically on the basis of the high quality of its
coal, which is not only valuable in the making of steel but, because of low
sulphur and high heat content, is also an attractive source of fuel to the
electric utility and other coal burning industries.

Other factors which affect competition include the price, availability and
public acceptance of alternative energy sources (in particular, oil, natural
gas, hydroelectric power and nuclear power), as well as the impact of federal
energy policies. Coal Operations is not able to predict the effect, if any, on
its business (especially with respect to sales to domestic utilities) of
particular price levels for such alternative energy sources, especially oil and
natural gas. However, any sustained and marked decline in such prices could have
a material adverse effect on such business.

Environmental Matters
The Surface Mining Control and Reclamation Act of 1977 and the regulations
promulgated thereunder ("SMCRA") by the Federal Office of Surface Mining
Reclamation and Enforcement ("OSM"), and the enforcement thereof by the U.S.
Department of the Interior, establish mining and reclamation standards for all
aspects of surface mining as well as many aspects of deep mining. SMCRA also
imposes a tax of $0.35 on each ton of surface-mined coal and $0.15 on each ton
of deep-mined coal. OSM and its state counterparts monitor compliance with SMCRA
and its regulations by the routine issuance of "notices of violation" which
direct the mine operator to correct the cited conditions within a stated period
of time. Coal Operations' policy is to correct the conditions that are the
subject of these notices or to contest those believed to be without merit in
appropriate proceedings.

Coal operations was involved in previously reported litigation with the state
and federal agencies that regulate the environmental aspects of underground and
surface mining. The litigation arose from the agencies' attempt to hold Coal
Operations liable for the unabated violations, civil penalties, and Abandoned
Mined Lands ("AML") fees of other companies ("contractors") that have contracted
in the past to mine Coal Operations' coal. In so doing, the agencies
retroactively applied "ownership or control" regulations first promulgated in
1988, to past transactions and ended relationships. The regulations are designed
to "block" or deny mining permits to any company that is "linked" by "ownership
or control" to another company that has outstanding violations, penalties or
fees. The company that is so linked cannot obtain new permits until the
outstanding liabilities of the violator are satisfied.

Coal Operations has settled the contractor liabilities with the Commonwealth of
Virginia, where almost all of the contractors operated. In this settlement,
which has been approved by the Governor of Virginia, Coal Operations agreed to
reimburse the state approximately $.2 million in reclamation costs and to
complete reclamation at several contractor sites. Under the agreement, Pittston
will have no further liability to the Commonwealth for these contractors.

Coal Operations has also settled with OSM, which retains oversight authority in
Virginia and other coal-producing states. This comprehensive agreement, which
had been under discussion for several years, requires Coal Operations to pay
approximately $.4 million in AML fees to OSM and obligates Coal Operations to
complete reclamation at various contractor sites.

Following completion of this settlement agreement, the United States Court of
Appeals for the D.C. Circuit Court held that OSM's ownership and control
regulations were invalid as an over-broad reading of the underlying statute.
Coal Operations is evaluating the impact of this ruling upon its obligations
under the settlement agreements.

Coal Operations is subject to various federal environmental laws, including the
Clean Water Act, the Clean Air Act and the Safe Drinking Water Act, as well as
state laws of similar scope in Virginia, West Virginia, Kentucky and Ohio. These
laws require approval of many aspects of coal mining operations, and both
federal and state inspectors regularly visit Coal Operations' mines and other
facilities to assure compliance.

                                       10

While it is not possible to quantify the costs of compliance with all applicable
federal and state laws, those costs have been and are expected to continue to be
significant. In that connection, it is estimated that Coal Operations made
capital expenditures for environmental control facilities in the amount of
approximately $1.0 million in 1996 and estimates expenditures of $1.4 million in
1997. Compliance with these laws has substantially increased the cost of coal
mining, but is, in general, a cost common to all domestic coal producers. The
Company believes that the competitive position of Coal Operations has not been
and should not be adversely affected except in the export market where Coal
Operations competes with various foreign producers not subject to regulations
prevalent in the U.S.

Federal, state and local authorities strictly monitor the sulphur dioxide and
particulate emissions from electric power plants served by Coal Operations. In
1990, Congress enacted the Clean Air Act Amendments of 1990, which, among other
things, permit utilities to use low sulphur coals in lieu of constructing
expensive sulphur dioxide removal systems. The Company believes this should have
a favorable impact on the marketability of Coal Operations' extensive reserves
of low sulphur coals. However, the Company cannot predict at this time the
timing or extent of such favorable impact.

Mine Health and Safety Laws
The coal operating companies included within Coal Operations are generally
liable under federal laws requiring payment of benefits to coal miners with
pneumoconiosis ("black lung"). The Black Lung Benefits Revenue Act of 1977 and
the Black Lung Benefits Reform Act of 1977 (the "1977 Act"), as amended by the
Black Lung Benefits and Revenue Amendments Act of 1981 (the "1981 Act"),
expanded the benefits for black lung disease and levied a tax on coal production
of $1.10 per ton for deep-mined coal and $0.55 per ton for surface-mined coal,
but not to exceed 4.4% of the sales price. In addition, the 1981 Act provides
that certain claims for which coal operators had previously been responsible
will be obligations of the government trust funded by the tax. The 1981 Act also
tightened standards set by the 1977 Act for establishing and maintaining
eligibility for benefits. The Revenue Act of 1987 extended the termination date
of the tax from January 1, 1996 to the earlier of January 1, 2014 or the date on
which the government trust becomes solvent. The Company cannot predict whether
any future legislation effecting changes in the tax will be enacted.

Stringent safety and health standards have been imposed by federal legislation
since 1969 when the Federal Coal Mine Health and Safety Act was adopted, which
resulted in increased operating costs and reduced productivity. The Federal Mine
Safety and Health Act of 1977 significantly expanded the enforcement of health
and safety standards.

Compliance with health and safety laws is, in general, a cost common to all
domestic coal producers. The Company believes that the competitive position of
Coal Operations has not been and should not be adversely affected except in the
export market where Coal Operations competes with various foreign producers
subject to less stringent health and safety regulations.

Employee Relations
At December 31, 1996, approximately 720 of the 2,100 employees of Coal
Operations were members of the UMWA. The remainder of such employees are either
unrepresented hourly employees or supervisory personnel. Since 1990, no
significant labor disruptions involving UMWA-represented employees have
occurred. Coal Operations believes that its employee relations are satisfactory.

Health Benefit Act
In October 1992, the Coal Industry Retiree Health Benefit Act of 1992 (the
"Health Benefit Act") was enacted as part of the Energy Policy Act of 1992. The
Health Benefit Act established rules for the payment of future health care
benefits for thousands of retired union mine workers and their dependents. The
Health Benefit Act established a trust fund to which "signatory operators" and
"related persons," including the Company and certain of its subsidiaries
(collectively, the "Pittston Companies"), are jointly and severally liable to
pay annual premiums for assigned beneficiaries, together with a pro rata share
for certain beneficiaries who never worked for such employers, including, in the
Company's case, the Pittston Companies ("unassigned beneficiaries"), in amounts
determined on the basis set forth in the Health Benefit Act. In October 1993,
the Pittston Companies received notices from the Social Security Administration
(the "SSA") with regard to their assigned beneficiaries for which they are
responsible under the Health Benefit Act. For 1996 and 1995, these amounts were
approximately $10.4 million and $10.8 million, respectively. The Company
believes that the annual cash funding under the Health Benefit Act for the
Pittston Companies' assigned beneficiaries will continue at approximately a $10
million per year range for the next several years and should begin to decline
thereafter as the number of such assigned beneficiaries decreases.

Based on the number of beneficiaries actually assigned by the SSA, the Company
estimates the aggregate pretax liability relating to the Pittston Companies'
assigned beneficiaries at December 31, 1996 at approximately $210 million, which
when discounted at 8.0% provides a present value estimate of approximately $90
million.

The ultimate obligation that will be incurred by the Company could be
significantly affected by, among other things, increased medical costs,
decreased number of beneficiaries, governmental funding arrangements, and such
federal health benefit legislation of general application as may be enacted. In
addition, the Health

                                       11

Benefit Act requires the Pittston Companies to fund, pro rata according to the
total number of assigned beneficiaries, a portion of the health benefits for
unassigned beneficiaries. At this time, the funding for such health benefits is
being provided from another source and for this and other reasons the Pittston
Companies' ultimate obligation for the unassigned beneficiaries cannot be
determined. The Company accounts for the obligation under the Health Benefit Act
as a participant in a multi-employer plan and recognizes the annual cost on a
pay-as-you-go basis.

Evergreen Case
In 1988, the trustees of certain pension and benefit trust funds (the "Trust
Funds") established under collective bargaining agreements with the UMWA brought
an action (the "Evergreen Case") against the Company and a number of its coal
subsidiaries in the United States District Court for the District of Columbia,
claiming that the defendants are obligated to contribute to such Trust Funds in
accordance with the provisions of the 1988 and subsequent National Bituminous
Coal Wage Agreements, to which neither the Company nor any of its subsidiaries
is a signatory. In December 1993, the Company and the Minerals Group recognized
in their financial statements the potential liability that might have resulted
from an ultimate adverse judgment in the Evergreen Case.

In late March 1996, a settlement was reached in the Evergreen Case. Under the
terms of the settlement, the coal subsidiaries which had been signatories to
earlier National Bituminous Coal Wage Agreements agreed to make various lump sum
payments in full satisfaction of all amounts allegedly due to the Trust Funds
through January 31, 1996, to be paid over time as follows: approximately $25.8
million upon dismissal of the Evergreen Case and the remainder of $24.0 million
in installments of $7.0 million in 1996 and $8.5 million in each of 1997 and
1998. The first payment was entirely funded through an escrow account previously
established by the Company. The second payment of $7.0 million was paid in
August of 1996 and was funded by cash flows from operating activities. In
addition, the coal subsidiaries agreed to future participation in the UMWA 1974
Pension Plan.

As a result of the settlement of the Evergreen Case, at an amount lower than
previously accrued, the Company recorded a pretax benefit of $35.7 million
($23.2 million after tax) in the first quarter of 1996 in its consolidated
financial statements and in its financial statements for the Minerals Group.

Properties
The principal properties of Coal Operations are coal reserves, coal mines and
coal preparation plants, all of which are located in Virginia, West Virginia and
eastern Kentucky. Such reserves are either owned or leased. Leases of land or
coal mining rights generally are either for a long-term period or until
exhaustion of the reserves, and require the payment of a royalty based generally
on the sales price and/or tonnage of coal mined from a particular property. Many
leases or rights provide for payment of minimum royalties. In addition, Coal
Operations has interests in the timber and oil and gas businesses.

Pittston estimates that Coal Operations' proven and probable surface mining,
deep mining and total coal reserves as of December 31, 1996 were 126 million,
211 million and 337 million tons, respectively. Such estimates represent
economically recoverable and minable tonnage and include allowances for
extraction and processing.

Of the 337 million tons of proved and probable coal reserves as of year-end
1996, approximately 76% has a sulphur content of less than 1% (which is
generally regarded in the industry as low sulphur coal) and approximately 24%
has a sulphur content greater than 1%. Approximately 42% of total proven and
probable reserves consist of metallurgical grade coal.

As of December 31, 1996, Coal operations controlled approximately 807 million
tons of additional coal deposits in the eastern United States, which cannot be
expected to be economically recovered without market improvement and/or the
application of new technologies. The reduction in tons from the 871 million at
December 31, 1995 is mainly due to the sale of the Badger Coal operations in
West Virginia in 1996. Coal Operations also owns substantial quantities of low
sulphur coal deposits in Sheridan County, Wyoming.

Most of the oil and gas rights associated with Coal Operations' properties are
managed by an indirect wholly owned subsidiary of Pittston which, in general,
receives royalty and other income from oil and gas development and operation by
third parties. Annual net working and royalty interests exceed 3.0 Bcf. Coal
Operations also receives incidental income from the sale of timber cutting
rights on certain properties as well as from the operation of a sawmill. Coal
Operations controls approximately 100 thousand acres of hardwood forests.

Coal Operations owns a 32.5% interest in Dominion Terminal Associates ("DTA"),
which leases and operates a ground storage-to-vessel coal transloading facility
in Newport News, Virginia. DTA has a throughput capacity of 22.0 million tons of
coal per year and ground storage capacity of 2.0 million tons. A portion of Coal
Operations' share of the throughput and ground storage capacity of the DTA
facility is subject to user rights of third parties which pay Coal Operations a
fee. The DTA facility serves export customers, as well as domestic coal users
located on the eastern seaboard of the United States. For information relating
to the financing arrangements for DTA, see Note 13 to Minerals Group Financial
Statements included in Part II hereof.

                                       12

Mineral Ventures

Mineral Ventures' business is directed at locating and acquiring mineral assets,
advanced stage projects and operating mines. Mineral Ventures is currently
evaluating gold projects in North America and Australia. An exploration office
has been opened in Reno, Nevada, to coordinate Mineral Ventures' expanded
exploration program in the Western United States. In 1996, Mineral Ventures
expended approximately $3.2 million on all such programs.

The Stawell gold mine, located in the Australian state of Victoria, in which
Mineral Ventures has a net equity interest of 67%, produced approximately 90,900
ounces of gold in 1996. Mineral Ventures estimates that on December 31, 1996,
the Stawell gold mine had approximately 531,000 ounces of recoverable proven and
probable gold reserves. In-mine exploration at Stawell continues to generate
positive results.

Mineral Ventures has a 17% indirect interest in the recently discovered Silver
Swan base metals property in Western Australia. Probable reserves are currently
estimated at 640,000 metric tonnes of ore graded at 9.5% nickel, with minor
cobalt, copper and arsenic values, and are anticipated to increase as a result
of current exploration efforts. Feasibility studies at Silver Swan are well
advanced and mining is currently expected to commence in mid-1997.

MATTERS RELATING TO FORMER OPERATIONS

In April 1990, the Company entered into a settlement agreement to resolve
certain environmental claims against the Company arising from hydrocarbon
contamination at a petroleum terminal facility ("Tankport") in Jersey City, New
Jersey, which operations were sold in 1983. Under the settlement agreement, the
Company is obligated to pay for 80% of the remediation costs.

Based on data available to the Company and its environmental consultants, the
Company estimates its portion of the cleanup costs, on an undiscounted basis,
using existing technologies to be between $6.9 million and $17.0 million over a
period of up to five years. Management is unable to determine that any amount
within that range is a better estimate due to a variety of uncertainties, which
include the extent of the contamination at the site, the permitted technologies
for remediation and the regulatory standards by which the clean-up will be
conducted. The clean-up estimates have been modified from prior years' in light
of cost inflation. The estimate of costs and the timing of payments could change
as a result of changes to the remediation plan required, changes in the
technology available to treat the site, unforseen circumstances existing at the
site and additional cost inflation.

The Company commenced insurance coverage litigation in 1990, in the United
States District Court for the District of New Jersey, seeking a declaratory
judgment that all amounts payable by the Company pursuant to the Tankport
obligation were reimbursable under comprehensive general liability and pollution
liability policies maintained by the Company. In August 1995, the District Court
ruled on various Motions for Summary Judgment. In its decision, the Court found
favorably for the Company on several matters relating to the comprehensive
general liability policies but concluded that the pollution liability policies
did not contain pollution coverage for the types of claims associated with the
Tankport site. The Company appealed the District Court's decision to the Third
Circuit. Management and its outside legal counsel continue to believe, however,
that recovery of a substantial portion of the cleanup costs ultimately will be
probable of realization. It is the Company's belief that, based on estimates of
potential liability and probable realization of insurance recoveries, the
Company would be liable for approximately $1.4 million based on the Court's
decision and related developments of New Jersey law.

ITEM 3. LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------

For a description of the Evergreen Case, see Items 1 and 2: "Pittston Minerals
Group-- Description of Businesses-- Coal Operations --Evergreen Case."

ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
- --------------------------------------------------------------------------------

    Not applicable.

                                       13

The Pittston Company and Subsidiaries
Executive Officers of the Registrant

The following is a list as of March 15, 1997, of the names and ages of the
executive and other officers of Pittston and the names and ages of certain
officers of its subsidiaries, indicating the principal positions and offices
held by each. There is no family relationship between any of the officers named.

Name                  Age   Positions and Offices Held                Held Since
- --------------------------------------------------------------------------------
Executive Officers:       
Joseph C. Farrell     61    Chairman, President and 
                               Chief Executive Officer                   1991
Gary R. Rogliano      45    Senior Vice President                        1996
James B. Hartough     49    Vice President-Corporate 
                               Finance and Treasurer                     1988
Frank T. Lennon       55    Vice President-Human Resources 
                               and Administration                        1985
Austin F. Reed        45    Vice President, General 
                               Counsel and Secretary                     1994
                          
Other Officers:           
Jonathan M. Sturman   54    Vice President-Corporate Development         1995
Arthur E. Wheatley    54    Vice President and Director of 
                               Risk Management                           1988
                          
Subsidiary Officers:      
Michael T. Dan        46    President and Chief Executive 
                               Officer of Brink's, Incorporated          1993
Karl K. Kindig        45    President and Chief Executive 
                               Officer of Pittston Coal Company          1995
Peter A. Michel       54    President and Chief Executive 
                               Officer of Brink's Home Security, Inc.    1988
================================================================================
                          
Executive and other officers of Pittston are elected annually and serve at the
pleasure of its Board of Directors.

Mr. Farrell was elected to his present position effective October 1, 1991. From
July 1990 through September 1991, he served as President and Chief Operating
Officer of Pittston, and from 1984 to 1990, he served as Executive Vice
President of Pittston.

Mr. Rogliano was elected to his present position on March 8, 1996. From 1991 to
March 1996, he served as Vice President-Controllership and Taxes and from 1986
to 1991, he served as Vice President and Director of Taxes of Pittston.

Mr. Reed has served as Vice President and Secretary since September 1993 and was
elected General Counsel in March 1994. Since 1989 he has served as General
Counsel to Brink's, Incorporated and Burlington Air Express Inc.

Messrs. Hartough, Lennon and Wheatley have served in their
present positions for more than the past five years.

Mr. Sturman was elected to his present position on February 3, 1995, having
served from December 1993 as Assistant to the Chairman of Pittston. Mr. Sturman
was Chief Financial Officer of Brink's, Incorporated, from August 1992 to
December 1993, Vice President, Operations Review of Pittston from October 1991
to August 1992 and Vice President and Controller of Pittston from 1986 through
October 1991.

Mr. Dan was elected President and Chief Executive Officer of Brink's,
Incorporated in July 1993. From August 1992 to July 1993 he served as President
of North American operations of Brink's, Incorporated and as Executive Vice
President of Brink's, Incorporated from 1985 to 1992.

Mr. Kindig was elected President and Chief Executive Officer of Pittston Coal
Company on January 1, 1995. He served as Vice President-Corporate Development of
Pittston from October 1991 to January 15, 1995. From 1990 to 1991 he served as
Vice President and General Counsel of Pittston Coal Management Company, and from
1986 to 1990 he served as Counsel to Coal Operations.

Mr. Michel was elected President and Chief Executive Officer of
Brink's Home Security, Inc. in April 1988. From 1985 to 1987 he
served as President and Chief Executive Officer of Penn Central
Technical Security Company.

                                       14

- --------------------------------------------------------------------------------
PART II
- --------------------------------------------------------------------------------

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
- --------------------------------------------------------------------------------

The Pittston Company and Subsidiaries
Common Stock
================================================================================
                                                   Market Price        Declared
                                                 High          Low     Dividends
- --------------------------------------------------------------------------------
1995
Pittston Services Group
1st Quarter                                    $ 27.75        23.75    $   .05
2nd Quarter                                      29.50        22.50        .05
3rd Quarter                                      29.50        23.13        .05
4th Quarter                                      32.63        26.50        .05
                                                                       
Pittston Minerals Group                                                
1st Quarter                                    $ 26.00        17.25    $ .1625
2nd Quarter                                      18.13         9.50      .1625
3rd Quarter                                      13.00         9.75      .1625
4th Quarter                                      14.75         9.38      .1625
- --------------------------------------------------------------------------------
1996
Pittston Brink's Group                                                 
1st Quarter (a)                                $ 28.13        22.38    $  .025
2nd Quarter                                      30.50        25.88       .025
3rd Quarter                                      32.00        27.63       .025
4th Quarter                                      32.75        23.13       .025
                                                                       
Pittston Burlington Group                                              
1st Quarter (b)                                $ 21.00        17.00    $   .06
2nd Quarter                                      21.63        18.00        .06
3rd Quarter                                      21.50        17.50        .06
4th Quarter                                      20.50        17.88        .06
                                                                       
Pittston Minerals Group                                                
1st Quarter                                    $ 15.88        12.88    $ .1625
2nd Quarter                                      15.75        12.38      .1625
3rd Quarter                                      15.00        11.13      .1625
4th Quarter                                      15.50        11.25      .1625
================================================================================
                                                                     
(a) First quarter market high and low prices for the Pittston Brink's Group
represent prices commencing on the first business day following the Brink's
Stock Proposal Transaction (January 19, 1996) through March 31, 1996.

(b) First quarter market high and low prices for the Pittston Burlington Group
represent prices commencing on the first date of when issued trading of
Burlington Stock in conjunction with the Brink's Stock Proposal Transaction
(January 3, 1996) through March 31, 1996.

During 1995, Pittston Services Group Common Stock ("Services Stock") and
Pittston Minerals Group Common Stock ("Minerals Stock") traded on the New York
Stock Exchange under the ticker symbols "PZS" and "PZM", respectively.

During 1996, Pittston Brink's Group Common Stock ("Brink's Stock"), Pittston
Burlington Group Common Stock ("Burlington Stock"), and Minerals Stock traded on
the New York Stock Exchange under the ticker symbols "PZB", "PZX" and "PZM",
respectively.

Effective January 19, 1996, the outstanding shares of the Company's Services
Stock were redesignated as Pittston Brink's Group Common Stock ("Brink's Stock")
and a new class of common stock, designated as Pittston Burlington Group Common
Stock ("Burlington Stock"), was distributed to holders of Services Stock on the
basis of one-half of one share for each share of Services Stock. When issued
trading for Brink's Stock and Burlington Stock commenced on January 3, 1996 and
such stocks trade on the New York Stock Exchange.

As of March 3, 1997, there were approximately 5,300 shareholders of record of
Brink's Stock, approximately 4,700 shareholders of record of Burlington Stock
and approximately 4,300 shareholders of record of Minerals Stock.

                                       15

ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------------------------------------------------------
The Pittston Company and Subsidiaries
- --------------------------------------------------------------------------------
SELECTED FINANCIAL DATA
- --------------------------------------------------------------------------------

Five Years in Review
(In thousands, except per share amounts)                1996          1995          1994          1993          1992
====================================================================================================================
                                                                                                  
Sales and Income:
Net sales and operating revenues                 $ 3,106,644     2,926,067     2,667,275     2,256,121     2,073,041
Net income (a)                                       104,154        97,972        26,897        14,146        49,087
- --------------------------------------------------------------------------------------------------------------------
Financial Position:
Net property, plant and equipment                $   540,851       486,168       445,834       369,821       376,872
Total assets                                       1,812,879     1,807,372     1,737,778     1,361,501     1,322,288
Long-term debt, less current maturities              158,837       133,283       138,071        58,388        91,208
Shareholders' equity                                 606,707       521,979       447,815       353,512       341,460
- --------------------------------------------------------------------------------------------------------------------
Average Common Shares Outstanding (b):
Pittston Brink's Group                                38,200        37,931        37,784        36,907        37,081
Pittston Burlington Group                             19,223        18,966        18,892        18,454        18,541
Pittston Minerals Group                                7,897         7,786         7,594         7,381         7,416
- --------------------------------------------------------------------------------------------------------------------
Common Shares Outstanding (b):
Pittston Brink's Group                                41,296        41,574        41,595        41,429        40,533
Pittston Burlington Group                             20,711        20,787        20,798        20,715        20,267
Pittston Minerals Group                                8,406         8,406         8,390         8,281         8,107
- --------------------------------------------------------------------------------------------------------------------
Per Pittston Brink's Group Common Share (b):
Net income (a)                                   $      1.56          1.35          1.10           .86           .65
Cash dividends                                           .10           .09           .09           .09           .07
Book value                                              8.21          6.81          5.70          4.66          4.03
- --------------------------------------------------------------------------------------------------------------------
Per Pittston Burlington Group Common Share (b):
Net income                                       $      1.76          1.73          2.03           .84           .18
Cash dividends                                           .24           .22           .22           .21           .17
Book value                                             15.70         14.30         12.74         10.81          9.93
- --------------------------------------------------------------------------------------------------------------------
Per Pittston Minerals Group Common Share (b):
Net income (loss) (c)                            $      1.14          1.45         (7.50)        (4.47)         2.94
Cash dividends                                           .65           .65           .65         .6204         .4924
Book value (d)                                         (8.38)        (9.46)       (10.74)        (3.31)         1.68
====================================================================================================================

(a) As of January 1, 1992, Brink's Home Security, Inc. ("BHS") elected to
capitalize categories of costs not previously capitalized for home security
installations to more accurately reflect subscriber installation costs. The
effect of this change in accounting principle was to increase income before
extraordinary credit and cumulative effect of accounting changes and net income
of the Company and the Brink's Group by $2,723 or $0.07 per share of Brink's
Stock in 1996, $2,720 or $0.07 per share of Brink's Stock in 1995, $2,486 or
$0.07 per share of Brink's Stock in 1994, $2,435 or $0.07 per share of Brink's
Stock in 1993 and $2,596 or $0.07 per share of Brink's Stock in 1992.

(b) All share and per share data presented reflects the completion of the
Brink's Stock Proposal transaction which occurred on January 18, 1996. For
periods prior to the completion of the Brink's Stock Proposal, the number of
shares of Pittston Brink's Group Common Stock ("Brink's Stock") are assumed to
be the same as the total number of shares of The Pittston Company's (the
"Company") previous Pittston Services Group Common Stock ("Services Stock") and
the number of shares of Pittston Burlington Group Common Stock ("Burlington
Stock") are assumed to equal one-half of the number of shares of the Company's
previous Services Stock.

Shares outstanding at the end of the period include shares outstanding under the
Company's Employee Benefits Trust. For the Pittston Brink's Group (the "Brink's
Group"), such shares totaled 3,141 shares, 3,553 shares, 3,779 shares and 3,854
shares at December 31, 1996, 1995, 1994, and 1993, respectively. For the
Pittston Burlington Group (the "Burlington Group"), such shares totaled 1,280
shares, 1,777 shares, 1,890 shares and 1,927 shares at December 31, 1996, 1995,
1994 and 1993, respectively. For the Pittston Minerals Group (the "Minerals
Group"), such shares totaled 424 shares, 594 shares, 723 shares and 770 shares
at December 31, 1996, 1995, 1994 and 1993, respectively. Average shares
outstanding do not include these shares.

The initial dividends on Brink's Stock and Burlington Stock were paid on March
1, 1996. Dividends paid by the Company on Services Stock have been attributed to
the Brink's Group and the Burlington Group in relation to the initial dividends
paid on the Brink's and Burlington Stocks.

(c) The amounts indicated represent primary earnings per share. For the years
ended December 31, 1996 and 1995, fully diluted earnings per share for Minerals
Stock was $1.08 and $1.40, respectively, based on average common shares
outstanding of 9,906 and 9,999, respectively. For the years ended December 31,
1994, 1993 and 1992, fully diluted earnings per share is considered to be the
same as primary since the effect of common stock equivalents and the assumed
conversion of preferred stock was either antidilutive or insignificant.

(d) Calculated based on the number of shares outstanding at the end of the
period excluding shares outstanding under the Company's Employee Benefits Trust.

                                       16

Pittston Brink's Group
- --------------------------------------------------------------------------------
SELECTED FINANCIAL DATA
- --------------------------------------------------------------------------------

The following Selected Financial Data reflects the results of operations and
financial position of the businesses which comprise Pittston Brink's Group
("Brink's Group") and should be read in connection with the Brink's Group's
financial statements. The financial information of the Brink's Group, Pittston
Burlington Group ("Burlington Group") and Pittston Minerals Group ("Minerals
Group") supplements the consolidated financial information of The Pittston
Company and Subsidiaries (the "Company") and, taken together, includes all
accounts which comprise the corresponding consolidated financial information of
the Company.

Five Years in Review

(In thousands, except per share amounts)          1996      1995      1994      1993      1992
==============================================================================================
                                                                            
Sales and Income:
Operating revenues                            $909,813   788,395   656,993   570,953   514,823
Net income (a)                                  59,695    51,093    41,489    31,650    23,953
- ----------------------------------------------------------------------------------------------
Financial Position:
Net property, plant and equipment             $256,759   214,653   180,930   156,976   142,648
Total assets                                   551,665   484,726   426,887   377,923   347,015
Long-term debt, less current maturities          5,542     5,795     7,990    12,649    22,734
Shareholder's equity                           313,378   258,805   215,531   175,219   147,582
- ----------------------------------------------------------------------------------------------
Average Pittston Brink's Group Common
  Shares Outstanding (b)                        38,200    37,931    37,784    36,907    37,081

Pittston Brink's Group Common Shares
  Outstanding (b)                               41,296    41,574    41,595    41,429    40,533
- ----------------------------------------------------------------------------------------------
Per Pittston Brink's Group Common Share (a):
Net income (a)                                $   1.56      1.35      1.10       .86       .65
Cash dividends                                     .10       .09       .09       .09       .07
Book value (c)                                    8.21      6.81      5.70      4.66      4.03
==============================================================================================

(a) As of January 1, 1992, Brink's Home Security, Inc. ("BHS") elected to
capitalize categories of costs not previously capitalized for home security
installations to more accurately reflect subscriber installation costs. The
effect of this change in accounting principle was to increase income before
extraordinary credit and cumulative effect of accounting changes and net income
of the Brink's Group by $2,723 or $0.07 per share in 1996, $2,720 or $0.07 per
share in 1995, $2,486 or $0.07 per share in 1994, $2,435 or $0.07 per share in
1993 and $2,596 or $0.07 per share in 1992.

(b) All share and per share data presented reflects the completion of the
Brink's Stock Proposal transaction which occurred on January 18, 1996. For
periods prior to the completion of the Brink's Stock Proposal, the number of
shares of Pittston Brink's Group Common Stock ("Brink's Stock") are assumed to
be the same as the total number of shares of the Company's previous Pittston
Services Group Common Stock ("Services Stock"). Shares outstanding at the end of
the period include shares outstanding under the Company's Employee Benefits
Trust of 3,141 shares, 3,553 shares, 3,779 shares and 3,854 shares at December
31, 1996, 1995, 1994 and 1993, respectively. Average shares outstanding do not
include these shares. The initial dividends on Brink's Stock were paid on March
1, 1996. Dividends paid by the Company on Services Stock have been attributed to
the Brink's Group in relation to the initial dividends paid on the Brink's and
Burlington Stocks.

(c) Calculated based on the number of shares outstanding at the end of the
period excluding shares outstanding under the Company's Employee Benefits Trust.

                                       17

Pittston Burlington Group
- --------------------------------------------------------------------------------
SELECTED FINANCIAL DATA
- --------------------------------------------------------------------------------

The following Selected Financial Data reflects the results of operations and
financial position of the businesses which comprise Pittston Burlington Group
("Burlington Group") and should be read in connection with the Burlington
Group's financial statements. The financial information of the Burlington Group,
Pittston Brink's Group ("Brink's Group") and Pittston Minerals Group ("Minerals
Group") supplements the consolidated financial information of The Pittston
Company and Subsidiaries (the "Company") and, taken together, includes all
accounts which comprise the corresponding consolidated financial information of
the Company.

Five Years in Review

(In thousands, except per share amounts)               1996        1995        1994        1993        1992
===========================================================================================================
                                                                                         
Sales and Income:
Operating revenues                               $1,500,318   1,414,821   1,215,284     998,079     900,347
Net income                                           33,801      32,855      38,356      15,476       3,324
- -----------------------------------------------------------------------------------------------------------
Financial Position:
Net property, plant and equipment                $  113,283      72,171      44,442      31,100      27,088
Total assets                                        615,674     572,077     521,516     432,236     424,023
Long-term debt, less current maturities              28,723      26,697      41,906      45,460      68,474
Shareholder's equity                                304,989     271,853     240,880     203,150     181,576
- -----------------------------------------------------------------------------------------------------------
Average Pittston Burlington Group
  Common Shares Outstanding (a)                      19,223      18,966      18,892      18,454      18,541

Pittston Burlington Group Common
  Shares Outstanding (a)                             20,711      20,787      20,798      20,715      20,267
- -----------------------------------------------------------------------------------------------------------
Per Pittston Burlington Group Common Share (a):
Net income                                       $     1.76        1.73        2.03         .84         .18
Cash dividends                                          .24         .22         .22         .21         .17
Book value (b)                                        15.70       14.30       12.74       10.81        9.93
===========================================================================================================

(a) All share and per share data presented reflects the completion of the
Brink's Stock Proposal transaction which occurred on January 18, 1996. For
periods prior to the completion of the Brink's Stock Proposal, the number of
shares of Pittston Burlington Group Common Stock ("Burlington Stock") are
assumed to be equal to one-half of the number of shares of the Company's
previous Pittston Services Group Common Stock ("Services Stock"). Shares
outstanding at the end of the period include shares outstanding under the
Company's Employee Benefits Trust of 1,280 shares, 1,777 shares, 1,890 shares
and 1,927 shares at December 31, 1996, 1995, 1994 and 1993, respectively.
Average shares outstanding do not include these shares. The initial dividends of
Burlington Stock were paid on March 1, 1996. Dividends paid by the Company on
Services Stock have been attributed to the Burlington Group in relation to the
initial dividend paid on the Burlington and Brink's Stocks.

(b) Calculated based on the number of shares outstanding at the end of the
period excluding shares outstanding under the Company's Employee Benefits Trust.

                                       18

Pittston Minerals Group
- --------------------------------------------------------------------------------
SELECTED FINANCIAL DATA
- --------------------------------------------------------------------------------

The following Selected Financial Data reflects the result of operations and
financial position of the businesses which comprise Pittston Minerals Group
("Minerals Group") and should be read in connection with the Minerals Group's
financial statements. The financial information of the Minerals Group, Pittston
Brink's Group ("Brink's Group") and Pittston Burlington Group ("Burlington
Group") supplements the consolidated financial information of The Pittston
Company and Subsidiaries (the "Company") and, taken together, includes all
accounts which comprise the corresponding consolidated financial information of
the Company.

Five Years in Review

(In thousands, except per share amounts)            1996        1995        1994        1993        1992
========================================================================================================
                                                                                      
Sales and Income (Loss):
Net sales                                      $ 696,513     722,851     794,998     687,089     657,871
Net income (loss)                                 10,658      14,024     (52,948)    (32,980)     21,810
- --------------------------------------------------------------------------------------------------------
Financial Position:
Net property, plant and equipment              $ 170,809     199,344     220,462     181,745     207,136
Total assets                                     706,981     798,609     867,512     606,247     587,696
Long-term debt, less current maturities          124,572     100,791      88,175         279        --
Shareholder's equity                             (11,660)     (8,679)     (8,596)    (24,857)     12,302
- --------------------------------------------------------------------------------------------------------
Average Pittston Minerals Group
  Common Shares Outstanding (a)                    7,897       7,786       7,594       7,381       7,416

Pittston Minerals Group Common
  Shares Outstanding (a)                           8,406       8,406       8,390       8,281       8,107
- --------------------------------------------------------------------------------------------------------
Per Pittston Minerals Group Common Share (a):
Net income (loss) (b)                          $    1.14        1.45       (7.50)      (4.47)       2.94
Cash dividends                                       .65         .65         .65       .6204       .4924
Book value (c)                                     (8.38)      (9.46)     (10.74)      (3.31)       1.68
========================================================================================================

(a) Shares outstanding at the end of the period include shares outstanding under
the Company's Employee Benefits Trust of 424 shares, 594 shares, 723 shares and
770 shares at December 31, 1996, 1995, 1994 and 1993, respectively. Average
shares outstanding do not include these shares.

(b) The amounts indicated represent primary earnings per share. For the years
ended December 31, 1996 and 1995, fully diluted earnings per share for Minerals
Stock was $1.08 and $1.40, respectively, based on average common shares
outstanding of 9,906 and 9,999, respectively. For the years ended December 31,
1994, 1993 and 1992, fully diluted earnings per share is considered to be the
same as primary since the effect of common stock equivalents and the assumed
conversion of preferred stock was either antidilutive or insignificant.

(c) Calculated based on the number of shares outstanding at the end of the
period excluding shares outstanding under the Company's Employee Benefits Trust.

                                       19

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
        FINANCIAL CONDITIONS
- --------------------------------------------------------------------------------
The Pittston Company and Subsidiaries
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
- --------------------------------------------------------------------------------

RESULTS OF OPERATIONS

                                                   Years Ended December 31
(In thousands)                                 1996          1995          1994
- --------------------------------------------------------------------------------
Net sales and operating revenues:
  Brink's                               $   754,011       659,459       547,046
  BHS                                       155,802       128,936       109,947
  Burlington                              1,500,318     1,414,821     1,215,284
  Coal Operations                           677,393       706,251       779,504
  Mineral Ventures                           19,120        16,600        15,494
- --------------------------------------------------------------------------------
Net sales and operating revenues        $ 3,106,644     2,926,067     2,667,275
================================================================================
Operating profit (loss):
  Brink's                               $    56,823        42,738        39,710
  BHS                                        44,872        39,506        32,432
  Burlington                                 64,604        58,723        69,224
  Coal Operations                            20,034        23,131       (83,451)
  Mineral Ventures                            1,619           207         1,134
- --------------------------------------------------------------------------------
  Segment operating profit                  187,952       164,305        59,049
  General corporate expense                 (21,445)      (16,806)      (16,176)
- --------------------------------------------------------------------------------
Operating profit                        $   166,507       147,499        42,873
================================================================================

The Pittston Company (the "Company") reported net income of $104.2 million in
1996 compared with net income of $98.0 million in 1995. Operating profit totaled
$166.5 million in 1996, an increase of $19.0 million over the prior year.
Operating profit and net income for 1996 included three significant items which
impacted the Company's Pittston Coal Company ("Coal Operations"): a benefit from
the settlement of the Evergreen case (discussed below) at an amount lower than
previously accrued ($35.7 million or $23.2 million after-tax), a charge related
to the new accounting standard regarding the impairment of long-lived assets
($29.9 million or $19.5 million after-tax) and the reversal of excess
restructuring liabilities ($11.7 million or $7.6 million after-tax). In
addition, net income in 1996 benefited from increased operating profits at the
Company's Brink's Home Security, Inc. ("BHS"), Brink's, Incorporated
("Brink's"), Pittston Mineral Ventures ("Mineral Ventures") and Burlington Air
Express Inc. ("Burlington") businesses. These increases were partially offset by
lower operating profit at the Company's Coal Operations business and by higher
general corporate expenses primarily resulting from the relocation of the
Company's corporate headquarters to Richmond, Virginia.

Net income for the Company for 1995 was $98.0 million compared with $26.9
million for 1994. Operating profit totaled $147.5 million for 1995, compared
with $42.9 million for 1994. The $71.1 million increase in net income in 1995
primarily reflects the inclusion in 1994 of after-tax writedowns and accruals
totaling $58.1 million attributable to the Company's Coal Operations related to
facility shutdowns. These writedowns and accruals impacted the 1994 operating
profit by $90.8 million. In addition, net income for 1995 benefited from
increased earnings the operations of Coal Operations, Brink's and BHS, partially
offset by decreases in earnings at Burlington and Mineral Ventures.

Brink's
The following is a table of selected financial data for Brink's on a comparative
basis:

                                                      Years Ended December 31
(In thousands)                                      1996        1995        1994
================================================================================
Operating revenues:
  North America (United States
    and Canada)                                 $418,941     379,230     337,641
  International subsidiaries                     335,070     280,229     209,405
- --------------------------------------------------------------------------------
Total operating revenues                        $754,011     659,459     547,046
================================================================================
Operating expenses                               605,851     533,109     438,851
Selling, general and administrative               93,770      84,507      74,398
- --------------------------------------------------------------------------------
Total costs and expenses                         699,621     617,616     513,249
- --------------------------------------------------------------------------------
Other operating income, net                        2,433         895       5,913
================================================================================
Operating profit:
  North America (United States
    and Canada)                                 $ 34,387      29,159      23,235
  International operations                        22,436      13,579      16,475
- --------------------------------------------------------------------------------
Total operating profit                          $ 56,823      42,738      39,710
================================================================================
Depreciation and amortization                   $ 24,293      21,844      20,553
================================================================================
Cash capital expenditures                       $ 32,149      22,415      22,312
================================================================================

Brink's worldwide consolidated revenues totaled $754.0 million in 1996 compared
to $659.5 million in 1995, a 14% increase. Brink's 1996 operating profit of
$56.8 million represented a 33% increase over the $42.7 million operating profit
reported in 1995. Total costs and expenses in 1996 increased by $82.0 million
(13%). Other operating income increased $1.5 million to $2.4 million, from $0.9
million in the prior year.

                                       20

Revenues from North American operations (United States and Canada) increased
$39.7 million, or 10%, to $418.9 million in 1996 from $379.2 million in 1995.
North American operating profit increased $5.2 million (18%) to $34.4 million in
the current year period from $29.2 million in 1995. The operating profit
improvement for 1996 primarily resulted from improved armored car operations,
which includes ATM servicing and improved currency processing operations.

Revenues from international subsidiaries increased $54.9 million to $335.1
million in 1996 from $280.2 million in 1995. Consolidation of the results of
Brink's Colombia, in which Brink's increased its ownership from 47% to 51% in
the third quarter of 1995, accounted for approximately $22.0 million of the
increase in international revenues. Brink's Brazil revenues also increased $16.9
million from $106.7 million in 1995 to $123.6 million in 1996. Operating profits
from international subsidiaries and minority-owned affiliates amounted to $22.4
million in the current year period compared to $13.6 million in the prior year
period. The increase in operating profits was primarily due to increases in
Brink's international diamond and jewelry operations of $1.2 million, as well as
improvements in Brink's Latin American operations, offset, in part, by lower
operating results in Europe. European operating profit decreased $2.1 million
due to lower operating results in Holland and France, offset partially by
improvements in the United Kingdom. The Asia/Pacific region also achieved a
modest increase of $0.7 million in operating profit during 1996.

Latin America's increase in operating profit, $9.0 million, includes a $3.1
million benefit from the consolidation of the results of Brink's Colombia (51%
owned) as well as improvements in Colombia's operations. Brink's Brazil (100%
owned) operating profit also increased $1.6 million from $5.3 million in 1995 to
$6.9 million in 1996. Equity in earnings from Brink's Mexican affiliate (20%
owned) amounted to $2.9 million compared with a $2.5 million loss recorded in
1995. The Mexican affiliate's results in 1995 were adversely impacted by the
devaluation of the local currency, the decline in general economic conditions,
high local interest rates and the costs associated with workforce reductions.

As part of its global growth strategy, in early 1997, Brink's increased its
ownership positions in its affiliates in Venezuela, Peru and The Netherlands. In
Venezuela, Brink's increased its ownership from 15% to 61% in Custodia y
Traslado de Valores C.A. ("Custravalca"), the largest armored car company in
Venezuela, for a purchase price of approximately $31 million. The remaining 39%
is held by a group of local investors including Venezuelan banks. In conjunction
with the Custravalca transaction, Brink's also acquired a 31% indirect interest
in Brink's Peru S.A., the largest armored car company in Peru increasing its
ownership of Brink's Peru to 36%. Brink's has also acquired the remaining
interests in Brink's Hong Kong and Brinks-Nedlloyd, the largest armored car
company in The Netherlands, increasing Brink's ownership of these companies to
100%. These acquisitions are expected to increase consolidated international
revenues and operating profits of Brink's and should be accretive to the
earnings of the Brink's Group beginning in 1997.

Brink's 1995 consolidated operating profit of $42.7 million amounted to a $3.0
million (8%) increase over the $39.7 million operating profit recorded in 1994.
Revenues increased by $112.4 million to $659.5 million, 21% higher than the 1994
level. Total costs and expenses increased by $104.4 million to $617.6 million, a
20% increase over the prior year. Other operating income of $0.9 million in 1995
represented a $5.0 million decline from the amount reported in 1994, principally
reflecting a reduction in equity income from unconsolidated foreign affiliates,
primarily Mexico.

Revenues from North American (United States and Canada) operations totaled
$379.2 million in 1995, $41.6 million (12%) higher than the 1994 level. North
American operating profit amounted to $29.2 million, an increase of $5.9 million
(25%) compared to the $23.2 million recorded in 1994. The favorable change in
operating profit was largely attributable to improved results generated by the
armored car business, which includes ATM servicing, as well as higher earnings
from the diamond and jewelry and currency processing businesses, partially
offset by a decline in profit from the air courier business.

Revenues from consolidated international subsidiaries increased by $70.8 million
(34%) to $280.2 million in 1995, but operating profit from international
subsidiaries and affiliates declined by 18%, to $13.6 million, from $16.5
million in the prior year. The increase in revenues principally reflects
additional business volume and higher prices in Brazil, the favorable impact
from the decline in the value of the U.S. dollar on foreign currency translation
and the consolidation of Colombian operations as a result of Brink's acquiring a
majority ownership of that company in the third quarter of 1995. The decline in
operating profit from international subsidiaries and affiliates principally was
due to a $5.3 million deterioration in the reported results of Brink's Mexican
affiliate with Brink's share of the company's results

                                       21

amounting to a $2.5 million loss in 1995 compared to a profit of $2.8 million in
1994. The Mexican affiliate's results in 1995 were adversely impacted by the
devaluation of the local currency in December 1994, the decline in general
economic conditions, high local interest rates and the costs associated with
workforce reductions in the business. Operating profit in the Latin America
region, which includes Mexico, decreased by $1.4 million in 1995 compared to the
prior year, reflecting the decline in Mexican earnings, mostly offset by
improved results in Brazil and higher reported earnings from Colombia. Brink's
Brazil reported an operating profit of $5.3 million in 1995 compared to an
operating profit of $3.2 million in the prior year. The increase in Colombia
largely reflects the impact of the consolidation of results subsequent to
Brink's acquisition of a majority ownership position in the company. Earnings
declined by $2.6 million in the European region, while results in the
Asian/Pacific region increased by $0.9 million.

BHS
The following is a table of selected financial data for BHS on a comparative
basis:

                                                    Years Ended December 31
(Dollars in thousands)                           1996         1995         1994
================================================================================
Operating revenues                          $ 155,802      128,936      109,947
Operating expenses                             81,324       66,575       59,334
Selling, general and administrative            29,606       22,855       18,181
- --------------------------------------------------------------------------------
Total costs and expenses                      110,930       89,430       77,515
- --------------------------------------------------------------------------------
Operating profit                            $  44,872       39,506       32,432
================================================================================
Depreciation and amortization               $  30,115       22,408       17,817
================================================================================
Cash capital expenditures                   $  61,522       47,256       34,071
================================================================================
Annualized recurring revenues (a)           $ 128,106      107,707       87,164
================================================================================
Number of subscribers:
   Beginning of period                        378,659      318,029      259,551
   Installations                               98,541       82,643       75,203
   Disconnects, net                           (30,695)     (22,013)     (16,725)
- --------------------------------------------------------------------------------
End of period                                 446,505      378,659      318,029
================================================================================

(a) Annualized recurring revenues are calculated based on the number of
subscribers at period end multiplied by the average fee per subscriber received
in the last month of the period for monitoring, maintenance and related
services.

Revenues for BHS increased by $26.9 million (21%) to $155.8 million in 1996 from
$128.9 million in 1995. The increase in revenues was predominantly the result of
higher ongoing monitoring and service revenues, caused by an 18% growth of the
subscriber base for the year. As a result of such growth, annualized recurring
revenues at the end of 1996 grew 19% over the amount in effect at the end of
1995. Total installation revenue in 1996 also grew by 15%, over the amount
recorded in 1995, as a result of the increased volume of installations. However,
revenue per installation decreased from amounts achieved in 1995 due to the
competitive connection fee pricing in the marketplace.

Operating profit of $44.9 million in 1996 represents an increase of $5.4 million
(14%) compared to the $39.5 million earned in 1995. The increase in operating
profit largely stemmed from the growth in the subscriber base and higher average
monitoring and service revenues, somewhat offset by higher depreciation and
increased account servicing and administrative expenses, which are also a
consequence of the larger subscriber base. In addition, installation and
marketing costs incurred and expensed during the year increased by approximately
$1 million from the prior year. BHS currently expenses net marketing and selling
costs related to obtaining a subscriber. As competitive pressure in the
marketplace continues, these costs, which are related to obtaining a subscriber,
may increase.

The cash operating margin from recurring revenues in 1996 remained consistent
with 1995; however, overall operating margin was negatively impacted by
increased depreciation, installation and marketing expenses. As a result,
overall operating margin was 29% in 1996 compared to 31% in 1995. Management
currently expects 1997 cash margins from recurring revenues to be consistent
with 1996 and overall operating margins to range in the mid to upper 20%.

Revenues for BHS increased by $19.0 million (17%) to $128.9 million in 1995 from
$109.9 million in 1994. The increase in revenues was primarily from ongoing
monitoring and recurring revenues caused by the 19% growth in the subscriber
base. As a result of such growth, annualized recurring revenues at the end of
1995 grew 24% over the amount in effect at the end of 1994. The total amount of
installation revenue grew slightly over the 1994 amount as revenue from
increased installations was mostly offset by a reduction in revenue per
installation. Revenue per installation decreased due to the competitive
environment in the marketplace.

Operating profit of $39.5 million for 1995 represented an increase of $7.1
million (22%) compared to the $32.4 million earned in 1994. The increase in
operating profit stemmed from the 21% growth in average subscribers in 1995, as
compared to the prior year, and higher monitoring and recurring revenue,
resulting from

                                       22

the growth in the subscriber base, which was only partially offset by increased
account servicing and administrative expenses. Installation and marketing costs
incurred and expensed during 1995 increased $0.8 million, over the 1994 amount.

At year-end 1996, BHS had approximately 446,500 subscribers, 40% more than the
year-end 1994 subscriber base. New subscribers totaled approximately 98,500 in
1996, 82,600 in 1995 and 75,200 in 1994. As a result, BHS's average subscriber
base increased by 18% and 21%, as compared with each prior year in 1996 and
1995, respectively.

As of January 1, 1992, BHS elected to capitalize categories of costs not
previously capitalized for home security installations to more accurately
reflect subscriber installation costs included as capitalized installation
costs, which added $4.5 million to operating profit in both 1996 and 1995 and
$4.1 million in 1994. 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 (in the
amount of $2.5 million in 1996, $2.7 million in 1995 and $2.6 million in 1994)
and costs incurred in maintaining facilities and vehicles dedicated to the
installation process (in the amount of $2.0 million in 1996, $1.8 million in
1995 and $1.5 million in 1994). The increase in the amount capitalized, while
adding to current period profitability comparisons, defers recognition of
expenses over the estimated useful life of the installation. The additional
subscriber installation costs which are currently capitalized were expensed in
prior years for subscribers in those years. Because capitalized subscriber
installation costs for periods prior to January 1, 1992, were not adjusted for
the change in accounting principle, installation costs for subscribers in those
years will continue to be depreciated based on the lesser amounts capitalized in
those periods. Consequently, depreciation of capitalized subscriber installation
costs in the current year and until such capitalized costs prior to January 1,
1992, are fully depreciated will be less than if such prior periods' capitalized
costs had been adjusted for the change in accounting. However, the Company
believes the effect on net income in 1996, 1995 and in 1994 was immaterial.
While the amounts of the costs incurred which are capitalized vary based on
current market and operating conditions, the types of such costs which are
currently capitalized will not change. The change in the amount capitalized has
no additional effect on current or future cash flows or liquidity.

Burlington
The following is a table of selected financial data for Burlington on a
comparative basis:

(Dollars in thousands - except per                 Years Ended December 31
pound/shipment amounts)                         1996         1995          1994
================================================================================
Operating revenues:
Expedited freight services:
  Domestic U.S.                           $  547,647      528,174       561,286
  International                              713,834      698,624       542,166
- --------------------------------------------------------------------------------
Total expedited freight services           1,261,481    1,226,798     1,103,452
Customs clearances                           135,887      115,135        77,586
Ocean and other (a)                          102,950       72,888        34,246
- --------------------------------------------------------------------------------
Total operating revenues                   1,500,318    1,414,821     1,215,284

Operating expense                          1,317,423    1,245,721     1,043,895
Selling, general and administrative          119,821      113,210       105,371
- --------------------------------------------------------------------------------
Total costs and expenses                   1,437,244    1,358,931     1,149,266
- --------------------------------------------------------------------------------
Other operating income, net                    1,530        2,833         3,206
- --------------------------------------------------------------------------------
Operating profit:
  Domestic U.S.                               36,143       30,416        45,732
  International                               28,461       28,307        23,492
- --------------------------------------------------------------------------------
Total operating profit                    $   64,604       58,723        69,224
================================================================================
Depreciation and amortization             $   23,254       19,856        17,209
================================================================================
Cash capital expenditures                 $   59,238       32,288        23,946
================================================================================
Expedited freight services shipment
  growth rate (b)                                1.3%         6.2%          6.1%
Expedited freight services weight
  growth rate (b):
  Domestic U.S.                                  3.3%        (3.8%)        19.3%
  International                                  3.0%        29.1%         25.3%
  Worldwide                                      3.1%        11.3%         22.1%
Expedited freight services weight
  (million pounds)                           1,433.2      1,390.2       1,248.5
================================================================================
Expedited freight services shipments
  (thousands)                                  5,180        5,112         4,805
================================================================================
Expedited freight services average:
  Yield (revenue per pound)               $    0.880        0.882         0.884
  Revenue per shipment                    $      244          240           229
  Weight per shipment (pounds)                   277          272           259
================================================================================

(a) Primarily international ocean freight.
(b) Compared to the same period in the prior year.

                                       23

Burlington's operating profit amounted to $64.6 million in 1996, an increase of
$5.9 million (10%) from the level achieved in 1995. Worldwide revenues increased
by 6% to $1.5 billion from $1.4 billion in 1995. The $85.5 million growth in
revenues reflects both an increase in worldwide expedited freight services
pounds shipped as well as substantially higher other freight services revenues,
which include customs clearances, ocean and other.

The worldwide expedited freight services revenues increase of 3%, from $1,226.8
million in 1995 to $1,261.5 million in 1996 was the result of a corresponding 3%
increase in worldwide expedited freight services weight shipped, from 1,390.2
million pounds in 1995 to 1,433.2 million pounds in 1996. The average expedited
freight services yield remained essentially unchanged. Other freight services
revenues increased 27% from $188.0 million in 1995 to $238.8 million in 1996,
due primarily to growth in custom clearance and ocean freight services. Total
costs and expenses increased by 6% from $1,358.9 million in 1995 to $1,437.2
million in 1996, reflecting the additional business volume, along with system
and facility improvements and expansion.

Domestic expedited freight services revenues during 1996 increased by 4% or
$19.5 million to $547.7 million from $528.2 million in the prior year, while
other domestic freight services revenues remained essentially unchanged at $6.9
million. Domestic operating profit increased 19% from $30.4 million in 1995 to
$36.1 million in 1996. The increase in operating profit reflects higher volume
and lower average transportation costs (primarily the benefit of reduced Federal
Excise Tax liabilities prior to re-instatement of such tax in August 1996),
partially offset by higher fuel costs. In addition, domestic operating margin
also benefited from station and general and administrative cost efficiencies.
However, the domestic average yield for 1996 remained essentially unchanged as
compared to 1995 due to lower average pricing and sales mix for Burlington's
overnight service, offset by the initiation of a surcharge on domestic
shipments.

International expedited freight services revenues of $713.8 million in 1996
represented a $15.2 million (2%) increase over the $698.6 million reported in
1995. This increase in revenue is due to the 3% growth in expedited freight
services weight shipped, offset partially by a slightly lower average yield. In
addition, international non-expedited freight services revenues increased $50.8
million (28%) from $181.1 million in 1995 to $231.9 million in 1996. This
increase in revenue is primarily due to an increase in custom clearance and a
continued expansion of ocean freight services. International operating profit
amounted to $28.5 million in 1996, essentially unchanged as compared to the
$28.3 million recorded in 1995. Operating profit in 1996, primarily reflects
improved operating margins in US exports and ocean freight services. However,
these improvements were offset, in large part, by added costs related to the
expansion of ocean and logistics operations and further investments to
strengthen Burlington's worldwide network including quality improvements in
global systems, facilities and acquisitions.

Burlington recently created a new business unit, BAX Global Logistics, (also
trading as Logistics Advantage('tm')) to provide customers with cost-effective
logistics solutions and, in 1996, it enhanced its information technology
capability, thus enabling the development of a broader range of sophisticated
business solutions. BAX Global Logistics operates from several warehouse
locations worldwide. In addition, six Burlington operations earned ISO 9002
certificates in 1996, bringing the total number of certified facilities to 144,
spanning 16 countries. Burlington has recently embarked on a program to enhance
the quality of its service and improve efficiencies. While the full benefits
cannot now be predicted with confidence, management believes significant cost
reductions and operating improvements can be made with initial impacts likely to
be felt in the second quarter of 1997.

Burlington's operating profit amounted to $58.7 million in 1995, a decline of
$10.5 million (15%) from the level achieved in 1994, as the 1994 results
benefited from significant additional domestic freight as a result of a
nationwide trucking strike, which added an estimated $8 million to operating
profit. Worldwide revenues increased by 16% to $1.4 billion from $1.2 billion in
1994. The $199.5 million growth in revenues principally reflects a 11% increase
in worldwide expedited freight services pounds shipped as well as substantially
higher non-expedited freight services revenues.

During 1995, worldwide expedited freight services revenues increased 11% as a
result of higher volumes with average yields essentially unchanged. Worldwide
expedited freight services weight shipped increased by 11%, from 1,248.5 million
pounds in 1994 to 1,390.2 million pounds in 1995. Total costs and expenses
increased by 18% over the 1994 level reflecting additional business volume and
the acquisition of additional foreign subsidiaries.

Domestic expedited freight services revenues for 1995 decreased by 6% to $528.2
million from $561.3 million in the prior year. Domestic operating profit also
declined from $45.7 million in 1994 to $30.4 million in 1995. Operating profit
declined by 33% reflecting a 2% decrease in the average yield, 4% lower volume
and modestly higher average transportation costs, partially offset by lower
administrative costs. The volume decline reflected the impact of the trucking
strike in the second quarter of 1994, which served to substantially increase
weight shipped in that period.

                                       24

International expedited freight services revenues in 1995 of $698.6 million
represented a $156.5 million (29%) increase over the $542.2 million reported in
1994. International operating profit amounted to $28.3 million in 1995, 20%
higher than the 1994 level, principally due to a 25% favorable change in
expedited freight services weight shipped, partially offset by higher
transportation costs. The increase in volume is mainly attributed to the growth
in the world-wide flow of international expedited freight services and the
expansion of company-owned operations.

Revenues from other activities during 1995 increased 68% or $76.2 million to
$188.0 million, due to an increase in custom clearance and a continued expansion
of ocean freight services.

Other operating income decreased $1.3 million to $1.5 million in 1996 from $2.8
million in 1995 and decreased $0.4 million in 1995 from $3.2 million in 1994.
Other operating income principally includes foreign exchange transaction gains
and losses. The changes in other operating income for the comparable periods are
due to fluctuations in such gains and losses.

Coal Operations
The following is a table of selected financial data for Coal Operations on a
comparative basis:

                                                        Years Ended December 31
(In thousands)                                      1996        1995       1994
================================================================================
Net sales                                      $ 677,393     706,251    779,504
Cost of sales                                    693,505     683,621    760,966
Selling, general and administrative               24,261      22,415     26,294
Restructuring and other (credits) charges,
  including litigation accrual                   (47,299)       --       90,806
- --------------------------------------------------------------------------------
Total costs and expenses                         670,467     706,036    878,066
- --------------------------------------------------------------------------------
Other operating income, net                       13,108      22,916     15,111
- --------------------------------------------------------------------------------
Operating profit (loss)                        $  20,034      23,131    (83,451)
================================================================================
Coal sales (tons):
  Metallurgical                                    8,124       8,607      9,884
  Utility and industrial                          14,847      15,789     18,198
- --------------------------------------------------------------------------------
Total coal sales                                  22,971      24,396     28,082
================================================================================
Production/purchased (tons):
  Deep                                             3,930       3,982      4,857
  Surface                                         11,151      12,934     15,107
  Contract                                         1,621       1,941      2,364
- --------------------------------------------------------------------------------
                                                  16,702      18,857     22,328
Purchased                                          5,762       6,047      5,826
- --------------------------------------------------------------------------------
Total                                             22,464      24,904     28,154
================================================================================

Coal Operations had an operating profit of $20.0 million in 1996 compared to an
operating profit of $23.1 million in 1995. Operating profit for 1996 included a
benefit of $35.7 million from the settlement of the Evergreen case at an amount
lower than previously accrued in 1993 and a benefit from excess restructuring
liabilities of $11.7 million. These benefits were offset, in part, by a $29.9
million charge related to the adoption of a new accounting standard regarding
the impairment of long-lived assets. The charge is included in cost of sales
($26.3 million) and selling, general and administrative expenses ($3.6 million).
All three of these items are discussed in greater detail below. Operating profit
in 1996 was also impacted by a decrease in other operating income of $9.8
million, primarily due to decreases in gains from the sale of coal assets which
generated $11.9 million in 1995.

Coal Operations' operating profit amounted to $23.1 million in 1995, compared to
the $83.5 million operating loss recorded in 1994. The operating loss in 1994
included $90.8 million of charges for asset writedowns and accruals for costs
related to facility shutdowns. Excluding the charges for asset writedowns and
accruals from the 1994 results, operating profit from Coal Operations increased
by $15.8 million in 1995.

Coal Operations' operating profit, excluding restructuring (credits) charges,
the effects of the Evergreen Settlement and the adoption of SFAS No. 121, is
analyzed as follows:

                                                         Years Ended December 31
(In thousands)                                        1996       1995       1994
================================================================================
Net coal sales (a)                                $670,121    702,864    777,758
Current production cost of coal sold (a)           634,754    648,383    723,967
- --------------------------------------------------------------------------------
Coal margin                                         35,367     54,481     53,791
Non-coal margin                                      2,177        749        324
Other operating income, net                         13,108     22,916     15,111
- --------------------------------------------------------------------------------
Margin and other income                             50,652     78,146     69,226
- --------------------------------------------------------------------------------
Other costs and expenses:
  Idle equipment and closed mines                    1,044      9,980      4,854
  Inactive employee cost                            26,300     22,620     30,723
  Selling, general and administrative               20,625     22,415     26,294
- --------------------------------------------------------------------------------
Total other costs and expenses                      47,969     55,015     61,871
- --------------------------------------------------------------------------------
Operating profit (before restructuring
  and other (credits) charges) (b)                $  2,683     23,131      7,355
================================================================================
Coal margin per ton:
  Realization                                     $  29.17      28.81      27.70
  Current production costs                           27.63      26.58      25.78
- --------------------------------------------------------------------------------
Coal margin                                       $   1.54       2.23       1.92
================================================================================

(a) Excludes non-coal components.

(b) Restructuring and other (credits) charges in 1996 consist of an impairment
loss related to the adoption of SFAS No. 121 of $29,948 ($26,312 in cost of
sales and $3,636 in selling, general and administrative expenses), a gain from
the settlement of the Evergreen case of $35,650 at an amount lower than
previously accrued and a benefit from excess restructuring liabilities of
$11,649. Both the gain from the Evergreen case and the benefit from excess
restructuring liabilities are included in Coal Operations' operating profit as
"Restructuring and other (credits) charges, including litigation accrual".
Restructuring and other (credits) charges in 1994 consist of $90,806 in
restructuring charges.

                                       25

Sales volume of 23.0 million tons in 1996 was 1.4 million tons less than the
24.4 million tons sold in 1995. Metallurgical coal sales decreased by 0.5
million tons (6%) in 1996 to 8.1 million tons compared to the prior year period.
Steam coal sales decreased by 0.9 million tons (6%) in 1996 to 14.9 million tons
compared to the prior year period. Steam coal sales represented 65% of the total
sales volume for both 1996 and 1995.

Total coal margin of $35.4 million for 1996 represented a decrease of $19.1
million (35%) from the 1995 coal margin of $54.5 million. The decline in coal
margin primarily reflects a $1.05 per ton (4%) increase in the current
production cost of coal sold which was partially offset by a $0.36 per ton (1%)
increase in realization. Coal margin was also negatively impacted by a decrease
in 1996 in tons of coal sold from 24.4 million to 23.0 million. The increase in
average realization per ton was mainly due to export metallurgical coal pricing.
For the contract year that began April 1, 1996, export metallurgical coal prices
only increased slightly over those in effect at April 1, 1995, which were
significantly improved over the April 1, 1994 prices. As a result, the export
metallurgical realization for 1996 as compared to 1995 benefited from higher
first quarter realization (1995 contract prices versus 1994 contract prices) and
from additional export tonnage shipped. Domestic steam coal pricing, mostly
priced according to long-term contracts, improved modestly as contract
escalations were mostly offset by lower priced spot sales. Coal Operations is
currently in negotiations with a majority of its metallurgical customers for the
contract year which begins on April 1, 1997. Expectations are that metallurgical
prices will not vary significantly from the current 1996 contract year pricing
levels.

The increase in the current production cost per ton of coal sold for 1996 is due
to higher company surface mine and purchased coal costs which were only
partially offset by lower company deep mine and contract coal costs as well as a
state tax credit for coal produced in Virginia. Current production costs in 1996
were also negatively impacted by higher fuel prices and increases in employee
benefits and reclamation and environmental costs. Production for 1996 totaled
16.7 million tons, a decrease of 11% from 1995, principally reflecting
reductions in production due to mine sales and closures in 1995. Surface mine
production accounted for 67% and 69% of the total production volume in 1996 and
1995, respectively. Productivity of 37.6 tons per man day represents a slight
increase from 1995.

Beginning in 1996, the amount of coal produced in Virginia generates tax credits
under the Commonwealth of Virginia's newly enacted law, the "Coalfield
Employment Enhancement Tax Credit." This law, which is effective from January 1,
1996 through December 31, 2001, provides Virginia coal producers with a
refundable credit against taxes imposed by the Commonwealth for coal produced in
Virginia. Coal Operations generated approximately $3 million in credits in 1996
to be realized in future years.

Non-coal margin for 1996 increased by $1.4 million from 1995, reflecting higher
gas prices. Other operating income, including sales of properties and equipment
and third party royalties, amounted to $13.0 million in 1996, $9.8 million less
than 1995. The higher level of income recorded in 1995 reflects gains of $11.9
million from the sale of coal assets.

Idle equipment and closed mine costs decreased by $8.9 million in 1996. Idle
equipment expenses were reduced from the prior period level as a result of Coal
Operations' improved equipment management program. Additionally, costs for 1995
were adversely impacted by the idling of two surface mines. Inactive employee
costs, which primarily represent long-term employee liabilities for pension and
retiree medical cost, increased by $3.8 million to $26.3 million in 1996. The
unfavorable variance is due to the use of lower long-term interest rates to
calculate the present value of the long-term liabilities in 1996. In addition,
inactive employee costs in 1995 include a benefit of $2.5 million from a
favorable litigation decision.

Selling, general and administrative expenses continued to decline in 1996 as a
result of cost control efforts implemented in 1995. These costs decreased $2.0
million (or 9%) in 1996 over the 1995 year.

Total coal margin of $54.5 million for 1995 increased by $0.7 million (1%) from
1994, as a $1.11 per ton increase in realization was only partially offset by an
$0.80 per ton increase in production costs on a lower production volume.

Sales volume of 24.4 million tons in 1995 was 3.7 million tons less than the
28.1 million tons sold in 1994. Steam coal sales decreased by 2.4 million tons
to 15.8 million tons and metallurgical coal sales declined by 1.3 million tons
to 8.6 million tons compared to the prior year. Steam coal sales represented 65%
of total volume in 1995, as in 1994.

Coal margin per ton increased to $2.23 in 1995 from $1.92 for 1994 caused by a
$1.11 (4%) per ton increase in realization partially offset by a $0.80 (3%) per
ton increase in current production costs. The average realization increase was
largely due to an increase in metallurgical coal pricing. Export metallurgical
coal prices increased substantially in the coal contract year which began on
April 1, 1995, compared to the prior year level, with realizations generally
increasing by $4.00 to $5.50 per metric ton, depending upon coal quality.
Domestic

                                       26

steam coal markets were depressed in 1995, with spot pricing at exceptionally
low levels. However, the majority of Coal Operations' steam coal sales were, in
1995, and continue to be sold under long-term contracts.

The current production cost of coal sold in 1995 increased over the 1994 level
largely stemming from higher mining costs and an increase in the cost of
purchased coal. Production in 1995 totaled 18.9 million tons, a 16% decrease
compared to the 22.3 million tons produced in 1994, principally reflecting the
scheduled reduction in underground mine production during 1994 and early 1995,
and the idling of surface steam coal mines. Production costs in 1995 benefited
from a reduction in property taxes associated with certain properties. The
property tax reduction was approximately $2.5 million in 1995. Surface
production accounted for 69% and 68% of total production volume in 1995 and
1994, respectively. Productivity of 37 tons per man day represented a 5%
increase over the 1994 level.

Other operating income, primarily reflecting sales of properties and equipment
and third party royalties, amounted to $22.9 million in 1995, $7.8 million
higher than in 1994. The favorable change in 1995 primarily reflects additional
income from property dispositions.

Idle equipment and closed mine costs increased by $5.1 million in 1995,
primarily reflecting higher idle equipment costs due to the idling of two
surface mines in 1995. Inactive employee costs, which primarily represent
long-term employee liabilities for pension and retiree medical costs, were
reduced by $8.1 million to $22.6 million in 1995. The reduction primarily
reflects the use of higher long-term interest rates used to calculate the
present value of the long-term liabilities at the beginning of 1995 compared to
those used in 1994. In addition, reduced costs reflected the continued decline
in black lung claims and a $2.5 million benefit recorded from a favorable
litigation decision which reduced previously accrued employee benefits.

Selling, general and administrative expenses in 1995 declined by $3.9 million
compared to the 1994 level. Expenses were reduced as a result of cost control
efforts, as well as the benefit from the full year impact of the consolidation
of administrative functions subsequent to the acquisition in early 1994 of
substantially all the coal mining operations and coal sales contracts of
Addington Resources, Inc. ("Addington").

The market for metallurgical coal, for much of the past fifteen years, has been
characterized by weak demand from primary steel producers and intense
competition from foreign coal producers, especially those in Australia and
Canada. Metallurgical coal sales contracts are typically subject to annual price
negotiations, which increase the risk of market forces. As a result of these
conditions in the metallurgical coal markets, Coal Operations decreased its
exposure to this business by selecting to participate only in those
higher-margin metallurgical markets which generate acceptable profitability.
Simultaneously with that business decision, management conducted a review of the
economic viability of its metallurgical coal assets in early 1994 and determined
that four underground mines were no longer economically viable and should be
closed, resulting in significant economic impairment to three related
preparation plants. In addition, it was determined that one surface steam coal
mine, the Heartland mine, which provided coal to Alabama Power under a long-term
sales agreement, would be closed due to rising costs caused by unfavorable
geological conditions.

As a result of these decisions, Coal Operations incurred pretax charges of $90.8
million ($58.1 million after-tax) in the first quarter of 1994, which included a
reduction in the carrying value of these assets and related accruals for mine
closure costs. These charges included asset writedowns of $46.5 million which
reduced the book carrying value of such assets to what management believes to be
their net realizable value based on either estimated sales or leasing of such
property to unrelated third parties. In addition, the charges included $3.8
million for required lease payments owed to lessors for machinery and equipment
that would be idled as a result of the mine and facility closures. The charges
also included $19.3 million for mine and plant closure costs which represented
estimates of reclamation and other environmental costs to be incurred to bring
the properties in compliance with federal and state mining and environmental
laws. This charge was required due to the premature closing of the mines. The
charge also included $21.2 million in contractually or statutorily required
employee severance and other benefit costs associated with terminated and
inactive employees, at these facilities.

Of the four underground mines included in the asset writedown, two ceased coal
production in 1994 and one ceased coal production in 1996. Also, in 1994, Coal
Operations reached agreement with Alabama Power Company to transfer the coal
sales contract serviced by the Heartland mine to another location in West
Virginia. The Heartland mine ceased coal production during 1994 and final
reclamation and environmental work is complete. By early 1995, two of the three
related preparation plants had also closed. At the beginning of 1994 there were
approximately 750 employees involved in operations and other administrative
support at the facilities included in the 1994

                                       27

charge. Employment at these facilities was reduced by 52% to approximately 360
employees at December 31, 1994; by 81% to approximately 140 employees at
December 31, 1995; and by 87% to approximately 100 employees at December 31,
1996.

The initiation in 1996 of the previously discussed Virginia tax credit, along
with favorable labor negotiations and improved metallurgical contract pricing
over 1994, led management to open three new underground coal mines in southwest
Virginia during late 1996 and to reactivate one coal preparation and loading
facility. When in full operation in 1997, these mines will annually produce
approximately 1 million tons of premium grade metallurgical coal. Based on
current reserve estimates, the mines will have an anticipated operating life of
six to eight years. In addition, management decided to continue operating the
last of the four underground mines and one related coal preparation and loading
facility included in the 1994 charge.

As a result of these decisions and favorable workers' compensation claim
development for closed mines, a portion of the restructuring reserve established
in 1994 was no longer required. Accordingly, Coal Operations reversed $11.7
million ($7.6 million after-tax) of its restructuring reserve during the year.
This amount includes $4.8 million related to estimated mine and plant closure
costs, primarily reclamation, and $6.9 million in employee severance and other
benefit costs.

Although coal production has ceased at the mines remaining in the accrual, Coal
Operations will incur reclamation and environmental costs for several years to
bring these properties into compliance with federal and state environmental
laws. In addition, employee termination and medical costs will continue to be
incurred for several years after the facilities have been closed. The
significant portion of these employee liabilities is for statutorily provided
workers' compensation costs for inactive employees. Such benefits include
indemnity and medical costs as required under state workers' compensation laws.
The long payment periods are based on continued, and, in some cases, lifetime
indemnity and medical payments to injured former employees and their surviving
spouses. Management believes that the reserve, as adjusted, at December 31,
1996, should be sufficient to provide for these future costs. Management does
not anticipate material additional future charges to operating earnings for
these facilities, although continual cash funding will be required over the next
several years.

The following table analyzes the changes in liabilities during the last three
years for facility closure costs recorded as restructuring and other charges:

                                                             Employee
                                                   Mine  Termination,
                                      Leased        and       Medical
                                   Machinery      Plant           and
                                         and    Closure     Severance
(In thousands)                     Equipment      Costs         Costs      Total
================================================================================
Balance January 1, 1994               $3,092     28,434        34,217     65,743
Additions                              3,836     19,290        21,193     44,319
Payments (a)                           3,141      9,468        12,038     24,647
- --------------------------------------------------------------------------------
Balance December 31, 1994              3,787     38,256        43,372     85,415
Payments (b)                           1,993      7,765         7,295     17,053
Other reductions (c)                     576      1,508          --        2,084
- --------------------------------------------------------------------------------
Balance December 31, 1995              1,218     28,983        36,077     66,278
Reversals                               --        4,778         6,871     11,649
Payments (d)                             842      5,499         3,921     10,262
Other reductions (c)                    --        6,267          --        6,267
- --------------------------------------------------------------------------------
Balance December 31, 1996             $  376     12,439        25,285     38,100
================================================================================
                                                          
(a) Of the total payments made, in 1994, $8,672 was for liabilities recorded in
years prior to 1993, $5,822 was for liabilities recorded in 1993 and $10,153 was
for liabilities recorded in 1994.

(b) Of the total payments made in 1995, $6,424 was for liabilities recorded in
years prior to 1993, $2,486 was for liabilities recorded in 1993 and $8,143 was
for liabilities recorded in 1994.

(c) These amounts represent the assumption of liabilities by third parties as a
result of sales transactions.

(d) Of the total payments made in 1996, $5,119 was for liabilities recorded in
years prior to 1993, $485 was for liabilities recorded in 1993, $4,658 was for
liabilities recorded in 1994.

During the next 12 months, expected cash funding of these charges will be
approximately $6 million to $10 million. Management estimates that the remaining
liability for leased machinery and equipment will be fully paid over the next
year. The liability for mine and plant closure costs is expected to be satisfied
over the next ten years, of which approximately 49% is expected to be paid over
the next two years. The liability for employee related costs, which is primarily
workers' compensation, is estimated to be 44% settled over the next four years
with the balance paid during the following five to ten years.

                                       28

In October 1992, the Coal Industry Retiree Health Benefit Act of 1992 (the
"Health Benefit Act") was enacted as part of the Energy Policy Act of 1992. The
Health Benefit Act established rules for the payment of future health care
benefits for thousands of retired union mine workers and their dependents. The
Health Benefit Act established a trust fund to which "signatory operators" and
"related persons", including the Company and certain of its subsidiaries (the
"Pittston Companies"), are jointly and severally liable for annual premiums for
assigned beneficiaries, together with a pro rata share for certain beneficiaries
who never worked for such employers ("unassigned beneficiaries"), in amounts
determined on the basis set forth in the Health Benefit Act. For 1996, 1995 and
1994, these amounts, on a pretax basis, were approximately $10.4 million, $10.8
million, and $11.0 million, respectively. The Company believes that the annual
cash funding under the Health Benefit Act for the Pittston Companies' assigned
beneficiaries will continue at approximately $10.0 million per year for the next
several years and should begin to decline thereafter as the number of such
assigned beneficiaries decreases.

Based on the number of beneficiaries actually assigned by the Social Security
Administration, the Company estimates the aggregate pretax liability relating to
the Pittston Companies' assigned beneficiaries remaining at December 31, 1996 at
approximately $210 million, which when discounted at 8% provides a present value
estimate of approximately $90 million.

The ultimate obligation that will be incurred by the Company could be
significantly affected by, among other things, increased medical costs,
decreased number of beneficiaries, governmental funding arrangements and such
federal health benefit legislation of general application as may be enacted. In
addition, the Health Benefit Act requires the Pittston Companies to fund, pro
rata according to the total number of assigned beneficiaries, a portion of the
health benefits for unassigned beneficiaries. At this time, the funding for such
health benefits is being provided from another source and for this and other
reasons the Pittston Companies' ultimate obligation for the unassigned
beneficiaries cannot be determined. The Company accounts for its obligations
under the Health Benefit Act as a participant in a multi-employer plan and
recognizes the annual cost on a pay-as-you-go basis.

In February 1990, Coal Operations and the UMWA entered into a collective
bargaining agreement that resolved a labor dispute and related strike of Coal
Operations by UMWA-represented employees that began on April 5, 1989. As part of
the agreement, the Coal Operations agreed to make a $10.0 million lump sum
payment to the 1950 Benefit Trust Fund and to renew participation in the 1974
Pension and Benefit Trust Funds at specified contribution rates. These aspects
of the agreement were subject to formal approval by the trustees of the funds.
The trustees did not accept the terms of the agreement and, therefore, payments
were made to escrow accounts for the benefit of union employees. Under the new
1994 Agreement, the Coal Operations agreed to continue participation in the 1974
Pension Plan at specified contribution rates, again subject to trustee approval.

In 1988, the trustees of the above-mentioned pension and benefit trust funds
(the "Trust Funds") established under collective bargaining agreements with the
UMWA brought an action (the "Evergreen Case") against the Company and a number
of its coal subsidiaries in the United States District Court for the District of
Columbia, claiming that the defendants are obligated to contribute to such Trust
Funds in accordance with the provisions of the 1988 and subsequent National
Bituminous Coal Wage Agreements, to which neither the Company nor any of its
subsidiaries is a signatory. In 1993, the Company recognized in its financial
statements the potential liability that might have resulted from an ultimate
adverse judgment in the Evergreen Case.

In late March 1996, a settlement was reached in the Evergreen Case. Under the
terms of the settlement, the coal subsidiaries which had been signatories to
earlier National Bituminous Coal Wage Agreements agreed to make various lump sum
payments in full satisfaction of all amounts allegedly due to the Trust Funds
through January 31, 1996, to be paid over time as follows: approximately $25.8
million upon dismissal of the Evergreen Case and the remainder of $24.0 million
in installments of $7.0 million in 1996 and $8.5 million in each of 1997 and
1998. The first payment was entirely funded through an escrow account previously
established by the Company. The second payment of $7.0 million was paid in
August 1996, and was funded through cash provided by operating activities. In
addition, the coal subsidiaries agreed to future participation in the UMWA 1974
Pension Plan.

As a result of the settlement of the Evergreen Case at an amount lower than
those previously accrued, the Company recorded a benefit of approximately $35.7
million ($23.2 million after-tax) in the first quarter of 1996 in its financial
statements.

                                       29

In 1996, the Minerals Group adopted Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies to review
assets for impairment whenever circumstances indicate that the carrying amount
for an asset may not be recoverable. SFAS No. 121 resulted in a pre-tax charge
to earnings for Coal Operations of $29.9 million ($19.5 million after-tax), of
which $26.3 million was included in cost of sales and $3.6 million was included
in selling, general and administrative expenses. Assets for which the impairment
loss was recognized consisted of property, plant and equipment, advanced
royalties and goodwill. These assets primarily related to mines scheduled for
closure in the near term and idled facilities and related equipment.

Mineral Ventures
The following is a table of selected financial data for Mineral Ventures on a
comparative basis:

(Dollars in thousands, except                           Years Ended December 31
per ounce data)                                    1996        1995        1994
================================================================================
Stawell Gold Mine
  Gold sales                                   $ 19,071      16,449      15,360
  Other revenue                                      49         151         134
- --------------------------------------------------------------------------------
Net sales                                        19,120      16,600      15,494
Cost of sales                                    13,898      12,554      10,620
Selling, general and administrative               1,124       1,025       1,122
- --------------------------------------------------------------------------------
Total costs and expenses                         15,022      13,579      11,742
- --------------------------------------------------------------------------------
Operating profit-Stawell Gold Mine                4,098       3,021       3,752
Other operating expense, net                     (2,479)     (2,814)     (2,618)
- --------------------------------------------------------------------------------
Operating profit                               $  1,619         207       1,134
================================================================================
Stawell Gold Mine:
  Mineral Ventures' 50% direct share:
   Ounces sold                                   45,957      40,302      38,626
   Ounces produced                               45,443      40,606      38,986
  Average per ounce sold (US$):
   Realization                                 $    415         408         398
   Cash cost                                        287         297         273
================================================================================

The operating profit of Mineral Ventures, primarily a 67% direct and indirect
interest in the Stawell gold mine ("Stawell") in western Victoria, Australia,
amounted to $1.6 million in 1996 an increase of $1.4 million from the 1995
level. Mineral Ventures' 50% direct interest in operating profit provided $1.1
million of the increase and reflects the benefits of an additional 5.7 thousand
ounces sold (14% increase), a $10 per ounce decrease in the cost of gold sold
and a $7 per ounce increase in the selling price of gold. Stawell's cost of gold
in 1996 was negatively impacted by four lost time accidents, but still improved
over 1995's cost which was high due to adverse geological conditions at the
mine. Other operating expense, net, which includes equity earnings from joint
ventures and gold exploration costs, decreased by $0.3 million , primarily due
to Stawell's improved performance, and accounted for the improvement in other
operating expense. Gold exploration costs, essentially unchanged from 1995, are
being incurred by Minerals Ventures in Nevada and Australia with its joint
venture partner.

Mineral Ventures earned an operating profit of $0.2 million in 1995, a decrease
of $0.9 million from the level reported in 1994. The unfavorable change reflects
lower profits from Stawell, which experienced adverse geological conditions in
1995 that led to the production of lower ore grade and higher production costs
and an increase in exploration costs.

At December 31, 1996, remaining recoverable proven and probable gold reserves at
the Stawell mine were estimated at 531,000 ounces. The joint venture also has
exploration rights in the highly prospective district around the mine.

In addition, Mineral Ventures has a 17% indirect interest in the Silver Swan
base metals property in Western Australia. During the second quarter of 1996, it
was formally announced that this nickel deposit will be developed as an
underground mine with production expected to commence in mid-1997. As of
December 31, 1996, the main production decline has reached 1,257 meters and the
surface facilities were 60% complete.

Foreign Operations
A portion of the Company's financial results is derived from activities in
several 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 limits 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 exchange 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,

                                       30

cumulative 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. Subsidiaries in Brazil operate in
such highly inflationary economies as does Brink's subsidiary in Venezuela,
where Brink's increased its ownership interest from 15% to 61% in January 1997.
Additionally, current conditions in Mexico, where the Brink's Group has an
affiliate (20% owned), have resulted in that economy being considered highly
inflationary as of January 1, 1997.

The Company is 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 1996, general corporate expenses totaled $21.4 million compared with $16.8
million in the prior year. This increase was impacted by the costs associated
with the relocation of the Company's corporate headquarters to Richmond,
Virginia, which approximated $2.9 million.

Other Operating Income
Other operating income for 1996 decreased $9.1 million to $17.4 million from
$26.5 million in the prior year. Other operating income increased $2.1 million
in 1995 from the $24.4 million recorded in 1994. Other operating income
principally includes the Company's share of net income of unconsolidated foreign
affiliates, primarily Brink's equity affiliates, royalty income from Coal
Operations and gains and losses from sales of coal assets. The lower level of
other operating income in 1996 was due primarily to decreases in the sale of
Coal assets which generated $11.9 million of gains in 1995 combined with an
approximate $1 million reduction in foreign currency exchange gains. These
decreases were partially offset by increases in both royalty income and equity
income of Brink's unconsolidated affiliates. In 1995, a $5.9 million decrease in
equity in earnings of unconsolidated affiliates was more than offset by
increases in gains on the disposition of Coal assets as compared to 1994. Equity
earnings of foreign affiliates totaled $2.1 million, $0.2 million and $6.3
million in 1996, 1995 and 1994, respectively.

Interest Income
Interest income increased slightly, $0.1 million, from $3.4 million in 1995 to
$3.5 million in 1996. During 1995, interest income increased $0.9 million from
$2.5 million in 1994.

Interest Expense
Interest expense totaled $14.1 million in 1996 compared with $14.3 million in
1995 and $11.5 million in 1994. Although total debt increased slightly in 1996,
interest expense remained essentially unchanged as compared to 1995 due to a
lower average rate of interest charged during the year. The increase in 1995
interest expense over 1994 was due to higher interest rates on higher average
debt balances which reflected the full year impact of the Addington acquisition.
Interest expense in 1994 was impacted for part of the year by higher average
borrowings resulting from the Addington acquisition, partially offset by a
decrease resulting from the Company's redemption of its 9.2% Convertible
Subordinated Debentures in April 1994.

Other Income (Expense), Net
Other net expense for 1996 increased $2.9 million to $9.2 million from $6.3
million in 1995. Other net expense in 1995 increased by $0.7 million from $5.6
million in 1994. The higher level of other net operating expense in 1996 was due
primarily to an increase in minority interest expense for Brink's consolidated
affiliates, offset in part by lower foreign translation losses. In 1994, the
Company recognized $1.2 million of expenses related to the redemption of its
9.2% Convertible Subordinated Debentures.

Income Taxes
In 1996, 1995 and 1994, the provision for income taxes was less than the
statutory federal income tax rate of 35% due to the tax benefits of percentage
depletion and lower taxes on foreign income. In addition, 1994 benefited from a
reduction in the valuation allowance on deferred tax assets. These benefits were
partially offset by state income taxes and goodwill amortization. In addition,
the 1996 and 1995 provision was impacted by an increase in the valuation
allowance for deferred tax assets.

Based on the Company's historical and expected taxable earnings, management
believes it is more likely than not that the Company will realize the benefit of
the existing deferred tax asset at December 31, 1996.

FINANCIAL CONDITION

Cash Provided By Operating Activities
Cash provided by operating activities during 1996 totaled $196.7 million
compared with $156.5 million in 1995. Net income, noncash charges and changes in
operating assets and liabilities in 1996 were significantly affected by three
items: a benefit from the settlement of the Evergreen case at an amount less
than originally accrued, a charge related to the adoption of SFAS 121,

                                       31

and a benefit from the reversal of excess restructuring liabilities. These items
had no effect on cash generated by operations except that the second Evergreen
Case settlement payment of $7.0 million was paid from operating cash in the
third quarter of 1996. The initial payment of $25.8 million related to the
Evergreen case settlement was entirely funded by an escrow account previously
established by the Company. The amount previously escrowed and accrued was
included in "Short-term investments" and "Accrued liabilities" on the Company's
balance sheet. As discussed under Coal Operations, funding requirements for
restructuring charges are expected to be approximately $6 to $10 million during
the next twelve months.

Capital Expenditures
Cash capital expenditures for 1996 totaled $180.7 million, and an additional
$30.6 million in expenditures were funded by operating and capital leases. Of
the amount of cash capital expenditures, $61.5 million (34%) was spent by BHS,
$59.2 million (33%) was spent by Burlington, $32.2 million (18%) was spent by
Brink's, $19.1 million (11%) was spent by Coal Operations and $2.7 million (1%)
was spent by Mineral Ventures. In addition, Company corporate expenditures
totaled $6.0 million (3%). Corporate expenditures primarily related to the
purchase of the Company's new corporate headquarters. Expenditures incurred by
BHS in 1996 were primarily for customer installations, reflecting the expansion
of the subscriber base. Capital expenditures made by Brink's, Mineral Ventures
and Coal Operations in 1996 were primarily for replacement and maintenance of
current ongoing business operations. Burlington expanded its global network
systems, purchased three aircraft which were previously held under long-term
operating leases and added new facilities.

Cash capital expenditures totaled $124.5 million in 1995. An additional $27.3
million of expenditures were made through capital and operating leases. Of the
amount of cash capital expenditures, $47.3 million (38%) was spent by BHS, $32.3
million (26%) was spent by Burlington, $22.4 million (18%) was spent by Brink's,
$19.8 million (16%) was spent by Coal Operations and $2.3 million (2%) was spent
by Mineral Ventures.

Gross capital expenditures in 1997 are currently expected to approximate $283
million, of which $77 million is expected to be financed through leases. The
1997 estimated expenditures are approximately $70 million higher than the 1996
level of gross expenditures. The increase is expected to result largely from
expenditures at Burlington, supporting new facilities and implementation of new
information systems, expenditures at BHS resulting from continued expansion of
the subscriber base and at Brink's for expansion of new products.

Other Investing Activities
All other investing activities in 1996 required net cash of $11.0 million, which
primarily related to aircraft heavy maintenance outlays of $23.4 million and
acquisitions of $4.1 million, partially offset by proceeds from the disposal of
property, plant and equipment of $11.3 million. All other investing activities
in 1995 used net cash of $2.0 million. The Company's Burlington Group
anticipates spending approximately $24.0 million on aircraft heavy maintenance
in 1997.

Financing
The Company intends to fund 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 short-term borrowing arrangements.

The Company has a $350.0 million revolving 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. During the second quarter of 1996, the maturity
date of both the term loan and revolving credit portion of the Facility was
extended to May 31, 2001. Interest on borrowings under the Facility is payable
at rates based on prime, certificate of deposit, Eurodollar or money market
rates. At December 31, 1996, borrowings of $100.0 million were outstanding under
the term loan portion of the Facility and $23.2 million of additional borrowings
were outstanding under the remainder of the Facility.

The 4% debentures, due July 1, 1997, are expected to be repaid from borrowings
under the Facility.

Under the terms of some of its debt instruments, the Company has agreed to
various restrictions relating to the payment of dividends, the repurchase of
capital stock, the maintenance of consolidated net worth and the amount of
additional debt which may be incurred. Allowable restricted payments for
dividends and stock repurchases aggregated $255.8 million at December 31, 1996.
Under the terms of the Facility, the Company has agreed to maintain at least
$400.0 million of Consolidated Net Worth, as defined, and can incur additional
indebtedness of approximately $560 million.

                                       32

Debt
Outstanding debt, including borrowings under revolving credit agreements,
aggregated $196.0 million at December 31, 1996, up from $177.6 million at
year-end 1995. The $18.4 million increase in debt reflects the inclusion of
acquired debt as well as funding requirements for activities including capital
expenditures, heavy aircraft maintenance, dividend payments and the repurchases
of stock.

Off-balance Sheet Instruments
The Company enters into various off-balance sheet financial instruments, as
discussed below, to hedge foreign currency and other market exposures. The risk
that counterparties to such instruments may be unable to perform is minimized by
limiting the counterparties to major financial institutions. The Company does
not expect any losses due to such counterparty default.

Foreign currency forward contracts--The Company enters into foreign currency
forward contracts with a duration of up to 360 days as a hedge against
liabilities denominated in various currencies. These contracts do not subject
the Company to risk due to exchange rate movements because gains and losses on
these contracts offset losses and gains on the liabilities being hedged. At
December 31, 1996, the total notional value of foreign currency forward
contracts outstanding was $1.1 million. As of such date, the fair value of
foreign currency forward contracts was not significant.

Gold contracts--In order to protect itself against downward movements in gold
prices, the Company hedges a portion of its recoverable proven and probable
reserves primarily through forward sales contracts. At December 31, 1996, 37,808
ounces of gold, representing approximately 14% of the Company's recoverable
proven and probable reserves, were sold forward under forward sales contracts
that mature periodically through early-1998. Because only a portion of its
future production is currently sold forward, the Company can take advantage of
increases, if any, in the spot price of gold. At December 31, 1996, the fair
value of the Company's forward sales contracts amounted to $3.2 million.

Fuel contracts--The Company has hedged a portion of its jet fuel requirements
through several commodity option transactions that are intended to protect
against significant increases in jet fuel prices. At December 31, 1996, these
transactions aggregated 18.0 million gallons and are applicable throughout the
first half of 1997. 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 December 31, 1996, the fair value of these
contracts was not significant.

Interest rate contracts--In connection with the aircraft leasing transactions by
Burlington, the Company has entered into an interest rate swap agreement. This
variable to fixed interest rate swap agreement has a notional value of $30
million and fixes the Company's interest rate at 7.05% until January 2, 1998.
Given the decline in the base variable rate subsequent to when the agreement was
entered into, the cost to the Company to terminate the agreement would have been
$0.6 million on December 31, 1996.

In 1994, the Company entered into a standard three year variable to fixed
interest rate swap on a portion of the Company's U.S. dollar term loan. This
agreement fixed the Company's interest rate at 5% on initial borrowings of $40.0
million in principal. The principal amount to which the 5% interest rate applies
declines periodically throughout the term of the agreement, and at December 31,
1996, this rate applied to borrowings of $5.0 million in principal. During 1995,
the Company entered into two other variable to fixed interest rate swap
agreements. One agreement fixes the Company's interest rate at 5.80% on $20.0
million in principal for a term of three years. The other agreement fixes the
Company's interest rate at 5.66% for a term of 21 months on $20.0 million in
principal. During 1996, the Company entered into a variable to fixed rate swap
agreement which fixes the Company's interest rate at 4.9% on initial borrowings
of $5.0 million in principal. The principal amount increases by $5.0 million
each quarter through the first quarter of 1998. The principal amount to which
the 4.9% interest rate applied as of December 31, 1996 was $15.0 million.

Contingent Liabilities
In April 1990, the Company entered into a settlement agreement to resolve
certain environmental claims against the Company arising from hydrocarbon
contamination at a petroleum terminal facility ("Tankport") in Jersey City, New
Jersey, which operations were sold in 1983. Under the settlement agreement, the
Company is obligated to pay 80% of the remediation costs.

Based on data available to the Company and its environmental consultants, the
Company estimates its portion of the cleanup costs on an undiscounted basis
using existing technologies to be between $6.9 million and $17.0 million over a
period of up to five

                                       33

years. Management is unable to determine that any amount within that range is a
better estimate due to a variety of uncertainties, which include the extent of
the contamination at the site, the permitted technologies for remediation and
the regulatory standards by which the cleanup will be conducted. The cleanup
estimates have been modified from prior years' in light of cost inflation. The
estimate of costs and the timing of payments could change as a result of changes
to the remediation plan required, changes in the technology available to treat
the site, unforseen circumstances existing at the site and additional cost
inflation.

The Company commenced insurance coverage litigation in 1990, in the United
States District Court for the District of New Jersey, seeking a declaratory
judgment that all amounts payable by the Company pursuant to the Tankport
obligation were reimbursable under comprehensive general liability and pollution
liability policies maintained by the Company. In August 1995 the District Court
ruled on various Motions for Summary Judgment. In its decision, the Court found
favorably for the Company on several matters relating to the comprehensive
general liability policies but concluded that the pollution liability policies
did not contain pollution coverage for the types of claims associated with the
Tankport site. The Company appealed the District Court's decision to the Third
Circuit. However, management and its outside legal counsel continue to believe
that recovery of a substantial portion of the cleanup costs will ultimately be
probable of realization. Accordingly, it is the Company's belief that, based on
estimates of potential liability and probable realization of insurance
recoveries, the Company would be liable for approximately $1.4 million based on
the Court's decision and related developments of New Jersey law.

Capitalization
On January 18, 1996, the shareholders of the Company approved the Brink's Stock
Proposal resulting in the modification of the capital structure of the Company
to include an additional class of common stock. The outstanding shares of
Pittston Services Group Common Stock ("Services Stock") were redesignated as
Pittston Brink's Group Common Stock ("Brink's Stock") on a share-for-share
basis, and a new class of common stock, designated as Pittston Burlington Group
Common Stock ("Burlington Stock"), was distributed on the basis of one-half of
one share of Burlington Stock for each share of Services Stock previously held
by shareholders of record on January 19, 1996. The Pittston Brink's Group (the
"Brink's Group") consists of the Brink's and BHS operations of the Company. The
Pittston Burlington Group (the "Burlington Group") consists of the Burlington
operations of the Company. The Pittston Minerals Group (the "Minerals Group")
consists of Coal Operations and Mineral Ventures operations of the Company.

Brink's Stock, Burlington Stock and the Pittston Minerals Group Common Stock
("Minerals Stock") are designed to provide shareholders with separate securities
reflecting the performance of the Brink's Group, Burlington Group and Minerals
Group, respectively, without diminishing the benefits of remaining a single
corporation or precluding future transactions affecting any of the Groups. The
Company prepares separate financial statements for the Brink's, Burlington and
Minerals Groups in addition to consolidated financial information of the
Company.

The redesignation of the Company's common stock as Brink's Stock and the
distribution of Burlington Stock as a result of the approval of the Brink's
Stock Proposal did not result in any transfer of assets or liabilities of the
Company or any of its subsidiaries. Holders of all three classes of stock are
shareholders of the Company, which continues to be responsible for all
liabilities. Therefore, financial developments affecting the Brink's Group, the
Burlington Group or the Minerals Group that affect the Company's financial
condition could affect the results of operations and financial condition of all
three Groups. The changes in the capital structure of the Company had no effect
on the Company's total capital, except as to expenses incurred in the execution
of the Brink's Stock Proposal. Since the approval of the Brink's Stock Proposal,
capitalization of the Company has been affected by the share activity related to
each of the classes of common stock.

In November 1995, the Board of Directors (the "Board") authorized a revised
share repurchase program which allowed for the purchase, from time to time, of
up to 1,500,000 shares of Brink's Stock, 1,500,000 shares of Burlington Stock
and 1,000,000 shares of Minerals Stock, not to exceed an aggregate purchase
price of $45.0 million; such shares to be purchased from time to time in the
open market or in private transactions, as conditions warrant. Prior to the
revised program, 401,900 shares of Services Stock at an aggregate cost of $9.6
million were repurchased, of which 145,800 shares at a total cost of $3.4
million were repurchased in 1995, and 117,300 shares of Minerals Stock at an
aggregate cost of $1.7 million were repurchased, of which 78,800 shares at a
total cost of $0.9 million were repurchased in 1995. No additional repurchases
were made during the remainder of 1995 subsequent to the implementation of the
revised program. During 1996, the Company repurchased 278,000 shares and 75,600
shares of Brink's Stock and Burlington Stock, respectively, at a cost of $6.9
million and $1.4 million, respectively. The program to acquire shares remains in
effect in 1997.

                                       34

The Company has the authority to issue up to 2,000,000 shares of preferred
stock, par value $10 per share. In January, 1994 the Company issued $80.5
million (161,000 shares) of Series C Cumulative Convertible Preferred Stock (the
"Convertible Preferred Stock"), convertible into Minerals Stock. The Convertible
Preferred Stock pays an annual cumulative dividend of $31.25 per share payable
quarterly, in cash, in arrears, out of all funds of the Company legally
available; therefore, when, as and if declared by the Board and bears a
liquidation preference of $500 per share, plus an attributed amount equal to
accrued and unpaid dividends thereon.

In 1994, the Board authorized the repurchase, from time to time, of up to $15
million of the Convertible Preferred Stock. Subsequent to this authorization and
through October 1995, 24,720 shares at a total cost of $9.6 million had been
repurchased, of which 16,370 shares at a cost of $6.3 million were repurchased
in 1995. In November 1995, the Board authorized an increase in the remaining
repurchase authority to $15 million. No additional share repurchases were made
during the remainder of 1995 subsequent to the increased authorization. In 1996,
20,920 shares at a cost of $7.9 million were repurchased. The program to acquire
shares remains in effect in 1997, and in February 1997, the Board authorized an
increase in the remaining repurchase authority to $15 million.

As of December 31, 1996, debt as a percent of capitalization (total debt and
shareholders' equity) was 24%, compared with 25% at December 31, 1995. The
decrease in the debt ratio since December 1995 was due to the 16% increase in
shareholders' equity compared to the 10% increase in total debt.

Dividends
The Board intends to declare and pay dividends on Brink's Stock, Burlington
Stock and Minerals Stock based on the earnings, financial condition, cash flow
and business requirements of the Brink's Group, Burlington Group and the
Minerals Group, respectively. Since the Company remains subject to Virginia law
limitations on dividends and to dividend restrictions in its public debt and
bank credit agreements, 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. At December 31, 1996, the
Available Minerals Dividend Amount was at least $22.1 million.

During 1996, the Board declared and the Company paid dividends of 10 cents per
share, 65 cents per share and 24 cents per share of Brink's Stock, Minerals
Stock and Burlington Stock, respectively. During 1995, the Board declared and
the Company paid dividends of 65 cents per share of Minerals Stock. On an
equivalent basis in 1995, the Company paid dividends of 9 cents per share on
Brink's Stock and 22 cents per share on Burlington Stock. At present, the annual
dividend rate for Minerals Stock is 65 cents per share, for Brink's Stock is 10
cents per share and for Burlington Stock is 24 cents per share.

In 1996 and 1995, dividends paid on the Convertible Preferred Stock amounted to
$3.8 million and $4.3 million, respectively. Preferred dividends included on the
Company's Statements of Operations for the years ended December 31, 1996 and
1995, are net of $2.1 million and $1.6 million, respectively, which was the
excess of the carrying amount of the preferred stock over the cash paid to
holders of the stock for repurchases made during each year.

                                       35

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 allocations reflected in these financial
statements are determined based upon methods which management believes to be an
equitable allocation of such expenses and credits. The accounting policies
applicable to the preparation of the Brink's Group's financial statements may be
modified or rescinded at the sole discretion of the Company's Board of Directors
(the "Board") without the approval of the shareholders, although there is no
intention to do so.

The Company will provide to holders of the 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. Notwithstanding the
attribution of assets and liabilities (including contingent liabilities) between
the Brink's Group and the Pittston Minerals Group (the "Minerals Group") and the
Pittston Burlington Group (the "Burlington Group") for the purpose of preparing
their financial statements, this attribution and the change in the capital
structure of the Company as a result of the approval of the Brink's Stock
Proposal, as described in the Company's proxy statement dated December 15, 1995,
did not result in any transfer of assets or liabilities of the Company or any of
its subsidiaries. Holders of Brink's Stock are shareholders of the Company,
which continues to be responsible for all liabilities. Therefore, financial
developments affecting the Brink's Group, the Minerals Group or the Burlington
Group that affect the Company's financial condition could affect the results of
operations and financial condition of all three 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

                                                  Years Ended December 31
(In thousands)                               1996           1995           1994
- --------------------------------------------------------------------------------
Operating revenues:
  Brink's                               $ 754,011        659,459        547,046
  BHS                                     155,802        128,936        109,947
- --------------------------------------------------------------------------------
Operating revenues                      $ 909,813        788,395        656,993
================================================================================
Operating profit:
  Brink's                               $  56,823         42,738         39,710
  BHS                                      44,872         39,506         32,432
- --------------------------------------------------------------------------------
  Segment operating profit                101,695         82,244         72,142
  General corporate expense                (7,457)        (4,770)        (4,666)
- --------------------------------------------------------------------------------
Operating profit                        $  94,238         77,474         67,476
================================================================================

The Brink's Group's net income amounted to $59.7 million in 1996, compared with
the $51.1 million earned in 1995. Operating profit totaled $94.2 million, $16.8
million (22%) higher than the amount reported in 1995. Net income and operating
profit were favorably impacted by improved operating results generated by the
Brink's and BHS businesses, partially offset by higher general corporate
expenses, of which approximately $1 million (pretax) related to the relocation
of the Company's corporate headquarters to Richmond, Virginia. In 1996, net
interest income was $0.9 million compared to net interest expense in 1995 of
$0.2 million. The $5.4 million in other non-operating expense represented a $1.9
million increase over the 1995 level. Total revenues of $909.8 million amounted
to a $121.4 million (15%) increase compared to 1995, with Brink's accounting for
$94.5 million of the increase and BHS accounting for $26.9 million of the
increase. Operating expenses and selling, general and

                                       36

administrative expenses increased by $106.2 million (15%) of which $82.0 million
was incurred by Brink's and $21.5 million was incurred by BHS.

The Brink's Group's net income amounted to $51.1 million in 1995, compared with
the $41.5 million earned in 1994. Operating profit totaled $77.5 million, $10.0
million (15%) higher than the amount reported in 1994. Net income and operating
profit were favorably impacted by improved operating results generated by the
Brink's and BHS businesses. In 1995, net interest expense declined by $0.7
million, to $0.2 million, but the $3.5 million in other non-operating expense
represented a $0.4 million increase over the 1994 level. Total revenues of
$788.4 million amounted to a $131.4 million (20%) increase compared to the 1994
total, with Brink's increase accounting for $112.4 million and BHS's increase
accounting for $19.0 million. Operating expenses and selling, general and
administrative expenses increased by $116.4 million (20%) over the 1994 level,
of which $104.4 million was incurred by Brink's and $11.9 million was incurred
by BHS.

Brink's
The following is a table of selected financial data for Brink's on a comparative
basis:

                                                         Years Ended December 31
(In thousands)                                      1996        1995        1994
================================================================================
Operating revenues:
  North America (United States
    and Canada)                                 $418,941     379,230     337,641
  International subsidiaries                     335,070     280,229     209,405
- --------------------------------------------------------------------------------
Total operating revenues                        $754,011     659,459     547,046
================================================================================
Operating expenses                               605,851     533,109     438,851
Selling, general and administrative               93,770      84,507      74,398
- --------------------------------------------------------------------------------
Total costs and expenses                         699,621     617,616     513,249
- --------------------------------------------------------------------------------
Other operating income, net                        2,433         895       5,913
================================================================================
Operating profit:
  North America (United States
    and Canada)                                 $ 34,387      29,159      23,235
  International operations                        22,436      13,579      16,475
- --------------------------------------------------------------------------------
Total operating profit                          $ 56,823      42,738      39,710
================================================================================
Depreciation and amortization                   $ 24,293      21,844      20,553
================================================================================
Cash capital expenditures                       $ 32,149      22,415      22,312
================================================================================

Brink's worldwide consolidated revenues totaled $754.0 million in 1996 compared
to $659.5 million in 1995, a 14% increase. Brink's 1996 operating profit of
$56.8 million represented a 33% increase over the $42.7 million operating profit
reported in 1995. Total costs and expenses in 1996 increased by $82.0 million
(13%). Other operating income increased $1.5 million to $2.4 million, from $0.9
million in the prior year.

Revenues from North American operations (United States and Canada) increased
$39.7 million, or 10%, to $418.9 million in 1996 from $379.2 million in 1995.
North American operating profit increased $5.2 million (18%) to $34.4 million in
the current year period from $29.2 million in 1995. The operating profit
improvement for 1996 primarily resulted from improved armored car operations,
which includes ATM servicing and improved currency processing operations.

Revenues from international subsidiaries increased $54.9 million to $335.1
million in 1996 from $280.2 million in 1995. Consolidation of the results of
Brink's Colombia, in which Brink's increased its ownership from 47% to 51% in
the third quarter of 1995, accounted for approximately $22.0 million of the
increase in international revenues. Brink's Brazil revenues also increased $16.9
million from $106.7 million in 1995 to $123.6 million in 1996. Operating profits
from international subsidiaries and minority-owned affiliates amounted to $22.4
million in the current year period compared to $13.6 million in the prior year
period. The increase in operating profits was primarily due to increases in
Brink's international diamond and jewelry operations of $1.2 million, as well as
improvements in Brink's Latin American operations, offset, in part, by lower
operating results in Europe. European operating profit decreased $2.1 million
due to lower operating results in Holland and France, offset partially by
improvements in the United Kingdom. The Asia/Pacific region also achieved a
modest increase of $0.7 million in operating profit during 1996.

Latin America's increase in operating profit, $9.0 million, includes a $3.1
million benefit from the consolidation of the results of Brink's Colombia (51%
owned) as well as improvements in Colombia's operations. Brink's Brazil (100%
owned) operating profit also increased $1.6 million from $5.3 million in 1995 to
$6.9 million in 1996. Equity in earnings from Brink's Mexican affiliate (20%
owned) amounted to $2.9 million compared with a $2.5 million loss recorded in
1995. The Mexican affiliate's results in 1995 were adversely impacted by the
devaluation of the local currency, the decline in general economic conditions,
high local interest rates and the costs associated with workforce reductions.

As part of its global growth strategy, in early 1997, Brink's increased its
ownership positions in its affiliates in Venezuela, Peru and The Netherlands. In
Venezuela, Brink's increased its ownership from 15% to 61% in Custodia y
Traslado de Valores C.A. ("Custravalca"), the largest armored car company in
Venezuela, for a purchase price of approximately $31 million. The remaining 39%
is held by a group of local investors including Venezuelan banks. In conjunction
with the Custravalca transaction, Brink's also acquired a 31% indirect interest
in Brink's Peru S.A., the largest armored car company in Peru

                                       37

increasing its ownership of Brink's Peru to 36%. Brink's has also acquired the
remaining interests in Brink's Hong Kong and Brinks-Nedlloyd, the largest
armored car company in The Netherlands, increasing Brink's ownership of these
companies to 100%. These acquisitions are expected to increase consolidated
international revenues and operating profits of Brink's and should be accretive
to the earnings of the Brink's Group beginning in 1997.

Brink's 1995 consolidated operating profit of $42.7 million amounted to a $3.0
million (8%) increase over the $39.7 million operating profit recorded in 1994.
Revenues increased by $112.4 million to $659.5 million, 21% higher than the 1994
level. Total costs and expenses increased by $104.4 million to $617.6 million, a
20% increase over the prior year. Other operating income of $0.9 million in 1995
represented a $5.0 million decline from the amount reported in 1994, principally
reflecting a reduction in equity income from unconsolidated foreign affiliates,
primarily Mexico.

Revenues from North American (United States and Canada) operations totaled
$379.2 million in 1995, $41.6 million (12%) higher than the 1994 level. North
American operating profit amounted to $29.2 million, an increase of $5.9 million
(25%) compared to the $23.2 million recorded in 1994. The favorable change in
operating profit was largely attributable to improved results generated by the
armored car business, which includes ATM servicing, as well as higher earnings
from the diamond and jewelry and currency processing businesses, partially
offset by a decline in profit from the air courier business.

Revenues from consolidated international subsidiaries increased by $70.8 million
(34%) to $280.2 million in 1995, but operating profit from international
subsidiaries and affiliates declined by 18%, to $13.6 million, from $16.5
million in the prior year. The increase in revenues principally reflects
additional business volume and higher prices in Brazil, the favorable impact
from the decline in the value of the U.S. dollar on foreign currency translation
and the consolidation of Colombian operations as a result of Brink's acquiring a
majority ownership of that company in the third quarter of 1995. The decline in
operating profit from international subsidiaries and affiliates principally was
due to a $5.3 million deterioration in the reported results of Brink's Mexican
affiliate, with Brink's share of the company's results amounting to a $2.5
million loss in 1995 compared to a profit of $2.8 million in 1994. The Mexican
affiliate's results in 1995 were adversely impacted by the devaluation of the
local currency in December 1994, the decline in general economic conditions,
high local interest rates and the costs associated with workforce reductions in
the business. Operating profit in the Latin America region, which includes
Mexico, decreased by $1.4 million in 1995 compared to the prior year, reflecting
the decline in Mexican earnings, mostly offset by improved results in Brazil and
higher reported earnings from Colombia. Brink's Brazil reported an operating
profit of $5.3 million in 1995 compared to an operating profit of $3.2 million
in the prior year. The increase in Colombia largely reflects the impact of the
consolidation of results subsequent to Brink's acquisition of a majority
ownership position in the company. Earnings declined by $2.6 million in the
European region, while results in the Asian/Pacific region increased by $0.9
million.

BHS
The following is a table of selected financial data for BHS on a comparative
basis:

                                                    Years Ended December 31
(Dollars in thousands)                           1996         1995         1994
================================================================================
Operating revenues                          $ 155,802      128,936      109,947

Operating expenses                             81,324       66,575       59,334
Selling, general and administrative            29,606       22,855       18,181
- --------------------------------------------------------------------------------
Total costs and expenses                      110,930       89,430       77,515
- --------------------------------------------------------------------------------
Operating profit                            $  44,872       39,506       32,432
================================================================================
Depreciation and amortization               $  30,115       22,408       17,817
================================================================================
Cash capital expenditures                   $  61,522       47,256       34,071
================================================================================
Annualized recurring revenues (a)           $ 128,106      107,707       87,164
================================================================================
Number of subscribers:
   Beginning of period                        378,659      318,029      259,551
   Installations                               98,541       82,643       75,203
   Disconnects, net                           (30,695)     (22,013)     (16,725)
- --------------------------------------------------------------------------------
End of period                                 446,505      378,659      318,029
================================================================================

(a) Annualized recurring revenues are calculated based on the number of
subscribers at period end multiplied by the average fee per subscriber received
in the last month of the period for monitoring, maintenance and related
services.

Revenues for BHS increased by $26.9 million (21%) to $155.8 million in 1996 from
$128.9 million in 1995. The increase in revenues was predominantly the result of
higher ongoing monitoring and service revenues, caused by an 18% growth of the
subscriber base for the year. As a result of such growth, annualized recurring
revenues at the end of 1996 grew 19% over the amount in effect at the end of
1995. Total installation revenue in 1996 also grew by 15%, over the amount
recorded in 1995, as a result of the increased volume of installations. However,
revenue per installation decreased from amounts achieved in 1995 due to the
competitive connection fee pricing in the marketplace.

                                       38

Operating profit of $44.9 million in 1996 represents an increase of $5.4 million
(14%) compared to the $39.5 million earned in 1995. The increase in operating
profit largely stemmed from the growth in the subscriber base and higher average
monitoring and service revenues, somewhat offset by higher depreciation and
increased account servicing and administrative expenses, which are also a
consequence of the larger subscriber base. In addition, installation and
marketing costs incurred and expensed during the year increased by approximately
$1 million from the prior year. BHS currently expenses net marketing and selling
costs related to obtaining a subscriber. As competitive pressure in the
marketplace continues, these costs, which are related to obtaining a subscriber,
may increase.

The cash operating margin from recurring revenues in 1996 remained consistent
with 1995; however, overall operating margin was negatively impacted by
increased depreciation, installation and marketing expenses. As a result,
overall operating margin was 29% in 1996 compared to 31% in 1995. Management
currently expects 1997 cash margins from recurring revenues to be consistent
with 1996 and overall operating margins to range in the mid to upper 20%.

Revenues for BHS increased by $19.0 million (17%) to $128.9 million in 1995 from
$109.9 million in 1994. The increase in revenues was primarily from ongoing
monitoring and recurring revenues caused by the 19% growth in the subscriber
base. As a result of such growth, annualized recurring revenues at the end of
1995 grew 24% over the amount in effect at the end of 1994. The total amount of
installation revenue grew slightly over the 1994 amount as revenue from
increased installations was mostly offset by a reduction in revenue per
installation. Revenue per installation decreased due to the competitive
environment in the marketplace.

Operating profit of $39.5 million for 1995 represented an increase of $7.1
million (22%) compared to the $32.4 million earned in 1994. The increase in
operating profit stemmed from the 21% growth in average subscribers in 1995, as
compared to the prior year, and higher monitoring and recurring revenue,
resulting from the growth in the subscriber base, which was only partially
offset by increased account servicing and administrative expenses. Installation
and marketing costs incurred and expensed during 1995 increased $0.8 million,
over the 1994 amount.

At year-end 1996, BHS had approximately 446,500 subscribers, 40% more than the
year-end 1994 subscriber base. New subscribers totaled approximately 98,500 in
1996, 82,600 in 1995 and 75,200 in 1994. As a result, BHS's average subscriber
base increased by 18% and 21%, as compared with each prior year in 1996 and
1995, respectively.

As of January 1, 1992, BHS elected to capitalize categories of costs not
previously capitalized for home security installations to more accurately
reflect subscriber installation costs included as capitalized installation
costs, which added $4.5 million to operating profit in both 1996 and 1995 and
$4.1 million in 1994. 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 (in the
amount of $2.5 million in 1996, $2.7 million in 1995 and $2.6 million in 1994)
and costs incurred in maintaining facilities and vehicles dedicated to the
installation process (in the amount of $2.0 million in 1996, $1.8 million in
1995 and $1.5 million in 1994). The increase in the amount capitalized, while
adding to current period profitability comparisons, defers recognition of
expenses over the estimated useful life of the installation. The additional
subscriber installation costs which are currently capitalized were expensed in
prior years for subscribers in those years. Because capitalized subscriber
installation costs for periods prior to January 1, 1992, were not adjusted for
the change in accounting principle, installation costs for subscribers in those
years will continue to be depreciated based on the lesser amounts capitalized in
those periods. Consequently, depreciation of capitalized subscriber installation
costs in the current year and until such capitalized costs prior to January 1,
1992, are fully depreciated will be less than if such prior periods' capitalized
costs had been adjusted for the change in accounting. However, the Company
believes the effect on net income in 1996, 1995 and in 1994 was immaterial.
While the amounts of the costs incurred which are capitalized vary based on
current market and operating conditions, the types of such costs which are
currently capitalized will not change. The change in the amount capitalized has
no additional effect on current or future cash flows or liquidity.

Foreign Operations
A portion of the Brink's Group's financial results is derived from activities in
several 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 limits 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 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

                                       39

specific transaction hedged. In addition, cumulative 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 Brazil operates in such a highly inflationary economy,
as does Brink's subsidiary in Venezuela, where Brink's increased its ownership
interest from 15% to 61% in January 1997. Additionally, current conditions in
Mexico, where the Brink's Group has an affiliate (20% owned), have resulted in
that economy being considered highly inflationary as of January 1, 1997.

The Brink's Group is 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 upon
utilization and other methods and criteria which management believes to be an
equitable and a reasonable estimate of the cost attributable to the Brink's
Group. These allocations were $7.5 million in 1996, $4.8 million in 1995 and
$4.7 million in 1994, respectively.

The increase in the corporate expense allocation during 1996 is primarily due to
additional services provided to the Brink's Group by corporate office personnel
combined with the relocation of the Company's corporate headquarters to
Richmond, Virginia, during September 1996. The costs of this move, including
moving expenses, employee relocation, severance pay and temporary employee
costs, amounted to $2.9 million. Approximately, $1 million of these costs were
attributed to the Brink's Group.

Other Operating Income
Other operating income increased $1.5 million to $2.4 million in 1996 from $0.9
million in 1995. Other operating income decreased $5.0 million to $0.9 million
in 1995 from $5.9 million in 1994. Other operating income principally includes
the equity earnings of foreign affiliates. These earnings, which are
attributable to equity affiliates of Brink's, amounted to $1.9 million in 1996,
$0.1 million in 1995 and $6.0 million in 1994. The lower level of other
operating income in 1995 as compared to 1996 and 1994 is primarily attributable
to lower earnings from Brink's affiliate in Mexico during 1995.

Interest Income
Interest income increased $0.9 million to $2.7 million in 1996 from $1.8 million
in 1995. The increase is primarily attributed to interest income of 0.8 million
earned from an increase in amounts owed by the Minerals Group in 1996. Interest
income increased only slightly, $0.3 million, from $1.5 million in 1994 to $1.8
million in 1995.

Interest Expense
Interest expense decreased $0.3 million to $1.8 million from $2.1 million in
1996 and decreased $0.4 million in 1995 from $2.5 million in 1994 due to lower
outstanding debt balances.

Other Income (Expense), Net
Other net expense, which principally includes foreign translation gains and
losses and minority interest earnings or losses, increased by $1.9 million to
$5.4 million in 1996 from a net expense of $3.5 million in 1995. The higher
level of expense in 1996 reflects an increase in minority interest, resulting
from the consolidation of the now 51% owned Brink's Colombia. In 1995, other net
expense increased by $0.4 million to a net expense of $3.5 million from $3.1
million in 1994.

Income Taxes
In 1996, 1995 and 1994, the provision for income taxes was less than the federal
statutory rate of 35% primarily due to lower taxes on foreign income, partially
offset by provisions for state income taxes.

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.

Corporate assets which were allocated to the Brink's Group consisted primarily
of pension assets and deferred income taxes and amounted to $60.8 million and
$47.0 million at December 31, 1996 and 1995, respectively.

Cash Provided By Operating Activities
Cash provided by operating activities totaled $113.8 million in 1996, an
increase from $90.8 million in 1995. The net increase in 1996 compared with 1995
was largely due to the increase in net income, which included higher amounts for
depreciation and amortization and other non-cash charges. Cash generated from

                                       40

operating activities exceeded cash requirements for investing activities. This
cash inflow before financing combined with proceeds from the exercise of stock
options was offset by lending to the Minerals Group, reduction of debt,
repurchases of stock, payment of dividends and payment of costs related to the
Brink's Stock Proposal. As a result, cash and cash equivalents decreased $2.0
million during 1996 to a year-end total of $20.0 million.

Capital Expenditures
Cash capital expenditures for 1996 totaled $95.8 million, of which $61.5 million
was spent by BHS and $32.2 million was spent by Brink's. In addition, $2.1
million was attributable to the Brink's Group for corporate expenditures
primarily relating to the purchase of the Company's new corporate headquarters.
Cash capital expenditures totaled $69.8 million in 1995. Additional expenditures
financed through capital and operating leases amounted to $19.6 million and
$16.2 million in 1996 and 1995, respectively. In 1996, a substantial portion of
the Brink's Group's total cash capital expenditures was attributable to BHS
customer installations, principally reflecting expansion of the subscriber base.
Of the total cash capital expenditures in 1996, $57.2 million or 60% related to
these costs. Capital expenditures made by Brink's during 1996 were primarily for
replacement or maintenance of ongoing business operations.

Gross capital expenditures in 1997 are currently expected to approximate $150
million, of which approximately $32 million is expected to be financed through
leases. The 1997 estimated expenditures are approximately $35 million higher
than the 1996 level of gross expenditures. The increase is expected to result
largely from expenditures at BHS, resulting from continued growth of the
subscriber base and at Brink's for expansion of new products which have been
designed to streamline the handling and management of cash receipts.

Other Investing Activities
All other investing activities in 1996 and 1995 provided net cash of $3.6
million and $0.9 million, respectively, which primarily related to proceeds from
dispositions of property, plant and equipment.

Financing
The Brink's Group intends to fund 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, short-term borrowing arrangements or repayments from the
Minerals Group.

The Company has a $350.0 million revolving 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. During the second quarter of 1996, the maturity date of both
the term loan and the revolving credit portion of the Facility was extended to
May 31, 2001. Interest on borrowings under the Facility is payable at rates
based on prime, certificate of deposit, Eurodollar or money market rates. No
portion of the total amount outstanding under the Facility at December 31, 1996
or at December 31, 1995 was attributed to the Brink's Group.

Under the terms of some of its debt instruments, the Company has agreed to
various restrictions relating to the payment of dividends, the repurchase of
capital stock, the maintenance of consolidated net worth and the amount of
additional debt which may be incurred. Allowable restricted payments for
dividends and stock repurchases aggregated $255.8 million at December 31, 1996.
Under the terms of the Facility, the Company has agreed to maintain at least
$400.0 million of Consolidated Net Worth, as defined, and can incur additional
indebtedness of approximately $560 million.

Debt
Total debt outstanding for the Brink's Group amounted to $9.4 million at
December 31, 1996 and $14.8 million at year-end 1995. During 1996, there was a
net cash inflow before financing of $21.7 million. Requirements for repurchases
of stock, payment of dividends, lending to the Minerals Group and payment of
costs related to the Brink's Stock Proposal were partially offset by proceeds
from the exercise of stock options, resulted in the decrease in total debt. At
December 31, 1996 and 1995, no portion of total debt outstanding was payable to
either the Burlington Group or the Minerals Group.

Related Party Transactions
At December 31, 1996, under an interest bearing borrowing arrangement, the
Minerals Group owed the Brink's Group $24.0 million, an increase of $6.1 million
from the $17.9 million owed at December 31, 1995.

At December 31, 1996, the Brink's Group owed the Minerals Group $18.8 million
for tax payments representing the Minerals Group's tax benefits utilized by
Brink's Group in accordance with the Company's tax sharing policy, of which
$10.0 million is expected to be paid within one year. The Brink's Group paid the
Minerals Group $14.5 million for the utilization of such tax benefits during
1996.

                                       41

Contingent Liabilities
Under the Coal Industry Retiree Health Benefit Act of 1992 (the "Health Benefit
Act"), the Company and its majority-owned subsidiaries at July 20, 1992,
including certain companies of the Brink's Group are jointly and severally
liable with certain companies of the Minerals Group and of the Burlington Group
for the costs of health care coverage provided for by that Act. For a
description of the Health Benefit Act and a calculation of certain of such
costs, see Note 12 to the Company's consolidated financial statements. At this
time, the Company expects the Minerals Group to generate sufficient cash flow to
discharge its obligations under the Act.

In April 1990, the Company entered into a settlement agreement to resolve
certain environmental claims against the Company arising from hydrocarbon
contamination at a petroleum terminal facility ("Tankport") in Jersey City, New
Jersey, which operations were sold in 1983. Under the settlement agreement, the
Company is obligated to pay 80% of the remediation costs. Based on data
available to the Company and its environmental consultants, the Company
estimates its portion of the cleanup costs on an undiscounted basis using
existing technologies to be between $6.9 million and $17.0 million over a period
of up to five years. Management is unable to determine that any amount within
that range is a better estimate due to a variety of uncertainties, which include
the extent of the contamination at the site, the permitted technologies for
remediation and the regulatory standards by which the cleanup will be conducted.
The cleanup estimates have been modified from prior years in light of cost
inflation. The estimate of costs and the timing of payments could change as a
result of changes to the remediation plan required, changes in the technology
available to treat the site, unforseen circumstances existing at the site and
additional cost inflation.

The Company commenced insurance coverage litigation in 1990, in the United
States District Court for the District of New Jersey, seeking a declaratory
judgment that all amounts payable by the Company pursuant to the Tankport
obligation were reimbursable under comprehensive general liability and pollution
liability policies maintained by the Company. In August 1995, the District Court
ruled on various Motions for Summary Judgment. In its decision, the Court found
favorably for the Company on several matters relating to the comprehensive
general liability policies but concluded that the pollution liability policies
did not contain pollution coverage for the types of claims associated with the
Tankport site. The Company has filed a notice of its intent to appeal the
District Court's decision to the Third Circuit. However, management and its
outside legal counsel continue to believe that recovery of a substantial portion
of the cleanup costs will ultimately be probable of realization. Accordingly, it
is the Company's belief that, based on estimates of potential liability and
probable realization of insurance recoveries, the Company would be liable for
approximately $1.4 million based on the Court's decision and related
developments of New Jersey law.

Capitalization
On January 18, 1996, the shareholders of the Company approved the Brink's Stock
Proposal, resulting in the modification of the capital structure of the Company
to include an additional class of common stock. The outstanding shares of
Pittston Services Group Common Stock ("Services Stock") were redesignated as
Brink's Stock on a share-for-share basis, and a new class of common stock,
designated as Pittston Burlington Group Common Stock ("Burlington Stock"), was
distributed on the basis of one-half of one share of Burlington Stock for each
share of Services Stock previously held by shareholders of record on January 19,
1996.

Brink's Stock, Burlington Stock and Minerals Stock are designed to provide
shareholders with separate securities reflecting the performance of the Brink's
Group, the Burlington Group and the Minerals Group, respectively, without
diminishing the benefits of remaining a single corporation or precluding future
transactions affecting any of the Groups. The Company prepares separate
financial statements for the Brink's, Burlington and Minerals Groups in addition
to consolidated financial information of the Company.

The redesignation of the Company's common stock as Brink's Stock and the
distribution of Burlington Stock as a result of the approval of the Brink's
Stock Proposal did not result in any transfer of assets or liabilities of the
Company or any of its subsidiaries. Holders of all three classes of stock are
shareholders of the Company, which continues to be responsible for all
liabilities. Therefore, financial developments affecting the Brink's Group, the
Burlington Group or the Minerals Group that affect the Company's financial
condition could affect the results of operations and financial condition of all
three Groups.

The changes in the capital structure of the Company had no effect on the
Company's total capital, except as to expenses incurred in the execution of the
Brink's Stock Proposal. Since the approval of the Proposal, capitalization of
the Company has been affected by the share activity related to each of the
classes of common stock.

                                       42

In November 1995, the Board authorized a revised share repurchase program which
allowed for the purchase, from time to time, of up to 1,500,000 shares of
Brink's Stock, 1,500,000 shares of Burlington Stock and 1,000,000 shares of
Minerals Stock, not to exceed an aggregate purchase price of $45.0 million; such
shares to be purchased from time to time in the open market or in private
transactions, as conditions warrant. Prior to the revised program, 401,900
shares of Services Stock were repurchased at an aggregate cost of $9.6 million,
of which 145,800 shares at an aggregate cost of $3.4 million were repurchased in
1995. On an equivalent basis, repurchases totaled 401,900 shares at an aggregate
cost attributed to the Brink's Group of $6.4 million, with repurchases of
145,800 shares at an attributed cost of $2.3 million in 1995. No additional
repurchases were made during the remainder of 1995 subsequent to the
implementation of the revised program. During 1996, the Company repurchased
278,000 shares of Brink's Stock at a cost of $6.9 million. The program to
acquire shares remains in effect in 1997.

The Company has the authority to issue up to 2,000,000 shares of preferred
stock, par value $10 per share. In January, 1994, the Company issued $80.5
million (161,000 shares) of Series C Cumulative Convertible Preferred Stock (the
"Convertible Preferred Stock"), convertible into Minerals Stock. The Convertible
Preferred Stock, which is attributable to the Minerals Group, pays an annual
cumulative dividend of $31.25 per share payable quarterly, in cash, in arrears,
out of all funds of the Company legally available; therefore, when, as and if
declared by the Board and bears a liquidation preference of $500 per share, plus
an attributed amount equal to accrued and unpaid dividends thereon.

In 1994, the Board authorized the repurchase, from time to time, of up to $15
million of the Convertible Preferred Stock. Subsequent to this authorization and
through October 1995, 24,720 shares at a total cost of $9.6 million had been
repurchased, of which 16,370 shares at a cost of $6.3 million were repurchased
in 1995. In November 1995, the Board authorized an increase in the remaining
repurchase authority to $15 million. No additional share repurchases were made
during the remainder of 1995 subsequent to the increased authorization. In 1996,
20,920 shares at a cost of $7.9 million were repurchased. The program to acquire
shares remains in effect in 1997, and in February 1997, the Board authorized an
increase in the remaining repurchase authority to $15 million.

Dividends
The Board intends to declare and pay dividends 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 and to dividend restrictions in its public debt and bank credit
agreements, losses by the Minerals Group or the Burlington Group could affect
the Company's ability to pay dividends in respect of stock relating to the
Brink's Group.

During 1996 and 1995, on an equivalent basis, the Board declared and the Company
paid dividends on Brink's Stock of 10 cents and 9 cents per share, respectively.

In 1996 and 1995, dividends paid on the Convertible Preferred Stock were $3.8
million and $4.3 million, respectively.

                                       43

Pittston Burlington Group
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
- --------------------------------------------------------------------------------

The financial statements of the Pittston Burlington Group (the "Burlington
Group") include the balance sheets, results of operations and cash flows of the
Burlington Air Express Inc. ("Burlington") 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 Burlington Group's financial statements are prepared
using the amounts included in the Company's consolidated financial statements.
Corporate allocations reflected in these financial statements are determined
based upon methods which management believes to be an equitable allocation of
such expenses and credits. The accounting policies applicable to the preparation
of the Burlington Group's financial statements may be modified or rescinded at
the sole discretion of the Company's Board of Directors (the "Board") without
the approval of the shareholders, although there is no intention to do so.

The Company will provide to holders of the Pittston Burlington Group Common
Stock ("Burlington Stock") separate financial statements, financial reviews,
descriptions of business and other relevant information for the Burlington Group
in addition to consolidated financial information of the Company.
Notwithstanding the attribution of assets and liabilities (including contingent
liabilities) between the Burlington Group and the Pittston Brink's Group (the
"Brink's Group") and the Pittston Minerals Group (the "Minerals Group") for the
purpose of preparing their financial statements, this attribution and the change
in the capital structure of the Company as a result of the approval of the
Brink's Stock Proposal, as described in the Company's proxy statement dated
December 15, 1995, did not result in any transfer of assets or liabilities of
the Company or any of its subsidiaries. Holders of Burlington Stock are
shareholders of the Company, which continues to be responsible for all
liabilities. Therefore, financial developments affecting the Burlington Group,
the Brink's Group or the Minerals Group that affect the Company's financial
condition could affect the results of operations and financial condition of all
three Groups. Accordingly, the Company's consolidated financial statements must
be read in connection with the Burlington Group's financial statements.

The following discussion is a summary of the key factors management considers
necessary in reviewing the Burlington 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 Burlington Group and the Company.

RESULTS OF OPERATIONS

                                                  Years Ended December 31
(In thousands)                               1996           1995           1994
- --------------------------------------------------------------------------------
Operating revenues:
  Burlington                          $ 1,500,318      1,414,821      1,215,284
================================================================================
Operating profit:
  Burlington                          $    64,604         58,723         69,224
  General corporate expense                (7,433)        (4,770)        (4,665)
- --------------------------------------------------------------------------------
Operating profit                      $    57,171         53,953         64,559
================================================================================

Net income for the Burlington Group for 1996 was $33.8 million, compared with
$32.9 million in 1995. Operating profit totaled $57.2 million in 1996, compared
with $54.0 million in 1995. Results for 1996 were impacted by higher general
corporate expenses, of which approximately $1 million (pretax) related to the
relocation of the Company's corporate headquarters to Richmond, Virginia.
Revenues increased $85.5 million or 6% during 1996 as compared with the prior
year. Operating expenses and selling, general and administrative expenses for
1996 increased $81.0 million or 6% over the 1995 level.

Net income for the Burlington Group for 1995 was $32.9 million compared with
$38.4 million for 1994. Operating profit for 1995 was $54.0 million compared
with $64.6 million in 1994. Net income and operating profit in 1994 benefited
from substantial additional volumes of freight directed to Burlington during a
nationwide trucking strike in the second quarter of 1994, which added an
estimated $8 million to operating profit and $5 million to net income. Revenues
for 1995 increased $199.5 million compared with 1994. Operating expenses and
selling, general and administrative expenses for 1995 increased $209.8 million
over the 1994 level.

                                       44

Burlington
The following is a table of selected financial data for Burlington on a
comparative basis:

(Dollars in thousands - except per                 Years Ended December 31
pound/shipment amounts)                         1996         1995          1994
================================================================================
Operating revenues:
Expedited freight services:
  Domestic U.S.                           $  547,647      528,174       561,286
  International                              713,834      698,624       542,166
- --------------------------------------------------------------------------------
Total expedited freight services           1,261,481    1,226,798     1,103,452
Customs clearances                           135,887      115,135        77,586
Ocean and other (a)                          102,950       72,888        34,246
- --------------------------------------------------------------------------------
Total operating revenues                   1,500,318    1,414,821     1,215,284

Operating expense                          1,317,423    1,245,721     1,043,895
Selling, general and administrative          119,821      113,210       105,371
- --------------------------------------------------------------------------------
Total costs and expenses                   1,437,244    1,358,931     1,149,266
- --------------------------------------------------------------------------------
Other operating income, net                    1,530        2,833         3,206
- --------------------------------------------------------------------------------
Operating profit:
  Domestic U.S.                               36,143       30,416        45,732
  International                               28,461       28,307        23,492
- --------------------------------------------------------------------------------
Total operating profit                    $   64,604       58,723        69,224
================================================================================
Depreciation and amortization             $   23,254       19,856        17,209
================================================================================
Cash capital expenditures                 $   59,238       32,288        23,946
================================================================================
Expedited freight services shipment
  growth rate (b)                                1.3%         6.2%          6.1%
Expedited freight services weight
  growth rate (b):
  Domestic U.S.                                  3.3%        (3.8%)        19.3%
  International                                  3.0%        29.1%         25.3%
  Worldwide                                      3.1%        11.3%         22.1%
Expedited freight services weight
  (million pounds)                           1,433.2      1,390.2       1,248.5
================================================================================
Expedited freight services shipments
  (thousands)                                  5,180        5,112         4,805
================================================================================
Expedited freight services average:
  Yield (revenue per pound)               $    0.880        0.882         0.884
  Revenue per shipment                    $      244          240           229
  Weight per shipment (pounds)                   277          272           259
================================================================================

(a) Primarily international ocean freight.
(b) Compared to the same period in the prior year.

Burlington's operating profit amounted to $64.6 million in 1996, an increase of
$5.9 million (10%) from the level achieved in 1995. Worldwide revenues increased
by 6% to $1.5 billion from $1.4 billion in 1995. The $85.5 million growth in
revenues reflects both an increase in worldwide expedited freight services
pounds shipped as well as substantially higher other freight services revenues,
which include customs clearances, ocean and other.

The worldwide expedited freight services revenues increase of 3%, from $1,226.8
million in 1995 to $1,261.5 million in 1996 was the result of a corresponding 3%
increase in worldwide expedited freight services weight shipped, from 1,390.2
million pounds in 1995 to 1,433.2 million pounds in 1996. The average expedited
freight services yield remained essentially unchanged. Other freight services
revenues increased 27% from $188.0 million in 1995 to $238.8 million in 1996,
due primarily to growth in custom clearance and ocean freight services. Total
costs and expenses increased by 6% from $1,358.9 million in 1995 to $1,437.2
million in 1996, reflecting the additional business volume, along with system
and facility improvements and expansion.

Domestic expedited freight services revenues during 1996 increased by 4% or
$19.5 million to $547.7 million from $528.2 million in the prior year, while
other domestic freight services revenues remained essentially unchanged at $6.9
million. Domestic operating profit increased 19% from $30.4 million in 1995 to
$36.1 million in 1996. The increase in operating profit reflects higher volume
and lower average transportation costs (primarily the benefit of reduced Federal
Excise Tax liabilities prior to re-instatement of such tax in August 1996),
partially offset by higher fuel costs. In addition, domestic operating margin
also benefited from station and general and administrative cost efficiencies.
However, the domestic average yield for 1996 remained essentially unchanged as
compared to 1995 due to lower average pricing and sales mix for Burlington's
overnight service, offset by the initiation of a surcharge on domestic
shipments.

International expedited freight services revenues of $713.8 million in 1996
represented a $15.2 million (2%) increase over the $698.6 million reported in
1995. This increase in revenue is due to the 3% growth in expedited freight
services weight shipped, offset partially by a slightly lower average yield. In
addition, international non-expedited freight services revenues increased $50.8
million (28%) from $181.1 million in 1995 to

                                       45

$231.9 million in 1996. This increase in revenue is primarily due to an increase
in custom clearance and a continued expansion of ocean freight services.
International operating profit amounted to $28.5 million in 1996, essentially
unchanged as compared to the $28.3 million recorded in 1995. Operating profit in
1996, primarily reflects improved operating margins in US exports and ocean
freight services. However, these improvements were offset, in large part, by
added costs related to the expansion of ocean and logistics operations and
further investments to strengthen Burlington's worldwide network including
quality improvements in global systems, facilities and acquisitions.

Burlington recently created a new business unit, BAX Global Logistics, (also
trading as Logistics Advantage('tm')) to provide customers with cost-effective
logistics solutions and, in 1996, it enhanced its information technology
capability, thus enabling the development of a broader range of sophisticated
business solutions. BAX Global Logistics operates from several warehouse
locations worldwide. In addition, six Burlington operations earned ISO 9002
certificates in 1996, bringing the total number of certified facilities to 144,
spanning 16 countries. Burlington has recently embarked on a program to enhance
the quality of its service and improve efficiencies. While the full benefits
cannot now be predicted with confidence, management believes significant cost
reductions and operating improvements can be made with initial impacts likely to
be felt in the second quarter of 1997.

Burlington's operating profit amounted to $58.7 million in 1995, a decline of
$10.5 million (15%) from the level achieved in 1994, as the 1994 results
benefited from significant additional domestic freight as a result of a
nationwide trucking strike, which added an estimated $8 million to operating
profit. Worldwide revenues increased by 16% to $1.4 billion from $1.2 billion in
1994. The $199.5 million growth in revenues principally reflects a 11% increase
in worldwide expedited freight services pounds shipped as well as substantially
higher non-expedited freight services revenues.

During 1995, worldwide expedited freight services revenues increased 11% as a
result of higher volumes with average yields essentially unchanged. Worldwide
expedited freight services weight shipped increased by 11%, from 1,248.5 million
pounds in 1994 to 1,390.2 million pounds in 1995. Total costs and expenses
increased by 18% over the 1994 level reflecting additional business volume and
the acquisition of additional foreign subsidiaries.

Domestic expedited freight services revenues for 1995 decreased by 6% to $528.2
million from $561.3 million in the prior year. Domestic operating profit also
declined from $45.7 million in 1994 to $30.4 million in 1995. Operating profit
declined by 33% reflecting a 2% decrease in the average yield, 4% lower volume
and modestly higher average transportation costs, partially offset by lower
administrative costs. The volume decline reflected the impact of the trucking
strike in the second quarter of 1994, which served to substantially increase
weight shipped in that period.

International expedited freight services revenues in 1995 of $698.6 million
represented a $156.5 million (29%) increase over the $542.2 million reported in
1994. International operating profit amounted to $28.3 million in 1995, 20%
higher than the 1994 level, principally due to a 25% favorable change in
expedited freight services weight shipped, partially offset by higher
transportation costs. The increase in volume is mainly attributed to the growth
in the world-wide flow of international expedited freight services and the
expansion of company-owned operations.

Revenues from other activities during 1995 increased 68% or $76.2 million to
$188.0 million, due to an increase in custom clearance and a continued expansion
of ocean freight services.

Other operating income decreased $1.3 million to $1.5 million in 1996 from $2.8
million in 1995 and decreased $0.4 million in 1995 from $3.2 million in 1994.
Other operating income principally includes foreign exchange transaction gains
and losses. The changes in other operating income for the comparable periods are
due to fluctuations in such gains and losses.

Foreign Operations
A portion of the Burlington Group's financial results is derived from activities
in several foreign countries, each with a local currency other than the U.S.
dollar. Because the financial results of the Burlington 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 Burlington Group's
international activity is not concentrated in any single currency, which limits
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 Burlington Group routinely
enters into such transactions in the normal course of its business. Although

                                       46

the diversity of its foreign operations limits the risks associated with such
transactions, the Company, on behalf of the Burlington Group, uses foreign
currency forward contracts to hedge the risk 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, cumulative
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 Brazil operates in such a highly
inflationary economy.

The Burlington Group is 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 Burlington 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 Burlington Group based upon
utilization and other methods and criteria which management believes to be an
equitable and a reasonable estimate of the costs attributable to the Burlington
Group. These allocations were $7.4 million, $4.8 million and $4.7 million in
1996, 1995 and 1994, respectively.

The increase in the corporate expense allocation during 1996 is primarily due to
additional services provided to the Burlington Group by corporate office
personnel combined with the relocation of the Company's corporate headquarters
to Richmond, Virginia, during September 1996. The costs of this move, including
moving expenses, employee relocation, severance pay and temporary employee
costs, amounted to $2.9 million. Approximately, $1 million of these costs were
attributed to the Burlington Group.

Other Operating Income
Other operating income decreased $1.3 million to $1.5 million in 1996 from $2.8
million in 1995 and decreased $0.4 million in 1995 from $3.2 million in 1994.
Other operating income principally includes foreign exchange transaction gains
and losses, and the changes for the comparable periods are due to fluctuations
in such gains and losses.

Interest Income
Interest income decreased $1.9 million to $2.5 million in 1996 from $4.4 million
in 1995, which was $2.3 million higher than the $2.1 million level in 1994. The
fluctuations in both years are primarily attributed to interest income earned
from amounts owed by the Minerals Group of $1.8 million and $3.4 million in 1996
and 1995, respectively.

Interest Expense
Interest expense for 1996 decreased $1.0 million to $4.1 million from $5.1
million in 1995. Interest expense for 1995 increased $1.3 million to $5.1
million from $3.8 million in 1994. The higher level of interest in 1996 and
1995, as compared to 1994, is primarily due to significantly higher average
borrowings, a significant portion of which resulted from the Burlington Group's
expansion of international operations.

Other Income (Expense), Net
In 1996, other net expense increased by $0.3 million to a net expense of $2.0
million. In 1995, other net expense increased $0.1 million compared to 1994.

Income Taxes
In 1996, 1995 and 1994, the provision 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 Burlington 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
Burlington Group.

Corporate assets, which were allocated to the Burlington Group consisted
primarily of pension assets and deferred income taxes and amounted to $17.6
million at December 31, 1996 and $32.4 million at December 31, 1995.

Cash Provided By Operating Activities
Cash provided by operating activities totaled $63.1 million in 1996, an increase
of $23.6 million from $39.5 million in 1995. Although net income increased $1.0
million, higher non-cash charges, included in net income, and lower funding
required for operating assets and liabilities, led to an additional $23.6
million in cash generated during the year.

                                       47

Capital Expenditures
Cash capital expenditures for 1996 totaled $61.3 million and an additional $0.4
million of expenditures were made through capital and operating leases. In
addition, $2.1 million was allocated to the Burlington Group for corporate
expenditures primarily related to the purchase of the Company's new corporate
headquarters. Cash capital expenditures totaled $32.4 million in 1995 and an
additional $2.4 million of expenditures were made through capital and operating
leases. Capital expenditures made during 1996 included expenditures to acquire
new facilities, to expand global network systems and to purchase three aircraft
which were previously held under long-term operating leases.

Gross capital expenditures in 1997 are currently expected to approximate $65
million, of which approximately $5 million is currently expected to be financed
through leases. The 1997 estimated expenditures approximate the 1996 level of
gross expenditures. The expenditures at Burlington will relate to the support of
new facilities and the implementation of new information systems providing
improved efficiency and service.

Other Investing Activities
Other investing activities, primarily outlays for aircraft heavy maintenance,
required net funding of $17.7 million in 1996 compared to $19.6 million in the
prior year. Cash outlays for heavy maintenance amounted to $23.4 million in
1996, $1.0 million higher than in 1995. Burlington anticipates spending
approximately $24 million on aircraft heavy maintenance in 1997.

Financing
The Burlington Group intends to fund 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, short-term borrowing arrangements or repayments from the
Minerals Group.

The Company has a $350.0 million revolving 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. During the second quarter of 1996, the maturity date of both
the term loan and the revolving credit portion of the Facility was extended to
May 31, 2001. Interest on borrowings under the Facility is payable at rates
based on prime, certificate of deposit, Eurodollar or money market rates. No
portion of the total amount outstanding under the Facility at December 31, 1996
or 1995 was attributed to the Burlington Group.

The 4% debentures, due July 1, 1997, are attributed to the Burlington Group and
are expected to be repaid from borrowings under the Facility.

Under the terms of some of its debt instruments, the Company has agreed to
various restrictions relating to the payment of dividends, the repurchase of
capital stock, the maintenance of consolidated net worth and the amount of
additional debt which may be incurred. Allowable restricted payments for
dividends and stock repurchases aggregated $255.8 million at December 31, 1996.
Under the terms of the Facility, the Company has agreed to maintain at least
$400.0 million of Consolidated Net Worth, as defined, and can incur additional
indebtedness of approximately $560 million.

Debt
Total debt outstanding for the Burlington Group amounted to $61.6 million at
December 31, 1996 and $60.8 million at year-end 1995. During 1996, there was a
net cash outflow before financing of $15.9 million. Requirements for common
stock repurchases, dividends and costs associated with the Brink's Stock
Proposal, offset in part by debt repayments from the Minerals Group and proceeds
from the exercise of stock options, resulted in an $8.0 million decrease in cash
balances.

Related Party Transactions
At December 31, 1996, under an interest bearing borrowing arrangement, the
Minerals Group owed the Burlington Group $7.7 million, a $12.2 million decrease
from the $19.9 million owed at December 31, 1995.

At December 31, 1996, the Burlington Group owed the Minerals Group $24.3 million
for tax payments representing Minerals Group's tax benefits utilized by
Burlington in accordance with the Company's tax sharing policy, of which $11.0
million is expected to be paid within one year. The Burlington Group paid the
Minerals Group $14.9 million for the utilization of such tax benefits during
1996.

Off-balance Sheet Instruments
The Burlington Group utilizes various off-balance sheet financial instruments,
as discussed below, to hedge foreign currency and other market exposures. The
risk that counterparties to such instruments may be unable to perform is
minimized by limiting the counterparties to major financial institutions. The
Burlington Group does not expect any losses due to such counterparty default.

                                       48

Foreign currency forward contracts--The Company, on behalf of the Burlington
Group, enters into foreign currency forward contracts with a duration of up to
45 days as a hedge against liabilities denominated in various currencies. These
contracts do not subject the Company to risk due to exchange rate movements
because gains and losses on these contracts offset losses and gains on the
liabilities being hedged. At December 31, 1996, the total notional value of
foreign currency forward contracts outstanding was $1.1 million. As of such
date, the fair value of the foreign currency forward contracts was not
significant.

Fuel contracts--The Company, on behalf of the Burlington Group, has hedged a
portion of its jet fuel requirements through several commodity option
transactions that are intended to protect against significant increases in jet
fuel prices. At December 31, 1996, these transactions aggregated 18.0 million
gallons and are applicable throughout the first half of 1997. 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 December 31,
1996, the fair value of these contracts was not significant.

Interest rate contracts--In connection with the aircraft leasing transactions by
Burlington, the Company has entered into an interest rate swap agreement. This
variable to fixed interest rate swap agreement has a notional value of $30
million and fixes the Company's interest rate at 7.05% until January 2,1998.
Given the decline in the base variable rate subsequent to when the agreement was
entered into, the cost to the Company to terminate the agreement would have been
$0.6 million on December 31, 1996.

Contingent Liabilities
Under the Coal Industry Retiree Health Benefit Act of 1992 (the "Health Benefit
Act"), the Company and its majority-owned subsidiaries at July 20, 1992,
including certain companies of the Burlington Group are jointly and severally
liable with certain companies of the Minerals Group and of the Brink's Group for
the costs of health care coverage provided for by that Act. For a description of
the Health Benefit Act and a calculation of certain of such costs, see Note 13
to the Company's consolidated financial statements. At this time, the Company
expects the Minerals Group to generate sufficient cash flow to discharge its
obligations under the Act.

In April 1990, the Company entered into a settlement agreement to resolve
certain environmental claims against the Company arising from hydrocarbon
contamination at a petroleum terminal facility ("Tankport") in Jersey City, New
Jersey, which operations were sold in 1983. Under the settlement agreement, the
Company is obligated to pay 80% of the remediation costs. Based on data
available to the Company and its environmental consultants, the Company
estimates its portion of the cleanup costs on an undiscounted basis using
existing technologies to be between $6.9 million and $17.0 million over a period
of up to five years. Management is unable to determine that any amount within
that range is a better estimate due to a variety of uncertainties, which include
the extent of the contamination at the site, the permitted technologies for
remediation and the regulatory standards by which the cleanup will be conducted.
The cleanup estimates have been modified from prior years' in light of cost
inflation. The estimate of costs and the timing of payments could change as a
result of changes to the remediation plan required, changes in the technology
available to treat the site, unforseen circumstances existing at the site and
additional cost inflation.

The Company commenced insurance coverage litigation in 1990, in the United
States District Court for the District of New Jersey, seeking a declaratory
judgment that all amounts payable by the Company pursuant to the Tankport
obligation were reimbursable under comprehensive general liability and pollution
liability policies maintained by the Company. In August 1995, the District Court
ruled on various Motions for Summary Judgment. In its decision, the Court found
favorably for the Company on several matters relating to the comprehensive
general liability policies but concluded that the pollution liability policies
did not contain pollution coverage for the types of claims associated with the
Tankport site. The Company appealed the District Court's decision to the Third
Circuit. However, management and its outside legal counsel continue to believe
that recovery of a substantial portion of the cleanup costs ultimately will be
probable of realization. Accordingly, it is the Company's belief that, based on
estimates of potential liability and probable realization of insurance
recoveries, the Company would be liable for approximately $1.4 million based on
the Court's decision and related developments of New Jersey law.

Capitalization
On January 18, 1996, the shareholders of the Company approved the Brink's Stock
Proposal, resulting in the modification of the capital structure of the Company
to include an additional class of common stock. The outstanding shares of
Pittston

                                       49

Services Group Common Stock ("Services Stock") were redesignated as Pittston
Brink's Group Common Stock ("Brink's Stock") on a share-for-share basis, and a
new class of common stock, designated as Burlington Stock, was distributed on
the basis of one-half of one share of Burlington Stock for each share of
Services Stock previously held by shareholders of record on January 19, 1996.

Brink's Stock, Burlington Stock and Minerals Stock are designed to provide
shareholders with separate securities reflecting the performance of the Brink's
Group, Burlington Group and Minerals Group, respectively, without diminishing
the benefits of remaining a single corporation or precluding future transactions
affecting any of the Groups. The Company prepares separate financial statements
for the Brink's, Burlington and Minerals Groups in addition to consolidated
financial information of the Company.

The redesignation of the Company's common stock as Brink's Stock and the
distribution of Burlington Stock as a result of the approval of the Brink's
Stock Proposal did not result in any transfer of assets or liabilities of the
Company or any of its subsidiaries. Holders of all three classes of stock are
shareholders of the Company, which continues to be responsible for all
liabilities. Therefore, financial developments affecting the Brink's Group, the
Burlington Group or the Minerals Group that affect the Company's financial
condition could affect the results of operations and financial condition of all
three Groups.

The change in the capital structure of the Company had no effect on the
Company's total capital, except as to expenses incurred in the execution of the
Brink's Stock Proposal. Since the approval of the Proposal, capitalization of
the Company has been affected by the share activity related to each of the
classes of common stock.

In November 1995, the Board authorized a revised share repurchase program which
allowed for the purchase, from time to time, of up to 1,500,000 shares of
Brink's Stock, 1,500,000 shares of Burlington Stock and 1,000,000 shares of
Minerals Stock, not to exceed an aggregate purchase price of $45.0 million; such
shares to be purchased from time to time in the open market or in private
transactions, as conditions warrant. Prior to the revised program, 401,900
shares of Services Stock were repurchased at an aggregate cost of $9.6 million,
of which 145,800 shares at an aggregate cost of $3.4 million were repurchased in
1995. On an equivalent basis, repurchases totaled 200,950 at an aggregate cost
attributed to the Burlington Group of $3.2 million, with repurchases of 72,900
shares at an attributed cost of $1.1 million in 1995. No additional repurchases
were made during the remainder of 1995 subsequent to the implementation of the
revised program. During 1996, the Company repurchased 75,600 shares of
Burlington Stock at a cost of $1.4 million. The program to acquire shares
remains in effect in 1997.

The Company has the authority to issue up to 2,000,000 shares of preferred
stock, par value $10 per share. In January, 1994, the Company issued $80.5
million (161,000 shares) of Series C Cumulative Convertible Preferred Stock (the
"Convertible Preferred Stock"), convertible into Minerals Stock. The Convertible
Preferred Stock, which is attributable to the Minerals Group, pays an annual
cumulative dividend of $31.25 per share payable quarterly, in cash, in arrears,
out of all funds of the Company legally available; therefore, when, as and if
declared by the Board and bears a liquidation preference of $500 per share, plus
attributed an amount equal to accrued and unpaid dividends thereon.

In 1994, the Board authorized the repurchase, from time to time, of up to $15
million of the Convertible Preferred Stock. Subsequent to this authorization and
through October 1995, 24,720 shares at a total cost of $9.6 million had been
repurchased, of which 16,370 shares at a cost of $6.3 million were repurchased
in 1995. In November 1995, the Board authorized an increase in the remaining
repurchase authority to $15 million. No additional share repurchases were made
during the remainder of 1995 subsequent to the increased authorization. In 1996,
20,920 shares at a cost of $7.9 million were repurchased. The program to acquire
shares remains in effect in 1997, and in February 1997, the Board authorized an
increase in the remaining repurchase authority to $15 million.

Dividends
The Board intends to declare and pay dividends on Burlington Stock based on the
earnings, financial condition, cash flow and business requirements of the
Burlington Group. Since the Company remains subject to Virginia law limitations
on dividends and to dividend restrictions in its public debt and bank credit
agreements, losses by the Minerals Group or the Brink's Group could affect the
Company's ability to pay dividends in respect of stock relating to the
Burlington Group.

During 1996 and 1995, on an equivalent basis, the Board declared and the Company
paid dividends on Burlington Stock of 24 cents and 22 cents per share,
respectively.

In 1996 and 1995, dividends paid on the Convertible Preferred Stock were $3.8
million and $4.3 million, respectively.

                                       50

Pittston Minerals Group
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
- --------------------------------------------------------------------------------

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 allocations reflected
in these financial statements are determined based upon methods which management
believes to be an equitable allocation of such expenses and credits. The
accounting policies applicable to the preparation of the Minerals Group's
financial statements may be modified or rescinded at the sole discretion of the
Company's Board of Directors (the "Board") without the approval of the
shareholders, although there is no intention to do so.

The Company will provide 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.
Notwithstanding the attribution of assets and liabilities (including contingent
liabilities) between the Minerals Group and the Pittston Brink's Group (the
"Brink's Group") and the Pittston Burlington Group (the "Burlington Group") for
the purpose of preparing their financial statements, this attribution and the
change in the capital structure of the Company as a result of the approval of
the Brink's Stock Proposal, as described in the Company's proxy statement dated
December 15, 1995, did not result in any transfer of assets or liabilities of
the Company or any of its subsidiaries. Holders of Minerals Stock are
shareholders of the Company, which continues to be responsible for all
liabilities. Therefore, financial developments affecting the Minerals Group, the
Brink's Group or the Burlington Group that affect the Company's financial
condition could affect the results of operations and financial condition of all
three 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

                                                    Years Ended December 31
(In thousands)                                   1996         1995         1994
- --------------------------------------------------------------------------------
Net sales:
  Coal Operations                           $ 677,393      706,251      779,504
  Mineral Ventures                             19,120       16,600       15,494
- --------------------------------------------------------------------------------
Net sales                                   $ 696,513      722,851      794,998
================================================================================
Operating profit (loss):
  Coal Operations                           $  20,034       23,131      (83,451)
  Mineral Ventures                              1,619          207        1,134
- --------------------------------------------------------------------------------
  Segment operating profit (loss)              21,653       23,338      (82,317)
  General corporate expense                    (6,555)      (7,266)      (6,845)
- --------------------------------------------------------------------------------
Operating profit (loss)                     $  15,098       16,072      (89,162)
================================================================================

In 1996, the Minerals Group reported net income of $10.7 million, compared to
net income of $14.0 million in 1995. Operating profit totaled $15.1 million in
1996 compared with $16.1 million in the prior year. Net sales during 1996
decreased $26.3 million (4%) compared to the corresponding period in 1995.
Operating profit and net income during 1996 included three significant items
(related to Coal Operations): a $35.7 million benefit from the settlement of the
Evergreen case at an amount lower than previously accrued ($23.2 million
after-tax); a $29.9 million charge related to the adoption of a new accounting
standard regarding the impairment of long-lived assets ($19.5 million
after-tax); and an $11.7 million benefit from the reversal of excess
restructuring liabilities ($7.6 million after-tax). Excluding the three items
mentioned above, Coal Operations would have recorded operating profit of $2.7
million for 1996 and the Minerals Group would have had a net loss of $0.6
million for 1996.

The Minerals Group earned $14.0 million of net income in 1995, compared to a net
loss of $52.9 million in 1994. Results in 1994 included charges of $58.1 million
and $90.8 million, affecting net income and operating profit, respectively, for
asset writedowns and accruals for costs related to facility shutdowns at Coal
Operations. Excluding the 1994 charges, net income increased by $8.8 million in
1995. This increase resulted primarily from sales of assets and a favorable
litigation accrual as well as a significant tax benefit, offset in part by an
increase in net interest expense and nonoperating expenses.

                                       51

Coal Operations
The following is a table of selected financial data for Coal Operations on a
comparative basis:

                                                        Years Ended December 31
(In thousands)                                      1996        1995       1994
================================================================================
Net sales                                      $ 677,393     706,251    779,504

Cost of sales                                    693,505     683,621    760,966
Selling, general and administrative               24,261      22,415     26,294
Restructuring and other (credits) charges,
  including litigation accrual                   (47,299)       --       90,806
- --------------------------------------------------------------------------------
Total costs and expenses                         670,467     706,036    878,066
- --------------------------------------------------------------------------------
Other operating income, net                       13,108      22,916     15,111
- --------------------------------------------------------------------------------
Operating profit (loss)                        $  20,034      23,131    (83,451)
================================================================================
Coal sales (tons):
  Metallurgical                                    8,124       8,607      9,884
  Utility and industrial                          14,847      15,789     18,198
- --------------------------------------------------------------------------------
Total coal sales                                  22,971      24,396     28,082
================================================================================
Production/purchased (tons):
  Deep                                             3,930       3,982      4,857
  Surface                                         11,151      12,934     15,107
  Contract                                         1,621       1,941      2,364
- --------------------------------------------------------------------------------
                                                  16,702      18,857     22,328
Purchased                                          5,762       6,047      5,826
- --------------------------------------------------------------------------------
Total                                             22,464      24,904     28,154
================================================================================

Coal Operations had an operating profit of $20.0 million in 1996 compared to an
operating profit of $23.1 million in 1995. Operating profit for 1996 included a
benefit of $35.7 million from the settlement of the Evergreen case at an amount
lower than previously accrued in 1993 and a benefit from excess restructuring
liabilities of $11.7 million. These benefits were offset, in part, by a $29.9
million charge related to the adoption of a new accounting standard regarding
the impairment of long-lived assets. The charge is included in cost of sales
($26.3 million) and selling, general and administrative expenses ($3.6 million).
All three of these items are discussed in greater detail below. Operating profit
in 1996 was also impacted by a decrease in other operating income of $9.8
million, primarily due to decreases in gains from the sale of coal assets which
generated $11.9 million in 1995.

Coal Operations' operating profit amounted to $23.1 million in 1995, compared to
the $83.5 million operating loss recorded in 1994. The operating loss in 1994
included $90.8 million of charges for asset writedowns and accruals for costs
related to facility shutdowns. Excluding the charges for asset writedowns and
accruals from the 1994 results, operating profit from Coal Operations increased
by $15.8 million in 1995.

Coal Operations' operating profit, excluding restructuring (credits) charges,
the effects of the Evergreen Settlement and the adoption of SFAS No. 121, is
analyzed as follows:

                                                         Years Ended December 31
(In thousands)                                        1996       1995       1994
================================================================================
Net coal sales (a)                                $670,121    702,864    777,758
Current production cost of coal sold (a)           634,754    648,383    723,967
- --------------------------------------------------------------------------------
Coal margin                                         35,367     54,481     53,791
Non-coal margin                                      2,177        749        324
Other operating income, net                         13,108     22,916     15,111
- --------------------------------------------------------------------------------
Margin and other income                             50,652     78,146     69,226
- --------------------------------------------------------------------------------
Other costs and expenses:
  Idle equipment and closed mines                    1,044      9,980      4,854
  Inactive employee cost                            26,300     22,620     30,723
  Selling, general and administrative               20,625     22,415     26,294
- --------------------------------------------------------------------------------
Total other costs and expenses                      47,969     55,015     61,871
- --------------------------------------------------------------------------------
Operating profit (before restructuring
  and other (credits) charges) (b)                $  2,683     23,131      7,355
================================================================================
Coal margin per ton:
  Realization                                     $  29.17      28.81      27.70
  Current production costs                           27.63      26.58      25.78
- --------------------------------------------------------------------------------
Coal margin                                       $   1.54       2.23       1.92
================================================================================

(a) Excludes non-coal components.

(b) Restructuring and other (credits) charges in 1996 consist of an impairment
loss related to the adoption of SFAS No. 121 of $29,948 ($26,312 in cost of
sales and $3,636 in selling, general and administrative expenses), a gain from
the settlement of the Evergreen case of $35,650 at an amount lower than
previously accrued and a benefit from excess restructuring liabilities of
$11,649. Both the gain from the Evergreen case and the benefit from excess
restructuring liabilities are included in Coal Operations' operating profit as
"Restructuring and other (credits) charges, including litigation accrual".
Restructuring and other (credits) charges in 1994 consist of $90,806 in
restructuring charges.

Sales volume of 23.0 million tons in 1996 was 1.4 million tons less than the
24.4 million tons sold in 1995. Metallurgical coal sales decreased by 0.5
million tons (6%) in 1996 to 8.1 million tons compared to the prior year period.
Steam coal sales decreased by 0.9 million tons (6%) in 1996 to 14.9 million tons
compared to the prior year period. Steam coal sales represented 65% of the total
sales volume for both 1996 and 1995.

                                       52

Total coal margin of $35.4 million for 1996 represented a decrease of $19.1
million (35%) from the 1995 coal margin of $54.5 million. The decline in coal
margin primarily reflects a $1.05 per ton (4%) increase in the current
production cost of coal sold which was partially offset by a $0.36 per ton (1%)
increase in realization. Coal margin was also negatively impacted by a decrease
in 1996 in tons of coal sold from 24.4 million to 23.0 million. The increase in
average realization per ton was mainly due to export metallurgical coal pricing.
For the contract year that began April 1, 1996, export metallurgical coal prices
only increased slightly over those in effect at April 1, 1995, which were
significantly improved over the April 1, 1994 prices. As a result, the export
metallurgical realization for 1996 as compared to 1995 benefited from higher
first quarter realization (1995 contract prices versus 1994 contract prices) and
from additional export tonnage shipped. Domestic steam coal pricing, mostly
priced according to long-term contracts, improved modestly as contract
escalations were mostly offset by lower priced spot sales. Coal Operations is
currently in negotiations with a majority of its metallurgical customers for the
contract year which begins on April 1, 1997. Expectations are that metallurgical
prices will not vary significantly from the current 1996 contract year pricing
levels.

The increase in the current production cost per ton of coal sold for 1996 is due
to higher company surface mine and purchased coal costs which were only
partially offset by lower company deep mine and contract coal costs as well as a
state tax credit for coal produced in Virginia. Current production costs in 1996
were also negatively impacted by higher fuel prices and increases in employee
benefits and reclamation and environmental costs. Production for 1996 totaled
16.7 million tons, a decrease of 11% from 1995, principally reflecting
reductions in production due to mine sales and closures in 1995. Surface mine
production accounted for 67% and 69% of the total production volume in 1996 and
1995, respectively. Productivity of 37.6 tons per man day represents a slight
increase from 1995.

Beginning in 1996, the amount of coal produced in Virginia generates tax credits
under the Commonwealth of Virginia's newly enacted law, the "Coalfield
Employment Enhancement Tax Credit." This law, which is effective from January 1,
1996 through December 31, 2001, provides Virginia coal producers with a
refundable credit against taxes imposed by the Commonwealth for coal produced in
Virginia. Coal Operations generated approximately $3 million in credits in 1996
to be realized in future years.

Non-coal margin for 1996 increased by $1.4 million from 1995, reflecting higher
gas prices. Other operating income, including sales of properties and equipment
and third party royalties, amounted to $13.0 million in 1996, $9.8 million less
than 1995. The higher level of income recorded in 1995 reflects gains of $11.9
million from the sale of coal assets.

Idle equipment and closed mine costs decreased by $8.9 million in 1996. Idle
equipment expenses were reduced from the prior period level as a result of Coal
Operations' improved equipment management program. Additionally, costs for 1995
were adversely impacted by the idling of two surface mines. Inactive employee
costs, which primarily represent long-term employee liabilities for pension and
retiree medical cost, increased by $3.8 million to $26.3 million in 1996. The
unfavorable variance is due to the use of lower long-term interest rates to
calculate the present value of the long-term liabilities in 1996. In addition,
inactive employee costs in 1995 include a benefit of $2.5 million from a
favorable litigation decision.

Selling, general and administrative expenses continued to decline in 1996 as a
result of cost control efforts implemented in 1995. These costs decreased $2.0
million (or 9%) in 1996 over the 1995 year.

Total coal margin of $54.5 million for 1995 increased by $0.7 million (1%) from
1994, as a $1.11 per ton increase in realization was only partially offset by an
$0.80 per ton increase in production costs on a lower production volume.

Sales volume of 24.4 million tons in 1995 was 3.7 million tons less than the
28.1 million tons sold in 1994. Steam coal sales decreased by 2.4 million tons
to 15.8 million tons and metallurgical coal sales declined by 1.3 million tons
to 8.6 million tons compared to the prior year. Steam coal sales represented 65%
of total volume in 1995, as in 1994.

Coal margin per ton increased to $2.23 in 1995 from $1.92 for 1994 caused by a
$1.11 (4%) per ton increase in realization partially offset by a $0.80 (3%) per
ton increase in current production costs. The average realization increase was
largely due to an increase in metallurgical coal pricing. Export metallurgical
coal prices increased substantially in the coal contract year which began on
April 1, 1995, compared to the prior year level, with realizations generally
increasing by $4.00 to $5.50 per metric ton, depending upon coal quality.
Domestic steam coal markets were depressed in 1995, with spot pricing at
exceptionally low levels. However, the majority of Coal Operations' steam coal
sales were, in 1995, and continue to be sold under long-term contracts.

                                       53

The current production cost of coal sold in 1995 increased over the 1994 level
largely stemming from higher mining costs and an increase in the cost of
purchased coal. Production in 1995 totaled 18.9 million tons, a 16% decrease
compared to the 22.3 million tons produced in 1994, principally reflecting the
scheduled reduction in underground mine production during 1994 and early 1995,
and the idling of surface steam coal mines. Production costs in 1995 benefited
from a reduction in property taxes associated with certain properties. The
property tax reduction was approximately $2.5 million in 1995. Surface
production accounted for 69% and 68% of total production volume in 1995 and
1994, respectively. Productivity of 37 tons per man day represented a 5%
increase over the 1994 level.

Other operating income, primarily reflecting sales of properties and equipment
and third party royalties, amounted to $22.9 million in 1995, $7.8 million
higher than in 1994. The favorable change in 1995 primarily reflects additional
income from property dispositions.

Idle equipment and closed mine costs increased by $5.1 million in 1995,
primarily reflecting higher idle equipment costs due to the idling of two
surface mines in 1995. Inactive employee costs, which primarily represent
long-term employee liabilities for pension and retiree medical costs, were
reduced by $8.1 million to $22.6 million in 1995. The reduction primarily
reflects the use of higher long-term interest rates used to calculate the
present value of the long-term liabilities at the beginning of 1995 compared to
those used in 1994. In addition, reduced costs reflected the continued decline
in black lung claims and a $2.5 million benefit recorded from a favorable
litigation decision which reduced previously accrued employee benefits.

Selling, general and administrative expenses in 1995 declined by $3.9 million
compared to the 1994 level. Expenses were reduced as a result of cost control
efforts, as well as the benefit from the full year impact of the consolidation
of administrative functions subsequent to the acquisition in early 1994 of
substantially all the coal mining operations and coal sales contracts of
Addington Resources, Inc. ("Addington").

The market for metallurgical coal, for much of the past fifteen years, has been
characterized by weak demand from primary steel producers and intense
competition from foreign coal producers, especially those in Australia and
Canada. Metallurgical coal sales contracts are typically subject to annual price
negotiations, which increase the risk of market forces. As a result of these
conditions in the metallurgical coal markets, Coal Operations decreased its
exposure to this business by selecting to participate only in those
higher-margin metallurgical markets which generate acceptable profitability.
Simultaneously with that business decision, management conducted a review of the
economic viability of its metallurgical coal assets in early 1994 and determined
that four underground mines were no longer economically viable and should be
closed, resulting in significant economic impairment to three related
preparation plants. In addition, it was determined that one surface steam coal
mine, the Heartland mine, which provided coal to Alabama Power under a long-term
sales agreement, would be closed due to rising costs caused by unfavorable
geological conditions.

As a result of these decisions, Coal Operations incurred pretax charges of $90.8
million ($58.1 million after-tax) in the first quarter of 1994, which included a
reduction in the carrying value of these assets and related accruals for mine
closure costs. These charges included asset writedowns of $46.5 million which
reduced the book carrying value of such assets to what management believes to be
their net realizable value based on either estimated sales or leasing of such
property to unrelated third parties. In addition, the charges included $3.8
million for required lease payments owed to lessors for machinery and equipment
that would be idled as a result of the mine and facility closures. The charges
also included $19.3 million for mine and plant closure costs which represented
estimates of reclamation and other environmental costs to be incurred to bring
the properties in compliance with federal and state mining and environmental
laws. This charge was required due to the premature closing of the mines. The
charge also included $21.2 million in contractually or statutorily required
employee severance and other benefit costs associated with terminated and
inactive employees, at these facilities.

Of the four underground mines included in the asset writedown, two ceased coal
production in 1994 and one ceased coal production in 1996. Also, in 1994, Coal
Operations reached agreement with Alabama Power Company to transfer the coal
sales contract serviced by the Heartland mine to another location in West
Virginia. The Heartland mine ceased coal production during 1994 and final
reclamation and environmental work is complete. By early 1995, two of the three
related preparation plants had also closed. At the beginning of 1994 there were
approximately 750 employees involved in operations and other administrative
support at the facilities included in the 1994 charge. Employment at these
facilities was reduced by 52% to approximately 360 employees at December 31,
1994; by 81% to approximately 140 employees at December 31, 1995; and by 87% to
approximately 100 employees at December 31, 1996.

                                       54

The initiation in 1996 of the previously discussed Virginia tax credit, along
with favorable labor negotiations and improved metallurgical contract pricing
over 1994, led management to open three new underground coal mines in southwest
Virginia during late 1996 and to reactivate one coal preparation and loading
facility. When in full operation in 1997, these mines will annually produce
approximately 1 million tons of premium grade metallurgical coal. Based on
current reserve estimates, the mines will have an anticipated operating life of
six to eight years. In addition, management decided to continue operating the
last of the four underground mines and one related coal preparation and loading
facility included in the 1994 charge.

As a result of these decisions and favorable workers' compensation claim
development for closed mines, a portion of the restructuring reserve established
in 1994 was no longer required. Accordingly, Coal Operations reversed $11.7
million ($7.6 million after-tax) of its restructuring reserve during the year.
This amount includes $4.8 million related to estimated mine and plant closure
costs, primarily reclamation, and $6.9 million in employee severance and other
benefit costs.

Although coal production has ceased at the mines remaining in the accrual, Coal
Operations will incur reclamation and environmental costs for several years to
bring these properties into compliance with federal and state environmental
laws. In addition, employee termination and medical costs will continue to be
incurred for several years after the facilities have been closed. The
significant portion of these employee liabilities is for statutorily provided
workers' compensation costs for inactive employees. Such benefits include
indemnity and medical costs as required under state workers' compensation laws.
The long payment periods are based on continued, and, in some cases, lifetime
indemnity and medical payments to injured former employees and their surviving
spouses. Management believes that the reserve, as adjusted, at December 31,
1996, should be sufficient to provide for these future costs. Management does
not anticipate material additional future charges to operating earnings for
these facilities, although continual cash funding will be required over the next
several years.

The following table analyzes the changes in liabilities during the last three
years for facility closure costs recorded as restructuring and other charges:

                                                             Employee      
                                                   Mine  Termination,
                                      Leased        and       Medical
                                   Machinery      Plant           and
                                         and    Closure     Severance
(In thousands)                     Equipment      Costs         Costs      Total
================================================================================
Balance January 1, 1994               $3,092     28,434        34,217     65,743
Additions                              3,836     19,290        21,193     44,319
Payments (a)                           3,141      9,468        12,038     24,647
- --------------------------------------------------------------------------------
Balance December 31, 1994              3,787     38,256        43,372     85,415
Payments (b)                           1,993      7,765         7,295     17,053
Other reductions (c)                     576      1,508          --        2,084
- --------------------------------------------------------------------------------
Balance December 31, 1995              1,218     28,983        36,077     66,278
Reversals                               --        4,778         6,871     11,649
Payments (d)                             842      5,499         3,921     10,262
Other reductions (c)                    --        6,267          --        6,267
- --------------------------------------------------------------------------------
Balance December 31, 1996             $  376     12,439        25,285     38,100
================================================================================
                                                       
(a) Of the total payments made, in 1994, $8,672 was for liabilities recorded in
years prior to 1993, $5,822 was for liabilities recorded in 1993 and $10,153 was
for liabilities recorded in 1994.

(b) Of the total payments made in 1995, $6,424 was for liabilities recorded in
years prior to 1993, $2,486 was for liabilities recorded in 1993 and $8,143 was
for liabilities recorded in 1994.

(c) These amounts represent the assumption of liabilities by third parties as a
result of sales transactions.

(d) Of the total payments made in 1996, $5,119 was for liabilities recorded in
years prior to 1993, $485 was for liabilities recorded in 1993, $4,658 was for
liabilities recorded in 1994.

During the next 12 months, expected cash funding of these charges will be
approximately $6 to $10 million. Management estimates that the remaining
liability for leased machinery and equipment will be fully paid over the next
year. The liability for mine and plant closure costs is expected to be satisfied
over the next ten years, of which approximately 49% is expected to be paid over
the next two years. The liability for employee related costs, which is primarily
workers' compensation, is estimated to be 44% settled over the next four years
with the balance paid during the following five to ten years.

                                       55

In October 1992, the Coal Industry Retiree Health Benefit Act of 1992 (the
"Health Benefit Act") was enacted as part of the Energy Policy Act of 1992. The
Health Benefit Act established rules for the payment of future health care
benefits for thousands of retired union mine workers and their dependents. The
Health Benefit Act established a trust fund to which "signatory operators" and
"related persons", including the Company and certain of its subsidiaries (the
"Pittston Companies"), are jointly and severally liable for annual premiums for
assigned beneficiaries, together with a pro rata share for certain beneficiaries
who never worked for such employers ("unassigned beneficiaries"), in amounts
determined on the basis set forth in the Health Benefit Act. For 1996, 1995 and
1994, these amounts, on a pretax basis, were approximately $10.4 million, $10.8
million, and $11.0 million, respectively. The Company believes that the annual
cash funding under the Health Benefit Act for the Pittston Companies' assigned
beneficiaries will continue at approximately $10 million per year for the next
several years and should begin to decline thereafter as the number of such
assigned beneficiaries decreases.

Based on the number of beneficiaries actually assigned by the Social Security
Administration, the Company estimates the aggregate pretax liability relating to
the Pittston Companies' assigned beneficiaries remaining at December 31, 1996 at
approximately $210 million, which when discounted at 8% provides a present value
estimate of approximately $90 million.

The ultimate obligation that will be incurred by the Company could be
significantly affected by, among other things, increased medical costs,
decreased number of beneficiaries, governmental funding arrangements and such
federal health benefit legislation of general application as may be enacted. In
addition, the Health Benefit Act requires the Pittston Companies to fund, pro
rata according to the total number of assigned beneficiaries, a portion of the
health benefits for unassigned beneficiaries. At this time, the funding for such
health benefits is being provided from another source and for this and other
reasons the Pittston Companies' ultimate obligation for the unassigned
beneficiaries cannot be determined. The Company accounts for its obligations
under the Health Benefit Act as a participant in a multi-employer plan and
recognizes the annual cost on a pay-as-you-go basis.

In February 1990, Coal Operations and the UMWA entered into a collective
bargaining agreement that resolved a labor dispute and related strike of Coal
Operations by UMWA-represented employees that began on April 5, 1989. As part of
the agreement, the Coal Operations agreed to make a $10.0 million lump sum
payment to the 1950 Benefit Trust Fund and to renew participation in the 1974
Pension and Benefit Trust Funds at specified contribution rates. These aspects
of the agreement were subject to formal approval by the trustees of the funds.
The trustees did not accept the terms of the agreement and, therefore, payments
were made to escrow accounts for the benefit of union employees. Under the new
1994 Agreement, the Coal Operations agreed to continue participation in the 1974
Pension Plan at specified contribution rates, again subject to trustee approval.

In 1988, the trustees of the above-mentioned pension and benefit trust funds
(the "Trust Funds") established under collective bargaining agreements with the
UMWA brought an action (the "Evergreen Case") against the Company and a number
of its coal subsidiaries in the United States District Court for the District of
Columbia, claiming that the defendants are obligated to contribute to such Trust
Funds in accordance with the provisions of the 1988 and subsequent National
Bituminous Coal Wage Agreements, to which neither the Company nor any of its
subsidiaries is a signatory. In 1993, the Minerals Group recognized in its
financial statements the potential liability that might have resulted from an
ultimate adverse judgment in the Evergreen Case.

In late March 1996, a settlement was reached in the Evergreen Case. Under the
terms of the settlement, the coal subsidiaries which had been signatories to
earlier National Bituminous Coal Wage Agreements agreed to make various lump sum
payments in full satisfaction of all amounts allegedly due to the Trust Funds
through January 31, 1996, to be paid over time as follows: approximately $25.8
million upon dismissal of the Evergreen Case and the remainder of $24.0 million
in installments of $7.0 million in 1996 and $8.5 million in each of 1997 and
1998. The first payment was entirely funded through an escrow account previously
established by the Company. The second payment of $7.0 million was paid in
August 1996, and was funded through cash provided by operating activities. In
addition, the coal subsidiaries agreed to future participation in the UMWA 1974
Pension Plan.

                                       56

As a result of the settlement of the Evergreen Case at an amount lower than
those previously accrued, the Minerals Group recorded a benefit of approximately
$35.7 million ($23.2 million after-tax) in the first quarter of 1996 in its
financial statements.

In 1996, the Minerals Group adopted Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies to review
assets for impairment whenever circumstances indicate that the carrying amount
for an asset may not be recoverable. SFAS No. 121 resulted in a pre-tax charge
to earnings for Coal Operations of $29.9 million ($19.5 million after-tax), of
which $26.3 million was included in cost of sales and $3.6 million was included
in selling, general and administrative expenses. Assets for which the impairment
loss was recognized consisted of property, plant and equipment, advanced
royalties and goodwill. These assets primarily related to mines scheduled for
closure in the near term and idled facilities and related equipment.

Mineral Ventures
The following is a table of selected financial data for Mineral Ventures on a
comparative basis:

(Dollars in thousands, except                           Years Ended December 31
per ounce data)                                    1996        1995        1994
================================================================================
Stawell Gold Mine
  Gold sales                                   $ 19,071      16,449      15,360
  Other revenue                                      49         151         134
- --------------------------------------------------------------------------------
Net sales                                        19,120      16,600      15,494
Cost of sales                                    13,898      12,554      10,620
Selling, general and administrative               1,124       1,025       1,122
- --------------------------------------------------------------------------------
Total costs and expenses                         15,022      13,579      11,742
- --------------------------------------------------------------------------------
Operating profit-Stawell Gold Mine                4,098       3,021       3,752
Other operating expense, net                     (2,479)     (2,814)     (2,618)
- --------------------------------------------------------------------------------
Operating profit                               $  1,619         207       1,134
================================================================================
Stawell Gold Mine:
  Mineral Ventures' 50% direct share:
   Ounces sold                                   45,957      40,302      38,626
   Ounces produced                               45,443      40,606      38,986
  Average per ounce sold (US$):
   Realization                                 $    415         408         398
   Cash cost                                        287         297         273
================================================================================

The operating profit of Mineral Ventures, primarily a 67% direct and indirect
interest in the Stawell gold mine ("Stawell") in western Victoria, Australia,
amounted to $1.6 million in 1996 an increase of $1.4 million from the 1995
level. Mineral Ventures' 50% direct interest in operating profit provided $1.1
million of the increase and reflects the benefits of an additional 5.7 thousand
ounces sold (14% increase), a $10 per ounce decrease in the cost of gold sold
and a $7 per ounce increase in the selling price of gold. Stawell's cost of gold
in 1996 was negatively impacted by four lost time accidents, but still improved
over 1995's cost which was high due to adverse geological conditions at the
mine. Other operating expense, net, which includes equity earnings from joint
ventures and gold exploration costs, decreased by $0.3 million, primarily due to
Stawell's improved performance, and accounted for the improvement in other
operating expense. Gold exploration costs, essentially unchanged from 1995, are
being incurred by Minerals Ventures in Nevada and Australia with its joint
venture partner.

Mineral Ventures earned an operating profit of $0.2 million in 1995, a decrease
of $0.9 million from the level reported in 1994. The unfavorable change reflects
lower profits from Stawell, which experienced adverse geological conditions in
1995 that led to the production of lower ore grade and higher production costs
and an increase in exploration costs.

At December 31, 1996, remaining recoverable proven and probable gold reserves at
the Stawell mine were estimated at 531,000 ounces. The joint venture also has
exploration rights in the highly prospective district around the mine.

In addition, Mineral Ventures has a 17% indirect interest in the Silver Swan
base metals property in Western Australia. During the second quarter of 1996, it
was formally announced that this nickel deposit will be developed as an
underground mine with production expected to commence in mid-1997. As of
December 31, 1996, the main production decline has reached 1,257 meters and the
surface facilities were 60% complete.

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.

                                       57

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 exchange forward contracts to hedge the
risks associated with certain transactions denominated in the Australian dollar.
Realized and unrealized gains and losses on these contracts are deferred and
recognized as part of the specific transaction hedged.

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 upon
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 allocations were $6.6 million, $7.3 million and $6.8 million in
1996, 1995 and 1994, respectively.

The decrease in the corporate expense allocation to the Mineral's Group during
1996 is primarily due to a decrease in services provided to the Minerals Group
by corporate office personnel partially offset by the relocation of the
Company's corporate headquarters to Richmond, Virginia, during September 1996.
The costs of this move in 1996, including moving expenses, employee relocation,
severance pay and temporary employee costs, amounted to $2.9 million.
Approximately $.9 million of these costs were attributed to the Minerals Group.

Other Operating Income
Other operating income decreased $9.4 million to $13.4 million in 1996 from
$22.8 million in 1995 and increased $7.5 million in 1995 from $15.3 million in
1994. Other operating income for the Minerals Group principally includes royalty
income and gains and losses from sales of coal assets. The decrease in 1996
compared to 1995 was largely due to decreased income from sales of coal assets
in 1996.

Interest Income
Interest income increased $0.2 million to $0.8 million in 1996 from $0.6 million
in 1995, which was $0.4 million higher than the $0.2 million level in 1994.

Interest Expense
Interest expense in 1996 increased $0.2 million to $10.7 million from $10.5
million in 1995 and increased $4.0 million in 1995 from $6.5 million in 1994.
Interest expense increased in 1996 due to higher average borrowings under
revolving credit facilities. Interest expense in 1996, 1995 and 1994 included a
portion of the Company's interest expense related to borrowings from the
Company's term loan and revolving credit lines which was attributed to the
Minerals Group. The amount of interest expense attributed to the Minerals Group
for 1996, 1995 and 1994 was $7.5 million, $6.3 million and $4.4 million,
respectively. In addition, interest expense includes charges on borrowings from
the Brink's Group and Burlington Group. In 1996, Minerals interest expense
included $2.6 million paid to Brink's and Burlington, as compared to $3.4
million in 1995.

Other Income (Expense), Net
Other income (expense), net, was a net expense of $1.8 million $1.1 million and
$0.9 million in 1996, 1995 and 1994, respectively.

Income Taxes
In 1996 and 1995, a credit for income taxes was recorded despite the Minerals
Group's generation of a pretax profit, due to the tax benefits of percentage
depletion which can be used by the Company. In 1994, the credit for income taxes
was higher than the amount that would have been recognized using the statutory
federal income tax rate of 35% due to the tax benefits of percentage depletion
and a reduction in the valuation allowance for deferred tax assets.

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 costs attributable to the Minerals
Group.

Corporate assets which were allocated to the Minerals Group consisted primarily
of pension assets and deferred income taxes and amounted to $89.4 million and
$77.5 million at December 31, 1996 and 1995, respectively.

Cash Provided By Operating Activities
Cash provided by operating activities amounted to $19.8 million in 1996 compared
to $26.3 million in 1995. Net income, noncash charges and changes in operating
assets and liabilities in 1996 were significantly affected by three items, a
benefit from the settlement of the Evergreen case at an amount less than
originally accrued, a charge related to SFAS 121, and a benefit

                                       58

from the reversal of excess restructuring liabilities. These items had no effect
on cash generated by operations except that the second Evergreen Case settlement
payment of $7.0 million was paid from operating cash in the third quarter of
1996. The initial payment of $25.8 million related to the Evergreen case
settlement was entirely funded by an escrow account previously established by
the Company. The amount previously escrowed and accrued was included in
"Short-term investments" and "Accrued liabilities" on the Minerals Group's
balance sheet. Cash flow from operating activities in 1996 and 1995 was also
positively impacted for tax payments received from the Burlington and Brink's
Groups, in the amounts of $14.9 million and $14.5 million, respectively. Such
payments represent Minerals Group's tax benefits utilized by the Burlington and
Brink's Group and settled in accordance with the Company's tax sharing policy.
Funding requirements for long-term inactive employee liabilities amounted to
approximately $45 million in 1996, compared to $50 million in 1995. Funding
requirements for restructuring charges are expected to be approximately $6
million to $10 million during the next twelve months.

The Minerals Group intends to fund any cash requirements during 1997 with
anticipated cash flows from operations. Shortfalls, if any, will be financed
through the Company's revolving credit agreements or borrowings from the Brink's
and Burlington Groups.

Capital Expenditures
Cash capital expenditures for 1996 and 1995 totaled $23.6 million and $22.3
million, respectively, excluding equipment expenditures that have been or are
expected to be financed through capital and operating leases. In 1996, Mineral
Ventures and Coal Operations spent $2.7 million and $19.1 million, respectively,
and $1.8 million was allocated to the Minerals Group for corporate expenditures
primarily related to the purchase of the Company's new corporate headquarters.
Additional expenditures financed through capital and operating leases amounted
to $10.6 million and $8.7 million in 1996 and 1995, respectively. Approximately
81% of the gross capital expenditures in 1996 were incurred by Coal Operations
segment. The majority of expenditures were for replacement and maintenance of
current ongoing business operations. Gross expenditures made by Mineral Ventures
operations approximated 11% of the Minerals Group's total capital expenditures
and were primarily costs incurred for project development.

Gross capital expenditures are currently expected to approximate $68 million, of
which approximately $40 million is currently expected to be financed through
leases. The 1997 estimated expenditures are $35 million higher than the 1996
level of gross capital expenditures. The increase mainly reflects additional
investments in existing mines as well as investment in new mines.

Other Investing Activities
Other investing activities provided net cash of $3.1 million in 1996. In 1995,
other investing activities provided net cash of $16.7 million, primarily due to
$18.9 million in proceeds from coal asset dispositions.

Financing
The Minerals Group intends to fund 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, short-term borrowings arrangements or borrowings from the
Brink's and Burlington Groups.

The Company has a $350.0 million revolving 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. During the second quarter of 1996, the maturity date of both
the term loan and the revolving credit portion of the Facility was extended to
May 31, 2001. Interest on borrowings under the Facility is payable at rates
based on prime, certificate of deposit, Eurodollar or money market rates. At
December 31, 1996, borrowings of $100.0 million were outstanding under the term
loan portion of the Facility and $23.2 million of additional borrowings were
outstanding under the remainder of the Facility. All borrowings under the
Facility were attributed to the Minerals Group.

Under the terms of some of its debt instruments, the Company has agreed to
various restrictions relating to the payment of dividends, the repurchase of
capital stock, the maintenance of consolidated net worth and the amount of
additional debt which may be incurred. Allowable restricted payments for
dividends and stock repurchases aggregated $255.8 million at December 31, 1996.
Under the terms of the Facility, the Company has agreed to maintain at least
$400.0 million of Consolidated Net Worth, as defined, and can incur additional
indebtedness of approximately $560 million.

                                       59

Debt
Total debt outstanding for the Minerals Group amounted to $125.0 million at
December 31, 1996, and $102.1 million at year-end 1995. During 1996, there was a
net cash outflow before financing of $0.7 million. The reduction of intercompany
debt, repurchase of stock, and the payment of dividends resulted in net
additional borrowings of $21.9 million and a decrease of $1.6 million in cash
balances at year-end. At December 31, 1996, $123.2 million of the Company's
long-term debt was attributed to the Minerals Group. The debt primarily relates
to the Minerals Group's Addington acquisition in 1994, which was financed with a
term loan under the Facility.

Related Party Transactions
At December 31, 1996, under interest bearing borrowing arrangements, the
Minerals Group owed the Brink's Group $24.0 million, an increase of $6.1 million
from the $17.9 million owed at December 31, 1995. The Minerals Group also owed
the Burlington Group $7.7 million, $12.2 million less than the prior
year-end amount.

At year-end 1996, the Brink's Group owed the Minerals Group $18.8 million for
tax benefits, of which $10.0 million is expected to be paid within one year.
Also at December 31, 1996, the Burlington Group owed the Minerals Group $24.3
million for tax benefits, of which $11.0 million is expected to be paid in one
year.

Off-balance Sheet Instruments
The Minerals Group utilizes off-balance sheet financial instruments, as
discussed below, to hedge foreign currency and other market exposures. The risk
that counterparties to such instruments may be unable to perform is minimized by
limiting he counterparties to major financial institutions. The Company does not
expect any losses due to such counterparty default.

Gold contracts--In order to protect itself against downward movements in gold
prices, the Minerals Group hedges a portion of its recoverable proven and
probable reserves primarily through forward sales contracts. At December 31,
1996, 37,808 ounces of gold, representing approximately 14% of the Minerals
Group's recoverable proven and probable reserves, were sold forward under
forward sales contracts that mature periodically through early-1998. Because
only a portion of its future production is currently sold forward, the Minerals
Group can take advantage of increases, if any, in the spot price of gold. At
December 31, 1996, the fair value of the Minerals Group's forward sales
contracts amounted to $3.2 million.

Interest rate contracts--In 1994, the Company entered into a standard three year
variable to fixed interest rate swap agreement on a portion of the Company's
U.S. dollar term loan. This agreement fixed the Company's interest rate at 5% on
initial borrowings of $40.0 million in principal. The principal amount to which
the 5% interest rate applies declines periodically throughout the term of the
agreement, and at December 31, 1996, this rate applied to borrowings of $5.0
million in principal. During 1995, the Company entered into two other variable
to fixed interest rate swap agreements. One agreement fixes the Company's
interest rate at 5.80% on $20.0 million in principal for a term of three years.
The other agreement fixes the Company's interest rate at 5.66% for a term of 21
months on $20.0 million in principal. During 1996, the Company entered into a
variable to fixed interest rate swap agreement which fixes the Company's
interest rate at 4.9% on initial borrowings of $5.0 million in principal. The
principal amount increases by $5.0 million each quarter through the first
quarter of 1998. The principal amount to which the 4.9% interest rate applied as
of December 31, 1996 was $15.0 million. All of these agreements have been
attributed to the Minerals Group.

Contingent Liabilities
In April 1990, the Company entered into a settlement agreement to resolve
certain environmental claims against the Company arising from hydrocarbon
contamination at a petroleum terminal facility ("Tankport") in Jersey City, New
Jersey, which operations were sold in 1983. Under the settlement agreement, the
Company is obligated to pay 80% of the remediation costs.

Based on data available to the Company and its environmental consultants, the
Company estimates its portion of the cleanup costs on an undiscounted basis
using existing technologies to be between $6.9 million and $17.0 million over a
period of up to five years. Management is unable to determine that any amount
within that range is a better estimate due to a variety of uncertainties, which
include the extent of the contamination at the site, the permitted technologies
for remediation and the regulatory standards by which the cleanup will be
conducted. The cleanup estimates have been modified from prior years' in light
of cost inflation. The estimate of costs and the timing of payments could change
as a result of changes to the remediation plan required, changes in the
technology available to treat the site, unforseen circumstances existing at the
site and additional cost inflation.

                                       60

The Company commenced insurance coverage litigation in 1990, in the United
States District Court for the District of New Jersey, seeking a declaratory
judgment that all amounts payable by the Company pursuant to the Tankport
obligation were reimbursable under comprehensive general liability and pollution
liability policies maintained by the Company. In August 1995 the District Court
ruled on various Motions for Summary Judgment. In its decision, the Court found
favorably for the Company on several matters relating to the comprehensive
general liability policies but concluded that the pollution liability policies
did not contain pollution coverage for the types of claims associated with the
Tankport site. The Company appealed the District Court's decision to the Third
Circuit. However, management and its outside legal counsel continue to believe
that recovery of a substantial portion of the cleanup costs ultimately will be
probable of realization. Accordingly, it is the Company's belief that, based on
estimates of potential liability and probable realization of insurance
recoveries, the Company would be liable for approximately $1.4 million based on
the Court's decision and related developments of New Jersey law.

Capitalization
On January 18, 1996, the shareholders of the Company approved the Brink's Stock
Proposal, resulting in the modification of the capital structure of the Company
to include an additional class of common stock. The outstanding shares of
Pittston Services Group Common Stock ("Services Stock") were redesignated as
Pittston Brink's Group Common Stock ("Brink's Stock") on a share-for-share
basis, and a new class of common stock, designated as Pittston Burlington Group
Common Stock ("Burlington Stock"), was distributed on the basis of one-half
share of Burlington Stock for each share of Services Stock previously held by
shareholders of record on January 19, 1996.

Brink's Stock, Burlington Stock and Minerals Stock are designed to provide
shareholders with separate securities reflecting the performance of the Brink's
Group, the Burlington Group and the Minerals Group, respectively, without
diminishing the benefits of remaining a single corporation or precluding future
transactions affecting any of the Groups. The Company prepares separate
financial statements for the Brink's, Burlington and Minerals Groups in addition
to consolidated financial information of the Company.

The redesignation of the Company's common stock as Brink's Stock and the
distribution of Burlington Stock as a result of the approval of the Brink's
Stock Proposal did not result in any transfer of assets or liabilities of the
Company or any of its subsidiaries. Holders of all three classes of stock are
shareholders of the Company, which continues to be responsible for all
liabilities. Therefore, financial developments affecting the Brink's Group, the
Burlington Group or the Minerals Group that affect the Company's financial
condition could affect the results of operations and financial condition of all
three Groups. The changes in the capital structure of the Company had no effect
on the Company's total capital, except as to expenses incurred in the execution
of the Brink's Stock Proposal. Since the approval of the Brink's Stock Proposal,
capitalization of the Company has been affected by the share activity related to
each of the classes of common stock.

In November 1995, the Board authorized a revised share repurchase program which
allows for the purchase, from time to time, of up to 1,500,000 shares of Brink's
Stock, 1,500,000 shares of Burlington Stock and 1,000,000 shares of Minerals
Stock, not to exceed an aggregate purchase price of $45.0 million; such shares
to be purchased from time to time in the open market or in private transactions,
as conditions warrant. Prior to the revised program of 117,300 shares of
Minerals Stock were repurchased at an aggregate cost of $1.7 million, of which
78,800 shares were repurchased in 1995 at an aggregate cost of $0.9 million. No
additional repurchases of Minerals Stock were made during the remainder of 1995
subsequent to the implementation of the revised program. No shares were
purchased during 1996. The program to acquire shares remains in effect in 1997.

The Company has the authority to issue up to 2,000,000 shares of preferred
stock, par value $10 per share. In January, 1994 the Company issued $80.5
million (161,000 shares) of Series C Cumulative Convertible Preferred Stock (the
"Convertible Preferred Stock"), convertible into Minerals Stock. The Convertible
Preferred Stock, which is attributable to the Minerals Group, pays an annual
cumulative dividend of $31.25 per share payable quarterly, in cash, in arrears,
out of all funds of the Company legally available; therefore, when, as and if
declared by the Board bears a liquidation preference of $500 per share, plus an
attributed amount equal to accrued and unpaid dividends thereon.

                                       61

In 1994, the Board authorized the repurchase, from time to time, of up to $15
million of the Convertible Preferred Stock. Subsequent to this authorization and
through October 1995, 24,720 shares at a total cost of $9.6 million had been
repurchased, of which 16,370 shares at a cost of $6.3 million were repurchased
in 1995. In November 1995, the Board authorized an increase in the remaining
repurchase authority to $15 million. No additional share repurchases were made
during the remainder of 1995 subsequent to the increased authorization. In 1996,
20,920 shares at a cost of $7.9 million were repurchased. The program to acquire
shares remains in effect in 1997, and in February 1997, the Board authorized an
increase in the remaining repurchase authority to $15 million.

Dividends
The Board intends to declare and pay dividends 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 and to dividend restrictions in its public debt and bank credit
agreements, losses incurred by the Brink's and Burlington Groups 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.
At December 31, 1996, the Available Minerals Dividend Amount was at least $22.1
million.

During 1996 and 1995, the Board declared and the Company paid dividends of 65
cents per share of Minerals Stock. In 1996 and 1995, dividends paid on the
cumulative convertible preferred stock were $3.8 million and $4.3 million,
respectively. Preferred dividends included on the Minerals Group's Statements of
Operations for the years ended December 31, 1996 and 1995 are net of $2.1
million and $1.6 million, respectively, which was the excess of the carrying
amount of the preferred stock over the cash paid to holders of the stock for
repurchases made during each year.

                                       62

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
The Pittston Company and Subsidiaries
- --------------------------------------------------------------------------------
STATEMENT OF MANAGEMENT RESPONSIBILITY
- --------------------------------------------------------------------------------

The management of The Pittston Company (the "Company") is responsible for
preparing the accompanying consolidated financial statements and for their
integrity and objectivity. The statements were prepared in accordance with
generally accepted accounting principles. Management has also prepared the other
information in the annual report and is responsible for its accuracy.

In meeting our responsibility for the integrity of the consolidated financial
statements, we maintain a system of internal controls designed to provide
reasonable assurance that assets are safe guarded, that transactions are
executed in accordance with management's authorization and that the accounting
records provide a reliable basis for the preparation of the financial
statements. Qualified personnel throughout the organization maintain and monitor
these internal controls on an ongoing basis. In addition, the Company maintains
an internal audit department that systematically reviews and reports on the
adequacy and effectiveness of the controls, with management follow-up as
appropriate.

Management has also established a formal Business Code of Ethics which is
distributed throughout the Company. We acknowledge our responsibility to
establish and preserve an environment in which all employees properly understand
the fundamental importance of high ethical standards in the conduct of our
business.

The Company's consolidated financial statements have been audited by KPMG Peat
Marwick LLP, independent auditors. During the audit they review and make
appropriate tests of accounting records and internal controls to the extent they
consider necessary to express an opinion on the Company's consolidated financial
statements.

The Company's Board of Directors pursues its oversight role with respect to the
Company's consolidated financial statements through the Audit and Ethics
Committee, which is composed solely of outside directors. The Committee meets
periodically with the independent auditors, internal auditors and management to
review the Company's control system and to ensure compliance with applicable
laws and the Company's Business Code of Ethics.

We believe that the policies and procedures described above are appropriate and
effective and do enable us to meet our responsibility for the integrity of the
Company's consolidated financial statements.

- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------

The Board of Directors and Shareholders
The Pittston Company

We have audited the accompanying consolidated balance sheets of The Pittston
Company and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the years in the three-year period ended December 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of The Pittston Company
and subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1996, in conformity with generally accepted accounting
principles.

As more fully discussed in Note 1 to the consolidated financial statements, the
Company changed its method of accounting for impairment of long-lived assets in
1996.

KPMG PEAT MARWICK LLP

KPMG Peat Marwick LLP
Stamford, Connecticut

January 23, 1997

                                       63

The Pittston Company and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------

                                                                                          December 31
(Dollars in thousands, except per share amounts)                                    1996         1995
======================================================================================================
                                                                                           
ASSETS
Current assets:
Cash and cash equivalents                                                    $    41,217        52,823
Short-term investments                                                             1,856        29,334
Accounts receivable:
  Trade (Note 3)                                                                 439,642       397,043
  Other                                                                           32,609        40,278
- ------------------------------------------------------------------------------------------------------
                                                                                 472,251       437,321
  Less estimated amount uncollectible                                             16,116        16,075
- ------------------------------------------------------------------------------------------------------
                                                                                 456,135       421,246
Coal inventory                                                                    26,495        37,329
Other inventory                                                                   10,632         9,070
- ------------------------------------------------------------------------------------------------------
                                                                                  37,127        46,399
Prepaid expenses                                                                  32,798        31,556
Deferred income taxes (Note 6)                                                    49,557        55,335
- ------------------------------------------------------------------------------------------------------
Total current assets                                                             618,690       636,693

Property, plant and equipment, at cost (Notes 1 and 4)                           998,607       923,514
  Less accumulated depreciation, depletion and amortization                      457,756       437,346
- ------------------------------------------------------------------------------------------------------
                                                                                 540,851       486,168
Intangibles, net of amortization (Notes 1, 5 and 10)                             317,062       327,183
Deferred pension assets (Note 13)                                                124,241       123,743
Deferred income taxes (Note 6)                                                    58,690        72,343
Other assets                                                                     153,345       161,242
- ------------------------------------------------------------------------------------------------------
Total assets                                                                 $ 1,812,879     1,807,372
======================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY 
Current liabilities:
Short-term borrowings                                                        $    31,669        37,063
Current maturities of long-term debt (Note 7)                                      5,450         7,280
Accounts payable                                                                 251,572       263,444
Accrued liabilities:
  Taxes                                                                           37,774        44,050
  Workers' compensation and other claims                                          33,557        42,010
  Payroll and vacation                                                            39,160        34,844
  Miscellaneous (Note 13)                                                        169,785       165,797
- ------------------------------------------------------------------------------------------------------
                                                                                 280,276       286,701
- ------------------------------------------------------------------------------------------------------
Total current liabilities                                                        568,967       594,488

Long-term debt, less current maturities (Note 7)                                 158,837       133,283
Postretirement benefits other than pensions (Note 13)                            226,697       219,895
Workers' compensation and other claims                                           116,893       125,894
Deferred income taxes (Note 6)                                                    15,075        17,213
Other liabilities                                                                119,703       194,620
Commitments and contingent liabilities (Notes 7, 11, 12, 13, 17 and 18)
Shareholders' equity (Notes 8 and 9):
  Preferred stock, par value $10 per share,
   Authorized: 2,000,000 shares $31.25 Series C Cumulative Preferred Stock,
   Issued: 1996--115,360 shares; 1995--136,280 shares                              1,154         1,362
  Pittston Brink's Group common stock, par value $1 per share:
   Authorized: 100,000,000 shares
   Issued: 1996--41,295,743 shares; 1995--41,573,743 shares                       41,296        41,574
  Pittston Burlington Group common stock, par value $1 per share:
   Authorized: 50,000,000 shares
   Issued: 1996--20,711,272; 1995--20,786,872                                     20,711        20,787
  Pittston Minerals Group common stock, par value $1 per share:
   Authorized:  20,000,000 shares
   Issued: 1996--8,405,908 shares; 1995--8,405,908 shares                          8,406         8,406
  Capital in excess of par value                                                 400,135       401,633
  Retained earnings                                                              273,118       188,728
  Equity adjustment from foreign currency translation                            (21,188)      (20,705)
  Employee benefits trust, at market value (Note 9)                             (116,925)     (119,806)
- ------------------------------------------------------------------------------------------------------
Total shareholders' equity                                                       606,707       521,979
- ------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity                                   $ 1,812,879     1,807,372
======================================================================================================

See accompanying notes to consolidated financial statements.

                                       64

The Pittston Company and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------

                                                                  Years Ended December 31
(In thousands, except per share amounts)                 1996          1995          1994
=========================================================================================
                                                                          
Net sales                                         $   696,513       722,851       794,998
Operating revenues                                  2,410,131     2,203,216     1,872,277
- -----------------------------------------------------------------------------------------
Net sales and operating revenues                    3,106,644     2,926,067     2,667,275
- -----------------------------------------------------------------------------------------
Costs and expenses:
Cost of sales                                         707,497       696,295       771,586
Operating expenses                                  2,004,598     1,845,404     1,542,080
Selling, general and administrative expenses          292,718       263,365       244,330
Restructuring and other (credits) charges,
  including litigation accrual (Notes 14 and 17)      (47,299)         --          90,806
- -----------------------------------------------------------------------------------------
Total costs and expenses                            2,957,514     2,805,064     2,648,802
- -----------------------------------------------------------------------------------------
Other operating income, net (Note 15)                  17,377        26,496        24,400
- -----------------------------------------------------------------------------------------
Operating profit                                      166,507       147,499        42,873
Interest income                                         3,487         3,395         2,513
Interest expense                                      (14,074)      (14,253)      (11,489)
Other expense, net                                     (9,224)       (6,305)       (5,572)
- -----------------------------------------------------------------------------------------
Income before income taxes                            146,696       130,336        28,325
Provision for income taxes (Note 6)                    42,542        32,364         1,428
- -----------------------------------------------------------------------------------------
Net income                                            104,154        97,972        26,897
Preferred stock dividends, net (Note 9)                (1,675)       (2,762)       (3,998)
- -----------------------------------------------------------------------------------------
Net income attributed to common shares            $   102,479        95,210        22,899
=========================================================================================

Pittston Brink's Group (Note 1):
Net income attributed to common shares            $    59,695        51,093        41,489
=========================================================================================
Net income per common share                       $      1.56          1.35          1.10
=========================================================================================
Average common shares outstanding                      38,200        37,931        37,784

Pittston Burlington Group (Note 1):
Net income attributed to common shares            $    33,801        32,855        38,356
=========================================================================================
Net income per common share                       $      1.76          1.73          2.03
=========================================================================================
Average common shares outstanding                      19,223        18,966        18,892

Pittston Minerals Group (Note 1):
Net income (loss) attributed to common shares     $     8,983        11,262       (56,946)
=========================================================================================
Net income (loss) per common share:
Primary                                           $      1.14          1.45         (7.50)
Fully diluted                                            1.08          1.40         (7.50)
=========================================================================================
Average common shares outstanding:
Primary                                                 7,897         7,786         7,594
Fully diluted                                           9,906         9,999        10,000
=========================================================================================

See accompanying notes to consolidated financial statements.

                                       65

The Pittston Company and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------

Years Ended December 31, 1996, 1995 and 1994

                                                             Pittston    Pittston   Pittston                         
                                                    $31.25    Brink's  Burlington   Minerals                         
                                                  Series C      Group       Group      Group  Capital in             
                                                Cumulative     Common      Common     Common   Excess of             
                                                 Preferred      Stock       Stock      Stock   Par Value   Retained  
(In thousands, except per share amounts)             Stock   (Note 1)    (Note 1)   (Note 1)    (Note 1)   Earnings  
=====================================================================================================================
                                                                                                
Balance at December 31, 1993                      $   --       41,429      20,715      8,281     334,196     98,290  
Net income                                            --         --          --         --          --       26,897  
Issuance of $31.25 Series C Cumulative                                                                               
  Preferred Stock, net of cash expenses (Note 9)     1,610       --          --         --        75,472       --    
Stock options exercised (Note 8)                      --          422         211        129       6,570       --    
Tax benefit of stock options exercised (Note 6)       --         --          --         --         2,936       --    
Foreign currency translation adjustment               --         --          --         --          --         --    
Remeasurement of employee benefits trust              --         --          --         --       (10,449)      --    
Shares released from employee benefits                                                                               
  trust to employee benefit plan (Note 9)             --         --          --         --          (309)      --    
Retirement of stock under share                                                                                      
  repurchase programs (Note 9)                         (84)      (256)       (128)       (20)     (8,749)      (718) 
Other                                                 --         --          --         --             5       --    
Cash dividends declared--Pittston Brink's                                                                            
  Group $.09 per share, Pittston Burlington                                                                          
  Group $.22 per share and Pittston                                                                                  
  Minerals Group $.65 per share and Series C                                                                         
  Preferred Stock $27.09 per share (Note 9)           --         --          --         --          --      (16,730) 
- ---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994                         1,526     41,595      20,798      8,390     399,672    107,739  
Net income                                            --         --          --         --          --       97,972  
Stock options exercised (Note 8)                      --          125          62         95       2,581       --    
Tax benefit of stock options exercised (Note 6)       --         --          --         --           720       --    
Foreign currency translation adjustment               --         --          --         --          --         --    
Remeasurement of employee benefits trust              --         --          --         --         9,947       --    
Shares released from employee benefits                                                                               
  trust to employee benefit plan (Note 9)             --         --          --         --          (993)      --    
Retirement of stock under share                                                                                      
  repurchase programs (Note 9)                        (164)      (146)        (73)       (79)    (10,294)       148  
Cash dividends declared--Pittston Brink's                                                                            
  Group $.09 per share, Pittston Burlington                                                                          
  Group $.22 per share and Pittston                                                                                  
  Minerals Group $.65 per share and Series C                                                                         
  Preferred Stock $31.25 per share (Note 9)           --         --          --         --          --      (17,131) 
- ---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995                         1,362     41,574      20,787      8,406     401,633    188,728  
Net income                                            --         --          --         --          --      104,154  
Tax benefit of stock options exercised (Note 6)       --         --          --         --         1,734       --    
Cost of Brink's Stock Proposal (Note 9)               --         --          --         --        (2,475)      --    
Foreign currency translation adjustment               --         --          --         --          --         --    
Remeasurement of employee benefits trust              --         --          --         --        20,481       --    
Shares released from employee benefits                                                                               
  trust (Notes 8 and 9)                               --         --          --         --        (7,659)      --    
Retirement of stock under share                                                                                      
  repurchase programs (Note 9)                        (208)      (278)        (76)      --       (13,579)    (2,096) 
Cash dividends declared--Pittston Brink's                                                                            
  Group $.10 per share, Pittston Burlington                                                                          
  Group $.24 per share, Pittston                                                                                     
  Minerals Group $.65 per share and Series C                                                                         
  Preferred Stock $31.25 per share (Note 9)           --         --          --         --          --      (17,668) 
- ---------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996                      $  1,154     41,296      20,711      8,406     400,135    273,118  
=====================================================================================================================

                                                     Equity
                                                 Adjustment
                                                from Foreign  Employee
                                                    Currency  Benefits
(In thousands, except per share amounts)         Translation     Trust
======================================================================
Balance at December 31, 1993                        (18,381)  (131,018)
Net income                                             --         --
Issuance of $31.25 Series C Cumulative           
  Preferred Stock, net of cash expenses (Note 9)       --         --
Stock options exercised (Note 8)                       --         --
Tax benefit of stock options exercised (Note 6)        --         --
Foreign currency translation adjustment               4,105       --
Remeasurement of employee benefits trust               --       10,449
Shares released from employee benefits           
  trust to employee benefit plan (Note 9)              --        2,940
Retirement of stock under share                  
  repurchase programs (Note 9)                         --         --
Other                                                  --         --
Cash dividends declared--Pittston Brink's        
  Group $.09 per share, Pittston Burlington      
  Group $.22 per share and Pittston              
  Minerals Group $.65 per share and Series C     
  Preferred Stock $27.09 per share (Note 9)            --         --
- ----------------------------------------------------------------------
Balance at December 31, 1994                        (14,276)  (117,629)
Net income                                             --         --
Stock options exercised (Note 8)                       --         --
Tax benefit of stock options exercised (Note 6)        --         --
Foreign currency translation adjustment              (6,429)      --
Remeasurement of employee benefits trust               --       (9,947)
Shares released from employee benefits           
  trust to employee benefit plan (Note 9)              --        7,770
Retirement of stock under share                  
  repurchase programs (Note 9)                         --         --
Cash dividends declared--Pittston Brink's        
  Group $.09 per share, Pittston Burlington      
  Group $.22 per share and Pittston              
  Minerals Group $.65 per share and Series C     
  Preferred Stock $31.25 per share (Note 9)            --         --
- ----------------------------------------------------------------------
Balance at December 31, 1995                        (20,705)  (119,806)
Net income                                             --         --
Tax benefit of stock options exercised (Note 6)        --         --
Cost of Brink's Stock Proposal (Note 9)                --         --
Foreign currency translation adjustment                (483)      --
Remeasurement of employee benefits trust               --      (20,481)
Shares released from employee benefits           
  trust (Notes 8 and 9)                                --       23,362
Retirement of stock under share                  
  repurchase programs (Note 9)                         --         --
Cash dividends declared--Pittston Brink's        
  Group $.10 per share, Pittston Burlington      
  Group $.24 per share, Pittston                 
  Minerals Group $.65 per share and Series C     
  Preferred Stock $31.25 per share (Note 9)            --         --
- ----------------------------------------------------------------------
Balance at December 31, 1996                        (21,188)  (116,925)
======================================================================

See accompanying notes to consolidated financial statements.

                                       66

The Pittston Company and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------

                                                               Years Ended December 31
(In thousands)                                              1996        1995        1994
==========================================================================================
                                                                              
Cash flows from operating activities:
Net income                                               $ 104,154      97,972      26,897
Adjustments to reconcile net income to net
 cash provided by operating activities:
  Noncash charges and other write-offs                      29,948        --        46,793
  Depreciation, depletion and amortization                 114,618     106,369     101,856
  Provision for aircraft heavy maintenance                  32,057      26,317      26,598
  Provision (credit) for deferred income taxes              19,320      11,115     (17,777)
  Provision (credit) for pensions, noncurrent                  935      (3,762)     (1,128)
  Provision for uncollectible accounts receivable            7,687       5,762       4,532
  Equity in earnings of unconsolidated affiliates,
   net of dividends received                                (2,183)      2,306      (1,432)
  Gain on sale of property, plant and equipment             (1,470)     (5,162)     (3,569)
  Other operating, net                                      10,003       4,916       3,491
  Change in operating assets and liabilities, net of
   effects of acquisitions and dispositions:
    Increase in accounts receivable                        (45,991)    (38,628)    (85,734)
    Decrease (increase) in inventories                       9,271     (12,026)     (4,184)
    Increase in prepaid expenses                            (1,869)     (2,157)     (2,849)
    (Decrease) increase in accounts payable and
      accrued liabilities                                   (8,879)      3,111      69,033
    (Increase) decrease in other assets                     (7,907)        326         991
    (Decrease) increase in workers' compensation
      and other claims, noncurrent                          (9,002)    (15,212)      6,605
    Decrease in other liabilities                          (53,522)    (22,458)    (15,283)
    Other, net                                                (499)     (2,254)       (178)
- ------------------------------------------------------------------------------------------
Net cash provided by operating activities                  196,671     156,535     154,662
- ------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment                (180,651)   (124,465)   (106,312)
Proceeds from disposal of property, plant and equipment     11,310      22,539       7,622
Aircraft heavy maintenance expenditures                    (23,373)    (22,356)    (15,333)
Acquisitions, net of cash acquired,
 and related contingency payments                           (4,078)     (3,372)   (163,262)
Other, net                                                   5,181       1,182       5,431
- ------------------------------------------------------------------------------------------
Net cash used by investing activities                     (191,611)   (126,472)   (271,854)
- ------------------------------------------------------------------------------------------
Cash flows from financing activities:
Additions to debt                                           28,642      29,866     117,332
Reductions of debt                                         (14,642)    (25,891)    (48,257)
Repurchase of stock of the Company                         (16,237)    (10,608)     (9,955)
Proceeds from exercise of stock options and
 employee stock purchase plan                                5,487       4,261       7,332
Dividends paid                                             (17,441)    (17,186)    (16,709)
Costs of stock proposals                                    (2,475)       --            (4)
Preferred stock issuance, net of cash expenses                --          --        77,359
- ------------------------------------------------------------------------------------------
Net cash (used) provided by financing activities           (16,666)    (19,558)    127,098
- ------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents       (11,606)     10,505       9,906
Cash and cash equivalents at beginning of year              52,823      42,318      32,412
- ------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                 $  41,217      52,823      42,318
==========================================================================================

See accompanying notes to consolidated financial statements.

                                       67

The Pittston Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

(Dollars in thousands, except per share amounts)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
On January 18, 1996, the shareholders of The Pittston Company (the "Company")
approved the Brink's Stock Proposal, as described in the Company's Proxy
Statement dated December 15, 1995, resulting in the modification, effective as
of January 19, 1996, of the capital structure of the Company to include an
additional class of common stock. The outstanding shares of Pittston Services
Group Common Stock, par value $1.00 per share ("Services Stock") were
redesignated as Pittston Brink's Group Common Stock, par value $1.00 per share
("Brink's Stock") on a share-for-share basis, and a new class of common stock,
designated as Pittston Burlington Group Common Stock, par value $1.00 per share
("Burlington Stock") was distributed on the basis of one-half of one share for
each outstanding share of Services Stock. Holders of Pittston Minerals Group
Common Stock, par value $1.00 per share, ("Minerals Stock") continue to be
holders of such stock, which continues to reflect the performance of the
Pittston Minerals Group (the "Minerals Group"). Brink's Stock is intended to
reflect the performance of the Pittston Brink's Group (the "Brink's Group") and
Burlington Stock is intended to reflect the performance of the Pittston
Burlington Group (the "Burlington Group").

The Pittston Brink's Group consists of the Brink's, Incorporated ("Brink's") and
Brink's Home Security, Inc. ("BHS") operations of the Company. The Pittston
Burlington Group consists of the Burlington Air Express Inc. ("Burlington")
operations of the Company. The Pittston Minerals Group consists of the Pittston
Coal Company ("Coal Operations") and Pittston Mineral Ventures ("Mineral
Ventures") operations of the Company. The approval of the Brink's Stock Proposal
did not result in any transfer of assets or liabilities of the Company or any of
its subsidiaries. The Company prepares separate financial statements for the
Minerals, Brink's and Burlington Groups in addition to consolidated financial
information of the Company.

Principles of Consolidation
The accompanying consolidated financial statements reflect the accounts of the
Company and its majority-owned subsidiaries. The Company's interests in 20% to
50% owned companies are carried on the equity method. All material intercompany
items and transactions have been eliminated in consolidation. Certain prior year
amounts have been reclassified to conform to the current year's financial
statement presentation.

Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits and investments
with original maturities of three months or less.

Short-term Investments
Short-term investments primarily include funds set aside by the Company for
certain obligations and are carried at cost which approximates market. These
investments have original maturities in excess of three months and not exceeding
one year.

Inventories
Inventories are stated at cost (determined under the first-in, first-out or
average cost method) or market, whichever is lower.

Property, Plant and Equipment
Expenditures for maintenance and repairs are charged to expense, and the costs
of renewals and betterments are capitalized. Depreciation is provided
principally on the straight-line method at varying rates depending upon
estimated useful lives. Depletion of bituminous coal lands is provided on the
basis of tonnage mined in relation to the estimated total of recoverable tonnage
in the ground.

Mine development costs, primarily included in bituminous coal lands, are
capitalized and amortized over the estimated useful life of the mine. These
costs include expenses incurred for site preparation and development as well as
operating deficits incurred at the mines during a development stage. A mine is
considered under development until all planned production units have been placed
in operation.

Valuation of coal properties is based primarily on mining plans and conditions
assumed at the time of the evaluation. These valuations could be impacted by
actual economic conditions which differ from those assumed at the time of the
evaluation.

Subscriber installation costs for home security systems provided by BHS are
capitalized and depreciated over the estimated life of the assets and are
included in machinery and equipment. The security system that is installed
remains the property of BHS and is capitalized at the cost to bring the revenue
producing asset to its intended use. When an installation is identified for
disconnection, the remaining net book value of the installation is fully
written-off and charged to depreciation expense.

                                       68

Intangibles
The excess of cost over fair value of net assets of businesses acquired is
amortized on a straight-line basis over the estimated periods benefited.

The Company evaluates the carrying value of intangibles and the periods of
amortization to determine whether events and circumstances warrant revised
estimates of asset value or useful lives. The Company annually assesses the
recoverability of the excess of cost over net assets acquired by determining
whether the amortization of the asset balance over its remaining life can be
recovered through projected undiscounted future operating cash flows. Evaluation
of asset value as well as periods of amortization are performed on a
disaggregated basis at each of the Company's operating units.

Goodwill allocated to a potentially impaired asset will be identified with that
asset in performing an impairment test in accordance with SFAS No. 121. If such
tests indicate that an impairment exists, the carrying amount of the identified
goodwill would be eliminated before making any reduction of the carrying amounts
of impaired long-lived assets.

Coal Supply Contracts
Coal supply contracts consist of contracts to supply coal to customers at
certain negotiated prices over a period of time, which have been acquired from
other coal companies, and are stated at cost at the time of acquisition, which
approximates fair market value. The capitalized cost of such contracts is
amortized over the term of the contract on the basis of tons of coal sold under
the contract.

Income Taxes
Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", which requires
recognition of deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse.

Pneumoconiosis (Black Lung) Expense
The Company acts as self-insurer with respect to almost all black lung benefits.
Provision is made for estimated benefits based on annual actuarial reports
prepared by outside actuaries. The excess of the present value of expected
future benefits over the accumulated book reserves is recognized over the
amortization period as a level percentage of payroll. Cumulative actuarial gains
or losses are calculated periodically and amortized on a straight-line basis.
Assumptions used in the calculation of the actuarial present value of black lung
benefits are based on actual retirement experience of the Company's coal
employees, black lung claims incidence for active miners, actual dependent
information, industry turnover rates, actual medical and legal cost experience
and projected inflation rates. As of December 31, 1996 and 1995, the actuarially
determined value of estimated future black lung benefits discounted at 6% was
approximately $57,000 and $60,400, respectively, and is included in workers'
compensation and other claims. Based on actuarial data, the amount (credited)
charged to operations was ($2,216) in 1996, ($1,402) in 1995 and $201 in 1994.
In addition, the Company accrued additional expenses for black lung benefits
related to federal and state assessments, legal and administration expenses and
other self insurance costs. These costs and expenses amounted to $1,849 in 1996,
$2,569 in 1995 and $2,472 in 1994.

Reclamation Costs
Expenditures relating to environmental regulatory requirements and reclamation
costs undertaken during mine operations are charged against earnings as
incurred. Estimated site restoration and post closure reclamation costs are
charged against earnings using the units of production method over the expected
economic life of each mine. Accrued reclamation costs are subject to review by
management on a regular basis and are revised when appropriate for changes in
future estimated costs and/or regulatory requirements.

Postretirement Benefits Other Than Pensions
Postretirement benefits other than pensions are accounted for in accordance with
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions", which requires employers to accrue
the cost of such retirement benefits during the employees' service
with the Company.

Foreign Currency Translation
Assets and liabilities of foreign subsidiaries have been translated at current
exchange rates, and related revenues and expenses have been translated at
average rates of exchange in effect during the year. Resulting cumulative
translation adjustments have been recorded as a separate component of
shareholders' equity. Translation adjustments relating to subsidiaries in
countries with highly inflationary economies are included in net income, along
with all transaction gains and losses for the period.

                                       69

A portion of the Company's financial results is derived from activities in
several 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 various foreign
currencies in relation to the U.S. dollar. However, the Company's international
activity is not concentrated in any single currency, which reduces the risks of
foreign currency rate fluctuations.

Financial Instruments
The Company uses foreign currency forward contracts to hedge the risk of changes
in foreign currency rates associated with certain transactions denominated in
various currencies. Realized and unrealized gains and losses on these contracts,
designated and effective as hedges, are deferred and recognized as part of the
specific transaction hedged.

The Company also utilizes other financial instruments to protect against adverse
price movements in gold, which the Company produces, and jet fuel products,
which the Company consumes as well as interest rate changes on certain variable
rate obligations. Gains and losses on these contracts, designated and effective
as hedges, are deferred and recognized as part of the transaction hedged.

Revenue Recognition
Coal Operations--Coal sales are generally recognized when coal is loaded onto
transportation vehicles for shipment to customers. For domestic sales, this
generally occurs when coal is loaded onto railcars at mine locations. For export
sales, this generally occurs when coal is loaded onto marine vessels at terminal
facilities.

Mineral Ventures--Gold sales are recognized when products are shipped to a
refinery. Settlement adjustments arising from final determination of weights and
assays are reflected in sales when received.

Burlington--Revenues related to transportation services are recognized, together
with related transportation costs, on the date shipments physically depart from
facilities en route to destination locations. Financial statements resulting
from existing recognition policies do not materially differ from the allocation
of revenue between reporting periods based on relative transit times in each
reporting period with expenses recognized as incurred.

Brink's--Revenues are recognized when services are performed.

BHS--Monitoring revenues are recognized when earned and amounts paid in advance
are deferred and recognized as income over the applicable monitoring period,
which is generally one year or less. Installation fee revenues are recognized to
the extent of direct selling costs incurred and expensed. Installation fee
revenues in excess of direct selling costs are deferred and recognized as income
on a straight-line basis over ten years.

Net Income Per Common Share
Net income per common share for Brink's Stock and Burlington Stock is computed
by dividing the net income for each Group by the weighted-average number of
shares outstanding during the period. The potential dilution from the exercise
of stock options is not material.

The computation of primary earnings per share for Minerals Stock is based on the
weighted-average number of outstanding common shares divided into net income for
the Minerals Group less preferred stock dividends. The computation of fully
diluted earnings per common share for Minerals Stock assumes the conversion of
the $31.25 Series C Cumulative Preferred Stock (issued in 1994) and additional
shares assuming the exercise of stock options (antidilutive in the primary
calculation) divided into net income for the Minerals Group. For 1994, the loss
per share, assuming full dilution, is considered to be the same as primary since
the effect of common stock equivalents and the preferred stock conversion would
be antidilutive.

The shares of Brink's Stock, Burlington Stock and Minerals Stock held in The
Pittston Company Employee Benefits Trust (Note 9) are not included in the net
income per share calculations as they were evaluated for inclusion in those
calculations under the treasury stock method and had no dilutive effect.

Use of Estimates
In accordance with generally accepted accounting principles, management of the
Company has made a number of estimates and assumptions relating to the reporting
of assets and liabilities and the disclosure of contingent assets and
liabilities to prepare these financial statements. Actual results could differ
from those estimates.

Accounting Changes
In 1996, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies to review
assets for impairment whenever circumstances indicate that the

                                       70

carrying amount of an asset may not be recoverable. SFAS No. 121 resulted in a
pretax charge to earnings in 1996 for the Company's Coal Operations of $29,948
($19,466 after-tax), of which $26,312 was included in cost of sales and $3,636
was included in selling, general and administrative expenses. Assets for which
the impairment loss was recognized consisted of property, plant and equipment,
advanced royalties and goodwill. These assets primarily related to mines
scheduled for closure in the near term and idled facilities and related
equipment.

In 1996, the Company also adopted SFAS No. 123, "Accounting for Stock Based
Compensation". SFAS No. 123 establishes financial accounting and reporting
standards for stock-based employee compensation plans. SFAS No. 123 allows for
the adoption of a fair value based method of accounting for all employee stock
compensation plans or it allows entities to continue to measure compensation
cost for those plans using the intrinsic value based method of accounting
prescribed by Accounting Principles Board Opinion ("APB") No. 25, "Accounting
for Stock Issued to Employees". APB No. 25 requires the disclosure of net income
and net income per share as if the fair value based method of accounting is
applied. The Company has elected to continue to account for its stock
compensation plans according to APB No. 25 with the disclosure of the impact on
net income and net income per share as if the fair value based method of
accounting is applied (Note 8).

2. FINANCIAL INSTRUMENTS

Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of cash and cash equivalents, short-term
investments and trade receivables. The Company places its cash and cash
equivalents and short-term investments with high credit qualified financial
institutions. Also, by policy, the Company limits the amount of credit exposure
to any one financial institution. Concentrations of credit risk with respect to
trade receivables are limited due to the large number of customers comprising
the Company's customer base and their dispersion across many different
industries and geographic areas.

The following details the fair values of financial instruments for which it is
practicable to estimate the value:

Cash and cash equivalents and short-term investments 
The carrying amounts approximate fair value because of the short maturity of
these instruments.

Accounts receivable, accounts payable and accrued liabilities The carrying
amounts approximate fair value because of the short-term nature of these
instruments.

Debt
The aggregate fair value of the Company's long-term debt obligations, which is
based upon quoted market prices and rates currently available to the Company for
debt with similar terms and maturities, approximates the carrying amount.

Off-balance sheet instruments
The Company enters into various off-balance sheet financial instruments, as
discussed below, to hedge its foreign currency and other market exposures. The
risk that counterparties to such instruments may be unable to perform is
minimized by limiting the counterparties to major financial institutions. The
Company does not expect any losses due to such counterparty default.

Foreign currency forward contracts--The Company enters into foreign currency
forward contracts with a duration of up to 360 days as a hedge against
liabilities denominated in various currencies. These contracts do not subject
the Company to risk due to exchange rate movements because gains and losses on
these contracts offset losses and gains on the liabilities being hedged. At
December 31, 1996, the total notional value of foreign currency forward
contracts outstanding was $1,052 and the fair value was not significant.

Gold contracts--In order to protect itself against downward movements in gold
prices, the Company hedges a portion of its recoverable proven and probable
reserves primarily through forward sales contracts. At December 31, 1996, 37,808
ounces of gold, representing approximately 14% of the Company's recoverable
proved and probable reserves, were sold forward under forward sales contracts
that mature periodically through early-1998. Because only a portion of its
future production is currently sold forward, the Company can take advantage of
increases, if any, in the spot price of gold. At December 31, 1996, the fair
value of the Company's forward sales contracts amounted to $3,233.

Fuel contracts--The Company has hedged a portion of its jet fuel requirements
through several commodity option transactions that are intended to protect
against significant increases in jet fuel prices. At December 31, 1996, these
transactions aggregated 18.0 million gallons and are applicable throughout the
first half of 1997. 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

                                       71

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
December 31, 1996, the fair value of these contracts was not significant.

Interest rate contracts--In connection with the aircraft leasing by Burlington,
the Company has entered into an interest rate swap agreement. This variable to
fixed interest rate swap agreement has a notional value of $30,000 that fixes
the Company's interest rate at 7.05% through January 2, 1998. Given the decline
in the base variable rate subsequent to when the agreement was entered into, the
cost to the Company to terminate the agreement, would have been $575 at December
31, 1996.

As further discussed in Note 7, in 1994, 1995 and 1996, the Company entered into
variable to fixed interest rate swap agreements. At December 31, 1996, the fair
value of these contracts was not significant.

3. ACCOUNTS RECEIVABLE--TRADE

For each of the years in the three-year period ended December 31, 1996, the
Company maintained agreements with financial institutions whereby it had the
right to sell certain coal receivables to those institutions. Certain agreements
contained provisions for sales with recourse. In 1996 and 1995, total coal
receivables of $15,390 and $25,092, respectively, were sold under such
agreements. As of December 31, 1996 and 1995, receivables sold which remained to
be collected totaled $5,183 and $5,222, respectively.

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, at cost, consists of the following:

                                                               As of December 31
                                                           1996             1995
- --------------------------------------------------------------------------------
Bituminous coal lands                                  $101,988          109,400
Land, other than coal lands                              31,190           27,605
Buildings                                               120,318           98,441
Machinery and equipment                                 745,111          688,068
- --------------------------------------------------------------------------------
Total                                                  $998,607          923,514
================================================================================

The estimated useful lives for property, plant and equipment are as follows:

                                                                           Years
- --------------------------------------------------------------------------------
Buildings                                                               10 to 50
Machinery and equipment                                                  2 to 30

Depreciation and depletion of property, plant and equipment aggregated $92,805
in 1996, $81,465 in 1995 and $74,270 in 1994.

Capitalized mine development costs totaled $8,144 in 1996, $10,118 in 1995 and
$11,908 in 1994.

Changes in capitalized subscriber installation costs for home security systems
included in machinery and equipment were as follows:

                                                        Years Ended December 31
                                                   1996        1995        1994
- --------------------------------------------------------------------------------
Capitalized subscriber installation costs--
  beginning of year                           $ 105,336      81,445      65,785
Capitalized cost of security system
  installations                                  57,194      44,488      32,309
Depreciation, including amounts recognized
  to fully depreciate capitalized costs for
  installations disconnected during the
  year                                          (27,680)    (20,597)    (16,649)
- --------------------------------------------------------------------------------
Capitalized subscriber installation costs--
  end of year                                 $ 134,850     105,336      81,445
================================================================================

New subscribers were approximately 98,500 in 1996, 82,600 in 1995 and 75,200 in
1994.

As of January 1, 1992, BHS elected to capitalize categories of costs not
previously capitalized for home security system installations. This change in
accounting principle is preferable because it more accurately reflects
subscriber installation costs. 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 (in the
amount of $2,517 in 1996, $2,712 in 1995 and $2,645 in 1994) and costs incurred
for maintaining facilities and vehicles dedicated to the installation process
(in the amount of $2,022 in 1996, $1,813 in 1995 and $1,492 in 1994). The effect
of this change in accounting principle was to increase operating profit of the
Brink's Group in 1996, 1995 and 1994 by $4,539, $4,525 and $4,137, respectively,
and net income of the Brink's

                                       72

Group in 1996, 1995 and 1994 by $2,723, $2,720 and $2,486, respectively, or by
$0.07 per share in 1996, 1995 and 1994. Prior to January 1, 1992, the records
needed to identify such costs were not available. Thus, it was impossible to
accurately calculate the effect on retained earnings as of January 1, 1992.
However, the Company believes the effect on retained earnings as of January 1,
1992, was immaterial.

Because capitalized subscriber installation costs for prior periods were not
adjusted for the change in accounting principle, installation costs for
subscribers in those years will continue to be depreciated based on the lesser
amounts capitalized in prior periods. Consequently, depreciation of capitalized
subscriber installation costs in the current year and until such capitalized
costs prior to January 1, 1992 are fully depreciated will be less than if such
prior periods' capitalized costs had been adjusted for the change in accounting.
However, the Company believes the effect on net income in 1996, 1995 and 1994
was immaterial.

5. INTANGIBLES

Intangibles consist entirely of the excess of cost over fair value of net assets
of businesses acquired and are net of accumulated amortization of $96,994 at
December 31, 1996 and $86,420 at December 31, 1995. The estimated useful life of
intangibles is generally forty years. Amortization of intangibles aggregated
$10,560 in 1996, $10,352 in 1995 and $9,686 in 1994.

6. INCOME TAXES

The provision (credit) for income taxes consists of the following:

                              U.S.
                           Federal        Foreign          State          Total
- --------------------------------------------------------------------------------
1996:
Current                   $  7,721         11,201          4,300         23,222
Deferred                    22,878         (3,731)           173         19,320
- --------------------------------------------------------------------------------
Total                     $ 30,599          7,470          4,473         42,542
================================================================================
1995:
Current                   $ 10,717          6,039          4,493         21,249
Deferred                    13,797         (1,866)          (816)        11,115
- --------------------------------------------------------------------------------
Total                     $ 24,514          4,173          3,677         32,364
================================================================================
1994:
Current                   $  7,563          5,956          5,686         19,205
Deferred                   (20,238)         2,696           (235)       (17,777)
- --------------------------------------------------------------------------------
Total                     $(12,675)         8,652          5,451          1,428
================================================================================

The significant components of the deferred tax expense (benefit) were as
follows:

                                                        Years Ended December 31
                                                     1996       1995       1994
- --------------------------------------------------------------------------------
Deferred tax expense (benefit),exclusive
  of the components listed below                 $ 19,171     16,376    (16,869)
Net operating loss carryforwards                   (5,065)    (2,911)      (393)
Alternative minimum tax credits                     4,200     (2,603)     1,147
Change in the valuation allowance for
  deferred tax assets                               1,014        253     (1,662)
- --------------------------------------------------------------------------------
Total                                            $ 19,320     11,115    (17,777)
================================================================================

The tax benefit for compensation expense related to the exercise of certain
employee stock options for tax purposes in excess of compensation expense for
financial reporting purposes is recognized as an adjustment to shareholders'
equity.

The components of the net deferred tax asset as of December 31, 1996 and
December 31, 1995 were as follows:

                                                             1996          1995
- --------------------------------------------------------------------------------
Deferred tax assets:
Accounts receivable                                     $   5,305         5,344
Postretirement benefits other than pensions               100,444        95,777
Workers' compensation and other claims                     53,760        56,694
Other liabilities and reserves                             81,413       104,226
Miscellaneous                                              11,358        11,162
Net operating loss carryforwards                           16,668        11,603
Alternative minimum tax credits                            30,325        33,793
Valuation allowance                                        (9,460)       (8,446)
- --------------------------------------------------------------------------------
Total deferred tax assets                                 289,813       310,153
- --------------------------------------------------------------------------------
Deferred tax liabilities:
Property, plant and equipment                              50,968        52,598
Pension assets                                             49,273        48,669
Other assets                                               14,679        12,934
Investments in foreign affiliates                          10,090        11,478
Miscellaneous                                              71,631        74,009
- --------------------------------------------------------------------------------
Total deferred tax liabilities                            196,641       199,688
- --------------------------------------------------------------------------------
Net deferred tax asset                                  $  93,172       110,465
================================================================================

The valuation allowance relates to deferred tax assets in certain foreign and
state jurisdictions.

                                       73

Based on the Company's historical and expected taxable earnings, management
believes it is more likely than not that the Company will realize the benefit of
the existing deferred tax asset at December 31, 1996.

The following table accounts for the difference between the actual tax provision
and the amounts obtained by applying the statutory U.S. federal income tax rate
of 35% in 1996, 1995 and 1994 to the income (loss) before income taxes.

                                                        Years Ended December 31
                                                   1996        1995        1994
- --------------------------------------------------------------------------------
Income (loss) before income taxes:
United States                                 $ 101,463      97,989     (16,517)
Foreign                                          45,233      32,347      44,842
- --------------------------------------------------------------------------------
Total                                         $ 146,696     130,336      28,325
================================================================================
Tax provision computed at statutory
  rate                                        $  51,344      45,618       9,914
Increases (reductions) in taxes due to:
Percentage depletion                             (7,644)     (9,861)     (9,313)
State income taxes (net of federal
  tax benefit)                                    1,894       1,664       5,043
Goodwill amortization                             2,404       2,825       2,437
Difference between total taxes on
  foreign income and the U.S. 
  federal statutory rate                         (6,384)     (6,261)     (6,111)
Change in the valuation allowance for
  deferred tax assets                             1,014         253      (1,662)
Miscellaneous                                       (86)     (1,874)      1,120
- --------------------------------------------------------------------------------
Actual tax provision                          $  42,542      32,364       1,428
================================================================================

It is the policy of the Company to accrue deferred income taxes on temporary
differences related to the financial statement carrying amounts and tax bases of
investments in foreign subsidiaries and affiliates which are expected to reverse
in the foreseeable future. As of December 31, 1996 and December 31, 1995 the
unrecognized deferred tax liability for temporary differences of approximately
$40,417 and $38,871, respectively, related to investments in foreign
subsidiaries and affiliates that are essentially permanent in nature and not
expected to reverse in the foreseeable future was approximately $14,146 and
$13,605, respectively.

The Company and its domestic subsidiaries file a consolidated
U.S. federal income tax return.

As of December 31, 1996, the Company had $30,325 of alternative minimum tax
credits available to offset future U.S. federal income taxes and, under current
tax law, the carryforward period for such credits is unlimited.

The tax benefit of net operating loss carryforwards as at December 31, 1996 was
$16,668 and related to various state and foreign taxing jurisdictions. The
expiration periods primarily range from 5 to 15 years.

7. LONG-TERM DEBT

Total long-term debt consists of the following:

                                                              As of December 31
                                                                1996       1995
- --------------------------------------------------------------------------------
Senior obligations:
U.S. dollar term loan due 2001 (year-end
  rate 5.97% in 1996 and 6.56% in 1995)                     $100,000     100,000
Revolving credit notes due 2001 (year-end
  rate 7.01% in 1996)                                         23,200        --
U.S. dollar term loan due 1996 (year-end
  rate 6.44% in 1995)                                           --         1,582
Canadian dollar term loan due 1999 (year-end
  rate 4.61% in 1996 and 7.50% in 1995)                        2,920       2,932
All other                                                     13,191      10,335
- --------------------------------------------------------------------------------
                                                             139,311     114,849
- --------------------------------------------------------------------------------
Subordinated obligations:
4% subordinated debentures due 1997                           14,348      14,348
- --------------------------------------------------------------------------------
Obligations under capital  leases (average rate
  11.43% in 1996 and 10.10% in 1995)                           5,178       4,086
- --------------------------------------------------------------------------------
Total long-term debt, less current maturities                158,837     133,283

Current maturities of long-term debt:
U.S. dollar term loan due 1996                                  --         1,869
Other senior obligations                                       3,324       3,201
Capital leases                                                 2,126       2,210
- --------------------------------------------------------------------------------
Total current maturities of long-term debt                     5,450       7,280
- --------------------------------------------------------------------------------
Total long-term debt including current maturities           $164,287     140,563
================================================================================

For the four years through December 31, 2001, minimum repayments of long-term
debt outstanding are as follows:

                     1998              $   6,125
                     1999                  3,757
                     2000                  2,574
                     2001                124,328

The Company has a $350,000 revolving credit agreement with a syndicate of banks
(the "Facility"). The Facility includes a $100,000 term loan and permits
additional borrowings, repayments and reborrowings of up to an aggregate of
$250,000. During the second quarter of 1996, the maturity date of both the term
loan and the revolving credit portion of the Facility was extended to May 31,
2001. Interest on borrowings under the Facility is payable at rates based on
prime, certificate

                                       74

of deposit, Eurodollar or money market rates. At December 31, 1996, borrowings,
in addition to the $100,000 term loan, of $23,200 were outstanding.

In 1994, the Company entered into a standard three year variable to fixed
interest rate swap agreement on a portion of the Company's U.S. dollar term
loan. This agreement fixed the Company's interest rate at 5% on initial
borrowings of $40,000 in principal. The principal amount to which the 5%
interest rate applies declines periodically throughout the term of the
agreement, and at December 31, 1996, this rate applied to borrowings of $5,000
in principal. During 1995, the Company entered into two other variable to fixed
interest rate swap agreements. One agreement fixes the Company's interest rate
at 5.80% on $20,000 in principal for a term of three years. The other agreement
fixes the Company's interest rate at 5.66% for a term of 21 months on $20,000 in
principal. During 1996, the Company entered into a variable to fixed interest
rate swap agreement which fixes the Company's interest rate at 4.9% on initial
borrowings of $5,000 in principal. The principal amount increases by $5,000 each
quarter through the first quarter of 1998. The principal amount to which the
4.9% interest rate applied as of December 31, 1996 was $15,000.

The Canadian dollar term loan held by a wholly-owned indirect subsidiary of
Burlington bears interest based on Canadian prime or Bankers' Acceptance rates
or, if converted to a U.S. dollar loan, based on Eurodollar or Federal Funds
rates. The loan is guaranteed by the Company.

The 4% subordinated debentures due July 1, 1997, are exchangeable only for cash,
at the rate of $157.80 per $1,000 debenture. The debentures are redeemable at
the Company's option, in whole or in part, at any time prior to maturity, at
redemption prices equal to 100% of the principal amount. The Company plans to
repay the debentures from borrowings under the long-term revolving credit
facility. In 1995, the Company redeemed $300 in principal of its 4% subordinated
debentures.

Various international subsidiaries maintain lines of credit and overdraft
facilities aggregating approximately $131,800 with a number of banks on either a
secured or unsecured basis. At December 31, 1996, $57,496 was outstanding under
such agreements.

Under the terms of some of its debt instruments, the Company has agreed to
various restrictions relating to the payment of dividends, the repurchase of
capital stock, the maintenance of consolidated net worth, and the amount of
additional funded debt which may be incurred. Allowable restricted payments for
dividends and stock repurchases aggregated $255,810 at December 31, 1996. Under
the terms of the Facility, the Company has agreed to maintain at least $400,000
of Consolidated Net Worth, as defined, and can incur additional indebtedness of
approximately $560,000.

At December 31, 1996, the Company had outstanding unsecured letters of credit
totaling $95,035 primarily supporting the Company's obligations under its
various self-insurance programs and aircraft lease obligations.

8. STOCK OPTIONS

The Company has various stock-based compensation plans as described below.

Stock Option Plans
The Company grants options under its 1988 Stock Option Plan (the "1988 Plan") to
executives and key employees and under its Non-Employee Directors' Stock Option
Plan (the "Non-Employee Plan") to outside directors, to purchase common stock at
a price not less than 100% of quoted market value at the date of grant. The 1988
Plan options can be granted with a maximum term of ten years and can vest within
six months from the date of grant. The majority of grants made in 1996, 1995 and
1994 have a maximum term of six years and vest 100% at the end of the third
year. The Non-Employee Plan options can be granted with a maximum term of ten
years and can vest within six months from the date of grant. The majority of
grants made in 1996, 1995 and 1994 have a maximum term of six years and vest
ratably over the first three years. The total number of shares underlying
options authorized for grant, but not yet granted, under the 1988 Plan is
2,460,981, 2,031,775 and 572,201 in Brink's Stock, Burlington Stock and Minerals
Stock, respectively. Under the Non-Employee Plan, the total number of shares
underlying options authorized for grant, but not yet granted, in Brink's Stock,
Burlington Stock and Minerals Stock is 137,879, 134,164 and 35,400,
respectively.

The Company's 1979 Stock Option Plan (the "1979 Plan") and the 1985 Stock Option
Plan (the "1985 Plan") terminated in 1985 and 1988, respectively, except as to
options still outstanding.

As part of the Brink's Stock Proposal (Note 1), the 1988 and Non-Employee Plans
were amended to permit option grants to be made to optionees with respect to
Brink's Stock or Burlington Stock, in addition to Minerals Stock. At the time of
the approval of the Brink's Stock Proposal, a total of 2,383,422 shares of
Services Stock were subject to options outstanding under the 1988 Plan, the
Non-Employee Plan, the 1979 Plan and the 1985 Plan. Pursuant to antidilution
provisions in the option agreements covering such plans, the Company converted
these options into options for shares of Brink's Stock or Burlington Stock, or
both, depending on the employment status and responsibilities of the particular
optionee. In the case of optionees having Company-wide responsibilities, each
outstanding Services Stock option was converted into options for both Brink's
Stock and Burlington Stock. In the case of other optionees, each outstanding
option was converted into a new

                                       75

option only for Brink's Stock or Burlington Stock, as the case may be. As a
result, upon approval of the Brink's Stock Proposal, 1,749,822 shares of Brink's
Stock and 1,989,466 shares of Burlington Stock were subject to options.

The table below summarizes the activity in all plans from December 31, 1993 to
December 31, 1996.

                                                                      Aggregate
                                                                       Exercise
                                                           Shares         Price
- --------------------------------------------------------------------------------
Pittston Services Group Common Stock Options:
Outstanding at December 31, 1993                        2,378,804    $   42,680
Granted                                                    73,000         2,018
Exercised                                                (421,302)       (5,567)
Forfeited or expired                                      (40,305)         (730)
- --------------------------------------------------------------------------------
Outstanding at December 31, 1994                        1,990,197        38,401
Granted                                                   586,500        14,595
Exercised                                                (170,982)       (2,289)
Forfeited or expired                                       (7,293)         (179)
- --------------------------------------------------------------------------------
Outstanding at December 31, 1995                        2,398,422        50,528
Exercised                                                 (15,000)         (206)
Converted in Brink's Stock Proposal                    (2,383,422)      (50,322)
- --------------------------------------------------------------------------------
Outstanding at December 31, 1996                             --      $     --
================================================================================

Pittston Brink's Group Common Stock Options:
Outstanding at December 31, 1995                             --      $     --
Converted in Brink's Stock Proposal                     1,749,822        26,865
Granted                                                   369,000         9,527
Exercised                                                (166,211)       (1,800)
Forfeited or expired                                      (37,090)         (734)
- --------------------------------------------------------------------------------
Outstanding at December 31, 1996                        1,915,521    $   33,858
================================================================================

Pittston Burlington Group Common Stock Options:
Outstanding at December 31, 1995                             --      $     --
Converted in Brink's Stock Proposal                     1,989,466        23,474
Granted                                                   439,750         7,972
Exercised                                                (318,123)       (2,905)
Forfeited or expired                                      (64,010)         (952)
- --------------------------------------------------------------------------------
Outstanding at December 31, 1996                        2,047,083    $   27,589
================================================================================

Pittston Minerals Group Common Stock Options:
Outstanding at December 31, 1993                          623,498    $   11,023
Granted                                                    23,000           431
Exercised                                                (128,667)       (1,765)
Forfeited or expired                                      (10,508)         (118)
- --------------------------------------------------------------------------------
Outstanding at December 31, 1994                          507,323         9,571
Granted                                                   258,300         2,665
Exercised                                                 (95,129)       (1,203)
Forfeited or expired                                      (72,697)       (1,674)
- --------------------------------------------------------------------------------
Outstanding at December 31, 1995                          597,797         9,359
Granted                                                     3,800            47
Exercised                                                  (3,400)          (45)
Forfeited or expired                                      (15,450)         (229)
- --------------------------------------------------------------------------------
Outstanding at December 31, 1996                          582,747    $    9,132
================================================================================

Options exercisable at the end of 1996, 1995 and 1994, respectively, on an
equivalent basis, for Brink's Stock were 1,098,836, 957,063 and 770,677; for
Burlington Stock were 1,033,647, 1,030,259 and 724,089; and, for Minerals Stock
were 291,860, 214,163 and 271,815.

The following table summarizes information about stock options outstanding as of
December 31, 1996.

                     ----------------------------------  -----------------------
                                          Stock Options           Stock Options
                                            Outstanding             Exercisable
- --------------------------------------------------------------------------------
                                  Weighted                           
                                   Average                           
                                  Remaining    Weighted                Weighted
                                Contractual     Average                 Average
Range of                               Life    Exercise                Exercise
Exercise Prices         Shares      (Years)       Price     Shares        Price
- --------------------------------------------------------------------------------
Brink's Group                                                        
$ 6.26 to  9.87        439,537         2.55   $    9.29    439,537    $    9.29
 10.55 to 13.79        119,521         3.16       11.77    119,521        11.77
 16.77 to 21.34        994,963         3.63       19.98    539,778        21.23
 25.57 to 29.50        361,500         5.38       25.82       --           N/A
- --------------------------------------------------------------------------------
Total                1,915,521                           1,098,836   
- --------------------------------------------------------------------------------
Burlington Group                                                     
$ 5.00 to  7.51        332,227         1.48   $    6.95    332,227    $    6.95
  7.71 to 11.70        318,265         3.36        9.59    318,177         9.59
 13.41 to 16.32        888,993         4.26       15.06    317,359        16.18
 17.06 to 21.13        507,598         4.92       17.95     65,884        17.06
- --------------------------------------------------------------------------------
Total                2,047,083                           1,033,647   
- --------------------------------------------------------------------------------
Minerals Group                                                       
$ 8.74 to 13.00        286,110         4.30   $   10.40     32,893    $   10.81
 13.43 to 18.63        111,637         3.08       15.18     99,637        14.78
 23.82 to 25.74        185,000         6.93       25.73    159,330        25.74
- --------------------------------------------------------------------------------
Total                  582,747                             291,860   
================================================================================
                                                                     
Employee Stock Purchase Plan                                        
Under the 1994 Employee Stock Purchase Plan (the "Plan"), the Company is
authorized to issue up to 750,000 shares of Brink's Stock, 375,000 shares of
Burlington Stock and 250,000 shares of Minerals Stock, to its employees who have
six months of service and who complete minimum annual work requirements. Under
the terms of the Plan, employees may elect each six-month period (beginning
January 1 and July 1), to have up to 10 percent of their annual earnings
withheld to purchase the Company's stock. Employees may purchase shares of any
or all of the three classes of Company common stocks. The purchase price of the
stock is 85% of the lower of its beginning-of-the-period or end-of-the-period
market price. Under the Plan, the

                                       76

Company sold 44,660 shares and 57,135 shares of Brink's Stock; 32,373 shares and
28,567 shares of Burlington Stock; and 29,831 shares and 44,098 shares of
Minerals Stock, to employees during 1996 and 1995, respectively. The share
amounts for Brink's Stock and Burlington Stock include the restatement for the
Services Stock conversion under the Brink's Stock Proposal (Note 1).

Accounting for Plans
The Company has adopted the disclosure - only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation", but applies APB Opinion No. 25 and
related Interpretations in accounting for its plans. Accordingly, no
compensation cost has been recognized in the accompanying financial statements.
Had compensation costs for the Company's plans been determined based on the fair
value of awards at the grant dates, consistent with SFAS No. 123, the Company's
net income and net income per share would approximate the pro forma amounts
indicated below:

                                                                 1996       1995
- --------------------------------------------------------------------------------
Net Income attributed to common shares
Pittston Company and Subsidiaries
  As Reported                                               $ 102,479     95,210
  Pro Forma                                                    99,628     93,455
Brink's Group
  As Reported                                                  59,695     51,093
  Pro Forma                                                    58,389     50,432
Burlington Group
  As Reported                                                  33,801     32,855
  Pro Forma                                                    32,528     32,098
Minerals Group
  As Reported                                                   8,983     11,262
  Pro Forma                                                     8,711     10,925
Net Income per common share
Brink's Group
  As Reported                                                    1.56       1.35
  Pro Forma                                                      1.53       1.33
Burlington Group
  As Reported                                                    1.76       1.73
  Pro Forma                                                      1.69       1.69
Minerals Group
  Primary, As Reported                                           1.14       1.45
  Primary, Pro Forma                                             1.10       1.40
  Fully Diluted, As Reported                                     1.08       1.40
  Fully Diluted, Pro Forma                                       1.05       1.37
================================================================================

Note: The pro forma disclosures shown may not be representative of the
effects on reported net income in future years.

The fair value of each stock option grant used to compute pro forma net income
and net income per share disclosures is estimated at the time of the grant using
the Black-Scholes option-pricing model. The weighted-average assumptions used in
the model are as follows:

                                                               1996        1995
- --------------------------------------------------------------------------------
Expected dividend yield:
  Brink's Stock                                                0.4%        0.4%
  Burlington Stock                                             1.2%        1.2%
  Minerals Stock                                               4.8%        4.8%
Expected volatility:                                                     
  Brink's Stock                                                 30%         30%
  Burlington Stock                                              32%         32%
  Minerals Stock                                                37%         38%
Risk-Free interest rate:                                                 
  Brink's Stock                                                6.3%        5.8%
  Burlington Stock                                             6.3%        5.8%
  Minerals Stock                                               6.1%        5.7%
Expected term (in years):                                                
  Brink's Stock                                                4.7         4.7
  Burlington Stock                                             4.7         4.7
  Minerals Stock                                               3.7         4.2
================================================================================

Using these assumptions in the Black-Scholes model, the weighted-average fair
value of options granted during 1996 and 1995 for the Brink's Stock is $3,341
and $2,317, for the Burlington Stock is $2,679 and $2,549 and for the Minerals
Stock is $10 and $687, respectively.

Under SFAS 123, compensation cost is also recognized for the fair value of
employee stock purchase rights. Because the Company settles its employee stock
purchase rights under the Plan at the end of each six-month offering period, the
fair value of these purchase rights was calculated using actual market
settlement data. The weighted-average fair value of the stock purchase rights
granted in 1996 and 1995 was $365 and $330 for Brink's Stock, $138 and $163 for
Burlington Stock, and $95 and $479 for Minerals Stock, respectively.

9. CAPITAL STOCK

The Company, at any time, has the right to exchange each outstanding share of
Burlington Stock for shares of Brink's Stock (or, if no Brink's Stock is then
outstanding, Minerals Stock) having a fair market value equal to 115% of the
fair market value of one share of Burlington Stock. In addition, upon the
disposition of all or substantially all of the properties and assets of the
Burlington Group to any person (with certain exceptions),

                                       77

the Company is required to exchange each outstanding share of Burlington Stock
for shares of Brink's Stock (or, if no Brink's Stock is then outstanding,
Minerals Stock) having a fair market value equal to 115% of the fair market
value of one share of Burlington Stock.

The Company, at any time, has the right to exchange each outstanding share of
Minerals Stock, which was previously subject to exchange for shares of Services
Stock, for shares of Brink's Stock (or, if no Brink's Stock is then outstanding,
Burlington Stock) having a fair market value equal to 115% of the fair market
value of one share of Minerals Stock. In addition, upon the disposition of all
or substantially all of the properties and assets of the Minerals Group to any
person (with certain exceptions), the Company is required to exchange each
outstanding share of Minerals Stock for shares of Brink's Stock (or, if no
Brink's Stock is then outstanding, Burlington Stock) having a fair market value
equal to 115% of the fair market value of one share of Minerals Stock. If any
shares of the Company's Preferred Stock are converted after an exchange of
Minerals Stock for Brink's Stock (or Burlington Stock), the holder of such
Preferred Stock would, upon conversion, receive shares of Brink's Stock (or
Burlington Stock) in lieu of shares of Minerals Stock otherwise issuable upon
such conversion.

Holders of Brink's Stock at all times have one vote per share. Holders of
Burlington Stock and Minerals Stock have one and 0.626 votes per share,
respectively, subject to adjustment on January 1, 1998, and on January 1 every
two years thereafter in such a manner so that each class' share of the aggregate
voting power at such time will be equal to that class' share of the aggregate
market capitalization of the Company's common stock at such time. Accordingly,
on each adjustment date, each share of Burlington Stock and Minerals Stock may
have more than, less than or continue to have the number of votes per share as
they have. Holders of Brink's Stock, Burlington Stock and Minerals Stock vote
together as a single voting group on all matters as to which all common
shareholders are entitled to vote. In addition, as prescribed by Virginia law,
certain amendments to the Articles of Incorporation affecting, among other
things, the designation, rights, preferences or limitations of one class of
common stock, or certain mergers or statutory share exchanges, must be approved
by the holders of such class of common stock, voting as a group, and, in certain
circumstances, may also have to be approved by the holders of the other classes
of common stock, voting as separate voting groups.

In the event of a dissolution, liquidation or winding up of the Company, the
holders of Brink's Stock, Burlington Stock and Minerals Stock, effective January
19, 1996, share on a per share basis an aggregate amount equal to 55%, 28% and
17%, respectively, of the funds, if any, remaining for distribution to the
common shareholders. In the case of Minerals Stock, such percentage has been
set, using a nominal number of shares of Minerals Stock of 4,202,954 (the
"Nominal Shares") in excess of the actual number of shares of Minerals Stock
outstanding, to ensure that the holders of Minerals Stock are entitled to the
same share of any such funds immediately following the consummation of the
transaction as they were prior thereto. These liquidation percentages are
subject to adjustment in proportion to the relative change in the total number
of shares of Brink's Stock, Burlington Stock and Minerals Stock, as the case may
be, then outstanding to the total number of shares of all other classes of
common stock then outstanding (which totals, in the case of Minerals Stock,
shall include the Nominal Shares).

In November 1995, the Board of Directors (the "Board") authorized a revised
share repurchase program which allowed for the purchase, from time to time, of
up to 1,000,000 shares of Minerals Stock, up to 1,500,000 shares of Brink's
Stock and up to 1,500,000 shares of Burlington Stock, not to exceed an aggregate
purchases price of $45,000; such shares to be purchased from time to time in the
open market or in private transactions, as conditions warrant. Prior to this
revised program, 117,300 shares of Minerals Stock at an aggregate cost of $1,720
were repurchased, of which 78,800 shares at a total cost of $912 were purchased
in 1995, and 401,900 shares of Services Stock (or the equivalent of 401,900
shares of Brink's Stock and 200,950 shares of Burlington Stock) at an aggregate
cost of $9,624 were repurchased, of which 145,800 shares at a total cost of
$3,436 were purchased in 1995. No additional repurchases were made during the
remainder of 1995 subsequent to the implementation of the revised program.
During 1996, the Company repurchased 278,000 shares and 75,600 shares of Brink's
Stock and Burlington Stock, respectively, at a total cost of $6,937 and $1,407,
respectively. No Minerals Stock was repurchased in 1996. The program to acquire
shares remains in effect in 1997.

The Company has authority to issue up to 2,000,000 shares of preferred stock,
par value $10 per share. In January 1994, the Company issued $80,500 or 161,000
shares of its $31.25 Series C Cumulative Convertible Preferred Stock (the
"Convertible Preferred Stock"). The Convertible Preferred Stock pays an annual
cumulative dividend of $31.25 per share payable quarterly, in cash, in arrears,
out of all funds of the Company legally available; therefore, when, as and if
declared by the Board, and bears a liquidation preference of $500 per share,
plus an amount equal to accrued and unpaid dividends thereon. Each share of the
Convertible Preferred Stock is convertible at the option of the holder at any
time, unless previously redeemed or, under certain circumstances, called for
redemption, into

                                       78

shares of Minerals Stock at a conversion price of $32.175 per share of Minerals
Stock, subject to adjustment in certain circumstances. Except under certain
circumstances, the Convertible Preferred Stock is not redeemable prior to
February 1, 1997. On and after such date, the Company may at its option, redeem
the Convertible Preferred Stock, in whole or in part, for cash initially at a
price of $521.875 per share, and thereafter at prices declining ratably annually
on each February 1 to an amount equal to $500.00 per share on and after February
1, 2004, plus in each case an amount equal to accrued and unpaid dividends on
the date of redemption. Except under certain circumstances or as prescribed by
Virginia law, shares of the Convertible Preferred Stock are nonvoting. The
voting rights of the Preferred Stock were not affected by the Brink's Stock
Proposal. Other than the Convertible Preferred Stock, no shares of preferred
stock are presently issued or outstanding.

In 1994, the Board authorized the repurchase from time to time of up to $15,000
of Convertible Preferred Stock. Subsequent to the authorization and through
October 1995, 24,720 shares at a total cost of $9,624 were repurchased, of which
16,370 shares at a total cost of $6,258 were purchased in 1995. In November
1995, the Board authorized an increase in the remaining authority to $15,000. No
additional share repurchases were made during the remainder of 1995 subsequent
to the increased authorization. In 1996, 20,920 shares at a total cost of $7,897
were repurchased. The program to acquire shares remains in effect in 1997, and
in February 1997, the Board authorized an increase in the remaining repurchase
authority to $15 million.

In 1996 and 1995, dividends paid on such stock amounted to $3,795 and $4,341,
respectively. Preferred dividends included on the Company's Statements of
Operations for the years ended December 31, 1996 and 1995, are net of $2,120 and
$1,579, respectively, which was the excess of the carrying amount of the
Convertible Preferred Stock over the cash paid to holders of the stock for
repurchases made during the year.

Under a Shareholder Rights Plan adopted by the Company's Board of Directors in
1987 and amended in December 1988, rights to purchase a new Series A
Participating Cumulative Preferred Stock (the "Series A Preferred Stock") of the
Company were distributed as a dividend at the rate of one right for each share
of the Company's common stock. Pursuant to the Brink's Stock Proposal, the
Shareholders Rights Plan was amended and restated to reflect the change in the
capital structure of the Company. At the time of the Brink's Stock Proposal,
each existing Services Right was amended to become a Pittston Brink's Group
Right (a "Brink's Right") and each holder of Burlington Stock received one
Pittston Burlington Group Right (a "Burlington Right") for each outstanding
share of Burlington Stock. Each Brink's Right, if and when it becomes
exercisable, will entitle the holder to purchase one-thousandth of a share of
Series A Preferred Stock at a purchase price of $26.67, subject to adjustment.
Each Burlington Right, if and when it becomes exercisable, will entitle the
holder to purchase one-thousandth of a share of Series D Preferred Stock at a
purchase price of $26.67, subject to adjustment. Each Minerals Right, if and
when it becomes exercisable, will entitle the holder to purchase one-thousandth
of a share of Series B Participating Cumulative Preferred Stock (the "Series B
Preferred Stock") at a purchase price of $40, subject to adjustment. Each
fractional share of Series A Preferred Stock and Series B Preferred Stock will
be entitled to participate in dividends and to vote on an equivalent basis with
one whole share of Brink's Stock, Burlington Stock and Minerals Stock,
respectively. Each right will not be exercisable until ten days after a third
party acquires 20% or more of the total voting rights of all outstanding Brink's
Stock, Burlington Stock and Minerals Stock or ten days after commencement of a
tender offer or exchange offer by a third party for 30% or more of the total
voting rights of all outstanding Brink's Stock, Burlington Stock and Minerals
Stock. If after the rights become exercisable, the Company is acquired in a
merger or other business combination, each right will entitle the holder to
purchase, for the purchase price, common stock of the surviving or acquiring
company having a market value of twice the purchase price. In the event a third
party acquires 30% or more of all outstanding Brink's Stock, Burlington Stock
and Minerals Stock or engages in one or more "self dealing" transactions with
the Company, the rights will entitle each holder to purchase, at the purchase
price, that number of fractional shares of Series A Preferred Stock, Series D
Preferred Stock and Series B Preferred Stock equivalent to the number of shares
of common stock which at the time of the triggering event would have a market
value of twice the purchase price. The rights may be redeemed by the Company at
a price of $0.01 per right and expire on September 25, 1997.

The Company's Articles of Incorporation limits dividends on Minerals Stock to
the lesser of (i) all funds of the Company legally available therefore (as
prescribed by Virginia law) and (ii) the Available Minerals Dividend Amount (as
defined in the Articles of Incorporation). At December 31, 1996, the Available
Minerals Dividend Amount was at least $22,099. Dividends on Minerals Stock are
also restricted by covenants in the Company's public indentures and bank credit
agreements (Note 7).

                                       79

In December 1992, the Company formed The Pittston Company Employee Benefits
Trust (the "Trust") to hold shares of its common stock to fund obligations under
certain employee benefit programs not including stock option plans. The trust
first began funding obligations under the Company's various stock option plans
in September 1995. Upon formation of the Trust, the Company sold for a
promissory note of the Trust, 4,000,000 new shares of its common stock to the
Trust at a price equal to the fair value of the stock on the date of sale. Upon
approval of the Brink's Stock Proposal, 3,537,811 shares in the Trust were
redesignated as Brink's Stock and 1,768,906 shares of Burlington Stock were
distributed to the Trust. At December 31, 1996, 3,141,493 shares of Brink's
Stock (3,552,906 in 1995), 1,279,544 shares of Burlington Stock (1,776,453 in
1995) and 423,652 shares of Minerals Stock (594,461 in 1995) remained in the
Trust, valued at market. These shares will be voted by the trustee in the same
proportion as those voted by the Company's employees participating in the
Company's Savings Investment Plan. The fair market value of the shares is
included in each issue of common stock and capital in excess of par and, in
total, as a reduction to common shareholders' equity in the Company's
consolidated balance sheet.

10. ACQUISITIONS

The following represents the significant acquisitions made by the Company in
1996, 1995 and 1994.

During 1994, a wholly owned indirect subsidiary of the Company completed the
acquisition of substantially all of the coal mining operations and coal supply
contracts of Addington Resources, Inc. ("Addington") for $157,324. The
acquisition has been accounted for as a purchase; accordingly, the purchase
price has been allocated to the underlying assets and liabilities based on their
respective estimated fair values at the date of acquisition. The fair value of
assets acquired was $173,959 and liabilities assumed was $138,518. The excess of
the purchase price over the fair value of assets acquired and liabilities
assumed was $121,883 and is being amortized over a period of forty years. The
acquisition was financed by the issuance of $80,500 of Convertible Preferred
Stock (Note 9) and additional borrowings under existing credit facilities. In
March 1994, the additional debt incurred for this acquisition was refinanced
with a portion of the proceeds from the five-year term loan (Note 7).

There were no significant acquisitions in 1995 or 1996.

The results of operations of the businesses acquired in 1996, 1995 and 1994 have
been included in the Company's results of operations from their dates of
acquisition.

11. COAL JOINT VENTURE

The Company, through a wholly owned indirect subsidiary, has a partnership
agreement, Dominion Terminal Associates ("DTA"), with three other coal companies
to operate coal port facilities in Newport News, Virginia, in the Port of
Hampton Roads (the "Facilities"). The Facilities, in which the Company's wholly
owned indirect subsidiary has a 32.5% interest, have an annual throughput
capacity of 22 million tons, with a ground storage capacity of approximately 2
million tons. The Facilities are financed by a series of coal terminal revenue
refunding bonds issued by the Peninsula Ports Authority of Virginia (the
"Authority"), a political subdivision of the Commonwealth of Virginia, in the
aggregate principal amount of $132,800, of which $43,160 are attributable to the
Company. These bonds bear a fixed interest rate of 7.375%. The Authority owns
the Facilities and leases them to DTA for the life of the bonds, which mature on
June 1, 2020. DTA may purchase the Facilities for one dollar at the end of the
lease term. The obligations of the partners are several, and not joint.

Under loan agreements with the Authority, DTA is obligated to make payments
sufficient to provide for the timely payment of the principal and interest on
the bonds. Under a throughput and handling agreement, the Company has agreed to
make payments to DTA that in the aggregate will provide DTA with sufficient
funds to make the payments due under the loan agreements and to pay the
Company's share of the operating costs of the Facilities. The Company has also
unconditionally guaranteed the payment of the principal of and premium, if any,
and the interest on the bonds. Payments for operating costs aggregated $5,208 in
1996, $6,841 in 1995 and $7,173 in 1994. The Company has the right to use 32.5%
of the throughput and storage capacity of the Facilities subject to user rights
of third parties which pay the Company a fee. The Company pays throughput and
storage charges based on actual usage at per ton rates determined by DTA.

                                       80

12. LEASES

The Company and its subsidiaries lease aircraft, facilities, vehicles, computers
and coal mining and other equipment under long-term operating leases with
varying terms, and most of the leases contain renewal and/or purchase options.
As of December 31, 1996, aggregate future minimum lease payments under
noncancellable operating leases were as follows:

                                                          Equipment
                                 Aircraft   Facilities      & Other        Total
- --------------------------------------------------------------------------------
1997                              $27,590       40,412       26,844       94,846
1998                               20,661       33,229       18,816       72,706
1999                               17,979       25,131       10,283       53,393
2000                               11,479       19,571        5,769       36,819
2001                               10,339       16,490        2,041       28,870
2002                                6,336       14,166          826       21,328
2003                                 --         12,857          556       13,413
2004                                 --         12,424          417       12,841
2005                                 --         11,250          417       11,667
Later Years                          --         67,124        3,298       70,422
- --------------------------------------------------------------------------------
Total                             $94,384      252,654       69,267      416,305
================================================================================

These amounts are net of aggregate future minimum noncancellable sublease
rentals of $4,476.

Net rent expense amounted to $111,562 in 1996, $120,583 in 1995 and $110,414 in
1994.

The Company incurred capital lease obligations of $3,185 in 1996, $2,948 in 1995
and $3,152 in 1994. In addition, in 1994 the Company assumed capital lease
obligations of $16,210 as part of the acquisition of the coal operations of
Addington (Note 10). As of December 31, 1996, the Company's obligations under
capital leases were not significant (Note 7).

13. EMPLOYEE BENEFIT PLANS

The Company and its subsidiaries maintain several noncontributory defined
benefit pension plans covering substantially all nonunion employees who meet
certain minimum requirements, in addition to sponsoring certain other defined
benefit plans. Benefits under most of the plans are based on salary (including
commissions, bonuses, overtime and premium pay) and years of service. The
Company's policy is to fund the actuarially determined amounts necessary to
provide assets sufficient to meet the benefits to be paid to plan participants
in accordance with applicable regulations.

The net pension expense (credit) for 1996, 1995 and 1994 for all plans is as
follows:

                                                        Years Ended December 31
                                                     1996       1995       1994
- --------------------------------------------------------------------------------
Service cost--benefits earned during year        $ 14,753     11,193     12,169
Interest cost on projected benefit obligation      23,719     21,429     19,781
Loss (return) on assets--actual                   (57,109)   (77,368)       576
(Loss) return on assets--deferred                  19,461     43,139    (33,601)
Other amortization, net                             1,741       (803)     1,441
- --------------------------------------------------------------------------------
Net pension expense (credit)                     $  2,565     (2,410)       366
================================================================================

The assumptions used in determining the net pension expense (credit) for the
Company's primary pension plan were as follows:

                                                            1996    1995    1994
- --------------------------------------------------------------------------------
Interest cost on projected benefit obligation               7.5%   8.75%    7.5%
Expected long-term rate of return on assets                10.0%   10.0%   10.0%
Rate of increase in compensation levels                     4.0%    4.0%    4.0%
================================================================================

The funded status and prepaid pension expense at December 31, 1996 and 1995 for
all plans are as follows:

                                                             1996          1995
- --------------------------------------------------------------------------------
Actuarial present value of accumulated benefit
  obligation:
  Vested                                                $ 276,335       263,992
  Nonvested                                                15,694        14,644
- --------------------------------------------------------------------------------
                                                          292,029       278,636
Benefits attributable to projected salaries                47,231        40,854
- --------------------------------------------------------------------------------
Projected benefit obligation                              339,260       319,490
Plan assets at fair value                                 450,430       406,923
- --------------------------------------------------------------------------------
Excess of plan assets over projected benefit
  obligation                                              111,170        87,433
Unamortized initial net asset                              (2,719)       (3,642)
Unrecognized experience loss                               11,179        35,820
Unrecognized prior service cost                             1,540         1,764
- --------------------------------------------------------------------------------
Net pension assets                                        121,170       121,375
Current pension liabilities                                 3,071         2,368
- --------------------------------------------------------------------------------
Deferred pension assets per balance sheet               $ 124,241       123,743
================================================================================

                                       81

For the valuation of the Company's primary pension obligations and the
calculation of the funded status, the discount rate was 8% in 1996 and 7.5% in
1995. The expected long-term rate of return on assets was 10% in both years. The
rate of increase in compensation levels used was 4% in 1996 and 1995.

The unrecognized initial net asset at January 1, 1986 (January 1, 1989 for
certain foreign pension plans), the date of adoption of Statement of Financial
Accounting Standards No. 87, has been amortized over the estimated remaining
average service life of the employees. As of December 31, 1996, approximately
70% of plan assets were invested in equity securities and 30% in fixed income
securities.

Under the 1990 collective bargaining agreement with the United Mine Workers of
America ("UMWA"), the Company agreed to make payments at specified contribution
rates for the benefit of the UMWA employees. The trustees of the UMWA pension
fund contested the agreement and brought action against the Company. While the
case was in litigation, Minerals Group's benefit payments were made into an
escrow account for the benefit of union employees. During 1996, the case was
settled and the escrow funds were released (Note 17). As a result of the
settlement, the Coal subsidiaries agreed to continue their participation in the
UMWA 1974 pension plan at defined contribution rates.

The Company and its subsidiaries also provide certain postretirement health care
and life insurance benefits for eligible active and retired employees in the
United States and Canada.

For the years 1996, 1995 and 1994, the components of periodic expense for these
postretirement benefits were as follows:

                                                         Years Ended December 31
                                                         1996     1995      1994
- --------------------------------------------------------------------------------
Service cost--benefits earned during the year         $ 2,069    1,720     2,446
Interest cost on accumulated postretirement
  benefit obligation                                   20,213   19,957    21,429
Amortization of losses (gains)                          1,128      (15)    2,804
- --------------------------------------------------------------------------------
Total expense                                         $23,410   21,662    26,679
================================================================================

Interest costs on the accumulated postretirement benefit obligation were based
upon rates of 7.5% in 1996, 8.75% in 1995 and 7.5% in 1994.

At December 31, 1996 and 1995, the actuarial and recorded liabilities for these
postretirement benefits, none of which have been funded, were as follows:

                                                        Years Ended December 31
                                                             1996          1995
- --------------------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees                                                $ 237,677       232,418
Fully eligible active plan participants                    25,267        25,211
Other active plan participants                             24,578        29,417
- --------------------------------------------------------------------------------
                                                          287,522       287,046
Unrecognized experience loss                              (42,850)      (48,113)
- --------------------------------------------------------------------------------
Liability included on the balance sheet                   244,672       238,933
Less current portion                                       17,975        19,038
- --------------------------------------------------------------------------------
Noncurrent liability for postretirement
  health care and life insurance benefits               $ 226,697       219,895
================================================================================

The accumulated postretirement benefit obligation was determined using the unit
credit method and an assumed discount rate of 8% in 1996 and 7.5% in 1995. The
assumed health care cost trend rate used in 1996 was 8.24% for pre-65 retirees,
grading down to 5% in the year 2001. For post-65 retirees, the assumed trend
rate in 1996 was 6.9%, grading down to 5% in the year 2001. The assumed Medicare
cost trend rate used in 1996 was 6.46%, grading down to 5% in the year 2001.

A percentage point increase each year in the assumed health care cost trend rate
used would have resulted in an increase of approximately $3,000 in the aggregate
service and interest components of expense for the year 1996, and an increase of
approximately $36,000 in the accumulated postretirement benefit obligation at
December 31, 1996.

The Company also sponsors a Savings-Investment Plan to assist eligible employees
in providing for retirement or other future financial needs. Employee
contributions are matched at rates of 50% to 125% up to 5% of compensation
(subject to certain limitations imposed by the Internal Revenue Code of 1986, as
amended). Contribution expense under the plan aggregated $6,875 in 1996, $6,324
in 1995 and $5,830 in 1994.

The Company sponsors other defined contribution benefit plans based on hours
worked, tons produced or other measurable factors. Contributions under all of
these plans aggregated $643 in 1996, $1,030 in 1995 and $1,026 in 1994.

                                       82

In October 1992, the Coal Industry Retiree Health Benefit Act of 1992 (the
"Health Benefit Act") was enacted as part of the Energy Policy Act of 1992. The
Health Benefit Act established rules for the payment of future health care
benefits for thousands of retired union mine workers and their dependents. The
Health Benefit Act established a trust fund to which the Company and certain of
its subsidiaries (the "Pittston Companies") are jointly and severally liable for
annual premiums for assigned beneficiaries, together with a pro rata share or
certain beneficiaries who never worked for such employers ("unassigned
beneficiaries"), in amounts determined on the basis set forth in the Health
Benefit Act. For 1996, 1995 and 1994, these amounts, on a pretax basis, were
approximately $10,400, $10,800 and $11,000, respectively. The Company believes
that the annual liability under the Health Benefit Act for the Pittston
Companies' assigned beneficiaries will continue at approximately $10,000 per
year for the next several years and should begin to decline thereafter as the
number of such assigned beneficiaries decreases.

Based on the number of beneficiaries actually assigned by the Social Security
Administration, the Company estimates the aggregate pretax liability relating to
the Pittston Companies' remaining assigned beneficiaries at approximately
$210,000, which when discounted at 8% provides a present value estimate of
approximately $90,000.

The ultimate obligation that will be incurred by the Company could be
significantly affected by, among other things, increased medical costs,
decreased number of beneficiaries, governmental funding arrangements and such
federal health benefit legislation of general application as may be enacted. In
addition, the Health Benefit Act requires the Pittston Companies to fund, pro
rata according to the total number of assigned beneficiaries, a portion of the
health benefits for unassigned beneficiaries. At this time, the funding for such
health benefits is being provided from another source and for this and other
reasons the Pittston Companies' ultimate obligation for the unassigned
beneficiaries cannot be determined. The Company accounts for its obligations
under the Health Benefit Act as a participant in a multi-employer plan and
recognizes the annual cost on a pay-as-you-go basis.

14. RESTRUCTURING AND OTHER (CREDITS) CHARGES,
INCLUDING LITIGATION ACCRUAL

Refer to Note 17 for a discussion of the benefit of the reversal of a litigation
accrual related to the Evergreen case of $35,650.

The market for metallurgical coal, for much of the past fifteen years, has been
characterized by weak demand from primary steel producers and intense
competition from foreign coal producers, especially those in Australia and
Canada. Metallurgical coal sales contracts are typically subject to annual price
negotiations, which increase the risk of market forces. As a result of these
conditions in the metallurgical coal markets, Coal operations decreased its
exposure to this business by selecting to participate only in those
higher-margin metallurgical markets which generate acceptable profitability.
Simultaneously with that business decision, management conducted a review of the
economic viability of its metallurgical coal assets in early 1994 and determined
that four underground mines were no longer economically viable and should be
closed, resulting in significant economic impairment to three related
preparation plants. In addition, it was determined that one surface steam coal
mine, the Heartland mine, which provided coal to Alabama Power under a long-term
sales agreement, would be closed due to rising costs caused by unfavorable
geological conditions.

As a result of these decisions, Coal operations incurred pretax charges of
$90,806 ($58,116 after-tax) in the first quarter of 1994, which included a
reduction in the carrying value of these assets and related accruals for mine
closure costs. These charges included asset writedowns of $46,487, $3,836 for
required lease payments owed to lessors for machinery and equipment that would
be idled as a result of the mine and facility closures, $19,290 for mine and
plant closure costs and $21,193 in contractually or statutorily required
employee severance and other benefit costs associated with terminated and
inactive employees at these facilities.

Of the four underground mines included in the asset writedown, two ceased coal
production in 1994 and one ceased coal production in 1996. Also, in 1994, the
Coal operations reached agreement with Alabama Power Company to transfer the
coal sales contract serviced by the Heartland mine to another location in West
Virginia. The Heartland mine ceased coal production during 1994 and final
reclamation and environmental work is complete. By early 1995, two of the three
related preparation plants had also closed. At the beginning of 1994 there were
approximately 750 employees involved in operations and other administrative
support at the facilities included in the 1994 charge. Employment at these
facilities was reduced by 52% to approximately 360 employees at December 31,
1994; by 81% to approximately 140 employees at December 31, 1995; and by 87% to
approximately 100 employees at December 31, 1996.

The initiation in 1996 of a Virginia tax credit, along with favorable labor
negotiations and improved metallurgical contract pricing over 1994, led
management to open three new underground coal mines in southwest Virginia during
late 1996 and to reactivate one coal preparation and loading facility. In
addition, management decided to continue operating the last of the four
underground mines and one related coal preparation and loading facility included
in the

                                       83

1994 charge. As a result of these decisions and favorable workers' compensation
claim development for closed mines, a portion of the restructuring reserve
established in 1994 was no longer required. Accordingly, Coal operations
reversed $11,649 ($7,572 after-tax) of its restructuring reserve during the
year.

Although coal production has ceased at the mines remaining in the accrual, Coal
will incur reclamation and environmental costs for several years to bring these
properties into compliance with federal and state environmental laws. In
addition, employee termination and medical costs will continue to be incurred
for several years after the facilities have been closed. Management believes
that the reserve, as adjusted, at December 31, 1996, should be sufficient to
provide for these future costs. Management does not anticipate material
additional future charges to operating earnings for these facilities, although
continual cash funding will be required over the next several years.

The following table analyzes the changes in liabilities during the last three
years for facility closure costs recorded as restructuring and other charges:

                                                             Employee
                                                   Mine  Termination,
                                      Leased        and       Medical
                                   Machinery      Plant           and
                                         and    Closure     Severance
(In thousands)                     Equipment      Costs         Costs      Total
================================================================================
Balance January 1, 1994               $3,092     28,434        34,217     65,743
Additions                              3,836     19,290        21,193     44,319
Payments (a)                           3,141      9,468        12,038     24,647
- --------------------------------------------------------------------------------
Balance December 31, 1994              3,787     38,256        43,372     85,415
Payments (b)                           1,993      7,765         7,295     17,053
Other reductions (c)                     576      1,508          --        2,084
- --------------------------------------------------------------------------------
Balance December 31, 1995              1,218     28,983        36,077     66,278
Reversals                               --        4,778         6,871     11,649
Payments (d)                             842      5,499         3,921     10,262
Other reductions (c)                    --        6,267          --        6,267
- --------------------------------------------------------------------------------
Balance December 31, 1996             $  376     12,439        25,285     38,100
================================================================================
                                                        
(a) Of the total payments made, in 1994, $8,672 was for liabilities recorded in
years prior to 1993, $5,822 was for liabilities recorded in 1993 and $10,153 was
for liabilities recorded in 1994.

(b) Of the total payments made in 1995, $6,424 was for liabilities recorded in
years prior to 1993, $2,486 was for liabilities recorded in 1993 and $8,143 was
for liabilities recorded in 1994.

(c) These amounts represent the assumption of liabilities by third parties as a
result of sales transactions.

(d) Of the total payments made in 1996, $5,119 was for liabilities recorded in
years prior to 1993, $485 was for liabilities recorded in 1993, $4,658 was for
liabilities recorded in 1994.

During the next 12 months, expected cash funding of these charges will be
approximately $6,000 to $10,000. Management estimates that the remaining
liability for leased machinery and equipment will be fully paid over the next
year. The liability for mine and plant closure costs is expected to be satisfied
over the next ten years, of which approximately 49% is expected to be paid over
the next two years. The liability for employee related costs, which is primarily
workers' compensation, is estimated to be 44% settled over the next four years
with the balance paid during the following five to ten years.

15. OTHER OPERATING INCOME

Other operating income includes the Company's share of net income of
unconsolidated affiliated companies carried on the equity method of $2,103, $182
and $6,336 for 1996, 1995 and 1994, respectively.

Summarized financial information presented includes the accounts of the
following equity affiliates (a):

                                                                       Ownership
                                                            At December 31, 1996
- --------------------------------------------------------------------------------
Servicio Pan Americano De Protecion, S.A. (Mexico)                         20.0%
Brink's Panama, S.A                                                        49.0%
Brink's S.A. (France)                                                      38.0%
Brink's Schenker, GmbH (Germany)                                           50.0%
Brink's Securmark S.p.A. (Italy)                                           24.5%
Security Services (Brink's Jordan), W.L.L                                  45.0%
Brink's-Allied Limited (Ireland)                                           50.0%
Brink's Arya India Private Limited                                         40.0%
Brink's Pakistan (Pvt.) Limited                                            49.0%
Brink's Taiwan Limited                                                     50.0%
Brink's (Thailand) Ltd.                                                    40.0%
Burlington International Forwarding Ltd. (Taiwan)                          33.3%
Continental Freight (Proprietary) Limited (South Africa)                   50.0%
Mining Project Investors Limited (Australia)                               34.1%
MPI Gold (USA)                                                             34.1%
================================================================================

                                               1996          1995           1994
- --------------------------------------------------------------------------------
Revenues                                   $728,815       762,250        833,056
Gross profit                                 78,900        60,712        154,608
Net income                                   11,160        (5,873)        23,503
Current assets                              209,089       186,039        180,868
Noncurrent assets                           217,445       227,229        299,338
Current liabilities                         192,679       219,253        145,549
Noncurrent liabilities                      117,952        85,057        160,876
Net equity                                  115,903       108,958        173,781
================================================================================

(a) Also includes amounts related to equity affiliates who were either sold
prior to December 31, 1996 or became consolidated affiliates through increased
ownership prior to December 31, 1996. All amounts for such affiliates are
presented pro-rata, where applicable.

Undistributed earnings of such companies included in consolidated retained
earnings approximated $32,200 at December 31, 1996.

                                       84

16. SEGMENT INFORMATION

Net sales and operating revenues by geographic area are as follows:

                                                      Years Ended December 31
                                                  1996         1995         1994
- --------------------------------------------------------------------------------
United States:
Domestic customers                          $1,487,145    1,449,684    1,477,450
Export customers                               273,162      256,396      274,695
- --------------------------------------------------------------------------------
                                             1,760,307    1,706,080    1,752,145
International operations                     1,346,337    1,219,987      915,130
- --------------------------------------------------------------------------------
Consolidated net sales and operating
  revenues                                  $3,106,644    2,926,067    2,667,275
================================================================================
                                                              
Segment operating profit by geographic area is as follows:

                                                      Years Ended December 31
                                                  1996         1995         1994
- --------------------------------------------------------------------------------
United States                                 $125,050      115,530       11,770
International operations                        62,902       48,775       47,279
- --------------------------------------------------------------------------------
Total segment operating profit                $187,952      164,305       59,049
================================================================================

Identifiable assets by geographic area are as follows:

                                                      As of December 31
                                              1996           1995           1994
- --------------------------------------------------------------------------------
United States                           $1,221,093      1,245,122      1,252,057
International operations                   485,479        453,451        389,074
- --------------------------------------------------------------------------------
Total                                   $1,706,572      1,698,573      1,641,131
================================================================================

Industry segment information is as follows:

                                                   Years Ended December 31
                                               1996          1995          1994
- --------------------------------------------------------------------------------
Net Sales and Operating Revenues:
Burlington                              $ 1,500,318     1,414,821     1,215,284
Brink's                                     754,011       659,459       547,046
BHS                                         155,802       128,936       109,947
Coal Operations                             677,393       706,251       779,504
Mineral Ventures                             19,120        16,600        15,494
- --------------------------------------------------------------------------------
Consolidated net sales and
  operating revenues                    $ 3,106,644     2,926,067     2,667,275
================================================================================
Operating Profit (Loss):
Burlington                              $    64,604        58,723        69,224
Brink's (a)                                  56,823        42,738        39,710
BHS (b)                                      44,872        39,506        32,432
Coal Operations (c)                          20,034        23,131       (83,451)
Mineral Ventures (c)                          1,619           207         1,134
- --------------------------------------------------------------------------------
Segment operating profit                    187,952       164,305        59,049
General Corporate expense                   (21,445)      (16,806)      (16,176)
- --------------------------------------------------------------------------------
Consolidated operating profit           $   166,507       147,499        42,873
================================================================================

(a) Includes equity in net income of unconsolidated foreign affiliates of $2,103
in 1996, $182 in 1995 and $6,336 in 1994 (Note 15).

(b) As of January 1, 1992, BHS elected to capitalize categories of costs not
previously capitalized for home security installations to more accurately
reflect subscriber installation costs. The effect of this change in accounting
principle was to increase operating profit by $4,539 in 1996, $4,525 in 1995 and
$4,137 in 1994 (Note 4).

(c) Operating profit (loss) of the Coal segment included a (benefit) charge from
restructuring and other (credits) charges, including litigation accrual of
($47,299) in 1996 and $90,806 in 1994 (Note 14).

                                                         Years Ended December 31
                                                      1996       1995       1994
- --------------------------------------------------------------------------------
Capital Expenditures:
Burlington                                        $ 59,470     34,576     24,701
Brink's                                             34,072     23,063     23,963
BHS                                                 61,522     47,256     34,071
Coal Operations                                     18,881     17,811     25,016
Mineral Ventures                                     3,714      2,332      2,514
General Corporate                                    5,950        391        209
- --------------------------------------------------------------------------------
Consolidated capital expenditures                 $183,609    125,429    110,474
================================================================================
Depreciation, Depletion and Amortization:
Burlington                                        $ 23,254     19,856     17,209
Brink's                                             24,293     21,844     20,553
BHS                                                 30,115     22,408     17,817
Coal Operations                                     34,632     40,285     44,731
Mineral Ventures                                     1,856      1,597      1,202
General Corporate                                      468        379        344
- --------------------------------------------------------------------------------
Consolidated depreciation, depletion
  and amortization                                $114,618    106,369    101,856
================================================================================

                                       85

                                                        As of December 31
                                                  1996         1995         1994
- --------------------------------------------------------------------------------
Assets:
Burlington                                  $  598,060      539,719      472,440
Brink's                                        340,922      321,022      297,816
BHS                                            149,992      116,701       87,372
Coal Operations                                594,772      699,049      761,827
Mineral Ventures                                22,826       22,082       21,676
- --------------------------------------------------------------------------------
Identifiable assets                          1,706,572    1,698,573    1,641,131
General Corporate (primarily cash,
  investments, advances and
  deferred pension assets)                     106,307      108,799       96,647
- --------------------------------------------------------------------------------
Consolidated assets                         $1,812,879    1,807,372    1,737,778
================================================================================

17. LITIGATION

In April 1990, the Company entered into a settlement agreement to resolve
certain environmental claims against the Company arising from hydrocarbon
contamination at a petroleum terminal facility ("Tankport") in Jersey City, New
Jersey, which operations were sold in 1983. Under the settlement agreement, the
Company is obligated to pay 80% of the remediation costs. Based on data
available to the Company and its environmental consultants, the Company
estimates its portion of the cleanup costs on an undiscounted basis using
existing technologies to be between $6,900 and $17,000 over a period of up to
five years. Management is unable to determine that any amount within that range
is a better estimate due to a variety of uncertainties, which include the extent
of the contamination at the site, the permitted technologies for remediation and
the regulatory standards by which the clean-up will be conducted. The clean-up
estimates have been modified from prior years' in light of cost inflation. The
estimate of costs and the timing of payments could change as a result of changes
to the remediation plan required, changes in the technology available to treat
the site, unforseen circumstances existing at the site and additional cost
inflation.

The Company commenced insurance coverage litigation in 1990, in the United
States District Court for the District of New Jersey, seeking a declaratory
judgment that all amounts payable by the Company pursuant to the Tankport
obligation were reimbursable under comprehensive general liability and pollution
liability policies maintained by the Company. In August 1995, the District Court
ruled on various Motions for Summary Judgement. In its decision, the Court found
favorably for the Company on several matters relating to the comprehensive
general liability policies but concluded that the pollution liability policies
did not contain pollution coverage for the types of claims associated with the
Tankport site. The Company has appealed the District Court's decision to the
Third Circuit. However, management and its outside legal counsel continue to
believe that recovery of a substantial portion of the cleanup costs will
ultimately be probable of realization. Accordingly, it is the Company's belief
that, based on estimates of potential liability and probable realization of
insurance recoveries, the Company would be liable for approximately $1,400 based
on the Court's decision and related developments of New Jersey law.

In 1988, the trustees of certain pension and benefit trust funds (the "Trust
Funds") established under collective bargaining agreements with the UMWA brought
an action (the "Evergreen Case") against the Company and a number of its coal
subsidiaries in the United States District Court for the District of Columbia,
claiming that the defendants are obligated to contribute to such Trust Funds in
accordance with the provisions of the 1988 and subsequent National Bituminous
Coal Wage Agreements, to which neither the Company nor any of its subsidiaries
is a signatory. In 1993, the Company recognized in its consolidated financial
statements the potential liability that might have resulted from an ultimate
adverse judgment in the Evergreen Case (Notes 13 and 14).

In late March 1996, a settlement was reached in the Evergreen Case. Under the
terms of the settlement, the coal subsidiaries which had been signatories to
earlier National Bituminous Coal Wage Agreements agreed to make various lump sum
payments in full satisfaction of all amounts allegedly due to the Trust Funds
through January 31, 1996, to be paid over time as follows: approximately $25,800
upon dismissal of the Evergreen Case and the remainder of $24,000 in
installments of $7,000 in 1996 and $8,500 in each of 1997 and 1998. The first
payment was entirely funded through an escrow account previously established by
the Company. The second payment of $7,000 was paid in 1996 and was funded from
cash provided by operating activities. In addition, the coal subsidiaries agreed
to future participation in the UMWA 1974 Pension Plan.

As a result of the settlement of the Evergreen Case at an amount lower than
those previously accrued, the Company recorded a pretax gain of $35,650 ($23,173
after-tax) in the first quarter of 1996 in its consolidated financial
statements.

                                       86

18. COMMITMENTS

At December 31, 1996, the Company had contractual commitments for third parties
to contract mine or provide coal. Based on the contract provisions these
commitments are currently estimated to aggregate approximately $124,675 and
expire from 1997 through 1999 as follows:

                   1997                 $ 79,894
                   1998                   27,480
                   1999                   17,301

Spending under the contracts was $99,161 in 1996, $83,532 in 1995 and $53,097 in
1994.

19. SUPPLEMENTAL CASH FLOW INFORMATION

For the years ended December 31, 1996, 1995 and 1994, cash payments for income
taxes, net of refunds received, were $26,412, $21,967 and $23,406, respectively.

For the years ended December 31, 1996, 1995 and 1994, cash payments for interest
were $14,659, $13,575 and $12,104, respectively.

In 1995, the Company sold mining operations in Ohio together with a related coal
supply contract for notes and royalties receivable totaling $6,949.

20. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Tabulated below are certain data for each quarter of 1996 and 1995.

                                            1st        2nd        3rd        4th
- --------------------------------------------------------------------------------
1996 Quarters:
Net sales and operating
  revenues                            $ 734,762    760,734    786,873    824,275
Gross profit                             61,956    104,693    116,745    111,155
Net income                               18,620     25,426     29,044     31,064

Per Pittston Brink's Group
  Common Share:
Net income                            $     .31        .37        .41        .47

Per Pittston Burlington Group
  Common Share:
Net income                            $     .20        .46        .56        .55

Per Pittston Minerals Group
  Common Share:
Net income (loss):
Primary                               $     .25        .35        .33        .20
Fully diluted                               .25        .27        .25        .20

1995 Quarters:
Net sales and operating
   revenues                           $ 699,084    711,767    752,453    762,763
Gross profit                             76,028     89,898    108,578    109,864
Net income                               14,065     24,608     29,599     29,700

Per Pittston Brink's Group
  Common Share:
Net income                            $     .25        .32        .39        .39

Per Pittston Burlington Group
  Common Share:
Net income                            $     .21        .42        .56        .54

Per Pittston Minerals Group
  Common Share:
Net income:
Primary                               $     .05        .45        .51        .43
Fully diluted                               .05        .45        .45        .43

                                       87

Pittston Brink's Group
- --------------------------------------------------------------------------------
STATEMENT OF MANAGEMENT RESPONSIBILITY
- --------------------------------------------------------------------------------

The management of The Pittston Company (the "Company") is responsible for
preparing the accompanying Pittston Brink's Group (the "Brink's Group")
financial statements and for their integrity and objectivity. The statements
were prepared in accordance with generally accepted accounting principles.
Management has also prepared the other information in the annual report and is
responsible for its accuracy.

In meeting our responsibility for the integrity of the financial statements, we
maintain a system of internal controls designed to provide reasonable assurance
that assets are safeguarded, that transactions are executed in accordance with
management's authorization and that the accounting records provide a reliable
basis for the preparation of the financial statements. Qualified personnel
throughout the organization maintain and monitor these internal controls on an
ongoing basis. In addition, the Company maintains an internal audit department
that systematically reviews and reports on the adequacy and effectiveness of the
controls, with management follow-up as appropriate.

Management has also established a formal Business Code of Ethics which is
distributed throughout the Company. We acknowledge our responsibility to
establish and preserve an environment in which all employees properly understand
the fundamental importance of high ethical standards in the conduct of our
business.

The accompanying financial statements have been audited by KPMG Peat Marwick
LLP, independent auditors. During the audit they review and make appropriate
tests of accounting records and internal controls to the extent they consider
necessary to express an opinion on the Brink's Group's financial statements.

The Company's Board of Directors pursues its oversight role with respect to the
Brink's Group's financial statements through the Audit and Ethics Committee,
which is composed solely of outside directors. The Committee meets periodically
with the independent auditors, internal auditors and management to review the
Company's control system and to ensure compliance with applicable laws and the
Company's Business Code of Ethics.

We believe that the policies and procedures described above are appropriate and
effective and do enable us to meet our responsibility for the integrity of the
Brink's Group's financial statements.

- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------

The Board of Directors and Shareholders
The Pittston Company

We have audited the accompanying balance sheets of Pittston Brink's Group (as
described in Note 1) as of December 31, 1996 and 1995, and the related
statements of operations and cash flows for each of the years in the three-year
period ended December 31, 1996. These financial statements are the
responsibility of The Pittston Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements of Pittston Brink's Group present
fairly, in all material respects, the financial position of Pittston Brink's
Group as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for each of the years in the three-year period ended December 31,
1996, in conformity with generally accepted accounting principles.

As more fully discussed in Note 1, the financial statements of Pittston Brink's
Group should be read in connection with the audited consolidated financial
statements of The Pittston Company and subsidiaries.

KPMG PEAT MARWICK LLP

KPMG Peat Marwick LLP
Stamford, Connecticut

January 23, 1997

                                       88

Pittston Brink's Group
- --------------------------------------------------------------------------------
BALANCE SHEETS
- --------------------------------------------------------------------------------

                                                                     December 31
(Dollars in thousands)                                            1996      1995
================================================================================
ASSETS
Current assets:
Cash and cash equivalents                                     $ 20,012    21,977
Short-term investments                                           1,856     3,288
Accounts receivable:
  Trade                                                        124,371   112,705
  Other                                                          5,527     4,841
- --------------------------------------------------------------------------------
                                                               129,898   117,546
  Less estimated amount uncollectible                            4,970     3,756
- --------------------------------------------------------------------------------
                                                               124,928   113,790
Receivable--Pittston Minerals Group (Note 2)                    14,027     3,945
Inventories                                                      3,073     2,795
Prepaid expenses                                                11,680    10,380
Deferred income taxes (Note 7)                                  14,481    13,146
- --------------------------------------------------------------------------------
Total current assets                                           190,057   169,321
Property, plant and equipment, at cost (Note 4)                497,500   429,077
  Less accumulated depreciation and amortization               240,741   214,424
- --------------------------------------------------------------------------------
                                                               256,759   214,653
Intangibles, net of amortization (Note 5)                       28,162    28,893
Investment in and advances to unconsolidated affiliates         29,081    28,406
Deferred pension assets (Note 12)                               33,670    33,923
Deferred income taxes (Note 7)                                   2,120     1,081
Other assets                                                    11,816     8,449
- --------------------------------------------------------------------------------
Total assets                                                  $551,665   484,726
================================================================================

LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Short-term borrowings                                         $  1,751     4,858
Current maturities of long-term debt (Note 8)                    2,139     4,117
Accounts payable                                                36,995    35,460
Accrued liabilities:
  Taxes                                                         14,051    13,690
  Workers' compensation and other claims                        16,667    17,613
  Payroll and vacation                                          21,993    19,025
  Deferred monitoring revenues                                  13,415    12,134
  Miscellaneous (Note 12)                                       32,381    23,544
- --------------------------------------------------------------------------------
                                                                98,507    86,006
- --------------------------------------------------------------------------------
Total current liabilities                                      139,392   130,441

Long-term debt, less current maturities (Note 8)                 5,542     5,795
Postretirement benefits other than pensions (Note 12)            3,835     3,475
Workers' compensation and other claims                          11,056    11,292
Deferred income taxes (Note 7)                                  38,539    37,529
Payable--Pittston Minerals Group (Note 2)                        8,760     7,844
Minority interests                                              22,929    21,361
Other liabilities                                                8,234     8,184
Commitments and contingent liabilities (Notes 8, 11 and 15)
Shareholder's equity (Notes 3, 9 and 10)                       313,378   258,805
- --------------------------------------------------------------------------------
Total liabilities and shareholder's equity                    $551,665   484,726
================================================================================

See accompanying notes to financial statements.

                                       89

Pittston Brink's Group
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------

                                                        Years Ended December 31
(In thousands, except per share amounts)           1996        1995        1994
================================================================================
Operating revenue                             $ 909,813     788,395     656,993
- --------------------------------------------------------------------------------
Costs and expenses:
Operating expenses                              687,175     599,683     498,185
Selling, general and administrative expenses    130,833     112,133      97,245
- --------------------------------------------------------------------------------
Total costs and expenses                        818,008     711,816     595,430
- --------------------------------------------------------------------------------
Other operating income, net (Note 13)             2,433         895       5,913
- --------------------------------------------------------------------------------
Operating profit                                 94,238      77,474      67,476

Interest income                                   2,745       1,840       1,503
Interest expense (Note 2)                        (1,810)     (2,050)     (2,450)
Other expense, net                               (5,407)     (3,505)     (3,068)
- --------------------------------------------------------------------------------
Income before income taxes                       89,766      73,759      63,461
Provision for income taxes (Note 7)              30,071      22,666      21,972
- --------------------------------------------------------------------------------
Net income                                    $  59,695      51,093      41,489
================================================================================
Net income per common share (Note 1)          $    1.56        1.35        1.10
================================================================================
Average common shares outstanding                38,200      37,931      37,784

See accompanying notes to financial statements.

                                       90

Pittston Brink's Group
- --------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------

                                                                Years Ended December 31
(In thousands)                                                 1996        1995        1994
- -------------------------------------------------------------------------------------------
                                                                               
Cash flows from operating activities:
Net income                                                $  59,695      51,093      41,489
Adjustments to reconcile net income to net
 cash provided by operating activities:
  Depreciation and amortization                              54,566      44,357      38,463
  Provision (credit) for deferred income taxes                   62        (952)      4,328
  Provision (credit) for pensions, noncurrent                 1,149        (466)       (169)
  Provision for uncollectible accounts receivable             4,416       3,265       1,346
  Equity in earnings of unconsolidated affiliates,
   net of dividends received                                 (1,755)      2,352      (1,144)
  Gain on sale of property, plant and equipment                (201)       (377)       (186)
  Other operating, net                                        7,206       3,104       2,380
  Change in operating assets and liabilities,
   net of effects of acquisitions and dispositions:
    Increase in accounts receivable                         (15,556)    (22,352)    (15,620)
    Increase in inventories                                    (276)       (812)       (529)
    Increase in prepaid expenses                             (1,300)     (1,858)       (675)
    Increase in accounts payable and accrued liabilities     11,623      14,442      15,645
    Increase in other assets                                 (4,742)     (1,597)       (982)
    (Decrease) increase in workers' compensation
      and other claims, noncurrent                             (237)      1,363         886
    (Decrease) increase in other liabilities                   (949)        337        (956)
    Other, net                                                   82      (1,119)       (820)
- -------------------------------------------------------------------------------------------
Net cash provided by operating activities                   113,783      90,780      83,456
- -------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment                  (95,754)    (69,783)    (56,443)
Proceeds from disposal of property, plant and equipment       2,798       3,178         515
Acquisitions, net of cash acquired, and
 related contingency payments                                   (90)       (956)       --
Other, net                                                      933      (1,313)     (4,884)
- -------------------------------------------------------------------------------------------
Net cash used by investing activities                       (92,113)    (68,874)    (60,812)
- -------------------------------------------------------------------------------------------
Cash flows from financing activities:
Additions to debt                                             1,842       1,782        --
Reductions of debt                                           (9,375)     (5,893)    (10,129)
Payments to Minerals Group                                   (6,082)    (12,240)     (5,705)
Repurchase of common stock                                   (6,936)     (2,303)     (4,146)
Proceeds from exercise of stock options and
 employee stock purchase plan                                 2,072       1,931       3,730
Other                                                          --          --           216
Dividends paid                                               (3,918)     (3,432)     (3,399)
Cost of stock proposals                                      (1,238)       --            (1)
- -------------------------------------------------------------------------------------------
Net cash used by financing activities                       (23,635)    (20,155)    (19,434)
- -------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents         (1,965)      1,751       3,210
Cash and cash equivalents at beginning of period             21,977      20,226      17,016
- -------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                $  20,012      21,977      20,226
===========================================================================================

See accompanying notes to financial statements.

                                       91

Pittston Brink's Group
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

(Dollars in thousands, except per share amounts)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
On January 18, 1996, the shareholders of The Pittston Company, (the "Company")
approved the Brink's Stock Proposal, as described in the Company's proxy
statement dated December 15, 1995, resulting in the modification, effective as
of January 19, 1996, of the capital structure of the Company to include an
additional class of common stock. The outstanding shares of Pittston Services
Group Common Stock, par value $1.00 per share, ("Services Stock") have been
redesignated as Pittston Brink's Group Common Stock, par value $1.00 per share,
("Brink's Stock") on a share-for-share basis, and a new class of common stock,
designated as Pittston Burlington Group Common Stock, par value $1.00 per share,
("Burlington Stock") was distributed on the basis of one-half of one share for
each outstanding share of Services Stock. Holders of Pittston Minerals Group
Common Stock, par value $1.00 per share, ("Minerals Stock") continue to be
holders of such stock, which continues to reflect the performance of the
Pittston Minerals Group (the "Minerals Group"). Brink's Stock is intended to
reflect the performance of the Pittston Brink's Group (the "Brink's Group") and
Burlington Stock is intended to reflect the performance of the Pittston
Burlington Group (the "Burlington Group").

The financial statements of the Brink's Group include the balance sheets, the
results of operations and cash flows of the Brink's, Incorporated ("Brink's")
and Brink's Home Security, Inc. ("BHS") operations of 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 allocations reflected in
these financial statements are determined based upon methods which management
believes to be a reasonable and equitable allocation of such items (Note 2).

The Company provides to holders of Brink's Stock separate financial statements,
financial review, descriptions of business and other relevant information for
the Brink's Group in addition to the consolidated financial information of the
Company. Notwithstanding the attribution of assets and liabilities (including
contingent liabilities) among the Minerals Group, the Brink's Group and the
Burlington Group for the purpose of preparing their respective financial
statements, this attribution and the change in the capital structure of the
Company as a result of the approval of the Brink's Stock Proposal did not affect
legal title to such assets or responsibility for such liabilities for the
Company or any of its subsidiaries. Holders of Brink's Stock are common
shareholders of the Company, which continues to be responsible for all
liabilities. Financial impacts arising from one group that affect the Company's
financial condition could affect the results of operations and financial
condition of each of the groups. Since financial developments within one group
could affect other groups, all shareholders of the Company could be adversely
affected by an event directly impacting only one group. Accordingly, the
Company's consolidated financial statements must be read in connection with the
Brink's Group's financial statements.

Principles of Combination
The accompanying financial statements reflect the combined accounts of the
businesses comprising the Brink's Group and their majority-owned subsidiaries.
The Brink's Group's interests in 20% to 50% owned companies are carried on the
equity method. All material intercompany items and transactions have been
eliminated in combination. Certain prior year amounts have been reclassified to
conform to the current year's financial statement presentation.

Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits and investments
with original maturities of three months or less.

Short-term Investments
Short-term investments are those with original maturities in excess of three
months, but not exceeding one year, and are carried at cost which approximates
market.

Inventories
Inventories are stated at cost (determined under the first-in, first-out or
average cost method) or market, whichever is lower.

                                       92

Property, Plant and Equipment
Expenditures for maintenance and repairs are charged to expense, and the costs
of renewals and betterments are capitalized. Depreciation is provided
principally on the straight-line method at varying rates depending upon
estimated useful lives.

Subscriber installation costs for home security systems provided by BHS are
capitalized and depreciated over the estimated life of the assets and are
included in machinery and equipment. The security system that is installed
remains the property of BHS and is capitalized at the cost to bring the revenue
producing asset to its intended use. When an installation is identified for
disconnection, the remaining net book value of the installation is fully
written-off and charged to depreciation expense.

Intangibles
The excess of cost over fair value of net assets of businesses acquired is
amortized on a straight-line basis over the estimated periods benefited.

The Brink's Group evaluates the carrying value of intangibles and the periods of
amortization to determine whether events and circumstances warrant revised
estimates of asset value or useful lives. The Brink's Group annually assesses
the recoverability of the excess of cost over net assets acquired by determining
whether the amortization of the asset balance over its remaining life can be
recovered through projected undiscounted future operating cash flows. Evaluation
of asset value as well as periods of amortization are performed on a
disaggregated basis at each of the Brink's Group's operating units.

Income Taxes
Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", which requires
recognition of deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse.

See Note 2 for allocation of the Company's U.S. federal income taxes to the
Brink's Group.

Postretirement Benefits Other Than Pensions
Postretirement benefits other than pensions are accounted for in accordance with
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions", which requires employers to accrue
the cost of such retirement benefits during the employees' service with the
Company.

Net Income Per Common Share
Net Income per common share is computed by dividing the net income by the
weighted-average number of shares outstanding during the period. The potential
dilution from the exercise of stock options is not material. The shares held in
The Pittston Company Employee Benefits Trust (Note 10) are not included in the
net income per share calculations as they were evaluated for inclusion in those
calculations under the treasury stock method and had no dilutive effect.

Foreign Currency Translation
Assets and liabilities of foreign operations have been translated at current
exchange rates, and related revenues and expenses have been translated at
average rates of exchange in effect during the year. Resulting cumulative
translation adjustments have been included in shareholder's equity. Translation
adjustments relating to operations in countries with highly inflationary
economies are included in net income, along with all transaction gains and
losses for the period.

A portion of the Brink's Group's financial results is derived from activities in
several 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 various foreign
currencies in relation to the U.S. dollar. However, the Brink's Group's
international activity is not concentrated in any single currency, which reduces
the risks of foreign currency rate fluctuations.

Revenue Recognition
Brink's--Revenues are recognized when services are performed.

BHS--Monitoring revenues are recognized when earned and amounts paid in advance
are deferred and recognized as income over the applicable monitoring period,
which is generally one year or less. Installation fee revenues are recognized to
the extent of direct selling costs incurred and expensed. Installation fee
revenues in excess of direct selling costs are deferred and recognized as income
on a straight-line basis over ten years.

Use of Estimates
In accordance with generally accepted accounting principles, management of the
Company has made a number of estimates and assumptions relating to the reporting
of assets and liabilities and the disclosure of contingent assets and
liabilities to prepare these financial statements. Actual results could differ
from those estimates.

                                       93

Accounting Changes
In 1996, the Brink's Group adopted Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies to review
for impairment whenever circumstances indicate that the carrying amount of an
asset may not be recoverable. The adoption of this statement did not have an
impact on the Brink's Group's financial statements.

In 1996 the Brink's Group also adopted SFAS No. 123, "Accounting for Stock Based
Compensation". SFAS No. 123 establishes financial accounting and reporting
standards for stock-based employee compensation plans. SFAS No. 123 allows for
the adoption of a fair value based method of accounting for all employee stock
compensation plans or it allows entities to continue to measure compensation
cost for those plans using the intrinsic value based method of accounting
prescribed by Accounting Principles Board Opinion ("APB") No. 25, "Accounting
for Stock Issued to Employees". APB No. 25 requires the disclosure of net income
and net income per share as if the fair value based method of accounting is
applied. The Brink's Group has elected to continue to account for its stock
compensation plans according to APB No. 25 with the disclosure of the impact on
net income and net income per share as if the fair value based method of
accounting is applied (Note 9).

2. RELATED PARTY TRANSACTIONS

The following policies may be modified or rescinded by action of the Board of
Directors (the "Board"), or the Board may adopt additional policies, without
approval of the shareholders of the Company, although the Board has no present
intention to do so. The Company allocated certain corporate general and
administrative expenses, net interest expense and related assets and liabilities
in accordance with the policies described below. Corporate assets and
liabilities are primarily deferred pension assets, income taxes and accrued
liabilities.

Financial
As a matter of policy, the Company manages most financial activities of the
Brink's Group, Burlington Group and Minerals Group on a centralized,
consolidated basis. Such financial activities include the investment of surplus
cash; the issuance, repayment and repurchase of short-term and long-term debt;
the issuance and repurchase of common stock and the payment of dividends. In
preparing these financial statements, transactions primarily related to invested
cash, short-term and long-term debt (including convertible debt), related net
interest and other financial costs have been attributed to the Brink's Group
based upon its cash flows for the periods presented after giving consideration
to the debt and equity structure of the Company. The Company attributes
long-term debt to the Brink's Group based upon the purpose for the debt in
addition to the cash requirements of the Brink's Group. At December 31, 1996 and
1995, none of the long-term debt of the Company was attributed to the Brink's
Group. The portion of the Company's interest expense allocated to the Brink's
Group for 1996, 1995 and 1994 was $106, $120 and $176, respectively. Management
believes such method of allocation to be equitable and a reasonable estimate of
the cost attributable to the Brink's Group.

To the extent borrowings are deemed to occur between the Brink's Group, the
Burlington Group and the Minerals Group, intergroup accounts are established
bearing interest at the rate in effect from time to time under the Company's
unsecured credit lines or, if no such credit lines exist, at the prime rate
charged by Chase Manhattan Bank from time to time. At December 31, 1996 and
1995, the Minerals Group owed the Brink's Group $24,027 and $17,945,
respectively, as the result of borrowings.

Income Taxes
The Brink's Group is included in the consolidated U.S. federal income tax return
filed by the Company.

The Company's consolidated provision and actual cash payments for U.S. federal
income taxes are allocated between the Brink's Group, Burlington Group and
Minerals Group in accordance with the Company's tax allocation policy and
reflected in the financial statements for each Group. In general, the
consolidated tax provision and related tax payments or refunds are allocated
among the Groups, for financial statement purposes, based principally upon the
financial income, taxable income, credits and other amounts directly related to
the respective Group. Tax benefits that cannot be used by the Group generating
such attributes, but can be utilized on a consolidated basis, are allocated to
the Group that generated such benefits and an intergroup account is established
for the benefit of the Group generating the attributes. As a result, the
allocated Group amounts of taxes payable or refundable are not necessarily
comparable to those that would have resulted if the Groups had filed separate
tax returns. At December 31, 1996 and 1995, the Brink's Group owed the Minerals
Group $18,760 and $21,844, respectively, for such tax benefits, of which $8,760
and $7,844, respectively, were not expected to be paid within one year from such
dates in accordance with the policy. The Brink's Group paid the Minerals Group
$14,470 in 1996 and $10,172 in 1995 for the utilization of such tax benefits.

Shared Services
A portion of the Company's corporate general and administrative expenses and
other shared services has been allocated to the Brink's Group based upon
utilization and other methods and

                                       94

criteria which management believes to be equitable and a reasonable estimate of
the cost attributable to the Brink's Group. These allocations were $7,457,
$4,770 and $4,666 in 1996, 1995 and 1994, respectively.

Pension
The Brink's Group's pension cost related to its participation in the Company's
noncontributory defined benefit pension plan is actuarially determined based on
its respective employees and an allocable share of the pension plan assets and
calculated in accordance with Statement of Financial Accounting Standards No.
87, "Employers' Accounting for Pensions" ("SFAS 87"). Pension plan assets have
been allocated to the Brink's Group based on the percentage of its projected
benefit obligation to the plan's total projected benefit obligation. Management
believes such method of allocation to be equitable and a reasonable estimate of
the cost attributable to the Brink's Group.

3. SHAREHOLDER'S EQUITY

The following presents shareholder's equity of the Brink's Group:

                                                        As of December 31
                                                   1996        1995        1994
- --------------------------------------------------------------------------------
Balance at beginning of period                $ 258,805     215,531     175,219
Net income                                       59,695      51,093      41,489
Foreign currency translation adjustment          (1,423)     (6,808)        (25)
Stock options exercised                           1,940       1,114       3,730
Stock released from employee benefits
  trust to employee benefits plan                 5,633       3,371         899
Other                                              --          --           216
Stock repurchases                                (6,936)     (2,303)     (4,146)
Dividends declared                               (3,902)     (3,437)     (3,404)
Cost of Stock Proposals                          (1,238)       --            (1)
Tax benefit of options exercised                    804         244       1,554
- --------------------------------------------------------------------------------
Balance at end of period                      $ 313,378     258,805     215,531
================================================================================

The cumulative foreign currency translation adjustment deducted from
shareholder's equity is $21,467, $20,044 and $13,236 at December 31, 1996, 1995
and 1994, respectively.

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, at cost, consist of the following:

                                                            As of December 31
                                                          1996              1995
- --------------------------------------------------------------------------------
Land                                                  $  5,463             4,461
Buildings                                               78,999            69,135
Machinery and equipment                                413,038           355,481
- --------------------------------------------------------------------------------
Total                                                 $497,500           429,077
================================================================================

The estimated useful lives for property, plant and equipment are as follows:

                                                                           Years
- --------------------------------------------------------------------------------
Buildings                                                               10 to 50
Machinery and equipment                                                  2 to 20
                                                     
Depreciation of property, plant and equipment aggregated $53,285 in 1996,
$42,853 in 1995, $35,992 in 1994.

Changes in capitalized subscriber installation costs for home security systems
included in machinery and equipment were as follows:

                                                        Years Ended December 31
                                                   1996        1995        1994
- --------------------------------------------------------------------------------
Capitalized subscriber installation
  costs--beginning of year                    $ 105,336      81,445      65,785
Capitalized cost of security system
  installations                                  57,194      44,488      32,309
Depreciation, including amounts recognized
  to fully depreciate capitalized costs for
  installations disconnected during the year    (27,680)    (20,597)    (16,649)
- --------------------------------------------------------------------------------
Capitalized subscriber installation
  costs--end of year                          $ 134,850     105,336      81,445
================================================================================

New subscribers were approximately 98,500 in 1996, 82,600 in 1995, and 75,200 in
1994.

                                       95

As of January 1, 1992, BHS elected to capitalize categories of costs not
previously capitalized for home security system installations. This change in
accounting principle is preferable because it more accurately reflects
subscriber installation costs. 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 (in the
amount of $2,517 in 1996, $2,712 in 1995 and $2,645 in 1994) and costs incurred
for maintaining facilities and vehicles dedicated to the installation process
(in the amount of $2,022 in 1996, $1,813 in 1995 and $1,492 in 1994). The effect
of this change in accounting principle was to increase operating profit of the
Brink's Group in 1996, 1995 and 1994 by $4,539, $4,525 and $4,137, respectively,
and net income of the Brink's Group in 1996, 1995 and 1994 by $2,723, $2,720 and
$2,486, respectively, or by $0.07 per share in 1996, 1995 and 1994. Prior to
January 1, 1992, the records needed to identify such costs were not available.
Thus, it was impossible to accurately calculate the effect on retained earnings
as of January 1, 1992. However, the Brink's Group believes the effect on
retained earnings as of January 1, 1992, was immaterial.

Because capitalized subscriber installation costs for prior periods were not
adjusted for the change in accounting principle, installation costs for
subscribers in those years will continue to be depreciated based on the lesser
amounts capitalized in prior periods. Consequently, depreciation of capitalized
subscriber installation costs in the current year and until such capitalized
costs prior to January 1, 1992 are fully depreciated will be less than if such
prior periods' capitalized costs had been adjusted for the change in accounting.
However, the Brink's Group believes the effect on net income in 1996, 1995 and
1994 was immaterial.

5. INTANGIBLES

Intangibles consist entirely of the excess of cost over fair value of net assets
of businesses acquired and are net of accumulated amortization of $8,778 at
December 31, 1996 and $7,793 at December 31, 1995. The estimated useful life of
intangibles is generally forty years. Amortization of intangibles aggregated
$967 in 1996, $958 in 1995 and $882 in 1994.

6. FINANCIAL INSTRUMENTS

Financial instruments which potentially subject the Brink's Group to
concentrations of credit risk consist principally of cash and cash equivalents,
short-term cash investments and trade receivables. The Brink's Group's cash and
cash equivalents and short-term investments are placed with high credit quality
financial institutions. Also, by policy, the amount of credit exposure to any
one financial institution is limited. Concentration of credit risk with respect
to trade receivables are limited due to the large number of customers comprising
the Brink's Group's customer base, and their dispersion across many geographic
areas.

The following details the fair values of financial instruments for which it is
practicable to estimate the value:

Cash and cash equivalents and short-term investments 
The carrying amounts approximate fair value because of the short maturity of
these instruments.

Accounts receivable, accounts payable and accrued liabilities
The carrying amounts approximate fair value because of the short-term nature of
these instruments.

Debt
The aggregate fair value of the Brink's Group's long-term debt obligations,
which is based upon quoted market prices and rates currently available to the
Brink's Group for debt with similar terms and maturities, approximates the
carrying amount.

Off-balance sheet instruments
The Brink's Group utilizes off-balance sheet financial instruments from time to
time to hedge its foreign currency and exposures. The risk that counterparties
to such instruments may be unable to perform is minimized by limiting the
counterparties to major financial institutions. The Brink's Group does not
expect any losses due to such counterparty default.

                                       96

7. INCOME TAXES

The provision (credit) for income taxes consists of the following:

                                  U.S.
                               Federal      Foreign         State         Total
- --------------------------------------------------------------------------------
1996:
Current                        $18,079        8,830         3,100        30,009
Deferred                         1,634       (1,760)          188            62
- --------------------------------------------------------------------------------
Total                          $19,713        7,070         3,288        30,071
================================================================================
1995:
Current                        $16,010        4,615         2,993        23,618
Deferred                           972       (1,550)         (374)         (952)
- --------------------------------------------------------------------------------
Total                          $16,982        3,065         2,619        22,666
================================================================================
1994:
Current                        $12,085        2,873         2,686        17,644
Deferred                         2,188        1,608           532         4,328
- --------------------------------------------------------------------------------
Total                          $14,273        4,481         3,218        21,972
================================================================================

The significant components of the deferred tax expense (benefit) were as
follows:

                                                        Years Ended December 31
                                                     1996       1995       1994
- --------------------------------------------------------------------------------
Deferred tax expense (benefit), exclusive
  of the components listed below                  $ 1,479      1,550      2,892
Net operating loss carryforwards                   (1,851)      (790)       449
Alternative minimum tax credits                       434     (1,712)     1,084
Change in the valuation allowance for
  deferred tax assets                                --         --          (97)
- --------------------------------------------------------------------------------
Total                                             $    62       (952)     4,328
================================================================================

The tax benefit for compensation expense related to the exercise of certain
employee stock options for tax purposes in excess of compensation expense for
financial reporting purposes is recognized as an adjustment to shareholder's
equity.

The components of the net deferred tax liability as of December 31, 1996 and
December 31, 1995 were as follows:

                                                               1996         1995
- --------------------------------------------------------------------------------
Deferred tax assets:
Accounts receivable                                         $ 1,815        1,417
Postretirement benefits other than pensions                   2,191        2,028
Workers' compensation and other claims                        6,208        5,180
Other liabilities and reserves                               14,718       13,561
Miscellaneous                                                 1,113        1,015
Net operating loss carryforwards                              5,206        3,355
Alternative minimum tax credits                              11,149       11,245
- --------------------------------------------------------------------------------
Total deferred tax assets                                    42,400       37,801
- --------------------------------------------------------------------------------
Deferred tax liabilities:
Property, plant and equipment                                25,857       22,063
Pension assets                                               15,287       15,031
Other assets                                                  2,791        2,929
Investments in foreign affiliates                            10,090       11,478
Miscellaneous                                                10,313        9,602
- --------------------------------------------------------------------------------
Total deferred tax liabilities                               64,338       61,103
- --------------------------------------------------------------------------------
Net deferred tax liability                                  $21,938       23,302
================================================================================

The recording of deferred federal tax assets is based upon their expected
utilization in the Company's consolidated federal income tax return and the
benefit that would accrue to the Brink's Group under the Company's tax
allocation policy.

The following table accounts for the difference between the actual tax provision
and the amounts obtained by applying the statutory U.S. federal income tax rate
of 35% in 1996, 1995 and 1994 to the income before income taxes.

                                                        Years Ended December 31
                                                     1996       1995       1994
- --------------------------------------------------------------------------------
Income before income taxes:
United States                                    $ 63,569     59,507     47,419
Foreign                                            26,197     14,252     16,042
- --------------------------------------------------------------------------------
Total                                            $ 89,766     73,759     63,461
================================================================================
Tax provision computed at statutory rate         $ 31,418     25,816     22,211
Increases (reductions) in taxes due to:
State income taxes (net of federal tax
  benefit)                                          2,137      1,702      2,092
Difference between total taxes on foreign
  income and the U.S. federal statutory rate       (4,149)    (5,528)    (3,259)
Miscellaneous                                         665        676        928
- --------------------------------------------------------------------------------
Actual tax provision                             $ 30,071     22,666     21,972
================================================================================

                                       97

It is the policy of the Brink's Group to accrue deferred income taxes on
temporary differences related to the financial statement carrying amounts and
tax bases of investments in foreign subsidiaries and affiliates which are
expected to reverse in the foreseeable future. As of December 31, 1996 and
December 31, 1995, the unrecognized deferred tax liability for temporary
differences of approximately $26,963 and $29,531, respectively, related to
investments in foreign subsidiaries and affiliates that are essentially
permanent in nature and not expected to reverse in the foreseeable future was
approximately $9,437 and $10,336, respectively.

The Brink's Group is included in the Company's consolidated U.S.
federal income tax return.

As of December 31, 1996, the Brink's Group had $11,149 of alternative minimum
tax credits allocated to it under the Company's tax allocation policy. Such
credits are available to offset future U.S. federal income taxes and, under
current tax law, the carryforward period for such credits is unlimited.

The tax benefits of net operating loss carryforwards of the Brink's Group as at
December 31, 1996 were $5,206 and related to various state and foreign taxing
jurisdictions. The expiration periods primarily range from 5 to 15 years.

8. LONG-TERM DEBT

Total long-term debt of the Brink's Group consists of the following:

                                                               As of December 31
                                                                 1996       1995
- --------------------------------------------------------------------------------
Senior obligations:
U.S. dollar term loan due 1996 (year-end
  rate 6.44% in 1995)                                          $ --        1,582
All other                                                       2,566      2,150
- --------------------------------------------------------------------------------
                                                                2,566      3,732
Obligations under capital leases (average rates
  15.24% in 1996 and 13.55% in 1995)                            2,976      2,063
- --------------------------------------------------------------------------------
Total long-term debt, less current maturities                   5,542      5,795

Current maturities of long-term debt:
Other senior obligations                                          331      1,083
U.S. dollar term loan due 1996                                   --        1,869
Capital leases                                                  1,808      1,165
- --------------------------------------------------------------------------------
Total current maturities of long-term debt                      2,139      4,117

Total long-term debt including current maturities              $7,681      9,912
================================================================================

For the four years through December 31, 2001, minimum repayments of long-term
debt outstanding are as follows:

                1998            $2,268
                1999               943
                2000               632
                2001               480

The Company has a $350,000 revolving credit agreement with a syndicate of banks
(the "Facility"). The Facility includes a $100,000 term loan and permits
additional borrowings, repayments and reborrowings of up to an aggregate of
$250,000. During the second quarter of 1996, the maturity date of both the term
loan and the revolving credit portion of the Facility was extended to May 31,
2001. Interest on borrowings under the Facility is payable at rates based on
prime, certificate of deposit, Eurodollar or money market rates. At December 31,
1996, borrowings, in addition to the $100,000 term loan of $23,200 were
outstanding. No portion of the total amount outstanding under the Facility at
December 31, 1996 or December 31, 1995 was attributed to the Brink's Group.

Various international operations maintain lines of credit and overdraft
facilities aggregating approximately $14,800 with a number of banks on either a
secured or unsecured basis. At December 31, 1996, $1,751 was outstanding under
such agreements.

Under the terms of some of its debt instruments, the Company has agreed to
various restrictions relating to the payment of dividends, the repurchase of
capital stock, the maintenance of consolidated net worth, and the amount of
additional funded debt which may be incurred. Allowable restricted payments for
dividends and stock repurchases aggregated $255,810 at December 31, 1996. Under
the terms of the Facility, the Company has agreed to maintain at least $400,000
of Consolidated Net Worth, as defined, and can incur additional indebtedness of
approximately $560,000.

At December 31, 1996, the Company's portion of outstanding unsecured letters of
credit allocated to the Brink's Group was $15,684, primarily supporting the
Brink's Group's obligations under its various self-insurance programs.

                                       98

9. STOCK OPTIONS

The Company has various stock-based compensation plans as described below.

Stock Option Plans
The Company grants options under its 1988 Stock Option Plan (the "1988 Plan") to
executives and key employees and under its Non-Employee Directors' Stock Option
Plan (the "Non-Employee Plan") to outside directors, to purchase common stock at
a price not less than 100% of quoted market value at date of grant. The 1988
Plan options can be granted with a maximum term of ten years and can vest within
six months from the date of grant. The majority of grants made in 1996, 1995 and
1994 have a maximum term of six years and vest 100% at the end of the third
year. The Non-Employee Plan options can be granted with a maximum term of ten
years and can vest within six months from the date of grant. The majority of
grants made in 1996, 1995 and 1994 have a maximum term of six years and vest
ratably over the first three years. The total number of Brink's shares
underlying options authorized for grant, but not yet granted, under the 1988
Plan is 2,460,981. Under the Non-Employee Plan, the total number of shares
underlying options authorized for grant, but not yet granted, is 137,879.

The Company's 1979 Stock Option Plan (the "1979 Plan") and the 1985 Stock Option
Plan (the "1985 Plan") terminated in 1985 and 1988, respectively, except as to
options still outstanding.

As part of the Brink's Stock Proposal (Note 1), the 1988 and Non-Employee Plans
were amended to permit option grants to be made to optionees with respect to
Brink's Stock or Burlington Stock in addition to Minerals Stock. At the time of
the approval of the Brink's Stock Proposal, a total of 2,383,422 shares of
Services Stock were subject to options outstanding under the 1988 Plan, the
Non-Employee Plan, the 1979 Plan and the 1985 Plan. Pursuant to antidilution
provisions in the option agreements covering such plans, the Company converted
these options into options for shares of Brink's Stock or Burlington Stock, or
both, depending on the employment status and responsibilities of the particular
optionee. In the case of optionees having Company-wide responsibilities, each
outstanding Services Stock option was converted into options for both Brink's
Stock and Burlington Stock. In the case of other optionees, each outstanding
option was converted into a new option only for Brink's Stock or Burlington
Stock, as the case may be. As a result, upon approval of the Brink's Stock
Proposal, 1,749,822 shares of Brink's Stock and 1,989,466 shares of Burlington
Stock were subject to options.

The table below summarizes the related plan activity.

                                                                      Aggregate
                                                                       Exercise
                                                        Shares            Price
- --------------------------------------------------------------------------------
Outstanding at December 31, 1995                          --         $     --
Converted in Brink's Stock Proposal                  1,749,822           26,865
Granted                                                369,000            9,527
Exercised                                             (166,211)          (1,800)
Forfeited or expired                                   (37,090)            (734)
- --------------------------------------------------------------------------------

Outstanding at December 31, 1996                     1,915,521       $   33,858
================================================================================

Options exercisable at the end of 1996, 1995 and 1994, respectively, for Brink's
Stock, on an equivalent basis, were 1,098,836, 957,063 and 770,677.

The following table summarizes information about stock options outstanding as of
December 31, 1996.

                   -----------------------------------      --------------------
                                         Stock Options             Stock Options
                                           Outstanding               Exercisable
- --------------------------------------------------------------------------------
                                 Weighted
                                  Average
                                Remaining     Weighted                  Weighted
                              Contractual      Average                   Average
Range of                             Life     Exercise                  Exercise
Exercise Prices       Shares      (Years)        Price       Shares        Price
- --------------------------------------------------------------------------------
$  6.2 to  9.87      439,537         2.55  $      9.29      439,537  $      9.29
  10.5 to 13.79      119,521         3.16        11.77      119,521        11.77
  16.7 to 21.34      994,963         3.63        19.98      539,778        21.23
  25.5 to 29.50      361,500         5.38        25.82         --            N/A
- --------------------------------------------------------------------------------
Total              1,915,521                                           1,098,836
================================================================================

Employee Stock Purchase Plan
Under the 1994 Employee Stock Purchase Plan (the "Plan"), the Company is
authorized to issue up to 750,000 shares of Brink's Stock to its employees who
have six months of service and who complete minimum annual work requirements.
Under the terms of the Plan, employees may elect each six-month period
(beginning January 1 and July 1), to have up to 10 percent of their annual
earnings withheld to purchase the Company's stock. Employees may purchase shares
of any or all of the three classes of Company common stocks. The purchase price
of the stock is 85% of the lower of its beginning-of-the-period or
end-of-the-period market price. Under the Plan, the Company sold

                                       99

44,660 shares and 57,135 shares of Brink's Stock to employees during 1996 and
1995, respectively. The share amounts for Brink's Stock include the restatement
for the Services Stock conversion under the Brink's Stock Proposal (Note 1).

Accounting For Plans
The Company has adopted the disclosure - only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation", but applies APB Opinion No. 25 and
related Interpretations in accounting for its plans. Accordingly, no
compensation cost has been recognized in the accompanying financial statements.
Had compensation costs for the Company's plans been determined based on the fair
value of awards at the grant dates, consistent with SFAS No. 123, the Brink's
Group's net income and net income per share would approximate the pro forma
amounts indicated below:

                                                         Years Ended December 31
                                                                 1996       1995
- --------------------------------------------------------------------------------
Net Income attributed to common shares
Brink's Group
  As Reported                                                $ 59,695     51,093
  Pro Forma                                                    58,389     50,432
Net Income per common share
Brink's Group
  As Reported                                                    1.56       1.35
  Pro Forma                                                      1.53       1.33
================================================================================

Note: The pro forma disclosures shown may not be representative of the effects
on reported net income in future years.

The fair value of each stock option grant used to compute pro forma net income
and earnings per share disclosures is estimated at the time of the grant using
the Black-Scholes option-pricing model. The weighted-average assumptions used in
the model are as follows:

                                                                 1996       1995
- --------------------------------------------------------------------------------
Expected dividend yield                                          0.4%       0.4%
Expected volatility                                               30%        30%
Risk-free interest rate                                          6.3%       5.8%
Expected term (in years)                                          4.7        4.7
================================================================================

Using these assumptions in the Black-Scholes model, the weighted-average fair
value of options granted during 1996 and 1995 is $3,341 and $2,317,
respectively.

Under SFAS 123, compensation cost is also recognized for the fair value of
employee stock purchase rights. Because the Company settles its employee stock
purchase rights under the Plan at the end of each six-month offering period, the
fair value of these purchase rights was calculated using actual market
settlement data. The weighted-average fair value of the stock purchase rights
granted in 1996 and 1995 was $224 and $330, respectively, for the Brink's Group.

10. CAPITAL STOCK

The Company, at any time, has the right to exchange each outstanding share of
Burlington Stock for shares of Brink's Stock (or, if no Brink's Stock is then
outstanding, Minerals Stock) having a fair market value equal to 115% of the
fair market value of one share of Burlington Stock. In addition, upon the
disposition of all or substantially all of the properties and assets of the
Burlington Group to any person (with certain exceptions), the Company is
required to exchange each outstanding share of Burlington Stock for shares of
Brink's Stock (or, if no Brink's Stock is then outstanding, Minerals Stock)
having a fair market value equal to 115% of the fair market value of one share
of Burlington Stock.

The Company, at any time has the right, to exchange each outstanding share of
Minerals Stock, which was previously subject to exchange for shares of Services
Stock, for shares of Brink's Stock (or, if no Brink's Stock is then outstanding,
Burlington Stock) having a fair market value equal to 115% of the fair market
value of one share of Minerals Stock. In addition, upon the disposition of all
or substantially all of the properties and assets of the Minerals Group to any
person (with certain exceptions), the Company is required to exchange each
outstanding share of Minerals Stock for shares of Brink's Stock (or, if no
Brink's Stock is then outstanding, Burlington Stock) having a fair market value
equal to 115% of the fair market value of one share of Minerals Stock. If any
shares of the Company's Preferred Stock are converted after an exchange of
Minerals Stock for Brink's Stock (or Burlington Stock), the holder of such
Preferred Stock would, upon conversion, receive shares of Brink's Stock (or
Burlington Stock) in lieu of shares of Minerals Stock otherwise issuable upon
such conversion.

Shares of Brink's Stock are not subject to either optional or mandatory
exchange. The net proceeds of any disposition of properties and assets of the
Brink's Group will be attributed to the Brink's Group. In the case of a
disposition of all or substantially all the properties and assets of any other
group, the net proceeds will be attributed to the group the shares of which have
been issued in exchange for shares of the selling group.

                                      100

Holders of Brink's Stock at all times have one vote per share. Holders of
Burlington Stock and Minerals Stock have one and 0.626 votes per share,
respectively, subject to adjustment on January 1, 1998, and on January 1 every
two years thereafter in such a manner that each class' share of the aggregate
voting power at such time will be equal to that class' share of the aggregate
market capitalization of the Company's common stock at such time. Accordingly,
on each adjustment date, each share of Burlington Stock and Minerals Stock may
have more than, less than or continue to have the number of votes per share as
they have. Holders of Brink's Stock, Burlington Stock and Minerals Stock vote
together as a single voting group on all matters as to which all common
shareholders are entitled to vote. In addition, as prescribed by Virginia law,
certain amendments to the Articles of Incorporation affecting, among other
things, the designation, rights, preferences or limitations of one class of
common stock, or certain mergers or statutory share exchanges, must be approved
by the holders of such class of common stock, voting as a group, and, in certain
circumstances, may also have to be approved by the holders of the other classes
of common stock, voting as separate voting groups.

In the event of a dissolution, liquidation or winding up of the Company, the
holders of Brink's Stock, Burlington Stock and Minerals Stock, effective January
19, 1996, share on a per share basis an aggregate amount equal to 55%, 28% and
17%, respectively, of the funds, if any, remaining for distribution to the
common shareholders. In the case of Minerals Stock, such percentage has been
set, using a nominal number of shares of Minerals Stock of 4,202,954 (the
"Nominal Shares") in excess of the actual number of shares of Minerals Stock
outstanding, to ensure that the holders of Minerals Stock are entitled to the
same share of any such funds immediately following the consummation of the
transactions as they were prior thereto. These liquidation percentages are
subject to adjustment in proportion to the relative change in the total number
of shares of Brink's Stock, Burlington Stock and Minerals Stock, as the case may
be, then outstanding to the total number of shares of all other classes of
common stock then outstanding (which totals, in the case of Minerals Stock,
shall include the Nominal Shares).

In November 1995, the Board of Directors (the "Board") authorized a revised
share repurchase program which allowed for the purchase , from time to time, of
up to 1,500,000 shares of Brink's Stock not to exceed an aggregate purchase
price of $45,000 for all common stock of the Company; such shares to be
purchased from time to time in the open market or in private transactions, as
conditions warrant. During 1996, 278,000 shares of Brink's Stock were
repurchased at a cost of $6,937. The program to repurchase shares remains in
effect in 1997.

Dividends paid to holders of Brink's Stock are limited to funds of the Company
legally available for the payment of dividends. Amounts available for dividends
may be further limited by covenants in the Company's public debt indentures and
bank credit agreements. See the Company's consolidated financial statements and
related footnotes. Subject to these limitations, the Company's Board, although
there is no requirement to do so, intends to declare and pay dividends on the
Brink's Stock based primarily on the earnings, financial condition, cash flow
and business requirements of the Brink's Group.

The Company has the authority to issue up to 2,000,000 shares of preferred
stock, par value $10 per share. In January 1994, the Company issued $80,500 or
161,000 shares of Series C Cumulative Convertible Preferred Stock (the
"Convertible Preferred Stock"). The Convertible Preferred Stock, which is
convertible into Minerals Stock and which has been attributed to the Minerals
Group, pays an annual dividend of $31.25 per share payable quarterly, in cash,
in arrears, out of all funds of the Company legally available therefore, when as
and if, declared by the Board. Payment of dividends commenced on March 1, 1994.
Such stock also bears a liquidation preference of $500 per share, plus an amount
equal to accrued and unpaid dividends thereon.

In 1994, the Board authorized the repurchase from time to time of up to $15,000
of Convertible Preferred Stock. Subsequent to the authorization and through
October 1995, 24,720 shares at a total cost of $9,624 had been repurchased, of
which 16,370 shares at a total cost of $6,258 were purchased in 1995. In
November 1995, the Board authorized an increase in the remaining authority to
$15,000. No additional share repurchases were made during the remainder of 1995
subsequent to the increased authorization. In 1996, 20,920 shares at a total
cost of $7,897 were repurchased. The program to acquire shares remains in effect
in 1997, and in February 1997, the Board authorized an increase in the remaining
repurchase authority to $15 million.

In 1996 and 1995, dividends paid on such stock amounted to $3,795 and $4,341,
respectively. Preferred dividends included on the Company's Statements of
Operations for the years ended December 31, 1996 and 1995, are net of $2,120 and
$1,579, respectively, which was the excess of the carrying amount of the
Convertible Preferred Stock over the cash paid to holders of the stock for
repurchases made during the year.

                                      101

In December 1992, the Company formed the Pittston Company Employee Benefits
Trust (the "Trust") to hold shares of its common stock to fund obligations under
certain employee benefits programs not including stock option plans. The trust
first began funding obligations under the Company's various stock option plans
in September 1995. Upon formation of the Trust, the Company sold for a
promissory note of the Trust, 4,000,000 shares of its common stock to the Trust
at a price equal to the fair value of the stock on the date of sale. Upon
approval of the Brink's Stock Proposal, 3,537,811 shares in the Trust were
redesignated as Brink's Stock. At December 31, 1996, 3,141,493 shares of Brink's
Stock (3,552,906 in 1995) remained in the Trust, valued at market. The value of
these shares has no impact on shareholder's equity.

11. LEASES

The Brink's Group's businesses lease facilities, vehicles, computers and other
equipment under long-term operating leases with varying terms, and most of the
leases contain renewal and/or purchase options. As of December 31, 1996,
aggregate future minimum lease payments under noncancellable operating leases
were as follows:

                                                       Equipment
                                      Facilities         & Other           Total
- --------------------------------------------------------------------------------
1997                                     $15,667           3,460          19,127
1998                                      13,725           2,852          16,577
1999                                       9,973           1,552          11,525
2000                                       7,902             837           8,739
2001                                       7,156             330           7,486
2002                                       6,373             141           6,514
2003                                       6,132             139           6,271
2004                                       6,112            --             6,112
2005                                       6,078            --             6,078
Later Years                               14,195            --            14,195
- --------------------------------------------------------------------------------
Total                                    $93,313           9,311         102,624
================================================================================

These amounts are net of aggregate future minimum non-cancelable sublease
rentals of $1,514.

Net rent expense amounted to $25,499 in 1996, $23,469 in 1995 and $17,419 in
1994.

The Brink's Group incurred capital lease obligations of $1,923 in 1996, $648 in
1995 and $1,651 in 1994. As of December 31, 1996, the Brink's Group's
obligations under capital leases were not significant (Note 8).

12. EMPLOYEE BENEFIT PLANS

The Brink's Group's businesses participate in the Company's noncontributory
defined benefit pension plan covering substantially all nonunion employees who
meet certain minimum requirements in addition to sponsoring certain other
defined benefit plans. Benefits under most of the plans are based on salary
(including commissions, bonuses, overtime and premium pay) and years of service.
The Brink's Group's pension cost relating to its participation in the Company's
defined benefit pension plan is actuarially determined based on its respective
employees and an allocable share of the pension plan assets. The Company's
policy is to fund the actuarially determined amounts necessary to provide assets
sufficient to meet the benefits to be paid to plan participants in accordance
with applicable regulations. The net pension expense (credit) for 1996, 1995 and
1994 for all plans is as follows:

                                                        Years Ended December 31
                                                     1996       1995       1994 
- --------------------------------------------------------------------------------
Service cost--benefits earned during year        $  7,125      5,031      5,551
Interest cost on projected
  benefit obligation                                9,788      8,719      7,838
Return on assets--actual                          (23,485)   (28,019)    (1,750)
(Loss) return on assets--deferred                   8,643     14,717    (10,910)
Other amortization, net                              (243)      (505)      (472)
- --------------------------------------------------------------------------------
Net pension expense (credit)                     $  1,828        (57)       257
================================================================================

The assumptions used in determining the net pension expense (credit) for the
Company's primary pension plan were as follows:

                                                         Years Ended December 31
                                                            1996    1995    1994
- --------------------------------------------------------------------------------
Interest cost on projected benefit obligation               7.5%   8.75%    7.5%
Expected long-term rate of return on assets                10.0%   10.0%   10.0%
Rate of increase in compensation levels                     4.0%    4.0%    4.0%
================================================================================

                                      102

The funded status and prepaid pension expense at December 31, 1996 and 1995 are
as follows:

                                                             1996          1995
- --------------------------------------------------------------------------------
Actuarial present value of accumulated
  benefit obligation:
  Vested                                                $ 112,224       104,120
  Nonvested                                                 8,978         8,282
- --------------------------------------------------------------------------------
                                                          121,202       112,402
Benefits attributable to projected salaries                21,714        18,966
- --------------------------------------------------------------------------------
Projected benefit obligation                              142,916       131,368
Plan assets at fair value                                 177,837       159,555
- --------------------------------------------------------------------------------
Excess of plan assets over projected
  benefit obligation                                       34,921        28,187
Unamortized initial net asset                              (2,318)       (2,918)
Unrecognized experience (gain) loss                        (1,122)        6,781
Unrecognized prior service cost                             1,158         1,385
- --------------------------------------------------------------------------------
Net pension assets                                         32,639        33,435
Current pension liabilities                                 1,031           488
- --------------------------------------------------------------------------------
Deferred pension assets per balance sheet               $  33,670        33,923
================================================================================

For the valuation of the Company's primary pension obligations and the
calculation of the funded status, the discount rate was 8% in 1996 and 7.5% in
1995. The expected long-term rate of return on assets was 10% in both years. The
rate of increase in compensation levels used was 4% in 1996 and 1995.

The unrecognized initial net asset at January 1, 1986 (January 1, 1989, for
certain foreign pension plans), the date of adoption of SFAS 87, has been
amortized over the estimated remaining average service life of the employees. As
of December 31, 1996, approximately 64% of plan assets were invested in equity
securities and 36% in fixed income securities.

The Brink's Group also provides certain postretirement health care and life
insurance benefits for eligible active and retired employees in the United
States and Canada.

For the years 1996, 1995 and 1994, the components of periodic expense for these
postretirement benefits were as follows:

                                                         Years Ended December 31
                                                          1996     1995     1994
- --------------------------------------------------------------------------------
Service cost--benefits earned during the year             $ 92       68       86
Interest cost on accumulated postretirement
  benefit obligation                                       248      240      232
- --------------------------------------------------------------------------------
Total expense                                             $340      308      318
================================================================================

Interest costs on the accumulated postretirement benefit obligation were based
upon rates of 7.5% in 1996, 8.75% in 1995 and 7.5% in 1994.

At December 31, 1996 and 1995, the actuarial and recorded liabilities for these
postretirement benefits, none of which have been funded, were as follows:

                                                         Years Ended December 31
                                                                1996        1995
- --------------------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees                                                      $1,566       1,632
Fully eligible active plan participants                          791         777
Other active plan participants                                 1,155       1,195
- --------------------------------------------------------------------------------
                                                               3,512       3,604
Unrecognized experience gain                                     605         155
- --------------------------------------------------------------------------------
Liability included on the balance sheet                        4,117       3,759
Less current portion                                             282         284
- --------------------------------------------------------------------------------
Noncurrent liability for postretirement health
  care and life insurance benefits                            $3,835       3,475
================================================================================

The accumulated postretirement benefit obligation was determined using the unit
credit method and an assumed discount rate of 8% in 1996 and 7.5% in 1995. The
postretirement benefit obligation for U.S. salaried employees does not provide
for changes in health care costs since the employer's contribution to the plan
is a fixed amount. The assumed health care cost trend rate used in 1996 for
employees under a foreign plan was 8.24% grading down to 5% in the year 2001.

The Brink's Group also participates in the Company's Savings-Investment Plan to
assist eligible employees in providing for retirement or other future financial
needs. Employee contributions are matched at rates of 75% to 125% up to 5% of
compensation (subject to certain limitations imposed by the Internal Revenue
Code of 1986, as amended). Contribution expense under the plan aggregated $3,612
in 1996, $2,794 in 1995 and $2,706 in 1994.

13. OTHER OPERATING INCOME

Other operating income includes the Brink's Group's share of net income of
unconsolidated affiliated companies carried on the equity method of $1,941, $136
and $6,048 for 1996, 1995 and 1994, respectively.

                                      103

Summarized financial information presented includes the accounts of the
following equity affiliates(a):

                                                                       Ownership
                                                            At December 31, 1996
- --------------------------------------------------------------------------------
Servicio Pan Americano De Protecion, S.A. (Mexico)                         20.0%
Brink's Panama, S.A.                                                       49.0%
Brink's S.A. (France)                                                      38.0%
Brink's Schenker, GmbH (Germany)                                           50.0%
Brink's Securmark S.p.A. (Italy)                                           24.5%
Security Services (Brink's Jordan), W.L.L.                                 45.0%
Brink's-Allied Limited (Ireland)                                           50.0%
Brink's Arya India Private Limited                                         40.0%
Brink's Pakistan (Pvt.) Limited                                            49.0%
Brink's Taiwan Limited                                                     50.0%
Brink's (Thailand) Ltd.                                                    40.0%
================================================================================

                                               1996          1995           1994
- --------------------------------------------------------------------------------
Revenues                                   $660,916       715,423        784,699
Gross profit                                 73,632        58,661        147,468
Net income (loss)                            10,427        (6,048)        22,661
Current assets                              171,336       155,687        149,367
Noncurrent assets                           197,642       218,019        291,085
Current liabilities                         168,986       209,016        135,824
Noncurrent liabilities                      109,972        80,860        156,375
Net equity                                   90,020        83,830        148,253
================================================================================

(a) Also includes amounts related to equity affiliates who were either sold
prior to December 31, 1996 or became consolidated affiliates through increased
ownership prior to December 31, 1996.

Undistributed earnings of such companies approximated $31,000 at December 31,
1996.

14. SEGMENT INFORMATION

Operating revenues by geographic area are as follows:

                                                    Years Ended December 31
                                                1996          1995          1994
- --------------------------------------------------------------------------------
United States                               $528,362       464,738       406,828
Brazil                                       123,237       106,678        70,492
Other international                          258,214       216,979       179,673
- --------------------------------------------------------------------------------
Total operating revenues                    $909,813       788,395       656,993
================================================================================

The following is derived from the business segment information in the Company's
consolidated financial statements as it relates to the Brink's Group. See Note
2, Related Party Transactions, for a description of the Company's policy for
corporate allocations.

The Brink's Group's portion of the Company's operating profit is as follows:

                                                    Years Ended December 31
                                                 1996         1995         1994
- --------------------------------------------------------------------------------
United States                               $  70,701       63,362       51,343
Brazil                                          6,943        5,329        3,162
Other international                            24,051       13,553       17,637
- --------------------------------------------------------------------------------
Brink's Group's portion of the
  Company's segment operating profit          101,695       82,244       72,142
Allocated general corporate
  expense                                      (7,457)      (4,770)      (4,666)
- --------------------------------------------------------------------------------
Total operating profit                      $  94,238       77,474       67,476
================================================================================

The Brink's Group's portion of the Company's assets at year end is as follows:

                                                     Years Ended December 31
                                                  1996         1995         1994
- --------------------------------------------------------------------------------
United States                                 $280,687      240,397      203,364
Brazil                                          34,976       29,492       25,843
Other international                            175,251      167,834      155,981
- --------------------------------------------------------------------------------
Brink's Group's portion of the
  Company's assets                             490,914      437,723      385,188
Brink's Group's portion of
  corporate assets                              35,409       24,697       24,503
Deferred tax reclass                            25,342       22,306       17,196
- --------------------------------------------------------------------------------
Total assets                                  $551,665      484,726      426,887
================================================================================

Industry segment information is as follows:

                                                     Years Ended December 31
                                                 1996         1995         1994
- --------------------------------------------------------------------------------
Revenues:
Brink's                                     $ 754,011      659,459      547,046
BHS                                           155,802      128,936      109,947
- --------------------------------------------------------------------------------
Total revenues                              $ 909,813      788,395      656,993
================================================================================
Operating Profit:
Brink's (a)                                 $  56,823       42,738       39,710
BHS (b)                                        44,872       39,506       32,432
- --------------------------------------------------------------------------------
Segment operating profit                      101,695       82,244       72,142
Allocated general corporate expense            (7,457)      (4,770)      (4,666)
- --------------------------------------------------------------------------------
Total operating profit                      $  94,238       77,474       67,476
================================================================================

(a) Includes equity in net income of unconsolidated foreign affiliates of $1,941
in 1996, $136 in 1995 and $6,048 in 1994 (Note 13).

(b) As of January 1, 1992, BHS elected to capitalize categories of costs not
previously capitalized for home security installations to more accurately
reflect subscriber installation costs. The effect of this change in accounting
principle was to increase operating profit $4,539 in 1996, $4,525 in 1995 and
$4,137 in 1994 (Note 4).

                                      104

        
                                                          As of December 31
                                                    1996        1995        1994
- --------------------------------------------------------------------------------
Capital Expenditures:
Brink's                                         $ 34,072      23,063      23,963
BHS                                               61,522      47,256      34,071
Allocated general corporate                        2,083         111          60
- --------------------------------------------------------------------------------
Total capital expenditures                      $ 97,677      70,430      58,094
================================================================================
Depreciation and Amortization:
Brink's                                         $ 24,293      21,844      20,553
BHS                                               30,115      22,408      17,817
Allocated general corporate expense                  158         105          93
- --------------------------------------------------------------------------------
Total depreciation and amortization             $ 54,566      44,357      38,463
================================================================================
Assets at December 31:
Brink's                                          340,922     321,022     297,816
BHS                                              149,992     116,701      87,372
- --------------------------------------------------------------------------------
Identifiable assets                              490,914     437,723     385,188
Allocated portion of the Company's
  corporate assets                                35,409      24,697      24,503
Deferred tax reclass                              25,342      22,306      17,196
- --------------------------------------------------------------------------------
Total assets                                    $551,665     484,726     426,887
================================================================================

15. CONTINGENT LIABILITIES

Under the Coal Industry Retiree Health Benefit Act of 1992 (the "Act"), the
Company and its majority-owned subsidiaries at July 20, 1992, including certain
companies of the Brink's Group included in these financial statements, are
jointly and severally liable with the Burlington Group and of the Minerals Group
for the costs of certain companies of health care coverage provided for by that
Act. For a description of the Act and an estimate of certain of such costs, see
Note 13 to the Company's consolidated financial statements. At this time, the
Company expects the Minerals Group to generate sufficient cash flow to discharge
its obligations under the Act.

In April 1990, the Company entered into a settlement agreement to resolve
certain environmental claims against the Company arising from hydrocarbon
contamination at a petroleum terminal facility ("Tankport") in Jersey City, New
Jersey, which operations were sold in 1983. Under the settlement agreement, the
Company is obligated to pay 80% of the remediation costs. Based on data
available to the Company and its environmental consultants, the Company
estimates its portion of the cleanup costs on an undiscounted basis using
existing technologies to be between $6,900 and $17,000 over a period of up to
five years. Management is unable to determine that any amount within that range
is a better estimate due to a variety of uncertainties, which include the extent
of the contamination at the site, the permitted technologies for remediation and
the regulatory standards by which the clean-up will be conducted. The clean-up
estimates have been modified from prior years' in light of cost inflation. The
estimate of costs and the timing of payments could change as a result of changes
to the remediation plan required, changes in the technology available to treat
the site, unforseen circumstances existing at the site and additional cost
inflation.

The Company commenced insurance coverage litigation in 1990, in the United
States District Court for the District of New Jersey, seeking a declaratory
judgment that all amounts payable by the Company pursuant to the Tankport
obligation were reimbursable under comprehensive general liability and pollution
liability policies maintained by the Company. In August 1995, the District Court
ruled on various Motions for Summary Judgement. In its decision, the Court found
favorably for the Company on several matters relating to the comprehensive
general liability policies but concluded that the pollution liability policies
did not contain pollution coverage for the types of claims associated with the
Tankport site. The Company has appealed the District Court's decision to the
Third Circuit. However, management and its outside legal counsel continue to
believe that recovery of a substantial portion of the cleanup costs will
ultimately be probable of realization. Accordingly, it is the Company's belief
that, based on estimates of potential liability and probable realization of
insurance recoveries, the Company would be liable for approximately $1,400 based
on the Court's decision and related developments of New Jersey law.

16. SUPPLEMENTAL CASH FLOW INFORMATION

For the years ended December 31, 1996, 1995 and 1994, cash payments for income
taxes, net of refunds received, were $33,718, $22,352 and $19,277, respectively.

For the years ended December 31, 1996, 1995 and 1994, cash payments for interest
were $1,825, $1,663 and $2,502, respectively.

17. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Tabulated below are certain data for each quarter of 1996 and 1995.

                                            1st        2nd        3rd        4th
- --------------------------------------------------------------------------------
1996 Quarters:
Operating revenues                     $212,560    222,055    232,022    243,176
Gross profit                             49,994     52,613     57,043     62,988

Net income                               11,839     14,034     15,841     17,981
Per Pittston Brink's Group
  Common Share:
Net income                             $    .31        .37        .41        .47

1995 Quarters:
Operating revenues                     $179,400    185,606    208,958    214,431
Gross profit                             39,876     44,242     50,803     53,791
Net income                                9,546     11,965     14,613     14,969

Per Pittston Brink's Group
  Common Share:
Net income                             $    .25        .32        .39        .39

                                      105

Pittston Burlington Group
- --------------------------------------------------------------------------------
STATEMENT OF MANAGEMENT RESPONSIBILITY
- --------------------------------------------------------------------------------

The management of The Pittston Company (the "Company") is responsible for
preparing the accompanying Pittston Burlington Group (the "Burlington Group")
financial statements and for their integrity and objectivity. The statements
were prepared in accordance with generally accepted accounting principles.
Management has also prepared the other information in the annual report and is
responsible for its accuracy.

In meeting our responsibility for the integrity of the financial statements, we
maintain a system of internal controls designed to provide reasonable assurance
that assets are safeguarded, that transactions are executed in accordance with
management's authorization and that the accounting records provide a reliable
basis for the preparation of the financial statements. Qualified personnel
throughout the organization maintain and monitor these internal controls on an
ongoing basis. In addition, the Company maintains an internal audit department
that systematically reviews and reports on the adequacy and effectiveness of the
controls, with management follow-up as appropriate.

Management has also established a formal Business Code of Ethics which is
distributed throughout the Company. We acknowledge our responsibility to
establish and preserve an environment in which all employees properly understand
the fundamental importance of high ethical standards in the conduct of our
business.

The accompanying financial statements have been audited by KPMG Peat Marwick
LLP, independent auditors. During the audit they review and make appropriate
tests of accounting records and internal controls to the extent they consider
necessary to express an opinion on the Burlington Group's financial statements.

The Company's Board of Directors pursues its oversight role with respect to the
Burlington Group's financial statements through the Audit and Ethics Committee,
which is composed solely of outside directors. The Committee meets periodically
with the independent auditors, internal auditors and management to review the
Company's control system and to ensure compliance with applicable laws and the
Company's Business Code of Ethics.

We believe that the policies and procedures described above are appropriate and
effective and do enable us to meet our responsibility for the integrity of the
Burlington Group's financial statements.

- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------

The Board of Directors and Shareholders
The Pittston Company

We have audited the accompanying balance sheets of Pittston Burlington Group (as
described in Note 1) as of December 31, 1996 and 1995, and the related
statements of operations and cash flows for each of the years in the three-year
period ended December 31, 1996. These financial statements are the
responsibility of The Pittston Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements of Pittston Burlington Group present
fairly, in all material respects, the financial position of Pittston Burlington
Group as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for each of the years in the three-year period ended December 31,
1996, in conformity with generally accepted accounting principles.

As more fully discussed in Note 1, the financial statements of Pittston
Burlington Group should be read in connection with the audited consolidated
financial statements of The Pittston Company and subsidiaries.

KPMG PEAT MARWICK LLP

KPMG Peat Marwick LLP
Stamford, Connecticut

January 23, 1997

                                      106

Pittston Burlington Group
- --------------------------------------------------------------------------------
BALANCE SHEETS
- --------------------------------------------------------------------------------

                                                                   December 31
(In thousands)                                                   1996       1995
================================================================================
ASSETS
Current assets:
Cash and cash equivalents                                    $ 17,818     25,847
Accounts receivable:                                                   
  Trade                                                       240,905    218,081
  Other                                                        11,277     11,973
- --------------------------------------------------------------------------------
                                                              252,182    230,054
  Less estimated amount uncollectible                           9,528     10,373
- --------------------------------------------------------------------------------
                                                              242,654    219,681
Receivable--Pittston Minerals Group (Note 2)                     --        5,910
Inventories                                                     2,251      1,684
Prepaid expenses                                               12,459     13,603
Deferred income taxes (Note 7)                                  7,847     11,512
- --------------------------------------------------------------------------------
Total current assets                                          283,029    278,237
Property, plant and equipment, at cost (Note 4)               176,183    128,440
  Less accumulated depreciation and amortization               62,900     56,269
- --------------------------------------------------------------------------------
                                                              113,283     72,171
Intangibles, net of amortization (Note 5)                     177,797    180,739
Deferred pension assets (Note 12)                               9,504     10,427
Deferred income taxes (Note 7)                                 19,015     12,875
Other assets                                                   13,046     17,628
- --------------------------------------------------------------------------------
Total assets                                                 $615,674    572,077
================================================================================
                                                                       
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Short-term borrowings                                        $ 29,918     32,181
Current maturities of long-term debt (Note 8)                   2,916      1,964
Accounts payable                                              155,474    157,770
Payable--Pittston Minerals Group (Note 2)                       3,270       --
Accrued liabilities:                                                   
  Taxes                                                         6,343     13,760
  Workers' compensation and other claims                        2,614      4,059
  Payroll and vacation                                         10,207      8,837
  Miscellaneous (Note 12)                                      48,135     35,655
- --------------------------------------------------------------------------------
                                                               67,299     62,311
- --------------------------------------------------------------------------------
Total current liabilities                                     258,877    254,226
                                                                       
Long-term debt, less current maturities (Note 8)               28,723     26,697
Postretirement benefits other than pensions (Note 12)           3,145      2,713
Deferred income taxes (Note 7)                                  1,880      1,996
Payable--Pittston Minerals Group (Note 2)                      13,310      8,029
Other liabilities                                               4,750      6,563
Commitments and contingent liabilities (Notes 8, 11 and 14)            
Shareholder's equity (Notes 3, 9 and 10)                      304,989    271,853
- --------------------------------------------------------------------------------
Total liabilities and shareholder's equity                   $615,674    572,077
================================================================================
                                                                       
See accompanying notes to financial statements.                        

                                      107

Pittston Burlington Group
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------

                                                   Years Ended December 31
(In thousands, except per share amounts)       1996          1995          1994
================================================================================
Operating revenue                       $ 1,500,318     1,414,821     1,215,284
- --------------------------------------------------------------------------------
Costs and expenses:
Operating expenses                        1,317,423     1,245,721     1,043,895
Selling, general and
administrativeexpenses                      127,254       117,980       110,036
- --------------------------------------------------------------------------------
Total costs and expenses                  1,444,677     1,363,701     1,153,931
- --------------------------------------------------------------------------------
Other operating income, net                   1,530         2,833         3,206
- --------------------------------------------------------------------------------
Operating profit                             57,171        53,953        64,559
Interest income                               2,463         4,430         2,127
Interest expense (Note 2)                    (4,097)       (5,108)       (3,847)
Other expense, net                           (2,028)       (1,702)       (1,629)
- --------------------------------------------------------------------------------
Income before income taxes                   53,509        51,573        61,210
Provision for income taxes (Note 7)          19,708        18,718        22,854
- --------------------------------------------------------------------------------
Net income                              $    33,801        32,855        38,356
================================================================================
Net income per common share (Note 1)    $      1.76          1.73          2.03
================================================================================
Average common shares outstanding            19,223        18,966        18,892

See accompanying notes to financial statements.

                                      108

Pittston Burlington Group
- --------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------

                                                              Years Ended December 31
(In thousands)                                               1996       1995       1994
=======================================================================================
                                                                           
Cash flows from operating activities:
Net income                                               $ 33,801     32,855     38,356
Adjustments to reconcile net income to net
 cash provided by operating activities:
  Noncash charges and other write-offs                       --         --          306
  Depreciation and amortization                            23,427     19,972     17,319
  Provision for aircraft heavy maintenance                 32,057     26,317     26,598
  Credit for deferred income taxes                         (2,830)    (4,345)    (5,256)
  Provision for pensions, noncurrent                        1,461        218        203
  Provision for uncollectible accounts receivable           3,009      2,336      3,054
  Equity in earnings of unconsolidated affiliates,
   net of dividends received                                 (126)      (194)      (118)
  Loss on sale of property, plant and equipment               130        209         39
  Other operating, net                                      1,912        828        343
  Change in operating assets and liabilities,
   net of effects of acquisitions and dispositions:
    Increase in accounts receivable                       (25,981)   (38,946)   (45,084)
    (Increase) decrease in inventories                       (569)       351       (242)
    Decrease (increase) in prepaid expenses                 1,249     (4,127)     1,575
    (Decrease) increase in accounts payable
      and accrued liabilities                              (2,594)     5,193     64,615
    (Increase) decrease in other assets                      (272)      (551)       272
    (Decrease) increase in other liabilities                 (824)       642      1,000
    Other, net                                               (761)    (1,270)       860
- ---------------------------------------------------------------------------------------
Net cash provided by operating activities                  63,089     39,488    103,840
- ---------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment                (61,321)   (32,399)   (24,005)
Proceeds from disposal of property, plant and equipment     3,898        422      1,467
Aircraft heavy maintenance expenditures                   (23,373)   (22,356)   (15,333)
Acquisitions, net of cash acquired, and
 related contingency payments                              (2,944)    (1,338)    (5,938)
Other, net                                                  4,757      3,683      3,775
- ---------------------------------------------------------------------------------------
Net cash used by investing activities                     (78,983)   (51,988)   (40,034)
- ---------------------------------------------------------------------------------------
Cash flows from financing activities:
Additions to debt                                           3,584     28,060     31,790
Reductions of debt                                         (3,948)    (2,834)   (30,482)
Payments from (to)--Minerals Group                         12,179       (878)   (55,731)
Repurchase of common stock                                 (1,406)    (1,132)    (2,042)
Proceeds from exercise of stock options
 and employee stock purchase plan                           3,207        951      1,837
Other                                                        --         --          106
Dividends paid                                             (4,514)    (4,204)    (4,154)
Cost of stock proposals                                    (1,237)      --           (1)
- ---------------------------------------------------------------------------------------
Net cash provided (used) by financing activities            7,865     19,963    (58,677)
- ---------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents       (8,029)     7,463      5,129
Cash and cash equivalents at beginning of period           25,847     18,384     13,255
- ---------------------------------------------------------------------------------------
Cash and cash equivalents at end of period               $ 17,818     25,847     18,384
=======================================================================================

See accompanying notes to financial statements.

                                      109

Pittston Burlington Group
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

(Dollars in thousands, except per share amounts)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
On January 18, 1996, the shareholders of The Pittston Company (the "Company")
approved the Brink's Stock Proposal, as described in the Company's proxy
statement dated December 15, 1995, resulting in the modification, effective as
of January 19, 1996, of the capital structure of the Company to include an
additional class of common stock. The outstanding shares of Pittston Services
Group Common Stock, par value $1.00 per share, ("Services Stock") were
redesignated as Pittston Brink's Group Common Stock, par value $1.00 per share,
("Brink's Stock") on a share-for-share basis, and a new class of common stock,
designated as Pittston Burlington Group Common Stock, par value $1.00 per share,
("Burlington Stock") was distributed on the basis of one-half of one share for
each outstanding share of Services Stock. Holders of Pittston Minerals Group
Common Stock, par value $1.00 per share, ("Minerals Stock") continue to be
holders of such stock, which continues to reflect the performance of the
Pittston Minerals Group (the "Minerals Group"). Brink's Stock is intended to
reflect the performance of the Pittston Brink's Group (the "Brink's Group") and
Burlington Stock is intended to reflect the performance of the Pittston
Burlington Group (the "Burlington Group").

The financial statements of the Burlington Group include the balance sheets, the
results of operations and cash flows of the Burlington Air Express Inc.
("Burlington") operations of 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 Burlington
Group's financial statements are prepared using the amounts included in the
Company's consolidated financial statements. Corporate allocations reflected in
these financial statements are determined based upon methods which management
believes to be a reasonable and equitable allocation of such items (Note 2).

The Company provides to holders of Burlington Stock separate financial
statements, financial review, descriptions of business and other relevant
information for the Burlington Group in addition to the consolidated financial
information of the Company. Notwithstanding the attribution of assets and
liabilities (including contingent liabilities) among the Minerals Group, the
Brink's Group and the Burlington Group for the purpose of preparing their
respective financial statements, this attribution and the change in the capital
structure of the Company as a result of the approval of the Brink's Stock
Proposal did not affect legal title to such assets or responsibility for such
liabilities for the Company or any of its subsidiaries. Holders of Burlington
Stock are common shareholders of the Company, which continues to be responsible
for all liabilities. Financial impacts arising from one group that affect the
Company's financial condition could affect the results of operations and
financial condition of each of the groups. Since financial developments within
one group could affect other groups, all shareholders of the Company could be
adversely affected by an event directly impacting only one group. Accordingly,
the Company's consolidated financial statements must be read in connection with
the Burlington Group's financial statements.

Principles of Combination
The accompanying financial statements reflect the combined accounts of the
businesses comprising the Burlington Group and their majority-owned
subsidiaries. The Burlington Group's interests in 20% to 50% owned companies are
carried on the equity method. All material intercompany items and transactions
have been eliminated in combination. Certain prior year amounts have been
reclassified to conform to the current year's financial statement presentation.

Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits and investments
with original maturities of three months or less.

Inventories
Inventories are stated at cost (determined under the first-in, first-out or
average cost method) or market, whichever is lower.

Property, Plant and Equipment
Expenditures for maintenance and repairs are charged to expense, and the costs
of renewals and betterments are capitalized. Depreciation is provided
principally on the straight-line method at varying rates depending upon
estimated useful lives.

                                      110

Intangibles
The excess of cost over fair value of net assets of businesses acquired is
amortized on a straight-line basis over the estimated periods benefited.

The Burlington Group evaluates the carrying value of intangibles and the periods
of amortization to determine whether events and circumstances warrant revised
estimates of asset value or useful lives. The Burlington Group annually assesses
the recoverability of the excess of cost over net assets acquired by determining
whether the amortization of the asset balance over its remaining life can be
recovered through projected undiscounted future operating cash flows. Evaluation
of asset value as well as periods of amortization are performed on a
disaggregated basis at each of the Burlington Group's operating units.

Income Taxes
Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", which requires
recognition of deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse.

See Note 2 for allocation of the Company's U.S. federal income taxes to the
Burlington Group.

Postretirement Benefits Other Than Pensions
Postretirement benefits other than pensions are accounted for in accordance with
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions", which requires employers to accrue
the cost of such retirement benefits during the employees' service
with the Company.

Net Income Per Common Share
Net Income per common share is computed by dividing the net income by the
weighted-average number of shares outstanding during the period. The potential
dilution from the exercise of stock options is not material. The shares held in
The Pittston Company Employee Benefits Trust (Note 10) are not included in the
net income per share calculations as they were evaluated for inclusion in those
calculations under the treasury stock method and had no dilutive effect.

Foreign Currency Translation
Assets and liabilities of foreign operations have been translated at current
exchange rates, and related revenues and expenses have been translated at
average rates of exchange in effect during the year. Resulting cumulative
translation adjustments have been included in shareholder's equity. Translation
adjustments relating to operations in countries with highly inflationary
economies are included in net income, along with all transaction gains and
losses for the period.

A portion of the Burlington Group's financial results is derived from activities
in several foreign countries, each with a local currency other than the U.S.
dollar. Because the financial results of the Burlington Group are reported in
U.S. dollars, they are affected by the changes in the value of various foreign
currencies in relation to the U.S. dollar. However, the Burlington Group's
international activity is not concentrated in any single currency, which reduces
the risks of foreign currency rate fluctuations.

Financial Instruments
The Burlington Group uses foreign currency forward contracts to hedge the risk
of changes in foreign currency rates associated with certain transactions
denominated in various currencies. Realized and unrealized gains and losses on
these contracts, designated and effective as hedges, are deferred and recognized
as part of the specific transaction hedged.

The Burlington Group also utilizes financial instruments to protect against
price increases in jet fuel as well as interest rate changes on certain variable
rate lease obligations. Gains and losses on such financial instruments,
designated and effective as hedges, are recognized as part of the specific
transaction hedged.

Revenue Recognition
Revenues related to transportation services are recognized, together with
related transportation costs, on the date shipments physically depart from
facilities en route to destination locations. Financial statements resulting
from existing recognition policies do not materially differ from the allocation
between reporting periods based on relative transit times in each reporting
period with expenses recognized as incurred.

                                      111

Use of Estimates
In accordance with generally accepted accounting principles, management of the
Company has made a number of estimates and assumptions relating to the reporting
of assets and liabilities and the disclosure of contingent assets and
liabilities to prepare these financial statements. Actual results could differ
from those estimates.

Accounting Changes
In 1996, the Burlington Group adopted Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies to
review assets for impairment whenever circumstances indicate that the carrying
amount of an asset may not be recoverable. The adoption of this statement did
not have an impact on the Burlington Group's financial statements.

In 1996, the Burlington Group also adopted SFAS No. 123, "Accounting for Stock
Based Compensation". SFAS No. 123 establishes financial accounting and reporting
standards for stock-based employee compensation plans. SFAS No. 123 allows for
the adoption of a fair value based method of accounting for all employee stock
compensation plans or it allows entities to continue to measure compensation
cost for those plans using the intrinsic value based method of accounting
prescribed by Accounting Principles Board Opinion ("APB") No. 25, "Accounting
for Stock issued to Employees". APB No. 25 requires the disclosure of net income
and net income per share as if the fair value based method of accounting is
applied. The Burlington Group has elected to continue to account for its stock
compensation plans according to APB No. 25 with the disclosure of the impact on
net income and net income per share as if the fair value based method of
accounting is applied (Note 9).

2. RELATED PARTY TRANSACTIONS

The following policies may be modified or rescinded by action of the Board of
Directors (the "Board"), or the Board may adopt additional policies, without
approval of the shareholders of the Company, although the Board has no present
intention to do so. The Company allocated certain corporate general and
administrative expenses, net interest expense and related assets and liabilities
in accordance with the policies described below. Corporate assets and
liabilities are primarily deferred pension assets, income taxes and accrued
liabilities.

Financial
As a matter of policy, the Company manages most financial activities of the
Burlington Group, Brink's Group and Minerals Group on a centralized,
consolidated basis. Such financial activities include the investment of surplus
cash; the issuance, repayment and repurchase of short-term and long-term debt;
the issuance and repurchase of common stock and the payment of dividends. In
preparing these financial statements, transactions primarily related to invested
cash, short-term and long-term debt (including convertible debt), related net
interest and other financial costs have been attributed to the Burlington Group
based upon its cash flows for the periods presented after giving consideration
to the debt and equity structure of the Company. The Company attributes
long-term debt to the Burlington Group based upon the purpose for the debt in
addition to the cash requirements of the Burlington Group. See Note 8 for
details and amounts of long-term debt. The portion of the Company's interest
expense allocated to the Burlington Group for 1996, 1995 and 1994 was $663,
$2,327 and $2,629, respectively. Management believes such method of allocation
to be equitable and a reasonable estimate of the cost attributable to the
Burlington Group.

To the extent borrowings are deemed to occur between the Burlington Group, the
Brink's Group and the Minerals Group, intergroup accounts are established
bearing interest at the rate in effect from time to time under the Company's
unsecured credit lines or, if no such credit lines exist, at the prime rate
charged by Chase Manhattan Bank from time to time. At December 31, 1996 and
1995, the Minerals Group owed the Burlington Group $7,730 and $19,910,
respectively, as the result of borrowings.

Income Taxes
The Burlington Group is included in the consolidated U.S. federal income tax
return filed by the Company.

The Company's consolidated provision and actual cash payments for U.S. federal
income taxes are allocated between the Burlington Group, Brink's Group and
Minerals Group in accordance with the Company's tax allocation policy and

                                      112

reflected in the financial statements for each Group. In general, the
consolidated tax provision and related tax payments or refunds are allocated
among the Groups, for financial statement purposes, based principally upon the
financial income, taxable income, credits and other amounts directly related to
the respective Group. Tax benefits that cannot be used by the Group generating
such attributes, but can be utilized on a consolidated basis, are allocated to
the Group that generated such benefits and an intergroup account is established
for the benefit of the Group generating the attributes. As a result, the
allocated Group amounts of taxes payable or refundable are not necessarily
comparable to those that would have resulted if the Groups had filed separate
tax returns. At December 31, 1996 and 1995, the Burlington Group owed the
Minerals Group $24,310 and $22,029, respectively, for such tax benefits, of
which $13,310 and $8,029, respectively, were not expected to be paid within one
year from such dates in accordance with the policy. The Burlington Group paid
the Minerals Group $14,949 in 1996 and $11,328 in 1995 for the utilization of
such tax benefits.

Shared Services
A portion of the Company's corporate general and administrative expenses and
other shared services has been allocated to the Burlington Group based upon
utilization and other methods and criteria which management believes to be
equitable and a reasonable estimate of the cost attributable to the Burlington
Group. These allocations were $7,433, $4,770 and $4,665 in 1996, 1995 and 1994,
respectively.

Pension
The Burlington Group's pension cost related to its participation in the
Company's noncontributory defined benefit pension plan is actuarially determined
based on its respective employees and an allocable share of the pension plan
assets and calculated in accordance with Statement of Financial Accounting
Standards No. 87, "Employers' Accounting for Pensions", ("SFAS 87"). Pension
plan assets have been allocated to the Burlington Group based on the percentage
of its projected benefit obligation to the plan's total projected benefit
obligation. Management believes such method of allocation to be equitable and a
reasonable estimate of the cost attributable to the Burlington Group.

3. SHAREHOLDER'S EQUITY

The following presents shareholder's equity of the Burlington Group:

                                                         As of December 31
                                                   1996        1995        1994
- --------------------------------------------------------------------------------
Balance at beginning of period                $ 271,853     240,880     203,150
Net income                                       33,801      32,855      38,356
Foreign currency translation
  adjustment                                       (171)        945       2,418
Stock options exercised                           2,970         548       1,835
Stock released from employee benefits
  trust to employee benefits plan                 3,017       1,661         454
Stock repurchases                                (1,406)     (1,134)     (2,042)
Dividends declared                               (4,707)     (4,201)     (4,161)
Cost of Stock Proposals                          (1,237)       --            (1)
Tax benefit of options exercised                    869         299         765
Other                                              --          --           106
- --------------------------------------------------------------------------------
Balance at end of period                      $ 304,989     271,853     240,880
================================================================================

The cumulative foreign currency translation adjustment deducted from
shareholder's equity is $892, $721 and $1,666 at December 31, 1996, 1995 and
1994, respectively.

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, at cost, consist of the following:

                                                            As of December 31
                                                          1996              1995
- --------------------------------------------------------------------------------
Land                                                  $  3,266             1,495
Buildings                                               32,466            20,102
Machinery and equipment                                140,451           106,843
- --------------------------------------------------------------------------------
Total                                                 $176,183           128,440
================================================================================

                                      113

The estimated useful lives for property, plant and equipment are as follows:

                                                                           Years
- --------------------------------------------------------------------------------
Buildings                                                               10 to 40
Machinery and equipment                                                  3 to 10
                                                
Depreciation of property, plant and equipment aggregated $16,887 in 1996,
$13,448 in 1995 and $10,797 in 1994.

5. INTANGIBLES

Intangibles consist entirely of the excess of cost over fair value of net assets
of businesses acquired and are net of accumulated amortization of $79,302 at
December 31, 1996 and $72,721 at December 31, 1995. The estimated useful life of
intangibles is generally forty years. Amortization of intangibles aggregated
$6,465 in 1996, $6,295 in 1995 and $6,162 in 1994.

6. FINANCIAL INSTRUMENTS

Financial instruments which potentially subject the Burlington Group to
concentrations of credit risk consist principally of cash and cash equivalents,
and trade receivables. The Burlington Group's cash and cash equivalents are
placed with high credit quality financial institutions. Also, by policy, the
amount of credit exposure to any one financial institution is limited.
Concentration of credit risk with respect to trade receivables are limited due
to the large number of customers comprising the Burlington Group's customer base
and their dispersion across many different industries and geographic areas.

The following details the fair values of financial instruments for which it is
practicable to estimate the value:

Cash and cash equivalents
The carrying amounts approximate fair value because of the short maturity of
these instruments.

Accounts receivable, accounts payable and accrued liabilities The carrying
amounts approximate fair value because of the short-term nature of these
instruments.

Debt
The aggregate fair value of the Burlington Group's long-term debt obligations,
which is based upon quoted market prices and rates currently available to the
Burlington Group for debt with similar terms and maturities, approximates the
carrying amount.

Off-balance sheet instruments
The Burlington Group utilizes various off-balance sheet financial instruments,
as discussed below, to hedge its foreign currency and other market exposures.
The risk that counterparties to such instruments may be unable to perform is
minimized by limiting the counterparties to major financial institutions. The
Burlington Group does not expect any losses due to such counterparty default.

Foreign currency forward contracts--The Company, on behalf of the Burlington
Group, enters into foreign currency forward contracts with a duration of up to
45 days as a hedge against accounts payable denominated in various currencies.
These contracts do not subject the Company to risk due to exchange rate
movements because gains and losses on these contracts offset losses and gains on
the payables being hedged. At December 31, 1996, the total notional value of
foreign currency forward contracts outstanding was $1,052 and the fair value was
not significant.

Fuel contracts--The Burlington Group has hedged a portion of its jet fuel
requirements through several commodity option transactions that are intended to
protect against significant increases in jet fuel prices. At December 31, 1996,
these transactions aggregated 18.0 million gallons and are applicable throughout
the first half of 1997. 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 December 31, 1996, the fair value of these
contracts was not significant.

Interest rate contracts--In connection with the aircraft leasing by Burlington,
the Company has entered into an interest rate swap agreement. This variable to
fixed interest rate swap agreement has a notional value of $30,000 that fixes
the Company's interest rate at 7.05% through January 2, 1998. Given the decline
in the base variable rate subsequent to when the agreement was entered into, the
cost to the Company to terminate the agreement would have been $575 at December
31, 1996.

                                      114

7. INCOME TAXES

The provision (credit) for income taxes consists of the following:

                              U.S.
                           Federal        Foreign          State          Total
- --------------------------------------------------------------------------------
1996:
Current                   $ 18,967          2,371          1,200         22,538
Deferred                       351         (3,166)           (15)        (2,830)
- --------------------------------------------------------------------------------
Total                     $ 19,318           (795)         1,185         19,708
================================================================================
1995:
Current                   $ 20,139          1,424          1,500         23,063
Deferred                    (2,839)        (1,064)          (442)        (4,345)
- --------------------------------------------------------------------------------
Total                     $ 17,300            360          1,058         18,718
================================================================================
1994:
Current                   $ 22,077          3,033          3,000         28,110
Deferred                    (4,472)            80           (864)        (5,256)
- --------------------------------------------------------------------------------
Total                     $ 17,605          3,113          2,136         22,854
================================================================================

The significant components of the deferred tax benefit were as follows:

                                                         Years Ended December 31
                                                     1996       1995       1994
- --------------------------------------------------------------------------------
Deferred tax expense (benefit), exclusive
  of the components listed below                  $  (372)    (2,212)    (6,028)
Net operating loss carryforwards                   (2,887)    (1,490)      (247)
Alternative minimum tax credits                       429       (565)     1,084
Change in the valuation allowance for
  deferred tax assets                                --          (78)       (65)
- --------------------------------------------------------------------------------
Total                                             $(2,830)    (4,345)    (5,256)
================================================================================

The tax benefit for compensation expense related to the exercise of certain
employee stock options for tax purposes in excess of compensation expense for
financial reporting purposes is recognized as an adjustment to shareholder's
equity.

The components of the net deferred tax asset as of December 31, 1996 and
December 31, 1995 were as follows:

                                                               1996         1995
- --------------------------------------------------------------------------------
Deferred tax assets:
Accounts receivable                                         $ 2,517        3,149
Postretirement benefits other than pensions                   1,302        1,100
Workers' compensation and other claims                          761        1,357
Other liabilities and reserves                               13,358       13,275
Miscellaneous                                                 1,840        1,642
Net operating loss carryforwards                              8,227        5,340
Alternative minimum tax credits                              11,597       11,653
- --------------------------------------------------------------------------------
Total deferred tax assets                                    39,602       37,516
- --------------------------------------------------------------------------------
Deferred tax liabilities:
Property, plant and equipment                                   625          576
Pension assets                                                  807        1,486
Other assets                                                    496          684
Miscellaneous                                                12,692       12,379
- --------------------------------------------------------------------------------
Total deferred tax liabilities                               14,620       15,125
- --------------------------------------------------------------------------------
Net deferred tax asset                                      $24,982       22,391
================================================================================

The recording of deferred federal tax assets is based upon their expected
utilization in the Company's consolidated federal income tax return and the
benefit that would accrue to the Burlington Group under the Company's tax
allocation policy.

The following table accounts for the difference between the actual tax provision
and the amounts obtained by applying the statutory U.S. federal income tax rate
of 35% in 1996, 1995 and 1994 to the income before income taxes.

                                                        Years Ended December 31
                                                     1996       1995       1994
- --------------------------------------------------------------------------------
Income before income taxes:
United States                                    $ 37,794     34,943     35,464
Foreign                                            15,715     16,630     25,746
- --------------------------------------------------------------------------------
Total                                            $ 53,509     51,573     61,210
================================================================================
Tax provision computed at statutory rate         $ 18,730     18,051     21,424
Increases (reductions) in taxes due to:
State income taxes (net of federal tax
  benefit)                                            771        688      1,388
Goodwill amortization                               2,086      2,079      1,891
Difference between total taxes on foreign
  income and the U.S. federal statutory rate       (2,392)    (1,430)    (2,790)
Miscellaneous                                         513       (670)       941
- --------------------------------------------------------------------------------
Actual tax provision                             $ 19,708     18,718     22,854
================================================================================

                                      115

It is the policy of the Burlington Group to accrue deferred income taxes on
temporary differences related to the financial statement carrying amounts and
tax bases of investments in foreign subsidiaries and affiliates which are
expected to reverse in the foreseeable future. As of December 31, 1996 and
December 31, 1995, the unrecognized deferred tax liability for temporary
differences of approximately $13,454 and $9,340, respectively, related to
investments in foreign subsidiaries and affiliates that are essentially
permanent in nature and not expected to reverse in the foreseeable future was
approximately $4,709 and $3,269, respectively.

The Burlington Group is included in the Company's consolidated U.S. federal
income tax return.

As of December 31, 1996, the Burlington Group had $11,597 of alternative minimum
tax credits allocated to it under the Company's tax allocation policy. Such
credits are available to offset future U.S. federal income taxes and, under
current tax law, the carryforward period for such credits is unlimited.

The tax benefits of net operating loss carryforwards of the Burlington Group as
at December 31, 1996 were $8,227 and related to various state and foreign taxing
jurisdictions. The expiration periods primarily range from 5 to 15 years.

8. LONG-TERM DEBT

A portion of the outstanding debt under the Company's credit agreement and the
Company's subordinated obligations have been attributed to the Burlington Group.
Total long-term debt of the Burlington Group consists of the following:

                                                               As of December 31
                                                                 1996       1995
- --------------------------------------------------------------------------------
Senior obligations:
Canadian dollar term loan due 1999 (year-end
  rate 4.61% in 1996 and 7.50% in 1995)                       $ 2,920      2,932
All other                                                      10,275      7,772
- --------------------------------------------------------------------------------
                                                               13,195     10,704
Obligations under capital leases (average
  rates 11.31% in 1996 and 13.00% in 1995)                      1,180      1,645
- --------------------------------------------------------------------------------
                                                               14,375     12,349
- --------------------------------------------------------------------------------
Attributed portion of the Company's debt:
4% subordinated debentures due 1997                            14,348     14,348
- --------------------------------------------------------------------------------
Total long-term debt, less current maturities                  28,723     26,697

Current maturities of long-term debt:
Other senior obligations                                        2,916      1,964
- --------------------------------------------------------------------------------
Total current maturities of long-term debt                      2,916      1,964

Total long-term debt including current maturities             $31,639     28,661
================================================================================

For the four years through December 31, 2001, minimum repayments of long-term
debt outstanding are as follows:

              1998                $ 3,336
              1999                  2,506
              2000                  1,585
              2001                    462

The Canadian dollar term loan held by a wholly-owned indirect subsidiary of the
Burlington Group bears interest based on Canadian prime or Bankers' Acceptance
rates or, if converted to a U.S. dollar loan, based on Eurodollar or Federal
Funds rates. The Canadian dollar term loan is guaranteed by the Company.

The Company has a $350,000 revolving credit agreement with a syndicate of banks
(the "Facility"). The Facility includes a $100,000 term loan and permits
additional borrowings, repayments and reborrowings of up to an aggregate of
$250,000. During the second quarter of 1996, the maturity date of both the term
loan and the revolving credit portion of the Facility was extended to May 31,
2001. Interest on borrowings under the Facility is payable at rates based on
prime, certificate of deposit, Eurodollar or money market rates. During 1995,
$23,400 of the term loan obligation attributed to the Burlington Group was
assumed by the Minerals Group as partial settlement of the Minerals Group
payable to the Burlington Group. At December 31, 1996, borrowings, in addition
to the $100,000 term loan of $23,200 were outstanding. No portion of the total
amount outstanding under the Facility at December 31, 1996 or at December 31,
1995 was attributed to the Burlington Group.

The 4% subordinated debentures due July 1, 1997, are exchangeable only for cash,
at the rate of $157.80 per $1,000 debenture. The debentures are redeemable at
the Company's option, in whole or in part, at any time prior to maturity, at
redemption prices equal to 100% of the principal amount. The Company plans to
repay the debentures from borrowings under the long-term revolving credit
facility. In 1995, the Company redeemed $300 in principal of its 4% subordinated
debentures.

Various international operations maintain lines of credit and overdraft
facilities aggregating approximately $117,000 with a number of banks on either a
secured or unsecured basis. At December 31, 1996, $55,745 was outstanding under
such agreements.

Under the terms of some of its debt instruments, the Company has agreed to
various restrictions relating to the payment of dividends, the repurchase of
capital stock, the maintenance of

                                      116

consolidated net worth, and the amount of additional funded debt which may be
incurred. Allowable restricted payments for dividends and stock repurchases
aggregated $255,810 at December 31, 1996. Under the terms of the Facility, the
Company has agreed to maintain at least $400,000 of Consolidated Net Worth, as
defined, and can incur additional indebtedness of approximately $560,000.

At December 31, 1996, the Company's portion of outstanding unsecured letters of
credit allocated to the Burlington Group was $41,304, primarily supporting the
Burlington Group's obligations under aircraft lease obligations and its various
self-insurance programs.

9. STOCK OPTIONS

The Company has various stock-based compensation plans as described below.

Stock Option Plans
The Company grants options under its 1988 Stock Option Plan (the "1988 Plan") to
executives and key employees and under its Non-Employee Directors' Stock Option
Plan (the "Non-Employee Plan") to outside directors, to purchase common stock at
a price not less than 100% of quoted market value at the date of grant. The 1988
Plan options can be granted with a maximum term of ten years and can vest within
six months from the date of grant. The majority of grants made in 1996, 1995 and
1994 have a maximum term of six years and vest 100% at the end of the third
year. The Non-Employee Plan options can be granted with a maximum term of ten
years and can vest within six months from the date of grant. The majority of
grants made in 1996, 1995 and 1994 have a maximum term of six years and vest
ratably over the first three years. The total number of shares underlying
options authorized for grant, but not yet granted, under the 1988 Plan is
2,031,775. Under the Non-Employee Plan, the total number of shares underlying
options for grant, but not yet granted, is 134,164.

The Company's 1979 Stock Option Plan (the "1979 Plan") and the 1985 Stock Option
Plan (the "1985 Plan") terminated in 1985 and 1988, respectively, except as to
options still outstanding.

As part of the Brink's Stock Proposal (Note 1), the 1988 and Non-Employee Plans
were amended to permit option grants to be made to optionees with respect to
Brink's Stock or Burlington Stock, in addition to Minerals Stock. At the time of
the approval of the Brink's Stock Proposal, a total of 2,383,422 shares of
Services Stock were subject to options outstanding under the 1988 Plan, the
Non-Employee Plan, the 1979 Plan and the 1985 Plan. Pursuant to antidilution
provisions in the option agreements covering such plans, the Company converted
these options into options for shares of Brink's Stock or Burlington Stock, or
both, depending on the employment status and responsibilities of the particular
optionee. In the case of optionees having Company-wide responsibilities, each
outstanding Services Stock option was converted into options for both Brink's
Stock and Burlington Stock. In the case of other optionees, each outstanding
option was converted into a new option only for Brink's Stock or Burlington
Stock, as the case may be. As a result, upon approval of the Brink's Stock
Proposal, 1,749,822 shares of Brink's Stock and 1,989,466 shares of Burlington
Stock were subject to options.

The table below summarizes the related plan activity.

                                                                       Aggregate
                                                                        Exercise
                                                        Shares            Price
- --------------------------------------------------------------------------------
Outstanding at December 31, 1995                          --         $     --
Converted in Brink's Stock Proposal                  1,989,466           23,474
Granted                                                439,750            7,972
Exercised                                             (318,123)          (2,905)
Forfeited or expired                                   (64,010)            (952)
- --------------------------------------------------------------------------------
Outstanding at December 31, 1996                     2,047,083       $   27,589
================================================================================

Options exercisable at the end of 1996, 1995 and 1994, respectively, on an
equivalent basis, for Burlington Stock were 1,033,647, 1,030,259 and 724,089.

The following table summarizes information about stock options outstanding as of
December 31, 1996.

                       ----------------------------------    -------------------
                                            Stock Options          Stock Options
                                              Outstanding            Exercisable
- --------------------------------------------------------------------------------
                                     Weighted
                                      Average
                                    Remaining    Weighted               Weighted
                                  Contractual     Average                Average
Range of                                 Life    Exercise               Exercise
Exercise Prices         Shares        (Years)       Price     Shares       Price
- --------------------------------------------------------------------------------
$ 5.00 to 7.51         332,227          1.48       $ 6.95    332,227      $ 6.95
  7.71 to 11.70        318,265          3.36         9.59    318,177        9.59
 13.41 to 16.32        888,993          4.26        15.06    317,359       16.18
 17.06 to 21.13        507,598          4.92        17.95     65,884       17.06
- --------------------------------------------------------------------------------
Total                2,047,083                             1,033,647 
================================================================================

                                      117

Employee Stock Purchase Plan
Under the 1994 Employee Stock Purchase Plan (the "Plan"), the Company is
authorized to issue up to 375,000 shares of Burlington Stock to its employees
who have six months of service and who complete minimum annual work
requirements. Under the terms of the Plan, employees may elect each six-month
period (beginning January 1 and July 1), to have up to 10 percent of their
annual earnings withheld to purchase the Company's stock. Employees may purchase
shares of any or all of the three classes of Company common stocks. The purchase
price of the stock is 85% of the lower of its beginning-of-the-period or
end-of-the-period market price. Under the Plan, the Company sold 32,373 shares
and 28,567 shares of Burlington Stock to employees during 1996 and 1995,
respectively. The share amounts for Burlington Stock include the restatement for
the Services Stock conversion under the Brink's Stock Proposal (Note 1).

Accounting For Plans
The Company has adopted the disclosure - only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation", but applies APB Opinion No. 25 and
related Interpretations in accounting for its plans. Accordingly, no
compensation cost has been recognized in the accompanying financial statements.
Had compensation costs for the Company's plans been determined based on the fair
value of awards at the grant dates, consistent with SFAS No. 123, the Burlington
Group's net income and net income per share would approximate the pro forma
amounts indicated below:

                                                         Years Ended December 31
                                                           1996             1995
- --------------------------------------------------------------------------------
Net Income attributed to common shares
Burlington Group
  As Reported                                          $ 33,801           32,855
  Pro Forma                                              32,528           32,098
Net Income per common share                                        
Burlington Group                                                   
  As Reported                                              1.76             1.73
  Pro Forma                                                1.69             1.69
================================================================================
                                                                   
Note: The pro forma disclosures shown may not be representative of the
effects on reported net income in future years.

The fair value of each stock option grant used to compute pro forma net income
and net income per share disclosures is estimated at the time of the grant using
the Black-Scholes option-pricing model. The weighted-average assumptions used in
the model are as follows:

                                                                 1996       1995
- --------------------------------------------------------------------------------
Expected dividend yield                                          1.2%       1.2%
Expected volatility                                               32%        32%
Risk-free interest rate                                          6.3%       5.8%
Expected term (in years)                                         4.7        4.7
================================================================================

Using these assumptions in the Black-Scholes model, the weighted-average fair
value of options granted during 1996 and 1995 is $2,679 and $2,549,
respectively.

Under SFAS 123, compensation cost is also recognized for the fair value of
employee stock purchase rights. Because the Company settles its employee stock
purchase rights under the Plan at the end of each six-month offering period, the
fair value of these purchase rights was calculated using actual market
settlement data. The weighted-average fair value of the stock purchase rights
granted in 1996 and 1995 was $231 and $352, respectively, for the Burlington
Group.

10. CAPITAL STOCK

The Company, at any time, has the right to exchange each outstanding share of
Burlington Stock for shares of Brink's Stock (or, if no Brink's Stock is then
outstanding, Minerals Stock) having a fair market value equal to 115% of the
fair market value of one share of Burlington Stock. In addition, upon the
disposition of all or substantially all of the properties and assets of the
Burlington Group to any person (with certain exceptions), the Company is
required to exchange each outstanding share of Burlington Stock for shares of
Brink's Stock (or, if no Brink's Stock is then outstanding, Minerals Stock)
having a fair market value equal to 115% of the fair market value of one share
of Burlington Stock.

                                      118

The Company, at any time, has the right to exchange each outstanding share of
Minerals Stock, which was previously subject to exchange for shares of Services
Stock, for shares of Brink's Stock (or, if no Brink's Stock is then outstanding,
Burlington Stock) having a fair market value equal to 115% of the fair market
value of one share of Minerals Stock. In addition, upon the disposition of all
or substantially all of the properties and assets of the Minerals Group to any
person (with certain exceptions), the Company is required to exchange each
outstanding share of Minerals Stock for shares of Brink's Stock (or, if no
Brink's Stock is then outstanding, Burlington Stock) having a fair market value
equal to 115% of the fair market value of one share of Minerals Stock. If any
shares of the Company's Preferred Stock are converted after an exchange of
Minerals Stock for Brink's Stock (or Burlington Stock), the holder of such
Preferred Stock would, upon conversion, receive shares of Brink's Stock (or
Burlington Stock) in lieu of shares of Minerals Stock otherwise issuable upon
such conversion.

Shares of Brink's Stock are not subject to either optional or mandatory
exchange. The net proceeds of any disposition of properties and assets of the
Brink's Group will be attributed to the Brink's Group. In the case of a
disposition of all or substantially all the properties and assets of any other
group, the net proceeds will be attributed to the group the shares of which have
been issued in exchange for shares of the selling group.

Holders of Brink's Stock at all times have one vote per share. Holders of
Burlington Stock and Minerals Stock have one and 0.626 votes per share,
respectively, subject to adjustment on January 1, 1998, and on January 1 every
two years thereafter in such a manner so that each class' share of the aggregate
voting power at such time will be equal to that class' share of the aggregate
market capitalization of the Company's common stock at such time. Accordingly,
on each adjustment date, each share of Burlington Stock and Minerals Stock may
have more than, less than or continue to have the number of votes per share as
they have. Holders of Brink's Stock, Burlington Stock and Minerals Stock vote
together as a single voting group on all matters as to which all common
shareholders are entitled to vote. In addition, as prescribed by Virginia law,
certain amendments to the Articles of Incorporation affecting, among other
things, the designation, rights, preferences or limitations of one class of
common stock, or certain mergers or statutory share exchanges, must be approved
by the holders of such class of common stock, voting as a group, and, in certain
circumstances, may also have to be approved by the holders of the other classes
of common stock, voting as separate voting groups.

In the event of a dissolution, liquidation or winding up of the Company, the
holders of Brink's Stock, Burlington Stock and Minerals Stock, effective as of
January 19, 1996, share on a per share basis an aggregate amount equal to 55%,
28% and 17%, respectively, of the funds, if any, remaining for distribution to
the common shareholders. In the case of Minerals Stock, such percentage has been
set, using a nominal number of shares of Minerals Stock of 4,202,954 (the
"Nominal Shares") in excess of the actual number of shares of Minerals Stock
outstanding, to ensure that the holders of Minerals Stock are entitled to the
same share of any such funds immediately following the consummation of the
transactions as they were prior thereto. These liquidation percentages are
subject to adjustment in proportion to the relative change in the total number
of shares of Brink's Stock, Burlington Stock and Minerals Stock, as the case may
be, then outstanding to the total number of shares of all other classes of
common stock then outstanding (which totals, in the case of Minerals Stock,
shall include the Nominal Shares).

In November 1995, the Board of Directors (the "Board"), authorized a revised
share repurchase program which allowed for the purchase, from time to time, of
up to 1,500,000 shares of Burlington Stock, not to exceed an aggregate purchase
price of $45,000 for all common stock of the Company; such shares to be
purchased from time to time in the open market or in private transactions, as
conditions warrant. Prior to this revised program, 401,900 shares of Services
Stock (or the equivalent of 209,500 shares of Burlington Stock) were repurchased
at an aggregate cost of $9,624, of which 145,800 shares (or the equivalent of
75,600 shares of Burlington Stock) were repurchased in 1995 at an aggregate cost
of $3,436. No additional repurchases were made during the remainder of 1995
subsequent to the implementation of the revised program. During 1996, 75,600
shares of Burlington Stock were repurchased at a cost of $1,407. The program to
repurchase shares remains in effect in 1997.

                                      119

Dividends paid to holders of Burlington Stock are limited to funds of the
Company legally available for the payment of dividends. Amounts available for
dividends may be further limited by covenants in the Company's public debt
indentures and bank credit agreements. See the Company's consolidated financial
statements and related footnotes. Subject to these limitations, the Company's
Board, although there is no requirement to do so, intends to declare and pay
dividends on the Burlington Stock based primarily on the earnings, financial
condition, cash flow and business requirements of the Burlington Group.

The Company has the authority to issue up to 2,000,000 shares of preferred
stock, par value $10 per share. In January, 1994, the Company issued $80,500 or
161,000 shares of Series C Cumulative Convertible Preferred Stock (the
"Convertible Preferred Stock"). The Convertible Preferred Stock, which is
convertible into Minerals Stock and which has been attributed to the Minerals
Group, pays an annual dividend of $31.25 per share payable quarterly, in cash,
in arrears, out of all funds of the Company legally available therefore, when as
and if, declared by the Board. Payment of dividends commenced on March 1, 1994.
Such stock also bears a liquidation preference of $500 per share, plus an amount
equal to accrued and unpaid dividends thereon.

In 1994, the Board authorized the repurchase from time to time of up to $15,000
of Convertible Preferred Stock. Subsequent to the authorization and through
October 1995, 24,720 shares at a total cost of $9,624 had been repurchased, of
which 16,370 shares at a total cost of $6,258 were purchased in 1995. In
November 1995, the Board authorized an increase in the remaining authority to
$15,000. No additional share repurchases were made during the remainder of 1995
subsequent to the increased authorization. In 1996, 20,920 shares at a total
cost of $7,897 were repurchased. The program to acquire shares remains in effect
in 1997, and in February 1997, the Board authorized an increase in the remaining
repurchase authority to $15 million.

In 1996 and 1995, dividends paid on such stock amounted to $3,795 and $4,341,
respectively. Preferred dividends included on the Company's Statements of
Operations for the years ended December 31, 1996 and 1995, are net of $2,120 and
$1,579, respectively, which was the excess of the carrying amount of the
Convertible Preferred Stock over the cash paid to holders of the stock for
repurchases made during the year.

In December 1992, the Company formed the Pittston Company Employee Benefits
Trust (the "Trust") to hold shares of its common stock to fund obligations under
certain employee benefits programs not including stock option plans. The trust
first began funding obligations under the Company's various stock option plans
in September 1995. Upon formation of the Trust, the Company sold for a
promissory note of the Trust, 4,000,000 shares of its common stock to the Trust
at a price equal to the fair value of the stock on the date of sale. Upon
approval of the Brink's Stock Proposal, 1,768,906 shares of Burlington Stock
were distributed to the Trust. At December 31, 1996, 1,279,544 shares of
Burlington Stock (1,776,453 in 1995) remained in the Trust, valued at market.
The value of these shares has no impact on shareholder's equity.

11. LEASES

The Burlington Group leases aircraft, facilities, vehicles, computers and other
equipment under long-term operating leases with varying terms, and most of the
leases contain renewal and/or purchase options. As of December 31, 1996,
aggregate future minimum lease payments under noncancellable operating leases
were as follows:

                                                          Equipment
                                 Aircraft   Facilities      & Other        Total
- --------------------------------------------------------------------------------
1997                              $27,590       24,400        5,062       57,052
1998                               20,661       19,160        3,719       43,540
1999                               17,979       14,833        2,539       35,351
2000                               11,479       11,372        1,803       24,654
2001                               10,339        9,101        1,188       20,628
2002                                6,336        7,791          685       14,812
2003                                 --          6,723          417        7,140
2004                                 --          6,310          417        6,727
2005                                 --          5,170          417        5,587
Later Years                          --         52,927        3,298       56,225
- --------------------------------------------------------------------------------
Total                             $94,384      157,787       19,545      271,716
================================================================================

These amounts are net of aggregate future minimum noncancellable sublease
rentals of $1,693.

Net rent expense amounted to $61,827 in 1996, $62,751 in 1995 and $57,412 in
1994.

                                      120

The Burlington Group incurred capital lease obligations of $231 in 1996, $2,288
in 1995 and $755 in 1994. As of December 31, 1995, the Burlington Group's
obligations under capital leases were not significant (Note 8).

12. EMPLOYEE BENEFIT PLANS

The Burlington Group's businesses participate in the Company's noncontributory
defined benefit pension plan covering substantially all nonunion employees who
meet certain minimum requirements, in addition to sponsoring certain other
defined benefit plans. Benefits under most of the plans are based on salary
(including commissions, bonuses, overtime and premium pay) and years of service.
The Burlington Group's pension cost is actuarially determined based on its
employees and an allocable share of the pension plan assets. The Company's
policy is to fund the actuarially determined amounts necessary to provide assets
sufficient to meet the benefits to be paid to plan participants in accordance
with applicable regulations. The net pension expense for 1996, 1995 and 1994 for
all plans is as follows:

                                                        Years Ended December 31
                                                       1996      1995      1994
- --------------------------------------------------------------------------------
Service cost--benefits earned during year           $ 4,067     2,856     3,009
Interest cost on projected benefit obligation         4,010     3,162     2,919
Loss (return) on assets--actual                      (8,053)  (11,344)      662
(Loss) return on assets--deferred                     2,177     6,223    (5,713)
Other amortization, net                                (339)     (305)     (357)
- --------------------------------------------------------------------------------
Net pension expense                                 $ 1,862       592       520
================================================================================

The assumptions used in determining the net pension expense for the Company's
primary pension plan were as follows:

                                                            1996    1995    1994
- --------------------------------------------------------------------------------
Interest cost on projected benefit obligation               7.5%   8.75%    7.5%
Expected long-term rate of return on assets                10.0%   10.0%   10.0%
Rate of increase in compensation levels                     4.0%    4.0%    4.0%
================================================================================

The funded status and prepaid pension expense at December 31, 1996 and 1995 are
as follows:

                                                              1996         1995
- --------------------------------------------------------------------------------
Actuarial present value of accumulated
  benefit obligation:
  Vested                                                  $ 43,018       38,240
  Nonvested                                                  2,846        2,524
- --------------------------------------------------------------------------------
                                                            45,864       40,764
Benefits attributable to projected salaries                 12,454       10,376
- --------------------------------------------------------------------------------
Projected benefit obligation                                58,318       51,140
Plan assets at fair value                                   68,016       59,831
- --------------------------------------------------------------------------------
Excess of plan assets over projected benefit
  obligation                                                 9,698        8,691
Unamortized initial net asset                                 (401)        (724)
Unrecognized experience (gain) loss                           (321)       1,732
Unrecognized prior service cost                                146          106
- --------------------------------------------------------------------------------
Net pension assets                                           9,122        9,805
Current pension liabilities                                    382          622
- --------------------------------------------------------------------------------
Deferred pension assets per balance sheet                 $  9,504       10,427
================================================================================

For the valuation of the Company's primary pension obligations and the
calculation of the funded status, the discount rate was 8% in 1996 and 7.5% in
1995. The expected long-term rate of return on assets was 10% in both years. The
rate of increase in compensation levels used was 4% in 1996 and 1995.

The unrecognized initial net asset at January 1, 1986 (January 1, 1989, for
certain foreign pension plans), the date of adoption of SFAS 87, has been
amortized over the estimated remaining average service life of the employees. As
of December 31, 1996, approximately 78% of plan assets were invested in equity
securities and 22% in fixed income securities.

The Burlington Group also provides certain postretirement health care and life
insurance benefits for eligible active and retired employees in the United
States and Canada.

                                      121

For the years 1996, 1995 and 1994, the components of periodic expense for these
postretirement benefits were as follows:

                                                         Years Ended December 31
                                                          1996     1995     1994
- --------------------------------------------------------------------------------
Service cost--benefits earned during year                 $167      129      219
Interest cost on accumulated postretirement
  benefit obligation                                       213      192      247
- --------------------------------------------------------------------------------
Total expense                                             $380      321      466
================================================================================

Interest costs on the accumulated postretirement benefit obligation were based
upon rates of 7.5% in 1996, 8.75% in 1995 and 7.5% in 1994.

At December 31, 1996 and 1995, the actuarial and recorded liabilities for these
postretirement benefits, none of which have been funded, were as follows:

                                                        Years Ended December 31
                                                                 1996      1995
- --------------------------------------------------------------------------------
Accumulated postretirement benefit obligation:
  Retirees                                                     $  546       569
  Fully eligible active plan participants                         517       403
  Other active plan participants                                2,007     1,919
- --------------------------------------------------------------------------------
                                                                3,070     2,891
Unrecognized experience gain (loss)                                75       (71)
- --------------------------------------------------------------------------------
Liability included on the balance sheet                         3,145     2,820
Less current portion                                             --         107
- --------------------------------------------------------------------------------
Noncurrent liability for postretirement health care
  and life insurance benefits                                  $3,145     2,713
================================================================================

The accumulated postretirement benefit obligation was determined using the unit
credit method and an assumed discount rate of 8% in 1996 and 7.5% in 1995. The
postretirement benefit obligation for U.S. salaried employees does not provide
for changes in health care costs since the employer's contribution to the plan
is a fixed amount.

The Burlington Group also participates in the Company's Savings-Investment Plan
to assist eligible employees in providing for retirement or other future
financial needs. Employee contributions are matched at rates of 75% up to 5% of
compensation (subject to certain limitations imposed by the Internal Revenue
Code of 1986, as amended). Contribution expense under the plan aggregated $2,259
in 1996, $2,326 in 1995 and $1,656 in 1994.

The Burlington Group sponsors several other defined contribution benefit plans
based on hours worked or other measurable factors. Contributions under all of
these plans aggregated $643 in 1996, $662 in 1995 and $556 in 1994.

13. SEGMENT INFORMATION

Operating revenues by geographic area are as follows:

                                                         Years Ended December 31
                                              1996           1995           1994
- --------------------------------------------------------------------------------
United States                           $  554,552        535,091        565,813
International operations                   945,766        879,730        649,471
- --------------------------------------------------------------------------------
Total operating revenues                $1,500,318      1,414,821      1,215,284
================================================================================

The following is derived from the business segment information in the Company's
consolidated financial statements as it relates to the Burlington Group. See
Note 2, Related Party Transactions, for a description of the Company's policy
for corporate allocations.

The Burlington Group's portion of the Company's operating profit is as follows:

                                                        Years Ended December 31
                                                   1996        1995        1994
- --------------------------------------------------------------------------------
United States                                  $ 36,143      30,416      45,732
International operations                         28,461      28,307      23,492
- --------------------------------------------------------------------------------
Burlington Group's portion of the
  Company's segment operating profit             64,604      58,723      69,224
Corporate expenses allocated to the
  Burlington Group                               (7,433)     (4,770)     (4,665)
- --------------------------------------------------------------------------------
Total operating profit                         $ 57,171      53,953      64,559
================================================================================

                                      122

The Burlington Group's portion of the Company's assets at year end is as
follows:

                                                        As of December 31
                                                  1996         1995         1994
- --------------------------------------------------------------------------------
United States                                 $344,048      302,593      284,294
International operations                       254,012      237,126      188,146
- --------------------------------------------------------------------------------
Burlington Group's portion of the
  Company's assets                             598,060      539,719      472,440
Burlington Group's portion of
  corporate assets                              17,614       32,358       49,076
- --------------------------------------------------------------------------------
Total assets                                  $615,674      572,077      521,516
================================================================================

14. CONTINGENT LIABILITIES

Under the Coal Industry Retiree Health Benefit Act of 1992 (the "Act"), the
Company and its majority-owned subsidiaries at July 20, 1992, including certain
companies of the Burlington Group included in these financial statements, are
jointly and severally liable with t certain companies of the Brink's Group and
of the Minerals Group for the costs of health care coverage provided for by that
Act. For a description of the Act and an estimate of certain of such costs, see
Note 13 to the Company's consolidated financial statements. At this time, the
Company expects the Minerals Group to generate sufficient cash flow to discharge
its obligations under the Act.

In April 1990, the Company entered into a settlement agreement to resolve
certain environmental claims against the Company arising from hydrocarbon
contamination at a petroleum terminal facility ("Tankport") in Jersey City, New
Jersey, which operations were sold in 1983. Under the settlement agreement, the
Company is obligated to pay 80% of the remediation costs. Based on data
available to the Company and its environmental consultants, the Company
estimates its portion of the cleanup costs on an undiscounted basis using
existing technologies to be between $6,900 and $17,000 over a period of up to
five years. Management is unable to determine that any amount within that range
is a better estimate due to a variety of uncertainties, which include the extent
of the contamination at the site, the permitted technologies for remediation and
the regulatory standards by which the clean-up will be conducted. The clean-up
estimates have been modified from prior years' in light of cost inflation. The
estimate of costs and the timing of payments could change as a result of changes
to the remediation plan required, changes in the technology available to treat
the site, unforseen circumstances existing at the site and additional cost
inflation.

The Company commenced insurance coverage litigation in 1990, in the United
States District Court for the District of New Jersey, seeking a declaratory
judgment that all amounts payable by the Company pursuant to the Tankport
obligation were reimbursable under comprehensive general liability and pollution
liability policies maintained by the Company. In August 1995, the District Court
ruled on various Motions for Summary Judgement. In its decision, the Court found
favorably for the Company on several matters relating to the comprehensive
general liability policies but concluded that the pollution liability policies
did not contain pollution coverage for the types of claims associated with the
Tankport site. The Company appealed the District Court's decision to the Third
Circuit. However, management and its outside legal counsel continue to believe
that recovery of a substantial portion of the cleanup costs will ultimately be
probable of realization. Accordingly, it is the Company's belief that, based on
estimates of potential liability and probable realization of insurance
recoveries, the Company would be liable for approximately $1,400 based on the
Court's decision and related developments of New Jersey law.

15. SUPPLEMENTAL CASH FLOW INFORMATION

For the years ended December 31, 1996, 1995 and 1994, cash payments for income
taxes, net of refunds received, were $22,018, $20,346 and $16,980, respectively.

For the years ended December 31, 1996, 1995 and 1994, cash payments for interest
were $4,646, $5,055 and $4,926, respectively.

On December 31, 1995, the Minerals Group assumed the portion of the Company's
term loan in the amount of $23,434, which had been attributed to the Burlington
Group, as partial settlement of the intercompany payable due to the Burlington
Group. This transfer of debt as partial settlement of the intercompany between
the Groups has been recognized as a noncash transaction and is not included in
the Burlington Group's 1995 Statement of Cash Flows.

                                      123

16. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Tabulated below are certain data for each quarter of 1996 and 1995.

                                            1st        2nd        3rd        4th
- --------------------------------------------------------------------------------
1996 Quarters:
Operating revenues                     $351,950    363,411    377,656    407,301
Gross profit                             37,595     46,256     50,414     48,630
Net income                                3,763      8,746     10,705     10,587

Per Pittston Burlington Group
  Common Share:
Net income                             $    .20        .46        .56        .55

1995 Quarters:
Operating revenues                     $323,944    341,950    365,793    383,134
Gross profit                             34,352     42,305     47,334     45,109
Net income                                4,049      8,009     10,524     10,273

Per Pittston Burlington Group
  Common Share:
Net income                             $    .21        .42        .56        .54

                                      124

Pittston Minerals Group
- --------------------------------------------------------------------------------
STATEMENT OF MANAGEMENT RESPONSIBILITY
- --------------------------------------------------------------------------------

The management of The Pittston Company (the "Company") is responsible for
preparing the accompanying Pittston Minerals Group (the "Mineral Group')
financial statements and for their integrity and objectivity. The statements
were prepared in accordance with generally accepted accounting principles.
Management has also prepared the other information in the annual report and is
responsible for its accuracy.

In meeting our responsibility for the integrity of the financial statements, we
maintain a system of internal controls designed to provide reasonable assurance
that assets are safeguarded, that transactions are executed in accordance with
management's authorization and that the accounting records provide a reliable
basis for the preparation of the financial statements. Qualified personnel
throughout the organization maintain and monitor these internal controls on an
ongoing basis. In addition, the Company maintains an internal audit department
that systematically reviews and reports on the adequacy and effectiveness of the
controls, with management follow-up as appropriate.

Management has also established a formal Business Code of Ethics which is
distributed throughout the Company. We acknowledge our responsibility to
establish and preserve an environment in which all employees properly understand
the fundamental importance of high ethical standards in the conduct of our
business.

The accompanying financial statements have been audited by KPMG Peat Marwick
LLP, independent auditors. During the audit they review and make appropriate
tests of accounting records and internal controls to the extent they consider
necessary to express an opinion on the Minerals Group's financial statements.

The Company's Board of Directors pursues its oversight role with respect to the
Minerals Group's financial statements through the Audit and Ethics Committee,
which is composed solely of outside directors. The Committee meets periodically
with the independent auditors, internal auditors and management to review the
Company's control system and to ensure compliance with applicable laws and the
Company's Business Code of Ethics.

We believe that the policies and procedures described above are appropriate and
effective and do enable us to meet our responsibility for the integrity of the
Minerals Group's financial statements.

- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------

The Board of Directors and Shareholders
The Pittston Company

We have audited the accompanying balance sheets of Pittston Minerals Group (as
described in Note 1) as of December 31, 1996 and 1995, and the related
statements of operations and cash flows for each of the years in the three-year
period ended December 31, 1996. These financial statements are the
responsibility of The Pittston Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements of Pittston Minerals Group present
fairly, in all material respects, the financial position of Pittston Minerals
Group as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for each of the years in the three-year period ended December 31,
1996, in conformity with generally accepted accounting principles.

As more fully discussed in Note 1, the financial statements of Pittston Minerals
Group should be read in connection with the audited consolidated financial
statements of The Pittston Company and subsidiaries.

As more fully discussed in Note 1 to the financial statements, Pittston Minerals
Group changed its method of accounting for impairment of long-lived assets in
1996.

KPMG PEAT MARWICK LLP

KPMG Peat Marwick LLP
Stamford, Connecticut

January 23, 1997

                                      125

Pittston Minerals Group
- --------------------------------------------------------------------------------
BALANCE SHEETS
- --------------------------------------------------------------------------------

                                                                        December 31
(In thousands)                                                       1996        1995
=====================================================================================
                                                                         
ASSETS
Current assets:
Cash and cash equivalents                                       $   3,387       4,999
Short-term investments                                               --        26,046
Accounts receivable:
  Trade (Note 5)                                                   74,366      66,257
  Other                                                            15,804      23,464
- -------------------------------------------------------------------------------------
                                                                   90,170      89,721
  Less estimated amount uncollectible                               1,618       1,946
- -------------------------------------------------------------------------------------
                                                                   88,552      87,775
Coal inventory                                                     26,495      37,329
Other inventory                                                     5,308       4,591
- -------------------------------------------------------------------------------------
                                                                   31,803      41,920
Prepaid expenses                                                    8,659       7,573
Deferred income taxes (Note 8)                                     27,229      30,677
- -------------------------------------------------------------------------------------
Total current assets                                              159,630     198,990
Property, plant and equipment, at cost (Notes 1 and 4)            324,924     365,997
  Less accumulated depreciation, depletion and amortization       154,115     166,653
- -------------------------------------------------------------------------------------
                                                                  170,809     199,344
Deferred pension assets (Note 15)                                  81,067      79,393
Deferred income taxes (Note 8)                                     62,899      80,699
Intangibles, net of amortization (Notes 1, 6 and 12)              111,103     117,551
Coal supply contracts (Note 12)                                    52,696      63,455
Receivable--Pittston Brink's Group/Burlington Group (Note 2)       22,071      15,873
Other assets                                                       46,706      43,304
- -------------------------------------------------------------------------------------
Total assets                                                    $ 706,981     798,609
=====================================================================================

LIABILITIES AND SHAREHOLDER'S EQUITY 
Current liabilities:
Short-term bank borrowings                                      $    --            24
Current maturities of long-term debt (Note 9)                         395       1,199
Accounts payable                                                   59,103      70,214
Payable--Pittston Brink's Group/Burlington Group, net (Note 2)     10,757       9,855
Accrued liabilities:
  Taxes                                                            17,380      16,600
  Workers' compensation and other claims                           14,276      20,338
  Postretirement benefits other than pensions (Note 15)            17,693      18,647
  Reclamation                                                      17,205      12,450
  Payroll and vacation                                              6,960       6,982
  Miscellaneous (Note 15)                                          40,956      63,367
- -------------------------------------------------------------------------------------
                                                                  114,470     138,384
- -------------------------------------------------------------------------------------
Total current liabilities                                         184,725     219,676
Long-term debt, less current maturities (Note 9)                  124,572     100,791
Postretirement benefits other than pensions (Note 15)             219,717     213,707
Workers' compensation and other claims                            105,837     114,602
Reclamation                                                        36,716      47,126
Other liabilities                                                  47,074     111,386
Commitments and contingent liabilities (Notes 9,
 13, 14, 15, 19 and 20)
Shareholder's equity (Notes 3, 10 and 11)                         (11,660)     (8,679)
- -------------------------------------------------------------------------------------
Total liabilities and shareholder's equity                      $ 706,981     798,609
=====================================================================================

See accompanying notes to financial statements.

                                      126

Pittston Minerals Group
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------

                                                         Years Ended December 31
(In thousands, except per share amounts)              1996        1995        1994
==================================================================================
                                                                    
Net sales                                        $ 696,513     722,851     794,998
- ----------------------------------------------------------------------------------
Costs and expenses:
Cost of sales                                      707,497     696,295     771,586
Selling, general and administrative expenses        34,631      33,252      37,049
Restructuring and other (credits) charges,
 including litigation accrual (Notes 16 and 19)    (47,299)       --        90,806
- ----------------------------------------------------------------------------------
Total costs and expenses                           694,829     729,547     899,441
- ----------------------------------------------------------------------------------
Other operating income, net (Note 17)               13,414      22,768      15,281
- ----------------------------------------------------------------------------------
Operating profit (loss)                             15,098      16,072     (89,162)

Interest income                                        835         564         192
Interest expense (Note 2)                          (10,723)    (10,534)     (6,501)
Other expense, net                                  (1,789)     (1,098)       (875)
- ----------------------------------------------------------------------------------
Income (loss) before income taxes                    3,421       5,004     (96,346)
Credit for income taxes (Note 8)                    (7,237)     (9,020)    (43,398)
- ----------------------------------------------------------------------------------
Net income (loss)                                   10,658      14,024     (52,948)
Preferred stock dividends, net (Note 11)            (1,675)     (2,762)     (3,998)
- ----------------------------------------------------------------------------------
Net income (loss) attributed to common shares    $   8,983      11,262     (56,946)
==================================================================================
Net income (loss) per common share (Note 1):
  Primary                                        $    1.14        1.45       (7.50)
  Fully diluted                                       1.08        1.40       (7.50)
==================================================================================
Average common shares outstanding (Note 1):
  Primary                                            7,897       7,786       7,594
  Fully diluted                                      9,906       9,999      10,000

See accompanying notes to financial statements.

                                      127

Pittston Minerals Group
- --------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------

                                                                          Years Ended December 31
(In thousands)                                                            1996       1995       1994
====================================================================================================
                                                                                         
Cash flows from operating activities:
Net income (loss)                                                     $ 10,658     14,024    (52,948)
Adjustments to reconcile net income (loss) to
 net cash provided (used) by
  operating activities:
  Noncash charges and other write-offs                                  29,948       --       46,487
  Depreciation, depletion and amortization                              36,624     42,040     46,074
  Provision (credit) for deferred income taxes                          22,088     16,412    (16,849)
  Credit for pensions, noncurrent                                       (1,676)    (3,514)    (1,162)
  Provision for uncollectible accounts receivable                          262        161        132
  Gain on sale of property, plant and equipment                         (1,398)    (4,994)    (3,422)
  Other operating, net                                                     583      1,132        407
  Change in operating assets and liabilities,
   net of effects of acquisitions and dispositions:
    (Increase) decrease in accounts receivable                          (4,454)    22,670    (25,030)
    Decrease (increase) in inventories                                  10,116    (11,565)    (3,413)
    (Increase) decrease in prepaid expenses                             (1,818)     3,828     (3,749)
    Decrease in accounts payable and accrued liabilities               (17,907)   (16,524)   (11,227)
    (Increase) decrease in other assets                                 (2,893)     2,474      1,701
    (Decrease) increase in workers' compensation and
      other claims, noncurrent                                          (8,766)   (16,575)     5,719
    Decrease in other liabilities                                      (51,749)   (23,437)   (15,711)
    Other, net                                                             181        135       (218)
- ----------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities                        19,799     26,267    (33,209)
- ----------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment                             (23,575)   (22,283)   (25,864)
Proceeds from disposal of property, plant and equipment                  4,613     18,939      5,640
Acquisitions, net of cash acquired, and related contingency payments    (1,134)    (1,078)  (157,324)
Other, net                                                                (419)    (1,188)     6,540
- ----------------------------------------------------------------------------------------------------
Net cash used by investing activities                                  (20,515)    (5,610)  (171,008)
- ----------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Additions to debt                                                       23,216         24     86,045
Reductions of debt                                                      (1,319)   (17,164)    (8,149)
Payments from Brink's Group                                              6,082     12,240      5,705
Payments (to) from Burlington Group                                    (12,179)       878     55,731
Repurchase of stock                                                     (7,895)    (7,173)    (3,767)
Proceeds from exercise of stock options
 and from employee stock purchase plan                                     208      1,379      1,765
Dividends paid                                                          (9,009)    (9,550)    (9,156)
Other, net                                                                --         --          251
Preferred stock issuance, net of cash expenses                            --         --       77,359
- ----------------------------------------------------------------------------------------------------
Net cash (used)  provided by financing activities                         (896)   (19,366)   205,784
- ----------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents                    (1,612)     1,291      1,567
Cash and cash equivalents at beginning of year                           4,999      3,708      2,141
- ----------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                              $  3,387      4,999      3,708
====================================================================================================

See accompanying notes to financial statements.

                                      128

Pittston Minerals Group
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

(Dollars in thousands, except per share amounts)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
On January 18, 1996, the shareholders of The Pittston Company (the "Company")
approved the Brink's Stock Proposal, as described in the Company's proxy
statement dated December 15, 1995, resulting in the modification, effective as
of January 19, 1996, of the capital structure of the Company to include an
additional class of common stock. The outstanding shares of Pittston Services
Group Common Stock, par value $1.00 per share, ("Services Stock") were
redesignated as Pittston Brink's Group Common Stock, par value $1.00 per share,
("Brink's Stock") a new class of common stock, designated as Pittston Burlington
Group Common Stock, par value $1.00 per share, ("Burlington Stock") was
distributed on the basis of one-half of one share for each outstanding share of
Services Stock. Holders of Pittston Minerals Group Common Stock, par value $1.00
per share, ("Minerals Stock") continue to be holders of such stock, which
continues to reflect the performance of the Pittston Minerals Group (the
"Minerals Group"). Brink's Stock is intended to reflect the performance of the
Pittston Brink's Group (the "Brink's Group") and Burlington Stock is intended to
reflect the performance of the Pittston Burlington Group (the "Burlington
Group").

The financial statements of the Minerals Group include the balance sheets, the
results of operations and cash flows of the Pittston Coal Company ("Coal
Operations") and Pittston Mineral Ventures ("Mineral Ventures") operations of
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 allocations reflected in these financial statements are determined
based upon methods which management believes to be a reasonable and equitable
allocation of such items (Note 2).

The Company provides to holders of Minerals Stock separate financial statements,
financial review, descriptions of business and other relevant information for
the Minerals Group in addition to consolidated financial information of the
Company. Notwithstanding the attribution of assets and liabilities (including
contingent liabilities) among the Minerals Group, the Brink's Group and the
Burlington Group for the purpose of preparing their respective financial
statements, this attribution and the change in the capital structure of the
Company as a result of the approval of the Brink's Stock Proposal did not affect
legal title to such assets or responsibility for such liabilities for the
Company or any of its subsidiaries. Holders of Minerals Stock are shareholders
of the Company, which continues to be responsible for all its liabilities.
Financial impacts arising from one group that affect the Company's financial
condition could affect the results of operations and financial condition of each
of the groups. Since financial developments within one group could affect other
groups, all shareholders of the Company could be adversely affected by an event
directly impacting only one group. Accordingly, the Company's consolidated
financial statements must be read in connection with the Minerals Group's
financial statements.

Principles of Combination
The accompanying financial statements reflect the combined accounts of the
businesses comprising the Minerals Group. The Minerals Group's interests in 20%
to 50% owned companies are carried on the equity method. All material
intercompany items and transactions have been eliminated in combination. Certain
prior year amounts have been reclassified to conform to the current year's
financial statement presentation.

Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits and investments
with original maturities of three months or less.

Short-term Investments
Short-term investments primarily include funds set aside by the Minerals Group
for certain obligations and are carried at cost which approximates market. These
investments have original maturities in excess of three months and not exceeding
one year.

Inventories
Inventories are stated at cost (determined under the average cost method) or
market, whichever is lower.

Property, Plant and Equipment
Expenditures for maintenance and repairs are charged to expense, and the costs
of renewals and betterments are capitalized. Depreciation is provided
principally on the straight-line method at varying rates depending upon
estimated useful lives. Depletion of bituminous coal lands is provided on the
basis of tonnage mined in relation to the estimated total of recoverable tonnage
in the ground.

Mine development costs, primarily included in bituminous coal lands, are
capitalized and amortized over the estimated useful life of the mine. These
costs include expenses incurred for site preparation and development as well as
operating deficits incurred at the mines during a development stage. A mine is
considered under development until all planned production units have been placed
in operation.

                                      129

Valuation of coal properties is based primarily on mining plans and conditions
assumed at the time of the evaluation. These valuations could be impacted by
actual economic conditions which differ from those assumed at the time of the
evaluation.

Intangibles
The excess of cost over fair value of net assets of businesses acquired is
amortized on a straight-line basis over the estimated periods benefited.

The Minerals Group evaluates the carrying value of intangibles and the periods
of amortization to determine whether events and circumstances warrant revised
estimates of assets value or useful lives. The Minerals Group annually assesses
the recoverability of the excess of cost over net assets acquired by determining
whether the amortization of the asset balance over its remaining life can be
recovered through projected undiscounted future operating cash flows. Evaluation
of asset value as well as periods of amortization are performed on a
disaggregated basis.

Goodwill allocated to a potentially impaired asset will be identified with that
asset in performing an impairment test in accordance with SFAS No. 121. If such
tests indicate that an impairment exists, the carrying amount of the identified
goodwill would be eliminated before making any reduction of the carrying amounts
of impaired long-lived assets.

Coal Supply Contracts
Coal supply contracts consist of contracts to supply coal to customers at
certain negotiated prices over a period of time, which have been acquired from
other coal companies, and are stated at cost at the time of acquisition, which
approximates fair market value. The capitalized cost of such contracts is
amortized over the term of the contract on the basis of tons of coal sold under
the contract.

Foreign Currency Translation
Assets and liabilities of foreign subsidiaries have been translated at current
exchange rates, and related revenues and expenses have been translated at
average rates of exchange in effect during the year. Resulting cumulative
translation adjustments have been included in shareholder's equity.

Postretirement Benefits Other Than Pensions
Postretirement benefits other than pensions are accounted for in accordance with
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions", which requires employers to accrue
the cost of such retirement benefits during the employees' service with the
Company.

Income Taxes
Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", which requires
recognition of deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse.

See Note 2 for allocation of the Company's U.S. federal income
taxes to the Minerals Group.

Pneumoconiosis (Black Lung) Expense
The Minerals Group acts as self-insurer with respect to almost all black lung
benefits. Provision is made for estimated benefits based on annual actuarial
reports prepared by outside actuaries. The excess of the present value of
expected future benefits over the accumulated book reserves is recognized over
the amortization period as a level percentage of payroll. Cumulative actuarial
gains or losses are calculated periodically and amortized on a straight-line
basis. Assumptions used in the calculation of the actuarial present value of
black lung benefits are based on actual retirement experience of the Company's
coal employees, black lung claims incidence for active miners, actual dependent
information, industry turnover rates, actual medical and legal cost experience
and projected inflation rates. As of December 31, 1996 and 1995, the actuarially
determined value of estimated future black lung benefits discounted at 6% was
approximately $57,000 and $60,400, respectively, and is included in workers'
compensation and other claims. Based on actuarial data, the amount (credited)
charged to operations was ($2,216) in 1996, ($1,402) in 1995 and $201 in 1994.
In addition, the Company accrued additional expenses for black lung benefits
related to federal and state assessments, legal and administrative expenses and
other self insurance costs. These costs amounted to $1,849 in 1996, $2,569 in
1995 and $2,472 in 1994.

Reclamation Costs
Expenditures relating to environmental regulatory requirements and reclamation
costs undertaken during mine operations are charged against earnings as
incurred. Estimated site restoration and post closure reclamation costs are
charged against earnings using the units of production method over the expected
economic life of each mine. Accrued reclamation costs are subject to review by
management on a regular basis and are revised when appropriate for changes in
future estimated costs and/or regulatory requirements.

                                      130

Financial Instruments
From time to time, the Minerals Group uses foreign currency forward contracts to
hedge the risk of changes in foreign currency rates associated with certain
transactions denominated in Australian dollars. Realized and unrealized gains
and losses on these contracts, designated and effective as hedges, are deferred
and recognized as part of the specific transaction hedged.

The Minerals Group also utilizes other financial instruments to protect against
adverse price movements in gold, which the company produces, as well as interest
rate changes on certain variable rate debt. Gains and losses on these contracts,
designated and effective as hedges, are deferred and recognized as part of the
transaction hedged.

Revenue Recognition
Coal sales are generally recognized when coal is loaded onto transportation
vehicles for shipment to customers. For domestic sales, this generally occurs
when coal is loaded onto railcars at mine locations. For export sales, this
generally occurs when coal is loaded onto marine vessels at terminal facilities.

Gold sales are recognized when products are shipped to a refinery. Settlement
adjustments arising from final determination of weights and assays are reflected
in sales when received.

Net Income Per Common Share
The computation of primary earnings per share is based on the weighted-average
number of outstanding common shares divided into net income less preferred stock
dividends. The computation of fully diluted earnings per common share assumes
the conversion of the $31.25 Series C Cumulative Preferred Stock (issued in
1994) and additional shares assuming the exercise of stock options (antidilutive
in the primary calculation) divided into net income. For 1994, the loss per
share, assuming full dilution, is considered to be the same as primary since the
effect of common stock equivalents and the preferred stock conversion would be
antidilutive. The shares of Minerals Stock held in The Pittston Company Employee
Benefits Trust (Note 11) are not included in the net income per share
calculations as they were evaluated for inclusion in that calculation under the
treasury stock method and had no dilutive effect.

Use of Estimates
In accordance with generally accepted accounting principles, management of the
Company has made a number of estimates and assumptions relating to the reporting
of assets and liabilities and the disclosure of contingent assets and
liabilities to prepare these financial statements. Actual results could differ
from those estimates.

Accounting Changes
In 1996, the Minerals Group adopted Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies to review
assets for impairment whenever circumstances indicate that the carrying amount
of an asset may not be recoverable. SFAS No. 121 resulted in a pretax charge to
earnings in 1996 for the Minerals Group's Coal Operations of $29,948 ($19,466
after-tax), of which $26,312 was included in cost of sales and $3,636 was
included in selling, general and administrative expenses. Assets for which the
impairment loss was recognized consisted of property, plant and equipment,
advanced royalties and goodwill. These assets primarily related to mines
scheduled for closure in the near term and idled facilities and related
equipment.

In 1996, the Minerals Group also adopted SFAS No. 123, "Accounting for Stock
Based Compensation". SFAS No. 123 establishes financial accounting and reporting
standards for stock-based employee compensation plans. SFAS No. 123 allows for
the adoption of a fair value based method of accounting for all employee stock
compensation plans or it allows entities to continue to measure compensation
cost for those plans using the intrinsic value based method of accounting
prescribed by Accounting Principles Board Opinion ("APB") No. 25, "Accounting
for Stock Issued to Employees". APB No. 25 requires the disclosure of net income
and net income per share as if the fair value based method of accounting is
applied. The Minerals Group has elected to continue to account for its stock
compensation plans according to APB No. 25 with the disclosure of the impact on
net income and net income per share as if the fair value based method of
accounting is applied (Note 10).

2. RELATED PARTY TRANSACTIONS

The following policies may be modified or rescinded by action of the Company's
Board of Directors (the "Board"), or the Board may adopt additional policies,
without approval of the shareholders of the Company, although the Board has no
present intention to do so. The Company allocated certain corporate general and
administrative expenses, net interest expense and related assets and liabilities
in accordance with the policies described below. Corporate assets and
liabilities are primarily deferred pension assets, income taxes and accrued
liabilities.

Financial
As a matter of policy, the Company manages most financial activities of the
Minerals Group, the Brink's Group and the Burlington Group on a centralized,
consolidated basis. Such financial activities include the investment of surplus
cash; the

                                      131

issuance, repayment and repurchase of short-term and long-term debt; the
issuance and repurchase of common stock and the payment of dividends. In
preparing these financial statements, transactions primarily related to invested
cash, short-term and long-term debt (including convertible debt), related net
interest and other financial costs have been attributed to the Minerals Group
based upon its cash flows for the periods presented after giving consideration
to the debt and equity structure of the Company. At December 31, 1996 and 1995,
the Company attributed long-term debt to the Minerals Group based upon the
purpose for the debt in addition to the cash flow requirements of the Minerals
Group. See Note 9 for details and amounts of long-term debt. The portion of the
Company's interest expense allocated to the Minerals Group for 1996, 1995 and
1994 was $7,475, $6,335 and $4,448, respectively. Management believes such
method of allocation to be equitable and a reasonable estimate of the cost
attributable to the Minerals Group.

To the extent borrowings are deemed to occur between the Brink's Group, the
Burlington Group and the Minerals Group, intergroup accounts have been
established bearing interest at the rate in effect from time to time under the
Company's unsecured credit lines or, if no such credit lines exist, at the prime
rate charged by Chase Manhattan Bank from time to time. At December 31, 1996,
the Minerals Group owed the Brink's Group and Burlington Group $24,027 and
$7,730; respectively, and at December 31, 1995, the Minerals Group owed the
Brink's Group and Burlington Group $17,945 and $19,910; respectively, as a
result of borrowings.

Income Taxes
The Minerals Group is included in the consolidated U.S. federal
income tax return filed by the Company.

The Company's consolidated provision and actual cash payments for U.S. federal
income taxes are allocated between the Minerals Group, the Brink's Group and the
Burlington Group in accordance with the Company's tax allocation policy and
reflected in the financial statements for each Group. In general, the
consolidated tax provision and related tax payments or refunds are allocated
among the Groups, for financial statement purposes, based principally upon the
financial income, taxable income, credits and other amounts directly related to
the respective Group. Tax benefits that cannot be used by the Group generating
such attributes, but can be utilized on a consolidated basis, are allocated to
the Group that generated such benefits and an intergroup account is established
for the benefit of the Group generating the attributes. As a result, the
allocated Group amounts of taxes payable or refundable are not necessarily
comparable to those that would have resulted if the Groups had filed separate
tax returns. At December 31, 1996, the Minerals Group was owed $18,760 and
$24,310 from the Brink's Group and the Burlington Group, respectively for such
tax benefits, of which $8,760 and $13,310, respectively, were not expected to be
received within one year from such dates in accordance with the policy. At
December 31, 1995, the Minerals Group was owed $21,844 and $22,029 from the
Brink's Group and the Burlington Group, respectively, for such tax benefits, of
which $7,844 and $8,029, respectively, were not expected to be received within
one year from such date. The Brink's and Burlington Groups paid the Minerals
Group $14,470 and $14,949, respectively in 1996 and $10,172 and $11,328,
respectively, in 1995 for the utilization of such tax benefits.

Shared Services
A portion of the Company's corporate general and administrative expenses and
other shared services has been allocated to the Minerals Group based upon
utilization and other methods and criteria which management believes to be
equitable and a reasonable estimate of the cost attributable to the Minerals
Group. These allocations were $6,555, $7,266 and $6,845 in 1996, 1995 and 1994,
respectively.

Pension
The Minerals Group's pension cost related to its participation in the Company's
noncontributory defined benefit pension plan is actuarially determined based on
its respective employees and an allocable share of the pension plan assets and
calculated in accordance with Statement of Financial Accounting Standards No.
87, "Employers' Accounting for Pensions" ("SFAS 87"). Pension plan assets have
been allocated to the Minerals Group based on the percentage of its projected
benefit obligation to the plan's total projected benefit obligation. Management
believes such method of allocation to be equitable and a reasonable estimate of
the cost attributable to the Minerals Group.

3. SHAREHOLDER'S EQUITY

The following analyzes shareholder's equity of the Minerals Group for the
periods presented:

                                                              As of December 31
                                                   1996        1995        1994
- --------------------------------------------------------------------------------
Balance at beginning of period                 $ (8,679)     (8,596)    (24,857)
Net income (loss)                                10,658      14,024     (52,948)
Stock options exercised                              43       1,203       1,767
Stock released from employee benefits
  trust to employee benefits plan                 2,100       1,745         712
Issuance of $31.25 Series C Cumulative
  Preferred Stock, net of cash expenses            --          --        77,082
Stock repurchases                                (7,895)     (7,173)     (3,767)
Dividends declared                               (9,059)     (9,493)     (9,165)
Foreign currency translation adjustment           1,111        (566)      1,712
Tax benefit of options exercised                     61         177         617
Other, net                                         --          --           251
- --------------------------------------------------------------------------------
Balance at end of period                       $(11,660)     (8,679)     (8,596)
================================================================================

                                      132

The cumulative foreign currency translation adjustment included in shareholder's
equity is $1,171, $60 and $626 at December 31, 1996, 1995 and 1994,
respectively.

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, at cost, consist of the following:

                                                               As of December 31
                                                           1996             1995
- --------------------------------------------------------------------------------
Bituminous coal lands                                  $101,988          109,400
Land, other than coal lands                              22,461           21,649
Buildings                                                 8,853            9,204
Machinery and equipment                                 191,622          225,744
- --------------------------------------------------------------------------------
Total                                                  $324,924          365,997
================================================================================

The estimated useful lives for property, plant and equipment are as follows:

                                                                           Years
- --------------------------------------------------------------------------------
Buildings                                                               10 to 40
Machinery and equipment                                                  3 to 30

Depreciation and depletion of property, plant and equipment aggregated $22,633
in 1996, $25,164 in 1995 and $27,481 in 1994.

Mine development costs which were capitalized totaled $8,144 in 1996, $10,118 in
1995 and $11,908 in 1994.

5. ACCOUNTS RECEIVABLE--TRADE

For each of the years in the three-year period ended December 31, 1996, the
Company, on behalf of the Minerals Group, maintained agreements with financial
institutions whereby it had the right to sell certain coal receivables to those
institutions. Certain agreements contained provisions for sales with recourse.
In 1996 and 1995, total coal receivables of $15,390 and $25,092, respectively,
were sold under such agreements. As of December 31, 1996 and 1995, receivables
sold which remained to be collected totaled $5,183 and $5,222, respectively.

6. INTANGIBLES

Intangibles consist entirely of the excess of cost over fair value of net assets
of businesses acquired and are net of accumulated amortization of $8,914 at
December 31, 1996 and $5,906 at December 31, 1995. The estimated useful life of
intangibles is generally forty years. Amortization of intangibles aggregated
$3,128 in 1996, $3,099 in 1995 and $2,642 in 1994.

7. FINANCIAL INSTRUMENTS

Financial instruments which potentially subject the Minerals Group to
concentrations of credit risk consist principally of cash and cash equivalents,
short-term investments and trade receivables. The Minerals Group's cash and cash
equivalents and short-term investments are placed with high credit quality
financial institutions. Also, by policy, the amount of credit exposure to any
one financial institution is limited. The Minerals Group makes substantial sales
to a few relatively large customers. Credit limits, ongoing credit evaluation
and account monitoring procedures are utilized to minimize the risk of loss from
nonperformance on trade receivables.

The following details the fair values of financial instruments for which it is
practicable to estimate the value:

Cash and cash equivalents and short-term investments 
The carrying amounts approximate fair value because of the short maturity of
these instruments.

Accounts receivable, accounts payable and accrued liabilities 
The carrying amounts approximate fair value because of the short-term nature of
these instruments.

Debt
The aggregate fair value of the Minerals Group's long-term debt obligations,
which is based upon quoted market prices and rates currently available to the
Company for debt with similar terms and maturities, approximates the carrying
amount.

Off-balance sheet instruments
The Minerals Group utilizes off-balance sheet financial instruments, as
discussed below, to hedge its market exposures. The risk that counterparties to
these contracts may be unable to perform is minimized by limiting the
counterparties to major financial institutions. The Minerals Group does not
expect any losses due to such counterparty default.

                                      133

Foreign currency forward contracts--The Minerals Group enters into foreign
currency forward contracts from time to time, with a duration of up to 360 days
as a hedge against liabilities denominated in the Australian dollar. These
contracts do not subject the Minerals Group to risk due to exchange rate
movements because gains and losses on these contracts offset losses and gains on
the liabilities being hedged. At December 31, 1996, no such currency forward
contracts were outstanding.

Gold contracts--In order to protect itself against downward movements in gold
prices, the Minerals Group hedges a portion of its recoverable proven and
probable reserves primarily through forward sales contracts. At December 31,
1996, 37,808 ounces of gold, representing approximately 14% of the Minerals
Group's recoverable proven and probable reserves, were sold forward under
forward sales contracts that mature periodically through early 1998. Because
only a portion of its future production is currently sold forward, the Minerals
Group can take advantage of increases, if any, in the spot price of gold. At
December 31, 1996, the fair value of the Minerals Group's forward sales
contracts amounted to $3,233.

Interest rate contracts--As discussed further in Note 9, in 1996, 1995 and 1994,
the Company entered into variable to fixed interest rate swap agreements. Fair
value at December 31, 1996 was not significant. These contracts have been
attributed to the Minerals Group.

8. INCOME TAXES

The provision (credit) for income taxes consists of the following:

                                U.S.
                             Federal        Foreign         State         Total
- --------------------------------------------------------------------------------
1996:
Current                     $(29,325)          --            --         (29,325)
Deferred                      20,893          1,195          --          22,088
- --------------------------------------------------------------------------------
Total                       $ (8,432)         1,195          --          (7,237)
================================================================================
1995:
Current                     $(25,432)          --            --         (25,432)
Deferred                      15,664            748          --          16,412
- --------------------------------------------------------------------------------
Total                       $ (9,768)           748          --          (9,020)
================================================================================
1994:
Current                     $(26,599)            50          --         (26,549)
Deferred                     (17,954)         1,008            97       (16,849)
- --------------------------------------------------------------------------------
Total                       $(44,553)         1,058            97       (43,398)
================================================================================

The significant components of the deferred tax expense (benefit) were as
follows:

                                                        Years Ended December 31
                                                     1996       1995      1994
- --------------------------------------------------------------------------------
Deferred tax expense (benefit), exclusive
  of the components listed below                 $ 18,064     17,038    (13,733)
Net operating loss carryforwards                     (327)      (631)      (595)
Alternative minimum tax credit                      3,337       (326)    (1,021)
Change in the valuation allowance for
  deferred tax assets                               1,014        331     (1,500)
- --------------------------------------------------------------------------------
Total                                            $ 22,088     16,412    (16,849)
================================================================================

The tax benefit for compensation expense related to the exercise of certain
employee stock options for tax purposes in excess of compensation expense for
financial reporting purposes is recognized as an adjustment to shareholder's
equity.

The components of the net deferred tax asset as of December 31, 1996, and
December 31, 1995, were as follows:

                                                             1996          1995
- --------------------------------------------------------------------------------
Deferred tax assets:
Accounts receivable                                     $     973           778
Postretirement benefits other than pensions                96,951        92,649
Workers' compensation and other claims                     46,791        50,157
Other liabilities and reserves                             53,337        77,390
Miscellaneous                                               8,405         8,505
Net operating loss carryforwards                            3,235         2,908
Alternative minimum tax credits                             7,579        10,895
Valuation allowance                                        (9,460)       (8,446)
- --------------------------------------------------------------------------------
Total deferred tax assets                                 207,811       234,836
- --------------------------------------------------------------------------------
Deferred tax liabilities:
Property, plant and equipment                              24,486        29,959
Pension assets                                             33,179        32,152
Other assets                                               11,392         9,321
Miscellaneous                                              48,626        52,028
- --------------------------------------------------------------------------------
Total deferred tax liabilities                            117,683       123,460
- --------------------------------------------------------------------------------
Net deferred tax asset                                  $  90,128       111,376
================================================================================

The recording of deferred federal tax assets is based upon their expected
utilization in the Company's consolidated federal income tax return and the
benefit that would accrue to the Minerals Group under the Company's tax
allocation policy.

The valuation allowance relates to deferred tax assets in certain foreign and
state jurisdictions.

                                      134

The following table accounts for the difference between the actual tax provision
and the amounts obtained by applying the statutory U.S. federal income tax rate
of 35% in 1996, 1995 and 1994 to the income (loss) before income taxes.

                                                        Years Ended December 31
                                                     1996       1995       1994
- --------------------------------------------------------------------------------
Income (loss) before income taxes:
United States                                     $   100      3,539    (99,400)
Foreign                                             3,321      1,465      3,054
- --------------------------------------------------------------------------------
Total                                             $ 3,421      5,004    (96,346)
================================================================================
Tax provision computed at statutory rate          $ 1,197      1,751    (33,721)
Increases (reductions) in taxes due to:
Percentage depletion                               (7,644)    (9,861)    (9,313)
State income taxes (net of federal tax
  benefit)                                         (1,014)      (726)     1,563
Change in the valuation allowance for
  deferred tax assets                               1,014        331     (1,500)
Miscellaneous                                        (790)      (515)      (427)
- --------------------------------------------------------------------------------
Actual tax credit                                 $(7,237)    (9,020)   (43,398)
================================================================================

It is the policy of the Minerals Group to accrue deferred income taxes on
temporary differences related to the financial statement carrying amounts and
tax bases of investments in foreign subsidiaries and affiliates which are
expected to reverse in the foreseeable future. As of December 31, 1996 and
December 31, 1995, there was no unrecognized deferred tax liability for
temporary differences related to investments in foreign subsidiaries and
affiliates.

The Minerals Group is included in the Company's consolidated U.S. federal income
tax return.

As of December 31, 1996, the Minerals Group had $7,579 of alternative minimum
tax credits allocated to it under the Company's tax allocation policy. Such
credits are available to offset future U.S. federal income taxes and, under
current tax law, the carryforward period for such credits is unlimited.

The tax benefit of net operating loss carryforwards for the Minerals Group as at
December 31, 1996 was $3,235 and related to various state and foreign taxing
jurisdictions. The expiration periods primarily range from 5 to 15 years.

9. LONG-TERM DEBT

A portion of the outstanding debt under the Company's revolving credit agreement
has been attributed to the Minerals Group. Total long-term debt of the Minerals
Group consists of the following:

                                                               As of December 31
                                                                1996        1995
- --------------------------------------------------------------------------------
Senior obligations                                          $    350         413
Obligations under capital leases (average
  rate 7.74% in 1996 and 6.22% in 1995)                        1,022         378
- --------------------------------------------------------------------------------
                                                               1,372         791
- --------------------------------------------------------------------------------
Attributed portion of Company's debt
U.S. dollar term loan due 2001 (year end
  rate 5.97% in 1996 and 6.56% in 1995)                      100,000     100,000
Revolving credit notes due 2001 (year-end
  rate 7.01% in 1996)                                         23,200        --
- --------------------------------------------------------------------------------
Total long-term debt, less current maturities                124,572     100,791
Current maturities of long-term debt:
Other senior obligations                                          77         154
Capital leases                                                   318       1,045
- --------------------------------------------------------------------------------
Total current maturities of long-term debt                       395       1,199
Total long-term debt including current maturities           $124,967     101,990
================================================================================

For the four years through December 31, 2001, minimum repayments of long-term
debt outstanding are as follows:

                1998          $     521
                1999                308
                2000                357
                2001            123,386

The Company has a $350,000 revolving credit agreement with a syndicate of banks
(the "Facility"). The Facility includes a $100,000 term loan and also permits
additional borrowings, repayments and reborrowings of up to an aggregate of
$250,000. During the second quarter of 1996, the maturity date of both the term
loan and revolving credit portion of the Facility was extended to May 31, 2001.
Interest on borrowings under the Facility is payable at rates based on prime,
certificate of deposit, Eurodollar or money market rates. During 1995, $23,400
of the term loan obligation attributed to the Burlington Group was assumed by
the Minerals Group as partial settlement of the Minerals Group payable to the
Burlington Group. At December 31, 1996, in addition to the borrowings, the
$100,000 term loan, of $23,200, were outstanding. All borrowings were attributed
to the Minerals Group.

                                      135

In 1994, the Company entered into a standard three year variable to fixed
interest rate swap agreement on a portion of the Company's U.S. dollar term
loan. This agreement fixed the Company's interest rate at 5% on initial
borrowings of $40,000 in principal. The principal amount to which the 5%
interest rate applies declines periodically throughout the term of the
agreement, and at December 31, 1996, this rate applied to borrowings of $5,000
in principal. During 1995, the Company entered into two other variable to fixed
interest rate swap agreements. One agreement fixes the Company's interest rate
at 5.80% on $20,000 in principal for a term of three years. The other agreement
fixes the Company's interest rate at 5.66% for a term of 21 months on $20,000 in
principal. During 1996, the Company entered into a variable to fixed interest
rate swap agreement which fixes the Company's interest rate at 4.9% on initial
borrowings of $5,000 in principal. The principal amount increases by $5,000 each
quarter through the first quarter of 1998. The principal amount to which the
4.9% interest rate applied as of December 31, 1996 was $15,000.

Under the terms of some of its debt instruments, the Company has agreed to
various restrictions relating to the payment of dividends, the repurchase of
capital stock, the maintenance of consolidated net worth, and the amount of
additional funded debt which may be incurred. Allowable restricted payments for
dividends and stock repurchases aggregated $255,810 at December 31, 1996. Under
the terms of the Facility, the Company has agreed to maintain at least $400,000
of Consolidated Net Worth, as defined, and can incur additional indebtedness of
approximately $560,000.

At December 31, 1996, the Company's portion of outstanding unsecured letters of
credit allocated to the Minerals Group was $38,047, primarily supporting its
obligations under its various self-insurance programs.

10. STOCK OPTIONS

The Company has various stock-based compensation plans as described below.

Stock Option Plans
The Company grants options under its 1988 Stock Option Plan (the "1988 Plan") to
executives and key employees and under its Non-Employee Directors' Stock Option
Plan (the "Non-Employee Plan") to outside directors, to purchase common stock at
a price not less than 100% of quoted market value at the date of grant. The 1988
Plan options can be granted with a maximum term of ten years and can vest within
six months from the date of grant. The majority of grants made in 1996, 1995 and
1994 have a maximum term of six years and vest 100% at the end of the third
year. The Non-Employee Plan options can be granted with a maximum term of ten
years and can vest within six months from the date of grant. The majority of
grants made in 1996, 1995 and 1994 have a maximum term of six years and vest
ratably over the first three years. The total number of shares underlying
options authorized for grant, but not yet granted, under the 1988 Plan is
572,201. Under the Non-Employee Plan, the total number of shares underlying
options authorized for grant, not yet granted, is 35,400.

The Company's 1979 Stock Option Plan (the "1979 Plan") and 1985 Stock Option
Plan (the "1985 Plan") terminated in 1985 and 1988, respectively, except as to
options still outstanding.

As part of the Brink's Stock Proposal (Note 1), the 1988 and the Non-Employee
Plans were amended to permit option grants to be made to optionees with respect
to Brink's Stock or Burlington Stock, in addition to Minerals Stock. The
approval of the Brink's Stock Proposal had no affect on options for Minerals
Stock.

The table below summarizes the related plan activity.

                                                                      Aggregate
                                                                       Exercise
                                                         Shares           Price
- --------------------------------------------------------------------------------
Outstanding at December 31, 1993                        623,498        $ 11,023
Granted                                                  23,000             431
Exercised                                              (128,667)         (1,765)
Forfeited or expired                                    (10,508)           (118)
- --------------------------------------------------------------------------------
Outstanding at December 31, 1994                        507,323           9,571
Granted                                                 258,300           2,665
Exercised                                               (95,129)         (1,203)
Forfeited or expired                                    (72,697)         (1,674)
- --------------------------------------------------------------------------------
Outstanding at December 31, 1995                        597,797           9,359
Granted                                                   3,800              47
Exercised                                                (3,400)            (45)
Forfeited or expired                                    (15,450)           (229)
- --------------------------------------------------------------------------------
Outstanding at December 31, 1996                        582,747        $  9,132
================================================================================

Options exercisable at the end of 1996, 1995 and 1994, respectively, for
Minerals Stock were 291,860, 214,163 and 271,815.

The following table summarizes information about stock options outstanding as of
December 31, 1996.
   
                               ------------------------------  -----------------
                                                Stock Options      Stock Options
                                                  Outstanding        Exercisable
- --------------------------------------------------------------------------------
                                           Weighted                        
                                            Average                     
                                          Remaining  Weighted           Weighted
                                        Contractual   Average            Average
Range of                                       Life  Exercise           Exercise
Exercise Prices                 Shares      (Years)     Price   Shares     Price
- --------------------------------------------------------------------------------
$  8.74 to 13.00               286,110        4.30    $ 10.40   32,893    $10.81
  13.43 to 18.63               111,637        3.08      15.18   99,637     14.78
  23.82 to 25.74               185,000        6.93      25.73  159,330     25.74
- --------------------------------------------------------------------------------
Total                          582,747                         291,860    
================================================================================

                                      136

Employee Stock Purchase Plan
Under the 1994 Employee Stock Purchase Plan (the "Plan"), the Company is
authorized to issue up to 250,000 shares of Minerals Stock, to its employees who
have six months of service and who complete minimum annual work requirements.
Under the terms of the Plan, employees may elect each six-month period
(beginning January 1 and July 1), to have up to 10 percent of their annual
earnings withheld to purchase the Company's stock. Employees may purchase shares
of any or all of the three classes of Company common stocks. The purchase price
of the stock is 85% of the lower of its beginning-of-the-period or
end-of-the-period market price. Under the Plan, the Company sold 29,831 shares
and 44,098 shares of Minerals Stock to employees during 1996 and 1995,
respectively.

Accounting For Plans
The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation", but applies APB Opinion No. 25 and
related Interpretations in accounting for its plans. Accordingly, no
compensation cost has been recognized in the accompanying financial statements.
Had compensation costs for the Company's plans been determined based on the fair
value of awards at the grant dates, consistent with SFAS No. 123, the Minerals
Group's net income and earnings per share would approximate the pro forma
amounts indicated below:

                                                         Years Ended December 31
                                                                 1996       1995
- --------------------------------------------------------------------------------
Net Income attributed to common shares
Minerals Group
  As Reported                                               $   8,983     11,262
  Pro Forma                                                     8,711     10,925
Net Income per common share
Minerals Group
  Primary, As Reported                                           1.14       1.45
  Primary, Pro Forma                                             1.10       1.40
  Fully Diluted, As Reported                                     1.08       1.40
  Fully Diluted, Pro Forma                                       1.05       1.37
================================================================================

Note: The pro forma disclosures shown may not be representative of the effects
on reported net income in future years.

The fair value of each stock option grant used to compute pro forma net income
and net income per share disclosures is estimated at the time of the grant using
the Black-Scholes option-pricing model. The weighted-average assumptions used in
the model are as follows:

                                                                  1996      1995
- --------------------------------------------------------------------------------
Expected dividend yield                                           4.8%      4.8%
Expected volatility                                                37%       38%
Risk-free interest rate                                           6.1%      5.7%
Expected term (in years)                                          3.7       4.2
================================================================================

Using these assumptions in the Black-Scholes model, the weighted-average fair
value of options granted during 1996 and 1995 is $10 and $687, respectively.

Under SFAS 123, compensation cost is also recognized for the fair value of
employee stock purchase rights. Because the Company settles its employee stock
purchase rights under the Plan at the end of each six-month offering period, the
fair value of these purchase rights was calculated using actual market
settlement data. The weighted-average fair value of the stock purchase rights
granted in 1996 and 1995 was $143 and $290 for the Minerals Group, respectively.

11. CAPITAL STOCK

The Company, at any time, has the right to exchange each outstanding share of
Minerals Stock, which was previously subject to exchange for shares of Services
Stock, for shares of Brink's Stock (or, if no Brink's Stock is then outstanding,
Burlington Stock) having a fair market value equal to 115% of the fair market
value of one share of Minerals Stock. In addition, upon the disposition of all
or substantially all of the properties and assets of the Minerals Group to any
person (with certain exceptions), the Company is required to exchange each
outstanding share of Minerals Stock for shares of Brink's Stock (or, if no
Brink's Stock is then outstanding, Burlington Stock) having a fair market value
equal to 115% of the fair market value of one share of Minerals Stock. If any
shares of the Company's Preferred Stock are converted after an exchange of
Minerals Stock for Brink's Stock (or Burlington Stock), the holder of such
Preferred Stock would, upon conversion, receive shares of Brink's Stock (or
Burlington Stock) in lieu of shares of Minerals Stock otherwise issuable upon
such conversion.

The Company, at any time, has the right to exchange each outstanding share of
Burlington Stock for shares of Brink's Stock (or, if no Brink's Stock is then
outstanding, Minerals Stock) having a fair market value equal to 115% of the
fair market value of one share of Burlington Stock. In addition, upon the
disposition of all or substantially all of the properties and assets of the
Burlington Group to any person (with certain exceptions), the Company is
required to exchange each outstanding share of Burlington Stock for shares of
Brink's Stock (or, if no Brink's Stock is then outstanding, Minerals Stock)
having a fair market value equal to 115% of the fair market value of one share
of Burlington Stock.

Holders of Brink's Stock at all times have one vote per share. Holders of
Burlington Stock and Minerals Stock have one and 0.626 votes per share,
respectively, subject to adjustment on January 1, 1998, and on January 1 every
two years thereafter in such a manner so that each class' share of the aggregate
voting

                                      137

power at such time will be equal to that class' share of the aggregate market
capitalization of the Company's common stock at such time. Accordingly, on each
adjustment date, each share of Burlington Stock and Minerals Stock may have more
than, less than or continue to have the number of votes per share as they have.
Holders of Brink's Stock, Burlington Stock and Minerals Stock vote together as a
single voting group on all matters as to which all common shareholders are
entitled to vote. In addition, as prescribed by Virginia law, certain amendments
to the Articles of Incorporation affecting, among other things, the designation,
rights, preferences or limitations of one class of common stock, or certain
mergers or statutory share exchanges, must be approved by the holders of such
class of common stock, voting as a group, and, in certain circumstances, may
also have to be approved by the holders of the other classes of common stock,
voting as separate voting groups.

In the event of a dissolution, liquidation or winding up of the Company, the
holders of Brink's Stock, Burlington Stock and Minerals Stock, effective January
19, 1996, share on a per share basis an aggregate amount equal to 55%, 28% and
17%, respectively, of the funds, if any, remaining for distribution to the
common shareholders. In the case of Minerals Stock, such percentage has been
set, using a nominal number of shares of Minerals Stock of 4,202,954 (the
"Nominal Shares") in excess of the actual number of shares of Minerals Stock
outstanding, to ensure that the holders of Minerals Stock are entitled to the
same share of any such funds immediately following the consummation of the
transactions as they were prior thereto. These liquidation percentages are
subject to adjustment in proportion to the relative change in the total number
of shares of Brink's Stock, Burlington Stock and Minerals Stock, as the case may
be, then outstanding to the total number of shares of all other classes of
common stock then outstanding (which totals, in the case of Minerals Stock,
shall include the Nominal Shares).

In November 1995, the Board of Directors (the "Board") authorized a revised
share repurchase program which allows for the repurchase of up to 1,000,000
shares of Minerals Stock, not to exceed an aggregate purchase price of $45,000
for all common shares of the Company; such shares to be purchased from time to
time in the open market or in private transactions, as conditions warrant. Prior
to the revised program, 117,300 shares of Minerals Stock at an aggregate cost of
$1,720 were repurchased, of which 78,800 shares at a total cost of $912 were
purchased in 1995. No additional repurchases of Minerals Stock were made during
the remainder of 1995 subsequent to the increased authorization. No shares were
repurchased in 1996. The program to acquire shares remains in effect in 1997.

The Company has the authority to issue up to 2,000,000 shares of preferred
stock, par value $10 per share. In January, 1994, the Company issued $80,500 or
161,000 shares of Series C Cumulative Convertible Preferred Stock (the
"Convertible Preferred Stock"). The proceeds of the Convertible Preferred Stock
offering have been attributed to the Minerals Group. The Convertible Preferred
Stock pays an annual cumulative dividend of $31.25 per share payable quarterly,
in cash, in arrears, out of all funds of the Company legally available
therefore; when as and if declared by the Board, and bears a liquidation
preference of $500 per share, plus an amount equal to accrued and unpaid
dividends thereon. Each share of the Convertible Preferred Stock is convertible
at the option of the holder unless previously redeemed or, under certain
circumstances, called for redemption, into shares of Minerals Stock at a
conversion price of $32.175 per share of Minerals Stock, subject to adjustment
in certain circumstances. Except under certain circumstances, the Convertible
Preferred Stock is not redeemable prior to February 1, 1997. On and after such
date, the Company may, at its option, redeem the Convertible Preferred Stock, in
whole or in part, for cash initially at a price of $521.875 per share, and
thereafter at prices declining ratable annually on each February 1 to an amount
equal to $500 per share on and after February 1, 2004, plus in each case and
amount equal to accrued and unpaid dividends on the date of redemption. Except
under certain circumstances or as prescribed by Virginia law, shares of the
Convertible Preferred Stock are nonvoting. The voting rights of the Preferred
Stock were not affected by the Brink's Stock Proposal.

In 1994, the Board authorized the repurchase from time to time of up to $15,000
of Convertible Preferred Stock. Subsequent to the authorization and through
October 1995, 24,720 shares at a total cost of $9,624 had been repurchased, of
which 16,370 shares at a total cost of $6,258 were purchased in 1995. In
November 1995, the Board authorized an increase in the remaining authority to
$15,000. No additional share repurchases were made during the remainder of 1995
subsequent to the increased authorization. In 1996, 20,920 shares at a total
cost of $7,897 were repurchased. The program to acquire shares remains in effect
in 1997, and in February 1997, the Board authorized an increase in the remaining
repurchase authority to $15 million.

In 1996 and 1995, dividends paid on such stock were $3,795 and $4,341,
respectively. Preferred dividends included on the Minerals Group's Statements of
Operations for the years ended December 31, 1996 and 1995 are net of $2,120 and
$1,579, respectively, which was the excess of the carrying amount of the
Convertible Preferred Stock over the cash paid to holders of the stock for
repurchases made during each year.

                                      138

The Company's Articles of Incorporation limits dividends on Minerals Stock to
the lesser of (i) all funds of the Company legally available therefore (as
prescribed by Virginia law) and (ii) the Available Minerals Dividend Amount (as
defined in the Articles of Incorporation). At December 31, 1996, the Available
Minerals Dividend Amount was at least $22,099. Dividends on Minerals Stock are
also restricted by covenants in the Company's public indentures and bank credit
agreements. See the Company's consolidated financial statements and related
footnotes. Subject to these limitations, the Company's Board, although there is
no requirement to do so, intends to declare and pay dividends on the Minerals
Stock based primarily on the earnings, financial condition, cash flow and
business requirements of the Minerals Group.

In December 1992, the Company formed The Pittston Company Employee Benefits
Trust (the "Trust") to hold shares of its common stock to fund obligations under
certain employee benefits programs not including stock option plans. The trust
first began funding obligations under the Company's various stock option plans
in September 1995. Upon formation of the Trust, the Company sold for a
promissory note of the Trust, 4,000,000 new shares of its common stock to the
Trust at a price equal to the fair value of the stock on the date of sale. Upon
approval of the Services Stock Proposal, 3,871,826 shares in the Trust were
redesignated as Services Stock and 774,365 shares of Minerals Stock were
distributed to the Trust. At December 31, 1996, 423,652 shares of Minerals Stock
(594,461 in 1995) remained in the Trust, valued at market. The value of these
shares has no impact on shareholder's equity.

12. ACQUISITIONS

The following represents significant acquisitions for the Minerals Group for
1996, 1995 and 1994.

In 1994, a wholly owned indirect subsidiary of the Minerals Group completed the
acquisition of substantially all of the coal mining operations and coal supply
contracts of Addington Resources, Inc. ("Addington") for $157,324. The
acquisition has been accounted for as a purchase; accordingly, the purchase
price has been allocated to the underlying assets and liabilities based on their
respective estimated fair values at the date of acquisition. The fair value of
assets acquired was $173,959 and liabilities assumed was $138,518. The excess of
the purchase price over the fair value of assets acquired and liabilities
assumed was $121,883 and is being amortized over a period of forty years. The
acquisition was financed by the issuance of $80,500 of Convertible Preferred
Stock (Note 11) and additional borrowings under existing credit facilities. In
March 1994, the additional debt incurred for this acquisition was refinanced
with a portion of the proceeds from the five-year term loan (Note 9).

There were no significant acquisitions in 1995 or 1996.

The results of operations of the businesses acquired in 1996, 1995 and 1994 have
been included in the Minerals Group's results of operations from their date of
acquisition.

13. COAL JOINT VENTURE

The Minerals Group, through a wholly owned indirect subsidiary of the Company,
has a partnership agreement, Dominion Terminal Associates ("DTA"), with three
other coal companies to operate coal port facilities in Newport News, Virginia,
in the Port of Hampton Roads (the "Facilities"). The Facilities, in which the
Minerals Group has a 32.5% interest, has an annual throughput capacity of 22
million tons, with a ground storage capacity of approximately 2 million tons.
The Facilities financing is provided by a series of coal terminal revenue
refunding bonds issued by the Peninsula Ports Authority of Virginia (the
"Authority"), a political subdivision of the Commonwealth of Virginia, in the
aggregate principal amount of $132,800, of which $43,160 are attributable to the
Company. These bonds bear a fixed interest rate of 7.375%. The Authority owns
the Facilities and leases them to DTA for the life of the bonds, which mature on
June 1, 2020. DTA may purchase the facilities for one dollar at the end of the
lease term. The obligations of the partners are several, and not joint.

Under loan agreements with the Authority, DTA is obligated to make payments
sufficient to provide for the timely payment of principal and interest on the
bonds. Under a throughput and handling agreement, the Minerals Group has agreed
to make payments to DTA that in the aggregate will provide DTA with sufficient
funds to make the payments due under the loan agreements and to pay the Minerals
Group's share of the operating costs of the Facilities. The Company has also
unconditionally guaranteed the payment of the principal and premium, if any, and
the interest on the bonds. Payments for operating costs aggregated $5,208 in
1996, $6,841 in 1995 and $7,173 in 1994. The Minerals Group has the right to use
32.5% of the throughput and storage capacity of the Facilities subject to user
rights of third parties which pay the Minerals Group a fee. The Minerals Group
pays throughput and storage charges based on actual usage at per ton rates
determined by DTA.

                                      139

14. LEASES

The Minerals Group's businesses lease coal mining and other equipment under
long-term operating leases with varying terms, and most of the leases contain
renewal and/or purchase options. As of December 31, 1996, aggregate future
minimum lease payments under noncancellable operating leases were as follows:

                                                       Equipment
                                      Facilities         & Other           Total
- --------------------------------------------------------------------------------
1997                                      $  345          18,322          18,667
1998                                         344          12,245          12,589
1999                                         325           6,192           6,517
2000                                         297           3,129           3,426
2001                                         233             523             756
2002                                           2            --                 2
2003                                           2            --                 2
2004                                           2            --                 2
2005                                           2            --                 2
Later Years                                    2            --                 2
- --------------------------------------------------------------------------------
Total                                     $1,554          40,411          41,965
================================================================================

These amounts are net of aggregate future minimum noncancellable sublease
rentals of $1,269. Almost all of the above amounts related to equipment are
guaranteed by the Company.

Net rent expense amounted to $24,236 in 1996, $34,363 in 1995, and $35,583 in
1994.

The Minerals Group incurred capital lease obligations of $1,031 in 1996, $12 in
1995 and $746 in 1994. As of December 31, 1996, the Minerals Group's obligations
under capital leases were not significant (Note 9).

15. EMPLOYEE BENEFIT PLANS

The Minerals Group's businesses participate in the Company's noncontributory
defined benefit pension plan covering substantially all nonunion employees who
meet certain minimum requirements. Benefits under most of the plans are based on
salary (including commissions, bonuses, overtime and premium pay) and years of
service. The Minerals Group's pension cost is actuarially determined based on
its employees and an allocable share of the pension plan assets. The Company's
policy is to fund the actuarially determined amounts necessary to provide assets
sufficient to meet the benefits to be paid to plan participants in accordance
with applicable regulations.

The net pension credit for 1996, 1995 and 1994 for the Minerals Group is as
follows:

                                                       Years Ended December 31
                                                     1996       1995       1994
- --------------------------------------------------------------------------------
Service cost--benefits earned during year        $  3,561      3,306      3,609
Interest cost on projected benefit obligation       9,921      9,548      9,024
Loss (return) on assets--actual                   (25,571)   (38,005)     1,664
(Loss) return on assets--deferred                   8,641     22,199    (16,978)
Other amortization, net                             2,323          7      2,270
- --------------------------------------------------------------------------------
Net pension credit                               $ (1,125)    (2,945)      (411)
================================================================================
                                                           
The assumptions used in determining the net pension credit for the Company's
primary pension plan were as follows:

                                                            1996    1995    1994
- --------------------------------------------------------------------------------
Interest cost on projected benefit obligation               7.5%   8.75%    7.5%
Expected long-term rate of return on assets                10.0%   10.0%   10.0%
Rate of increase in compensation levels                     4.0%    4.0%    4.0%
================================================================================

The Minerals Group's allocated funded status and deferred pension assets at
December 31, 1996 and 1995 are as follows:

                                                               1996         1995
- --------------------------------------------------------------------------------
Actuarial present value of accumulated
  benefit obligation:
  Vested                                                   $121,093      121,632
  Nonvested                                                   3,870        3,838
- --------------------------------------------------------------------------------
                                                            124,963      125,470
Benefits attributable to projected salaries                  13,063       11,512
- --------------------------------------------------------------------------------
Projected benefit obligation                                138,026      136,982
Plan assets at fair value                                   204,577      187,537
- --------------------------------------------------------------------------------
Excess of plan assets over projected benefit
  obligation                                                 66,551       50,555
Unrecognized experience loss                                 12,622       27,307
Unrecognized prior service cost                                 236          273
- --------------------------------------------------------------------------------
Net pension assets                                           79,409       78,135
Current pension liabilities                                   1,658        1,258
- --------------------------------------------------------------------------------
Deferred pension assets per balance sheet                  $ 81,067       79,393
================================================================================

For the valuation of the Company's primary pension obligations and the
calculation of the funded status, the discount rate was 8% in 1996 and 7.5% in
1995. The expected long-term rate of return on assets was 10% in both years. The
rate of increase in compensation levels used was 4% in 1996 and 1995.

                                      140

The unrecognized initial net asset at January 1, 1986, the date of adoption of
SFAS 87, has been amortized over the estimated remaining average service life of
the employees. As of December 31, 1996, approximately 73% of plan assets were
invested in equity securities and 27% in fixed income securities.

Under the 1990 collective bargaining agreement with the United Mine Workers of
America ("UMWA"), the Minerals Group agreed to make payments at specified
contribution rates for the benefit of the UMWA employees. The trustees of the
UMWA pension fund contested the agreement and brought action against the
Company. While the case was in litigation, Minerals Group's benefit payments
were made into an escrow account for the benefit of union employees. During
1996, the case was settled and the escrow funds were released (Note 19). As a
result of the settlement, the Coal subsidiaries agreed to continue their
participation in the UMWA 1974 pension plan at defined contribution rates.

The Minerals Group also provides certain postretirement health care and life
insurance benefits for eligible active and retired employees in the United
States.

For the years 1996, 1995 and 1994, the components of periodic expense for these
postretirement benefits were as follows:

                                                       Years Ended December 31
                                                      1996       1995       1994
- --------------------------------------------------------------------------------
Service cost--benefits earned during year          $ 1,810      1,523      2,141
Interest cost on accumulated post-
  retirement benefit obligation                     19,752     19,510     20,948
Amortization of (gains) losses                       1,128       --        2,806
- --------------------------------------------------------------------------------
Total expense                                      $22,690     21,033     25,895
================================================================================

Interest costs on the accumulated postretirement benefit obligation were based
upon rates of 7.5% in 1996, 8.75% in 1995 and 7.5% in 1994.

At December 31, 1996 and 1995, the actuarial and recorded liabilities for these
postretirement benefits, none of which have been funded, were as follows:

                                                        Years Ended December 31
                                                             1996          1995
- --------------------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees                                                $ 235,565       230,217
Fully eligible active plan participants                    23,959        24,031
Other active plan participants                             21,416        26,303
- --------------------------------------------------------------------------------
                                                          280,940       280,551
Unrecognized experience loss                              (43,530)      (48,197)
- --------------------------------------------------------------------------------
Liability included on the balance sheet                   237,410       232,354
Less current portion                                       17,693        18,647
- --------------------------------------------------------------------------------
Noncurrent liability for postretirement health
  care and life insurance benefits                      $ 219,717       213,707
================================================================================

The accumulated postretirement benefit obligation was determined using the unit
credit method and an assumed discount rate of 8% in 1996 and 7.5% in 1995. The
assumed health care cost trend rate used in 1996 was 8.24% for pre-65 retirees,
grading down to 5% in the year 2001. For post-65 retirees, the assumed trend
rate in 1996 was 6.9%, grading down to 5% in the year 2001. The assumed medicare
cost trend rate used in 1996 was 6.46%, grading down to 5% in the year 2001.

A percentage point increase each year in the assumed health care cost trend rate
used would have resulted in an increase of approximately $3,000 in the aggregate
service and interest components of expense for the year 1996, and an increase of
approximately $36,000 in the accumulated postretirement benefit obligation at
December 31, 1996.

The Minerals Group also participates in the Company's Savings-Investment Plan to
assist eligible employees in providing for retirement or other future financial
needs. Employee contributions are matched at rates of 50% to 100% up to 5% of
compensation (subject to certain limitations imposed by the Internal Revenue
Code of 1986, as amended). Contribution expense under the plan aggregated $1,004
in 1996, $1,204 in 1995 and $1,468 in 1994.

The Minerals Group sponsors other defined contribution plans and contributions
under these plans aggregated $368 in 1995 and $470 in 1994. There was no expense
during 1996 as these plans were terminated.

In October 1992, the Coal Industry Retiree Health Benefit Act of 1992 (the
"Health Benefit Act") was enacted as part of the Energy Policy Act of 1992. The
Health Benefit Act established rules for the payment of future health care
benefits for thousands of retired union mine workers and their dependents. The
Health Benefit Act established a trust fund to which "signatory operators" and
"related persons", the Company and certain of its subsidiaries (the "Pittston
Companies") are jointly and severally liable for annual premiums for assigned
beneficiaries, together with a pro rata share for certain beneficiaries who
never worked for such employers ("unassigned beneficiaries"), in amounts
determined on the basis set forth in the Health Benefit Act. For 1996, 1995 and
1994, these amounts, on a pretax basis, were approximately $10,400, $10,800 and
$11,000, respectively. The Company believes that the annual liability under the
Health Benefit Act for the Pittston Companies' assigned beneficiaries will
continue at approximately $10,000 per year for the next several years and should
begin to decline thereafter as the number of such assigned beneficiaries
decreases.

Based on the number of beneficiaries actually assigned by the Social Security
Administration, the Company estimates the aggregate pretax liability relating to
the Pittston Companies' remaining assigned beneficiaries at approximately
$210,000, which when discounted at 8% provides a present value estimate of
approximately $90,000.

                                      141

The ultimate obligation that will be incurred by the Company could be
significantly affected by, among other things, increased medical costs,
decreased number of beneficiaries, governmental funding arrangements and such
federal health benefit legislation of general application as may be enacted. In
addition, the Health Benefit Act requires the Pittston Companies to fund, pro
rata according to the total number of assigned beneficiaries, a portion of the
health benefits for unassigned beneficiaries. At this time, the funding for such
health benefits is being provided from another source and for this and other
reasons the Pittston Companies' ultimate obligation for the unassigned
beneficiaries cannot be determined. The Company accounts for its obligations
under the Health Benefit Act as a participant in a multi-employer plan and
recognizes the annual cost on a pay-as-you-go basis.

16. RESTRUCTURING AND OTHER (CREDITS) CHARGES,
INCLUDING LITIGATION ACCRUAL

Refer to Note 19 for a discussion of the benefit ($35,650) of the reversal of a
litigation accrual related to the Evergreen Case.

The market for metallurgical coal, for much of the past fifteen years, has been
characterized by weak demand from primary steel producers and intense
competition from foreign coal producers, especially those in Australia and
Canada. Metallurgical coal sales contracts are typically subject to annual price
negotiations, which increase the risk of market forces. As a result of these
conditions in the metallurgical coal markets, Coal Operations decreased its
exposure to this business by selecting to participate only in those
higher-margin metallurgical markets which generate acceptable profitability.
Simultaneously with that business decision, management conducted a review of the
economic viability of its metallurgical coal assets in early 1994 and determined
that four underground mines were no longer economically viable and should be
closed, resulting in significant economic impairment to three related
preparation plants. In addition, it was determined that one surface steam coal
mine, the Heartland mine, which provided coal to Alabama Power under a long-term
sales agreement, would be closed due to rising costs caused by unfavorable
geological conditions.

As a result of these decisions, Coal Operations incurred pretax charges of
$90,806 ($58,116 after-tax) in the first quarter of 1994, which included a
reduction in the carrying value of these assets and related accruals for mine
closure costs. These charges included asset writedowns of $46,487, $3,836 for
required lease payments owed to lessors for machinery and equipment that would
be idled as a result of the mine and facility closures, $19,290 for mine and
plant closure costs and $21,193 in contractually or statutorily required
employee severance and other benefit costs associated with terminated and
inactive employees at these facilities.

Of the four underground mines included in the asset writedown, two ceased coal
production in 1994 and one ceased coal production in 1996. Also, in 1994, the
Coal Operations reached agreement with Alabama Power Company to transfer the
coal sales contract serviced by the Heartland mine to another location in West
Virginia. The Heartland mine ceased coal production during 1994 and final
reclamation and environmental work is complete. By early 1995, two of the three
related preparation plants had also closed. At the beginning of 1994 there were
approximately 750 employees involved in operations and other administrative
support at the facilities included in the 1994 charge. Employment at these
facilities was reduced by 52% to approximately 360 employees at December 31,
1994; by 81% to approximately 140 employees at December 31, 1995; and by 87% to
approximately 100 employees at December 31, 1996.

The initiation in 1996 of a Virginia tax credit, along with favorable labor
negotiations and improved metallurgical contract pricing over 1994, led
management to open three new underground coal mines in southwest Virginia during
late 1996 and to reactivate one coal preparation and loading facility. In
addition, management decided to continue operating the last of the four
underground mines and one related coal preparation and loading facility included
in the 1994 charge. As a result of these decisions and favorable workers'
compensation claim development for closed mines, a portion of the restructuring
reserve established in 1994 was no longer required. Accordingly, Coal Operations
reversed $11,649 ($7,572 after-tax) of its restructuring reserve during the
year.

Although coal production has ceased at the mines remaining in the accrual, Coal
Operations will incur reclamation and environmental costs for several years to
bring these properties into compliance with federal and state environmental
laws. In addition, employee termination and medical costs will continue to be
incurred for several years after the facilities have been closed. Management
believes that the reserve, as adjusted, at December 31, 1996, should be
sufficient to provide for these future costs. Management does not anticipate
material additional future charges to operating earnings for these facilities,
although continual cash funding will be required over the next several years.

                                      142

The following table analyzes the changes in liabilities during the last three
years for facility closure costs recorded as restructuring and other charges:

                                                             Employee
                                                   Mine  Termination,
                                      Leased        and       Medical
                                   Machinery      Plant           and
                                         and    Closure     Severance
(In thousands)                     Equipment      Costs         Costs      Total
================================================================================
Balance January 1, 1994               $3,092     28,434        34,217     65,743
Additions                              3,836     19,290        21,193     44,319
Payments (a)                           3,141      9,468        12,038     24,647
- --------------------------------------------------------------------------------
Balance December 31, 1994              3,787     38,256        43,372     85,415
Payments (b)                           1,993      7,765         7,295     17,053
Other reductions (c)                     576      1,508          --        2,084
- --------------------------------------------------------------------------------
Balance December 31, 1995              1,218     28,983        36,077     66,278
Reversals                               --        4,778         6,871     11,649
Payments (d)                             842      5,499         3,921     10,262
Other reductions (c)                    --        6,267          --        6,267
- --------------------------------------------------------------------------------
Balance December 31, 1996             $  376     12,439        25,285     38,100
================================================================================

(a) Of the total payments made, in 1994, $8,672 was for liabilities recorded in
years prior to 1993, $5,822 was for liabilities recorded in 1993 and $10,153 was
for liabilities recorded in 1994.

(b) Of the total payments made in 1995, $6,424 was for liabilities recorded in
years prior to 1993, $2,486 was for liabilities recorded in 1993 and $8,143 was
for liabilities recorded in 1994.

(c) These amounts represent the assumption of liabilities by third parties as a
result of sales transactions.

(d) Of the total payments made in 1996, $5,119 was for liabilities recorded in
years prior to 1993, $485 was for liabilities recorded in 1993, $4,658 was for
liabilities recorded in 1994.

During the next 12 months, expected cash funding of these charges will be
approximately $6,000 to $10,000. Management estimates that the remaining
liability for leased machinery and equipment will be fully paid over the next
year. The liability for mine and plant closure costs is expected to be satisfied
over the next ten years, of which approximately 49% is expected to be paid over
the next two years. The liability for employee related costs, which is primarily
workers' compensation, is estimated to be 44% settled over the next four years
with the balance paid during the following five to ten years.

17. OTHER OPERATING INCOME

Other operating income primarily includes royalty income and gains on sales of
assets.

18. SEGMENT INFORMATION

Net sales by geographic area are as follows:

                                                         Years Ended December 31
                                                1996          1995          1994
- --------------------------------------------------------------------------------
United States:
Domestic customers                          $421,645       467,479       512,875
Export customers in Europe                   112,738       108,111       131,447
Export customers in Japan                     52,033        67,145        71,937
Other export customers                        90,977        63,516        63,245
- --------------------------------------------------------------------------------
                                             677,393       706,251       779,504
Australia                                     19,120        16,600        15,494
- --------------------------------------------------------------------------------
Total net sales                             $696,513       722,851       794,998
================================================================================

The following is derived from the business segment information in the Company's
consolidated financial statements as it relates to the Minerals Group. See Note
2, Related Party Transactions, for a description of the Company's policy for
corporate allocations.

The Minerals Group's portion of the Company's operating profit is as follows:

                                                        Years Ended December 31
                                                 1996         1995         1994
- --------------------------------------------------------------------------------
United States (a)                            $ 18,206       21,752      (85,305)
Australia (a)                                   3,447        1,586        2,988
- --------------------------------------------------------------------------------
Minerals Group's portion of the
  Company's segment operating
  profit                                       21,653       23,338      (82,317)
Corporate expenses allocated to the
  Minerals Group                               (6,555)      (7,266)      (6,845)
- --------------------------------------------------------------------------------
Total operating profit (loss)                $ 15,098       16,072      (89,162)
================================================================================

(a) Operating profit (loss) includes a (benefit) charge from restructuring and
other (credits) charges, including litigation accrual aggregating ($47,299) and
$90,806 in 1996 and 1994, respectively, all of which is included in the United
States (Note 16).

                                      143

The Minerals Group's portion of the Company's assets at year end is as follows:

                                                               As of December 31
                                                  1996         1995         1994
- --------------------------------------------------------------------------------
United States                                 $596,358      702,132      764,399
Australia                                       21,240       18,999       19,104
- --------------------------------------------------------------------------------
Minerals Group's portion of the
  Company's assets                             617,598      721,131      783,503
Minerals Group's portion of
  corporate assets                              89,383       77,478       84,009
- --------------------------------------------------------------------------------
Total assets                                  $706,981      798,609      867,512
================================================================================

Industry segment information is as follows:

                                                        Years Ended December 31
                                                 1996         1995         1994
- --------------------------------------------------------------------------------
Net Sales:
Coal Operations                             $ 677,393      706,251      779,504
Mineral Ventures                               19,120       16,600       15,494
- --------------------------------------------------------------------------------
Total revenues                              $ 696,513      722,851      794,998
================================================================================
Operating Profit (Loss):
Coal Operations (a)                         $  20,034       23,131      (83,451)
Mineral Ventures (a)                            1,619          207        1,134
- --------------------------------------------------------------------------------
Segment operating profit (loss)                21,653       23,338      (82,317)
Allocated general corporate expense            (6,555)      (7,266)      (6,845)
- --------------------------------------------------------------------------------
Total operating profit (loss)               $  15,098       16,072      (89,162)
================================================================================

(a) Operating profit (loss) of the Coal Operations segment included a (benefit)
charge from restructuring and other charges, including litigation accrual of
($47,299) in 1996 and $90,806 in 1994 (Note 16).

Capital Expenditures:
Coal Operations                                   $ 18,881     17,811     25,016
Mineral Ventures                                     3,714      2,332      2,514
Allocated general corporate                          1,785        168         90
- --------------------------------------------------------------------------------
Total capital expenditures                        $ 24,380     20,311     27,620
================================================================================
Depreciation, Depletion and Amortization:
Coal Operations                                   $ 34,632     40,285     44,731
Mineral Ventures                                     1,856      1,597      1,202
Allocated general corporate                            136        158        141
- --------------------------------------------------------------------------------
Total depreciation, depletion and
  amortization                                    $ 36,624     42,040     46,074
================================================================================
Assets at December 31:
Coal Operations                                   $594,772    699,049    761,827
Mineral Ventures                                    22,826     22,082     21,676
- --------------------------------------------------------------------------------
Identifiable assets                                617,598    721,131    783,503
Allocated portion of the Company's
  corporate assets                                  89,383     77,478     84,009
- --------------------------------------------------------------------------------
Total assets                                      $706,981    798,609    867,512
================================================================================

In 1996, 1995 and 1994, net sales to one customer of the Coal segment amounted
to approximately $150,000, $126,000 and $112,000, respectively.

19. LITIGATION

In April 1990, the Company entered into a settlement agreement to resolve
certain environmental claims against the Company arising from hydrocarbon
contamination at a petroleum terminal facility ("Tankport") in Jersey City, New
Jersey, which operations were sold in 1983. Under the settlement agreement, the
Company is obligated to pay 80% of the remediation costs. Based on data
available to the Company and its environmental consultants, the Company
estimates its portion of the cleanup costs on an undiscounted basis using
existing technologies to be between $6,900 and $17,000 over a period of up to
five years. Management is unable to determine that any amount within that range
is a better estimate due to a variety of uncertainties, which include the extent
of the contamination at the site, the permitted technologies for remediation and
the regulatory standards by which the clean-up will be conducted. The clean-up
estimates have been modified from prior years' in light of cost inflation. The
estimate of costs and the timing of payments could change as a result of changes
to the remediation plan required, changes in the technology available to treat
the site, unforseen circumstances existing at the site and additional cost
inflation.

The Company commenced insurance coverage litigation in 1990, in the United
States District Court for the District of New Jersey, seeking a declaratory
judgment that all amounts payable by the Company pursuant to the Tankport
obligation were reimbursable under comprehensive general liability and pollution
liability policies maintained by the Company. In August 1995, the District Court
ruled on various Motions for Summary Judgement. In its decision, the Court found
favorably for the Company on several matters relating to the comprehensive
general liability policies but concluded that the pollution liability policies
did not contain pollution coverage for the types of claims associated with the
Tankport site. The Company has appealed the District Court's decision to the
Third Circuit. However, management and its outside legal counsel continue to
believe that recovery of a substantial portion of the cleanup costs will
ultimately be probable of realization. Accordingly, it is the Company's belief
that, based on estimates of potential liability and probable realization of
insurance recoveries, the Company would be liable for approximately $1,400 based
on the Courts decision and related developments of New Jersey law.

In 1988, the trustees of certain pension and benefit trust funds (the "Trust
Funds") established under collective bargaining agreements with the UMWA brought
an action (the "Evergreen Case") against the Company and a number of its coal
subsidiaries in the United

                                      144

States District Court for the District of Columbia, claiming that the defendants
are obligated to contribute to such Trust Funds in accordance with the
provisions of the 1988 and subsequent National Bituminous Coal Wage Agreements,
to which neither the Company nor any of its subsidiaries is a signatory. The
Company recognized in 1993 in its financial statements for the Minerals Group
the potential liability that might have resulted from an ultimate adverse
judgment in the Evergreen Case (Notes 15 and 16).

In late March 1996 a settlement was reached in the Evergreen Case. Under the
terms of the settlement, the coal subsidiaries which had been signatories to
earlier National Bituminous Coal Wage Agreements agreed to make various lump sum
payments in full satisfaction of all amounts allegedly due to the Trust Funds
through January 31, 1996, to be paid over time as follows: approximately $25,800
upon dismissal of the Evergreen Case and the remainder of $24,000 in
installments of $7,000 in 1996 and $8,500 in each of 1997 and 1998. The first
payment was entirely funded through an escrow account previously established by
the Company. The second payment of $7,000 was paid in 1996 and was funded from
cash by operating activities. In addition, the coal subsidiaries agreed to
future participation in the UMWA 1974 Pension Plan.

As a result of the settlement of these cases at an amount lower than those
previously accrued, the Minerals Group recorded a pretax gain of $35,650
($23,173 after-tax) in the first quarter of 1996 in its financial statements.

20. COMMITMENTS

At December 31, 1996, the Minerals Group had contractual commitments for third
parties to contract mine or provide coal. Based on the contract provisions these
commitments are currently estimated to aggregate approximately $124,675 and
expire from 1997 through 1999 as follows:

           1997                     $ 79,894
           1998                       27,480
           1999                       17,301

Spending under the contracts was $99,161 in 1996, $83,532 in 1995 and $53,097 in
1994.

21. SUPPLEMENTAL CASH FLOW INFORMATION

For the years ended December 31, 1996, 1995 and 1994, there were net cash tax
refunds of $29,324, $20,731 and $12,851, respectively.

For the years ended December 31, 1996, 1995 and 1994, cash payments for interest
were $10,746, $10,296 and $5,985, respectively.

On December 31, 1995, the Minerals Group assumed the portion of the Company's
term loan in the amount of $23,434, which had been attributed to the Burlington
Group, as partial settlement of the intercompany payable due to the Burlington
Group. This transfer of debt as partial settlement of the intercompany between
the Groups has been recognized as a noncash transaction and is not included in
the Minerals Group's 1995 Statement of Cash Flows.

In 1995, the Minerals Group sold mining operations in Ohio together with a
related coal supply contract for notes and royalties receivable totaling $6,949.

22. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Tabulated below are certain data for each quarter of 1996 and 1995.

                                          1st         2nd        3rd        4th
- --------------------------------------------------------------------------------
1996 Quarters:
Net sales                           $ 170,252     175,268    177,195    173,798
Gross profit (loss)                   (25,633)      5,824      9,288       (463)
Net income                          $   3,020       2,644      2,498      2,496

Per Pittston Minerals Group
  Common Share:
Net income
Primary                             $     .25         .35        .33        .20
Fully diluted                       $     .25         .27        .25        .20

1995 Quarters:
Net sales                           $ 195,740     184,211    177,702    165,198
Gross profit                            1,800       3,351     10,441     10,964
Net income                          $     470       4,634      4,462      4,458

Per Pittston Minerals Group
  Common Share:
Net income
Primary                             $     .05         .45        .51        .43
Fully diluted                       $     .05         .45        .45        .43

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
- --------------------------------------------------------------------------------

Not applicable.

                                      145

- --------------------------------------------------------------------------------
PART III
- --------------------------------------------------------------------------------

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- --------------------------------------------------------------------------------

The information required by this Item regarding directors is incorporated by
reference to Pittston's definitive proxy statement to be filed pursuant to
Regulation 14A within 120 days after December 31, 1996. The information
regarding executive officers is included in this report following Item 4, under
the caption "Executive Officers of the Registrant.

ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- --------------------------------------------------------------------------------

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------

The information required by Items 11 through 13 is incorporated by reference to
Pittston's definitive proxy statement to be filed pursuant to Regulation 14A
within 120 days after December 31, 1996.

- --------------------------------------------------------------------------------
PART IV
- --------------------------------------------------------------------------------

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------------

(a)   1.    All financial statements--see index to financial statements and
            schedules.

      2.    Financial statement schedules--see index to financial statements and
            schedules.

      3.    Exhibits--see exhibit index.

Undertaking
For the purposes of complying with the amendments to the rules governing Form
S-8 (effective July 13, 1990) under the Securities Act of 1933, the undersigned
Registrant hereby undertakes as follows, which undertaking shall be incorporated
by reference into Registrant's Registration Statements on Form S-8 Nos. 2-64258,
33-2039, 33-21393, 33-23333, 33-69040, 33- 53565 and 333-02219:

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

                                      146

The Pittston Company and Subsidiaries
Signatures

Pursuant to the requirements of Section 13 or 15(d) 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, on March 27, 1997.

                                             The Pittston Company
                                             --------------------
                                                 (Registrant)

                                       By        J. C. Farrell
                                          ---------------------------
                                          (J. C. Farrell, Chairman of
                                            the Board, President and
                                             Chief Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated, on March 27, 1997.

   Signatures                                                Title
   ----------                                                -----

R. G. Ackerman*                                             Director
M. J. Anton*                                                Director
J. R. Barker*                                               Director
J. L. Broadhead*                                            Director
W. F. Craig*                                                Director

J. C. Farrell                                       Director and Chairman of
- ---------------------------------------             the Board, President and
(J. C. Farrell)                                     Chief Executive Officer
                                                 (principal executive officer)

R. M. Gross*                                                Director
C. F. Haywood*                                              Director
D. L. Marshall*                                     Director and Vice Chairman
                                                          of the Board

G.R. Rogliano                                        Senior Vice President
- ---------------------------------------         (principal accounting officer)
(G. R. Rogliano)

R. H. Spilman*                                              Director
A. H. Zimmerman*                                            Director

*By   J. C. Farrell
      ---------------------------------
      (J. C. Farrell, Attorney-in-Fact)

The Registrant does not have any designated principal financial officer.

                                      147

The Pittston Company and Subsidiaries
Index to Financial Statements and Schedules

Financial Statements:

THE PITTSTON COMPANY AND SUBSIDIARIES

  Statement of Management Responsibility...................................   63
                                                                              
  Independent Auditors' Report.............................................   63
                                                                              
  Consolidated Balance Sheets..............................................   64
                                                                              
  Consolidated Statements of Operations....................................   65
                                                                              
  Consolidated Statements of Shareholders' Equity .........................   66
                                                                              
  Consolidated Statements of Cash Flows....................................   67
                                                                              
  Notes to Consolidated Financial Statements...............................   68
                                                                              
PITTSTON BRINK'S GROUP                                                        
                                                                              
  Statement of Management Responsibility...................................   88
                                                                              
  Independent Auditors' Report.............................................   88
                                                                              
  Balance Sheets...........................................................   89
                                                                              
  Statements of Operations.................................................   90
                                                                              
  Statements of Cash Flows.................................................   91
                                                                              
  Notes to Financial Statements............................................   92
                                                                             
PITTSTON BURLINGTON GROUP                                                    
                                                                             
  Statement of Management Responsibility...................................  106
                                                                             
  Independent Auditors' Report.............................................  106
                                                                             
  Balance Sheets...........................................................  107
                                                                             
  Statements of Operations.................................................  108
                                                                             
  Statements of Cash Flows.................................................  109
                                                                             
  Notes to Financial Statements............................................  110
                                                                             
PITTSTON MINERALS GROUP                                                      
                                                                             
Statement of Management Responsibility.....................................  125
                                                                             
Independent Auditors' Report...............................................  125
                                                                             
Balance Sheets.............................................................  126
                                                                             
Statements of Operations...................................................  127
                                                                             
Statements of Cash Flows...................................................  128
                                                                             
Notes to Financial Statements..............................................  129

Financial Statement Schedules:                                               
                                                                             
Schedules are omitted because they are not material, not applicable or not 
required, or the information is included elsewhere in the financial statements.

                                      148

The Pittston Company and Subsidiaries
Exhibit Index

Each Exhibit listed below that is followed by a reference to a previously filed
document is hereby incorporated by reference to such document.

Exhibit
Number                             Description

3(i)     The Registrant's Restated Articles of Incorporation. Exhibit 3(i) to
         the Registrant's Quarterly Report on Form 10-Q for the quarter ended
         June 30, 1996.

3(ii)    The Registrant's Bylaws, as amended. Exhibit 3(ii) to the Registrant's
         Annual Report on Form 10-K for the year ended December 31, 1995 (the
         "1995 Form 10-K").

 4(a)    (i)      Amended and Restated Rights Agreement dated as of January 19,
                  1996, between the Registrant and Chemical Mellon Shareholder
                  Services, L.L.C., as Rights Agent. Exhibit 2 to the
                  Registrant's Registration Statement on Form 8-A dated February
                  26, 1996 (the "Form 8-A").

         (ii)     Form of Right Certificate for Brink's Rights. Exhibit B-1 to
                  Exhibit 2 to the Form 8-A.

         (iii)    Form of Right Certificate for Minerals Rights. Exhibit B-2 to
                  Exhibit 2 to the Form 8-A.

         (iv)     Form of Right Certificate for Burlington Rights. Exhibit B-3
                  to Exhibit 2 to the Form 8-A.

         Instruments defining the rights of holders of long-term debt of the
         Registrant and its consolidated subsidiaries have been omitted because
         the amount of debt under any such instrument does not exceed 10% of the
         total assets of the Registrant and its consolidated subsidiaries. The
         Registrant agrees to furnish a copy of any such instrument to the
         Commission upon request.

10(a)*   The Registrant's 1979 Stock Option Plan, as amended. Exhibit 10(a) to
         the Registrant's Annual Report on Form 10-K for the year ended December
         31, 1992 (the "1992 Form 10-K").

10(b)*   The Registrant's 1985 Stock Option Plan, as amended. Exhibit 10(b) to
         the 1992 Form 10-K.

10(c)*   The Registrant's Key Employees Incentive Plan, as amended. Exhibit
         10(c) to the Registrant's Annual Report on Form 10-K for the year ended
         December 31, 1991 (the "1991 Form 10-K").

10(d)*   The Company's Key Employees' Deferred Compensation Program as amended.
         Exhibit 10(d) to the 1995 Form 10-K.

10(e)*   (i)      The Registrant's Pension Equalization Plan, as amended.
                  Exhibit 10(a) to the Registrant's Quarterly Report on Form
                  10-Q for the quarter ended September 30, 1994 (the "Third
                  Quarter 1994 Form 10-Q").

         (ii)     Trust Agreement under the Pension Equalization Plan,
                  Retirement Plan for Non-Employee Directors and Certain
                  Contractual Arrangements of The Pittston Company made as of
                  September 16, 1994, by and between the Registrant and Chase
                  Manhattan Bank (National Association), as Trustee. Exhibit
                  10(i) to the Third Quarter 1994 Form 10-Q.

         (iii)    Form of letter agreement dated as of September 16, 1994,
                  between the Registrant and one of its officers. Exhibit 10(e)
                  to the Third Quarter 1994 Form 10-Q.

         (iv)     Form of letter agreement dated as of September 16, 1994,
                  between the Registrant and Participants pursuant to the
                  Pension Equalization Plan. Exhibit 10(f) to the Third Quarter
                  1994 Form 10-Q.

10(f)*   The Registrant's Executive Salary Continuation Plan. Exhibit 10(e) to
         the 1991 Form 10-K.

10(g)*   The Registrant's Non-Employee Directors' Stock Option Plan. Annex III-A
         to Registration Statement No. 33-63323 on Form S-4 dated December 4,
         1995 (the "S-4").

10(h)*   The Registrant's 1988 Stock Option Plan, as amended. Annex III-B to the
         S-4.

10(i)*   (i)      Employment Agreement dated as of May 1, 1993, between the
                  Registrant and J. C. Farrell. Exhibit 10 to the Registrant's
                  Quarterly Report on Form 10-Q for the quarter ended March 31,
                  1993.

                                      149

         (ii)     Amendment No. 1 to Employment Agreement dated as of May 1,
                  1993, between the Registrant and J. C. Farrell. Exhibit 10(h)
                  to the 1993 Form 10-K.

         (iii)    Form of Amendment No. 2 dated as of September 16, 1994, to
                  Employment Agreement dated as of May 1, 1993, as amended by
                  Amendment No. 1 thereto dated March 18, 1994, between the
                  Registrant and Joseph C. Farrell. Exhibit 10(b) to the Third
                  Quarter 1994 Form 10-Q.

         (iv)     Amendment No. 3 to Employment Agreement dated as of May 1,
                  1996, between the Registrant and J. C. Farrell. Exhibit
                  10(i)(iv) to the 1995 Form 10-K.

10(j)*   (i)      Employment Agreement dated as of June 1, 1994, between the
                  Registrant and D. L. Marshall. Exhibit 10 to the Second
                  Quarter 1994 Form 10-Q.

         (ii)     Form of Letter Agreement dated as of September 16, 1994,
                  amending Employment Agreement dated as of June 1, 1994,
                  between the Registrant and D. L. Marshall. Exhibit 10(c) to
                  the Third Quarter 1994 Form 10-Q.

         (iii)    Form of Letter Agreement dated as of June 1, 1995, replacing
                  all prior Employment Agreements and amendments or
                  modifications thereto, between the Registrant and D. L.
                  Marshall (the "Marshall Employment Agreement"). Exhibit 10 to
                  the Registrant's quarterly report on Form 10-Q for the Quarter
                  ended June 30, 1995.

         (iv)     Letter Agreement dated as of April 1, 1996, amending the
                  Marshall Employment Agreement. Exhibit 10(j)(iv) to the 1995
                  Form 10-K.

         (v)      Form of Letter Agreement dated as of June 1, 1997, replacing
                  all prior Employment Agreements and amendments or
                  modifications thereto, between the Registrant and D.L.
                  Marshall.

10(k)*   The Company's 1994 Employee Stock Purchase Plan. Exhibit 10.7 to the
         First Quarter 1994 Form 10-Q.

10(l)*   (i)      Form of change in control employment agreement between the
                  Registrant and Mr. Farrell. Exhibit 10(j) to the 1987 Form
                  10-K.

         (ii)     Form of change in control employment agreement between the
                  Registrant and one of its officers. Exhibit 10(l)(ii) to the
                  1989 Form 10-K.

         (iii)    Form of change in control employment agreement between the
                  Registrant (or a subsidiary) and six of the Registrant's
                  officers. Exhibit 10(l)(iii) to the 1989 Form 10-K.

         (iv)     Form of letter agreement dated as of July 8, 1993, amending
                  change in control employment agreements between the Registrant
                  and five of the Registrant's officers. Exhibit 10 (k) (iv) to
                  the 1993 Form 10-K.

         (v)      Form of letter agreement dated as of March 8, 1996, amending
                  change in control employment agreement between the Registrant
                  and one of the Registrant's officers. Exhibit 10(l)(v) to the
                  1995 Form 10-K.

10(m)*   Form of Indemnification Agreement entered into by the Registrant with
         its directors and officers. Exhibit 10(l) to the 1991 Form 10-K.

10(n)*   (i)      Registrant's Retirement Plan for Non-Employee Directors, as
                  amended. Exhibit 10(g) to the Third Quarter 1994 Form 10-Q.

         (ii)     Form of letter agreement dated as of September 16, 1994,
                  between the Registrant and its Non-Employee Directors pursuant
                  to Retirement Plan for Non-Employee Directors. Exhibit 10(h)
                  to the Third Quarter 1994 Form 10-Q.

10(o)*   Registrant's Directors' Stock Accumulation Plan. Exhibit A to the
         Registrant's Proxy Statement filed March 29, 1996.

10(p)*   Registrant's Amended and Restated Plan for Deferral of Directors' Fees.
         Exhibit 10(o) to the 1989 Form 10-K.

10(q)    (i)      Participation Agreement (the "Participation Ag reement") dated
                  as of December 19, 1985, among Burlington Air Express Inc.
                  (formerly, Burlington Northern Air Freight Inc. and Burlington
                  Air Express USA Inc.) ("Burlington"), the loan participants
                  named therein (the "Loan Participants"), Manufacturers Hanover
                  Leasing Corporation, as Owner Participant (the "Owner
                  Participant"), The Connecticut National Bank, as Indenture
                  Trustee (the "Indenture Trustee") and Meridian Trust Company,
                  as Owner Trustee (the "Owner Trustee"). Exhibit 10(p)(i) to
                  the Registrant's Annual Report on Form 10-K for the year ended
                  December 31, 1988 (the "1988 Form 10-K").

                                      150

         (ii)     Trust Agreement (the "Trust Agreement") dated as of December
                  19, 1985, between the Owner Participant and the Owner Trustee.
                  Exhibit 10(p)(ii) to the 1988 Form 10-K.

         (iii)    Trust Indenture and Mortgage (the "Trust Indenture and
                  Mortgage") dated December 19, 1985, between the Owner Trustee,
                  as Mortgagor, and the Indenture Trustee, as Mortgagee (the
                  "Mortgagee"). Exhibit 10(p)(iii) to the 1988 Form 10-K.

         (iv)     Lease Agreement (the "Lease Agreement") dated as of December
                  19, 1985, between the Owner Trustee, as Lessor, and
                  Burlington, as Lessee. Exhibit 10(p)(iv) to the 1988 Form
                  10-K.

         (v)      Tax Indemnity Agreement (the "Tax Indemnity Agreement") dated
                  as of December 19, 1985, between the Owner Participant and
                  Burlington, including Amendment No. 1 dated March 10, 1986.
                  Exhibit 10(p)(v) to the 1988 Form 10-K.

         (vi)     Guaranty (the "Guaranty") dated as of December 19, 1985, by
                  the Registrant. Exhibit 10(p)(vi) to the 1988 Form 10-K.

         (vii)    Trust Agreement and Mortgage Supplement Nos. 1 through 4,
                  dated December 23 and 30, 1985 and March 10 and May 8, 1986,
                  between the Owner Trustee, as Mortgagor, and the Indenture
                  Trustee, as Mortgagee, including Amendment No. 1 dated as of
                  October 1, 1986 to Trust Agreement and Mortgage Supplement
                  Nos. 3 and 4. Exhibit 10(p)(vii) to the 1988 Form 10-K.

         (viii)   Lease Supplements Nos. 1 through 4 dated December 23 and 30,
                  1985 and March 10 and May 8, 1986, between the Owner Trustee,
                  as Lessor, and Burlington, as Lessee, including Amendment No.
                  1 dated as of October 1, 1986 to Lease Supplements Nos. 3 and
                  4. Exhibit 10(p)(viii) to the 1988 Form 10-K.

         (ix)     Letter agreement dated March 10, 1986, among the Owner
                  Participant, the Mortgagee, the Owner Trustee, the Loan
                  Participants, Burlington and the Registrant, amending the
                  Lease Agreement, the Trust Indenture and Mortgage and the
                  Participation Agreement. Exhibit 10(p)(ix) to the 1988 Form
                  10-K.

         (x)      Letter agreement dated as of May 8, 1986, among the Owner
                  Participant, the Mortgagee, the Owner Trustee, the Loan
                  Participants, Burlington and the Registrant, amending the
                  Participation Agreement. Exhibit 10(p)(x) to the 1988 Form
                  10-K.

         (xi)     Letter agreement dated as of May 25, 1988, between the Owner
                  Trustee, as Lessor, and Burlington, as Lessee, amending the
                  Lease Agreement. Exhibit 10(p)(xi) to the 1988 Form 10-K.

         (xii)    Partial Termination of Lease, dated September 18, 1992,
                  between the Owner Trustee, as Lessor, and Burlington, as
                  Lessee, amending the Lease Agreement. Exhibit 10(o)(xii) to
                  the 1992 Form 10-K.

         (xiii)   Partial Termination of Trust Indenture and Mortgage, dated
                  September 18, 1992, between the Indenture Trustee, as
                  Mortgagee, and the Owner Trustee, as Mortgagor, amending the
                  Trust Indenture and Mortgage. Exhibit 10(o)(xiii) to the 1992
                  Form 10-K.

         (xiv)    Trust Agreement and Mortgage Supplement No. 5, dated September
                  18, 1992, between the Owner Trustee, as Mortgagor, and the
                  Indenture Trustee, as Mortgagee. Exhibit 10(o)(xiv) to the
                  1992 Form 10-K.

         (xv)     Lease Supplement No. 5, dated September 18, 1992, between the
                  Owner Trustee, as Lessor, and Burlington, as Lessee. Exhibit
                  10(o)(xv) to the 1992 Form 10-K.

         (xvi)    Lease Supplement No. 6, dated January 20, 1993, between the
                  Owner Trustee, as Lessor, and Burlington, as Lessor, amending
                  the Lease Agreement. Exhibit 10(o)(xvi) to the 1992 Form 10-K.

10(r)    (i)      Lease dated as of April 1, 1989 between Toledo-Lucas County
                  Port Authority (the "Authority"), as Lessor, and Burlington,
                  as Lessee. Exhibit 10(i) to the Registrant's quarterly report
                  on Form 10-Q for the quarter ended June 30, 1989 (the "Second
                  Quarter 1989 Form 10-Q").

         (ii)     Lease Guaranty Agreement dated as of April 1, 1989 between
                  Burlington (formerly, Burlington Air Express Management Inc.),
                  as Guarantor, and the Authority. Exhibit 10(ii) to the Second
                  Quarter 1989 Form 10-Q.

                                      151

         (iii)    Trust Indenture dated as of April 1, 1989 between the
                  Authority and Society Bank & Trust (formerly, Trustcorp Bank,
                  Ohio) (the "Trustee"), as Trustee. Exhibit 10(iii) to the
                  Second Quarter 1989 Form 10-Q.

         (iv)     Assignment of Basic Rent and Rights Under a Lease and Lease
                  Guaranty dated as of April 1, 1989 from the Authority to the
                  Trustee. Exhibit 10(iv) to the Second Quarter 1989 Form 10-Q.

         (v)      Open-End First Leasehold Mortgage and Security Agreement dated
                  as of April 1, 1989 from the Authority to the Trustee. Exhibit
                  10(v) to the Second Quarter 1989 Form 10-Q.

         (vi)     First Supplement to Lease dated as of January 1, 1990, between
                  the Authority and Burlington, as Lessee. Exhibit 10 to the
                  Registrant's quarterly report on Form 10-Q for the quarter
                  ended March 31, 1990.

         (vii)    Revised and Amended Second Supplement to Lease dated as of
                  September 1, 1990, between the Authority and Burlington.
                  Exhibit 10(i) to the Registrant's quarterly report on Form
                  10-Q for the quarter ended September 30, 1990 (the "Third
                  Quarter 1990 Form 10-Q").

         (viii)   Amendment Agreement dated as of September 1, 1990, among City
                  of Toledo, Ohio, the Authority, Burlington and the Trustee.
                  Exhibit 10(ii) to the Third Quarter 1990 Form 10-Q.

         (ix)     Assumption and Non-Merger Agreement dated as of September 1,
                  1990, among Burlington, the Authority and the Trustee. Exhibit
                  10(iii) to the Third Quarter 1990 Form 10-Q.

         (x)      First Supplemental Indenture between Toledo-Lucas County Port
                  Authority, and Society National Bank, as Trustee, dated as of
                  March 1, 1994. Exhibit 10.1 to the First Quarter 1994 Form
                  10-Q.

         (xi)     Third Supplement to Lease between Toledo-Lucas County Port
                  Authority, as Lessor, and Burlington Air Express Inc., as
                  Lessee, dated as of March 1, 1994. Exhibit 10.2 to the First
                  Quarter 1994 Form 10-Q.

         (xii)    Fourth Supplement to Lease between Toledo-Lucas County Port
                  Authority, as Lessor, and Burlington Air Express Inc., as
                  Lessee, dated as of June 1, 1991. Exhibit 10.3 to the First
                  Quarter 1994 Form 10-Q.

         (xiii)   Fifth Supplement to Lease between Toledo-Lucas County Port
                  Authority, as Lessor, and Burlington Air Express Inc., as
                  Lessee, dated as of December 1, 1996.

10(s)    Stock Purchase Agreement dated as of September 24, 1993, between the
         Pittston Acquisition Company and Addington Holding Company, Inc.
         Exhibit 10 to the Registrant's Quarterly Report on Form 10-Q for the
         quarter ended September 30, 1993.

10(t)    (i)      Credit Agreement dated as of March 4, 1994, among The Pittston
                  Company, as Borrower, Lenders Parties Thereto, Chemical Bank,
                  Credit Suisse and Morgan Guaranty Trust Company of New York,
                  as Co- agents, and Credit Suisse, as Administrative Agent (the
                  "Credit Agreement"). Exhibit 10.4 to the First Quarter 1994
                  Form 10-Q.

         (ii)     Amendment to the Credit Agreement dated as of May 1, 1995.
                  Exhibit 10(s)(ii) to the 1995 Form 10-K.

         (iii)    Amendment to Credit Agreement dated as of May 15, 1996.

11       Computation of Earnings Per Common Share.

21       Subsidiaries of the Registrant.

23       Consent of independent auditors.

24       Powers of attorney.

27       Financial Data Schedule.

99*      Amendment to the Registrant's Pension-Retirement Plan relating to
         preservation of assets of the Pension-Retirement Plan upon a change in
         control. Exhibit 99 to the 1992 Form 10-K.

- ----------
    *Management contract or compensatory plan or arrangement.

                            STATEMENT OF DIFFERENCES

               The degree symbol shall be expressed as........[d]

                                      152

                                                                Exhibit 10(j)(v)

As of June 1, 1997

Mr. David L. Marshall
20 Dolphin Point Lane
Hilton Head Island
South Carolina 29926

Dear David:

         This will set forth the terms and conditions of your employment by The
Pittston Company (the "Company") from and after the date of this agreement.

         1. Employment. The Company agrees to employ you, and you agree to serve
in the Company's employ, on and subject to the terms and conditions hereinafter
set forth, for the period commencing on the date of this agreement and ending on
May 31, 1999 (the "Employment Period"). This agreement shall replace all prior
and/or existing employment agreements between the Company and you, including,
without limitation, the Agreement dated as of September 1, 1992, the
Supplemental Agreement dated February 27, 1984, including any amendments or
modifications to such agreements, the Agreement dated as of June 1, 1994, the
Amendment to the June 1, 1994 Agreement dated as of September 16, 1994, the
letter agreement dated as of June 1, 1995 and a letter agreement dated as of
April 1, 1996 (together, the "Prior or Existing Agreements"). As of the
effective date of the Employment Period, all such Prior or Existing Agreements
shall terminate to the extent they have not already been terminated. It is
understood that your employment pursuant to the terms and conditions of this
Agreement shall continue notwithstanding your election as of June 1, 1997 to
retire, an Early Retirement Date under the Pittston Pension Plan, which election
you hereby confirm.

         2. Duties. Subject to the further provisions of this Section 2, during
the Employment Period you will, as and to the extent hereinafter provided,
render services to the Company and, at its request, to one or more of its
affiliates ("Affiliates"). All such services will be rendered at the request of
and subject to the direction and control of the Chairman of the Board of the
Company. Such services may include, among other things, representation of the
Company and its Affiliates in the negotiation and completion of mergers and
acquisitions and the provision of advice to and consultation with members of
management of the Company and its Affiliates with respect to various matters. In
addition, you agree, if nominated and elected, to serve as a director of the
Company.

         During the Employment Period you will use your best efforts to perform
faithfully and efficiently the responsibilities assigned to you hereunder,
except for temporary periods of illness or incapacity.

         It is understood and agreed, with respect to the services to the
Company which you shall render pursuant to this Section 2, that

           (i) the Chairman of the Board will, insofar as reasonably
    practicable, consider your convenience in the timing of requests, and your
    failure or inability, by reason of temporary illness or other cause beyond
    your control, to respond to such requests during any such temporary period
    shall not be deemed to constitute a default on your part in the performance
    hereunder of such services; provided, however, that after June 1, 1997, the
    number of hours that you will be required to devote to fulfilling your
    obligations under this Agreement will be fewer than forty hours per calendar
    month; and

          (ii) except as and to the extent that the Chairman of the Board or his
    designee may otherwise prescribe in writing, you shall not have any
    authority to negotiate or conclude any contracts on behalf of, or otherwise
    to bind, the Company or any of its Affiliates.

         3. Compensation. (a) During the Employment Period you will receive for
all services to be rendered by you pursuant to Section 2 above a salary at the
rate of $50,000 per year, payable in equal installments no less frequently than
monthly.

         (b) Eligibility for Certain Benefit Plans. In addition to your salary,
during the period ending May 31, 1997 you will be entitled to participate in the
Company's Pension-Retirement Plan, Savings-Investment Plan and all other
employee benefit plans in which you participate as of the day prior to the
Employment Period, in accordance with the terms and conditions of each such
plan. On and after June 1, 1997, you will

                                      153

participate in all employee benefit plans in which you will be eligible, but
only in accordance with the terms and conditions of each such plan, subject to
the provisions of Section 3(d) below. On and after June 1, 1997, the Company
will provide you with $300,000 of group term life insurance during the term of
this Agreement.

         (c) Supplemental Retirement Benefit. You have been provided with a
Supplemental Retirement Benefit pursuant to which you shall be entitled to
receive a pension calculated in accordance with the provisions of the
Pension-Retirement Plan of The Pittston Company and Its Subsidiaries (the
"Pittston Pension Plan") (except that the limitations set forth in Section
13.01(a) thereof and in the second paragraph of Section 13.07 thereof shall be
disregarded) with full credit for determining your benefit accrual for the
period of your employment with Freeport-McMoRan Inc., the Company or any of
their respective Affiliates (as hereinafter defined) or predecessor companies.
The amount of such Supplemental Retirement Benefit will be offset by the
following:

    --   the amount of any benefit payable to you in respect to the
         Freeport-McMoRan Retirement Plan;

    --   the amount of any benefit payable to you under the Pittston Pension
         Plan and any other pension plan of the Company; and

    --   the amount of any general offset specifically set forth in the Pittston
         Pension Plan (it being understood and agreed that any such offset shall
         be applied without duplication of any offset (whether in respect of the
         Social Security taxable wage base or otherwise) taken into account in
         calculating benefits under such Plan).

For purposes of determining the net Supplemental Retirement Benefit under this
Section 3(c), the Supplemental Retirement Benefit before offset and the amount
of the benefits which offset the Supplemental Retirement Benefit shall be
calculated on an actuarially equivalent basis (i.e., assuming the same frequency
of payments (e.g., monthly), the same commencement date for payments, and to the
extent feasible the same form of annuity (e.g., single life annuity)).

         It is the intention of the parties that payments under this Section
3(c) shall be made to you (or your beneficiary) at such time and in such manner
as provided for under the Pittston Pension Plan and that the procedures, terms
and provisions of that Plan, generally, shall be applicable hereunder. The
obligation of the Company under this Section 3(c) to provide a pension and the
obligations of the Company under Section 4 below shall continue in effect
notwithstanding the termination (for any reason) of your employment with the
Company and its Affiliates.

         As used in this Agreement, the term "affiliate" shall have the meaning
ascribed thereto in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934 as in effect on the date of this Agreement.

         (d) Eligibility for Retiree Medical Benefits. In the event that your
employment shall terminate for any reason, or if you shall, at any time, elect
to retire on an Early Retirement Date under the Pittston Pension Plan, you shall
be deemed to be eligible for early retiree medical coverage under the Company's
Comprehensive Medical Expense Benefits Plan (the "Medical Plan"), anything in
this Agreement or the Medical Plan to the contrary notwithstanding. The
obligation of the Company under this Section 3(d) to provide such coverage shall
continue in effect notwithstanding the termination of your employment with the
Company and its Affiliates; provided, however, that nothing herein shall affect
in any way the Company's right to make future changes in the Medical Plan or to
terminate the Plan entirely; and provided, further, that any such change which
relates to your eligibility for such coverage under the Plan (including the
so-called "rule of 75") or which has the purpose or effect of discriminating
against you or your beneficiaries as to benefits under such Plan shall not
adversely affect such eligibility or benefits as applicable immediately prior to
such change.

         (e) Business Expenses. During the Employment Period the Company shall,
in accordance with policies then in effect with respect to payments of expenses,
pay or reimburse you for all reasonable out-of-pocket travel and other expenses
(other than ordinary commuting expenses) incurred by you in performing services
hereunder. All such expenses shall be accounted for in such reasonable detail as
the Company may require.

         4. Supplemental Retirement Benefits; Change in Control. The provisions
of this Section 4 shall be controlling, anything in the other provisions of this
Agreement to the contrary notwithstanding.

         (a) In the event that a Change in Control (as hereinafter defined in
subparagraph (b) of this Section 4 shall occur or the Company's Board of
Directors shall in its discretion determine that a Change in Control is
anticipated within 90 days from the date of such determination, the Company
shall forthwith take such action as shall be necessary or appropriate to
activate the trust agreement dated as of September 16, 1994 between the Company
and The Chase Manhattan Bank (National Association), as trustee, by the payment
in cash to the trustee under such trust agreement of the aggregate amount which
A. Foster Higgins & Co. Inc. (or another nationally recognized firm of actuaries
selected by the Board) shall determine, on the basis of mortality and other
assumptions at the time applicable under the Pittston Pension Plan, to be
required to provide all projected benefit obligations to you (or your
beneficiary) under Section 3(c) of this Agreement, as of the date the Change in
Control

                                      154

occurs or as of the date of such determination, as the case may be. All expenses
and income and other taxes in connection with the establish ment and operation
of such trust shall be paid by the Company.

         (b) For purposes of this Section 4, a Change in Control shall be deemed
to occur if either (i) any person, or any two or more persons acting as a group,
and all affiliates of such person or persons, shall own beneficially more than
20% of the total voting power in the election of directors of the Company of
shares of all classes of Common Stock of the Company outstanding (exclusive of
shares held by any corporation of which shares representing at least 50% of the
ordinary voting power are owned, directly or indirectly by the Company) pursuant
to a tender offer, exchange offer or series of purchases or other acquisitions,
or any combination of those transactions, or (ii) there shall be a change in the
composition of the Company's Board of Directors at any time within two years
after any tender offer, exchange offer, merger, consolidation, share exchange,
sale of assets or contested election, or any combination of those transactions
(a "Transaction"), so that (i) the persons who were directors of the Company
immediately before the first such Transaction cease to constitute a majority of
the board of directors of the corporation which shall thereafter be in control
of the companies or other entities that were parties to or otherwise involved in
such first Transaction, or (ii) the number of persons who shall thereafter be
directors of such corporation shall be fewer than two-thirds of the number of
directors of the Company immediately prior to such first Transaction. A Change
in Control shall be deemed to take place upon the first to occur of the events
specified in the foregoing clauses (i) and (ii).

         (c) In addition to all other rights under applicable law, you shall,
from and after the date on which a Change in Control shall occur or be
anticipated as provided in subparagraph (b) above, have the right to bring an
action to enforce the provisions of this Section 4 by seeking injunctive relief
and/or damages, and the Company shall be obligated to pay or reimburse you to
the extent that you prevail, in whole or in substantial part, for all reasonable
expenses, including attorney's fees, in connection with such action.

         (d) The foregoing provisions of this Section 4 shall be construed
liberally to the end that accrued benefits under this Section 4 shall be assured
to the fullest extent practicable; provided, however, that nothing in this
Section 4 shall be construed in a manner that would subject you to current
taxation on establishment of the trust.

         (e) Nothing in this Section 4 shall of itself be deemed to increase the
amount of any accrued benefits to which you shall have become entitled under
Section 3(c) of this Agreement. The establishment and activation of the trust
agreement referred to in subparagraph (a) of this Section 4 shall not be deemed
to relieve the Company of its obligations to you under such Section 3(c) except
pro tanto to the extent that amounts in respect thereof are paid under such
trust agreement to you.

         5. Termination. (a) Death. This agreement shall terminate automatically
upon your death.

         (b) Cause. The Company may terminate your employment for Cause. For
purposes of this agreement, "Cause" means (i) an act or acts of dishonesty or
disloyalty on your part which are intended to result in your substantial
personal enrichment at the expense of the Company or any of its Affiliates or to
adversely affect the business of any of them or (ii) a violation or violations
by you of your obligations under Section 8 or Section 9 other than any
insubstantial and inadvertent violation remedied by you promptly after receipt
of notice thereof given by the Company.

         6.  Obligations of the Company upon Termination.

         (a) Death. If your employment is terminated by reason of your death,
this agreement shall terminate without further obligations to your legal
representatives under this agreement other than those obligations accrued
hereunder at the date of your death.

         (b) Cause. If your employment is terminated for Cause, the Company
shall pay you your full salary through the date of such termination at the rate
in effect at such date., and the Company shall have no further obligations to
you under Sections 3(a), (b) or (e) of this agreement; provided, however, that
the Company's obligations under Sections 3(c) and (d) shall continue
notwithstanding termination under either Section 6(a) or (b).

         7. Full Settlement. Subject to full compliance by the Company with all
of its obligations under this agreement, this agreement shall be deemed to
constitute the settlement of such claims as you might otherwise be entitled to
assert against the Company by reason of the termination of your employment for
any reason during or after the Employment Period, including, without limitation,
all claims for discrimination on the basis of age, sex or race or for any other
alleged violation of public policy arising out of such termination. The Company
agrees to pay, to the fullest extent permitted by law, all expenses (including,
without limitation, counsel fees) which you may reasonably incur as a result of
your successful contest, by judicial proceedings or otherwise, of the validity
or enforceability of, or liability under, any provision of this agreement. The
parties acknowledge and agree that the foregoing constitutes a complete release
of all such claims.

         8. Covenant Not to Compete. You agree that during the Employment Period
and during the period ending two years thereafter (the

                                      155

"Non-Compete Period"), you shall not compete with any business then conducted by
the Company or any Affiliate (the "Business"). For purposes of this Agreement,
the term "compete" shall mean engaging in a business as a more than ten percent
(10%) stockholder, an officer, a director, an employee, a partner, an agent, a
consultant, or any other individual or representative capacity if it involves:

            (i) engaging in the Business in competition with the Company or an
    Affiliate within the Pittston Services Group in any state of the United
    States in which the Company or any of such Affiliates (which shall mean for
    purposes of this Section 8 any such Affiliate in which the Company owns,
    directly or indirectly, an equity interest of twenty percent (20%) or more)
    operates at anytime during the Non-Compete Period; or

           (ii) rendering services or advice pertaining to the Business to or on
    behalf of any person, firm or corporation which is in competition with the
    Company or any Affiliate within the Pittston Services Group at any time
    during the Non-Compete Period in any state of the United States.

         In the event the restrictions against engaging in a competitive
activity contained in this Section 8 shall be determined by any court of
competent jurisdiction to be unenforceable by reason of its extending for too
great a period of time or over too great a geographic area or by reason of its
being too extensive in any other respect, it shall be interpreted to extend only
over the maximum period of time for which it may be enforceable, and over the
maximum geographic area as to which it may be enforceable and to the maximum
extent in all other respects as to which it may be enforceable, all as
determined by such court in such action.

         Clauses (i) and (ii), above, are intended by the Company as separate
and divisible provisions, and if for any reason any one is held to be invalid or
unenforceable, neither the validity nor the enforceability of the other shall
thereby be affected.

         9. Confidential Information. (a) You acknowledge that in the course of
your employment you may receive, have access to, or develop confidential or
proprietary information or trade secrets relating to the business of the Company
or its Affiliates. You will hold in a fiduciary capacity for the benefit of the
Company and such Affiliates all such confidential or proprietary information,
secrets, knowledge or data relating to their respective businesses, including,
without limitation, information relating to strategic plans, public and
shareholder relations, marketing, pricing, purchasing of transportation (ground
or air) arrangements, plans or programs, computer programs, communication
systems, cost data, or customer lists, obtained by you prior to, during or after
the Employment Period, and you will not, during the Employment Period or
thereafter, communicate or divulge any such information, secrets, knowledge or
data to any other person, firm or corporation without the prior written consent
of the Chairman of the Board of the Company. All records, files, drawings,
documents, notes, equipment and the like relating to the business or activities
of the Company or any of such Affiliates which you shall prepare or use or come
into contact with shall be and remain the sole property of the Company or such
Affiliates, as the case may be, and upon termination of your employment with the
Company all of such property shall be returned to the Company in accordance with
the directions given by it.

         (b) Equitable Relief. You acknowledge that the foregoing provisions of
Sections 8 and 9 are essential to the Company and are reasonable and necessary
to protect the legitimate interests of the Company and its Affiliates and that
damages sustained by the breach of such provisions would cause irreparable harm
to the Company because of the special services that have been performed by you
and that recovery of damages at law would not be an adequate remedy. You further
agree that the Company and its Affiliates, in addition to any other remedy which
any of them may have under this agreement or at law, shall be entitled to
injunctive and other equitable relief to prevent to curtail any breach of any
such provision. If any provision of Sections 8 or 9 shall be deemed to be
invalid, illegal or unenforceable as written by reason of the extent or duration
thereof, or otherwise, the determining body or authority making such
determination shall be empowered to reduce such provision so as to be
enforceable to the greatest extent possible and, as so reduced, such provision
shall then be deemed to be rewritten and enforced as reduced.

         (c) The provisions of this Section 9 shall survive the termination of
this agreement.

         10. Successors. (a) This agreement is personal to you and without the
prior written consent of the Company shall not be assignable by you or otherwise
than by will or the laws of descent and distribution. This agreement shall inure
to the benefit of and be enforceable by your legal representatives.

         (b) This agreement shall inure to the benefit of and be binding upon
the Company and its successors.

         11. Governing Law. This agreement shall be governed by and construed in
accordance with the substantive and procedural law of New York without reference
to principles of conflict of laws. The parties hereto agree that any dispute
hereunder may be submitted to any court of competent jurisdiction in New York
and for purposes thereof each party hereto submits to such jurisdiction.

         12. Miscellaneous. (a) This agreement contains the entire understanding
with you with respect to the subject matter hereof and

                                      156

supersedes any and all prior agreements or understandings, written or oral,
relating to such subject matter. This agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives. The captions of this agreement
are not part of the provisions hereof and shall have no force or effect.

         (b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepared, addressed as
follows:

         If to you:

         20 Dolphin Point Lane
         Hilton Head Island
         South Carolina 29926

         If to the Company:

         1000 Virginia Center Parkway
         P. O. Box 4229
         Glen Allen, VA 23058-4229

         Attention:  Chairman of the Board

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be deemed to be
given when mailed by certified or registered mail, return receipt requested.

         (c) The invalidity or unenforceability of any provision of this
agreement shall not affect the validity or enforceability of any other provision
of this agreement.

         (d) The Company may withhold from any amounts payable under this
agreement such federal, state or local taxes for which withholding is provided
pursuant to any applicable law or regulation.

         Please confirm that the foregoing is in accordance with our agreement.

                                              Very truly yours,

                                              THE PITTSTON COMPANY

                                              By___________________________
                                                  Chairman of the Board

         I hereby confirm that the foregoing is in accordance with our
agreement.

                                              _____________________________
                                                  David L. Marshall

Dated as of June 1, 1997

                                      157

================================================================================

                           FIFTH SUPPLEMENT TO LEASE

                                     between

                  TOLEDO-LUCAS COUNTY PORT AUTHORITY, as Lessor

                                       and

                     BURLINGTON AIR EXPRESS INC., as Lessee

                          Dated as of December 1, 1996

================================================================================

Filed for record on on December 19, 1996 at   This  Fifth  Supplement  to  Lease
10:30 o'clock a.m.,  E.D.T., at M96-          supplements  a Lease  between  the
3194C08, in the LUCAS COUNTY, OHIO RECORDS    named  Lessor and Lessee  dated as
                                              of April 1,  1989,  as  previously
                                              supplemented by a First Supplement
                                              to Lease  dated as of  January  1,
                                              1990, a Revised and Amended Second
                                              Supplement  to  Lease  dated as of
                                              September   1,   1990,   a   Third
                                              Supplement  to  Lease  dated as of
                                              June  1,   1991,   and  a   Fourth
                                              Supplement  to  Lease  dated as of
                                              March 1, 1994,  each  between  the
                                              Lessor and the Lessee.  A Restated
                                              Memorandum  of Lease was filed for
                                              record on October 1, 1990 at 12:44
                                              o'clock  p.m.  E.D.S.T.,  at  M90-
                                              1318C06  in the  Records  of Lucas
                                              County, Ohio, the Third Supplement
                                              to Lease was  filed for  record on
                                              October  1,  1991 at 8:55  o'clock
                                              a.m. E.D.S.T., at M91-1446A06, and
                                              the Second Restated  Memorandum of
                                              Lease  was  filed  for  record  on
                                              March  22,  1994 at 11:24  o'clock
                                              a.m.,  E.S.T.,  at M94-746C09,  in
                                              the Records of Lucas County, Ohio.

                                      158

 

                            FIFTH SUPPLEMENT TO LEASE

              This Fifth Supplement to Lease (the Fifth  Supplement) dated as of
December 1, 1996 between the Toledo-Lucas  County Port Authority (the Issuer), a
port authority and political  subdivision  duly  organized and validly  existing
under the laws of the State of Ohio (the State), and Burlington Air Express Inc.
(formerly known as Burlington Air Express USA Inc.) (the Company),  a for-profit
corporation  organized and existing  under the laws of the State of Delaware and
duly  authorized  to transact  business in the State (with each term used in the
recitals  that  follow as a defined  term but not  defined  therein  having  the
meaning assigned to it expressly or by reference in Section 1);

                              W I T N E S S E T H:

              WHEREAS,  the Issuer, as lessor, and the Company,  as lessee, have
heretofore  entered into a Lease dated as of April 1, 1989 (the Original Lease),
as amended and  supplemented by a First  Supplement to Lease dated as of January
1, 1990 (the First Supplement), a Revised and Amended Second Supplement to Lease
dated as of September 1, 1990 (the Second  Supplement),  a Third  Supplement  to
Lease dated as of June 1, 1991 (the Third Supplement) and a Fourth Supplement to
Lease dated as of March 1, 1994 (the Fourth Supplement), each between the Issuer
and the Company (as so amended and  supplemented,  the Existing  Lease) and have
caused a  Restated  Memorandum  of  Lease,  the  Third  Supplement,  the  Fourth
Supplement and a Second  Restated  Memorandum of Lease to be filed for record as
described on the cover page hereto; and

              WHEREAS,  the  Issuer  is  obligated  under  Section  11.2  of the
Existing  Lease to reimburse the Company for any United States  Customs  Service
charges  incurred by the Company with respect to its  operations at the Airport;
and

              WHEREAS, pursuant to the Act and the Joint Participation Agreement
entered  into with and at the request of the  Company,  the Issuer  entered into
contracts  for the  acquisition,  construction,  installation,  improvement  and
equipping  of the  Project in order to expand the area of the Ramp,  as to which
Ramp Expansion the Company is to have a preferential right of use in common with
all  other  users of the  Airport,  and the  Ramp  Expansion  was  substantially
completed and the Company commenced use of the Ramp Expansion in September 1996;
and

              WHEREAS,  the Project will enhance the use and value of the Leased
Premises  to the  Authority  and the Company  and create and  preserve  jobs and
employment   opportunities   and  promote   economic   development   within  the
jurisdiction of the Issuer; and

              WHEREAS, in accordance with the Joint Participation Agreement, the
Company has provided money to the Issuer to pay certain Project costs heretofore
due and payable,  in  anticipation  of being  reimbursed  for its  provision for
payment  of those  costs  from  proceeds  of the  Bonds  which  the  Issuer  has
determined  to issue,  sell and  deliver at the  request  of the  Company in the
aggregate  principal  amount  of  $4,000,000,  for such  purpose  and to pay any
additional Project costs, pursuant to the Act, the Inducement Resolution and the
Joint Participation Agreement; and

              WHEREAS,  the Company,  in consideration of the services  provided
and to be  provided  by the  Issuer  under  the  Existing  Lease,  the  Issuer's
acquisition,  construction,  installation,  improvement  and  equipping  of  the
Project  in order to expand  the area of the Ramp,  the  Company's  preferential
right of use of the  Ramp  Expansion  and the  Issuer's  determination  to issue
revenue  obligations  to provide  funds to pay, or to reimburse  the Company for
provision  of funds for  payment  of,  costs of the  Project,  has agreed to (i)
assume a portion of the charges for United States Customs  Service  charges with
respect to its  operations  at the  Airport  for 1996,  1997 and 1998 and all of
those  charges for which bills are  received on or after  December 31, 1998 with
respect to its  operations,  (ii) an increase in the Ramp Fees in respect of the
additional

                                      159

 

costs to the Issuer of maintaining the Ramp Expansion,  (iii) a reduction in the
Expansion  Area by the  area of the Ramp  Expansion,  and (iv) pay to or for the
account of the Issuer amounts  sufficient to pay, on condition that they be used
to pay,  the  principal of and interest and any premium on the Bonds as provided
in the Use Agreement; and

              WHEREAS, this Fifth Supplement modifies certain contract rights of
the Issuer  and the  Company  under the  Existing  Lease but does not  otherwise
affect the leasehold interest established by the Existing Lease;

              NOW,  THEREFORE,  in  consideration of the premises and the mutual
covenants  and   agreements   herein   contained  and  contained  in  the  Joint
Participation  Agreement and the Use Agreement,  and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Issuer and the Company hereby covenant and agree as follows:

              Section 1.  Definitions.  Each term used herein as a defined  term
and not otherwise defined herein,  unless the context or use requires otherwise,
shall have the meaning  assigned to it in the Existing Lease. In addition to the
words and terms defined by reference or elsewhere in this Fifth  Supplement,  as
used herein:

              "Bonds" means the $4,000,000  Airport  Development  Revenue Bonds,
Series 1996-1  (Burlington  Air  Express  Inc.   Obligor),  issued by the Issuer
pursuant to Resolution No. 69-96 adopted on July 25, 1996.

              "Joint  Participation  Agreement" means the agreement  between the
Issuer and the  Company,  stated to be  effective  February  22,  1996 and fully
executed as of March 29, 1996, pursuant to which the Issuer agreed,  among other
things,   to  let,  and  proceeded  to  let,   contracts  for  the  acquisition,
construction,  installation,  improvement  and  equipping  of  the  Project,  in
consideration  of the Company's  agreement to provide money to pay Project costs
due and payable prior to the issuance and delivery of the Bonds and of the other
agreements and covenants made therein by the Company.

              "Project"  means  expansion of the existing Ramp at the Airport by
acquiring,  constructing,  installing, improving and equipping a general purpose
aircraft apron on the Ramp Expansion Site adjacent to the existing Ramp Site for
transient aircraft parking and loading and unloading  operations,  consisting of
4-inch limestone  screenings  covered by 8 inches of black bituminous  material,
covered by 15 inches of concrete,  together with any necessary  taxiway  lights,
two high mast apron flood  lights,  drainage  facilities  (including  an oil and
water  separation  system),  and relocation of portions of Air Cargo Parkway and
the access road between the Ramp and the Fuel Farm located  formerly on the Ramp
Expansion Site onto adjacent property, and all necessary appurtenances.

              "Ramp  Expansion" means that portion of the Project other than the
acquisition,  construction,   installation  and  improvement  of  the  relocated
portions of Air Cargo  Parkway and the access road between the Ramp and the Fuel
Farm onto property adjacent to the Ramp Expansion Site.

              "Ramp Expansion Site" means the real property described in Exhibit
A hereto.

              "Use  Agreement"  means the Use  Agreement,  dated as of even date
herewith,  between the Company and the Issuer,  as amended or supplemented  from
time to time.

                                      160

 

              Section 2. Ramp Expansion. The definition of "Ramp" in Section 1.1
of the Existing Lease shall be and hereby is amended to read as follows:

              "Ramp"   means  the  portion  of  the  Project   comprised  of  an
approximately 40-acre transient aircraft parking and loading and unloading ramp,
and necessary appurtenances thereto, constructed on the Ramp Site, together with
an approximately  10-acre expansion thereof, used for transient aircraft parking
and loading and unloading,  and necessary appurtenances thereto,  constructed on
the Ramp Expansion Site, and the taxiway connectors relating thereto.

              The  following  definition  of  "Ramp  Expansion  Site"  and a new
"Exhibit  C-1" in the form of Exhibit A hereto  shall be and are hereby added to
the Existing Lease:

              "Ramp Expansion Site" means the real property described in Exhibit
C-1 hereto.

              Section 3. United States Customs Service Charges.  Notwithstanding
the provisions of the Existing  Lease or any other existing  agreement or course
of conduct or dealing,  the  Company has paid  $100,000 to the Issuer in 1996 in
respect of Customs  Service  charges for which bills are received by the Company
in 1996 with respect to the Company's  regularly  scheduled  flights arriving at
the  Airport,  and  hereby  agrees to pay to the Issuer the amount of $75,000 on
January  1, 1997 and on July 1, 1997 and the  amount of  $100,000  on January 1,
1998 and on July 1, 1998 in respect of such charges for which bills are received
by the Company in 1997 and 1998;  provided,  that the Issuer shall remain liable
under the  Existing  Lease for the  payment of all Customs  Service  charges for
which  bills are  received by the  Company on or before  December  31, 1998 with
respect to Customs  Service  activities  provided  for the  Company's  regularly
scheduled  flights arriving at the Airport,  regardless of whether the foregoing
deposits to be made by the Company shall be sufficient  for the payment of those
charges. Any Customs Service charges for which bills are received by the Company
on or after  December  31,  1998 with  respect  to  Customs  Service  activities
provided for the Company's  flights arriving at the Airport,  whether  regularly
scheduled or otherwise,  shall be paid by the Company,  and the Issuer shall not
have any obligation for the payment or reimbursement of all or any part of those
charges.

             Section 4. Expansion  Site.  The definition of "Expansion  Site" in
Section 1.1  of  the  Existing  Lease  shall be and is hereby amended to read as
follows:

              "Expansion  Site" means a  54.952-acre  Expansion  Site  presently
owned or leased by the Lessor and contiguous to the Initial Site,  including the
Leased  Expansion Site and the precise  location of the balance of which will be
identified,  when agreed upon by the Lessor and the Lessee,  in a supplement  to
this Lease to be executed and  delivered by  appropriate  officers of the Lessor
and the Lessee and, so long as such site does not exceed  54.952  acres less the
Leased Expansion Site,  without any further  legislative action on behalf of the
Lessor;  provided, that the location of the Expansion Site may be changed at any
time and from time to time by an appropriate  instrument executed by appropriate
officers of the Lessor and the Lessee solely in the discretion of the Lessor and
the Lessee, without notice to or the consent of any other Person and, so long as
the size of the Expansion Site is not increased, without any further legislative
action on behalf of the Lessor.

              Section 5.   Ramp Fees.  Clause (a)(ii)  of  Section  3.2  of  the
Existing  Lease  shall  be  and  is  hereby amended, in its entirety, to read as
follows:

                    (ii) on or prior to each Rental Payment Date commencing with
              the  November  1991  Rental  Payment  Date,  as a user fee for the
              preferential

                                      161

 

               but common use of the Ramp,  the Ramp Fees in an amount  equal to
               (A) during the Initial Term (I) prior to the November 1996 Rental
               Payment  Date,  $38,368.97,  (II)  on the  November  1996  Rental
               Payment  Date,  $33,674.53,  (III) on the  December  1996  Rental
               Payment Date, $55,445.21 (which includes the amounts of $5,442.67
               with respect to use and  maintenance  of the Ramp  Expansion Site
               for each of the months September, October and November 1996), and
               (IV)  on  and  after  the  January  1997  Rental   Payment  Date,
               $39,117.20,  provided,  that, the Ramp Fees to be paid under this
               Section  3.2(a)(ii)(A) (under each of subclauses (I), (II), (III)
               and (IV))  shall be  adjusted  upward,  commencing  on the Rental
               Payment  Date  next  following  any  date on  which  the  Lessor,
               pursuant to Section 2(b) of the Second Supplement pays, or causes
               to be paid,  for deposit or transfer to the  Interest  Account in
               the Bond Fund, an amount  sufficient to fund the Monthly Interest
               Payment  portions  of the Basic Rent as set forth in  Schedules I
               and II of  Exhibit D to this  Lease,  by,  and  shall  thereafter
               include,  in addition to all other amounts payable hereunder,  an
               amount equal to  $3,001.97,  and (B) during any of the  extension
               periods  provided  pursuant  to  Section  2.5  hereof,  an amount
               adjusted,  pursuant thereto,  to the fair market value of the use
               of the Ramp.

              Section 6.  Ratification  of Lease;  Integration.  As amended  and
supplemented  hereby,  the  Existing  Lease is, in all  respects,  ratified  and
confirmed and remains in full force and effect. It is understood and agreed that
as of the date of execution and delivery of this Fifth Supplement,  the Lease is
comprised only and exclusively of the Original Lease, the First Supplement,  the
Second  Supplement,  the Third Supplement,  the Fourth Supplement and this Fifth
Supplement,  and that the Lease, as so  constituted,  together with the Guaranty
and the Assumption Agreement,  constitute the entire understanding of the Issuer
and the Company with respect to the subject matter thereof and hereof,  and that
the  Lease,  as so  constituted,  together  with  the  Guaranty  and  Assumption
Agreement,  supersede all other oral or written agreements, prior to the date of
execution and delivery of this Fifth Supplement, with respect thereto.

              Section 7. General  Agreements.  This Fifth  Supplement shall take
effect upon the execution and delivery hereof and shall continue in effect until
the  expiration  of the Lease Term.  The Issuer and the Company  agree that they
will  execute and deliver such  further  documents  and do such further acts and
things as are necessary  fully to effect the purposes of this Fifth  Supplement.
THIS FIFTH  SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE AND SHALL  INURE TO THE  BENEFIT  OF AND BE  BINDING  UPON THE
ISSUER  AND THE  COMPANY  AND  THEIR  RESPECTIVE  SUCCESSORS  AND  ASSIGNS.  Any
provision  hereof invalid under any law shall be inapplicable and deemed omitted
herefrom,  but shall not invalidate the remaining  provisions hereof. This Fifth
Supplement may be executed in counterpart, and in several counterparts,  each of
which shall be deemed an original.

                   (Balance of page intentionally left blank)

                                      162

 

              IN WITNESS  WHEREOF,  the Issuer and the Company  have caused this
Fifth Supplement to Lease to be duly executed in their respective names by their
duly authorized officers all as of the date first hereinbefore written.

Signed and acknowledged as to               TOLEDO-LUCAS COUNTY PORT
the Issuer in the presence of:              AUTHORITY

/s/ Margaret J. Hutchinson                  By: /s/ James H. Hartung
- -----------------------------                   --------------------------------
Name:  Margaret J. Hutchinson                       James H. Hartung, President

/s/ Geraldine A. Jagos                      By: /s/ Jerry J. Arkebauer
- -----------------------------                   --------------------------------
Name:  Geraldine A. Jagos                           Jerry J. Arkebauer,
   (Witnesses as to both)                           Secretary-Fiscal Officer

Signed and acknowledged as to               BURLINGTON AIR EXPRESS INC.
the Company in the presence of:

/s/ Peter Laterza                           By: /s/ David J. Duffy
- -----------------------------                   --------------------------------
Name:  Peter Laterza                        David J. Duffy, Assistant Treasurer

/s/ Sherry L. Carlton
- -----------------------------
Name:  Sherry L. Carlton
       (Witnesses)

     Approved as to form: /s/ Mary Frederick Coy
                          ------------------------------------
                              Mary Frederick Coy, Staff Counsel

                                      163

 

STATE OF OHIO                               )
                                            )

COUNTY OF LUCAS                             )

              On this 12th day of December,  1996, before me, a Notary Public in
and for said County and State, personally appeared James H. Hartung and Jerry J.
Arkebauer,   President  and  Secretary-Fiscal  Officer,   respectively,  of  the
Toledo-Lucas  County Port  Authority,  and  acknowledged  that they did sign the
foregoing instrument as such officers of said Port Authority,  respectively, for
and on behalf of said Port Authority and by authority  granted by law and by the
Board of Directors of said Port  Authority and that the same is their  voluntary
act and deed as such officers on behalf of said Port Authority and the voluntary
and corporate act and deed of said Port Authority.

              IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed
my official seal on the day and year aforesaid.

[Seal]                                                  /s/ Margaret Hutchinson
                                                        -----------------------
                                                                 Notary Public

                                                MARGARET J. HUTCHINSON
                                                Notary Public, State of Ohio
                                            My Commission Expires Aug. 19, 1997

COMMONWEALTH OF VIRGINIA                       )
                                               )

COUNTY OF HENRICO                              )

              On this 16th day of December,  1996, before me, a Notary Public in
and for said  County  and  Commonwealth,  personally  appeared  David J.  Duffy,
Assistant Treasurer of Burlington Air Express Inc., and acknowledged that he did
sign the  foregoing  instrument as such officer of said  corporation  for and on
behalf of said corporation and by authority granted by the Board of Directors of
said corporation and that the same is his voluntary act and deed as such officer
on behalf of said  corporation  and the  voluntary and corporate act and deed of
said corporation.

              IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed
my official seal on the day and year aforesaid.

[Seal]                                                 /s/ Pamela D. Washington
                                                       -------------------------
                                                           Notary Public

          This instrument was prepared by:     D. Bruce Gabriel, Esq.
                                               Squire, Sanders & Dempsey L.L.P.
                                               4900 Key Tower
                                               127 Public Square
                                               Cleveland, Ohio  44114-1304

                                      164

 

                                   CERTIFICATE

              The undersigned,  Fiscal Officer of the Issuer under the aforesaid
Fifth Supplement to Lease, hereby certifies that the moneys required to meet the
obligations  of the Issuer  during the year 1996 under that Fifth  Supplement to
Lease have been  lawfully  appropriated  by the Board of Directors of the Issuer
for such  purposes  and are in the  treasury  of the Issuer or in the process of
collection  to the  credit  of an  appropriate  fund,  free  from  any  previous
encumbrances.  This Certificate is given in compliance with Sections 5705.41 and
5705.44, Ohio Revised Code.

Dated:  December 18, 1996                    /s/ Jerry J. Arkebauer
                                             -----------------------
                                             Secretary - Fiscal Officer,

                       Toledo-Lucas County Port Authority

                                      165

 

                               CONSENT OF DIRECTOR

              The undersigned, The Director of Development of the State of Ohio,
by the  undersigned  duly authorized  officer,  hereby  acknowledges  receipt of
notice of, and hereby consents to, the foregoing  Fifth  Supplement to Lease and
the amendments, changes, modifications, covenants and agreements therein made to
the extent, if any, that those amendments, changes, modifications, covenants and
agreements are material to that Director.

                                                    THE DIRECTOR OF DEVELOPMENT
                                                    OF THE STATE OF OHIO

Dated:  December 18, 1996                           By: /s/ Donald E. Jakeway
                                                        ---------------------
                                                            Deputy Director
                                      166

 

                               CONSENT OF TRUSTEE

              The undersigned,  as Trustee under the Indenture identified in the
foregoing Fifth Supplement to Lease, by the undersigned duly authorized officer,
hereby (i)  acknowledges  receipt of notice of the foregoing Fifth Supplement to
Lease and the  amendments,  changes,  modifications,  covenants  and  agreements
therein made, (ii) determines that such amendments, changes and modifications of
the Lease are required in  connection  with changes in the Lease that are not to
the  prejudice  of the  Trustee or the  holders of the Bonds  issued  under that
Indenture,  and  (iii)  consents  to that  Fifth  Supplement  to  Lease  and the
amendments, changes, modifications, covenants and agreements therein made.

                                                MELLON BANK, F.S.B., as Trustee

Dated:  December 18, 1996                       By: /s/ Lisa J. Garrett
                                                    -------------------
                                                       Vice President

                                      167

 

                                                                       EXHIBIT A
                              RAMP EXPANSION SITE

     A parcel of land being a part of Section  10,  Town 7 North,  Range 9 East,
Swanton Township,  Lucas County, Ohio, and being more particularly  described as
follows:

     Commencing  at an iron pin at the Southeast corner of the Northeast quarter
of Section 10, Swanton Township;

     thence North 88[d] 46' 07" West, on the South line of the Northeast quarter
of Section 10, a distance of 1,539.26 feet to a point;

     thence  North  21[d] 23' 38" West,  on a line being at right  angles to the
centerline  of  Runway  7-25,  a  distance  of  439.34  feet to a  point  on the
Southeasterly line of the existing 40,000 acre Burlington Apron;

     thence South 68[d] 36' 22" West, on a line being 1362.50 feet Southeasterly
of as measured  perpendicular to and parallel with the centerline of Runway 7-25
and on the  Southeasterly  line of the existing 40,000 acre Burlington  Apron, a
distance of 930.00 feet to a point, said point being the TRUE POINT OF BEGINNING
of the parcel herein described; thence continuing South 68[d] 36' 22" West, on a
line  being  1362.50  feet  Southeasterly  of as measured  perpendicular  to and
parallel with the centerline of Runway 7-25 and on the  Southwesterly  extension
of the  Southeasterly  line of the  existing  40,000 acre  Burlington  apron,  a
distance of 700.00 feet to a point;

     thence  North  21[d] 23' 38" West,  on a line being at right  angles to the
centerline of Runway 7-25, a distance of 625.25 feet to a point;

     thence North 68[d] 36' 22" East, on a line being 737.25 feet, Southeasterly
of as measured perpendicular to and parallel with the centerline of Runway 7-25,
a distance of 700.00 feet to the  Northwesterly  corner of the  existing  40,000
acre Burlington Apron;

     thence  South  21[d] 23' 38" East,  on a line being at right  angles to the
centerline of Runway 7-25, and on the Southwesterly  line of the existing 40,000
acre Burlington  Apron, a distance of 625.25 feet to the TRUE POINT OF BEGINNING
of the parcel herein  described,  containing 10.048 acres of land, more or less,
subject to all easements, zoning restrictions of record and legal highways.

     The bearings used herein are for the purpose of describing  angles only and
are not referenced to true or magnetic North.

                                      168

                                                                  CONFORMED COPY

                                  AMENDMENT #2

                  AMENDMENT dated as of May 15, 1996 among THE PITTSTON COMPANY,
a Virginia corporation (the "Borrower"), the financial institutions listed on
the signature pages hereto, CHEMICAL BANK, CREDIT SUISSE and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as agents for the financial institutions from time to
time party to the Agreement hereafter referred to (in such capacity, the "Co-
Agents"), and CREDIT SUISSE, as administrative agent (in such capacity, the
"Administrative Agent"), to the CREDIT AGREEMENT dated as of March 4, 1994 among
the Borrower, the financial institutions which are parties to the Agreement
hereafter referred to (each a "Lender" and collectively, the "Lenders"), the
Co-Agents and the Administrative Agent (as amended by an amendment dated as of
May 1, 1995, the "Agreement").

                              W I T N E S S E T H :

                  WHEREAS, the parties hereto desire to amend the Agreement (i)
to extend the scheduled maturity date of the Loans, (ii) to extend the period
during which Borrower may borrow Revolving Loans pursuant to the Agreement,
(iii) reduce the margins applicable to certain interest rates on certain Loans,
(iv) reflect the addition of certain financial institutions as lenders under the
Agreement and the elimination of certain others, and (v) in certain other
respects;

                  WHEREAS, subject to the terms and conditions stated below, the
Lenders and those financial institutions who are to become Lenders pursuant
hereto are amenable to such amendments;

                  NOW, THEREFORE, it is agreed:

                  1. Definitions. (a) All the terms used herein which are
defined in the Agreement (including, to the extent any such terms are to be
amended by this Amendment, as if such terms were already amended by this
Amendment unless the context shall indicate otherwise) shall have the same
meanings when used herein unless otherwise defined herein. All references to
Sections in this Amendment shall be deemed references to Sections in the
Agreement unless otherwise specified.

                  (b) As used in this Amendment, the following terms have the
following meanings:

                  "Amendment Effective Date" shall mean the date when this
Amendment becomes effective in accordance with Section 10 hereof.

                                      169

 

                  "Chase" shall mean The Chase Manhattan Bank (National
Association).

                  "Fleet" shall mean Fleet National Bank, N.A.

                  "FNBB" shall mean Bank of Boston Connecticut.

                  "New Lender" shall mean a financial institution listed on New
Schedule 2.01 but not on Old Schedule 2.01.

                  "New Schedule 2.01" shall mean the Schedule 2.01 attached to
this Amendment.

                  "Old Lender" shall mean Chase and National Westminster Bank
plc, financial institutions that were Lenders immediately prior to the
effectiveness of this Amendment but which are not listed on New Schedule 2.01.

                  "Old Schedule 2.01" shall mean the Schedule 2.01 as in effect
immediately prior to the effectiveness of this Amendment.

                  "Sanwa" shall mean The Sanwa Bank Limited.

                  2. Effect of Amendment. As used in the Agreement (including
all exhibits and attachments thereto), the Notes and all instruments and
documents executed in connection with any of the foregoing, on and subsequent to
the date on which this Amendment becomes effective, any reference to the
Agreement shall mean the Agreement as amended hereby.

                  3. Commitment Fee. The chart that is in the definition of
"Applicable Commitment Fee Rate" in Section 1.01 of the Agreement is hereby
amended to read in its entirety as follows:

                     Level 1              Level 2              Level 3              Level 4             Level 5
                     -------              -------              -------              -------             -------
                                                                                       
                     Senior LT            Senior LT            Senior LT            Senior LT           Senior LT
                     Rating:              Rating:              Rating:              Rating:             Rating:
                     BBB+/Baa1            BBB/Baa2             BBB-/Baa3            BB+/Ba1             Below
                     or Better                                                                          BB+/Ba1
                     ------------         ------------         ------------         ------------        -------
                     Subordinated         Subordinated         Subordinated         Subordinated        Subordinated
                     LT Rating:           LT Rating:           LT Rating:           LT Rating:          LT Rating:
                     BBB/Baa2             BBB-/Baa3            BB+/Ba2              BB-/Ba3             Below
                     or Better                                                                          BB-/Ba3

Commitment             .100                 .125                 .150                 .250                .375
Fee Rate
===================  ===================  ==================== ===================  =================== ===================

                  4. Applicable Margin. The chart that is in the definition of
"Applicable Margin" in Section 1.01 of the Agreement is hereby amended to read
in its entirety as follows:

                                      170

 

                          Level 1             Level 2              Level 3              Level 4             Level 5
                          -------             -------              -------              -------             -------
                                                                                         
                          Senior LT           Senior LT            Senior LT            Senior LT           Senior LT
                          Rating:             Rating:              Rating:              Rating:             Rating:
                          BBB+/Baa1           BBB/Baa2             BBB-/Baa3            BB+/Ba1             Below
                          or Better                                                                         BB+/Ba1
                          ------------        ------------         ------------         ------------        -------
                          Subordinated        Subordinated         Subordinated         Subordinated        Subordinated
                          LT Rating:          LT Rating:           LT Rating:           LT Rating:          LT Rating:
                          BBB/Baa2            BBB-/Baa3            BB+/Ba2              BB-/Ba3             Below
                          or Better                                                                         BB-/Ba3

Eurodollar
Revolving Margin          .32500              .37500               .42500                .62500              .87500

CD Revolving
Margin                    .45000              .50000               .55000                .75000              1.0000

Base Rate
Revolving Margin          .00000              .00000               .00000                .00000              .00000

Eurodollar Term
Margin                    .32500              .37500               .42500                .75000              1.1250

CD Term Margin            .45000              .50000               .55000                .87500              1.2500

Base Rate Term
Margin                    .00000              .00000               .00000                .00000              .00000
========================  =================== ===================  ===================  =================== ===================

                  5. Utilization Fee. The chart that is in the definition of
"Applicable Utilization Rate" in Section 1.01 of the Agreement is hereby amended
to read in its entirety as follows:

                  Level 1                Level 2               Level 3              Level 4                Level 5
                  -------                -------               -------              -------                -------
                                                                                  
                  Senior LT              Senior LT             Senior LT            Senior LT              Senior LT
                  Rating:                Rating:               Rating:              Rating:                Rating:
                  BBB+/Baa1              BBB/Baa2              BBB-/Baa3            BB+/Ba1                Below
                  or Better                                                                                BB+/Ba1
                  ------------           ------------          ------------         ------------           -------
                  Subordinated LT        Subordinated          Subordinated         Subordinated           Subordinated
                  Rating:                LT Rating:            LT Rating:           LT Rating:             LT Rating:
                  BBB/Baa2               BBB-/Baa3             BB+/Ba2              BB-/Ba3                Below
                  or Better                                                                                BB-/Ba3
Utilization
Rate                    0.0                    0.0                  0.0                 .12500                 .25000
================  =====================  ====================  ===================  =====================  =====================

                  6. Maturity Date. The definition of "Maturity Date" in Section
1.01 of the Agreement is hereby amended to read in its entirety as follows:

                                      171

 

                  "Maturity Date" shall mean May 31, 2001.

                  7. Minimum Net Worth. Subsection (iv) of Section 6.02 of the
Agreement is hereby amended to read in its entirety as follows:

                           "(iv)  Consolidated Net Worth.  Permit Consolidated
                  Net Worth as of the last day of any fiscal quarter of the
                  Borrower to be less than $400,000,000."

                  8. Lenders. (a) Schedule 2.01 to the Agreement is hereby
amended and replaced in its entirety by Schedule 2.01 to this Amendment.

                  (b) Each New Lender agrees to be bound by all provisions
relating to "Lenders" under and as defined in the Agreement (as amended hereby),
including (without limitation) provisions relating to the dissemination of
information and the payment of indemnification.

                  9. Successors. Borrower acknowledges that, prior to the date
hereof, Fleet National Bank, N.A. succeeded to the rights and obligations of
Shawmut Bank, N.A. as a Lender.

                  10. Effectiveness. This Amendment shall become effective as of
May 31, 1996 when:

                  (a) The Borrower, the Co-Agents, the Administrative Agent and
each financial institution listed on the signature pages hereto (which includes
all such institutions who were Lenders immediately prior to the effectiveness of
this Amendment and all such institutions who shall become Lenders upon
effectiveness of this Amendment) shall have executed a copy hereof and delivered
the same to the Administrative Agent at 12 East 49th Street, New York, New York
10017 (attention: Juerg Johner), fax no. 212/238-5439.

                  (b) The Borrower shall have delivered to the Agent, on behalf
of each of the following New Lenders, a duly executed Revolving Credit Note and
a duly executed Term Note (in each case made payable to such Lender) in the
amounts specified for such Lenders on New Schedule 2.01 as such Lender's
Revolving Credit Commitment and Term Loan Commitment, respectively:

                           FNBB;

                           Sanwa; and
                           The Sumitomo Bank, Limited.

                  (c) Each of the following Old Lenders shall have delivered to
the Agent, for further delivery to the Borrower, the Term Notes and Revolving
Credit Notes previously issued to them (or, if lost, duly signed "lost note
affidavits" in form and substance satisfactory to the Borrower):

                                      172

 

                  Chase; and
                  National Westminster Bank plc.

                  (d)  [intentionally deleted]

                  (e) The following financial institutions shall have remitted
to the Administrative Agent for payment to the Old Lenders, on or before May 31,
1996 and in immediately available funds, the amounts set forth below
(appropriately adjusted to reflect any Loans made or repaid between the date
hereof and May 31, 1996 or, if later, the Amendment Effective Date):

                                    Amount of                    Amount of

Lender                              Revolving Loan               Term Loan

FNBB                                -0-                          $4,285,714.29
Sanwa                               -0-                          $4,285,714.29
The Sumitomo
 Bank, Limited                      -0-                          $4,285,714.29

                  (f) The Borrower shall have paid to each of the Lenders party
to the Agreement immediately prior to the Amendment Effective Date all accrued
but unpaid interest and Commitment Fees payable to such Lenders through May 31,
1996 (or, if later, the date that this Amendment becomes effective in accordance
with its terms). The parties hereto acknowledge that no Utilization Fees are
payable to the Lenders for the two months ending May 31, 1996.

                  (g) Each of the Old Lenders shall have received an amount
equal to the outstanding principal amount of their Term Loans and Revolving
Loans on May 31, 1996 (or, if later, on the Amendment Effective Date), together
with (from the Borrower) any amounts payable pursuant to Section 3.05 of the
Agreement if any Eurodollar Loans, CD Rate Loans or Money Market Loans made by
such Lenders are being repaid (whether pursuant to the Agreement or this clause
(g) on a date other than the last day of the Interest Period applicable
thereto).

If this Amendment shall not have become effective by the close of business (New
York time) on May 31, 1996 (or such later time or date as the Administrative
Agent consents to in writing), the provisions of this Amendment shall be deemed
rescinded, null and void.

                  11. Reallocation. Notwithstanding anything to the contrary
contained in the Agreement or any other Loan Document (including without
limitation in Section 9.03 of the Agreement):

                  (a) upon the effectiveness of this Amendment, the Old Lenders
shall cease to be Lenders;

                  (b) upon effectiveness of this Amendment, the New Lenders
shall be Lenders under the Agreement, with Commitments as set forth

                                      173

 

in New Schedule 2.01, as fully as if they had become Purchasers in accordance
with the provisions of Section 9.03 of the Agreement;

                  (c) the Borrower, the New Lenders and each other party hereto
hereby authorize the Administrative Agent, upon receipt of monies from the New
Lenders paid pursuant to Section 10(e) of this Amendment, to apply (concurrently
with the effectiveness of this Amendment) the amounts so received from such
Lenders (to the extent thereof) to pay to the Old Lenders the principal amounts
of their outstanding Loans to the Borrower;

                  (d) upon effectiveness of this Amendment, the Revolving Loans
and Term Loans outstanding to each of the New Lenders shall:

                           (i) in the case of Term Loans, equal the amount
listed as such Lenders' Term Loan Commitments on the New Schedule 2.01;

                           (ii) in the case of the Revolving Loans, equal the
amount remitted by each such Lender pursuant to Section 10(e) above.

                  12. Limited Nature of Amendments. The amendments, waivers (if
any) and consents (if any) set forth herein are limited precisely as written and
shall not be deemed to (a) be a consent to any waiver of, or modification of,
any other term or condition of the Agreement or any of the documents referred to
therein or (b) prejudice any right or rights which the Lenders or any Co-Agent
or the Administrative Agent may now have or may have in the future under or in
connection with the Agreement or any of the documents referred to therein.
Except as expressly amended hereby, the terms and provisions of the Agreement
shall remain in full force and effect.

                  13. Governing Law. THIS AMENDMENT, INCLUDING THE VALIDITY
THEREOF AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED WHOLLY WITHIN THE STATE OF
NEW YORK (REGARDLESS OF THE PLACE WHERE THE AGREEMENT OR THIS AMENDMENT IS OR
WAS EXECUTED).

                  14. Headings. The descriptive headings of the various
provisions of this Amendment are inserted for convenience of reference only and
shall not be deemed to affect the meaning or construction of any of the
provisions hereof.

                  15. Counterparts. This Amendment may be executed in any number
of counterparts by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all the
counterparts shall together constitute one and the same instrument. Telecopied
signatures hereto shall be of the same force and effect as an original of a
manually signed copy.

                                      174

 

                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective duly authorized
officers as of the date first above written.

THE PITTSTON COMPANY                          CREDIT SUISSE, as a Co-Agent, as
                                              Administrative Agent and as a
By JAMES B. HARTOUGH                          Lender
  --------------------------
  Name:    James B. Hartough
  Title:   Vice President                     By pp J JOHNER
           Corporate Finance                     --------------------------
           and Treasurer                         Name: Juerg Johner
                                                 Title:Associate

                                              By pp SCHULTHEISS-JENSEN
                                                 --------------------------
                                              Name:  Anne Schultheiss-Jensen
                                              Title: Associate

CHEMICAL BANK, as a Co-Agent and              MORGAN GUARANTY TRUST COMPANY OF
                      a Lender                NEW YORK, as a Co-Agent and a
                                              Lender

By PETER LING                                 By ROBERT BOTTAMEDI
  ---------------------------                    --------------------------
  Name:    P. Ling                            Name:  Robert Bottamedi
  Title:   VP                                 Title: Vice President

  THE SANWA BANK LIMITED                     THE SUMITOMO BANK, LIMITED

  By STEPHEN C. SMALL                        By Y. KAWAMURA
     --------------------                       ---------------------------
     Name:    Stephen C. Small                  Name:    Yoshinori Kawamura
     Title:   Vice President & Area             Title:   Joint General
              Manager                                    Manager

                                      175

 

BANK OF MONTREAL

By JOSEPH LONGPRE
   ------------------------
  Name:   Joseph M. Longpre
  Title:  Managing Director

THE BANK OF NOVA SCOTIA

By JAMES R. TRIMBLE
   --------------------------
  Name:    J.R. Trimble
  Title:   Senior Relationship
           Manager

 THE CHASE MANHATTAN BANK               FLEET NATIONAL BANK, N.A. (for
 (NATIONAL ASSOCIATION)                 itself and as successor to
                                        SHAWMUT BANK, N.A.)

 By PETER LING
    --------------------------
   Name:   P. Ling                      By ROBERT C. RUBINO
   Title:  VP                              ----------------------------
                                           Name:  Robert Rubino
                                           Title: V.P.

 J. P. MORGAN DELAWARE                  THE LONG-TERM CREDIT BANK OF
                                        JAPAN, LIMITED, NEW YORK BRANCH

 By JACQLYN KENNEDY SISSON
    -------------------------
   Name:  Jacqlyn Kennedy Sisson        By NOBORU KUBOTA
   Title: Associate                        ---------------------------
                                           Name:  Noboru Kubota
                                           Title: Deputy General Manager

 MELLON BANK, N.A.                      NATIONAL WESTMINSTER BANK PLC

 By STEPHEN L. PRATHER
    -------------------------
   Name:  Stephen L. Prather            By IAN M. PLESTER
   Title: Vice President                   ---------------------------
                                           Name:  Ian M. Plester
                                           Title: Vice President

 NATIONSBANK, N.A. (SOUTH),
 formerly known as:

 NATIONSBANK OF GEORGIA, N.A.           PNC BANK, NATIONAL ASSOCIATION

 By PATRICIA G. McCORMACK               By DALE A. STEIN
    -------------------------              ---------------------------
   Name:                                   Name:  Dale A. Stein
   Title:  Senior Vice President           Title: Vice President

 TORONTO DOMINION (NEW YORK), INC.      BANK OF BOSTON CONNECTICUT

 By J. GARCIA                           By RICHARD J. KLOUDA
    -------------------------              ---------------------------
   Name:  Jorge Garcia                     Name:  Richard J. Klouda
   Title: Vice President                   Title: Director

                                      176

 

                                                                   SCHEDULE 2.01

                                   COMMITMENTS

Lender (including notice address         Revolving Credit         Term Loan
and Applicable Lending Officers)         Commitment               Commitment

Credit Suisse
Tower 49                                 $28,571,428.58           $11,428,571.42
12 East 49th Street
New York, NY 10017
Attention: Juerg Johner
Telecopy: (212) 238-5419

Bank of Boston Connecticut
One Landmark Square                      $10,714,285.71           $ 4,285,714.29
Stamford, CT 06901
Attention: Richard J. Klouda
Telecopy: (203) 967-8169

Morgan Guaranty Trust
Company of New York                      $12,500,000.00           $ 5,000,000.00
60 Wall Street
New York, NY 10260-0060
Attention: James Finch
Telecopy: (212) 648-5335

Bank of Montreal
430 Park Avenue                          $17,857,142.86           $ 7,142,857.14
New York, NY 10022
Attention: Michael Sassos
Telecopy: (212) 605-1451

The Bank of Nova Scotia
One Liberty Plaza/26th floor             $17,857,142.86           $ 7,142,857.14
New York, NY 10006
Attention: Frank Vidal
Telecopy: (212) 225-5090

                                      177

 

                                                     

Chemical Bank
One Chase Manhattan Plaza                 $25,000,000.00          $10,000,000.00
5th floor
New York, NY 10081
Attention: Peter Ling
Telecopy: (212) 552-7773

Fleet National Bank, N.A.
1 Federal Street                          $21,428,571.43          $ 8,571,428.57
Boston, Mass. 02211
Attention: Robert Rubino
Telecopy: (617) 346-0585

J. P. Morgan Delaware
902 N. Market Street                      $12,500,000.00          $ 5,000,000.00
Wilmington, DE 19801-3015
Attention: Philip S. Detjens
Telecopy: (302) 654-5336

The Long-Term Credit Bank of
Japan, Limited,                           $17,857,142.86          $ 7,142,857.14
  New York Branch
165 Broadway
New York, NY 10006
Attention: Gregory L. Hong
Telecopy: (212) 608-2371

Mellon Bank, N.A.
One Mellon Bank Center                    $10,714,285.71          $ 4,285,714.29
Room 4401
Pittsburgh, PA 15258-0001
Attention: Stephen L. Prather
Telecopy: (412) 234-8888

The Sanwa Bank Limited
55 East 52nd Street                       $10,714,285.71          $ 4,285,714.29
New York, NY 10055
Attention: Steve Small
Telecopy: (212) 754-2368

                                      178

 

                                                     
NationsBank of Georgia, N.A.
767 Fifth Avenue                           $21,428,571.43         $ 8,571,428.57
New York, NY 10153
Attention: Patricia McCormick
Telecopy: (212) 751-6909

PNC Bank, National Association
One PNC Plaza / 3rd floor                  $21,428,571.43         $ 8,571,428.57
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
Attention: Dale A. Stein
Telecopy: (412) 762-2571

The Sumitomo Bank, Limited
277 Park Avenue                            $10,714,285.71         $ 4,285,714.29
New York, NY 10172
Attention: Timothy Clear
Telecopy: (212) 224-5188

Toronto Dominion (New York), Inc.
31 West 52nd Street                        $10,714,285.71         $ 4,285,714.29
New York, NY 10019
Attention: Jeff Weaver
Telecopy: (212) 262-1926

Total                                      $250,000,000           $  100,000,000
================================================================================

                                      179

The Pittston Company and Subsidiaries                                 Exhibit 11
Computation of Earnings Per Share
(In thousands, except per share amounts)

Fully Diluted Earnings Per Share (a):

                                                      Years Ended December 31
                                                     1996       1995       1994
================================================================================
Pittston Brink's Group:
Net Income                                       $ 59,695     51,093     41,489
================================================================================
Average common shares outstanding                  38,200     37,931     37,784
Incremental shares of stock options                   483        400        464
- --------------------------------------------------------------------------------
Pro forma shares outstanding                       38,683     38,331     38,248
================================================================================
Net income                                       $   1.54       1.33       1.08
================================================================================
Pittston Burlington Group:
Net income                                       $ 33,801     32,855     38,356
================================================================================
Average common shares outstanding                  19,223     18,966     18,892
Incremental shares of stock options                   486        200        232
- --------------------------------------------------------------------------------
Pro forma shares outstanding                       19,709     19,166     19,124
================================================================================
Net income                                       $   1.72       1.71       2.01
================================================================================
Pittston Minerals Group:
Net income (loss)                                $ 10,658     14,024    (52,948)
Preferred stock dividends                          (1,675)    (2,762)    (3,998)
- --------------------------------------------------------------------------------
Net income (loss) attributable to common shares  $  8,983     11,262    (56,946)
================================================================================
Average common shares outstanding                   7,897      7,786      7,594
Incremental shares of stock options (b)                64         27       --
Convertible preferred stock (b)                     1,945      2,186       --
- --------------------------------------------------------------------------------
Pro forma shares outstanding                        9,906      9,999      7,594
================================================================================
Net income (loss) attributable to common shares  $   1.08       1.40      (7.50)
================================================================================

(a) On January 18, 1996, the shareholders of The Pittston Company (the
"Company") approved the Brink's Stock Proposal, as described in the Company's
proxy statement dated December 15, 1995, resulting in the modification,
effective as of January 19, 1996, of the capital structure of the Company to
include an additional class of common stock. The outstanding shares of Pittston
Services Group Common Stock ("Services Stock") have been redesignated as
Pittston Brink's Group Common Stock and one-half of one share of a new class of
common stock identified as Pittston Burlington Group Common Stock has been
distributed for each outstanding share of Services Stock. Accordingly, all
common share, stock options and per share data prior to the redesignation has
been restated to reflect the Company's new equity structure.

(b) For 1994 the effect of stock options are excluded from the computations
because they are antidilutive, whereby their inclusion results in a lower loss
per common share. In addition, in 1994 the preferred stock conversion is also
excluded since it is antidilutive.

Primary Earnings Per Share
Primary earnings per share can be computed from the information on the face of
the Consolidated Statements of Operations.

                                      180

                                                                      EXHIBIT 21

                     SUBSIDIARIES OF THE PITTSTON COMPANY
         (Percentage of Voting Securities 100% unless otherwise noted)

                                                                                                           Jurisdiction
                          Company                                                                       of Incorporation
                          -------                                                                       ----------------
                                                                                                     
PITTSTON SERVICES GROUP INC.                                                                              VIRGINIA
BRINK'S HOLDING COMPANY                                                                                   VIRGINIA

         Brink's Home Security, Inc.                                                                      Delaware
                  Brink's Guarding Services, Inc.                                                         Delaware
                  Brink's Home Security Canada Limited                                                    Canada
         Brink's, Incorporated                                                                            Delaware
                  Brink's Express Company                                                                 Illinois
                  Brink's (Liberia) Inc.                                                                  Liberia
                  Brink's Redevelopment Corporation                                                       Missouri
                  Brink's Security International, Inc.                                                    Delaware
                           Brink's Air Courier Australia Pty. Ltd.                                        Australia
                           Brink's Argentina [51%]                                                        Argentina
                           Brink's Bolivia S.A. [59%]                                                     Bolivia
                           Brink's Canada Limited                                                         Canada
                                    Brink's Security Company Limited                                      Canada
                                    Brink's SFB Solutions, Ltd.                                           Canada
                                    2721821 Canada Inc.                                                   Canada
                           Brink's C.I.S., Inc.                                                           Delaware
                           Brink's de Colombia S.A. [50.5%]                                               Colombia
                           Brink's Diamond & Jewelry Services, Inc.                                       Delaware
                           Brink's Diamond & Jewelry Services (International
                                    1993) Ltd. [BSI 99.9%][BIMGI .1%]                                     Israel
                           Brink's Diamond & Jewelry Services S.R.L.                                      Italy
                           Brink's Far East Limited [99.9%]                                               Hong Kong
                           Brink's HKS Limited [33.33%][33.33% BI]                                        Hong Kong
                           Brink's Holland B.V.                                                           Netherlands
                           Brink's International Air Courier, Inc.                                        Delaware
                           Brink's International A.G. [50% BSI; 50% BL]                                   Switzerland
                           Brink's International Management Group, Inc.                                   Delaware
                           Brink's Israel, Ltd. [70%]                                                     Israel
                           Brink's Japan Ltd. [51%]                                                       Japan
                           Brink's Network, Incorporated                                                  Delaware
                           Brink's Puerto Rico, Inc.                                                      Puerto Rico
                           Brink's Security Transport Singapore Pte. Ltd [60%]                            Singapore
                           Brink's (UK) Limited                                                           U.K.
                                    Brink's Commercial Services Limited
                                            [399,999 shs. BUK][1 share BI]                                U.K.
                                    Brink's Diamond & Jewellery Services Limited
                                            [499,999 shs. BUK][1 share BI]                                U.K.
                                    Brink's Limited [649,999 shs. BUK][1 share BI]                        U.K.
                                            Brink's Nedlloyd Special Services [60%][5% BH]                Netherlands
                                            Brink's Limited (Bahrain) EC                                  Bahrain
                                            Brink's (Gibraltar) Limited [99%]                             Gibraltar
                                            Brink's Security Limited [99%]                                U.K.
                                            Quarrycast Commercial Limited [50% BL]                        U.K.
                           Hermes Securitransport S.A. [50.5%]                                            Greece
                           S.A. Brink's Diamond & Jewelry Services N.V. [99%]                             Belgium
                           S.A. Brink's Europe N.V. [99%]                                                 Belgium
                           Servicios Brink's S.A. [60.45%]                                                Chile
                           Transpar-Participacoes Ltda. [99%; 1% BI]                                      Brazil
                                    Alarm-Curso de Formacao de Vigilantes, Ltda.[99%]                     Brazil
                                    Brink's Seguranca Transporte de Valores [99%]                         Brazil

                                      181

                                                                                                     

                                    Brink's Transportes e Despachos Ltda. [99%]                           Brazil
                           Transporte de Valores (Brink's Chile) S.A. [60.45]                             Chile

                  Brink's SFB Solutions, Inc.                                                             Delaware
                  Brink's (Southern Africa) (Proprietary) Limited                                         South Africa
         Pittston Finance Company Inc.                                                                    Delaware
BAX HOLDING COMPANY                                                                                       VIRGNIA
         BAX Finance Inc.                                                                                 Delaware
         Burlington Air Express Inc.                                                                      Delaware
                  Burlington Air Express International Inc.                                               Delaware
                           BAX Holdings, Inc.                                                             Philippines
                                    Burlington Air Express Philippines, Inc.                              Philippines
                           BAX (Malaysia) Sdn. Bhd.                                                       Malaysia
                           Bax-Transitarios, Lda. [Esc. 4.980.000/BAX Esc. 20.000]                        Portugal
                           Burlington Air Express Aktiebolag                                              Sweden
                           Burlington Air Express Gotenberg AB                                            Sweden
                           Burlington Air Express AG                                                      Switzerland
                           Burlington Air Express A/S                                                     Denmark
                           Burlington Air Express B.V.                                                    Netherlands
                                    Burlington Air Express N.V./S.A.                                      Belgium
                                    Burlington Air Express Pte Ltd.                                       Singapore
                           Burlington Air Express (Brazil) Inc.                                           Delaware
                           Burlington Air Express (Canada) Ltd.                                           Canada
                                    797726 Ontario Limited                                                Canada
                           Burlington Air Express do Brazil Ltda.                                         Brazil
                           Burlington Air Express (Dubai) Inc.                                            Delaware
                           Burlington Air Express (France) SARL                                           France
                                    Burlington Air Express France S.A.                                    France
                           Burlington Air Express GmbH                                                    Germany
                           Burlington Air Express Holdings Pty. Limited                                   Australia
                                    Burlington Air Express (Aust) Pty. Limited                            Australia
                                            Burlington Air Express Cartage Pty. Limited                   Australia
                           Burlington Air Express (Ireland) Limited [11 sh./BAX 1 sh.]                    Ireland
                           Burlington Air Express Japan K.K.                                              Japan
                           Burlington Air Express Limited [Hong Kong]                                     Hong Kong
                           Burlington Air Express Mexico, S.A. de C.V.
                                            [49,999 sh./BAX 1 sh.]                                        Mexico
                           Burlington Air Express (NZ) Ltd.                                               New Zealand
                                    Colebrook Brothers Limited                                            New Zealand
                                    Walsh and Anderson (1991) Limited                                     New Zealand
                           Burlington Air Express Services Inc.                                           Delaware
                           Burlington Air Express (U.K.) Limited                                          U.K.
                                    Alltransport Holdings Limited                                         U.K.
                                            Alltransport International Group Limited                      U.K.
                                            Alltransport Warehousing Limited                              U.K.
                                            Burlington Air Express Limited                                U.K.
                                            Burlington European Express Limited                           U.K.
                                            Burlington Ocean Services Limited                             U.K.
                                    WTC Air Freight (U.K.) Limited                                        U.K.
                           Burlington Networks B.V.                                                       Netherlands
                           Burlington Networks Inc.                                                       Delaware
                           Burlington Air Express S.A.                                                    Spain
                           Burlington-Transmaso Air Express Lda. (being liquidated)                       Portugal
                           Indian Enterprises Inc.                                                        Delaware
                           PZS S.r.l. [99% BAXI; 1% BAX)                                                  Italy
                                    CSC Customs and Management Services S.r.l.                            Italy
                  Burlington Air Imports Inc.                                                             Delaware
                  Burlington Airline Express Inc.                                                         Delaware

                                      182

                                                                                                     
                  Burlington Land Trading Inc.                                                            Delaware
                  Highway Merchandise Express, Inc.                                                       California
                  WTC Airlines, Inc.                                                                      California
                  WTC SUB                                                                                 California
PITTSTON ADMINISTRATIVE SERVICES INC.                                                                     DELAWARE
PITTSTON MINERALS GROUP INC.                                                                              VIRGINIA
         Pittston Coal Company                                                                            Delaware
                  American Eagle Coal Company                                                             Virginia
                  Appalachian Equipment Rental Corp.                                                      Delaware
                  Heartland Coal Company                                                                  Delaware
                  Maxim Management Company                                                                Virginia
                  Mountain Forest Products, Inc.                                                          Virginia
                  Pine Mountain Oil and Gas, Inc.                                                         Virginia
                  Pittston Acquisition Company                                                            Virginia
                           Addington, Inc.                                                                Kentucky
                                    Ironton Coal Company                                                  Ohio
                           Appalachian Land Company                                                       W. Virginia
                           Appalachian Mining, Inc.                                                       W. Virginia
                                    Molloy Mining, Inc.                                                   W. Virginia
                                    Wilderness Mining Company, Inc.                                       W. Virginia
                           Kanawha Development Corporation                                                W. Virginia
                           Vandalia Resources, Inc.                                                       W. Virginia
                  Pittston Coal Management Company                                                        Virginia
                  Pittston Coal Sales Corp.                                                               Virginia
                                    Pittston Coal Terminal Corporation                                    Virginia
                  Pyxis Resources Company                                                                 Virginia
                           Heartland Resources, Inc.                                                      W. Virginia
                           HICA Corporation                                                               Kentucky
                           Holston Mining, Inc.                                                           W. Virginia
                           Motivation Coal Company                                                        Virginia
                           Paramont Coal Corporation                                                      Delaware
                           Pyxis Coal Sales Company                                                       Virginia
                  Sheridan-Wyoming Coal Company, Incorporated                                             Delaware
                  Thames Development, Ltd.                                                                Virginia
                           Buffalo Mining Company                                                         W. Virginia
                           Clinchfield Coal Company                                                       Virginia
                           Dante Coal Company                                                             Virginia
                           Eastern Coal Corporation                                                       W. Virginia
                           Elkay Mining Company                                                           W. Virginia
                           Jewell Ridge Coal Corporation                                                  Virginia
                           Kentland-Elkhorn Coal Corporation                                              Kentucky
                           Little Buck Coal Company                                                       Virginia
                           Meadow River Coal Company                                                      Kentucky
                           Pittston Coal Group, Inc.                                                      Virginia
                           Ranger Fuel Corporation                                                        W. Virginia
                           Sea "B" Mining Company                                                         Virginia
         Pittston Mineral Ventures Company                                                                Delaware
                  PMV Gold Company                                                                        Delaware
                  Pittston Mineral Ventures International Ltd.                                            Delaware
                  Pittston Mineral Ventures of Australia Pty. Limited                                     Australia
                           Carbon Ventures Pty. Limited                                                   Australia
                                    International Carbon (Aust.) Pty. Limited                             Australia
                           Pittston Australasian Mineral Exploration Pty Limited                          Australia
                           Pittston Black Sands of Western Australia Pty Limited                          Australia
THE PITTSTON COMPANY [DELAWARE]                                                                           DELAWARE

                                      183

                                                                      Exhibit 23
Consent of Independent Auditors

The Board of Directors
The Pittston Company

We consent to incorporation by reference in the Registration Statements (Nos.
2-64258, 33-2039, 33-21393, 33-23333, 33-69040, 33-53565 and 333-02219) on Form
S-8 of The Pittston Company of our reports dated January 23, 1997, as listed in
the accompanying Index to Financial Statements in Item 14(a)1 included in the
1996 Annual Report on Form 10-K of The Pittston Company which reports appear
herein.

Our reports for Pittston Brink's Group, Pittston Burlington Group and Pittston
Minerals Group contain an explanatory paragraph that states that the financial
statements of Pittston Brink's Group, Pittston Burlington Group and Pittston
Minerals Group should be read in connection with the audited consolidated
financial statements of The Pittston Company and subsidiaries.

KPMG PEAT MARWICK LLP

KPMG Peat Marwick LLP
Stamford, Connecticut

March 27, 1997

                                      184

                                                                      Exhibit 24

                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby
constitute and appoint Joseph C. Farrell, Austin F. Reed and Gary R. Rogliano,
and each of them (with full power of substitution), his true and lawful
attorney-in-fact and agent to do any and all acts and things and to execute any
and all instruments which, with the advice of counsel, any of said attorneys and
agents may deem necessary or advisable to enable The Pittston Company, a
Virginia corporation (the "Company"), to comply with the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended, and any rules,
regulations and requirements of the Securities and Exchange Commission in
respect thereof, in connection with the preparation and filing of the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1996 (the
"Form 10-K"), including specifically, but without limitation, power and
authority to sign his name as an officer and/or director of the Company, as the
case may be, to the Form 10-K or any amendments thereto; and the undersigned
does hereby ratify and confirm all that said attorneys shall do or cause to be
done by virtue hereof.

         IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of March,
1997.

                                                 R. G. Ackerman
                                                 -------------------------------
                                                 Roger G. Ackerman

                                      185

                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby
constitute and appoint Joseph C. Farrell, Austin F. Reed and Gary R. Rogliano,
and each of them (with full power of substitution), his true and lawful
attorney-in-fact and agent to do any and all acts and things and to execute any
and all instruments which, with the advice of counsel, any of said attorneys and
agents may deem necessary or advisable to enable The Pittston Company, a
Virginia corporation (the "Company"), to comply with the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended, and any rules,
regulations and requirements of the Securities and Exchange Commission in
respect thereof, in connection with the preparation and filing of the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1996 (the
"Form 10-K"), including specifically, but without limitation, power and
authority to sign his name as an officer and/or director of the Company, as the
case may be, to the Form 10-K or any amendments thereto; and the undersigned
does hereby ratify and confirm all that said attorneys shall do or cause to be
done by virtue hereof.

         IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1997.

                                                 Mark J. Anton
                                                 -------------------------------
                                                 M. J. Anton

                                      186

                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby
constitute and appoint Joseph C. Farrell, Austin F. Reed and Gary R. Rogliano,
and each of them (with full power of substitution), his true and lawful
attorney-in-fact and agent to do any and all acts and things and to execute any
and all instruments which, with the advice of counsel, any of said attorneys and
agents may deem necessary or advisable to enable The Pittston Company, a
Virginia corporation (the "Company"), to comply with the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended, and any rules,
regulations and requirements of the Securities and Exchange Commission in
respect thereof, in connection with the preparation and filing of the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1996 (the
"Form 10-K"), including specifically, but without limitation, power and
authority to sign his name as an officer and/or director of the Company, as the
case may be, to the Form 10-K or any amendments thereto; and the undersigned
does hereby ratify and confirm all that said attorneys shall do or cause to be
done by virtue hereof.

         IN WITNESS WHEREOF, I have hereunto set my hand this 11 day of March,
1997.

                                                 J. R. Barker
                                                 -------------------------------
                                                 J. R. Barker

                                      187

                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby
constitute and appoint Joseph C. Farrell, Austin F. Reed and Gary R. Rogliano,
and each of them (with full power of substitution), his true and lawful
attorney-in-fact and agent to do any and all acts and things and to execute any
and all instruments which, with the advice of counsel, any of said attorneys and
agents may deem necessary or advisable to enable The Pittston Company, a
Virginia corporation (the "Company"), to comply with the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended, and any rules,
regulations and requirements of the Securities and Exchange Commission in
respect thereof, in connection with the preparation and filing of the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1996 (the
"Form 10-K"), including specifically, but without limitation, power and
authority to sign his name as an officer and/or director of the Company, as the
case may be, to the Form 10-K or any amendments thereto; and the undersigned
does hereby ratify and confirm all that said attorneys shall do or cause to be
done by virtue hereof.

         IN WITNESS WHEREOF, I have hereunto set my hand this 13 day of March,
1997.

                                                 J. L. Broadhead
                                                 -------------------------------
                                                 J. L. Broadhead

                                      188

                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby
constitute and appoint Joseph C. Farrell, Austin F. Reed and Gary R. Rogliano,
and each of them (with full power of substitution), his true and lawful
attorney-in-fact and agent to do any and all acts and things and to execute any
and all instruments which, with the advice of counsel, any of said attorneys and
agents may deem necessary or advisable to enable The Pittston Company, a
Virginia corporation (the "Company"), to comply with the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended, and any rules,
regulations and requirements of the Securities and Exchange Commission in
respect thereof, in connection with the preparation and filing of the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1996 (the
"Form 10-K"), including specifically, but without limitation, power and
authority to sign his name as an officer and/or director of the Company, as the
case may be, to the Form 10-K or any amendments thereto; and the undersigned
does hereby ratify and confirm all that said attorneys shall do or cause to be
done by virtue hereof.

         IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1997.

                                                 W. F. Craig
                                                 -------------------------------
                                                 W. F. Craig

                                      189

                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby
constitute and appoint Austin F. Reed and Gary R. Rogliano, and each of them
(with full power of substitution), his true and lawful attorney-in-fact and
agent to do any and all acts and things and to execute any and all instruments
which, with the advice of counsel, any of said attorneys and agents may deem
necessary or advisable to enable The Pittston Company, a Virginia corporation
(the "Company"), to comply with the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the preparation and filing of the Company's annual report on
Form 10-K for the fiscal year ended December 31, 1996 (the "Form 10-K"),
including specifically, but without limitation, power and authority to sign his
name as an officer and/or director of the Company, as the case may be, to the
Form 10-K or any amendments thereto; and the undersigned does hereby ratify and
confirm all that said attorneys shall do or cause to be done by virtue hereof.

         IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of March,
1997.

                                                 J. Farrell
                                                 -------------------------------
                                                 J. C. Farrell

                                      190

                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby
constitute and appoint Joseph C. Farrell, Austin F. Reed and Gary R. Rogliano,
and each of them (with full power of substitution), his true and lawful
attorney-in-fact and agent to do any and all acts and things and to execute any
and all instruments which, with the advice of counsel, any of said attorneys and
agents may deem necessary or advisable to enable The Pittston Company, a
Virginia corporation (the "Company"), to comply with the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended, and any rules,
regulations and requirements of the Securities and Exchange Commission in
respect thereof, in connection with the preparation and filing of the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1996 (the
"Form 10-K"), including specifically, but without limitation, power and
authority to sign his name as an officer and/or director of the Company, as the
case may be, to the Form 10-K or any amendments thereto; and the undersigned
does hereby ratify and confirm all that said attorneys shall do or cause to be
done by virtue hereof.

         IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1997.

                                                 R. M. Gross
                                                 -------------------------------
                                                 R. M. Gross

                                      191

                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby
constitute and appoint Joseph C. Farrell, Austin F. Reed and Gary R. Rogliano,
and each of them (with full power of substitution), his true and lawful
attorney-in-fact and agent to do any and all acts and things and to execute any
and all instruments which, with the advice of counsel, any of said attorneys and
agents may deem necessary or advisable to enable The Pittston Company, a
Virginia corporation (the "Company"), to comply with the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended, and any rules,
regulations and requirements of the Securities and Exchange Commission in
respect thereof, in connection with the preparation and filing of the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1996 (the
"Form 10-K"), including specifically, but without limitation, power and
authority to sign his name as an officer and/or director of the Company, as the
case may be, to the Form 10-K or any amendments thereto; and the undersigned
does hereby ratify and confirm all that said attorneys shall do or cause to be
done by virtue hereof.

         IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1997.

                                                 C. F. Haywood
                                                 -------------------------------
                                                 C. F. Haywood

                                      192

                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby
constitute and appoint Austin F. Reed, Joseph C. Farrell and Gary R. Rogliano,
and each of them (with full power of substitution), his true and lawful
attorney-in-fact and agent to do any and all acts and things and to execute any
and all instruments which, with the advice of counsel, any of said attorneys and
agents may deem necessary or advisable to enable The Pittston Company, a
Virginia corporation (the "Company"), to comply with the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended, and any rules,
regulations and requirements of the Securities and Exchange Commission in
respect thereof, in connection with the preparation and filing of the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1996 (the
"Form 10-K"), including specifically, but without limitation, power and
authority to sign his name as an officer and/or director of the Company, as the
case may be, to the Form 10-K or any amendments thereto; and the undersigned
does hereby ratify and confirm all that said attorneys shall do or cause to be
done by virtue hereof.

         IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of March,
1997.

                                                 D. L. Marshall
                                                 -------------------------------
                                                 D. L. Marshall

                                      193

                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby
constitute and appoint Joseph C. Farrell, Austin F. Reed and Gary R. Rogliano,
and each of them (with full power of substitution), his true and lawful
attorney-in-fact and agent to do any and all acts and things and to execute any
and all instruments which, with the advice of counsel, any of said attorneys and
agents may deem necessary or advisable to enable The Pittston Company, a
Virginia corporation (the "Company"), to comply with the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended, and any rules,
regulations and requirements of the Securities and Exchange Commission in
respect thereof, in connection with the preparation and filing of the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1996 (the
"Form 10-K"), including specifically, but without limitation, power and
authority to sign his name as an officer and/or director of the Company, as the
case may be, to the Form 10-K or any amendments thereto; and the undersigned
does hereby ratify and confirm all that said attorneys shall do or cause to be
done by virtue hereof.

         IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of March,
1997.

                                                 R. H. Spilman
                                                 -------------------------------
                                                 R. H. Spilman

                                      194

                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby
constitute and appoint Joseph C. Farrell, Austin F. Reed and Gary R. Rogliano,
and each of them (with full power of substitution), his true and lawful
attorney-in-fact and agent to do any and all acts and things and to execute any
and all instruments which, with the advice of counsel, any of said attorneys and
agents may deem necessary or advisable to enable The Pittston Company, a
Virginia corporation (the "Company"), to comply with the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended, and any rules,
regulations and requirements of the Securities and Exchange Commission in
respect thereof, in connection with the preparation and filing of the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1996 (the
"Form 10-K"), including specifically, but without limitation, power and
authority to sign his name as an officer and/or director of the Company, as the
case may be, to the Form 10-K or any amendments thereto; and the undersigned
does hereby ratify and confirm all that said attorneys shall do or cause to be
done by virtue hereof.

         IN WITNESS WHEREOF, I have hereunto set my hand this 12th day of March,
1997.

                                                 A. H. Zimmerman
                                                 -------------------------------
                                                 A. H. Zimmerman

                                      195

                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby
constitute and appoint Joseph C. Farrell, Austin F. Reed and James B. Hartough,
and each of them (with full power of substitution), his true and lawful
attorney-in-fact and agent to do any and all acts and things and to execute any
and all instruments which, with the advice of counsel, any of said attorneys and
agents may deem necessary or advisable to enable The Pittston Company, a
Virginia corpo ration (the "Company"), to comply with the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended, and any
rules, regulations and requirements of the Securities and Exchange Commission in
respect thereof, in connection with the preparation and filing of the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1996 (the
"Form 10-K"), including specifically, but without limitation, power and
authority to sign his name as an officer and/or director of the Company, as the
case may be, to the Form 10-K or any amendments thereto; and the undersigned
does hereby ratify and confirm all that said attorneys shall do or cause to be
done by virtue hereof.

         IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1997.

                                                 G. R. Rogliano
                                                 -------------------------------
                                                 G. R. Rogliano

                                      196

  

                 5

This schedule contains summary financial information from The Pittston Company
Form 10K for the calendar year ended December 31, 1996, and is qualified in its
entirety by reference to such financial statements.

              1,000

                                          12-MOS
                                      DEC-31-1996
                                           DEC-31-1996
                                                      41,217
                                                 1,856
                                              439,642
                                                16,116
                                                 37,127
                                           618,690
                                                     998,607
                                             457,756
                                           1,812,879
                                      568,967
                                                    158,837
                                                    70,413
                                            0
                                                  1,154
                                                 535,140
                             1,812,879
                                                    696,513
                                         3,106,644
                                                      707,497
                                            2,957,514
                                           (47,299)
                                             7,688
                                          14,074
                                            146,696
                                                42,542
                                        104,154
                                                   0
                                                  0
                                                        0
                                               104,154
                                                0
                                                0

Pittston Brink's Group - Primary - 1.56
Pittston Burlington Group - Primary - 1.76
Pittston Minerals Group - Primary - 1.14
Pittston Brink's Group - Diluted - 1.56
Pittston Burlington Group - Diluted - 1.76
Pittston Minerals Group - Diluted - 1.08