SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 24, 1997
THE PITTSTON COMPANY
(Exact Name of registrant as specified in its charter)
Virginia 1-9148 54-1317776
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of Incorporation)
1000 Virginia Center Parkway
P. O. Box 4229
Glen Allen, VA 23058-4229
(Address of principal (Zip Code)
executive offices)
(804)553-3600
(Registrant's telephone number, including area code)
Item 5. Other Events
The Pittston Company has announced earnings for the second quarter of
1997 for its Brink's Group, Burlington Group and Minerals Group. Press releases
dated July 24, 1997, are filed as exhibits to this report and are incorporated
herein by reference.
EXHIBITS
99(a) Registrant's Brink's Group press release dated July 24, 1997.
99(b) Registrant's Burlington Group press release dated July 24, 1997.
99(c) Registrant's Minerals Group press release dated July 24, 1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE PITTSTON COMPANY
(Registrant)
By /s/ James B. Hartough
Vice President - Corporate
Finance and Treasurer
Dated: July 24, 1997
EXHIBITS
Exhibit Description
99(a) Registrant's Brink's Group
press release dated July 24, 1997
99(b) Registrant's Burlington Group
press release dated July 24, 1997
99(c) Registrant's Minerals Group
press release dated July 24, 1997
Pittston Brink's Group Earns
$.46 Per Share in the Second Quarter
Richmond, VA - July 24, 1997 - Pittston Brink's Group reported net income of
$17.7 million, or $.46 per share, in the second quarter ended June 30, 1997, a
26% improvement over the $14.0 million, or $.37 per share, earned in the second
quarter of 1996. Combined second quarter revenues of Brink's, Incorporated and
Brink's Home Security, Inc. increased 21% to $268.8 million compared to $222.1
million a year earlier. For the first six months of 1997, Pittston Brink's Group
generated net income of $33.0 million ($.86 per share) compared to $25.9 million
($.68 per share) for the comparable period in 1996. Combined revenues for the
first six months were up 20% to $520.2 million.
Brink's, Incorporated (Brink's)
Brink's worldwide consolidated revenues increased 22% to $224.6 million in the
quarter. Operating profits amounted to $19.1 million in the quarter, 53% greater
than recorded in the prior year's quarter due to improvements in both the North
American and international operations. For the first six months of 1997, Brink's
worldwide revenues increased 21% to $433.7 million and operating profits climbed
60% to $34.9 million.
Revenues from North American operations (United States and Canada) amounted to
$117.6 million in the quarter, 13% higher than in the comparable period in 1996.
Operating profits for the quarter increased 18% to $9.7 million primarily due to
the improved results achieved by armored car operations, which includes ATM
servicing. For the first six months of 1997, North American operating profits
were $17.4 million, a 24% increase over the comparable 1996 period.
Consolidated international subsidiaries recorded revenues of $106.9 million in
the quarter, 34% higher than the $79.5 million generated in the prior year's
quarter. More than one-half of the increase in revenues reflects the
acquisition, in the first quarter of 1997, of a majority interest in Brink's
Venezuelan affiliate, in which Brink's previously owned a 15% interest. Brink's
now owns 61% of this affiliate. Operating profits from international
subsidiaries and affiliates amounted to $9.5 million, 116% higher than the $4.4
million earned in the prior year's quarter. The strong improvement in operating
profits was largely attributable to increased ownership positions in the
Venezuelan and Peru affiliates and improved operations in Colombia and Chile,
somewhat offset by lower results in Brazil. Interest expense and minority
interest associated with the acquisitions offset more than half of the higher
operating profits. Europe's results were better as improvements in Belgium,
Israel, United Kingdom and several other countries were largely offset by lower
results from the 38% owned affiliate in France.
For the first six months of 1997, operating profits from international
subsidiaries and affiliates totaled $17.5 million, 124% higher than the $7.8
million earned in the first six months of 1996 due in large part to the
increased ownership of affiliates in Venezuela and Peru. Interest expense and
minority interest associated with the acquisitions offset more than half of the
higher operating profits.
Brink's Home Security, Inc. (BHS)
Brink's Home Security's revenues totaled $44.2 million in the second quarter
1997, a 14% increase over the comparable period in 1996. Operating profits
increased 16% to $13.3 million. For the six months ended June 30, 1997, revenues
and operating profits increased 15% and 16% to $86.4 million and $26.1 million,
respectively.
Brink's Home Security installed approximately 26,800 new subscribers during the
quarter and the subscriber base now exceeds 482,000 customers, a 17% increase
compared to a year ago. As a result, annualized service revenues increased 22%
to $142.0 million as of June 30, 1997. BHS's disconnect rate for the first six
months was 7%, which BHS believes may be the lowest rate in the industry.
Based on demonstrated retention of customers, BHS adjusted its annual
depreciation rate for capitalized subscribers' installation costs beginning in
1997. This change more accurately matches depreciation expense with monthly
recurring revenue generated from customers. This change in accounting estimate
reduced depreciation expense for capitalized installation costs for the quarter
and six months ended June 30, 1997 by approximately $2.1 million and $4.2
million, respectively.
As a result of aggressive pricing and marketing by competitors, BHS is
experiencing lower installation fees and higher marketing and sales costs.
Although as the quarter progressed, industry pricing appeared to be stabilizing.
As a result, operating profit was negatively impacted approximately $1.9 million
from 1996's second quarter. Monitoring revenues increased as a result of a
greater number of subscribers and higher monitoring fees per subscriber.
Brink's Home Security is on schedule to occupy its new state-of-the-art national
monitoring, customer service, and corporate center in Irving, Texas in the
fourth quarter of 1997. This custom designed 93,000 sq. ft. facility will allow
BHS to consolidate its operations from three buildings into one resulting in
greater operating efficiencies. BHS opened the Greenville, South Carolina market
during the quarter.
Financial - Consolidated
The Pittston Company reported net income of $14.7 million in the second quarter
compared to $25.4 million in the second quarter of 1996. For the first six
months of 1997, net income totaled $36.0 million compared to $44.0 million in
1996. Consolidated cash flow from operating activities totaled $85.5 million for
the six months ended June 30, 1997. Total debt at June 30, 1997 was $297.4
million. The Pittston Company's credit rating was recently raised to 'BBB' by
Standard & Poor's Corporation.
* * * * * * * * * *
Pittston Brink's Group Common Stock (NYSE-PZB), Pittston Burlington Group Common
Stock (NYSE-PZX) and Pittston Minerals Group Common Stock (NYSE- PZM) represent
the three classes of common stock of The Pittston Company, a diversified company
with interest in security services through Brink's, Incorporated and Brink's
Home Security, Inc. (Pittston Brink's Group), global freight transportation and
logistics management services through Burlington Air Express Inc. (Pittston
Burlington Group) and mining and minerals exploration through Pittston Coal
Company and Pittston Mineral Ventures (Pittston Minerals Group). Copies of the
Pittston Burlington Group and Pittston Minerals Group earnings releases are
available upon request.
<TABLE>
Pittston Brink's Group
Supplemental Financial Data
(Unaudited)
BRINK'S, INCORPORATED
<CAPTION>
Three Months Ended
June 30 Six Months Ended June 30
(In thousands) 1997
1996 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING REVENUES
<S> <C>
<C> <C> <C>
North America (United States & Canada) $ 117,616
103,935 228,388 202,115
International subsidiaries 106,934
79,476 205,361 157,150
- ------------------------------------------------------------------------------------------------------------------------------------
Total operating revenues $ 224,550
183,411 433,749 359,265
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT
North America (United States & Canada) $ 9,657
8,161 17,411 14,091
International operations 9,486
4,363 17,533 7,811
- ------------------------------------------------------------------------------------------------------------------------------------
Total operating profit $ 19,143
12,524 34,944 21,902
- ------------------------------------------------------------------------------------------------------------------------------------
Depreciation and amortization $ 6,811
5,708 14,358 11,737
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
BRINK'S HOME SECURITY, INC.
<CAPTION>
Three Months Ended
June 30 Six Months Ended June 30
(Dollars in thousands) 1997
1996 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
<C> <C> <C>
OPERATING REVENUES $ 44,225
38,644 86,410 75,350
- ------------------
OPERATING PROFIT $ 13,273
11,401 26,052 22,503
- ----------------
DEPRECIATION AND AMORTIZATION $ 7,116
7,422 13,782 14,244
- -----------------------------
Annualized recurring revenues*
$ 142,005 116,509
Number of Subscribers:
Beginning of period 464,007
395,676 446,505 378,659
Installations 26,798
24,447 52,388 48,703
Disconnects (8,740)
(7,532) (16,828) (14,771)
- ------------------------------------------------------------------------------------------------------------------------------------
End of period 482,065
412,591 482,065 412,591
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------
* 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.
<TABLE>
Pittston Brink's Group
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
(In thousands, except Three Months Ended
June 30 Six Months Ended June 30
per share data) 1997
1996 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
<C> <C> <C>
Operating revenues $ 268,775
222,055 520,159 434,615
- ------------------------------------------------------------------------------------------------------------------------------------
Operating expenses 197,741
169,443 385,649 332,009
Selling, general and administrative
expenses 40,296
30,784 76,359 61,359
- ------------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 238,037
200,227 462,008 393,368
- ------------------------------------------------------------------------------------------------------------------------------------
Other operating income (expense), net 117
325 (504) (169)
- ------------------------------------------------------------------------------------------------------------------------------------
Operating profit 30,855
22,153 57,647 41,078
Interest income 553
755 1,206 989
Interest expense (2,664)
(518) (4,903) (985)
Other expense, net (1,447)
(1,155) (3,105) (2,172)
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 27,297
21,235 50,845 38,910
Provision for income taxes 9,558
7,200 17,800 13,036
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 17,739
14,035 33,045 25,874
- ------------------------------------------------------------------------------------------------------------------------------------
Net income per common share $ .46
.37 .86 .68
- ------------------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding 38,230
38,152 38,209 38,105
- ------------------------------------------------------------------------------------------------------------------------------------
SEGMENT INFORMATION
Operating revenues:
Brink's $ 224,550
183,411 433,749 359,265
BHS 44,225
38,644 86,410 75,350
- ------------------------------------------------------------------------------------------------------------------------------------
Total operating revenues $ 268,775
222,055 520,159 434,615
- ------------------------------------------------------------------------------------------------------------------------------------
Operating profit:
Brink's $ 19,143
12,524 34,944 21,902
BHS 13,273
11,401 26,052 22,503
- ------------------------------------------------------------------------------------------------------------------------------------
Segment operating profit 32,416
23,925 60,996 44,405
General corporate expense (1,561)
(1,772) (3,349) (3,327)
- ------------------------------------------------------------------------------------------------------------------------------------
Total operating profit $ 30,855
22,153 57,647 41,078
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<TABLE>
Pittston Brink's Group
CONDENSED BALANCE SHEETS
<CAPTION>
June 30 December 31
(In thousands)
1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
Assets
Current assets:
<S>
<C> <C>
Cash and cash equivalents
$ 25,969 20,012
Accounts receivable, net of estimated amounts
uncollectible
145,474 124,928
Inventories and other current assets
41,180 45,117
- ------------------------------------------------------------------------------------------------------------------------------------
Total current assets
212,623 190,057
Property, plant and equipment, at cost, net of
accumulated depreciation and amortization
315,297 256,759
Intangibles, net of amortization
16,586 28,162
Other assets
82,695 76,687
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets
$ 627,201 551,665
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholder's Equity
Current liabilities
$ 144,433 139,392
Long-term debt, less current maturities
46,491 5,542
Other liabilities
94,675 93,353
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities
285,599 238,287
Shareholder's equity
341,602 313,378
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholder's equity
$ 627,201 551,665
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<TABLE>
Pittston Brink's Group
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended June 30
(In thousands)
1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S>
<C> <C>
Net income
$ 33,045 25,874
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
28,218 26,051
Other, net
9,589 4,185
Changes in operating assets and liabilities:
Increase in receivables
(5,852) (3,852)
Increase in inventories and other current assets
(5,038) (3,360)
(Decrease) increase in current liabilities
(3,432) 1,295
Other, net
(1,789) (2,141)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities
54,741 48,052
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment
(54,234) (47,472)
Proceeds from disposal of property, plant and equipment
1,209 475
Acquisitions, net of cash acquired
(53,303) --
Other, net
6,834 1,180
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities
(99,494) (45,817)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net additions to (reductions of) debt
40,502 (5,031)
Payments from - Minerals Group
14,770 2,670
Share and other equity activity
(4,562) (2,234)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities
50,710 (4,595)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents
5,957 (2,360)
Cash and cash equivalents at beginning of period
20,012 21,977
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period
$ 25,969 19,617
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<TABLE>
The Pittston Company and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
(In thousands, except Three Months Ended
June 30 Six Months Ended June 30
per share amounts) 1997
1996 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
<C> <C> <C>
Net sales $ 157,812
175,268 316,695 345,520
Operating revenues 668,342
582,119 1,291,135 1,142,774
- ------------------------------------------------------------------------------------------------------------------------------------
Net sales and operating revenues 826,154
757,387 1,607,830 1,488,294
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of sales 153,836
169,444 307,248 365,329
Operating expenses 553,434
483,250 1,072,253 956,316
Restructuring and other credits,
including litigation accrual -
- - (37,758)
Selling, general and administrative
expenses 94,455
71,026 170,098 143,322
- ------------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 801,725
723,720 1,549,599 1,427,209
- ------------------------------------------------------------------------------------------------------------------------------------
Other operating income 2,875
7,243 6,451 10,058
- ------------------------------------------------------------------------------------------------------------------------------------
Operating profit 27,304
40,910 64,682 71,143
Interest income 991
811 2,010 1,336
Interest expense (6,422)
(3,379) (11,986) (7,124)
Other expense, net (1,899)
(2,009) (4,288) (4,406)
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 19,974
36,333 50,418 60,949
Provision for income taxes 5,311
10,908 14,414 16,904
- ------------------------------------------------------------------------------------------------------------------------------------
Net income 14,663
25,425 36,004 44,045
Preferred stock dividends, net (902)
146 (1,803) (919)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income attributed to common shares $ 13,761
25,571 34,201 43,126
- ------------------------------------------------------------------------------------------------------------------------------------
Pittston Brink's Group:
Net income attributed to common shares $ 17,739
14,035 33,045 25,874
- ------------------------------------------------------------------------------------------------------------------------------------
Net income per common share $ .46
.37 .86 .68
- ------------------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding 38,230
38,152 38,209 38,105
- ------------------------------------------------------------------------------------------------------------------------------------
Pittston Burlington Group:
Net (loss) income attributed to common
shares $ (1,913)
8,746 3,175 12,507
- ------------------------------------------------------------------------------------------------------------------------------------
Net (loss) income per common share:
Primary $ (.10)
.46 .16 .65
Fully diluted (.10)(a)
.46 (a) .16 (a) .65 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding:
Primary 19,471
19,161 19,439 19,100
Fully diluted 20,164
19,161 20,128 19,100
- ------------------------------------------------------------------------------------------------------------------------------------
Pittston Minerals Group:
Net (loss) income attributed to common
shares: $ (2,065)
2,790 (2,019) 4,745
- ------------------------------------------------------------------------------------------------------------------------------------
Net (loss) income per common share:
Primary $ (.26)
.35 (.25) .60
Fully diluted (.26)(b)
.27 (.25)(b) .57
- ------------------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding:
Primary 8,068
7,866 8,035 7,844
Fully diluted 9,903
9,947 9,878 9,969
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
(a) Fully diluted net income per share is considered to be the same as primary
since the effect of common stock equivalents was either antidilutive or
insignificant.
(b) Fully diluted net income 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.
<TABLE>
The Pittston Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30 December 31
(In thousands)
1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
Assets
Current assets:
<S>
<C> <C>
Cash and cash equivalents
$ 59,997 41,217
Accounts receivable, net of estimated amounts uncollectible
504,628 475,859
Inventories and other current assets
145,729 121,338
- ------------------------------------------------------------------------------------------------------------------------------------
Total current assets
710,354 638,414
Property, plant and equipment, at cost, net of accumulated
depreciation, depletion and amortization
604,007 540,851
Intangibles, net of amortization
300,266 317,062
Other assets
342,519 336,276
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets
$ 1,957,146 1,832,603
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities
$ 592,043 588,691
Long-term debt, less current maturities
254,965 158,837
Postretirement benefits other than pensions
229,913 226,697
Workers' compensation and other claims
112,747 116,893
Other liabilities
136,863 134,778
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities
1,326,531 1,225,896
Shareholders' equity
630,615 606,707
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity
$ 1,957,146 1,832,603
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<TABLE>
The Pittston Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended June 30
(In thousands)
1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S>
<C> <C>
Net income
$ 36,004 44,045
Adjustments to reconcile net income to net cash
provided by operating activities:
Noncash charges and other write-offs
- 29,948
Depreciation, depletion and amortization
60,824 55,035
Provision for aircraft heavy maintenance
16,382 16,067
Provision for deferred income taxes
5,117 9,362
Other, net
10,469 6,528
Changes in operating assets and liabilities net of effects of acquisitions
and dispositions:
Increase in receivables
(15,870) (17,999)
Increase in inventories and other current assets
(24,067) (5,103)
Increase (decrease) in current liabilities
490 (22,710)
Other, net
(3,807) (47,346)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities
85,542 67,827
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment
(82,236) (78,004)
Proceeds from disposal of property, plant and equipment
3,698 8,262
Aircraft heavy maintenance
(19,350) (9,713)
Acquisitions and related contingent payments,
net of cash acquired
(54,094) (971)
Other, net
6,996 4,181
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities
(144,986) (76,245)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Additions to debt
99,082 21,643
Reductions of debt
(8,263) (8,550)
Share and other equity activity
(12,595) (12,910)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities
78,224 183
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents
18,780 (8,235)
Cash and cash equivalents at beginning of period
41,217 52,823
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period
$ 59,997 44,588
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
The Pittston Company and Subsidiaries
Pittston Brink's Group
NOTES TO FINANCIAL INFORMATION
(1) The Company has three classes of common stock: Pittston Brink's Group
Common Stock ("Brink's Stock"), Pittston Burlington Group Common Stock
("Burlington Stock") and Pittston Minerals Group Common Stock ("Minerals
Stock"), which were designed to provide shareholders with separate
securities reflecting the performance of the Pittston Brink's Group (the
"Brink's Group"), Pittston Burlington Group (the "Burlington Group") and
Pittston Minerals Group (the "Minerals Group"), respectively, without
diminishing the benefits of remaining a single corporation or precluding
future transactions affecting any of the Groups.
The financial information for the Brink's Group includes the results of the
Company's Brink's, Incorporated ("Brink's") and Brink's Home Security, Inc.
("BHS") businesses. It is prepared using the amounts included in the
Company's consolidated financial statements. Accordingly, the Company's
consolidated financial statements must be read in connection with the
Brink's Group's financial data.
(2) In 1988, the trustees of certain pension and benefit trust funds (the
"Trust Funds") established under collective bargaining agreements with the
United Mine Workers of America ("UMWA") brought an action (the "Evergreen
Case") against the Company and a number of its coal subsidiaries, claiming
that the defendants were obligated to contribute to such Trust Funds in
accordance with the provisions of the 1988 and subsequent National
Bituminous Coal Wage Agreements, to which neither the Company nor any of
its subsidiaries were a signatory. In 1993, the Company recognized in its
consolidated financial statements the potential liability that might have
resulted from an ultimate adverse judgement in the Evergreen Case.
In March 1996, a settlement was reached in the Evergreen Case. Under the
terms of the settlement, the coal subsidiaries which had been signatories
to earlier National Bituminous Coal Wage Agreements agreed to make various
lump sum payments in full satisfaction of all amounts allegedly due to the
Trust Funds through January 31, 1996, to be paid over time as follows:
approximately $25.8 million upon dismissal of the Evergreen Case and the
remainder of $24 million in installments of $7.0 million in 1996 and $8.5
million in each of 1997 and 1998. The first payment was entirely funded
through an escrow account previously established by the Company. The second
payment of $7.0 million was paid in 1996 and was funded from cash provided
by operating activities. The third payment of $7.0 million is expected to
be paid in August, 1997 and will be funded from cash provided by operating
activities. In addition, the coal subsidiaries agreed to future
participation in the UMWA 1974 Pension Plan.
As a result of the settlement of the Evergreen Case at an amount lower than
previously accrued, the Company recorded a pretax gain of $35.7 million
($23.2 million after tax) in the first quarter of 1996 in its consolidated
financial statements.
(3) In 1996, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies
to review assets for impairment whenever circumstances indicate that the
carrying amount of an asset may not be recoverable. SFAS No. 121, resulted
in a pretax charge to earnings in the first quarter of 1996 for the Company
and the Minerals Group of $29.9 million ($19.5 million after- tax), of
which $26.3 million was included in cost of sales and $3.6 million was
included in selling, general and administrative expenses. SFAS No. 121 had
no impact on the Brink's Group.
(4) Based on demonstrated retention of customers, BHS adjusted its annual
depreciation rate for capitalized subscribers' installation costs beginning
in 1997. This change more accurately matches depreciation expense with
monthly recurring revenue generated from customers. This change in
accounting estimate reduced depreciation expense for capitalized
installation costs by $2.1 million and $4.2 million in the quarter and six
months ended June 30, 1997, respectively.
(5) During the three months ended June 30, 1997 and 1996, the Company purchased
13,000 shares (at a cost of $0.4 million) and no shares, respectively, of
Brink's Stock; no shares and 5,000 shares (at a cost of $0.1 million),
respectively, of Burlington Stock; and no shares of Minerals Stock under
the share repurchase program authorized by the Board of Directors of the
Company (the "Board"). During the six months ended June 30, 1997 and 1996,
the Company purchased 166,000 shares (at a cost of $4.3 million) and no
shares, respectively, of Brink's Stock; 132,100 shares (at a cost of $2.6
million) and 5,000 shares (at a cost of $0.1 million), respectively, of
Burlington Stock; and no shares of Minerals Stock under the share
repurchase program.
(6) There were no Series C Cumulative Convertible Preferred Stock (the
"Convertible Preferred Stock") repurchases during the quarter and six
months ended June 30, 1997. During the quarter and six months ended June
30, 1996, the Company purchased 10,600 shares of the Convertible Preferred
Stock. Preferred dividends included on the Company's Statement of
Operations for the quarter and six months ended June 30, 1996, are net of
$1.1 million which is the excess of the carrying amount of the Convertible
Preferred Stock over the cash paid to holders of the stock.
(7) Certain prior period amounts have been reclassified to conform to the
current period's financial statement presentation.
(8) Financial information for the Minerals Group, which includes the results of
the Pittston Coal Company and Pittston Mineral Ventures operations, and the
Burlington Group which includes the results of the Company's Burlington Air
Express Inc. business, is available upon request.
Pittston Burlington Group
Reports Second Quarter Results
Richmond, VA -- July 24, 1997. Pittston Burlington Group reported a net loss of
$1.9 million, or $.10 cents per share (primary and fully diluted), in the second
quarter ended June 30, 1997, including special consulting expenses of $12.5
million (pre-tax), or $.40 per share, related to the redesign of the Burlington
Air Express, Inc. ("Burlington") global business processes and new information
systems architecture. A year ago, net income was $8.7 million, or $.46 per
share. Consolidated worldwide revenues totaled $399.6 million, an 11% increase
over the $360.1 million reported in the prior year's quarter.
For the first six months of 1997, worldwide revenues increased 9% to $771.0
million compared to $708.2 million for the comparable period in 1996. Net income
was $3.2 million, or $.16 per share (primary and fully diluted), including the
special consulting expenses of $.41 per share, for the first six months of 1997.
A year ago, net income was $12.5 million, or $.65 per share.
International
Burlington's international revenues rose 13% in the second quarter to $253.0
million from $224.7 million in the comparable 1996 period due primarily to
strong growth in Asia/Pacific markets. International expedited freight services
revenues increased 12% to $192.7 million, reflecting higher volumes and higher
average yields. Other international revenues, primarily customs clearance and
ocean services, rose 16% to $60.3 million in the second quarter as compared to
$52.2 million in the prior year quarter. International operating profits,
excluding any impact of the aforementioned special consulting expenses, amounted
to $8.4 million in the second quarter, a 33% increase over the $6.3 million
earned in the second quarter of 1996. For the first six months of 1997,
international operating profits totaled $15.1 million, a 34% increase over the
$11.3 million recorded a year earlier.
Burlington recently announced the acquisition of Cleton & Company, one of The
Netherlands' leading logistics providers. Cleton & Company employs over 170
logistics professionals and currently operates over 500,000 sq. ft. of
logistics/distribution facilities. Cleton generated annual gross revenues
equivalent to U.S.$17 million in 1996.
Domestic
In the second quarter, Burlington's domestic expedited freight services revenues
increased 8% to $144.7 million, reflecting higher volumes and higher average
yields. Domestic operating profits, excluding any impact of the aforementioned
special consulting expenses, were $3.5 million in the second quarter compared to
$10.0 million in the same period a year ago. The 1996 second quarter benefitted
from a reduction in Federal excise tax liabilities of approximately $3 million.
In the current quarter, transportation costs were higher as a results of
additional capacity designed to improve on time customer service and meet rising
demand in high growth markets such as the aerospace and electronics industries.
In addition, transportation costs included certain costs associated with
Burlington's strategy of establishing a certificated airline carrier operation.
Second quarter domestic expedited freight services average yield (revenue per
pound) increased by 5% while weight shipped, which was impacted by declining
shipments in the automotive sector, increased 3%. For the first six months of
1997, domestic operating profits, excluding any impact of the second quarter
special consulting expenses, were $7.6 million compared to $13.7 million a year
earlier.
During the second quarter, Burlington announced major new contracts with
Wal-Mart, TRW, General Instrument and Epson America, Inc. Giant retailer
Wal-Mart selected Burlington to be its primary carrier for heavy-weight
international air shipments. The TRW contract is for two years as the preferred,
heavy-weight air carrier worldwide. Burlington will handle General Instrument's
domestic heavy-weight air freight for both overnight and second day deliveries.
The contract with Epson America, Inc. is for worldwide air and ocean freight
services.
As previously indicated, Burlington has formed a Global Innovation Team to
redesign Burlington's global business processes and further enhance service
quality and improve efficiencies. A key component of this process was a review
of current information systems and technology needs on a global basis. The
innovation team is responsible for optimizing Burlington's investment in
technology to assure delivery of "state of the art" information systems for both
customer and operations requirements. Other cost and service improvement
programs have been identified through this process and are being implemented
during the balance of 1997. Annualized cost savings from these initiatives are
currently projected at a minimum of $5-10 million. Special expenses incurred in
the second quarter represent most of the consulting fees and other project
expenses expected to be incurred in the planning stage of this redesign program.
Joseph C. Farrell, Chairman and CEO of Burlington, stated "We are optimistic
about the outlook for Burlington's business for the balance of 1997 and beyond.
We expect full year results to be in line with current estimates of $1.90-$2.00
per share exclusive of any special expenses." A number of new contracts for
Burlington's logistics and transportation services have been concluded this year
which are expected to further improve international and domestic volumes during
the second half. The recently completed acquisition of Cleton & Co. will also
enhance international revenue growth. Some of the initial benefits of the
process redesign program are also expected to benefit second half results. The
recent FAA proposal to limit payloads of converted Boeing 727 aircraft is not
expected to materially impact Burlington's second half transportation costs.
Financial - Consolidated
The Pittston Company reported net income of $14.7 million in the second quarter
compared to $25.4 million in the second quarter of 1996. For the first six
months of 1997, net income totaled $36.0 million compared to $44.0 million in
1996. Consolidated cash flow from operating activities totaled $85.5 million for
the six months ended June 30, 1997. Total debt at June 30, 1997 was $297.4
million. The Pittston Company's credit rating was recently raised to 'BBB' by
Standard & Poor's Corporation.
This release contains both historical and forward looking information. In
particular statements herein regarding the benefits from the redesign
initiatives and the impact of the automotive market, new business contracts and
implementation of recent acquisitions on second half results are subject to
known and unknown risks, uncertainties and contingencies, many of which are
beyond the control of Burlington, which may cause actual results, performance or
achievements to differ materially from those which are anticipated. Factors that
might affect such forward looking statements include, among others, overall
economic and business conditions, the demand for Burlington's services, pricing
and other competitive factors in the industry, new government regulations, and
uncertainty about the implementation of systems initiatives and the integration
of acquisitions.
* * * * * * * * * *
Pittston Burlington Group Common Stock (NYSE-PZX), Pittston Brink's Group Common
Stock (NYSE-PZB) and Pittston Minerals Group Common Stock (NYSE-PZM) represent
the three classes of common stock of The Pittston Company. Pittston is a
diversified company with interests in global freight transportation and
logistics management services through Burlington Air Express Inc. (Pittston
Burlington Group), security services through Brink's, Incorporated and Brink's
Home Security, Inc. (Pittston Brink's Group), and in coal through Pittston Coal
Company and in gold mining and metals exploration through Pittston Mineral
Ventures Company (Pittston Minerals Group). Copies of the Pittston Brink's Group
and Pittston Minerals Group earnings releases are available upon request.
<TABLE>
Pittston Burlington Group
Supplemental Financial Data
(Unaudited)
BURLINGTON AIR EXPRESS INC.
<CAPTION>
(In thousands, except Three Months Ended June 30
Six Months Ended June 30
per pound/shipment amounts) 1997 1996
1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
OPERATING REVENUES
Domestic U.S.
<S> <C> <C>
<C> <C>
Expedited freight services $ 144,668 133,952
281,340 262,732
Other 1,890 1,434
3,612 2,102
- --------------------------------------------------------------------------------------------------------------------------
Total Domestic U.S. 146,558 135,386
284,952 264,834
International
Expedited freight services $ 192,731 172,461
373,622 342,176
Customs clearances 31,663 30,362
59,300 58,776
Ocean and other 28,615 21,855
53,102 42,373
- --------------------------------------------------------------------------------------------------------------------------
Total International 253,009 224,678
486,024 443,325
Total operating revenues $ 399,567 360,064
770,976 708,159
- --------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Domestic U.S. $ 3,498 10,029
7,615 13,737
International 8,437 6,298
15,076 11,276
Other (a) (12,500) -
(12,500) -
- --------------------------------------------------------------------------------------------------------------------------
Total operating (loss) profit $ (565) 16,327
10,191 25,013
- --------------------------------------------------------------------------------------------------------------------------
Expedited freight services
shipment growth rate 0.6% 3.4%
(0.6)% 4.4%
Expedited freight services weight growth rate:
Domestic U.S. 3.1% 5.3%
2.0% 4.1%
International 7.9% 6.5%
5.2% 7.9%
Worldwide 5.7% 5.9%
3.7% 6.1%
- --------------------------------------------------------------------------------------------------------------------------
Expedited freight services
weight (millions of pounds) 372.6 352.6
723.1 697.2
Expedited freight services
shipments (thousands) 1,330 1,322
2,605 2,620
- --------------------------------------------------------------------------------------------------------------------------
Expedited freight services average:
Yield (revenue per pound) $ .906 .869
.906 .868
Revenue per shipment $ 254 232
251 231
Weight per shipment (pounds) 280 267
278 266
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Consulting expenses related to the redesign of Burlington's business
processes and new information systems architecture.
<TABLE>
Pittston Burlington Group
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
(In thousands, except Three Months Ended June 30
Six Months Ended June 30
per share amounts) 1997 1996
1997 1996
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
<C> <C>
Operating revenues $ 399,567 360,064
770,976 708,159
- --------------------------------------------------------------------------------------------------------------------------
Operating expenses 355,693 313,807
686,604 624,307
Selling, general and administrative
expenses 46,852 32,219
79,023 62,906
- --------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 402,545 346,026
765,627 687,213
- --------------------------------------------------------------------------------------------------------------------------
Other operating income 859 518
1,508 741
- --------------------------------------------------------------------------------------------------------------------------
Operating (loss) profit (2,119) 14,556
6,857 21,687
Interest income 145 657
475 1,549
Interest expense (1,066) (988)
(2,012) (2,040)
Other expense, net - (337)
(281) (1,344)
- --------------------------------------------------------------------------------------------------------------------------
(Loss) income before income taxes (3,040) 13,888
5,039 19,852
(Credit) provision for income taxes (1,127) 5,142
1,864 7,345
- --------------------------------------------------------------------------------------------------------------------------
Net (loss) income $ (1,913) 8,746
3,175 12,507
- --------------------------------------------------------------------------------------------------------------------------
Net (loss) income per common share:
Primary $ (.10) .46
.16 .65
Fully diluted (.10) (a) .46
(a) .16 (a) .65 (a)
- --------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding:
Primary 19,471 19,161
19,439 19,100
Fully diluted 20,164 19,161
20,128 19,100
- --------------------------------------------------------------------------------------------------------------------------
SEGMENT INFORMATION
Operating revenues:
Burlington $ 399,567 360,064
770,976 708,159
- --------------------------------------------------------------------------------------------------------------------------
Operating (loss) profit:
Burlington $ (565) 16,327
10,191 25,013
General corporate expense (1,554) (1,771)
(3,334) (3,326)
- --------------------------------------------------------------------------------------------------------------------------
Operating (loss) profit $ (2,119) 14,556
6,857 21,687
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
(a) Fully diluted net income per share is considered to be the same as primary
since the effect of common stock equivalents was either antidilutive or
insignificant.
<TABLE>
Pittston Burlington Group
CONDENSED BALANCE SHEETS
<CAPTION>
June 30 December 31
(In thousands)
1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
(Unaudited)
Assets
Current assets:
<S> <C>
<C>
Cash and cash equivalents $
29,913 17,818
Accounts receivable, net of estimated amounts
uncollectible
274,233 262,378
Inventories and other current assets
25,227 22,557
- ---------------------------------------------------------------------------------------------------------------------------
Total current assets
329,373 302,753
Property, plant and equipment, at cost, net of
accumulated depreciation and amortization
111,698 113,283
Intangibles, net of amortization
174,082 177,797
Other assets
50,993 41,565
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $
666,146 635,398
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholder's Equity
Current liabilities $
310,629 278,601
Long-term debt, less current maturities
27,350 28,723
Other liabilities
23,286 23,085
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities
361,265 330,409
Shareholder's equity
304,881 304,989
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholder's equity $
666,146 635,398
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<TABLE>
Pittston Burlington Group
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended June 30
(In thousands)
1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S>
<C> <C>
Net income
$ 3,175 12,507
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
14,122 10,891
Provision for aircraft heavy maintenance
16,382 16,067
Other, net
3,705 1,758
Changes in operating assets and liabilities:
(Increase) decrease in receivables
(13,493) 4,535
Increase in inventories and other current assets
(3,563) (228)
Increase (decrease) in current liabilities
5,873 (16,854)
Other, net
1,380 (847)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities
27,581 27,829
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment
(10,973) (16,533)
Proceeds from disposal of property, plant and equipment
315 5,265
Aircraft heavy maintenance
(19,350) (9,713)
Other, net
658 738
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities
(29,350) (20,243)
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net (reductions of) additions to debt
(5,708) 393
Payments from (to) Minerals Group
23,304 (11,419)
Share and other equity activity
(3,732) (2,194)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities
13,864 (13,220)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents
12,095 (5,634)
Cash and cash equivalents at beginning of period
17,818 25,847
- ---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period
$ 29,913 20,213
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<TABLE>
The Pittston Company and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
(In thousands, except Three Months Ended
June 30 Six Months Ended June 30
per share amounts) 1997
1996 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
<C> <C> <C>
Net sales $ 157,812
175,268 316,695 345,520
Operating revenues 668,342
582,119 1,291,135 1,142,774
- ------------------------------------------------------------------------------------------------------------------------------------
Net sales and operating revenues 826,154
757,387 1,607,830 1,488,294
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of sales 153,836
169,444 307,248 365,329
Operating expenses 553,434
483,250 1,072,253 956,316
Restructuring and other credits,
including litigation accrual -
- - (37,758)
Selling, general and administrative
expenses 94,455
71,026 170,098 143,322
- ------------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 801,725
723,720 1,549,599 1,427,209
- ------------------------------------------------------------------------------------------------------------------------------------
Other operating income 2,875
7,243 6,451 10,058
- ------------------------------------------------------------------------------------------------------------------------------------
Operating profit 27,304
40,910 64,682 71,143
Interest income 991
811 2,010 1,336
Interest expense (6,422)
(3,379) (11,986) (7,124)
Other expense, net (1,899)
(2,009) (4,288) (4,406)
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 19,974
36,333 50,418 60,949
Provision for income taxes 5,311
10,908 14,414 16,904
- ------------------------------------------------------------------------------------------------------------------------------------
Net income 14,663
25,425 36,004 44,045
Preferred stock dividends, net (902)
146 (1,803) (919)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income attributed to common shares $ 13,761
25,571 34,201 43,126
- ------------------------------------------------------------------------------------------------------------------------------------
Pittston Brink's Group:
Net income attributed to common shares $ 17,739
14,035 33,045 25,874
- ------------------------------------------------------------------------------------------------------------------------------------
Net income per common share $ .46
.37 .86 .68
- ------------------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding 38,230
38,152 38,209 38,105
- ------------------------------------------------------------------------------------------------------------------------------------
Pittston Burlington Group:
Net (loss) income attributed to common
shares $ (1,913)
8,746 3,175 12,507
- ------------------------------------------------------------------------------------------------------------------------------------
Net (loss) income per common share:
Primary $ (.10) .46
.16 .65
Fully diluted (.10)(a) .46
(a) .16 (a) .65 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding:
Primary 19,471
19,161 19,439 19,100
Fully diluted 20,164
19,161 20,128 19,100
- ------------------------------------------------------------------------------------------------------------------------------------
Pittston Minerals Group:
Net (loss) income attributed to common
shares: $ (2,065) 2,790
(2,019) 4,745
- ------------------------------------------------------------------------------------------------------------------------------------
Net (loss) income per common share:
Primary $ (.26) .35
(.25) .60
Fully diluted (.26)(b) .27
(.25)(b) .57
- ------------------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding:
Primary 8,068
7,866 8,035 7,844
Fully diluted 9,903
9,947 9,878 9,969
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
(a) Fully diluted net income per share is considered to be the same as primary
since the effect of common stock equivalents was either antidilutive or
insignificant.
(b) Fully diluted net income 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.
<TABLE>
The Pittston Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30 December 31
(In thousands)
1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
Assets
Current assets:
<S>
<C> <C>
Cash and cash equivalents
$ 59,997 41,217
Accounts receivable, net of estimated amounts uncollectible
504,628 475,859
Inventories and other current assets
145,729 121,338
- ------------------------------------------------------------------------------------------------------------------------------------
Total current assets
710,354 638,414
Property, plant and equipment, at cost, net of accumulated
depreciation, depletion and amortization
604,007 540,851
Intangibles, net of amortization
300,266 317,062
Other assets
342,519 336,276
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets
$ 1,957,146 1,832,603
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities
$ 592,043 588,691
Long-term debt, less current maturities
254,965 158,837
Postretirement benefits other than pensions
229,913 226,697
Workers' compensation and other claims
112,747 116,893
Other liabilities
136,863 134,778
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities
1,326,531 1,225,896
Shareholders' equity
630,615 606,707
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity
$ 1,957,146 1,832,603
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<TABLE>
The Pittston Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended June 30
(In thousands)
1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S>
<C> <C>
Net income
$ 36,004 44,045
Adjustments to reconcile net income to net cash
provided by operating activities:
Noncash charges and other write-offs
- 29,948
Depreciation, depletion and amortization
60,824 55,035
Provision for aircraft heavy maintenance
16,382 16,067
Provision for deferred income taxes
5,117 9,362
Other, net
10,469 6,528
Changes in operating assets and liabilities net of effects of acquisitions
and dispositions:
Increase in receivables
(15,870) (17,999)
Increase in inventories and other current assets
(24,067) (5,103)
Increase (decrease) in current liabilities
490 (22,710)
Other, net
(3,807) (47,346)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities
85,542 67,827
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment
(82,236) (78,004)
Proceeds from disposal of property, plant and equipment
3,698 8,262
Aircraft heavy maintenance
(19,350) (9,713)
Acquisitions and related contingent payments,
net of cash acquired
(54,094) (971)
Other, net
6,996 4,181
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities
(144,986) (76,245)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Additions to debt
99,082 21,643
Reductions of debt
(8,263) (8,550)
Share and other equity activity
(12,595) (12,910)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities
78,224 183
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents
18,780 (8,235)
Cash and cash equivalents at beginning of period
41,217 52,823
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period
$ 59,997 44,588
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
The Pittston Company and Subsidiaries
Pittston Burlington Group
NOTES TO FINANCIAL INFORMATION
(1) The Company has three classes of common stock: Pittston Brink's Group
Common Stock ("Brink's Stock"), Pittston Burlington Group Common Stock
("Burlington Stock") and Pittston Minerals Group Common Stock ("Minerals
Stock"), which were designed to provide shareholders with separate
securities reflecting the performance of the Pittston Brink's Group (the
"Brink's Group"), Pittston Burlington Group (the "Burlington Group") and
Pittston Minerals Group (the "Minerals Group"), respectively, without
diminishing the benefits of remaining a single corporation or precluding
future transactions affecting any of the Groups.
The financial information for the Burlington Group includes the results of
the Company's Burlington Air Express Inc. business. It is prepared using
the amounts included in the Company's consolidated financial statements.
Accordingly, the Company's consolidated financial statements must be read
in connection with the Burlington Group's financial data.
(2) In 1988, the trustees of certain pension and benefit trust funds (the
"Trust Funds") established under collective bargaining agreements with the
United Mine Workers of America ("UMWA") brought an action (the "Evergreen
Case") against the Company and a number of its coal subsidiaries, claiming
that the defendants were obligated to contribute to such Trust Funds in
accordance with the provisions of the 1988 and subsequent National
Bituminous Coal Wage Agreements, to which neither the Company nor any of
its subsidiaries were a signatory. In 1993, the Company recognized in its
consolidated financial statements the potential liability that might have
resulted from an ultimate adverse judgement in the Evergreen Case.
In March 1996, a settlement was reached in the Evergreen Case. Under the
terms of the settlement, the coal subsidiaries which had been signatories
to earlier National Bituminous Coal Wage Agreements agreed to make various
lump sum payments in full satisfaction of all amounts allegedly due to the
Trust Funds through January 31, 1996, to be paid over time as follows:
approximately $25.8 million upon dismissal of the Evergreen Case and the
remainder of $24 million in installments of $7.0 million in 1996 and $8.5
million in each of 1997 and 1998. The first payment was entirely funded
through an escrow account previously established by the Company. The second
payment of $7.0 million was paid in 1996 and was funded from cash provided
by operating activities. The third payment of $7.0 million is expected to
be paid in August, 1997 and will be funded from cash provided by operating
activities. In addition, the coal subsidiaries agreed to future
participation in the UMWA 1974 Pension Plan.
As a result of the settlement of the Evergreen Case at an amount lower than
previously accrued, the Company recorded a pretax gain of $35.7 million
($23.2 million after tax) in the first quarter of 1996 in its consolidated
financial statements.
(3) In 1996, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies
to review assets for impairment whenever circumstances indicate that the
carrying amount of an asset may not be recoverable. SFAS No. 121, resulted
in a pretax charge to earnings in the first quarter of 1996 for the Company
and the Minerals Group of $29.9 million ($19.5 million after-tax), of which
$26.3 million was included in cost of sales and $3.6 million was included
in selling, general and administrative expenses. SFAS No. 121 had no impact
on the Burlington Group.
(4) During the three months ended June 30, 1997 and 1996, the Company purchased
13,000 shares (at a cost of $0.4 million) and no shares, respectively, of
Brink's Stock; no shares and 5,000 shares (at a cost of $0.1 million),
respectively, of Burlington Stock; and no shares of Minerals Stock under
the share repurchase program authorized by the Board of Directors of the
Company (the "Board"). During the six months ended June 30, 1997 and 1996,
the Company purchased 166,000 shares (at a cost of $4.3 million) and no
shares, respectively, of Brink's Stock; 132,100 shares (at a cost of $2.6
million) and 5,000 shares (at a cost of $0.1 million), respectively, of
Burlington Stock; and no shares of Minerals Stock under the share
repurchase program.
(5) There were no Series C Cumulative Convertible Preferred Stock (the
"Convertible Preferred Stock") repurchases during the quarter and six
months ended June 30, 1997. During the quarter and six months ended June
30, 1996, the Company purchased 10,600 shares of the Convertible Preferred
Stock. Preferred dividends included on the Company's Statement of
Operations for the quarter and six months ended June 30, 1996, are net of
$1.1 million which is the excess of the carrying amount of the Convertible
Preferred Stock over the cash paid to holders of the stock.
(6) Certain prior period amounts have been reclassified to conform to the
current period's financial statement presentation.
(7) Financial information for the Minerals Group, which includes the results of
the Company's Coal and Mineral Ventures operations, and the Brink's Group,
which includes the results of the Company's Brink's, Incorporated and
Brink's Home Security, Inc. businesses, is available upon request.
Pittston Minerals Group
Reports Second Quarter Results
Richmond, VA - July 24, 1997 - Pittston Minerals Group reported a net loss of
$1.2 million, or $.26 per share (primary and fully diluted), in the second
quarter ended June 30, 1997. A year earlier, net income was $2.6 million, or
$.35 per share ($.27 fully diluted). Through six months, the net loss was $.2
million, $.25 per share (primary and fully diluted), compared to net income of
$5.7 million, or $.60 per share ($.57 fully diluted), in the 1996 period.
Pittston Coal Company
The coal segment's operating profit was $1.2 million in the second quarter
compared to $5.2 million in the same period in 1996. Operating profit a year-ago
included $4.0 million of a one-time benefit related to litigation settlements
and additional Virginia tax credits.
Second quarter coal sales volume was 5.1 million tons compared to 5.8 million
tons in the prior year quarter. Steam and metallurgical coal sales amounted to
3.3 million and 1.8 million tons compared to 3.8 million and 2.0 million tons,
respectively, in last year's second quarter.
Coal production totaled 4.4 million tons in the quarter, up from 4.3 million
tons a year earlier. Surface production accounted for 63% of total production
compared to 68% in the second quarter of 1996.
The second quarter 1997 coal margin per ton increased slightly from last year,
although last year's production costs benefitted from additional Virginia tax
credits. The decrease in other operating income of $4.0 million is primarily the
result of the inclusion in 1996 of $3.0 million of litigation settlements and
$.7 million of additional gains on asset sales. Selling, general and
administrative costs improved while costs associated with inactive employees and
idle facilities were unchanged.
Both the steam and metallurgical coal markets remain weak and the company is
reviewing its operating plans to reflect the realities of the current market.
Pittston Mineral Ventures
Pittston Mineral Ventures (PMV) reported a $1.3 million operating loss in the
second quarter compared to a $0.6 million operating profit a year earlier. The
Stawell gold mine in western Victoria, Australia, in which PMV has a 67% direct
and indirect interest, produced 18,600 ounces of gold in the second quarter
compared to 23,700 ounces in the prior year quarter. The average cash cost per
ounce sold was US $370 in the second quarter of 1997 compared to US $304 in the
prior year quarter. PMV's year-to-date operating loss was $1.8 million compared
to an operating profit of $1.7 million for the first six months of 1996.
The poor performance at the Stawell Gold mine was caused by lower production and
higher costs associated with the collapse of a new ventilation shaft during its
construction. No injuries were associated with the collapse, however, lower
production and remedial work had a significant negative impact on costs. The
potential for rehabilitating the shaft is currently being evaluated. While
operations at Stawell have returned to near normal levels, the collapse of the
shaft and the substantial decline of gold prices during the second quarter have
prompted a comprehensive review of Stawell's operating plan in order to improve
near-term results.
Early in July, PMV closed a gold forward sale hedge position resulting in a gain
of $3.4 million, which will be recognized over the next 18,000 ounces of gold
sales.
The initial mining and commissioning of the Silver Swan nickel project has
proceeded according to expectations and the complex is now fully operational.
The initial shipment of nickel concentrate is expected to take place in the
third quarter with subsequent ramp up to full production by mid-1998. PMV is
continuing gold exploration projects in Nevada and Australia with its joint
venture partner.
Financial - Consolidated
The Pittston Company reported net income of $14.7 million in the second quarter
compared to $25.4 million in the second quarter of 1996. For the first six
months of 1997, net income totaled $36.0 million compared to $44.0 million in
1996. Consolidated cash flow from operating activities totaled $85.5 million for
the six months ended June 30, 1997. Total debt at June 30, 1997 was $297.4
million. The Pittston Company's credit rating was recently raised to 'BBB' by
Standard & Poor's Corporation.
**********
Pittston Minerals Group Common Stock (NYSE-PZM), Pittston Brink's Group Common
Stock (NYSE-PZB) and Pittston Burlington Group Common Stock (NYSE-PZX) represent
the three classes of common stock of The Pittston Company, a diversified company
with interests in mining and minerals exploration through Pittston Coal Company
and Pittston Mineral Ventures (Pittston Minerals Group), security services
through Brink's, Incorporated and Brink's Home Security, Inc. (Pittston Brink's
Group) and global freight transportation and logistics management services
through Burlington Air Express Inc. (Pittston Burlington Group). Copies of the
Pittston Brink's Group and Pittston Burlington Group earnings releases are
available upon request.
<TABLE>
Pittston Minerals Group
Supplemental Financial Data
(Unaudited)
PITTSTON COAL COMPANY
<CAPTION>
Three Months Ended June 30
Six Months Ended June 30
(In thousands) 1997 1996
1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
<C> <C>
Net sales $ 154,073 169,896
308,666 335,364
Operating profit $ 1,232 5,190
4,855 9,567
COAL SALES (Tons)
Metallurgical 1,823 1,954
3,714 3,999
Utility and industrial 3,294 3,831
6,523 7,403
- ---------------------------------------------------------------------------------------------------------------------------
Total coal sales 5,117 5,785
10,237 11,402
- ---------------------------------------------------------------------------------------------------------------------------
PRODUCTION/PURCHASED (Tons)
Deep 1,324 991
2,426 2,053
Surface 2,739 2,870
5,398 5,586
Contract 373 459
736 854
- ---------------------------------------------------------------------------------------------------------------------------
4,436 4,320
8,560 8,493
Purchased 963 1,376
2,303 2,984
- ---------------------------------------------------------------------------------------------------------------------------
Total 5,399 5,696
10,863 11,477
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended June 30
Six Months Ended June 30
(In thousands) 1997 1996
1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
<C> <C>
Net coal sales (a) $ 151,303 168,551
304,001 332,459
Current production cost
of coal sold (a) 140,554 156,947
282,126 314,918
- ---------------------------------------------------------------------------------------------------------------------------
Coal margin 10,749 11,604
21,875 17,541
Non-coal margin 527 249
1,245 857
Other operating income, net 2,078 6,109
5,783 9,050
- ---------------------------------------------------------------------------------------------------------------------------
Margin and other income 13,354 17,962
28,903 27,448
- ---------------------------------------------------------------------------------------------------------------------------
Other costs and expenses:
Idle equipment and closed mines 250 200
557 459
Inactive employee cost 7,097 7,063
13,780 14,487
Selling, general and
administrative expenses 4,775 5,509
9,711 10,745
- ---------------------------------------------------------------------------------------------------------------------------
Total other costs and expenses 12,122 12,772
24,048 25,691
- ---------------------------------------------------------------------------------------------------------------------------
Operating profit (loss) (before
restructuring and other
credits and SFAS 121) (b) $ 1,232 5,190
4,855 1,757
- ---------------------------------------------------------------------------------------------------------------------------
Coal margin per ton:
Realization $ 29.57 29.14
29.70 29.16
Current production costs 27.47 27.13
27.56 27.62
- ---------------------------------------------------------------------------------------------------------------------------
Coal margin $ 2.10 2.01
2.14 1.54
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Excludes non-coal components.
(b) Restructuring and other credits in the six months ended June 30, 1996
consist of an impairment loss related to the adoption of SFAS No. 121 of $29,948
($26,312 in cost of sales and $3,636 in selling, general and administrative
expenses), a gain from the settlement of the Evergreen Case of $35,650 and a
benefit from excess restructuring liabilities of $2,108. Both the gain from the
Evergreen Case and the benefit from excess restructuring liabilities are
included in the operating profit of the Pittston Coal Company as "Restructuring
and other credits, including litigation accrual".
<TABLE>
PITTSTON MINERAL VENTURES COMPANY
(Unaudited)
<CAPTION>
(In thousands, except Three Months Ended June 30
Six Months Ended June 30
ounce data) 1997 1996
1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
Stawell Gold Mine:
<S> <C> <C>
<C> <C>
Gold sales $ 3,718 5,404
7,999 10,106
Other revenue (expense) 20 (32)
29 50
- --------------------------------------------------------------------------------------------------------------------------
Net sales 3,738 5,372
8,028 10,156
Cost of sales (a) 3,666 4,139
7,297 7,105
Selling, general and
administrative expenses (a) 381 272
679 534
- --------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 4,047 4,411
7,976 7,639
- --------------------------------------------------------------------------------------------------------------------------
Operating profit (loss)-Stawell
Gold Mine (309) 961
52 2,517
Other operating expense, net (1,001) (386)
(1,817) (768)
- --------------------------------------------------------------------------------------------------------------------------
Operating (loss) profit $ (1,310) 575
(1,765) 1,749
- --------------------------------------------------------------------------------------------------------------------------
Stawell Gold Mine:
Mineral Ventures' 50%
direct share:
Ounces sold 9,665 12,841
20,241 24,600
Ounces produced 9,315 11,868
20,266 23,982
Average per ounce sold (US$):
Realization $ 385 421
395 411
Cash cost 370 304
348 275
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Excludes $26 and $797, and $68 and $1,414, of non-Stawell related cost of
sales and selling, general and administrative expenses for the quarter and six
months ended June 30, 1997, respectively. Excludes $678 and $1,204, of
non-Stawell related selling, general and administrative expenses for the quarter
and six months ended June 30, 1996, respectively. Such costs are reclassified to
cost of sales and selling, general and administrative expenses in the Minerals
Group income statement.
<TABLE>
Pittston Minerals Group
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
(In thousands, except Three Months Ended June 30
Six Months Ended June 30
per share data) 1997 1996
1997 1996
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
<C> <C>
Net sales $ 157,812 175,268
316,695 345,520
- --------------------------------------------------------------------------------------------------------------------------
Cost of sales 153,836 169,444
307,248 365,329
Restructuring and other credits,
including litigation accrual - -
- (37,758)
Selling, general and
administrative expenses 7,307 8,023
14,716 19,057
- --------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 161,143 177,467
321,964 346,628
Other operating income, net 1,899 6,400
5,447 9,486
- --------------------------------------------------------------------------------------------------------------------------
Operating (loss) profit (1,432) 4,201
178 8,378
Interest income 335 197
617 322
Interest expense (2,734) (2,671)
(5,359) (5,623)
Other expense, net (452) (517)
(902) (890)
- --------------------------------------------------------------------------------------------------------------------------
(Loss) income before income taxes (4,283) 1,210
(5,466) 2,187
Credit for income taxes (3,120) (1,434)
(5,250) (3,477)
- --------------------------------------------------------------------------------------------------------------------------
Net (loss) income (1,163) 2,644
(216) 5,664
Preferred stock dividends, net (902) 146
(1,803) (919)
- --------------------------------------------------------------------------------------------------------------------------
Net (loss) income attributed to
common shares $ (2,065) 2,790
(2,019) 4,745
- --------------------------------------------------------------------------------------------------------------------------
Net (loss) income per common share:
Primary $ (.26) .35
(.25) .60
Fully diluted $ (.26) (a) .27
(.25) (a) .57
- --------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding:
Primary 8,068 7,866
8,035 7,844
Fully diluted 9,903 9,947
9,878 9,969
- --------------------------------------------------------------------------------------------------------------------------
SEGMENT INFORMATION
Net sales:
Coal Operations $ 154,073 169,896
308,666 335,364
Mineral Ventures 3,739 5,372
8,029 10,156
- --------------------------------------------------------------------------------------------------------------------------
Net sales $ 157,812 175,268
316,695 345,520
- --------------------------------------------------------------------------------------------------------------------------
Operating (loss) profit:
Coal Operations $ 1,232 5,190
4,855 9,567
Mineral Ventures (1,310) 575
(1,765) 1,749
- --------------------------------------------------------------------------------------------------------------------------
Segment operating (loss) profit (78) 5,765
3,090 11,316
General corporate expense (1,354) (1,564)
(2,912) (2,938)
- --------------------------------------------------------------------------------------------------------------------------
Operating (loss) profit $ (1,432) 4,201
178 8,378
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
(a) Fully diluted net income 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.
<TABLE>
Pittston Minerals Group
CONDENSED BALANCE SHEETS
<CAPTION>
June 30 December 31
(In thousands)
1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
(Unaudited)
Assets
Current assets:
<S> <C>
<C>
Cash and cash equivalents $
4,115 3,387
Accounts receivable, net of estimated amounts
uncollectible
84,921 88,552
Inventories and other current assets
106,952 67,691
- --------------------------------------------------------------------------------------------------------------------------
Total current assets
195,988 159,630
Property, plant and equipment, at cost, net of
accumulated depreciation, depletion and amortization
177,012 170,809
Coal supply contracts, net of amortization
47,075 52,696
Intangibles, net of amortization
109,598 111,103
Other assets
207,431 212,743
- --------------------------------------------------------------------------------------------------------------------------
Total assets $
737,104 706,981
- --------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholder's Equity
Current liabilities $
164,611 184,725
Long-term debt, less current maturities
181,124 124,572
Postretirement benefits other than pensions
222,554 219,717
Workers' compensation and other claims
101,350 105,837
Other liabilities
83,333 83,790
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities
752,972 718,641
Shareholder's equity
(15,868) (11,660)
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholder's equity $
737,104 706,981
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<TABLE>
Pittston Minerals Group
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended June 30
(In thousands)
1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S>
<C> <C>
Net (loss) income
$ (216) 5,664
Adjustments to reconcile net (loss) income to net cash
provided (used) by operating activities:
Noncash charges and other write-offs
- 29,948
Depreciation, depletion and amortization
18,484 18,093
Provision for deferred income taxes
4,075 11,120
Other, net
(1,783) (1,173)
Changes in operating assets and liabilities net of effects of acquisitions
and dispositions:
Decrease (increase) in receivables
3,475 (18,682)
Increase in inventories and other current assets
(15,466) (1,515)
Decrease in current liabilities
(1,951) (7,151)
Other, net
(3,398) (44,358)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities
3,220 (8,054)
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment
(17,029) (13,999)
Proceeds from disposal of property, plant and equipment
2,174 2,522
Acquisitions including related contingent payments
(791) (746)
Other, net
(496) 2,038
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities
(16,142) (10,185)
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net additions to debt
56,025 17,731
Payments (to) from - Burlington Group/Brink's Group
(38,074) 8,749
Other share activity
(4,301) (8,482)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities
13,650 17,998
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents
728 (241)
Cash and cash equivalents at beginning of period
3,387 4,999
- ---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period
$ 4,115 4,758
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<TABLE>
The Pittston Company and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
(In thousands, except Three Months Ended
June 30 Six Months Ended June 30
per share amounts) 1997
1996 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
<C> <C> <C>
Net sales $ 157,812
175,268 316,695 345,520
Operating revenues 668,342
582,119 1,291,135 1,142,774
- -----------------------------------------------------------------------------------------------------------------------------------
Net sales and operating revenues 826,154
757,387 1,607,830 1,488,294
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of sales 153,836
169,444 307,248 365,329
Operating expenses 553,434
483,250 1,072,253 956,316
Restructuring and other credits,
including litigation accrual -
- - (37,758)
Selling, general and administrative
expenses 94,455
71,026 170,098 143,322
- -----------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 801,725
723,720 1,549,599 1,427,209
- -----------------------------------------------------------------------------------------------------------------------------------
Other operating income 2,875
7,243 6,451 10,058
- -----------------------------------------------------------------------------------------------------------------------------------
Operating profit 27,304
40,910 64,682 71,143
Interest income 991
811 2,010 1,336
Interest expense (6,422)
(3,379) (11,986) (7,124)
Other expense, net (1,899)
(2,009) (4,288) (4,406)
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 19,974
36,333 50,418 60,949
Provision for income taxes 5,311
10,908 14,414 16,904
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 14,663
25,425 36,004 44,045
Preferred stock dividends, net (902)
146 (1,803) (919)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income attributed to common shares $ 13,761
25,571 34,201 43,126
- -----------------------------------------------------------------------------------------------------------------------------------
Pittston Brink's Group:
Net income attributed to common shares $ 17,739
14,035 33,045 25,874
- -----------------------------------------------------------------------------------------------------------------------------------
Net income per common share $ .46
.37 .86 .68
- -----------------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding 38,230
38,152 38,209 38,105
- -----------------------------------------------------------------------------------------------------------------------------------
Pittston Burlington Group:
Net (loss) income attributed to common
shares $ (1,913)
8,746 3,175 12,507
- -----------------------------------------------------------------------------------------------------------------------------------
Net (loss) income per common share:
Primary $ (.10)
.46 .16 .65
Fully diluted (.10)(a)
.46 (a) .16 (a) .65 (a)
- -----------------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding:
Primary 19,471
19,161 19,439 19,100
Fully diluted 20,164
19,161 20,128 19,100
- -----------------------------------------------------------------------------------------------------------------------------------
Pittston Minerals Group:
Net (loss) income attributed to common
shares: $ (2,065)
2,790 (2,019) 4,745
- -----------------------------------------------------------------------------------------------------------------------------------
Net (loss) income per common share:
Primary $ (.26)
.35 (.25) .60
Fully diluted (.26)(b)
.27 (.25)(b) .57
- -----------------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding:
Primary 8,068
7,866 8,035 7,844
Fully diluted 9,903
9,947 9,878 9,969
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
(a) Fully diluted net income per share is considered to be the same as primary
since the effect of common stock equivalents was either antidilutive or
insignificant.
(b) Fully diluted net income 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.
<TABLE>
The Pittston Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30 December 31
(In thousands)
1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
Assets
Current assets:
<S>
<C> <C>
Cash and cash equivalents
$ 59,997 41,217
Accounts receivable, net of estimated amounts uncollectible
504,628 475,859
Inventories and other current assets
145,729 121,338
- ------------------------------------------------------------------------------------------------------------------------------------
Total current assets
710,354 638,414
Property, plant and equipment, at cost, net of accumulated
depreciation, depletion and amortization
604,007 540,851
Intangibles, net of amortization
300,266 317,062
Other assets
342,519 336,276
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets
$ 1,957,146 1,832,603
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities
$ 592,043 588,691
Long-term debt, less current maturities
254,965 158,837
Postretirement benefits other than pensions
229,913 226,697
Workers' compensation and other claims
112,747 116,893
Other liabilities
136,863 134,778
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities
1,326,531 1,225,896
Shareholders' equity
630,615 606,707
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity
$ 1,957,146 1,832,603
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<TABLE>
The Pittston Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended June 30
(In thousands)
1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S>
<C> <C>
Net income
$ 36,004 44,045
Adjustments to reconcile net income to net cash
provided by operating activities:
Noncash charges and other write-offs
- 29,948
Depreciation, depletion and amortization
60,824 55,035
Provision for aircraft heavy maintenance
16,382 16,067
Provision for deferred income taxes
5,117 9,362
Other, net
10,469 6,528
Changes in operating assets and liabilities net of effects of acquisitions
and dispositions:
Increase in receivables
(15,870) (17,999)
Increase in inventories and other current assets
(24,067) (5,103)
Increase (decrease) in current liabilities
490 (22,710)
Other, net
(3,807) (47,346)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities
85,542 67,827
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment
(82,236) (78,004)
Proceeds from disposal of property, plant and equipment
3,698 8,262
Aircraft heavy maintenance
(19,350) (9,713)
Acquisitions and related contingent payments,
net of cash acquired
(54,094) (971)
Other, net
6,996 4,181
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities
(144,986) (76,245)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Additions to debt
99,082 21,643
Reductions of debt
(8,263) (8,550)
Share and other equity activity
(12,595) (12,910)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities
78,224 183
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents
18,780 (8,235)
Cash and cash equivalents at beginning of period
41,217 52,823
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period
$ 59,997 44,588
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
The Pittston Company and Subsidiaries
Pittston Minerals Group
NOTES TO FINANCIAL INFORMATION
(1) The Company has three classes of common stock: Pittston Brink's Group
Common Stock ("Brink's Stock"), Pittston Burlington Group Common Stock
("Burlington Stock") and Pittston Minerals Group Common Stock ("Minerals
Stock"), which were designed to provide shareholders with separate
securities reflecting the performance of the Pittston Brink's Group (the
"Brink's Group"), Pittston Burlington Group (the "Burlington Group") and
Pittston Minerals Group (the "Minerals Group"), respectively, without
diminishing the benefits of remaining a single corporation or precluding
future transactions affecting any of the Groups.
The financial information for the Minerals Group includes the results of
the Coal and Minerals Ventures operations of the Company. It is prepared
using the amounts included in the Company's consolidated financial
statements. Accordingly, the Company's consolidated financial statements
must be read in connection with the Minerals Group's financial data.
(2) In 1988, the trustees of certain pension and benefit trust funds (the
"Trust Funds") established under collective bargaining agreements with the
United Mine Workers of America ("UMWA") brought an action (the "Evergreen
Case") against the Company and a number of its coal subsidiaries, claiming
that the defendants were obligated to contribute to such Trust Funds in
accordance with the provisions of the 1988 and subsequent National
Bituminous Coal Wage Agreements, to which neither the Company nor any of
its subsidiaries were a signatory. In 1993, the Company recognized in its
consolidated financial statements the potential liability that might have
resulted from an ultimate adverse judgement in the Evergreen Case.
In March 1996, a settlement was reached in the Evergreen Case. Under the
terms of the settlement, the coal subsidiaries which had been signatories
to earlier National Bituminous Coal Wage Agreements agreed to make various
lump sum payments in full satisfaction of all amounts allegedly due to the
Trust Funds through January 31, 1996, to be paid over time as follows:
approximately $25.8 million upon dismissal of the Evergreen Case and the
remainder of $24 million in installments of $7.0 million in 1996 and $8.5
million in each of 1997 and 1998. The first payment was entirely funded
through an escrow account previously established by the Company. The second
payment of $7.0 million was paid in 1996 and was funded from cash provided
by operating activities. The third payment of $7.0 million is expected to
be paid in August, 1997 and will be funded from cash provided by operating
activities. In addition, the coal subsidiaries agreed to future
participation in the UMWA 1974 Pension Plan.
As a result of the settlement of the Evergreen Case at an amount lower than
previously accrued, the Company recorded a pretax gain of $35.7 million
($23.2 million after tax) in the first quarter of 1996 in its consolidated
financial statements and the financial statements of the Minerals Group.
(3) In 1996, the Minerals Group implemented a new accounting standard,
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long- Lived Assets and for Long-Lived Assets to Be
Disposed Of". SFAS No. 121 requires companies to review assets for
impairment whenever circumstances indicate that the carrying amount of an
asset may not be recoverable. SFAS No. 121 resulted in a pretax charge to
earnings in the first quarter of 1996 for the Minerals Group's Coal
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.
(4) During the three months ended June 30, 1997 and 1996, the Company purchased
13,000 shares (at a cost of $0.4 million) and no shares, respectively, of
Brink's Stock; no shares and 5,000 shares (at a cost of $0.1 million),
respectively, of Burlington Stock; and no shares of Minerals Stock under
the share repurchase program authorized by the Board of Directors of the
Company (the "Board"). During the six months ended June 30, 1997 and 1996,
the Company purchased 166,000 shares (at a cost of $4.3 million) and no
shares, respectively, of Brink's Stock; 132,100 shares (at a cost of $2.6
million) and 5,000 shares (at a cost of $0.1 million), respectively, of
Burlington Stock; and no shares of Minerals Stock under the share
repurchase program.
(5) There were no Series C Cumulative Convertible Preferred Stock (the
"Convertible Preferred Stock") repurchases during the quarter and six
months ended June 30, 1997.
During the quarter and six months ended June 30, 1996, the Company
purchased 10,600 shares of the Convertible Preferred Stock. Preferred
dividends included on the Company's Statement of Operations for the quarter
and six months ended June 30, 1996, are net of $1.1 million which is the
excess of the carrying amount of the Convertible Preferred Stock over the
cash paid to holders of the stock.
(6) Certain prior period amounts have been reclassified to conform to the
current period's financial statement presentation.
(7) Financial information for the Brink's Group, which includes the results of
the Company's Brink's, Incorporated and Brink's Home Security, Inc.
businesses, and the Burlington Group, which includes the results of the
Company's Burlington Air Express Inc. business, is available upon request.
