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):
January 23, 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)
1
Item 5. Other Events
The Pittston Company ("Registrant") has announced earnings for the fourth
quarter of 1996 for its Brink's Group, Burlington Group and Minerals Group.
Press releases dated January 23, 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
January 23, 1997.
99(b) Registrant's Burlington Group press release dated
January 23, 1997.
99(c) Registrant's Minerals Group press release dated
January 23, 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)
Gary R. Rogliano
By _________________________
Senior Vice President
Date: January 23, 1997
2
January 23, 1997
Pittston Brink's Group Earns
$.47 Per Share in the Fourth Quarter
Richmond, VA - January 23, 1997 - The Pittston Brink's Group (NYSE-PZB), The
Pittston Company's class of common stock which reflects the performance of
Brink's, Incorporated and Brink's Home Security, Inc. recorded net income of
$18.0 million, or $.47 per share, in the fourth quarter, a 20% improvement over
the $15.0 million, or $.39 per share, earned in the fourth quarter of 1995. For
the full year 1996, net income was a record $59.7 million compared to $51.1
million recorded in 1995. Earnings per share for 1996 reached $1.56 per share, a
16% improvement over the $1.35 per share recorded in 1995.
Brink's, Incorporated (Brink's)
Brink's worldwide consolidated revenues totaled $202.3 million in the fourth
quarter of 1996, a 13% improvement over $179.3 million reported in the
comparable period in 1995. Operating profits totaled $18.9 million for the
fourth quarter, 47% higher than the $12.9 million recorded in the prior year's
quarter due to improvements in both North American and international operations.
For the full year 1996, Brink's consolidated revenues totaled $754.0 million, a
14% increase over 1995. Brink's earned record operating profits of $56.8 million
in 1996, a 33% increase over the $42.7 million earned in 1995 due to
improvements in both North American and international operations. This
represents the ninth consecutive year of record operating profits for Brink's.
Revenues from North American operations (U.S. and Canada) reached $110.7 million
in the fourth quarter, 9% higher than in the comparable period in 1995. Fourth
quarter operating profits of $11.0 million represented a 31% increase over the
prior year's quarter due to improved results achieved by the armored car
operations which include ATM servicing. For the full year 1996, North American
revenues increased by 10% to $418.9 million and operating profits amounted to
$34.4 million, 18% higher than the $29.2 million earned in 1995, with the
increase principally due to higher earnings generated by the armored car
operations.
Consolidated international subsidiaries recorded revenues of $91.6 million in
the fourth quarter, an increase of 17% over the $78.2 million generated in the
fourth quarter of 1995. Operating profits from international subsidiaries and
affiliates amounted to $7.9 million for the quarter, a 77% increase over the
$4.4 million recorded in the 1995 period. Increased operating profits in all
three regions - Latin America, Europe and Asia/Pacific led to the significantly
higher results. In particular, the equity earnings achieved by Brink's Mexican
affiliate (20% owned) showed a significant improvement over the loss recorded in
the fourth quarter of 1995.
For the full year 1996, consolidated international subsidiaries recorded
revenues of $335.1 million compared with the $280.2 million recorded in 1995. In
1996, operating profits from international subsidiaries and affiliates totaled
$22.4 million, compared to the $13.6 million recorded in 1995. The increased
operating profits were primarily attributable to improvements in Latin America
due to the strong turnaround in Mexico from the loss incurred in 1995, as well
as the improved performances in Brazil and Colombia. Latin America's results
also benefited from the consolidation of Columbia, a now 51% owned subsidiary.
European operations reported lower operating profits primarily due to lower
results in Holland and France partially offset by improved results in the United
Kingdom. Operating profit in the Asia/Pacific region improved over 1995.
As part of its global growth strategy, Brink's recently announced that it
increased its ownership positions in its affiliates in Venezuela, Peru and The
Netherlands. In Venezuela, Brink's increased its ownership to 61% in Custodia y
Traslado de Valores, C.A. ("Custravalca"), the largest armored car company in
Venezuela, in which Brink's previously owned a 15% interest. The remaining 39%
is held by a group of local investors including Venezuelan banks. Custravalca
also owns a 31% interest in Brink's
Peru S.A., the largest armored car company in Peru. Brink's has also acquired
the remaining 35% of Brinks-Nedlloyd, the largest armored car company in The
Netherlands, increasing Brink's ownership to 100%. These acquisitions are
expected to meaningfully increase consolidated international revenues and
operating profits of Brink's and should be accretive to the earnings of the
Pittston Brink's Group beginning in 1997.
Brink's Home Security, Inc. (BHS)
BHS installed 26,511 new subscribers during the quarter, a 12% increase over the
fourth quarter of 1995. The subscriber base totaled 446,505 customers on
December 31, 1996, a net increase of 67,846 subscribers (18%) from the year-end
1995 level. As a result, annualized service revenues increased by 19% to $128.1
million as of December 31, 1996. BHS's disconnect rate for 1996 was 7.5% of the
average subscriber base during the period. The Company believes this may be the
lowest disconnect rate of any major residential security company.
For the full year 1996, BHS's revenues increased 21% to $155.8 million. BHS also
reported record operating profits of $44.9 million, 14% higher than the $39.5
million reported in 1995. This represents the ninth consecutive year of record
profits for BHS. BHS's revenues totaled $40.9 million in the fourth quarter, a
17% increase over the comparable period in 1995. Operating profits totaled $10.9
million compared to $10.8 million generated in the fourth quarter of 1995.
Monitoring revenues increased as a result of the greater number of subscribers
and higher monitoring fees on new subscribers. Installation revenues declined on
a per subscriber basis during the quarter reflecting increasingly aggressive
pricing by competitors. In addition, installation and marketing costs expensed
during the quarter increased by $1.2 million from the prior year period.
Management expects to counter these competitive impacts on profit growth by
improving cost effectiveness while enhancing service quality. The operating
profit margin was 27% during the quarter. For the full year 1997, the operating
profit margin is expected to remain in the middle to upper 20% range.
BHS opened operations in Boston during the fourth quarter, bringing to seven the
total number of new markets opened in 1996. New markets previously opened were
Tucson and Toledo in the first quarter, Richmond and Chattanooga in the second
quarter and Oklahoma City and Baton Rouge in the third quarter.
Financial - Consolidated
The Pittston Company reported net income of $31.1 million in the fourth quarter
compared to $29.7 million recorded in the comparable period in 1995. Net income
for the year 1996 amounted to $104.2 million compared to $98.0 million in 1995.
Consolidated cash flow from operating activities amounted to $196.7 million in
1996. Total debt at December 31, 1996 was $196.0 million compared to $177.6
million at year-end 1995.
During 1996, the Company purchased 278,000 shares of Pittston Brink's Group
Common Stock and 75,600 shares of Pittston Burlington Group Common Stock at a
total cost of $8.3 million. In 1996, the Company also purchased 20,920 shares of
Pittston Company Series C Convertible Preferred Stock for a total cost of $7.9
million. The Company has remaining authority to repurchase over time up to 1.0
million shares of Pittston Minerals Group Common Stock, 1.2 million shares of
Pittston Brink's Group Common Stock, 1.4 million shares of Pittston Burlington
Group Common Stock, and an additional $7.1 million of the Pittston Company
Series C Convertible Preferred Stock.
The Company has retained Boston EquiServe, L.P., acting through The First
National Bank of Boston, as its registrar and stock transfer agent effective
January 13, 1997. Shareholders should call 1-800-733-5001 with inquires
regarding dividends, share certificates and other issues with respect to the
proper registration of shares.
**********
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 coal and gold mining (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 Minerals Group and Pittston Burlington Group earnings releases
are available upon request.
<TABLE>
Pittston Brink's Group
Supplemental Financial Data
BRINK'S, INCORPORATED
<CAPTION>
Three Months Twelve Months
Ended December 31 Ended December 31
(In thousands) 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Unaudited)
REVENUES
U.S. & Canada operations $ 110,670 101,146 418,941 379,230
International subsidiaries 91,585 78,172 335,070 280,229
- -------------------------------------------------------------------------------------------------------------------------
Total $ 202,255 179,318 754,011 659,459
- -------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT
U.S. & Canada operations $ 11,004 8,407 34,387 29,159
International operations 7,884 4,449 22,436 13,579
- -------------------------------------------------------------------------------------------------------------------------
Total $ 18,888 12,856 56,823 42,738
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
BRINK'S HOME SECURITY, INC.
<CAPTION>
Three Months Twelve Months
(In thousands, Ended December 31 Ended December 31
except subscriber data) 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Unaudited)
REVENUES $ 40,921 35,113 155,802 128,936
OPERATING PROFIT $ 10,860 10,804 44,872 39,506
Annualized recurring revenues* $ 128,106 107,707
Number of Subscribers:
Beginning of period 427,793 361,203 378,659 318,029
Installations 26,511 23,701 98,541 82,643
Disconnects (7,799) (6,245) (30,695) (22,013)
- -------------------------------------------------------------------------------------------------------------------------
End of period 446,505 378,659 446,505 378,659
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
____________
* Annualized recurring revenue is calculated based on the number of subscribers
at period end multiplied by the average service fee per subscriber received in
the last month for monitoring, maintenance and related services.
<TABLE>
Pittston Brink's Group
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Twelve Months
(In thousands, Ended December 31 Ended December 31
except per share amounts) 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Unaudited)
Operating revenues $ 243,176 214,431 909,813 788,395
- -------------------------------------------------------------------------------------------------------------------------
Operating expenses 180,188 160,640 687,175 599,683
Selling, general and administrative 35,768 31,677 130,833 112,133
- -------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 215,956 192,317 818,008 711,816
- -------------------------------------------------------------------------------------------------------------------------
Other operating income, net 955 310 2,433 895
- -------------------------------------------------------------------------------------------------------------------------
Operating profit 28,175 22,424 94,238 77,474
Interest income 1,037 364 2,745 1,840
Interest expense (400) (572) (1,810) (2,050)
Other expense, net (1,773) (1,003) (5,407) (3,505)
- -------------------------------------------------------------------------------------------------------------------------
Income before income taxes 27,039 21,213 89,766 73,759
Provision for income taxes 9,058 6,244 30,071 22,666
- -------------------------------------------------------------------------------------------------------------------------
Net income $ 17,981 14,969 59,695 51,093
- -------------------------------------------------------------------------------------------------------------------------
Net income per common share $ .47 .39 1.56 1.35
- -------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding 38,326 37,983 38,200 37,931
- -------------------------------------------------------------------------------------------------------------------------
SEGMENT INFORMATION
Revenues:
Brink's $ 202,255 179,318 754,011 659,459
BHS 40,921 35,113 155,802 128,936
- -------------------------------------------------------------------------------------------------------------------------
Revenues $ 243,176 214,431 909,813 788,395
- -------------------------------------------------------------------------------------------------------------------------
Operating profit:
Brink's $ 18,888 12,856 56,823 42,738
BHS 10,860 10,804 44,872 39,506
- -------------------------------------------------------------------------------------------------------------------------
Segment operating profit 29,748 23,660 101,695 82,244
General corporate expense (1,573) (1,236) (7,457) (4,770)
- -------------------------------------------------------------------------------------------------------------------------
Operating profit $ 28,175 22,424 94,238 77,474
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<TABLE>
Pittston Brink's Group
CONDENSED BALANCE SHEETS
<CAPTION>
December 31 December 31
(In thousands) 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 20,012 21,977
Accounts receivable, net of estimated amounts
uncollectible 124,928 113,790
Inventories and other current assets 45,117 33,554
- -------------------------------------------------------------------------------------------------------------------
Total current assets 190,057 169,321
Property, plant and equipment, at cost, net of
accumulated depreciation and amortization 256,759 214,653
Intangibles, net of amortization 28,162 28,893
Other assets 76,687 71,859
- -------------------------------------------------------------------------------------------------------------------
Total assets $ 551,665 484,726
- -------------------------------------------------------------------------------------------------------------------
Liabilities and shareholders' equity
Current liabilities $ 139,392 130,441
Long-term debt, less current maturities 5,542 5,795
Other liabilities 93,353 89,685
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 238,287 225,921
Shareholders' equity 313,378 258,805
- -------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 551,665 484,726
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<TABLE>
Pittston Brink's Group
STATEMENTS OF CASH FLOWS
<CAPTION>
Twelve Months Ended December 31
(In thousands) 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 59,695 51,093
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 53,200 42,977
Other, net 10,876 6,926
Changes in operating assets and liabilities:
Increase in receivables (15,556) (22,352)
Increase in inventories and other current
assets (1,576) (2,670)
Increase in current liabilities 12,989 15,822
Other, net (5,845) (1,016)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 113,783 90,780
- -------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (95,754) (69,783)
Proceeds from disposal of property, plant and
equipment 2,798 3,178
Other, net 843 (2,269)
- -------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (92,113) (68,874)
- -------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net reductions of debt (7,533) (4,111)
Payments to - Minerals Group (6,082) (12,240)
Share and other equity activity (10,020) (3,804)
- -------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities (23,635) (20,155)
- -------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash
equivalents (1,965) 1,751
Cash and cash equivalents at beginning of period 21,977 20,226
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 20,012 21,977
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<TABLE>
The Pittston Company and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Twelve Months
<CAPTION>
(In thousands, Ended December 31 Ended December 31
except per share amounts) 1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Unaudited)
Net sales $ 173,798 165,198 696,513 722,851
Operating revenues 650,477 597,565 2,410,131 2,203,216
- -----------------------------------------------------------------------------------------------------------------------------------
Net sales and operating revenues 824,275 762,763 3,106,644 2,926,067
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of sales 174,261 154,234 707,497 696,295
Operating expenses 538,859 498,665 2,004,598 1,845,404
Restructuring and other charges, including
litigation accrual (9,541) - (47,299) -
Selling, general and administrative 74,685 68,363 292,718 263,365
- -----------------------------------------------------------------------------------------------------------------------------------
Total cost and expenses 778,264 721,262 2,957,514 2,805,064
- -----------------------------------------------------------------------------------------------------------------------------------
Other operating income (expense) 3,635 4,079 17,377 26,496
- -----------------------------------------------------------------------------------------------------------------------------------
Operating profit 49,646 45,580 166,507 147,499
Interest income 1,271 841 3,487 3,395
Interest expense (3,541) (3,844) (14,074) (14,253)
Other expense, net (2,312) (2,292) (9,224) (6,305)
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 45,064 40,285 146,696 130,336
Provision for income taxes 14,000 10,585 42,542 32,364
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 31,064 29,700 104,154 97,972
Preferred stock dividends, net (902) (1,065) (1,675) (2,762)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income attributed to common shares $ 30,162 28,635 102,479 95,210
- -----------------------------------------------------------------------------------------------------------------------------------
Pittston Brink's Group:
Net income attributed to common shares $ 17,981 14,969 59,695 51,093
- -----------------------------------------------------------------------------------------------------------------------------------
Net income per common share $ .47 .39 1.56 1.35
- -----------------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding 38,326 37,983 38,200 37,931
- -----------------------------------------------------------------------------------------------------------------------------------
Pittston Burlington Group:
Net income attributed to common shares $ 10,587 10,273 33,801 32,855
- -----------------------------------------------------------------------------------------------------------------------------------
Net income per common share $ .55 .54 1.76 1.73
- -----------------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding 19,408 18,992 19,223 18,966
- -----------------------------------------------------------------------------------------------------------------------------------
Pittston Minerals Group:
Net income attributed to common shares $ 1,594 3,393 8,983 11,262
- -----------------------------------------------------------------------------------------------------------------------------------
Net income per common share:
Primary $ .20 .43 1.14 1.45
Fully diluted $ .20 .43 1.08 1.40
- -----------------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding:
Primary 7,970 7,802 7,897 7,786
Fully diluted 9,826 9,968 9,906 9,999
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<TABLE>
The Pittston Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31 December 31
(In thousands) 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 41,217 52,823
Accounts receivable, net of estimated
amounts uncollectible 456,135 421,246
Inventories and other current assets 121,338 162,624
- -------------------------------------------------------------------------------------------------------------------
Total current assets 618,690 636,693
Property, plant and equipment, at cost, net of
accumulated depreciation, depletion and
amortization 540,851 486,168
Intangibles, net of amortization 317,062 327,183
Other assets 336,276 357,328
- -------------------------------------------------------------------------------------------------------------------
Total assets $ 1,812,879 1,807,372
- -------------------------------------------------------------------------------------------------------------------
Liabilities and shareholders' equity
Current liabilities $ 568,967 594,488
Long-term debt, less current maturities 158,837 133,283
Postretirement benefits and other claims 226,697 219,895
Workers' compensation and other claims 116,892 125,894
Other liabilities 134,779 211,833
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 1,206,172 1,285,393
Shareholders' equity 606,707 521,979
- -------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 1,812,879 1,807,372
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<TABLE>
The Pittston Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Twelve Months Ended December 31
(In thousands) 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 104,154 97,972
Adjustments to reconcile net income to net cash
provided by operating activities:
Noncash charges and other write-offs 29,948 -
Depreciation, depletion and amortization 113,251 104,989
Provision for aircraft heavy maintenance 32,057 26,317
Provision for deferred income taxes 19,320 11,115
Other, net 14,972 4,060
Changes in operating assets and liabilities net
of effects of acquisitions and dispositions:
Increase in receivables (45,991) (38,628)
Decrease (increase) in inventories and other
current assets 10,784 (14,183)
(Decrease) increase in current liabilities (10,894) 4,491
Other, net (70,930) (39,598)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 196,671 156,535
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (177,269) (124,465)
Proceeds from disposal of property, plant and
equipment 11,310 22,539
Aircraft heavy maintenance (23,373) (22,356)
Acquisitions and related contingent payments (4,078) (3,372)
Other, net 1,799 1,182
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (191,611) (126,472)
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Additions to debt 28,642 29,866
Reductions of debt (14,642) (25,891)
Share and other equity activity (30,666) (23,533)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities (16,666) (19,558)
- ---------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash
equivalents (11,606) 10,505
Cash and cash equivalents at beginning of period 52,823 42,318
- ---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 41,217 52,823
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
The Pittston Company and Subsidiaries
Pittston Brink's Group
NOTES TO FINANCIAL INFORMATION
(1) The approval on January 18, 1996, by the shareholders of The Pittston
Company (the "Company") of the Brink's Stock Proposal, as described in the
Company's proxy statement dated December 15, 1995, resulted in the
reclassification of the Company's class of common stock formerly known as
Pittston Services Group Common Stock ("Services Stock"). The outstanding
shares of Services Stock were redesignated as Pittston Brink's Group Common
Stock ("Brink's Stock") on a share-for-share basis, and a new class of
common stock, designated as Pittston Burlington Group Common Stock
("Burlington Stock"), was distributed on the basis of one-half share of
Burlington Stock for each share of Services Stock previously held by
shareholders of record on January 19, 1996. Due to the reclassification of
the Services Stock, all stock and per share data in the accompanying
financial information have been restated to reflect the reclassification.
The financial information for Pittston Brink's Group ("Brink's Group")
includes the results of the Company's Brink's, Incorporated and Brink's
Home Security, Inc. 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 was a signatory.
In late March 1996, a settlement was reached in the Evergreen Case. Under
the terms of the settlement, the coal subsidiaries which had been
signatories to earlier National Bituminous Coal Wage Agreements agreed to
make various lump sum payments in full satisfaction of all amounts
allegedly due to the Trust Funds through January 31, 1996, to be paid over
time as follows: approximately $25.8 million upon dismissal of the
Evergreen Case in March 1996 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 the third quarter of 1996 and was funded through cash provided
by operating activities. In addition, the coal subsidiaries agreed to
future participation in the UMWA 1974 Pension Plan. Separate lawsuits
against each of the UMWA and the Bituminous Coal Operations Association,
previously reported, have also been dismissed.
As a result of the settlement of these cases, 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) As of January 1, 1996, the Company and the Brink's 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
long-lived assets and certain identifiable intangibles to be held and used
by an entity for impairment whenever circumstances indicate that the
carrying amount of an asset may not be recoverable. SFAS No. 121 requires
companies to utilize a two-step approach to determining whether impairment
of such assets has occurred and, if so, the amount of such impairment. As a
result, an impairment loss of $29.9 million has been recorded for the
Company and the Company's Minerals Group in 1996. The adoption of SFAS No.
121 had no impact on the Brink's Group's financial statements in 1996.
(4) During the twelve months ended December 31, 1996, the Company purchased
20,920 shares of its Series C Cumulative Convertible Preferred Stock.
Preferred dividends included on the Company's statement of operations for
the twelve months ended December 31, 1996, are net of $2.1 million, which
is the excess of the carrying amount of the preferred stock over the cash
paid to holders of the preferred stock. There were no repurchases of
preferred stock during the quarter ended December 31, 1996. During the
twelve months ended December 31, 1995, the Company purchased 16,370 shares
of its preferred stock. Preferred dividends for the twelve months ended
December 31, 1995 are net of $1.6 million, which was the excess of the
carrying amount of the preferred stock over the cash paid to holders of the
preferred stock. There were no repurchases of preferred stock during the
quarter ended December 31, 1995.
(5) Financial information for the Minerals Group, which includes the results of
the Company's Coal and Mineral Ventures operations, and the Burlington
Group which includes the results of the Company's Burlington Air Express
Inc. business, is available upon request.
January 23, 1997
Pittston Burlington Group Earns
$.55 Per Share in the Fourth Quarter
Richmond, VA - January 23, 1997 - The Pittston Burlington Group (NYSE-PZX), The
Pittston Company's class of common stock which reflects the performance of
Burlington Air Express Inc. (Burlington), a global freight transportation and
logistics management services company, reported that Burlington's operating
profits for 1996 increased 10% to $64.6 million from the $58.7 million reported
in 1995. For the fourth quarter of 1996, Burlington generated operating profits
of $19.1 million compared to $18.8 million earned in the fourth quarter of 1995.
For the full year of 1996, net income was $33.8 million, or $1.76 per share,
compared to $32.9 million, $1.73 per share, reported in 1995. Net income for the
fourth quarter totaled $10.6 million, or $.55 per share, compared to $10.3
million, or $.54 per share, recorded in the fourth quarter of 1995.
Burlington worldwide revenues totaled $407.3 million in the fourth quarter, a 6%
increase over the $383.1 million reported in the fourth quarter of 1995. For the
full year of 1996, Burlington's global revenues climbed to $1.5 billion, a 6%
increase over 1995 revenues.
International
International revenues totaled $261.3 million in the fourth quarter compared to
$241.2 million in the comparable 1995 period. Expedited freight services
revenues totaled $196.1 million, customs clearance revenues increased to $35.4
million, and ocean freight and other revenues reached $29.8 million.
International operating profits amounted to $8.5 million in the quarter compared
to $8.7 million earned in the fourth quarter of 1995.
For the full year 1996, international revenues were $945.8 million, an 8%
increase over the level recorded in 1995. International operating profits
totaled $28.5 million in 1996 compared to the $28.3 million recorded in 1995.
Margins on expedited freight services improved 11% primarily reflecting
improvements in U.S. exports. During the year, profits were impacted by added
costs related to the expansion of ocean and logistics operations and further
investments to strengthen Burlington's worldwide network including quality
improvements in global systems, facilities and acquisitions. During 1996,
Burlington operations in Canada, France, Hong Kong, Japan, Sweden and the U.S.
earned ISO 9002 certification. In total, 144 Burlington facilities in 15
countries are now ISO registered.
Domestic
In the fourth quarter, domestic expedited freight services revenues increased 3%
to $142.4 million reflecting higher yields and slightly lower volume. Domestic
operating profits totaled $10.6 million compared to the $10.2 million in the
fourth quarter of 1995. During the fourth quarter, domestic average yields
improved as a result of the initiation in mid-September of a surcharge on
domestic shipments. This surcharge was designed to partially offset certain cost
increases experienced by Burlington's domestic operations.
Full year 1996 domestic expedited freight revenues totaled $547.6 million
compared to $528.2 in 1995. Domestic operating profit for 1996 totaled $36.1
million, a 19% increase over the $30.4 million reported in 1995. Domestic weight
shipped increased 3% from the 1995 level while average yields were essentially
unchanged. Operating margins benefited from lower station and general and
administrative costs.
Burlington has recently embarked on a program to enhance the quality of its
service and improve efficiencies. While the full benefits cannot now be
predicted with confidence, the company believes significant cost reductions and
operating improvements can be made with initial impacts likely to be felt in the
second quarter of this year.
Financial - Consolidated
The Pittston Company reported net income of $31.1 million in the fourth quarter
compared to $29.7 million recorded in the comparable period in 1995. Net income
for 1996 as a whole amounted $104.2 million compared to $98.0 million in 1995.
Consolidated cash flow from operating activities amounted to $196.7 million in
1996. Total debt at December 31, 1996 was $196.0 million compared to $177.6
million at year-end 1995.
During 1996, the Company purchased 278,000 shares of Pittston Brink's Group
Common Stock and 75,600 shares of Pittston Burlington Group Common Stock at a
total cost of $8.3 million. In 1996, the Company also purchased 20,920 shares of
Pittston Company Series C Convertible Preferred Stock for a total cost of $7.9
million. The Company has remaining authority to repurchase over time up to 1.0
million shares of Pittston Minerals Group Common Stock, 1.2 million shares of
Pittston Brink's Group Common Stock, 1.4 million shares of Pittston Burlington
Group Common Stock, and an additional $7.1 million of the Pittston Company
Series C Convertible Preferred Stock.
The Company has retained Boston Equiserve, L.P., acting through The First
National Bank of Boston, as its registrar and stock transfer agent effective
January 13, 1997. Shareholders should call 1-800-733-5001 with inquires
regarding dividends, share certificates and other issues regarding the proper
registration of shares.
**********
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, 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 coal and gold mining (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
BURLINGTON AIR EXPRESS INC.
<CAPTION>
Three Months Twelve Months
(In thousands, except Ended December 31 Ended December 31
per pound/shipment amounts) 1996 1995 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Unaudited)
REVENUES
Expedited freight services
Domestic U.S. $ 142,409 138,462 547,647 528,174
International 196,142 189,098 713,834 698,624
- ------------------------------------------------------------------------------------------------------------------------------------
Total expedited freight services 338,551 327,560 1,261,481 1,226,798
Customs clearances 35,414 34,543 135,887 115,135
Ocean and other (a) 33,336 21,031 102,950 72,888
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues $ 407,301 383,134 1,500,318 1,414,821
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT
Domestic U.S. $ 10,623 10,155 36,143 30,416
International 8,503 8,655 28,461 28,307
- ------------------------------------------------------------------------------------------------------------------------------------
Total operating profit $ 19,126 18,810 64,604 58,723
- ------------------------------------------------------------------------------------------------------------------------------------
Expedited freight services shipment
growth rate (b) (2.9%) 7.2% 1.3% 6.2%
Expedited freight services weight growth rate (b):
Domestic U.S. (1.6%) (2.5%) 3.3% (3.8%)
International (1.0%) 25.5% 3.0% 29.1%
Worldwide (1.3%) 10.9% 3.1% 11.3%
Expedited freight services weight
(millions of pounds) 374.0 378.9 1,433.2 1,390.2
Expedited freight services shipments
(thousands) 1,266 1,304 5,180 5,112
Expedited freight services average:
Yield (revenue per pound) $ .905 .864 .880 .882
Revenue per shipment $ 267 251 244 240
Weight per shipment (pounds) 296 290 277 272
- -------------
(a) Primarily international ocean freight.
(b) Compared to the same period in the prior year.
</TABLE>
<TABLE>
Pittston Burlington Group
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Twelve Months
(In thousands, Ended December 31 Ended December 31
except per share amounts) 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Unaudited)
Operating revenues $ 407,301 383,134 1,500,318 1,414,821
- --------------------------------------------------------------------------------------------------------------------------------
Operating expenses 358,671 338,025 1,317,423 1,245,721
Selling, general and administrative 31,618 28,536 127,254 117,980
- --------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 390,289 366,561 1,444,677 1,363,701
- --------------------------------------------------------------------------------------------------------------------------------
Other operating income, net 564 1,000 1,530 2,833
- --------------------------------------------------------------------------------------------------------------------------------
Operating profit 17,576 17,573 57,171 53,953
Interest income 286 1,416 2,463 4,430
Interest expense (1,113) (1,647) (4,097) (5,108)
Other expense, net (89) (840) (2,028) (1,702)
- --------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 16,660 16,502 53,509 51,573
Provision for income taxes 6,073 6,229 19,708 18,718
- --------------------------------------------------------------------------------------------------------------------------------
Net income $ 10,587 10,273 33,801 32,855
- --------------------------------------------------------------------------------------------------------------------------------
Net income per common share $ .55 .54 1.76 1.73
- --------------------------------------------------------------------------------------------------------------------------------
Average common shares outstanding 19,408 18,992 19,223 18,966
- --------------------------------------------------------------------------------------------------------------------------------
SEGMENT INFORMATION
Revenues:
Burlington $ 407,301 383,134 1,500,318 1,414,821
- --------------------------------------------------------------------------------------------------------------------------------
Operating profit:
Burlington $ 19,126 18,810 64,604 58,723
General corporate expense (1,550) (1,237) (7,433) (4,770)
- --------------------------------------------------------------------------------------------------------------------------------
Operating profit $ 17,576 17,573 57,171 53,953
- --------------------------------------------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
<TABLE>
Pittston Burlington Group
CONDENSED BALANCE SHEETS
<CAPTION>
December 31 December 31
(In thousands) 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 17,818 25,847
Accounts receivable, net of estimated amounts
uncollectible 242,654 219,681
Inventories and other current assets 22,557 32,709
- -------------------------------------------------------------------------------------------------------------------
Total current assets 283,029 278,237
Property, plant and equipment, at cost, net of
accumulated depreciation and amortization 113,283 72,171
Intangibles, net of amortization 177,797 180,739
Other assets 41,565 40,930
- -------------------------------------------------------------------------------------------------------------------
Total assets $ 615,674 572,077
- -------------------------------------------------------------------------------------------------------------------
Liabilities and shareholders' Equity
Current liabilities $ 258,877 254,226
Long-term debt, less current maturities 28,723 26,697
Other liabilities 23,085 19,301
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 310,685 300,224
Shareholders' equity 304,989 271,853
- -------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 615,674 572,077
- -------------------------------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
<TABLE>
Pittston Burlington Group
STATEMENTS OF CASH FLOWS
<CAPTION>
Twelve Months Ended December 31
(In thousands) 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 33,801 32,855
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 23,427 19,972
Provision for aircraft heavy maintenance 32,057 26,317
Other, net 3,556 (948)
Changes in operating assets and liabilities:
Increase in receivables (25,981) (38,946)
Decrease (increase) in inventories and other
current assets 680 (3,776)
(Decrease) increase in current liabilities (2,594) 5,193
Other, net (1,857) (1,179)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 63,089 39,488
- -------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (61,321) (32,399)
Proceeds from disposal of property, plant and
equipment 3,898 422
Aircraft heavy maintenance (23,373) (22,356)
Other, net 1,813 2,345
- -------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (78,983) (51,988)
- -------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net (reductions of) additions to debt (364) 25,226
Payments from (to) - Minerals Group 12,179 (878)
Share and other equity activity (3,950) (4,385)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 7,865 19,963
- -------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash
equivalents (8,029) 7,463
Cash and cash equivalents at beginning of period 25,847 18,384
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 17,818 25,847
- -------------------------------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
<TABLE>
The Pittston Company and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Twelve Months
(In thousands, Ended December 31 Ended December 31
except per share amounts) 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C>
Net sales $ 173,798 165,198 696,513 722,851
Operating revenues 650,477 597,565 2,410,131 2,203,216
- -------------------------------------------------------------------------------------------------
Net sales and operating revenues 824,275 762,763 3,106,644 2,926,067
- -------------------------------------------------------------------------------------------------
Cost of sales 174,261 154,234 707,497 696,295
Operating expenses 538,859 498,665 2,004,598 1,845,404
Restructuring and other charges, including
litigation accrual (9,541) -- (47,299) --
Selling, general and administrative 74,685 68,363 292,718 263,365
- -------------------------------------------------------------------------------------------------
Total cost and expenses 778,264 721,262 2,957,514 2,805,064
- -------------------------------------------------------------------------------------------------
Other operating income (expense) 3,635 4,079 17,377 26,496
- -------------------------------------------------------------------------------------------------
Operating profit 49,646 45,580 166,507 147,499
Interest income 1,271 841 3,487 3,395
Interest expense (3,541) (3,844) (14,074) (14,253)
Other expense, net (2,312) (2,292) (9,224) (6,305)
- -------------------------------------------------------------------------------------------------
Income before income taxes 45,064 40,285 146,696 130,336
Provision for income taxes 14,000 10,585 42,542 32,364
- -------------------------------------------------------------------------------------------------
Net income 31,064 29,700 104,154 97,972
Preferred stock dividends, net (902) (1,065) (1,675) (2,762)
- -------------------------------------------------------------------------------------------------
Net income attributed to common shares $ 30,162 28,635 102,479 95,210
- -------------------------------------------------------------------------------------------------
Pittston Brink's Group:
Net income attributed to common shares $ 17,981 14,969 59,695 51,093
- -------------------------------------------------------------------------------------------------
Net income per common share $ .47 .39 1.56 1.35
- -------------------------------------------------------------------------------------------------
Average common shares outstanding 38,326 37,983 38,200 37,931
- -------------------------------------------------------------------------------------------------
Pittston Burlington Group:
Net income attributed to common shares $ 10,587 10,273 33,801 32,855
- -------------------------------------------------------------------------------------------------
Net income per common share $ .55 .54 1.76 1.73
- -------------------------------------------------------------------------------------------------
Average common shares outstanding 19,408 18,992 19,223 18,966
- -------------------------------------------------------------------------------------------------
Pittston Minerals Group:
Net income attributed to common shares $ 1,594 3,393 8,983 11,262
- -------------------------------------------------------------------------------------------------
Net income per common share:
Primary $ .20 .43 1.14 1.45
Fully diluted $ .20 .43 1.08 1.40
- -------------------------------------------------------------------------------------------------
Average common shares outstanding:
Primary 7,970 7,802 7,897 7,786
Fully diluted 9,826 9,968 9,906 9,999
- -------------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
<TABLE>
The Pittston Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31 December 31
(In thousands) 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 41,217 52,823
Accounts receivable, net of estimated amounts
uncollectible 456,135 421,246
Inventories and other current assets 121,338 162,624
- -------------------------------------------------------------------------------------------------------------------
Total current assets 618,690 636,693
Property, plant and equipment, at cost, net of
accumulated depreciation, depletion and
amortization 540,851 486,168
Intangibles, net of amortization 317,062 327,183
Other assets 336,276 357,328
- -------------------------------------------------------------------------------------------------------------------
Total assets $ 1,812,879 1,807,372
- -------------------------------------------------------------------------------------------------------------------
Liabilities and shareholders' equity
Current liabilities $ 568,967 594,488
Long-term debt, less current maturities 158,837 133,283
Postretirement benefits and other claims 226,697 219,895
Workers' compensation and other claims 116,892 125,894
Other liabilities 134,779 211,833
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 1,206,172 1,285,393
Shareholders' equity 606,707 521,979
- -------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 1,812,879 1,807,372
- -------------------------------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
<TABLE>
The Pittston Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Twelve Months Ended December 31
(In thousands) 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 104,154 97,972
Adjustments to reconcile net income to net cash
provided by operating activities:
Noncash charges and other write-offs 29,948 -
Depreciation, depletion and amortization 113,251 104,989
Provision for aircraft heavy maintenance 32,057 26,317
Provision for deferred income taxes 19,320 11,115
Other, net 14,972 4,060
Changes in operating assets and liabilities net of effects of acquisitions
and dispositions:
Increase in receivables (45,991) (38,628)
Decrease (increase) in inventories and other
current assets 10,784 (14,183)
(Decrease) increase in current liabilities (10,894) 4,491
Other, net (70,930) (39,598)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 196,671 156,535
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (177,269) (124,465)
Proceeds from disposal of property, plant and
equipment 11,310 22,539
Aircraft heavy maintenance (23,373) (22,356)
Acquisitions and related contingent payments (4,078) (3,372)
Other, net 1,799 1,182
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (191,611) (126,472)
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Additions to debt 28,642 29,866
Reductions of debt (14,642) (25,891)
Share and other equity activity (30,666) (23,533)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities (16,666) (19,558)
- ---------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash
equivalents (11,606) 10,505
Cash and cash equivalents at beginning of period 52,823 42,318
- ---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 41,217 52,823
- ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
The Pittston Company and Subsidiaries
Pittston Burlington Group
NOTES TO FINANCIAL INFORMATION
(1) The approval on January 18, 1996, by the shareholders of The Pittston
Company (the "Company") of the Brink's Stock Proposal, as described in the
Company's proxy statement dated December 15, 1995, resulted in the
reclassification of the Company's class of common stock formerly known as
Pittston Services Group Common Stock ("Services Stock"). The outstanding
shares of Services Stock were redesignated as Pittston Brink's Group Common
Stock ("Brink's Stock") on a share-for-share basis, and a new class of
common stock, designated as Pittston Burlington Group Common Stock
("Burlington Stock"), was distributed on the basis of one-half share of
Burlington Stock for each share of Services Stock previously held by
shareholders of record on January 19, 1996. Due to the reclassification of
the Services Stock, all stock and per share data in the accompanying
financial information have been restated to reflect the reclassification.
The financial information for Pittston Burlington Group ("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 was a signatory.
In late March 1996, a settlement was reached in the Evergreen Case. Under
the terms of the settlement, the coal subsidiaries which had been
signatories to earlier National Bituminous Coal Wage Agreements agreed to
make various lump sum payments in full satisfaction of all amounts
allegedly due to the Trust Funds through January 31, 1996, to be paid over
time as follows: approximately $25.8 million upon dismissal of the
Evergreen Case in March 1996 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 the third quarter of 1996 and was funded through cash provided
by operating activities. In addition, the coal subsidiaries agreed to
future participation in the UMWA 1974 Pension Plan. Separate lawsuits
against each of the UMWA and the Bituminous Coal Operations Association,
previously reported, have also been dismissed.
As a result of the settlement of these cases, 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) As of January 1, 1996, the Company and the Burlington 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 long-lived assets and certain identifiable intangibles to be held
and used by an entity for impairment whenever circumstances indicate that
the carrying amount of an asset may not be recoverable. SFAS No. 121
requires companies to utilize a two-step approach to determining whether
impairment of such assets has occurred and, if so, the amount of such
impairment. As a result, an impairment loss of $29.9 million has been
recorded for the Company and the Company's Minerals Group in 1996. The
adoption of SFAS No. 121 had no impact on the Burlington Group's financial
statements in 1996.
(4) During the twelve months ended December 31, 1996, the Company purchased
20,920 shares of its Series C Cumulative Convertible Preferred Stock.
Preferred dividends included on the Company's statement of operations for
the twelve months ended December 31, 1996, are net of $2.1 million, which
is the excess of the carrying amount of the preferred stock over the cash
paid to holders of the preferred stock. There were no repurchases of
preferred stock during the quarter ended December 31, 1996. During the
twelve months ended December 31, 1995, the Company purchased 16,370 shares
of its preferred stock. Preferred dividends for the twelve months ended
December 31, 1995 are net of $1.6 million, which was the excess of the
carrying amount of the preferred stock over the cash paid to holders of the
preferred stock. There were no repurchases of preferred stock during the
quarter ended December 31, 1995.
(5) 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.
January 23, 1997
Pittston Minerals Group Earns
$.20 Per Share in the Fourth Quarter
Richmond, VA - January 23, 1997 - The Pittston Minerals Group (NYSE-PZM), The
Pittston Company's class of common stock which reflects the performance of
Pittston Coal Company and Pittston Minerals Ventures, recorded net income of
$2.5 million in the fourth quarter compared to net income of $4.5 million the
fourth quarter of 1995. Earnings per share amounted to $.20 (primary and fully
diluted) in the most recent quarter compared to $.43 per share (primary and
fully diluted) in the fourth quarter of 1995. The Pittston Minerals Group earned
net income of $10.7 million, or $1.14 per share ($1.08 per share on a
fully-diluted basis), for the full year 1996 compared to $14.0 million, or $1.45
per share ($1.40 per share on a fully-diluted basis), in 1995.
Pittston Coal Company
The coal segment's operating profit was $5.1 million in the fourth quarter
compared to $7.9 million in the comparable period in 1995. Operating profit in
the 1996 fourth quarter included a net benefit from excess liabilities for
employee benefits and reclamation/environmental costs of approximately $1.2
million, which has been recorded in the income statement as a $9.5 million
benefit in restructuring charges and $8.3 million in additional cost of sales.
The 1995 results included a reduction in expenses primarily related to property
tax liabilities on inactive properties for which provisions were made during the
year and had been determined to be no longer necessary. For the full year 1996,
operating profits totaled $20.0 million compared to $23.1 million in 1995.
Fourth quarter coal sales volume was 5.8 million tons compared to 5.3 million
tons in the prior year quarter. Steam and metallurgical coal sales were 3.6 and
2.2 million tons, respectively, compared to 3.4 and 1.9 million tons,
respectively, sold in last year's fourth quarter. Total sales volume for the
full year amounted to 23.0 million tons, compared to the 1995 level of 24.4
million tons. Steam and metallurgical coal sales totaled 14.9 and 8.1 million
tons, respectively, in 1996 compared to 15.8 and 8.6 million tons sold in 1995.
Coal production was 4.1 million tons in the quarter, the same as in 1995.
Surface production accounted for 68% of total company production compared to 66%
in the fourth quarter of 1995. Full year production amounted to 16.7 million
tons compared to 18.9 million tons in 1995. In 1996, surface production
accounted for 67% of total production compared to 69% in 1995.
Pittston Minerals Ventures (PMV)
Pittston Mineral Ventures reported a $.2 million operating profit in the fourth
quarter compared to a $0.5 million operating loss reported in the prior year
quarter. Full year 1996 PMV operating profits were $1.6 million compared to $0.2
million recorded in 1995.
The Stawell gold mine in western Victoria, Australia, in which PMV has a 67%
direct and indirect interest, produced 21,411 ounces of gold in the fourth
quarter compared to 20,800 ounces in the prior year period. For the year,
production was 90,886 ounces, a 12% increase over 1995. The average cash cost
per ounce produced was U.S. $297 in 1996, the same as in 1995. Proven, probable
and inferred gold reserves at Stawell increased by 45,000 ounces over
year-earlier levels to 968,000 ounces, after accounting for 1996 production. PMV
is continuing gold exploration projects in Nevada and Australia with its joint
venture partner.
Development of the Black Swan nickel project in western Australia continues on
plan and budget. At the end of December the decline was at 1257 meters and the
surface facilities were more than 60% complete.
Financial - Consolidated
The Pittston Company reported net income of $31.1 million in the fourth quarter
compared to $29.7 million recorded in the comparable period in 1995. Net income
for the year 1996 amounted to $104.2 million compared to $98.0 million in 1995.
Consolidated cash flow from operating activities amounted to $196.7 million in
1996. Total debt at December 31, 1996 was $196.0 million compared to $177.6
million at year-end 1995.
During 1996, the Company purchased 278,000 shares of Pittston Brink's Group
Common Stock and 75,600 shares of Pittston Burlington Group Common Stock at a
total cost of $8.3 million. In 1996, the Company also purchased 20,920 shares of
Pittston Company Series C Convertible Preferred Stock for a total cost of $7.9
million. The Company has remaining authority to repurchase over time up to 1.0
million shares of Pittston Minerals Group Common Stock, 1.2 million shares of
Pittston Brink's Group Common Stock, 1.4 million shares of Pittston Burlington
Group Common Stock, and an additional $7.1 million of Pittston Company Series C
convertible Preferred Stock.
The Company has retained Boston EquiServe, L. P., acting through The First
National Bank of Boston, as its registrar and stock transfer agent effective
January 13, 1997. Shareholders should call 1-800-733-5001 with inquires
regarding dividends, share certificates and other issues regarding the proper
registration of shares.
**********
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 coal and gold mining (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
PITTSTON COAL COMPANY
<CAPTION>
Three Months Twelve Months
Ended December 31 Ended December 31
(In thousands) 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Unaudited)
Net sales $ 169,426 160,996 677,393 706,251
Segment operating profit $ 5,075 7,935 20,034 23,131
COAL SALES (Tons)
Metallurgical 2,145 1,906 8,124 8,607
Utility & Industrial 3,607 3,436 14,847 15,789
- -------------------------------------------------------------------------------------------------------------------
Total 5,752 5,342 22,971 24,396
- -------------------------------------------------------------------------------------------------------------------
PRODUCTION/PURCHASED (Tons)
Deep 953 957 3,930 3,982
Surface 2,801 2,662 11,151 12,934
Contract 360 441 1,621 1,941
- -------------------------------------------------------------------------------------------------------------------
4,114 4,060 16,702 18,857
Purchased 1,397 1,256 5,762 6,047
- -------------------------------------------------------------------------------------------------------------------
Total 5,511 5,316 22,464 24,904
- -------------------------------------------------------------------------------------------------------------------
Three Months Twelve Months
(In thousands, Ended December 31 Ended December 31
except per ton amounts) 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
Net coal sales $ 167,362 159,599 670,121 702,864
Current production cost of coal sold 163,703 140,864 634,754 648,383
- -------------------------------------------------------------------------------------------------------------------
Coal margin 3,659 18,735 35,367 54,481
Non-coal margin 701 410 2,178 749
Other operating income (net) 2,025 2,901 12,955 22,916
- -------------------------------------------------------------------------------------------------------------------
Margin and other income 6,385 22,046 50,500 78,146
- -------------------------------------------------------------------------------------------------------------------
Other costs and expenses:
Idle equipment and closed mines 315 1,486 1,044 9,980
Inactive employee cost 5,648 7,307 26,404 22,621
General and administrative 4,888 5,318 20,369 22,414
- -------------------------------------------------------------------------------------------------------------------
Total other costs and expenses 10,851 14,111 47,817 55,015
- -------------------------------------------------------------------------------------------------------------------
Operating (loss) profit before
restructuring and other non-recurring
items (Note 5) $ (4,466) 7,935 2,683 23,131
- -------------------------------------------------------------------------------------------------------------------
Coal margin per ton:
Realization $ 29.10 29.87 29.17 28.81
Current production cost of coal sold 28.46 26.37 27.63 26.58
- -------------------------------------------------------------------------------------------------------------------
Coal margin $ .64 3.50 1.54 2.23
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
PITTSTON MINERAL VENTURES COMPANY
<CAPTION>
Three Months Twelve Months
(In thousands, Ended December 31 Ended December 31
except ounce data) 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Unaudited)
Net sales $ 4,372 4,202 19,120 16,600
Segment operating profit (loss) $ 193 (468) 1,619 207
Stawell Gold Mine:
Mineral Ventures= 50% direct share
ounces sold 10,582 10,073 45,957 40,302
Average realized gold price per
ounce (US$) $ 416 417 415 408
</TABLE>
<TABLE>
Pittston Minerals Group
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Twelve Months
(In thousands, except Ended December 31 Ended December 31
per share amounts) 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Unaudited)
Net sales $ 173,798 165,198 696,513 722,851
- -------------------------------------------------------------------------------------------------------------------
Cost of sales 174,261 154,234 707,497 696,295
Restructuring and other charges,
including litigation accrual (9,541) - (47,299) -
Selling, general and administrative 7,299 8,150 34,631 33,252
- -------------------------------------------------------------------------------------------------------------------
Total costs and expenses 172,019 162,384 694,829 729,547
Other operating income 2,116 2,769 13,414 22,768
- -------------------------------------------------------------------------------------------------------------------
Operating profit 3,895 5,583 15,098 16,072
Interest income 328 192 835 564
Interest expense (2,408) (2,756) (10,723) (10,534)
Other expense, net (450) (449) (1,789) (1,098)
- -------------------------------------------------------------------------------------------------------------------
Income before income taxes 1,365 2,570 3,421 5,004
Credit for income taxes (1,131) (1,888) (7,237) (9,020)
- -------------------------------------------------------------------------------------------------------------------
Net income 2,496 4,458 10,658 14,024
Preferred stock dividends, net (902) (1,065) (1,675) (2,762)
- -------------------------------------------------------------------------------------------------------------------
Net income attributed to
common shares $ 1,594 3,393 8,983 11,262
- -------------------------------------------------------------------------------------------------------------------
Net income per common share:
Primary $ .20 .43 1.14 1.45
Fully diluted $ .20 .43 1.08 1.40
- -------------------------------------------------------------------------------------------------------------------
Average common shares outstanding:
Primary 7,970 7,802 7,897 7,786
Fully diluted 9,826 9,968 9,906 9,999
- -------------------------------------------------------------------------------------------------------------------
SEGMENT INFORMATION
Net sales:
Coal Operations $ 169,426 160,996 677,393 706,251
Mineral Ventures 4,372 4,202 19,120 16,600
- -------------------------------------------------------------------------------------------------------------------
Net sales $ 173,798 165,198 696,513 722,851
- -------------------------------------------------------------------------------------------------------------------
Operating profit (loss):
Coal Operations $ 5,075 7,935 20,034 23,131
Mineral Ventures 193 (468) 1,619 207
- -------------------------------------------------------------------------------------------------------------------
Segment operating profit 5,268 7,467 21,653 23,338
General corporate expense (1,373) (1,884) (6,555) (7,266)
- -------------------------------------------------------------------------------------------------------------------
Operating profit $ 3,895 5,583 15,098 16,072
- -------------------------------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
<TABLE>
Pittston Minerals Group
CONDENSED BALANCE SHEETS
<CAPTION>
December 31 December 31
(In thousands) 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 3,387 4,999
Accounts receivable, net of estimated amounts
uncollectible 88,552 87,775
Inventories and other current assets 67,691 106,216
- -------------------------------------------------------------------------------------------------------------------
Total current assets 159,630 198,990
Property, plant and equipment, at cost, net of
accumulated depreciation, depletion and amortization 170,809 199,344
Coal supply contracts, net of amortization 52,697 63,455
Intangibles, net of amortization 111,103 117,551
Other assets 212,742 219,269
- -------------------------------------------------------------------------------------------------------------------
Total assets $ 706,981 798,609
- -------------------------------------------------------------------------------------------------------------------
Liabilities and shareholders' Equity
Current liabilities $ 184,725 219,676
Long-term debt, less current maturities 124,572 100,791
Postretirement benefits other than pensions 219,717 213,707
Workers' compensation and other claims 105,836 114,602
Other liabilities 83,791 158,512
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 718,641 807,288
Shareholders' equity (11,660) (8,679)
- -------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 706,981 798,609
- -------------------------------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
<TABLE>
Pittston Minerals Group
STATEMENTS OF CASH FLOWS
<CAPTION>
Twelve Months Ended December 31
(In thousands) 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 10,658 14,024
Adjustments to reconcile net income to net cash
provided by operating activities:
Noncash charges and other write-offs 29,948 -
Depreciation, depletion and amortization 36,624 42,040
Provision for deferred income taxes 22,088 16,412
Other, net (2,228) (7,215)
Changes in operating assets and liabilities net
of effects of acquisitions and dispositions:
(Increase) decrease in receivables (4,454) 22,670
Decrease (increase) in inventories and other
current assets 11,680 (7,737)
Decrease in current liabilities (21,289) (16,524)
Other, net (63,228) (37,403)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 19,799 26,267
- -------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (20,193) (22,283)
Proceeds from disposal of property, plant
and equipment 4,613 18,939
Acquisitions and related contingent payments (1,134) (1,078)
Other, net (3,801) (1,188)
- -------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (20,515) (5,610)
- -------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net additions to (reduction of) debt 21,897 (17,140)
Payments (to) from - Burlington Group/Brink's
Group (6,097) 13,118
Other share activity (16,696) (15,344)
- -------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities (896) (19,366)
- -------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash
equivalents (1,612) 1,291
Cash and cash equivalents at beginning of period 4,999 3,708
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 3,387 4,999
- -------------------------------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
<TABLE>
The Pittston Company and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Twelve Months
(In thousands, Ended December 31 Ended December 31
except per share amounts) 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Unaudited)
Net sales $ 173,798 165,198 696,513 722,851
Operating revenues 650,477 597,565 2,410,131 2,203,216
- -------------------------------------------------------------------------------------------------
Net sales and operating revenues 824,275 762,763 3,106,644 2,926,067
- -------------------------------------------------------------------------------------------------
Cost of sales 174,261 154,234 707,497 696,295
Operating expenses 538,859 498,665 2,004,598 1,845,404
Restructuring and other charges, including
litigation accrual (9,541) -- (47,299) --
Selling, general and administrative 74,685 68,363 292,718 263,365
- -------------------------------------------------------------------------------------------------
Total cost and expenses 778,264 721,262 2,957,514 2,805,064
- -------------------------------------------------------------------------------------------------
Other operating income (expense) 3,635 4,079 17,377 26,496
- -------------------------------------------------------------------------------------------------
Operating profit 49,646 45,580 166,507 147,499
Interest income 1,271 841 3,487 3,395
Interest expense (3,541) (3,844) (14,074) (14,253)
Other expense, net (2,312) (2,292) (9,224) (6,305)
- -------------------------------------------------------------------------------------------------
Income before income taxes 45,064 40,285 146,696 130,336
Provision for income taxes 14,000 10,585 42,542 32,364
- -------------------------------------------------------------------------------------------------
Net income 31,064 29,700 104,154 97,972
Preferred stock dividends, net (902) (1,065) (1,675) (2,762)
- -------------------------------------------------------------------------------------------------
Net income attributed to common shares $ 30,162 28,635 102,479 95,210
- -------------------------------------------------------------------------------------------------
Pittston Brink's Group:
Net income attributed to common shares $ 17,981 14,969 59,695 51,093
- -------------------------------------------------------------------------------------------------
Net income per common share $ .47 .39 1.56 1.35
- -------------------------------------------------------------------------------------------------
Average common shares outstanding 38,326 37,983 38,200 37,931
- -------------------------------------------------------------------------------------------------
Pittston Burlington Group:
Net income attributed to common shares $ 10,587 10,273 33,801 32,855
- -------------------------------------------------------------------------------------------------
Net income per common share $ .55 .54 1.76 1.73
- -------------------------------------------------------------------------------------------------
Average common shares outstanding 19,408 18,992 19,223 18,966
- -------------------------------------------------------------------------------------------------
Pittston Minerals Group:
Net income attributed to common shares $ 1,594 3,393 8,983 11,262
- -------------------------------------------------------------------------------------------------
Net income per common share:
Primary $ .20 .43 1.14 1.45
Fully diluted $ .20 .43 1.08 1.40
- -------------------------------------------------------------------------------------------------
Average common shares outstanding:
Primary 7,970 7,802 7,897 7,786
Fully diluted 9,826 9,968 9,906 9,999
- -------------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
<TABLE>
The Pittston Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31 December 31
(In thousands) 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 41,217 52,823
Accounts receivable, net of estimated amounts
uncollectible 456,135 421,246
Inventories and other current assets 121,338 162,624
- -------------------------------------------------------------------------------------------------------------------
Total current assets 618,690 636,693
Property, plant and equipment, at cost, net of
accumulated depreciation, depletion and
amortization 540,851 486,168
Intangibles, net of amortization 317,062 327,183
Other assets 336,276 357,328
- -------------------------------------------------------------------------------------------------------------------
Total assets $ 1,812,879 1,807,372
- -------------------------------------------------------------------------------------------------------------------
Liabilities and shareholders' equity
Current liabilities $ 568,967 594,488
Long-term debt, less current maturities 158,837 133,283
Postretirement benefits and other claims 226,697 219,895
Workers' compensation and other claims 116,892 125,894
Other liabilities 134,779 211,833
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 1,206,172 1,285,393
Shareholders' equity 606,707 521,979
- -------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 1,812,879 1,807,372
- -------------------------------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
<TABLE>
The Pittston Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Twelve Months Ended December 31
(In thousands) 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 104,154 97,972
Adjustments to reconcile net income to net cash
provided by operating activities:
Noncash charges and other write-offs 29,948 -
Depreciation, depletion and amortization 113,251 104,989
Provision for aircraft heavy maintenance 32,057 26,317
Provision for deferred income taxes 19,320 11,115
Other, net 14,972 4,060
Changes in operating assets and liabilities net
of effects of acquisitions and dispositions:
Increase in receivables (45,991) (38,628)
Decrease (increase) in inventories and other
current assets 10,784 (14,183)
(Decrease) increase in current liabilities (10,894) 4,491
Other, net (70,930) (39,598)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 196,671 156,535
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (177,269) (124,465)
Proceeds from disposal of property, plant and
equipment 11,310 22,539
Aircraft heavy maintenance (23,373) (22,356)
Acquisitions and related contingent payments (4,078) (3,372)
Other, net 1,799 1,182
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (191,611) (126,472)
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Additions to debt 28,642 29,866
Reductions of debt (14,642) (25,891)
Share and other equity activity (30,666) (23,533)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities (16,666) (19,558)
- ---------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash
equivalents (11,606) 10,505
Cash and cash equivalents at beginning of period 52,823 42,318
- ---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 41,217 52,823
- ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
The Pittston Company and Subsidiaries
Pittston Minerals Group
NOTES TO FINANCIAL INFORMATION
(1) The approval on January 18, 1996, by the shareholders of The Pittston
Company (the "Company") of the Brink's Stock Proposal, as described in the
Company's proxy statement dated December 15, 1995, resulted in the
reclassification of the Company's class of common stock formerly known as
Pittston Services Group Common Stock ("Services Stock"). The outstanding
shares of Services Stock were redesignated as Pittston Brink's Group Common
Stock ("Brink's Stock") on a share-for-share basis, and a new class of
common stock, designated as Pittston Burlington Group Common Stock
("Burlington Stock"), was distributed on the basis of one-half share of
Burlington Stock for each share of Services Stock previously held by
shareholders of record on January 19, 1996. Due to the reclassification of
the Services Stock, all stock and per share data in the accompanying
financial information have been restated to reflect the reclassification.
The financial information for Pittston Minerals Group ("Minerals Group")
includes the results of the Company's Coal and Minerals Ventures
operations. 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 was a signatory.
In late March 1996, a settlement was reached in the Evergreen Case. Under
the terms of the settlement, the coal subsidiaries which had been
signatories to earlier National Bituminous Coal Wage Agreements agreed to
make various lump sum payments in full satisfaction of all amounts
allegedly due to the Trust Funds through January 31, 1996, to be paid over
time as follows: approximately $25.8 million upon dismissal of the
Evergreen Case in March 1996 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 the third quarter of 1996 and was funded through cash provided
by operating activities. In addition, the coal subsidiaries agreed to
future participation in the UMWA 1974 Pension Plan. Separate lawsuits
against each of the UMWA and the Bituminous Coal Operations Association,
previously reported, have also been dismissed.
As a result of the settlement of these cases, 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) As of January 1, 1996, the Company and 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 long-lived assets and certain identifiable intangibles to be held
and used by an entity for impairment whenever circumstances indicate that
the carrying amount of an asset may not be recoverable. SFAS No. 121
requires companies to utilize a two-step approach to determining whether
impairment of such assets has occurred and, if so, the amount of such
impairment. As a result, an impairment loss of $29.9 million has been
recorded for the Company and the Minerals Group in 1996.
(4) During the twelve months ended December 31, 1996, the Company purchased
20,920 shares of its Series C Cumulative Convertible Preferred Stock.
Preferred dividends included on the Company's statement of operations for
the twelve months ended December 31, 1996, are net of $2.1 million, which
is the excess of the carrying amount of the preferred stock over the cash
paid to holders of the preferred stock. There were no repurchases of
preferred stock during the quarter ended December 31, 1996. During the
twelve months ended December 31, 1995, the Company purchased 16,370 shares
of its preferred stock. Preferred dividends for the twelve months ended
December 31, 1995 are net of $1.6 million, which was the excess of the
carrying amount of the preferred stock over the cash paid to holders of the
preferred stock. There were no repurchases of preferred stock during the
quarter ended December 31, 1995.
(5) Restructuring and other non-recurring items consist of the following:
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
(In thousands) December 31, 1996 December 31, 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SFAS No. 121 impairment
loss (Note 3) $ - (29,948)
Evergreen settlement gain
(Note 2) - 35,650
Benefit from excess restructuring
liabilities 9,541 11,649
- -------------------------------------------------------------------------------------------------------------------
Total restructuring and other $ 9,541 17,351
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(6) Financial information for the Pittston 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.
