The Pittston Company Reports First Quarter Results
RICHMOND, Va.--April 26, 2001--The Pittston Company reported income from continuing operations of $8.7 million ($0.17 per diluted share) for the first quarter ended March 31, 2001 on revenue of $908 million. For the same period a year earlier, income from continuing operations was $14.4 million ($0.29 per diluted share) on revenue of $930 million.Higher revenue in the Brink's, Incorporated ("Brink's") and Brink's Home Security businesses was offset in the current quarter by lower revenue in the BAX Global business. The year-over-year increase in operating profits for the quarter at Brink's Home Security was more than offset by a combination of lower operating profits at Brink's and a larger operating loss at BAX Global when compared to the same quarter a year ago.
Business and Security Services
Brink's worldwide first quarter revenue of $373 million increased 6% compared to the same period in 2000 despite the adverse effects of a stronger US dollar. North American revenue increased 6% in the current quarter versus a year earlier as demand for Brink's armored car, ATM, coin wrapping, currency processing and CompuSafe(R) services continued to strengthen. Brink's international revenue of $207 million in the current quarter was 5% more than for the same period last year. Growth in the Company's French and Venezuelan operations more than offset the effects of the strong US dollar. Year-over-year growth in international revenue would have approximated 13% for the quarter, if the effects of the relative strengthening of the US dollar primarily versus the Euro and certain Latin American currencies were eliminated.
Brink's operating profits were $18.8 million in the quarter ended March 31, 2001 in comparison to the $24.0 million earned in the strong first quarter a year ago. Lower performance in North American operations resulted primarily from increased labor expenses and higher workers' compensation and other insurance costs. On the international side, difficult economic conditions in Latin America, the effects of a brief strike in France and the costs of new business start-ups in the United Kingdom and Belgium combined to reduce operating performance from last year's level.
Brink's Home Security revenue increased 7% to $62 million in the first quarter as compared to the same period last year due to a combination of the larger subscriber base and higher average monthly monitoring revenue. As a result of the increase in subscribers and a lower disconnect rate, operating profits in the current quarter increased to a record $14.5 million, up from $14.1 million in the prior year's first quarter. At March 31, 2001, Brink's Home Security had more than 683,000 subscribers contributing $18.2 million of monthly recurring revenue. The annualized disconnect rate for the quarter just ended declined to 7.2%.
BAX Global's worldwide revenue declined 9% to $463 million in the current quarter when compared to the same quarter last year. Total international revenue for the quarter was essentially unchanged from that of a year ago as strong demand for supply chain management and transportation services in the European region was offset by a slowing of technology-related business activity in the Pacific region. Americas revenue declined 14% primarily due to the general slowing of the economy in the United States.
Despite significant savings in transportation costs, operating expenses and selling, general and administrative costs stemming from the restructuring actions implemented late last year, BAX Global's operating loss increased to $5.7 million in the seasonally weak first quarter primarily as a result of the decline in economic activity in the United States. In the same period a year ago, BAX Global's operating loss was $2.9 million.
Other Operations
Other Operations, which represents the Company's interests in natural gas, timber and gold mining operations, reported revenue of $9.8 million in the first quarter compared to $9.2 million a year ago. Operating profit for the quarter was $2.3 million compared to $2.2 million a year earlier.
Michael T. Dan, Chairman, President and Chief Executive Officer of The Pittston Company, commented: "Despite difficult challenges presented by the United States economy and in some of our international operations, we made steady progress during the first quarter towards achieving our strategic goals.
"The process of selling our coal operations continues to move ahead at a pace which we find encouraging. We remain confident that the process will be completed this year.
"We are also encouraged by the performance of BAX Global in the face of a slowing United States economy. All of BAX's cost reduction targets, established with the restructuring actions taken last December, were met or exceeded. At the same time, BAX's service performance level improved. These improvements, combined with a more focused selling effort emphasizing the broader array of available service offerings, give us confidence that BAX Global will report improved performance in the second quarter.
"Brink's continued to show solid demand for its services as evidenced by the increase in revenues. Brink's was not able to overcome the higher labor and insurance costs in the United States and the difficult conditions in some of the European and Latin American markets we serve. Our people are hard at work to resolve these issues as rapidly as possible.
"We are pleased with the solid performance of the Brink's Home Security unit. Operating profit from recurring services increased 9% compared to a year ago as our efforts at subscriber retention helped drive the disconnect rate down to an annualized rate of 7.2% during the quarter."
This release contains both historical and forward-looking information. Statements regarding the timing of the disposal of the coal business, improvements in BAX Global's performance in the second quarter and the ability of Brink's to overcome higher labor and insurance costs in the United States and difficult conditions in some European and Latin American markets involve forward-looking information which is subject to known and unknown risks, uncertainties and contingencies, which could cause actual results, performance or achievements to differ materially from those that are anticipated. Such risks, uncertainties and contingencies, many of which are beyond the control of The Pittston Company and its subsidiaries, include, but are not limited to, the ultimate outcome of efforts to sell the coal business, the completion of sales of coal assets on mutually agreeable terms, the impact of a more focused selling effort at BAX Global, BAX Global's continued ability to meet its cost reduction targets and maintain or further improve its service performance levels, overall domestic and international economic and business conditions, the strength of the US dollar relative to foreign currencies, the implementation of effective practices by Brink's to mitigate higher labor and insurance costs and manage difficult conditions in some European and Latin American markets, the domestic and international demand for services of The Pittston Company and its subsidiaries, pricing and other competitive factors in the industries, fuel prices, labor relations, new government regulations and/or legislative initiatives, variations in costs or expenses and performance delays of any public or private sector supplier, service provider or customer. The information included in this release is representative only as of the date of this release, and The Pittston Company undertakes no obligation to update any information contained in this release.
The Pittston Company is a diversified company with interests in security services through Brink's, Incorporated and Brink's Home Security, Inc., global freight transportation and supply chain management services through BAX Global and mining and minerals exploration through Pittston Coal Company and Pittston Mineral Ventures. Press releases are available on the World Wide Web at www.pittston.com, or by calling toll free (877) 275-7488.
The Company will host a conference call today, April 26, at 11:00 AM eastern time to discuss this press release. Interested parties can listen in on the conference call by dialing (877) 447-8228 within the US or (706) 679-3727 from outside the US, or via live webcast at either www.pittston.com or www.streetfusion.com. Please dial-in at least five minutes prior to the start of the call. Dial-in replay will be available through May 3, 2001 by calling (888) 710-2577 within the US or (706) 645-9291 outside the US and entering conference identification number 342208. Webcast replay will be available at www.pittston.com through May 24, 2001.
THE PITTSTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, Three Months Ended March 31
except per share amounts) 2001 2000
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Operating revenues and net sales $ 908,327 929,784
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Costs and expenses:
Cost of sales and operating expenses 779,921 786,263
Selling, general and administrative
expenses 107,195 114,192
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Total costs and expenses 887,116 900,455
Other operating income, net 4,216 2,970
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Operating profit (Note 2) 25,427 32,299
Interest expense, net (7,783) (9,241)
Other income (expense), net (Note 3) (3,676) 307
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Income from continuing operations
before income taxes and cumulative
effect of change in accounting principle 13,968 23,365
Provision for income taxes 5,238 8,926
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Income from continuing operations
before cumulative effect of change
in accounting principle 8,730 14,439
Loss from discontinued operations,
net of tax (Note 1) - (4,483)
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Income before cumulative effect of
change in accounting principle 8,730 9,956
Cumulative effect of change in
accounting principle, net of tax (Note 4) - (51,952)
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Net income (loss) 8,730 (41,996)
Preferred stock dividends, net (167) (231)
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Net income (loss) attributed to
common shares $ 8,563 (42,227)
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Net income (loss) per common share:
Basic:
Continuing operations $ 0.17 0.29
Discontinued operations N/A (0.09)
Cumulative effect of change in
accounting principle N/A (1.05)
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Total basic $ 0.17 (0.85)
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Net income (loss) per common share:
Diluted:
Continuing operations $ 0.17 0.29
Discontinued operations N/A (0.09)
Cumulative effect of change in
accounting principle N/A (1.05)
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Total diluted $ 0.17 (0.85)
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Comprehensive income $ (940) (50,454)
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See accompanying notes.
THE PITTSTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31 December 31
(In thousands) 2001 2000
----------------------------------------------------------------------
(Unaudited)
Assets
Current assets $ 757,975 797,153
Current assets of discontinued operations 18,002 16,473
Property, plant and equipment, net 819,000 831,557
Intangibles, net 234,962 232,969
Noncurrent assets of discontinued operations 110,308 110,547
Other assets 492,341 490,010
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Total assets $2,432,588 2,478,709
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Liabilities and Shareholders' Equity
Current liabilities $ 838,920 894,573
Current liabilities of discontinued
operations 4,595 3,734
Long-term debt, less current maturities 315,361 311,418
Noncurrent liabilities of discontinued
operations 23,750 24,242
Other liabilities 767,378 768,919
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Total liabilities 1,950,004 2,002,886
Shareholders' equity 482,584 475,823
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Total liabilities and shareholders' equity $2,432,588 2,478,709
----------------------------------------------------------------------
See accompanying notes.
THE PITTSTON COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
Three Months Ended March 31
(In thousands) 2001 2000
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Operating revenues and net sales:
Business and security services:
Brink's $ 373,315 353,696
Brink's Home Security 61,786 57,865
BAX Global 463,397 509,040
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Total business and security services 898,498 920,601
Other Operations (a) 9,829 9,183
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Total operating revenues and net sales $ 908,327 929,784
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Operating profit (loss):
Business and security services:
Brink's $ 18,759 23,955
Brink's Home Security 14,506 14,050
BAX Global (5,740) (2,868)
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Total business and security services 27,525 35,137
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Other Operations (a) 2,296 2,244
General corporate expense (4,394) (5,082)
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Total operating profit $ 25,427 32,299
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(a) Includes the gas, timber and gold operations of the Company.
OTHER FINANCIAL INFORMATION
(Unaudited)
(In thousands, except number of Three Months Ended March 31
subscribers and as otherwise noted) 2001 2000
----------------------------------------------------------------------
Brink's:
Operating revenues:
North America $ 166,686 156,837
International 206,629 196,859
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Total operating revenues $ 373,315 353,696
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Operating profit:
North America $ 8,600 10,814
International 10,159 13,141
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Total segment profit $ 18,759 23,955
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Brink's Home Security:
Operating revenue $ 61,786 57,865
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Operating profit:
Operating profit from recurring services $ 25,902 23,791
Investment in new subscribers (11,396) (9,741)
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Total segment profit $ 14,506 14,050
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Monthly recurring revenues $ 18,248 17,215
Annualized disconnect rate 7.2% 7.6%
EBITDA $ 30,650 29,186
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Number of subscribers:
Beginning of period 675,278 643,277
Installations 20,627 21,542
Disconnects (12,248) (12,241)
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End of period 683,657 652,578
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BAX Global:
Operating revenues:
Americas (a) $ 266,003 310,459
International 213,078 212,405
Eliminations (15,684) (13,824)
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Total operating revenues $ 463,397 509,040
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Operating profit (loss):
Americas $ (9,598) (762)
International 7,665 7,376
Other (3,807) (9,482)
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Total segment loss (Note 2) $ (5,740) (2,868)
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Worldwide expedited freight services:
Revenues $ 378,922 416,150
Weight (million pounds) 377.2 432.5
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(a) Includes Intra-US revenue of $120.7 million and $156.3 million
for the quarters ended March 31, 2001 and 2000, respectively.
OTHER FINANCIAL INFORMATION
(Unaudited)
Three Months Ended March 31
(In thousands) 2001 2000
----------------------------------------------------------------------
Depreciation & Amortization:
Business and security services:
Brink's $ 14,895 14,897
Brink's Home Security 16,144 15,136
BAX Global 14,611 13,573
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Total business and security services 45,650 43,606
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Other Operations 1,001 1,314
General corporate 84 105
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Total depreciation & amortization $ 46,735 45,025
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Capital Expenditures:
Business and security services:
Brink's $ 19,647 23,206
Brink's Home Security 19,258 17,179
BAX Global 15,114 11,975
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Total business and security services 54,019 52,360
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Other Operations 1,210 1,826
General corporate 73 44
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Total capital expenditures $ 55,302 54,230
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THE PITTSTON COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL INFORMATION
(1) The Pittston Company (the "Company") currently includes four
operating segments and one discontinued segment. The operating
segments are Brink's, Brink's Home Security ("BHS"), BAX Global and
Other Operations which consists of the Company's gold, timber and gas
operations.
On December 6, 1999, the Company announced its intention to exit
the coal business through the sale of the Company's coal mining
operations and reserves. Based on progress since that date, the
Company has formalized its plan to dispose of those operations by the
end of 2001. As a result, Coal Operations were reported as
discontinued operations of the Company as of December 31, 2000. The
Company's results for the first quarter of 2000 have been
reclassified, accordingly.
(2) Operating performance for BAX Global includes the benefit of
$2.1 million and $0.5 million for the first quarter of 2001 and 2000,
respectively, from the reversal of incentive accruals.
(3) During the fourth quarter of 2000, BAX Global entered into a
five-year agreement to sell a revolving interest in its US domestic
accounts receivable through a commercial paper conduit program. Other
income (expense), net, for the first quarter of 2001 includes costs
related to the sale of accounts receivable of $2.0 million, comprising
the discount, incremental fees and provision for uncollectible
accounts.
(4) The Company's results for the first quarter of 2000 include a
non-cash after-tax charge of $51,952 ($84,676 pre-tax), or $1.05 per
diluted share, to reflect the cumulative effect on years prior to 2000
of changing the method of accounting for nonrefundable up-front
revenues and the related direct costs of acquiring new subscribers at
BHS. The accounting change was implemented in the fourth quarter of
2000, but made effective as of January 1, 2000. Under the Company's
current accounting policy, both the nonrefundable up-front revenues
and related direct costs of obtaining subscribers are deferred and
recognized in results of operations over the estimated term of the
subscriber relationship, which is generally 15 years. BHS previously
recognized nonrefundable up-front revenue as received and the related
direct costs as incurred.
(5) Certain prior period amounts have been reclassified to conform
to the current period's financial statement presentation.