UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _______________
Commission file number 1-9148
------
THE SAVINGS-INVESTMENT PLAN OF THE PITTSTON COMPANY AND ITS
SUBSIDIARIES
(Full title of the Plan)
THE PITTSTON COMPANY
(Name of the issuer of securities held pursuant to the Plan)
P.O. BOX 18100
1801 BAYBERRY COURT
RICHMOND, VIRGINIA 23226-8100
(Address of issuer's principal (Zip Code)
executive offices)
1
THE SAVINGS-INVESTMENT PLAN
OF THE PITTSTON COMPANY AND ITS SUBSIDIARIES
Financial Statements and Schedules
December 31, 2001 and 2000
(With Independent Auditors' Report Thereon)
2
THE SAVINGS-INVESTMENT PLAN
OF THE PITTSTON COMPANY AND ITS SUBSIDIARIES
Index to Financial Statements and Schedules
December 31, 2001 and 2000
Pages
-----
Independent Auditors' Report 4
Financial Statements
--------------------
Statements of Net Assets Available for Benefits
December 31, 2001 and 2000 5
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2001 and 2000 6
Notes to Financial Statements 7-12
Schedules
---------
Schedule H, Line 4i, -
Schedule of Assets (Held at End of Year) -
December 31, 2001 13
Schedule H, Line 4j, -
Schedule of Reportable Transactions
Year Ending December 31, 2001 14
Other schedules not filed herewith are omitted because of the absence of
conditions under which they are required to be filed.
3
INDEPENDENT AUDITORS' REPORT
----------------------------
The Pension Committee of the Board of Directors
The Pittston Company:
We have audited the accompanying statements of net assets available for benefits
of The Savings-Investment Plan of The Pittston Company and its Subsidiaries (the
"Plan") as of December 31, 2001 and 2000, and the related statements of changes
in net assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2001 and 2000, and the changes in net assets available for benefits
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
(held at end of year) and reportable transactions are presented for the purpose
of additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. These supplemental schedules are the
responsibility of the Plan's management. The supplemental schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ KPMG LLP
------------------
Richmond, Virginia
June 21, 2002
4
THE SAVINGS-INVESTMENT PLAN OF THE PITTSTON COMPANY AND ITS SUBSIDIARIES
Statements of Net Assets Available for Benefits
December 31
(In thousands) 2001 2000
-------------------------------------------------------------------
Assets
Investments at fair value:
Pittston Common Stock $ 63,505 52,533
Mutual funds 78,519 102,254
Common trust funds 19,342 -
Notes receivable from participants 14,038 12,831
Investments at contract value 54,726 51,367
-------------------------------------------------------------------
Total investments 230,130 218,985
Receivables:
Participant contributions 1,553 1,485
Employer contributions 793 560
Interest 85 74
-------------------------------------------------------------------
Total receivables 2,431 2,119
-------------------------------------------------------------------
Total assets $ 232,561 221,104
-------------------------------------------------------------------
Liabilities
Accrued liabilities $ 292 359
-------------------------------------------------------------------
Total liabilities 292 359
-------------------------------------------------------------------
Net assets available for benefits $ 232,269 220,745
-------------------------------------------------------------------
See accompanying notes to financial statements.
5
THE SAVINGS-INVESTMENT PLAN OF THE PITTSTON COMPANY AND ITS SUBSIDIARIES
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31
(In thousands) 2001 2000
-------------------------------------------------------------------
Income:
Dividends $ 4,903 13,173
Interest 1,047 961
Net appreciation (depreciation) in
fair value of investments:
Participant-directed (11,909) (17,530)
Nonparticipant-directed 5,761 (3,259)
-------------------------------------------------------------------
(6,148) (20,789)
Contributions:
Participant 19,240 18,290
Employer 9,732 8,993
Rollover 1,507 1,052
-------------------------------------------------------------------
Total additions 30,281 21,680
Distributions to participants
or beneficiaries (18,757) (26,184)
-------------------------------------------------------------------
Net increase (decrease) 11,524 (4,504)
Net assets available for benefits:
Beginning of year 220,745 225,249
-------------------------------------------------------------------
End of year $ 232,269 220,745
-------------------------------------------------------------------
See accompanying notes to financial statements.
6
THE SAVINGS-INVESTMENT PLAN
OF THE PITTSTON COMPANY AND ITS SUBSIDIARIES
Notes to Financial Statements
December 31, 2001 and 2000
1. Plan Information and Summary of Significant Accounting Policies
Description of Plan
-------------------
The Savings-Investment Plan of The Pittston Company and Its Subsidiaries
(the "Plan") is a voluntary defined contribution plan sponsored by The
Pittston Company and participating subsidiaries (the "Company"). Prior to
July 1, 2001, employees of the Company who were not members of a
collective bargaining unit (unless the collective bargaining agreement
provides specifically for and the Administrative Committee has approved
participation) were eligible to participate after six months of full time
service in which they had at least 1,000 hours of service or at least
1,000 hours of service in any twelve month period. Effective July 1, 2001,
eligible employees could participate after thirty days of service. The
Plan is subject to the Employee Retirement Income Security Act of 1974
("ERISA"). Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
A participant may withdraw the following at any time without being
suspended from the Plan:
(a) All or a portion of Company matching contributions made prior to
January 1, 1985;
(b) All or a portion of after-tax contributions made prior to January 1,
1987; or
(c) Any rollover contributions.
Any withdrawals of vested Company matching contributions made after
January 1, 1985 require the employer to suspend making matching
contributions on behalf of the participant for a period of six months.
The Plan generally requires that pre-tax savings remain in the Plan while
the participant is actively employed. However, the Plan allows two
exceptions:
(a) If the participant is age 59 1/2 or older, he or she may withdraw
all or a portion of his or her pre-tax contributions, or
(b) If the participant has a "financial hardship" (as that term is
defined by Internal Revenue Service ("IRS") guidelines) it is
possible to withdraw all or a portion of his or her pre-tax
contributions in the Plan up to the amount needed to satisfy the
hardship, regardless of age.
The first exception results in a suspension of Company matching
contributions for a period of six months. A hardship withdrawal results in
a suspension of employee pre-tax contributions for twelve months.
7
Vesting Policy
--------------
A participant is 100% vested in the market value of his or her pre-tax
contributions. Vesting in the Company matching contributions is based on
years of service as follows:
Less than 3 years None
3 but less than 4 years 50%
4 but less than 5 years 75%
5 or more years 100%
If a participant ends his or her employment with the Company and is
subsequently rehired, his or her prior service with the Company is counted
for vesting purposes. Once a participant reaches normal retirement age, he
or she is 100% vested in Company matching contributions regardless of
years of service.
Forfeitures by the participants of the nonvested portion of their account
upon withdrawal from the Plan are used to reduce future contributions of
the Company to the Plan. Employer contributions receivable are net of
forfeitures of $62,000 and $249,000 at December 31, 2001 and 2000,
respectively. Also, in 2001 and 2000, employer contributions were reduced
by $333,000 and $614,000, respectively, from forfeited nonvested accounts.
Plan Termination
----------------
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, participants will become 100% vested in their accounts.
Basis of Presentation
---------------------
The accompanying financial statements have been prepared on the accrual
basis of accounting and present net assets available for benefits and
changes in those assets at fair values. Certain prior year amounts have
been reclassified to conform to the current year's financial statement
presentation.
The fair value of Pittston Common Stock, mutual fund investments and
common trust fund investments is determined by using quoted market prices.
The contract value (contributions made plus interest accrued at the
contract rate less withdrawals and fees) of certain investments
approximates fair value. Participant notes receivable are valued at cost
which approximates fair value. The cost of securities sold is determined
principally on the basis of average cost at the time of sale. Purchases
and sales of securities are recorded on a trade-date basis. Dividend
income is recorded on the ex-dividend date, and interest income is
recorded on the accrual basis. Benefits are recorded when paid.
Use of Estimates
----------------
In accordance with accounting principles generally accepted in the United
States of America, management of the Company has made a number of
estimates and assumptions relating to the reporting of assets and
liabilities and the disclosure of contingent assets and liabilities to
prepare these financial statements. Actual results could differ materially
from those estimates.
Risks and Uncertainties
-----------------------
The Plan provides for various investment options which invest in any
combination of equities, fixed income securities and investment contracts.
Investment securities are exposed to various risks, such as interest
rates, credit and overall market volatility. Due to the level of risk
associated with certain investment securities and the level of uncertainty
related to the changes in the value of investment securities, it is
reasonably possible that changes in risk could materially affect
participants' account balances and the amounts reported.
8
2. Participant Notes Receivable
Participants can borrow, in exchange for a promissory note, up to the
lesser of $50,000 or 50% of their aggregate vested account balance in the
Plan, including rollovers, subject to certain maximum limits designated by
the IRS. Each note is secured by a pledge of the participant account
balance in the Plan to the extent of the unpaid balance. The interest rate
charged is generally equal to the prime interest rate plus 1%. Repayments
are made through level monthly payroll deductions. The term of a loan
cannot exceed 4 1/2 years for general purpose loans and 15 years for
principal residence loans.
3. Contributions
During the second half of 2001, each participant could designate a basic
contribution of up to the lesser of $10,500 or 20% of pre-tax earnings.
During the first half of 2001 and all of 2000, each participant could
designate a basic contribution of up to the lesser of $10,500 or 15% of
pre-tax earnings. Amounts contributed are subject to limitations under IRS
non-discrimination tests. For purposes of determining Plan contributions,
pre-tax earnings are defined as regular pay including commissions and
bonuses, but excluding overtime, premium pay and allowances. Employee
contributions may be divided among investment funds, in multiples of 1%,
based upon the participant's election. Participants have the option to
change their contribution percentages during each pay period.
During 2001 and 2000, participant contributions to the Plan could be
invested in one of thirteen and twelve T. Rowe Price investment funds,
respectively, or Pittston Common Stock.
Participant contributions up to 5% of pre-tax earnings were matched by the
Company at rates ranging from 50% to 100% in both 2001 and 2000. Company
matching contributions are in the form of Pittston Common Stock.
Participants who were employees of the following wholly owned subsidiaries
of the Company were matched at the following rates in 2001 and 2000:
Brink's, Incorporated 100%
Brink's Home Security 75%
BAX Global Inc. 75%
Air Transport International, LLC 50%
Pittston Coal Company 50%
Pittston Minerals Ventures 50%
Employees of Pittston Administrative Services and The Pittston Company
were matched at a rate of 100% in 2001 and 2000. The Company may adjust
the rate at which contributions are matched.
4. Distributions
Upon leaving the Company for any reason and after a formal disbursement
request is made by the participant, the full fair value of an employee's
contributions and related investment income and all vested Company
matching contributions and related investment income will be distributed
in cash, except payouts from the Company stock funds which will be made in
shares of the Company's stock unless cash payment is specifically
requested. The value of any fractional shares will be distributed in cash.
Additionally, if a participant's employment with the Company terminates
and he or she has a vested account balance of more than $5,000, he or she
may (1) elect to leave all of his or her contributions and related
investment income and the vested portion of Company contributions and
related investment income in the Plan for an unlimited period of time, or
(2) make an irrevocable election to receive the payout in installments for
a period of up to five years. Participants who retire on their normal
retirement date may elect to defer distribution until the later of age 70
1/2 or their retirement date.
9
5. Related Party Transactions
Certain Plan investments are shares of mutual funds, common trusts, and
investment contracts managed by T. Rowe Price Trust Company, the Trustee.
Additionally, the Plan invests in shares of Pittston Common Stock. Such
transactions are deemed to be party-in-interest transactions of the Plan
as are all participant notes receivable.
At December 31, 2001, the Plan held 2,873,529 shares of Pittston Common
Stock valued at $63,504,981.
At December 31, 2000, the Plan held 2,643,172 shares of Pittston Common
Stock valued at $52,533,041.
6. Federal Income Taxes
The Plan obtained its latest determination letter on March 24, 1998, in
which the Internal Revenue Service stated that the Plan, as designed, was
in compliance with Section 401(a) of the Internal Revenue Code ("IRC") and
accordingly, the Plan is exempt from income tax under Section 501(a) of
the IRC. Although the Plan has been amended since receiving the
determination letter, the Plan administrator and the Plan's tax counsel
believe that the Plan is designed and is currently being operated in
compliance with the applicable requirements of the IRC. The Plan filed for
its latest request for a determination letter on February 27, 2002, and
the Plan has yet to receive the requested determination letter.
8. Investments
During 2001 and 2000, the Plan's investments (including investments
bought, sold and held during the year) appreciated (depreciated) in value
as follows:
Years Ended December 31
2001 2000
-----------------------------------------------------------------
(In thousands)
Appreciation (depreciation) of investments
at fair value as determined by quoted
market prices:
Pittston Common Stock $ 6,207 (3,754)
Mutual funds (11,162) (17,035)
Common trust funds (1,193) -
-----------------------------------------------------------------
$ (6,148) (20,789)
-----------------------------------------------------------------
In 2001 and 2000, participants had the option to invest in a stability
fund (the "fund") investing in money market funds, short-term investments
and benefit-responsive investment contracts, including synthetic
investment contracts, issued by banks, insurance companies and other
high-quality issuers. The fund seeks to maintain a constant net asset
value and, as a result, allows participants to withdraw all or a portion
of their investment at contract value. The investment contracts held by
the fund are nontransferable, but provide for these benefit-responsive
withdrawals by Plan participants at the contract value. The fund is
presented in the financial statements at contract value, as reported to
the Plan by the Trustee. Generally, contract value approximates fair
value. If an event occurs that may impair the ability of the contract
issuer to perform in accordance with the contract terms, fair value may be
less than contract value. The investments in the fund may have fixed rates
of interest for fixed periods of time, or may have rates of interest that
vary during the contract period based on the contract issuer's investment
experience or on another formula applicable under the contract. The
average yield on investments held by the fund was approximately 6.2% and
6.6% at December 31, 2001 and 2000, respectively. Maturities of the
investment contracts held by the fund ranged from 2002 to 2039 and from
2001 to 2030 at December 31, 2001 and 2000, respectively.
10
Investments at fair value or contract value which represent 5% or more of
the net assets available for benefits at December 31 are as follows:
December 31
2001 2000
-----------------------------------------------------------------
(In thousands)
Investment:
Pittston Common Stock (a) $ 63,505 52,533
T. Rowe Price Stable Value Fund 54,726 51,367
T. Rowe Price Equity Index 500 Fund (b) - 22,505
T. Rowe Price New America Growth Fund (b) - 25,621
T. Rowe Price Personal Strategy
Balanced Fund 18,939 18,742
T. Rowe Price Equity Index Trust (c) 19,342 -
T. Rowe Price Blue Chip Growth Fund (c) 20,469 -
Notes receivable from participants 14,038 12,831
-----------------------------------------------------------------
(a) Includes nonparticipant-directed investments in 2001 and
2000 of $59,098 and $48,516, respectively.
(b) Closed in 2001.
(c) Added in 2001.
8. Nonparticipant-Directed Investments
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments
is as follows:
December 31
2001 2000
------------------------------------------------------------
(In thousands)
Net Assets:
Pittston Common Stock $ 59,098 48,516
Employer contributions receivable 793 560
Accrued liabilities (272) -
------------------------------------------------------------
$ 59,619 49,076
------------------------------------------------------------
Year Ended December 31
2001 2000
------------------------------------------------------------
(In thousands)
Changes in Net Assets:
Contributions - Employer $ 9,732 8,993
Dividends 254 229
Net appreciation (depreciation) 5,761 (3,259)
Distributions to participants
or beneficiaries (4,577) (3,742)
Transfers to participant-directed
investments (627) (891)
------------------------------------------------------------
$ 10,543 1,330
------------------------------------------------------------
9. Reconciliation to Form 5500
The Form 5500 for the Plan includes a liability for benefits payable in
the statements of net assets available for benefits as of December 31,
2001 and 2000. In addition, Form 5500 for the Plan reflects a reduction in
net assets for deemed distributions of certain participant loans in the
statements of net assets available for benefits as of December 31, 2001
and 2000, respectively. The accompanying financial statements do not
include this reduction as the participants to which the deemed
distributions relate continue to retain their net assets within the Plan.
The following reconciles net assets available for benefits and benefits
paid to participants from the Form 5500 to the Plan financial statements:
11
December 31
2001 2000
------------------------------------------------------------
(In thousands)
Net assets available for benefits
per the Form 5500 $ 227,798 217,781
Cumulative deemed distributions 137 133
Benefits payable to participants at
end of year 4,334 2,831
------------------------------------------------------------
Net assets available for benefits
per the Statements of Net Assets
Available for Benefits $ 232,269 220,745
------------------------------------------------------------
Years Ended December 31
2001 2000
--------------------------------------------------------------
(In thousands)
Distributions to participants per the
Form 5500 $ 20,264 24,240
Deemed distributions of participant loans (4) (58)
Benefits payable to participants at
beginning of year 2,831 4,833
Benefits payable to participants at
end of year (4,334) (2,831)
--------------------------------------------------------------
Distributions paid to participants per the
Statements of Changes in Net Assets
Available for Benefits $ 18,757 26,184
--------------------------------------------------------------
10. Plan Amendments
The Plan was amended and restated effective January 1, 2002. The Plan
reflects certain new IRS rules including rules regarding minimum required
distributions. In addition, vesting in the Company matching contributions
will be based on years of service as follows:
Less than 2 years None
2 but less than 3 years 20%
3 but less than 4 years 50%
4 but less than 5 years 75%
5 or more 100%
Participants should refer to the Plan document for a more complete
description of the Plan's new provisions.
12
Schedule 1
THE SAVINGS-INVESTMENT PLAN
OF THE PITTSTON COMPANY AND ITS SUBSIDIARIES
Schedule H, Line 4i, Schedule of Assets (Held at End of Year)
December 31, 2001
(In thousands, except share amounts)
Cost (non-
Identity of Issue, Description of Investment Including participant
Borrower, Lessor or Maturity Date, Rate of Interest, directed Current
Similar Party Collateral, Par or Maturity Value only Value
------------------------------------------------------------------------------------
The Pittston Company* 2,674,137 shares nonparticipant directed
Pittston Common Stock; $1 par value $ 57,625 59,098
The Pittston Company* 199,392 shares of participant directed
Pittston Common Stock; $1 par value 4,407
T. Rowe Price* 54,726,136 shares in the Stable Value Fund 54,726
T. Rowe Price* 174,506 shares in the Spectrum Income Fund 1,850
T. Rowe Price* 300,009 shares in the Equity Income Fund 7,095
T. Rowe Price* 627,383 shares in the Equity Index Trust 19,342
T. Rowe Price* 344,828 shares in the International Stock Fund 3,790
T. Rowe Price* 203,102 shares in the Small Cap Value Fund 4,606
T. Rowe Price* 373,806 shares in the New Horizons Fund 8,461
T. Rowe Price* 185,380 shares in the Personal Strategy
Income Fund 2,375
T. Rowe Price* 1,255,061 shares in the Personal Strategy
Balanced Fund 18,939
T. Rowe Price* 306,461 shares in the Personal Strategy
Growth Fund 5,375
T. Rowe Price* 236,112 shares in the Science & Technology Fund 4,941
T. Rowe Price* 15,692 shares in the Mid-Cap Growth Fund 618
T. Rowe Price* 706,545 shares in the Blue Chip Growth Fund 20,469
Notes receivable Participant notes receivable at interest rates
from participants* ranging from 6% to 11%, maturities not to
exceed 4 1/2 years for general purpose and
15 years for principal residence 14,038
------------------------------------------------------------------------------------
$ 230,130
------------------------------------------------------------------------------------
The cost of participant-directed investments is not required.
*Indicates a party-in-interest investment.
See accompanying independent auditors' report.
13
Schedule 2
THE SAVINGS-INVESTMENT PLAN
OF THE PITTSTON COMPANY AND ITS SUBSIDIARIES
Schedule H, Line 4j, Schedule of Reportable Transactions
For the Year Ended December 31, 2001
(In thousands, except number of purchase and sale amounts)
Current value
Description of asset Cost of asset on
(include interest rate and Purchase Selling Lease Expense incurred of Transaction Net gain
Identity of party involved maturity in case of a loan Price Price Rental with Transaction Asset Date or (loss)
------------------------------------------------------------------------------------------------------------------------------------
The Pittston Company Pittston Common Stock
28 purchases 10,132 N/A N/A N/A 10,132 10,132 N/A
The Pittston Company Pittston Common Stock
212 sales N/A 5,441 N/A N/A 5,524 5,441 (83)
------------------------------------------------------------------------------------------------------------------------------------
Transactions under an individual account plan that a participant or beneficiary
directed with respect to assets allocated to his or her account are not treated
for purposes of line 4j as reportable transactions. Transactions listed
srepresent a series of transactions in a security of the same issue in excess of
5% of the plan market value as of December 31, 2000.
See accompanying independent auditors' report.
14
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
The Savings-Investment Plan
of The Pittston Company
and Its Subsidiaries
-------------------------------
(Name of Plan)
/s/ Frank T. Lennon
-----------------------------
(Frank T. Lennon
Vice President-Human Resources and
Administration of The Pittston Company)
Date: June 27, 2002
15
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We consent to incorporation by reference in the registration statements (Nos.
333-02219, 333-78633 and 333-70766) on Form S-8 of The Pittston Company of our
report dated June 21, 2002, relating to the statements of net assets available
for benefits of The Savings-Investment Plan of The Pittston Company and its
Subsidiaries as of December 31, 2001 and 2000, and the related statements of
changes in net assets available for benefits for the years then ended, which
report appears in the December 31, 2001 Annual Report on Form 11-K of The
Savings-Investment Plan of The Pittston Company and its Subsidiaries.
/s/ KPMG LLP
------------
Richmond, Virginia
June 27, 2002
16