UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 1-9148
THE BRINK'S COMPANY
(Exact name of registrant as specified in its charter)
Virginia 54-1317776
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
P.O. Box 18100,
1801 Bayberry Court
Richmond, Virginia 23226-8100
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 289-9600
Former Name of Registrant. The Pittston Company
--------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Pittston Brink's Group Common Stock, Par Value $1
Rights to Purchase Series A Participating Cumulative Preferred Stock
Name of exchange on
which registered
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
Yes X No
As of May 13, 2003, there were issued and outstanding 54,253,423 shares
of common stock. The aggregate market value of such stocks held by
nonaffiliates, as of June 28, 2002, was $1,237,810,008.
Documents incorporated by reference: Part I, Part II and Part IV
incorporate information by reference from the Annual Report of the Company for
the year ended December 31, 2001. Part III incorporates information by reference
from portions of the Registrant's definitive Proxy Statement to be filed
pursuant to Regulation 14A.
Explanatory Note
Information included in the original report on Form 10-K has not been
amended by this form 10-K/A to reflect any information or events subsequent to
the filing of the original Annual Report on Form 10-K. On May 5, 2003, The
Pittston Company changed its name to The Brink's Company. The Brink's Company
common stock trades on the New York Stock Exchange under the symbol "BCO."
1
PART I
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
The Pittston Company
The Pittston Company, a Virginia corporation, has three operating segments
within its "Business and Security Services" businesses: Brink's, Incorporated
("Brink's"); Brink's Home Security, Inc. ("BHS"); and BAX Global Inc. ("BAX
Global"). The fourth operating segment is its Other Operations, which consists
of gold, timber and natural gas operations. The Pittston Company's common stock
trades on the New York Stock Exchange under the symbol "PZB."
The Company announced its intention to exit the coal business through the
disposal of the Company's coal mining operations and reserves. The Company
formalized a plan of disposal which it is in the process of implementing.
Accordingly, Pittston Coal Operations ("Coal Operations") are reported as
discontinued operations of the Company as of December 31, 2000.
Prior to January 14, 2000, the Company had three classes of common stock, each
designed to track a component of the Company's businesses: Pittston Brink's
Group Common Stock ("Brink's Stock"), Pittston BAX Group Common Stock ("BAX
Stock") and Pittston Minerals Group Common Stock ("Minerals Stock").
The Company eliminated its tracking stock capital structure on January 14, 2000
by exchanging all outstanding shares of Minerals Stock and BAX Stock for shares
of Brink's Stock (the "Exchange"). For additional information regarding the
Exchange, see Note 20 to the Consolidated Financial Statements included in the
Company's 2001 Annual Report, which Note is herein incorporated by reference.
After the Exchange, Brink's Stock is the only outstanding class of common stock
of the Company. Shares of Brink's Stock after the Exchange are hereinafter
referred to as "Pittston Common Stock."
Financial information related to the Company's operating segments is included in
Note 2 to the Consolidated Financial Statements in the Company's 2001 Annual
Report, which Note is herein incorporated by reference.
The Company's continuing operations have a total of approximately 50,000
employees. The Company's discontinued operations have a total of approximately
1,400 employees.
A significant portion of the Company's business is conducted outside the United
States. Because the financial results of the Company are reported in U.S.
dollars, they are affected by changes in the value of the various foreign
currencies in relation to the U.S. dollar. The Company, from time to time, uses
foreign currency forward contracts to hedge certain transactional risks
associated with foreign currencies. The Company is also subject to other risks
customarily associated with doing business in foreign countries, including labor
and economic conditions, political instability, controls on repatriation of
earnings and capital, nationalization, expropriation and other forms of
restrictive action by local governments. The future effects of such risks on the
Company cannot be predicted.
BUSINESS AND SECURITY SERVICES
Brink's, Incorporated ("Brink's")
General
The major services offered by Brink's include armored car transport, automated
teller machine ("ATM") servicing, currency and deposit processing, coin sorting
and wrapping, arranging the secure air transport of valuables ("Global
Services"), and the deploying and servicing of safes and safe control devices,
including its patented CompuSafe(R) service. Brink's serves customers through
154 branches in the U.S. and 42 branches in Canada. Service is also provided
through subsidiaries, equity affiliates and associated companies in 52 countries
outside the U.S. and Canada. Brink's ownership interest in subsidiaries and
affiliated companies ranges from 20% to 100%. In some instances local laws limit
the extent of Brink's ownership interest.
Brink's customers include banks, industrial and commercial businesses,
investment banking and brokerage firms and government agencies, such as a
country's central bank. Brink's provides individualized services under separate
contracts designed to meet the distinct transportation and security requirements
of its customers. These contracts are usually for an initial term of one year or
less, but continue in effect thereafter until canceled by either party.
Brink's armored car transport services generally include secure transportation
of (i) cash from industrial and commercial businesses to banks for deposit, and
(ii) cash, securities and other negotiable items and valuables between
commercial banks, central banks (such as the U.S. Federal Reserve Banks and
their branches and correspondents), and brokerage firms. Brink's also transports
new currency, coins and precious metals for a number of central banks throughout
the world including most recently the introduction of the euro in Europe. In
certain geographic areas, Brink's transports canceled checks between banks or
between a clearing house and its member banks.
2
Coin and currency processing services ("cash logistics") are offered primarily
to banks and retail customers. Retail customers use Brink's services to count
and reconcile coins and currency in Brink's secure environment, to prepare bank
deposit information and to replenish retail locations' coins and currency in
proper denominations.
Brink's has the ability, through its information systems, to integrate a full
range of cash vault, ATM, transportation, storage, processing, inventory
management and reporting services. Brink's believes that its processing and
information capabilities differentiate its currency and deposit processing
services from its competitors and enable Brink's to take advantage of the trend
by banks, retail business establishments and others to outsource vaulting and
cash room operations.
For transporting money and other valuables over long distances, Brink's Global
Services offers a combined armored car and secure air transport service between
many cities around the world. Brink's uses regularly scheduled or chartered
aircraft in connection with its air courier services. Included in Global
Services is a worldwide specialized diamond and jewelry secure transportation
operation, with offices in the major diamond and jewelry centers of the world.
Brink's CompuSafe(R) services provide retail customers with a proprietary
integrated system of safeguarding and managing cash. Brink's markets its
CompuSafe(R) services to a variety of cash intensive retail customers, such as
convenience stores, gas stations and restaurants. The service includes
installing a specialized safe in the retail establishment that holds safeguarded
canisters. The customer's employees deposit currency into the canister. The
canister can only be removed by Brink's armored car personnel.
Brink's International operations accounted for approximately 55% of its revenues
and operating profits in 2001. Brink's manages its International operations in
three regions: Europe, Latin America and Asia/Pacific.
Competition
Brink's is the oldest and largest armored car service company in the U.S. as
well as a market leader in many of the countries in which it operates.
Worldwide, Brink's competes with a number of large multinational companies and
with many smaller companies.
Primary factors in the attraction and retention of customers are security, the
quality of services provided and the price charged for services rendered.
Brink's believes that its recognizable name, its reputation for a high level of
service and security, its proprietary cash processing and information systems
and high-quality insurance coverage are important competitive advantages.
Brink's believes its cost structure is generally competitive, although Brink's
believes certain competitors may have lower costs as a result of lower wage and
benefit levels for employees or as a result of different security standards.
Service Mark, Patents and Copyrights
BRINKS is a registered service mark in the U.S. and certain foreign countries.
The BRINKS mark, name and related marks are of material significance to Brink's
business. Brink's owns patents with respect to certain coin sorting and counting
machines, which expire in 2007 and 2008, respectively. Brink's has a patented
integrated service, CompuSafe(R), that expires in 2018. CompuSafe(R) has been
designed to streamline the handling and management of cash receipts. The patents
for CompuSafe(R) and sorting and counting machines provide important advantages
to Brink's in their respective areas of business. However, Brink's operations
are not dependent on the existence of the aforementioned patents.
Insurance
The availability of quality and reliable insurance coverage is an important
factor in the ability of Brink's to obtain and retain customers and to manage
the risks of its business. Brink's purchases "all risk" insurance coverage for
losses in excess of what it considers prudent deductibles and/or retentions. For
losses below deductible or retention levels, Brink's is self-insured. Brink's
insurance policies cover losses from most causes, with the exception of war,
nuclear risk and certain other exclusions typical for such policies.
Insurance is provided by different groups of underwriters at negotiated rates
and terms. Insurance is available to Brink's in major markets although the
premiums charged are subject to fluctuations depending on market conditions. The
loss experience of Brink's and, to a limited extent, other armored carriers
affects premium rates charged to Brink's.
3
Government Regulation
The operations of Brink's are subject to regulation by the U.S. Department of
Transportation with respect to safety of operations and equipment and financial
responsibility. Intrastate operations in the U.S. and intraprovince operations
in Canada are subject to regulation by state and by Canadian and provincial
regulatory authorities, respectively. Brink's International operations are
regulated to varying degrees by the countries in which they operate.
Employee Relations
At December 31, 2001, Brink's and its subsidiaries had approximately 11,400
employees in North America, (of whom approximately 2,300 were classified as
part-time employees) and approximately 26,100 employees outside North America.
At December 31, 2001, Brink's was a party to 14 collective bargaining agreements
in North America with various local unions covering approximately 1,600
employees, almost all of whom are employees in Canada and members of unions
affiliated with the International Brotherhood of Teamsters. Negotiations are
continuing on one agreement that expired in December 2001 and five agreements
expiring in 2002. The remaining agreements will expire after 2002. Brink's
believes that its employee relations are satisfactory. Outside of North America,
the branch workforce are members of labor or employee organizations in the
majority of the countries of operation.
Properties
In North America, Brink's owns 29 branch offices and leases an additional 167
branch offices, located in 39 states, the District of Columbia and nine Canadian
provinces. Such branches generally include office space and garage or vehicle
terminals, and serve not only the city in which they are located but also nearby
cities. Of the leased branches, 113 facilities are held under long-term leases.
The remaining 54 branches are held under short-term leases or month-to-month
tenancies. Brink's corporate headquarters facility in Darien, Connecticut, is
held under a lease expiring in 2005, with an option for an early termination in
2003.
In North America, Brink's owns or leases approximately 2,500 armored vehicles,
300 panel trucks and 200 other vehicles that are primarily service vehicles. In
addition, approximately 4,000 Brink's-owned CompuSafe(R) devices are located on
customers' premises. The armored vehicles are of bullet-resistant construction
and are specially designed and equipped to afford security for crew and cargo.
Brink's subsidiaries and affiliated and associated companies located outside
North America operate from approximately 500 branches, the majority of which are
leased, with approximately 4,700 owned or leased armored vehicles.
Brink's Home Security ("BHS")
General
BHS believes that it is the third largest provider of residential monitored
security services in North America. BHS is primarily engaged in the business of
marketing, selling, installing, monitoring and servicing electronic security
systems in owner-occupied, single-family residences. At December 31, 2001, BHS
had approximately 713,500 systems under monitoring contracts, including
approximately 91,000 new subscribers added during the year. BHS services more
than 120 metropolitan areas in 42 states, the District of Columbia and two
western provinces in Canada.
BHS's typical security system installation consists of sensors and other devices
which are installed at a customer's premises. The equipment can be configured to
signal intrusion, fire, medical and other alerts. When an alarm is triggered, a
signal is sent by telephone line to BHS's central monitoring station in Irving,
Texas, a suburb of Dallas. The monitoring station holds an Underwriters'
Laboratories, Inc. ("UL") listing. UL specifications for service centers include
building integrity, back-up computer and power systems, staffing and standard
operating procedures. In the event of an emergency, such as fire, tornado, major
interruption in telephone or computer service, or any other event affecting the
Irving facility, monitoring operations can be transferred to a backup facility
located in Carrollton, Texas.
BHS markets its alarm systems primarily through advertising, inbound
telemarketing and field sales employees. BHS employees install and service most
of the systems; however, subcontractors are utilized on occasion in some service
areas. BHS does not manufacture the equipment used in its security systems.
Equipment is purchased from a limited number of suppliers and no interruptions
in supply are expected. Equipment inventories are maintained at each branch
office.
BHS has an authorized dealer program to expand its geographic coverage and
leverage its national advertising. During 2001, the dealer program accounted for
less than 7% of installations and, as of December 31, 2001, approximately 45
dealers were actively participating in the program. BHS requires that its
dealers install the same type of equipment as is installed by its own branches,
and adhere to the same installation quality standards.
4
In addition to initiating subscriber relationships through its branch and dealer
networks, BHS obtains new residential subscribers through its Brink's Home
Technologies division. Brink's Home Technologies markets residential security
systems, as well as a variety of low-voltage security, home networking,
communications and entertainment options, directly to major home builders.
BHS also provides monitored security to residents of apartment and condominium
complexes; however, such customers currently represent a small percentage of
subscribers.
Although its core business is focused on the monitoring of residential security
systems, BHS installs and monitors commercial security systems on a limited
basis.
BHS has entered into certain agreements to license the Brink's or the Brink's
Home Security name. Examples include licenses to distributors of security
products (padlocks, home safes, etc.) offered for sale to consumers through
major retail chains.
Regulation
BHS and its employees are subject to various federal, state and local consumer
protection, licensing and other laws and regulations. BHS's business relies upon
the use of telephone lines to communicate signals, and telephone companies are
currently regulated by both the Federal and state governments. Regulation of the
installation and monitoring of fire detection devices has also increased in
several local markets. BHS's wholly owned Canadian subsidiary, Brink's Home
Security Canada Limited, is subject to the laws of Canada, British Columbia and
Alberta.
The alarm service industry experiences a high incidence of false alarms. BHS
believes its false alarm rate compares favorably to other companies' rates.
Police departments in two western U.S. cities do not respond to calls from alarm
companies unless an emergency has been separately verified. There is a
possibility that in the future other police departments may refuse to respond to
calls from alarm companies, which could necessitate that private response forces
be used to respond to alarm signals. The high incidence of false alarms in the
industry has caused some local governments to impose assessments, fines and
penalties on either subscribers or the alarm companies. BHS alarm service
contracts allow BHS to pass these charges on to customers.
Competition
BHS competes in most major metropolitan markets in the U.S. and several markets
in western Canada through branch operations or its authorized dealer program.
The home security market has a large number of competitors, including many local
and regional companies. Several of BHS's large competitors rely extensively on
independent dealers and acquisitions to add new subscribers. BHS believes that
it is the third largest provider of residential monitored security services in
North America.
Competition is based on a variety of factors including, but not limited to,
price, product quality, company reputation and service quality. There has been
substantial competitive pressure on installation fees in recent years. Several
significant competitors offer installation prices which match or are less than
BHS's prices; however, many of the small local competitors in BHS's markets
continue to charge significantly more for installation. Competitive pressure on
monitoring rates, while less intense than on installation fees, is still
substantial. BHS believes that the monitoring rates it offers are generally
comparable to the rates offered by other major security companies.
BHS believes its customer retention rate is the highest among the major home
security service companies.
BHS holds patents on its 2000 model control panel and keypad. Over 725,000 model
2000 systems have been installed by BHS. The patents prevent others from copying
the appearance of the 2000 keypad and from copying certain design functions
which provide a cost effective approach to providing several user friendly
operation features.
Employees
BHS has approximately 2,400 employees, none of whom is covered by a collective
bargaining agreement. BHS believes that its employee relations are satisfactory.
Properties
BHS has approximately 60 leased offices and warehouse facilities located
throughout the U.S. and two leased offices in Canada. The central monitoring
station in Irving, Texas is leased for a seven-year term ending in 2005,
including renewal options. This facility is also occupied by administrative,
technical and marketing services personnel who support branch operations. The
lease for the backup monitoring center in Carrollton, Texas, expires in 2002.
BHS is in the process of negotiating a renewal. BHS leases approximately 1,200
vehicles which are used in the process of installing and servicing its security
systems.
BHS retains ownership of most of the approximately 713,500 systems currently
under contract. When a customer cancels monitoring services, BHS typically
disables the system. In a limited number of cases, BHS removes the equipment.
When a customer cancels monitoring services because of a move, the
5
retention of the BHS system in the residence facilitates the marketing of
monitoring services to the new homeowner.
BAX Global
General
BAX Global is a multi-modal transportation and supply chain management company
operating through a global network. BAX Global markets to business-to-business
shippers and specializes in the heavy-freight market.
BAX Global offers its North American transportation customers a variety of
products and pricing options, such as guaranteed and standard overnight and
second-day delivery as well as deferred delivery (delivery generally within one
to three business days). A variety of ancillary services, such as shipment
tracking, inventory control and management reports are also provided.
Internationally, BAX Global offers a variety of services including standard and
expedited freight services, ocean forwarding and door-to-door delivery.
BAX Global generally picks up or receives freight shipments from its customers,
consolidates the freight of various customers into shipments for common
destinations and arranges for the transportation of the consolidated freight.
BAX Global uses either commercial carriers or, in the case of most of its U.S.,
Canadian and Mexican (the "Americas") shipments, uses its own transportation
fleet and regional hub sorting facility. BAX Global distributes the shipments at
the package's destination. For international shipments, BAX Global also
frequently acts as customs broker, facilitating the clearance of goods through
customs at international points of entry.
BAX Global provides certain transportation customers with supply chain
management services and operates more than 40 logistics warehouse and
distribution facilities in key world markets. BAX Global specializes in
developing supply chain management programs for companies entering new global
markets or consolidating regional activity. The healthcare, automotive,
aerospace and high technology industries have been targeted as businesses with
significant supply chain management needs.
BAX Global has the ability to provide freight service to all North American
business communities as well as to virtually all countries through its network
of company-operated stations and agent locations in 123 countries. While
shipments move long distances on either common carrier or BAX Global's fleet,
the local pickup and delivery of freight are accomplished principally by
independent contractors. BAX Global markets its services primarily through its
direct sales force and also employs other marketing methods, including print
media advertising and direct marketing campaigns.
BAX Global's freight business is typically seasonal, with higher volumes of
shipments from August through December than during the other months of the year.
The lowest volume of shipments generally occurs in January and February.
Including U.S. export and import revenue, BAX Global's international shipments
and logistics services accounted for approximately 74% of its revenues in 2001.
Intra-U.S. shipments accounted for approximately 26% of total revenues in 2001.
BAX Global's network is composed primarily of ownership of affiliates and, to a
lesser extent, agents and sales representatives in many non-U.S. locations
typically under short-term contracts.
BAX Global's network has a worldwide communications and information system
which, among other things, provides worldwide tracking and tracing of shipments
and various data for management information reports, enabling customers to
improve efficiency and control costs.
Aircraft Operations
BAX Global has a fleet of leased or contracted aircraft providing regularly
scheduled next-day service, throughout the Americas. BAX Global's wholly owned
subsidiary, Air Transport International LLC ("ATI"), is a U.S.-based freight and
passenger airline that operates a certificated fleet of DC-8 aircraft. BAX
Global's Boeing 727s are operated under contracts that provide for aircraft,
crew, maintenance and insurance ("ACMI"). ATI also provides domestic and
international service for the U.S. Government Air Mobility Command and other
charter customers using primarily combi-configuration aircraft (aircraft
designed to carry cargo and passengers).
6
The following is a summary of BAX Global's fleet as of January 1, 2002.
BAX Global's
Transportation Charter
Network Customers Grounded Total
-------------------------------------------------------------------------------
Leased or Contracted:
DC-8:
Cargo 12 1 - 13
Combi-Configured - 3 - 3
727-Cargo 9 - - 9
-------------------------------------------------------------------------------
21 4 - 25
-------------------------------------------------------------------------------
Owned:
DC-8:
Cargo - - 4 4
Combi-Configured - 2 - 2
-------------------------------------------------------------------------------
Total Planes 21 6 4 31
-------------------------------------------------------------------------------
Of the 21 planes in BAX Global's transportation network, 18 are assigned to
regularly scheduled routes. Generally, three planes are held for use as backups
or are in maintenance. Pursuant to a 2000 restructuring plan, 10 planes were
taken out of service in the first half of 2001. In an ongoing effort to control
costs, an additional four planes were removed from service in late 2001. Of the
14 planes taken out of service, 10 have been returned to the lessors and four
owned planes remain for sale. See Note 18 to the Consolidated Financial
Statements in the Company's 2001 Annual Report, which Note is herein
incorporated by reference, for a discussion of BAX Global's 2000 restructuring
plan.
Also, see Note 13 to the Consolidated Financial Statements in the Company's 2001
Annual Report for information regarding future minimum lease payments related to
the Company's aircraft. Based on the current state of the aircraft leasing
market, BAX Global believes that it should be able to renew these leases or
enter into new leases on terms reasonably comparable to those currently in
effect.
BAX Global's nightly scheduled lift capacity for planes in operation at January
1, 2002 was approximately 1.1 million pounds, calculated using an average
freight density of 7.5 pounds per cubic foot. BAX Global's nightly lift capacity
varies depending upon the number and type of planes operated by BAX Global at
any particular time. Including trucking capacity available to BAX Global, the
aggregate daily cargo capacity at January 1, 2002, was approximately 2.0 million
pounds.
For aircraft held under long-term lease, ATI is generally responsible for all
the normal costs of operating and maintaining the aircraft. In addition, ATI is
generally responsible for all or a portion of any special maintenance or
modifications which may be required by Federal Aviation Administration
regulations or orders (see "Government Regulation" below). ATI's ultimate
liability for such payments is generally subject to dollar limits, specific
exclusions and sharing arrangements with the lessors. Over the last three years,
ATI has spent approximately $119 million on routine heavy maintenance of its
aircraft fleet. For aircraft operated under ACMI contracts, besides the payment
of the contractual amount, BAX Global is generally responsible for fuel costs
and other incidental costs such as landing fees.
The average airframe age of the fleet operated by ATI is in excess of 30 years,
however, the condition of a particular aircraft and its fair market value is
dependent on its maintenance history. Factors other than age, such as cycles
(essentially the number of flights) can have a significant impact on an
aircraft's serviceability. Generally, cargo aircraft tend to have fewer cycles
than passenger aircraft over comparable time periods because they are used for
fewer flights per day and longer flight segments.
Fuel costs are a significant element of the total costs of operating BAX
Global's aircraft fleet. Fuel prices are subject to worldwide and local market
conditions. It is not possible to predict the impact of future conditions on
fuel prices and fuel availability. In order to protect against price increases
in jet fuel, from time to time BAX Global enters into hedging agreements,
including swap contracts, options and collars. Although BAX Global has on
occasion charged its customers for a portion of its higher fuel costs, there is
no assurance that future increases in fuel costs will be recoverable from
customers.
Customers
BAX Global's customers include thousands of large and small industrial and
commercial businesses. The Company focuses on customers in the automotive,
aerospace, healthcare, high technology, retail and other industries where rapid
delivery of high-value products is required.
Competition
The transportation and supply chain management industries have been and are
expected to remain highly competitive. The principal competitive factors in the
transportation industry are price, the ability to provide consistently fast and
reliable delivery of shipments and the ability to provide ancillary services
such as shipment tracking. The principal competitive factors in the supply chain
industry are price, access to a reliable transportation network, warehousing and
distribution capabilities, and sophisticated information systems.
There is aggressive price competition in the heavy-freight market, particularly
for the business of high volume shippers. BAX Global competes with various types
of transportation companies, including other integrated transportation companies
that operate their own fleets, as well as with freight forwarders, premium
less-than-truckload (or "LTL") carriers, express delivery services, and
passenger airlines.
7
Domestically, BAX Global also competes with package delivery services provided
by ground transportation companies, including trucking firms and surface freight
forwarders, that offer specialized time-specific services within limited
geographical areas. As a freight forwarder to, from and within international
markets, BAX Global also competes with government-owned or subsidized passenger
airlines and ocean shipping companies.
BAX Global believes its hub-and-spoke network of aircraft and trucks that serves
the Americas markets allows it to move freight more reliably than if it solely
used third-party services. The hub, which is located in Toledo, Ohio, consists
of various facilities, including a technologically advanced material handling
system, which is capable of sorting approximately one million pounds of freight
per hour. BAX Global believes its hub-and-spoke system feeds much of its
Americas import and export business and believes it provides a competitive
advantage by offering superior, reliable service to its customers, shipping to,
from or within the Americas.
In supply chain management services, BAX Global competes with many third-party
logistics providers.
Government Regulation
The air transportation industry is subject to regulation by the Federal Aviation
Administration ("FAA") under the Federal Aviation Act of 1958, as amended. The
FAA is an agency of the Department of Transportation (the "DOT"). ATI is an
airline and operates an FAA-certificated fleet and, accordingly, is subject to
FAA regulations. As an indirect air carrier, BAX Global's operations are also
subject to the direction of the FAA.
BAX Global is subject to other various requirements and regulations in
connection with the operation of its motor vehicles, including certain safety
regulations promulgated by the DOT and state agencies.
Employee Relations
BAX Global and its subsidiaries have approximately 10,000 employees worldwide,
of whom about 1,200 are classified as part-time. Approximately 100 of these
employees in the U.S. (principally customer service, clerical and/or dock
workers) are represented by labor unions, that in most cases are affiliated with
the International Brotherhood of Teamsters.
As of December 31, 2001, approximately 200 flight crewmembers (captains, first
officers and flight engineers), employed by ATI were represented for purposes of
collective bargaining by the International Brotherhood of Teamsters. Other
employees are not represented by any labor organization. BAX Global did not
experience any significant strike or work stoppage in 2001 and believes that its
employee relations are satisfactory.
Most of BAX Global's pick-up and delivery operations are conducted by
independent contractors. However, BAX Global elected to provide its own pick-up
and delivery in a few Midwestern U.S. station locations.
Properties
BAX Global operates approximately 260 (100 domestic and 160 international)
stations with BAX Global personnel, and has agency agreements with approximately
240 (50 domestic and 190 international) stations. These stations are located
near primary shipping areas, generally at or near airports. BAX Global-operated
domestic stations, which generally include office space and warehousing
facilities, are located in 36 states, the District of Columbia and Puerto Rico.
BAX Global-operated international facilities are located in 30 countries. Nearly
all BAX Global-operated stations are held under lease.
BAX Global has a lease expiring in 2013, with the Toledo-Lucas County Port
Authority covering its freight-sorting hub and related facilities (the "Hub") at
Toledo Express Airport in Ohio. The lease provides BAX Global with rights of
renewal for three five-year periods. Other facilities are held under leases
having terms of one to ten years. BAX Global's corporate headquarters facility
located in Irvine, California is anticipated to be relocated within the area in
late Fall 2002.
BAX Global owns or leases, in the U.S. and Canada, a fleet of approximately 40
automobiles and 150 vans and trucks utilized in station work or for hauling
freight between airport facilities and BAX Global's stations.
See "Aircraft Operations" above for information about leased and owned aircraft.
OTHER OPERATIONS
The Company's Other Operations include its gold, timber and natural gas
businesses. At the end of 2001, the Company's Other Operations had approximately
100 employees. The Company does not consider its businesses within its Other
Operations to be core businesses. The Company's long term strategy is to
ultimately exit these activities to focus resources on its core Business and
Security Services businesses.
Each of the gold, timber and natural gas businesses operate in cyclical
commodity business environments where prices are determined based partly on the
local and worldwide economy. The results from operations of each of these
businesses are highly dependent on the price of their respective products.
The Company's Other Operations owns non-coal properties including land, hardwood
forests, natural gas reserves and a gold mine and reserves.
Gold
8
The Company's gold business is directed at locating and acquiring mineral
assets, developing advanced stage projects and operating mines. The Company
continued to evaluate gold projects in Australia throughout 2001.
The Company has a 45.1% interest in Mining Project Investors ("MPI"). Through
its ownership of MPI and a 50% direct interest, the Company has a 72.5% interest
in a gold mine in Stawell, Victoria, Australia ("Stawell"). The Stawell gold
mine produced approximately 103,500 ounces of gold in 2001. The Company
estimates that the Stawell gold mine had approximately 410,000 ounces of proven
and probable gold reserves as of December 31, 2001.
Timber
The Company's timber business has a sawmill facility that produces products
primarily for the hardwood flooring industry. The timber business also sells
hardwood chips to the paper industry and logs to other sawmill customers that
are used in the high-grade furniture and veneer markets. The Company owns
approximately 225 thousand surface acres of land including approximately 125
thousand acres of saw timber grade hardwood forests, mostly in Virginia.
Natural Gas
The Company invests in and receives royalty income from gas development and
operations. As of December 31, 2001, net proven developed natural gas reserves
located in Virginia and West Virginia approximated 52 billion cubic feet
including royalty interests.
DISCONTINUED OPERATIONS
The Company's Coal Operations was reported as a discontinued operation as of
December 31, 2000 due to the Company's formal plan to exit the business.
Although the Company intends to dispose of its Coal Operations, it expects to
retain certain assets and liabilities associated with the Coal Operations,
certain of which are material to the Company. See Note 5 to the Consolidated
Financial Statements in the Company's 2001 Annual Report, which Note is herein
incorporated by reference.
Coal Operations
General
Coal Operations is primarily engaged in the mining, preparation and marketing of
coal, the purchase of coal for resale, and the sale or leasing of coal lands to
others. At the end of 2001, the Company's Coal Operations employed approximately
1,400 people. Through its Coal Operations, the Company produces coal suitable
for the steam and metallurgical markets from approximately 24 company or
contractor-operated surface and deep mines located in Virginia, West Virginia
and eastern Kentucky. Steam coal is sold primarily to utilities and industrial
customers located in the eastern U.S. Metallurgical coal is sold to steel and
merchant coke producers primarily located in the U.S., Europe, the Mediterranean
basin and Brazil. Coal Operations has substantial reserves of low sulphur coal,
much of which can be produced from lower cost surface mines. Moreover, it has a
significant share of the premium quality metallurgical coal reserves in the
U.S., along with other high-quality feed stock reserves demanded by the coke and
steel-making industry.
The following tables indicate the tons of coal purchased, produced and sold by
Coal Operations for the years ended 2001, 2000 and 1999.
Years ended December 31
(In thousands of tons) 2001 2000 1999
-------------------------------------------------------------------------------
Produced 9,440 9,805 10,620
Purchased 969 1,524 2,346
-------------------------------------------------------------------------------
10,409 11,329 12,966
-------------------------------------------------------------------------------
Sales:
North America 8,376 9,272 9,360
Export 1,965 2,679 3,488
-------------------------------------------------------------------------------
10,341 11,951 12,848
-------------------------------------------------------------------------------
9
Environmental Matters
The Surface Mining Control and Reclamation Act of 1977 and the regulations
promulgated thereunder ("SMCRA") by the Federal Office of Surface Mining
Reclamation and Enforcement ("OSM") establish mining and reclamation standards
for all aspects of surface mining as well as many aspects of deep mining. OSM
and its state counterparts monitor compliance with SMCRA. Coal Operations'
policy is to correct violations that are the subject of OSM notices or to
contest those believed to be without merit.
Coal Operations reached a broad settlement with the OSM in 1996 involving SMCRA
liabilities of former contractors. Coal Operations has also entered into a
number of similar agreements with the states. Under these agreements, Coal
Operations agreed to perform certain reclamation and to pay certain fees of
former contractors. Coal Operations is in the process of completing all required
work under these agreements.
Coal Operations is also subject to other federal environmental laws, including
the Resource Conservation and Recovery Act; the Occupational Safety and Health
Act; the Toxic Substances Control Act; the Comprehensive Environmental Resource,
Compensation and Liability Act; the Clean Water Act; the Clean Air Act and the
Safe Drinking Water Act, as well as state laws of similar scope in Virginia,
West Virginia and Kentucky. The Company believes it is in compliance with all
applicable environmental laws.
Health and Safety Laws
Health and safety standards in the U.S. coal industry are legislated by the
Federal Coal Mine Health and Safety Act of 1969 and the Federal Mine Safety and
Health Act of 1977. The Company believes it is in compliance with all applicable
health and safety laws.
Compliance with health and safety laws is, in general, a cost common to all
domestic coal producers. The Company believes that the competitive position of
Coal Operations has not been and should not be adversely affected except in the
export market where Coal Operations competes with various foreign producers
subject to less stringent health and safety regulations. See Note 14 to the
Consolidated Financial Statements in the Company's 2001 Annual Report for a
description of certain of the Company's employee benefit obligations.
Properties
The principal properties of Coal Operations are coal reserves, coal mines and
coal preparation plants, all of which are located in Virginia, West Virginia and
eastern Kentucky. Such reserves are either owned or leased. Leases of land or
coal mining rights generally are either for a long-term period or until
exhaustion of the reserves, and require the payment of a royalty based generally
on the sales price and/or tons of coal mined from a particular property. Many
leases or rights provide for payment of minimum royalties.
Coal Operations owns a 32.5% interest in Dominion Terminal Associates ("DTA"),
which leases and operates a ground storage-to-vessel coal transloading facility
in Newport News, Virginia. DTA has a throughput capacity of 22.0 million tons of
coal per year and ground storage capacity of 2.0 million tons. A portion of Coal
Operations' share of the throughput and ground storage capacity of the DTA
facility is subject to user rights of third parties, which pay Coal Operations a
fee. The DTA facility serves export customers, as well as domestic coal users
located on the eastern seaboard of the United States.
MATTERS RELATING TO FORMER
OPERATIONS
In April 1990, the Company entered into a settlement agreement to resolve
certain environmental claims against the Company arising from hydrocarbon
contamination at a petroleum terminal facility ("Tankport") in Jersey City, New
Jersey, which facility was sold in 1983. Under the settlement agreement, the
Company is obligated to pay 80% of the hydrocarbon remediation costs. The
Company is in the process of remediating the site under an approved plan. The
Company estimates its portion of the actual remaining clean-up and operational
and maintenance costs, on an undiscounted basis, to be between $3.8 and $8.1
million. Management is unable to determine that any amount within that range is
a better estimate due to a variety of uncertainties which include unforeseen
circumstances existing at the site, changes in the regulatory standards under
which the clean-up is being conducted, and additional costs due to inflation.
The estimate of costs and the timing of payments could change significantly
based upon any one of the uncertainties described immediately above.
Taking into account the proceeds from a previous settlement with its insurers of
claims relating to this matter, it is the Company's belief that the ultimate
amount for which it will be liable resulting from the remediation of the
Tankport site will not have a material adverse impact on the Company's financial
position.
Forward-Looking Information
Certain of the matters discussed herein, including statements regarding the
uninterrupted supply of equipment to BHS, the possibility that police
departments may refuse to respond to calls from alarm companies requiring that a
private response force be used, the ability of BHS to renew the lease for its
backup monitoring center, the expected seasonal impact of the volumes shipped by
BAX Global, the ability of BAX Global to renew certain aircraft leases or enter
into new leases on reasonably comparable terms, the highly competitive nature of
the transportation and supply chain management industries, plans to discontinue
Coal Operations and the retention of certain assets and liabilities associated
with the Coal Operations, the amount of proven and probable gold reserves in the
Stawell gold mine, the amount of proven developed natural gas reserves, the
Company's long-term plan to exit its gold, timber and natural gas businesses,
the competitive position of Coal Operations, environmental clean-
10
up estimates and the impact of environmental clean-up costs on the
Company's financial position, results of operations and cash flows 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 which are anticipated.
Such risks, uncertainties and contingencies, many of which are beyond the
control of the Company, include, but are not limited to, the performance of
BHS's equipment suppliers, the incidence of false alarms, the real estate market
in the Carrollton, Texas area, the market for airplanes, the actual amount of
gold reserves and natural gas reserves held by the Company's Other Operations,
the accuracy of the testing done and the validity of the assumptions used in
estimating gold and natural gas reserves, changes in the Company's long-term
strategies, overall economic and business conditions, foreign currency exchange
rates, the demand for the Company's products and services, the ability of the
Company and its operations to obtain appropriate insurance coverage at
reasonable prices, the timing and ultimate outcome of the sale of the coal
assets, pricing and other competitive industry factors, fuel prices, new
government regulations and/or legislative initiatives, issuance of permits, the
performance of contractors and subcontractors of work in connection with the
remediation of the Tankport site, judicial decisions, variations in costs or
expenses including interest rates, variations in the spot prices of coal and the
ability of counterparties to perform.
Should one or more of these risks materialize (or the consequences of such a
development worsen), or should the underlying assumptions prove incorrect,
actual results could differ materially from those forecasted or expected. The
Company assumes no duty to update any forward-looking statements whether as a
result of new information, future events or otherwise.
11
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
Not applicable.
12
The Pittston Company and Subsidiaries
Executive Officers of the Registrant
The following is a list as of March 15, 2002, of the names and ages of the
executive and other officers of Pittston and the names and ages of certain
officers of its subsidiaries, indicating the principal positions and offices
held by each. There is no family relationship between any of the officers named.
Name Age Positions and Offices Held Held Since
----------------------------- -------- --- ---------------------------------------------------------------- --------------------
Executive Officers:
Michael T. Dan 51 President and Chief Executive Officer 1998
Chairman of the Board 1999
James B. Hartough 54 Vice President-Corporate Finance and Treasurer 1988
Frank T. Lennon 60 Vice President-Human Resources and Administration 1985
Austin F. Reed 50 Vice President, General Counsel and Secretary 1994
Robert T. Ritter 50 Vice President and Chief Financial Officer 1998
Other Officers:
Matthew A.P. Schumacher 43 Controller 2001
Arthur E. Wheatley 59 Vice President and Director of Risk Management 1988
Subsidiary Officers:
Joseph L. Carnes 44 President of BAX Global Inc. 2000
Thomas W. Garges, Jr. 62 President and Chief Executive Officer of Pittston Coal Company 1999
Richard R.N. Hickson 45 President of Brink's, Incorporated 2000
Robert B. Allen 48 President of Brink's Home Security, Inc. 2001
----------------------------- -------- --- ---------------------------------------------------------------- --------------------
Executive and other officers of Pittston are elected annually and serve at the
pleasure of its Board of Directors.
Mr. Dan was elected President, Chief Executive Officer and Director of The
Pittston Company on February 6, 1998 and was elected Chairman of the Board
effective January 1, 1999. He also serves as Chief Executive Officer of Brink's,
Incorporated, a position he has held since July 1993 and as President and Chief
Executive Officer of Brink's Holding Company, a position he has held since
December 31, 1995. He also serves as Chairman of the Board of BAX Global Inc., a
position he has held since February 1998. He also serves as Chairman of the
Board of Pittston Mineral Ventures, a position he has held since August 31, 1998
and as Chairman of the Board of Pittston Coal Company, a position he has held
since September 1, 1998. From August 1992 to July 1993 he served as President of
North American operations of Brink's, Incorporated and as Executive Vice
President of Brink's, Incorporated from 1985 to 1992.
Mr. Ritter joined The Pittston Company as Vice President and Chief Financial
Officer in August 1998. From June 1996 to July 1998, he served as Chief
Financial Officer of WLR Foods, Inc. He was a private investor and financial
consultant from April 1995 to May 1996 and was Treasurer at American Cyanamid
Company from March 1991 to January 1994 and Controller from February 1994 to
March 1995.
Messrs. Hartough, Lennon, Reed and Wheatley have served in their present
positions for more than the past five years.
Mr. Schumacher was elected to his current position on July 13, 2001 after
joining the Company in July 2001. For the five years prior to July 2001, he was
employed by NL Industries, Inc. as the Manager of Financial Reporting in 1996
and as the Assistant Controller in 1997 through July 2001.
Mr. Carnes was elected President of BAX Global Inc. in May 2000. He joined BAX
Global Inc. as President - U.S. and Canada in September 1999. Prior to joining
BAX Global Inc., he served as Executive Vice President, North America for Fritz
Companies Inc. where he was employed from 1987 - 1999.
Mr. Hickson was elected President of Brink's, Incorporated in November 2000. He
had served as Vice President and Managing Director of Brink's Europe from June
1999, and joined the Brink's organization as Managing Director - Brink's Limited
U.K. in February 1998. Prior to joining Brink's, Mr. Hickson served as a
consultant from October 1995 to February 1998, and Chief Executive Officer for
Holmes Protection Group, Inc. USA where he was employed from February 1990 to
August 1995.
13
Mr. Garges joined Pittston Coal Company on January 4, 1999 as President and
Chief Executive Officer. Before joining Pittston Coal, he served as President
and Chief Executive Officer of Rochester and Pittsburgh Coal Company. From 1971
to 1986, he was Executive Vice President - Operations for Pittston Coal and
President of Pittston Coal's Pyxis operations.
Mr. Allen joined Brink's Home Security, Inc. in August 1999 as Executive Vice
President and Chief Operating Officer. He was promoted to President of Brink's
Home Security, Inc. in March 2001. From January 1997 to August 1999, he held the
various positions at Aegis Communications Group (formerly ATC Communications)
including Executive Vice President of Sales and Marketing and Chief Operating
Officer. From 1980 through 1996, he held various domestic and international
positions at Frito-Lay including Vice President of Field Marketing and Country
Manager in Greece and Turkey.
14
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Prior to January 14, 2000, the Company had three classes of common stock:
Pittston Brink's Group Common Stock ("Brink's Stock"), Pittston BAX Group Common
Stock ("BAX Stock") and Pittston Minerals Group Common Stock ("Minerals Stock").
On January 14, 2000, the holders of Minerals Stock received 0.0817 shares of
Brink's Stock for each share of their Minerals Stock, and holders of BAX Stock
received 0.4848 shares of Brink's Stock for each share of their BAX Stock. For
additional information concerning the exchange, see Note 20 to the Consolidated
Financial Statements included in the Company's 2001 Annual Report, which is
herein incorporated by reference. Brink's Stock is now the only outstanding
class of common stock of the Company and continues to trade on the New York
Stock Exchange under the symbol "PZB."
Reference is made to pages 57 through 59 of the Company's 2001 Annual Report
which is herein incorporated by reference, for other information required by
this item.
ITEM 6. SELECTED FINANCIAL DATA
Reference is made to pages 60 through 62 of the Company's 2001 Annual Report
which is herein incorporated by reference, for information required by this
item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Reference is made to pages 2 through 24 of the Company's 2001 Annual Report
which is herein incorporated by reference, for information required by this
item.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information regarding quantitative and qualitative disclosures about market
risk is included in this report under Item 7.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to pages 25 through 59 of the Company's 2001 Annual Report
which is herein incorporated by reference, for information required by this
item.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
15
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item regarding directors is herein incorporated
by reference to the Company's definitive proxy statement to be filed pursuant to
Regulation 14A within 120 days after December 31, 2001. The information
regarding executive officers is included in this report following Item 4, under
the caption "Executive Officers of the Registrant."
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Items 11 through 13 is incorporated by reference to
the Company's definitive proxy statement to be filed pursuant to Regulation 14A
within 120 days after December 31, 2001.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. All financial statements - see index to financial statements and
schedules.
2. Financial statement schedules - see index to financial statements
and schedules.
3. Exhibits - see exhibit index.
(b) A report on Form 8-K was filed on December 4, 2001. Under Item 5 the
Company described the current status of its Federal Black Lung Excise Tax
claims. No other reports on Form 8-K were filed during the fourth quarter
of 2001 and through the date of this report.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Undertaking
For the purposes of complying with the amendments to the rules governing Form
S-8 (effective July 13, 1990) under the Securities Act of 1933, the undersigned
Registrant hereby undertakes as follows, which undertaking shall be incorporated
by reference into Registrant's Registration Statements on Form S-8 Nos. 2-64258,
33-2039, 33-21393, 33-23333, 33-69040, 33-53565, 333-02219, 333-78631,
333-78633, 333-70758, 333-70772, 333-70766 and 333-70762.
16
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on May 15, 2003.
The Brink's Company
-----------------------------
(Registrant)
By /s/ M. T. Dan
-----------------------------------
(M. T. Dan, Chairman, President
and Chief Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, on May 15, 2003.
Signatures Title
----------------- -----------
R. G. Ackerman* Director
B. C. Alewine* Director
J. R. Barker* Director
M. C. Breslawsky* Director
J. L. Broadhead* Director
/s/ M. T. Dan Chairman, President and
----------------------------------------------
(M. T. Dan) Chief Executive Officer
(principal executive officer)
G. Grinstein* Director
R. M. Gross* Director
/s/ R. T. Ritter Vice President
----------------------------------------------
(R.T. Ritter) and Chief Financial
Officer (principal
financial officer and
principal accounting
officer)
C. S. Sloane* Director
*By /s/ M. T. Dan
-------------------------------------
(M. T. Dan, Attorney-in-Fact)
17
CERTIFICATIONS
I, Michael T. Dan, certify that:
1. I have reviewed this annual report on Form 10-K/A of The
Brink's Company;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
annual report; and
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this annual report.
Date: May 15, 2003 /s/ Michael T. Dan
-----------------------------------
Michael T. Dan
Chief Executive Officer
18
CERTIFICATIONS (CONTINUED)
I, Robert T. Ritter, certify that:
1. I have reviewed this annual report on Form 10-K/A of The
Brink's Company;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
annual report; and
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this annual report.
Date: May 15, 2003 /s/ Robert T. Ritter
-----------------------------------
Robert T. Ritter
Vice President and Chief Financial Officer
19
The Pittston Company and Subsidiaries
Index to Financial Statements and Schedules
Financial Statements:
The Consolidated Financial Statements of The Pittston Company, listed in the
index below which are included in the Company's 2001 Annual Report for the year
ended December 31, 2001, are herein incorporated by reference. With the
exception of the pages listed in the index below and the information
incorporated by reference included in Parts I, II and IV, the 2001 Annual Report
of the Shareholders is not deemed filed as part of this report.
THE PITTSTON COMPANY ANNUAL REPORT
Management's Discussion and Analysis of Results of
Operations and Financial Condition....................2-24
Independent Auditors' Report............................26
Consolidated Balance Sheets.............................27
Consolidated Statements of Operations................28-29
Consolidated Statements of Comprehensive
Income (Loss)........................................30
Consolidated Statements of Shareholders' Equity.........31
Consolidated Statements of Cash Flows...................32
Notes to Consolidated Financial Statements...........33-59
Selected Financial Data .............................60-62
Financial Statement Schedules:
Schedules are omitted because they are not material, not applicable or not
required, or the information is included elsewhere in the financial statements.
20
The Pittston Company and Subsidiaries
Exhibit Index
Each Exhibit listed previously filed document is hereby incorporated by
reference to such document.
Exhibit
Number Description
2(i) Membership Interest Acquisition Agreement Among Air
Transport International LLC and BAX Global Inc., dated
February 3, 1998. Exhibit 2 to the Registrant's Current
Report on Form 8-K filed May 14, 1998.
2(ii) Share Purchase Agreement, dated as of January 27, 1998,
between Brink's Security International, Inc., acting as
Purchaser, and Generale de Transport et D'Industrie, acting
as Seller. Exhibit 10(v) to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1998 (the "1998
Form 10-K").
2(iii) Shareholders' Agreement, dated as of January 10, 1997,
between Brink's Security International, Inc., and Valores
Tamanaco, C.A. Exhibit 10(w) to the 1998 Form 10-K.
3(i) The Registrant's Articles of Correction to its Articles of
Incorporation. Exhibit 3(i) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998.
3(ii) The Registrant's Bylaws, as amended through July 14, 2000.
Exhibit 3(b) to the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 2000.
4(a) (i) Amended and Restated Rights
Agreement dated as of January 14,
2000 (the "Rights Agreement"),
between the Registrant and Bank
Boston, N.A., as Rights Agent.
Exhibit 4(a)(i) to the
Registrant's Annual Report on
Form 10-K for the year ended
December 31, 2000 (the "2000 Form
10-K").
(ii) Form of Right Certificate for
Rights. Exhibit 4(a)(ii) to the
2000 Form 10-K. Instruments
defining the rights of holders of
long-term debt of the Registrant
and its consolidated subsidiaries
have been omitted because the
amount of debt under any such
instrument does not exceed 10% of
the total assets of the
Registrant and its consolidated
subsidiaries. The Registrant
agrees to furnish a copy of any
such instrument to the Commission
upon request. Exhibit 4(a) to the
Registrant's Annual Report on
Form 10-K for the year ended
December 31, 1999 (the "1999 Form
10-K").
(iii) Amendment, effective November 30,
2001, by and among The Pittston
Company, Fleet National Bank (f/k/a
BankBoston, N.A.) and EquiServe
Trust Company, N.A., to the Amended
and Restated Rights Agreement dated
as of January 14, 2000 between The
Pittston Company and BankBoston,
N.A., as Rights Agent. Exhibit 1 to
the Registrant's Amendment No. 3 to
Form 8-A/A (filed on January 14,
2002).
10(a)* The Key Employees' Incentive Plan, as
amended. Exhibit 10(a) to the 1998 Form 10-K.
10(b)* The Key Employees' Deferred Compensation
Program, as amended and restated as of January 14, 2000. Exhibit
10(b) to the 1999 Form 10-K.
10(c)* (i) The Registrant's Pension Equalization Plan as amended.
Exhibit 10(e)(I) to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1997 (the "1997 Form
10-K").
(ii) Amended and Restated Trust Agreement, dated December 1,
1997, between Registrant and Chase Manhattan Bank, as
Trustee (the "Trust Agreement"). Exhibit 10(e)(ii) to the
1997 Form 10-K.
(iii) Amendment No. 1 to Trust Agreement, dated as of August 18,
1999. Exhibit 10(c)(iii) to the 1999 Form 10-K.
(iv) Trust Agreement under the Pension
Equalization Plan, Retirement Plan
for
21
Non-Employee Directors and
Certain Contractual Arrangements of
The Pittston Company made as of
September 16, 1994, by and between
the Registrant and Chase Manhattan
Bank (National Association), as
Trustee. Exhibit 10(I) to the
Registrant's Quarterly Report on
Form 10-Q for the quarter ended
September 30, 1994 (filed November
14, 1994 - File No. 1-9148) (the
"Third Quarter 1994 Form 10-Q").
(v) Form of letter agreement dated as of September 16, 1994,
between the Registrant and one of its officers. Exhibit
10(e) to the Third Quarter 1994 Form 10-Q.
(vi) Form of letter agreement dated as of September 16, 1994,
between the Registrant and Participants pursuant to the
Pension Equalization Plan. Exhibit 10(f) to the Third
Quarter 1994 Form 10-Q.
10(d)* The Registrant's Executive Salary
Continuation Plan. Exhibit 10(e) to the
Registrant's Annual Report on Form 10-K
for the year ended December 31, 1991
(filed March 26, 1991 - File No. 1-9148)
(the "1991 Form 10-K").
10(e)* The Registrant's Non-Employee Directors' Stock Option Plan, as
amended and restated as of January 14, 2000. Exhibit 10(e) to the
1999 Form 10-K.
10(f)* The Registrant's 1988 Stock Option Plan, as amended and restated as
of January 14, 2000. Exhibit 10(f) to the 1999 Form 10-K.
10(g)* The Pittston Company Management
Performance Improvement Plan. Exhibit
10(g) to the 1999 Form 10-K.
10(h)* Form of change in control agreement
replacing all prior change in control
agreements and amendments and
modifications thereto, between the
Registrant (or a subsidiary) and various
officers of the Registrant. Exhibit
10(l)(ii) to the 1997 Form 10-K.
10(i)* Form of Indemnification Agreement entered
into by the Registrant with its directors
and officers. Exhibit 10(l) to the 1991
Form 10-K.
10(j)* (i) Registrant's Retirement Plan for
Non-Employee Directors, as amended.
Exhibit 10(g) to the Third Quarter
1994 Form 10-Q.
(ii) Form of letter agreement dated as of September 16, 1994,
between the Registrant and its Non-Employee Directors
pursuant to Retirement Plan for Non-Employee Directors.
Exhibit 10(h) to the Third Quarter 1994 Form 10-Q.
10(k)* (i) Form of severance agreement between
the Registrant (or a subsidiary)
and various of the Registrant's
officers. Exhibit 10(o)(ii) to the
1997 Form 10-K.
10(l)* Registrant's Directors' Stock Accumulation
Plan, as amended and restated as of January 14, 2000. Exhibit 10(l)
to the 1999 Form 10-K.
10(m)* Registrant's Amended and Restated Plan for
Deferral of Directors' Fees. Exhibit 10(o)
to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1989
(filed March 24, 1990 - File
No. 1-9148).
10(n) (i) Lease dated as of April 1, 1989,
between Toledo-Lucas County Port
Authority (the "Authority"), as
Lessor, and Burlington, as Lessee.
Exhibit 10(i) to the Registrant's
Quarterly Report on Form 10-Q for
the quarter ended June 30, 1989
(filed August 11, 1989 - File No.
1-9148) (the "Second Quarter 1989
Form 10-Q").
(ii) Lease Guaranty Agreement dated as of April 1, 1989, between
Burlington (formerly Burlington Air Express Management
Inc.), as Guarantor, and the Authority. Exhibit 10(ii) to
the Second Quarter 1989 Form 10-Q.
(iii) Trust Indenture dated as of April 1, 1989 between the
Authority and Society Bank & Trust (formerly, Trustcorp.
Bank, Ohio) (the "Trustee"), as Trustee. Exhibit 10(iii) to
the Second Quarter 1989 Form 10-Q.
22
(iv) Assignment of Basic Rent and Rights Under a Lease and Lease
Guaranty dated as of April 1, 1989 from the Authority to the
Trustee. Exhibit 10(iv) to the Second Quarter 1989 Form
10-Q.
(v) Open-End First Leasehold Mortgage and Security Agreement
dated as of April 1, 1989 from the Authority to the Trustee.
Exhibit 10(v) to the Second Quarter 1989 Form 10-Q.
(vi) First Supplement to Lease dated as
of January 1, 1990, between the
Authority and Burlington, as
Lessee. Exhibit 10 to the
Registrant's Quarterly Report on
Form 10-Q for the quarter ended
March 31, 1990 (filed May 15, 1990
- File No. 1-9148).
(vii) Revised and Amended Second Supplement to Lease dated as of
September 1, 1990, between the Authority and Burlington.
Exhibit 10(i) to the Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1990 (filed
November 13, 1990 - File No. 1-9148) (the "Third Quarter
1990 Form 10-Q").
(viii) Amendment Agreement dated as of September 1, 1990, among
City of Toledo, Ohio, the Authority, Burlington and the
Trustee.
Exhibit 10(ii) to the Third Quarter
1990 Form 10-Q.
(ix) Assumption and Non-Merger Agreement dated as of September 1,
1990, among Burlington, the Authority and the Trustee.
Exhibit 10(iii) to the Third Quarter 1990 Form 10-Q.
(x) First Supplemental Indenture
between Toledo-Lucas County Port
Authority, and Society National
Bank, as Trustee, dated as of March
1, 1994. Exhibit 10.1 to the
Registrant's Quarterly Report on
Form 10-Q for the quarter ended
March 31, 1994 (filed May 12, 1994
- File No. 1-9148) (the "First
Quarter 1994 Form 10-Q").
(xi) Third Supplement to Lease between Toledo-Lucas County Port
Authority, as Lessor, and Burlington Air Express Inc., as
Lessee, dated as of March 1, 1994. Exhibit 10.2 to the First
Quarter 1994 Form 10-Q.
(xii) Fourth Supplement to Lease between Toledo-Lucas County Port
Authority, as Lessor, and Burlington Air Express Inc., as
Lessee, dated as of June 1, 1991. Exhibit 10.3 to the First
Quarter 1994 Form 10-Q.
(xiii) Fifth Supplement to Lease between Toledo-Lucas County Port
Authority, as Lessor, and Burlington Air Express Inc., as
Lessee, dated as of December 1, 1996. Exhibit 10(r)(xiii) to
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996.
10(o) (i) Credit Agreement, dated as of
October 3, 2000, among the
Registrant, as Borrower, Certain of
Its Subsidiaries, as Guarantors,
Various Lenders and Fleet National
Bank and Chase Manhattan Bank as
Co-Syndication Agents and Bank of
America, N.A., as Administrative
Agent. Exhibit 10 to the
Registrant's Quarterly Report on
Form 10-Q for the quarter ended
September 30, 2000.
(ii) First Amendment, dated as of
October 2, 2001, to the Credit
Agreement, dated as of October 3,
2000, among the Registrant, as
Borrower, Certain of Its
Subsidiaries, as Guarantors,
Various Lenders and Bank of
America, N.A., as Administrative
Agent. Exhibit 10 to the
Registrant's Quarterly Report on
Form 10-Q for the quarter ended
September 30, 2001
10(p)* Employment Agreement dated as of May 4,
1998, between the Registrant and M. T.
Dan. Exhibit 10(a) to the Registrant's
Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998 (the
"Third Quarter 1998 Form 10-Q").
23
10(q)* Executive Agreement dated as of May 4,
1998, between the Registrant and M. T.
Dan. Exhibit 10(b) to the Third Quarter 1998 Form 10-Q.
10(r)* Executive Agreement dated as of August 7,
1998, between the Registrant and R. T.
Ritter. Exhibit 10(c) to the Third Quarter 1998 Form 10-Q.
10(s)* Severance Agreement dated as of August 7,
1998, between the Registrant and R. T.
Ritter. Exhibit 10(d) to the Third Quarter 1998 Form 10-Q.
10(t) Trust Agreement for The Pittston Company Employee Welfare Benefit
Trust. Exhibit 10(t) to the 1999 Form 10-K.
10(u) (i) Note Purchase Agreement dated as of January 18, 2001,
between the Registrant and the Purchasers listed on Schedule
A thereto. Exhibit 10(u)(i) to the 2000 Form 10-K.
(ii) Form of Series A Promissory Note. Exhibit 10(u)(ii) to the
2000 Form 10-K.
(iii) Form of Series B Promissory Note. Exhibit 10(u)(iii) to the
2000 Form 10-K.
10(v) (i) Receivables Purchase Agreement dated as of December 15,
2000, among BAX Funding Corporation, BAX Global Inc., Liberty
Street Funding Corp. and the Bank of Nova Scotia. Exhibit
10(v)(i) to the 2000 Form 10-K.
(ii) Purchase and Sale Agreement dated as of December 15, 2000,
among the Originators named therein, BAX Funding Corporation
and BAX Global Inc. Exhibit 10(v)(ii) to the 2000 Form 10-K.
13 2001 Annual Report of the Registrant.
21 Subsidiaries of the Registrant.
23 Consent of independent auditors.
24 Powers of attorney.
99* (a) Amendment to Registrant's
Pension-Retirement Plan relating to
preservation of assets of the
Pension-Retirement Plan upon a change
in control. Exhibit 99 to the
Registrant's Annual Report on Form
10-K for the year ended December 31,
1992 (filed March 20, 1993 - File No.
1-9148).
99 (b) Certifications for Chief Executive
Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of
the Sarbanes Oxley Act of 2002.
--------------------------
*Management contract or compensatory plan or arrangement.
24