INVESTMENT COMMUNITY MEETING
Michael T. Dan
Chairman, President and CEO
Robert T. Ritter
Chief Financial Officer
December 7, 1999
FORWARD-LOOKING STATEMENTS
This presentation contains both historical and forward-
looking information. Statements regarding expected
performance and progress, shareholder value, financial
performance, including profit and earnings growth, earnings
per share, EBITDA, margins, revenues, profitability, return
on capital and creation of economic value, prospects to grow
the Company, investment grade ratings, new products and
services, customer retention, cash flow and availability,
the turnaround at BAX Global, investment in the Company's
services businesses, allocation of resources, dividends,
disposition of the Company's coal mining operations and
reserves, management and funding of the coal legacy costs
and future cash costs 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
Pittston Company, include, but are not limited to, overall
domestic and international economic and business conditions,
currency exchange rates, the domestic and international
demand for the Company's services, pricing and other
competitive factors in the industry, government regulations
and/or legislative initiatives, required permits and
approvals, judicial decisions, customer service, inflation
rates, interest rates, variations in costs or expenses, fuel
prices, delays or problems in the implementation of Year
2000 initiatives by the Company and/or any public or private
sector supplier, service provider or customer, contractual
disputes, the ultimate outcome of efforts to sell certain
assets, the cost of providing certain welfare benefits to
eligible employees, retirees, and their dependents,
reclamation cost, and other coal legacy costs.
OVERVIEW
- - New Pittston strategy
- - Overview of strategic businesses
- - 2000 Objectives
NEW PITTSTON STRATEGY OBJECTIVES
- - Maximize shareholder value
- - Focus on growing service businesses
- Brink's, Incorporated
- Brink's Home Security
- BAX Global
- - Deliver double digit earnings growth
- - Grow EVA
IMMEDIATE ACTIONS
TO ACCOMPLISH OBJECTIVES
- - Exit Coal business
- - Contain "legacy" costs
- Establish VEBA
- - Simplify capital structure
NEW PITTSTON
- - Global business and security services company
- Brink's, Incorporated
- Brink's Home Security
- BAX Global
- - Strong market positions in growth industries
- - High quality service provider to large customer base
- - EVA driving management decisions
PITTSTON REVENUES
Twelve months ending 9/30/99
Actual
[GRAPH]
BAX Brink's BHS Minerals
1,963 1,360 224 413
Total $ 4.0 billion
Pro Forma Without Minerals
[GRAPH]
BAX Brink's BHS
1,963 1,360 224
Total $ 3.6 billion
PITTSTON REVENUE GROWTH
Pro Forma Without Minerals
[GRAPH]
($ millions)
1996 1997 1998 1999E
Brink's 754 922 1,248 1,356
BHS 156 179 203 229
BAX 1,485 1,662 1,777 2,020
Compound Annual Growth Rate 15%
PITTSTON OPERATING PROFIT GROWTH
Pro Forma Without Minerals
(before corp. expense and special charges)
[GRAPH]
($ millions)
1996 1997 1998 1999E
Brink's 57 82 98 101
BHS 45 53 53 53
BAX 65 63 35 58
Compound Annual Growth Rate 8%
BRINK'S, INCORPORATED
OVERVIEW
- - World's premier security company
- - The largest provider of cash management and transportation services
- - Strong global brand
- - Geographic strength and diversity
- - Premium price for premium services
- - $1.4 billion annual revenue
- - Consistent positive EVA
BRINK'S, INCORPORATED
FACTORS DRIVING GROWTH
- - Growing market
- Worldwide ATM proliferation
- Cash management outsourcing
- Value added data management
- CompuSafe services
- - Broadest service offerings
- - Risk management expertise
BRINK'S HOME SECURITY
OVERVIEW
- - A leading residential security provider
- - 650,000 subscribers/$17 million MRR
- - Strong brand
- - $225 million annual revenue
- - Loyal subscriber base
- - 20%+ operating margins
BRINK'S HOME SECURITY
FACTORS DRIVING GROWTH
- - Market opportunities
- Less than 25% market penetration
- Expanded geographical presence
- New products and services
- - High quality customer service
- - Long-term customer retention
- - Competitive environment
BAX GLOBAL
OVERVIEW
- - Worldwide provider of specialized transportation and supply chain
management services
- - Strong brand
- - $2 billion annual revenue
- - Top tier multi-national customer base
- - Turnaround well underway
BAX GLOBAL
FACTORS DRIVING GROWTH
- - New operating management
- - Mode-neutral capabilities
- - High quality services
- - Rapid global market growth
- Value-added supply chain management services
- Increased time-definite service requirements
- Global customers/global needs
- - Premium services/improving prices
STRATEGY IMPLEMENTATION
- - Exit Coal business
- Evaluation assessment completed
- Retaining advisors
- - Contain "legacy" costs
- VEBA established
- Funding from asset sales
- - Simplify capital structure
- One stock - "PZB" - represents the New Pittston
NEW PITTSTON
- - Leading positions in attractive growth markets
- - Strong global franchises developed through high quality customer service
- - Strong EVA discipline
- - Positioned to deliver attractive financial returns
OVERVIEW
- - Tracking stock elimination
- Terms
- Exchange mechanism
- - Coal "legacy" liabilities
- Sizing
- VEBA
- - Pro forma financials
- - Financial expectations/goals
TRACKING STOCK EXCHANGE
- - Pre-established formula approved by shareholders in 1993 and 1996
- - PZX and PZM holders receive PZB stock at 115% of Fair Market Value
- - Fair Market Value calculated during 10 day trading period starting
30 trading days prior to announcement
- - PZB shares increase from about 39MM to about 49MM after exchange (for EPS)
TRACKING STOCK EXCHANGE
Brink's BAX Minerals
(PZB) (PZX) (PZM)
Ten day average price* $18.92 $7.98 $1.34
15% premium $1.19 $0.20
Exchange price $9.17 $1.54
Exchange ratio .4848 .0817
*(Oct. 22 - Nov. 4, 1999)
COAL "LEGACY" LIABILITIES
- - Retiree medical benefits
- - Black lung benefits costs
- - Workers' compensation
- - Reclamation expenses
COAL "LEGACY" LIABILITIES
ESTIMATES (PRE-TAX)
($ millions)
Year end 1999 $575-$625
Annual expenses $40-$45
Annual cash flow requirement $55-$60
COAL "LEGACY" LIABILITIES
PLANS FOR CONTAINMENT
- - Transfer appropriate liabilities
- - Fund through VEBA
- - Continue to manage aggressively
VEBA
- - Voluntary Employees' Beneficiary Association
- - Tax-efficient funding vehicle, IRS qualified
- - Initial funding in Q4 1999
- - Additional funding from asset sales
- - Incremental funding required over time
PITTSTON BALANCE SHEET
($ millions)
Cash and equivalents $ 80
Total debt $ 485
Shareholders' equity $ 764
Investment grade credit BBB/Baa3
HISTORICAL PERFORMANCE
($ millions)
Actual Estimate
1996 1997 1998 1999
Revenues
Services 2,400 2,760 3,230 3,600
Minerals 700 630 520 400
Total $3,100 $3,390 $3,750 $4,000
Operating profit (before corp. expenses and 1998 special charges)
Services 167 198 187 212
Minerals 21 10 2 (37)
Total $ 188 $ 208 $ 189 $ 175
EBITDA $ 281 $ 317 $ 315 $ 330
Pro forma EPS $2.10 $2.15 $1.75 $1.70
FINANCIAL EXPECTATIONS
($ millions)
Estimate Forecast 3-5 Year
1999 2000 Growth Rate
Revenues
Services 3,600 3,950 10-12%
Minerals 400 400
Total $4,000 $4,350
Operating profit (before corp. expenses and special charges)
Services 212 250 12-15%
Minerals (37) (35)
Total $ 175 $ 215
EBITDA $ 330 $ 400
Pro forma EPS $1.70 $2.00
FINANCIAL GOALS
- - Double-digit revenue and profit growth
- - Consistent and predictable performance
- - Margin improvement
- - Investment grade credit rating
- - Improved EVA
Increase Shareholder Value