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 year ended December 31, 1998
OR
[ ] 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
1994 EMPLOYEE STOCK PURCHASE PLAN OF THE PITTSTON COMPANY
(Full title of the Plan)
THE PITTSTON COMPANY
(Name of the issuer of securities held pursuant to the Plan)
P.O. BOX 4229
1000 VIRGINIA CENTER PKWY.
RICHMOND, VIRGINIA 23058-4229
(Address of issuer's principal (Zip Code)
executive offices)
Independent Auditors' Report
The Participants of the 1994 Employee Stock
Purchase Plan of The Pittston Company:
We have audited the accompanying statements of financial condition of the 1994
Employee Stock Purchase Plan of The Pittston Company (the "Plan") as of December
31, 1998 and 1997, and the related statements of income and changes in plan
equity for each of the years in the three-year period ended December 31, 1998.
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 generally accepted auditing
standards. 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 financial position of the 1994 Employee Stock
Purchase Plan of The Pittston Company as of December 31, 1998 and 1997, and the
income and changes in plan equity for each of the years in the three-year period
ended December 31, 1998, in conformity with generally accepted accounting
principles.
KPMG LLP
Richmond, Virginia
March 12, 1999
1994 EMPLOYEE STOCK PURCHASE PLAN OF THE PITTSTON COMPANY
STATEMENT OF FINANCIAL CONDITION
December 31, 1998
- -------------------------------------------------------------------------------------------
Pittston Pittston Pittston
Brink's Group BAX Group Minerals Group
Common Stock Common Stock Common Stock Total
- -------------------------------------------------------------------------------------------
ASSETS:
Common stock, at
market value (Note 2) $2,922,013 761,072 225,749 3,908,834
Contributions receivable
from The Pittston Company (Note 5) 587,550 253,625 152,916 994,091
- -------------------------------------------------------------------------------------------
Total assets $3,509,563 1,014,697 378,665 4,902,925
===========================================================================================
LIABILITIES AND PLAN EQUITY:
Payable to plan participants $ 45,128 11,637 3,252 60,017
Plan equity 3,464,435 1,003,060 375,413 4,842,908
- -------------------------------------------------------------------------------------------
Total liabilities and plan equity $3,509,563 1,014,697 378,665 4,902,925
===========================================================================================
See accompanying notes to financial statements.
3
1994 EMPLOYEE STOCK PURCHASE PLAN OF THE PITTSTON COMPANY
STATEMENT OF FINANCIAL CONDITION
December 31, 1997
- ----------------------------------------------------------------------------------------
Pittston Pittston Pittston
Brink's Group BAX Group Minerals Group
Common Stock Common Stock Common Stock Total
- ----------------------------------------------------------------------------------------
ASSETS:
Common stock, at
market value (Note 2) $3,222,294 1,404,716 475,118 5,102,128
Contributions receivable
from The Pittston Company 526,738 275,556 174,146 976,440
- ----------------------------------------------------------------------------------------
Total assets $3,749,032 1,680,272 649,264 6,078,568
========================================================================================
LIABILITIES AND PLAN EQUITY:
Payable to plan participants $ 78,639 43,074 10,893 132,606
Plan equity 3,670,393 1,637,198 638,371 5,945,962
- ---------------------------------------------------------------------------------------
Total liabilities and plan equity $3,749,032 1,680,272 649,264 6,078,568
=======================================================================================
See accompanying notes to financial statements.
4
1994 EMPLOYEE STOCK PURCHASE PLAN OF THE PITTSTON COMPANY
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
Year Ended December 31, 1998
- ------------------------------------------------------------------------------------------------------------------
Pittston Pittston Pittston
Brink's Group BAX Group Minerals Group
Common Stock Common Stock Common Stock Total
- ------------------------------------------------------------------------------------------------------------------
INCOME:
Participant contributions $ 1,176,123 524,244 315,655 2,016,022
Dividend income 9,422 15,613 21,906 46,941
Unrealized depreciation
on common stock (Note 3) (839,160) (894,615) (357,251) (2,091,026)
Realized gain (loss) on distributions (Note 4) 465,480 7,165 (90,864) 381,781
- ------------------------------------------------------------------------------------------------------------------
811,865 (347,593) (110,554) 353,718
- ------------------------------------------------------------------------------------------------------------------
WITHDRAWALS:
Distribution to Plan participants,
at market value 1,017,823 286,545 152,404 1,456,772
- ------------------------------------------------------------------------------------------------------------------
Decrease in Plan equity (205,958) (634,138) (262,958) (1,103,054)
Plan equity--beginning of year 3,670,393 1,637,198 638,371 5,945,962
- ------------------------------------------------------------------------------------------------------------------
Plan equity--end of year $ 3,464,435 1,003,060 375,413 4,842,908
==================================================================================================================
See accompanying notes to financial statements.
5
1994 EMPLOYEE STOCK PURCHASE PLAN OF THE PITTSTON COMPANY
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
Year Ended December 31, 1997
- -----------------------------------------------------------------------------------------------------------
Pittston Pittston Pittston
Brink's Group BAX Group Minerals Group
Common Stock Common Stock Common Stock Total
- -----------------------------------------------------------------------------------------------------------
INCOME:
Participant contributions $1,074,916 559,881 349,927 1,984,724
Dividend income 8,715 12,777 42,071 63,563
Unrealized appreciation (depreciation)
on common stock (Note 3) 887,903 305,630 (462,445) 731,088
Realized gain (loss) on distributions (Note 4) 798,646 286,224 (60,371) 1,024,499
- -----------------------------------------------------------------------------------------------------------
2,770,180 1,164,512 (130,818) 3,803,874
- -----------------------------------------------------------------------------------------------------------
WITHDRAWALS:
Distribution to Plan participants,
at market value 1,446,889 606,425 158,767 2,212,081
- -----------------------------------------------------------------------------------------------------------
Increase (decrease) in Plan equity 1,323,291 558,087 (289,585) 1,591,793
Plan equity--beginning of year 2,347,102 1,079,111 927,956 4,354,169
- -----------------------------------------------------------------------------------------------------------
Plan equity--end of year $3,670,393 1,637,198 638,371 5,945,962
===========================================================================================================
See accompanying notes to financial statements.
6
1994 EMPLOYEE STOCK PURCHASE PLAN OF THE PITTSTON COMPANY
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
Year Ended December 31, 1996
- ---------------------------------------------------------------------------------------------------------------------
Pittston Pittston Pittston Pittston
Services Group Brink's Group BAX Group Minerals Group
Common Stock Common Stock Common Stock Common Stock Total
- ---------------------------------------------------------------------------------------------------------------------
INCOME:
Participant contributions $ -- 954,941 531,992 330,132 1,817,065
Dividend income -- 4,621 8,270 28,221 41,112
Unrealized appreciation
on common stock (Note 3) 12,282 449,708 142,412 189,400 793,802
Realized gain on distributions (Note 4) -- 293,950 70,208 59,418 423,576
- ---------------------------------------------------------------------------------------------------------------------
12,282 1,703,220 752,882 607,171 3,075,555
- ---------------------------------------------------------------------------------------------------------------------
WITHDRAWALS AND OTHER:
Distribution to Plan participants,
at market value -- 813,836 287,853 288,212 1,389,901
Effect of Brink's Stock Proposal (Note 1) 2,071,800 (1,457,718) (614,082) -- --
- ---------------------------------------------------------------------------------------------------------------------
2,071,800 (643,882) (326,229) 288,212 1,389,901
- ---------------------------------------------------------------------------------------------------------------------
(Decrease) increase in Plan equity (2,059,518) 2,347,102 1,079,111 318,959 1,685,654
Plan equity--beginning of year 2,059,518 -- -- 608,997 2,668,515
- ---------------------------------------------------------------------------------------------------------------------
Plan equity--end of year $ -- 2,347,102 1,079,111 927,956 4,354,169
=====================================================================================================================
See accompanying notes to financial statements.
7
1994 EMPLOYEE STOCK PURCHASE PLAN OF THE PITTSTON COMPANY
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
1. SUMMARY OF PLAN
The 1994 Employee Stock Purchase Plan of The Pittston Company (the "Plan") is an
"employee stock purchase plan" within the meaning of Section 423 of the Internal
Revenue Code of 1986 (the "Code"), as amended, covering all eligible employees
of The Pittston Company and its subsidiaries (the "Company"). The Plan years
begin on January 1 and end on December 31.
On January 18, 1996, the shareholders of the Company approved the Brink's Stock
Proposal, resulting in the modification, effective as of January 19, 1996, of
the capital structure of the Company to include an additional class of common
stock. The outstanding shares of Pittston Services Group Common Stock ("Services
Stock") were redesignated as Brink's Group Common Stock ("Brink's Stock") on a
share-for-share basis, and a new class of common stock, designated as BAX Group
Common Stock ("BAX Stock"), was distributed on the basis of one-half share of
BAX Stock for each share of Services Stock held by shareholders of record on
January 19, 1996. Accordingly, on the effective date, 48,702 shares of Services
Stock held by the Plan were converted to 48,702 shares of Brink's Stock and
24,351 shares of BAX Stock and a fair value for these shares of $1,457,718 and
$614,082, respectively, was allocated from Services Stock to Brink's Stock and
BAX Stock.
Upon approval of the Brink's Stock Proposal, the Plan was amended to provide
that participant contributions can be used to purchase Brink's Stock, BAX Stock,
Minerals Stock, or a combination, as elected by the participant. For each of the
Plan years, the purchase price for each share of common stock to be purchased
under the Plan is the lesser of 85% of the Fair Market Value (as defined) of
such share on either (a) the first date of each six-month period commencing on
each July 1 or January 1 (the "Offering Date") or (b) the last day of each
six-month period from an Offering Date (the "Purchase Date"). The Fair Market
Value with respect to shares of any class of common stock is generally defined
as the average of the high and low quoted sales price of a share of such stock
on the applicable date as reported on the New York Stock Exchange Composite
Transaction Tape.
The maximum number of shares of common stock which may be issued or allocated
pursuant to the Plan is 750,000 shares of Brink's Stock, 375,000 shares of BAX
Stock and 250,000 shares of Minerals Stock.
Effective May 4, 1998, the designation of Pittston Burlington Group Common Stock
and the name of the Pittston Burlington Group were changed to Pittston BAX Group
Common Stock and Pittston BAX Group, respectively. All rights and privileges of
the holders of such Stock are otherwise unaffected by such changes. The stock
continues to trade on the New York Stock Exchange under the symbol "PZX".
ELIGIBILITY
Generally, any employee of The Pittston Company or a designated subsidiary (a
"Subsidiary") (a) whose date of hire was at least six months prior to the
commencement of the six-month period from an Offering Date to and including the
next following Purchase Date (the "Offering Period")
8
and (b) who is customarily employed for at least 20 hours per week and at least
five months in a calendar year is eligible to participate in the Plan; provided,
however, that in the case of an employee who is covered by a collective
bargaining agreement, he or she shall not be considered an eligible employee
unless and until the labor organization representing such individual has
accepted the Plan on behalf of the employees in the collective bargaining unit.
Any such employee shall continue to be an eligible employee during an approved
leave of absence provided such employee's right to continue employment with The
Pittston Company or a Subsidiary upon expiration of such employee's leave of
absence is guaranteed either by statute or by contract with or a policy of The
Pittston Company or a Subsidiary.
CONTRIBUTIONS
Participants can elect to contribute any whole percentage from 1% up to and
including 10% of their annual base rate of pay, including commissions, but
generally excluding overtime or premium pay. A participant may reduce (but not
increase) the rate of payroll withholding during an Offering Period at any time
prior to the end of such Offering Period for which such reduction is to be
effective. Not more than one reduction may be made in any Offering Period unless
otherwise determined by nondiscriminatory rules. Each participant designates a
percentage in multiples of 10% of the amounts withheld during an Offering Period
that is to be used to purchase Brink's Stock, BAX Stock or Minerals Stock;
provided, however, that 100% of the amount withheld is allocated between the
three classes of common stock. In the event a participant elects to reduce the
rate of payroll withholding during an Offering Period, such reduction shall be
applied ratably to the allocation of his or her withheld amounts among the three
classes of common stock. During an Offering Period, a participant may not change
the allocation of his or her withholdings for such Offering Period although such
allocation may be changed for any subsequent Offering Period. A participant who
elects to cease participation in the Plan may not resume participation in the
Plan until after the expiration of one full Offering Period (following cessation
of participation).
No participant shall have a right to purchase shares of any class of common
stock if (a) immediately after electing to purchase such shares, such
participant would own common stock possessing 5% or more of the total combined
voting power or value of all classes of stock of The Pittston Company or of any
Subsidiary, or (b) the rights of such participant to purchase common stock under
the Plan would accrue at a rate that exceeds $15,000 of Fair Market Value of
such common stock (determined at the time or times such rights are granted) for
each calendar year for which such rights are outstanding at any time.
DISTRIBUTION
A participant may elect, as of the first day of any calendar quarter, to have
some or all of the full shares of any class of common stock purchased by the
Plan on his or her behalf, registered in such individual's name. Shares of
common stock purchased on behalf of a participant generally must be held by the
Plan or participant for a period of at least six months from the date such
shares of common stock are purchased. Shares registered in the name of a
participant may not be conveyed, sold, transferred, encumbered or otherwise
disposed of until the expiration of this six-month period without the prior
written consent of the Company.
Should a participant elect to cease active participation in the Plan with
respect to any or all of the three classes of common stock at any time up to the
end of an Offering Period, all payroll deductions credited to such participant's
plan account and allocated to the purchase of the class of common stock with
respect to which the participant is ceasing participation shall be returned to
such participant in cash, without interest, as promptly as practicable.
9
In the event of the termination of a participant's employment for any reason,
including retirement or death, or the failure of a participant to remain
eligible under the terms of the Plan, all full shares of each class of common
stock then held for his or her benefit shall be registered in such individual's
name and an amount equal to the Fair Market Value (on the date of registration
of full shares of common stock in the name of the participant) of any fractional
share then held for the benefit of such participant shall be paid to such
individual, in cash, as soon as administratively practicable, and such
individual shall thereupon cease to own the right to any such fractional share.
Any amounts credited to such individual, prior to the last day of each six-month
Offering Period, shall be refunded, without interest, to such individual or, in
the event of his or her death, to his or her legal representative.
TERMINATION
The Plan will remain in effect until June 30, 2002, unless extended pursuant to
shareholder approval.
The Board of Directors of The Pittston Company may, at any time and from time to
time, amend, modify or terminate the Plan, but no such amendment or modification
without the approval of the shareholders shall: (a) increase the maximum number
(determined as provided in the Plan) of shares of any class of common stock
which may be issued pursuant to the Plan; (b) permit the issuance of any shares
of any class of common stock at a purchase price less than that provided in the
Plan as approved by the shareholders; (c) extend the term of the Plan; or (d)
cause the Plan to fail to meet the requirements of an "employee stock purchase
plan" under the Code.
BASIS OF ACCOUNTING
The accompanying financial statements are prepared on the accrual basis of
accounting.
INCOME TAXES
The Plan, and the rights of participants to make purchases thereunder, is
intended to qualify as an "employee stock purchase plan" under Section 423 of
the Code. The Plan is not qualified under Section 401(a) of the Code. Pursuant
to Section 423 of the Code, no income (other than dividends) will be taxable to
a participant until disposition of the shares purchased under the Plan. Upon the
disposition of the shares, the participant will generally be subject to tax and
the amount and character of the tax will depend upon the holding period.
Dividends received on shares held by the Plan on behalf of a participant are
taxable to the participant as ordinary income. Therefore, the Plan does not
provide for income taxes.
ADMINISTRATIVE COSTS
All administrative costs incurred by the Plan are paid by the Company.
10
2. INVESTMENTS
At December 31, 1998, investments in the Plan consisted of 91,671 shares of
Brink's Stock with a total cost of $2,062,238, 68,411 shares of BAX stock with a
total cost of $1,055,433 and 100,231 shares of Minerals Stock with a total cost
of $769,328.
At December 31, 1997, investments in the Plan consisted of 80,057 shares of
Brink's Stock with a total cost of $1,523,359, 53,513 shares of BAX stock with a
total cost of $804,462 and 63,349 shares of Minerals Stock with a total cost of
$661,446.
At December 31, 1998 and 1997, the Plan had a total of 1,520 and 1,361
participants, respectively. The cost values of investments under the Plan are
calculated using an average cost methodology.
3. UNREALIZED APPRECIATION (DEPRECIATION) ON COMMON STOCK
Changes in unrealized appreciation and depreciation on common stock of the Plan
are as follows:
1998
- -----------------------------------------------------------------------------------------------------------------------------------
Pittston Brink's Pittston BAX Pittston Minerals
Group Common Group Common Group Common
Stock Stock Stock Total
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation):
Beginning of year $ 1,698,935 600,254 (186,328) 2,112,861
End of year 859,775 (294,361) (543,579) 21,835
- -----------------------------------------------------------------------------------------------------------------------------------
Change in unrealized
appreciation (depreciation) $ (839,160) (894,615) (357,251) (2,091,026)
- -----------------------------------------------------------------------------------------------------------------------------------
1997
- -----------------------------------------------------------------------------------------------------------------------------------
Pittston Brink's Pittston BAX Pittston Minerals
Group Common Group Common Group Common
Stock Stock Stock Total
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation):
Beginning of year $ 811,032 294,624 276,117 1,381,773
End of year 1,698,935 600,254 (186,328) 2,112,861
- -----------------------------------------------------------------------------------------------------------------------------------
Change in unrealized
appreciation (depreciation) $ 887,903 305,630 (462,445) 731,088
1996
- -----------------------------------------------------------------------------------------------------------------------------------
Pittston Services Pittston Brink's Pittston BAX Pittston Minerals
Group Common Group Common Group Common Group Common
Stock Stock Stock Stock Total
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation:
Beginning of year $ 501,254 -- -- 86,717 587,971
Effect of Brink's Stock
Proposal (513,536) 361,324 152,212 -- --
End of year -- 811,032 294,624 276,117 1,381,773
- -----------------------------------------------------------------------------------------------------------------------------------
Change in unrealized
appreciation $ 12,282 449,708 142,412 189,400 793,802
- -----------------------------------------------------------------------------------------------------------------------------------
11
4. REALIZED GAIN (LOSS) ON DISTRIBUTIONS
The realized gain (loss) on distribution of common stock as a result of
participant withdrawals is as follows:
1998
- -----------------------------------------------------------------------------------------------------------------------------------
Pittston Brink's Pittston BAX Pittston Minerals
Group Common Group Common Group Common
Stock Stock Stock Total
- -----------------------------------------------------------------------------------------------------------------------------------
Value of shares distributed:
Market value $ 1,051,334 317,982 160,046 1,529,362
Cost basis 585,854 310,817 250,910 1,147,581
- -----------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on distribution
of shares to participants $ 465,480 7,165 (90,864) 381,781
- -----------------------------------------------------------------------------------------------------------------------------------
1997
- -----------------------------------------------------------------------------------------------------------------------------------
Pittston Brink's Pittston BAX Pittston Minerals
Group Common Group Common Group Common
Stock Stock Stock Total
- -----------------------------------------------------------------------------------------------------------------------------------
Value of shares distributed:
Market value $ 1,526,632 635,403 236,022 2,398,057
Cost basis 727,986 349,179 296,393 1,373,558
- -----------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on distribution
of shares to participants $ 798,646 286,224 (60,371) 1,024,499
- -----------------------------------------------------------------------------------------------------------------------------------
1996
- -----------------------------------------------------------------------------------------------------------------------------------
Pittston Brink's Pittston BAX Pittston Minerals
Group Common Group Common Group Common
Stock Stock Stock Total
- -----------------------------------------------------------------------------------------------------------------------------------
Value of shares distributed:
Market value $ 699,852 214,353 210,631 1,124,836
Cost basis 405,902 144,145 151,213 701,260
- -----------------------------------------------------------------------------------------------------------------------------------
Realized gain on distribution
of shares to participants $ 293,950 70,208 59,418 423,576
- -----------------------------------------------------------------------------------------------------------------------------------
Participant withdrawals for the year ended December 31, 1998 consisted of 28,085
shares of Brink's Stock, 19,337 shares of BAX Stock and 28,805 shares of
Minerals Stock.
Participant withdrawals for the year ended December 31, 1997 consisted of 39,340
shares of Brink's Stock, 23,684 shares of BAX Stock and 28,266 shares of
Minerals Stock.
Participant withdrawals for the year ended December 31, 1996 consisted of 25,795
shares of Brink's Stock, 11,658 shares of BAX Stock and 14,967 shares of
Minerals Stock.
5. SUBSEQUENT EVENTS
In January 1999, the Plan purchased from The Pittston Company Employee Benefits
Trust, 22,187 shares of Brink's Stock at $26.483 per share, 27,918 shares of BAX
Stock at $9.085 per
12
share and 84,671 shares of Minerals Stock at $1.806 per share for a total
purchase price of $994,091 to satisfy contributions made for the last six months
of the Plan year ended December 31, 1998.
As a result of the January 1999 purchase of shares, the maximum number of
Minerals Stock shares had been issued pursuant to the Plan.
At a meeting held on March 12, 1999, the Company's Board of Directors adopted an
amendment to increase the maximum number of shares of common stock which may be
issued pursuant to the Plan to 750,000 shares of Brink's Stock, 375,000 shares
of BAX Stock and 650,000 shares of Minerals Stock. This amendment to the Plan is
subject to shareholder approval on May 7, 1999.
13
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustee
(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.
1994 Employee Stock Purchase Plan
of The Pittston Company
-----------------------------------
(Name of Plan)
/s/ Frank T. Lennon
-----------------------------------
(Frank T. Lennon
Vice President - Human Resources
and Administration)
March 23, 1999
14
Consent of Independent Auditors
The Participants of the 1994 Employee Stock
Purchase Plan of The Pittston Company:
We consent to incorporation by reference in the registration statement (No.
33-53565) on Form S-8 of The Pittston Company of our report dated March 12,
1999, relating to the statements of financial condition of the 1994 Employee
Stock Purchase Plan of The Pittston Company as of December 31, 1998 and 1997,
and the related statements of income and changes in plan equity for each of the
years in the three-year period ended December 31, 1998, which report appears in
the 1998 Annual Report on Form 11-K of the 1994 Employee Stock Purchase Plan of
The Pittston Company.
KPMG LLP
Richmond, Virginia
March 23, 1999