The Pittston Company 2000 Annual Report

Revenues in 1999 of $228.7 million were $25.1 million (12%) higher than in 1998, primarily as a result of a 12% growth in the average subscriber base, as well as higher average monitoring fees. As a result of these changes, monthly recurring revenues increased 12% in 1999.

Operating profit in 1999 increased to $54.2 million, an increase of $1.2 million as compared to 1998. Primarily as the result of the larger subscriber base, as well as higher average monitoring fees, earnings from monitoring and service activities increased significantly. This was partially offset by higher charges resulting from subscriber disconnects due to an increase in the rate of such disconnects, the higher subscriber base and the higher average subscriber costs of such base. Growth in overall operating profit in 1999 was also negatively affected by a year over year $3.3 million increase in the investment in new subscribers.

BAX Global
The following are tables of selected financial data for BAX Global on a comparative basis:

(a) Includes Intra-US revenue of $604.6 million, $654.5 million and $626.7 million for 2000, 1999 and 1998, respectively.

(b) Expenses associated with major IT projects and certain overhead costs have been reallocated in 1999 from Other to the Americas and International, respectively.

(c) Includes restructuring charges of $54.6 million for Americas and $2.9 million for International for 2000.

BAX Global operates in the Americas and internationally. The Americas includes the domestic and export business of the United States ("US"), Latin America and Canada; International includes BAX Global's European and Asia-Pacific operating regions. Each region includes both expedited and non-expedited freight services. Revenues and profits on expedited freight services are shared among the origin and destination countries on all export volumes. Accordingly, BAX Global's US business, the region with the largest export volume, significantly impacts the trend of results in BAX Global's worldwide expedited freight services. Non-expedited freight services primarily include supply chain management and ocean freight services. In addition, BAX Global operations include an international customs brokerage business as well as a federally certificated airline, Air Transport International ("ATI"), which was acquired in April 1998. ATI's results, net of intercompany eliminations, are included in the Americas region. Eliminations/other revenues primarily include intercompany revenue eliminations on shared services. Other primarily consists of global support costs including global information technology costs and goodwill amortization. In 1998, Other also included additional expenses of approximately $36 million (discussed below).

Over the course of 2000, the operating performance of BAX Global's Americas region was negatively impacted by lower than expected demand and higher transportation, operating and administrative costs relative to that lower demand. As such, BAX Global evaluated alternatives directed at returning its Americas operations to profitability, including ways to improve sales performance and to reduce transportation, operating and administrative expenses. Through actions taken in the third quarter, employee-related costs were reduced by approximately $8 million on an annualized basis. During the fourth quarter of 2000, BAX Global finalized a restructuring plan aimed at reducing the capacity and cost of its airlift capabilities in the US as well as reducing station operating expenses, sales costs and overhead in the Americas and Atlantic regions, including:

• The removal of 10 planes from the fleet, 9 of which were dedicated to providing lift capacity in BAX Global's commercial cargo system.

• The closure of 9 operating stations and realignment of domestic operations.

• The reduction of employee-related costs at BAX Global and ATI through the elimination of approximately 300 full-time positions including aircraft crew and station operating, sales and business unit overhead positions.