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Two important events marked the transformation of our company in recent months. We exited the coal business and we began the process of changing the company’s name from The Pittston Company to The Brink’s Company.
The new name reflects the company’s position as a global leader in business and security services. The Brink’s brand is synonymous with integrity, security, efficiency, global presence and world-class service – hallmarks of the way we do business. Although the Brink’s name is most directly associated with our armored vehicles and our home security services, the competitive advantages it represents and the dedicated service it implies also apply to BAX Global, our freight transportation and supply chain management services company. All of our businesses “go the extra mile” to protect people and property – at home, at work, or en route – virtually anywhere around the world. We are committed to providing premier service and the Brink’s name effectively conveys that central strategy.
Although the future of The Brink’s Company clearly lies in these high-growth service industries, we will never forget the dedication and hard work of thousands of people during our company’s 165-year coal-mining history. We thank them for their many contributions and we pledge to continue to follow their example of hard work and faithful stewardship. We are pleased to report that most of our former coal operations remain open, and their new owners have hired the vast majority of our former employees.
The Pittston Company still shoulders some costs related to our heritage as a major producer of coal, but we are now positioned to significantly reduce our exposure to these liabilities. More importantly, the disposal of our coal operations has allowed us to focus on growth opportunities at BAX Global, Brink’s and Brink’s Home Security.
Despite the continuing sluggish economy in 2002, BAX Global bounced back from an operating loss of nearly $28 million in 2001 to an operating profit of more than $17 million. While we are not yet satisfied with the financial results of BAX, we are pleased that it is moving in the right direction.
The people at BAX Global have done an excellent job in turbulent times. In the past two years, the business has reduced the number of aircraft flown from 35 to 17, which is more in line with customer demand. BAX also has built on its strengths by establishing several new vendor hubs that provide supply chain management services to customers in Singapore, Hong Kong and the United States and new supply chain operations in Europe and Brazil.
BAX Global is well-positioned to benefit from explosive growth in China, which is rapidly becoming the world’s factory floor. BAX has also continued to evolve from its earlier focus as an air freight
forwarder: it is now a global logistics network that uses the appropriate mode of transportation to meet each customer’s needs.
Brink’s, Incorporated is the number one or number two security services transport company in the majority of the more than 50 countries where it does business, and in 2002 it continued to expand with the acquisition of the non-owned portion of its affiliate in Japan.
Maintaining a global presence is a major competitive advantage for Brink’s, Incorporated, the worldwide leader in transporting currency and other valuables that require the ultimate in protection
and control. Its worldwide reach allows Brink’s to manage valuables from pickup to delivery.
The work we do is vital for commerce and can sometimes be dangerous. Valuables have to move, and no one is better equipped than Brink’s to transport and process them with the highest degree of safety and security, whether they are moving across the street or around the globe.
Protecting precious cargo is important, but our number one job is protecting our people. We want all of our employees to return safely to their families every night, but unfortunately that does not always happen: eight of our employees were murdered in 2002.
Our customers’ needs are constantly evolving, and Brink’s
anticipates those needs with new and improved services. Cash logistics,
for example, is an important part of the future of Brink’s,
just as automated teller machines drove growth during the last decade.
Retailers and financial institutions are beginning to outsource
all aspects of how their cash is moved, counted and secured, and
Brink’s has formed a new operating unit, Brink’s Cash
Logistics, to meet this growing demand.
Anticipating trends and responding quickly to customers’ needs
have produced excellent financial results over the years. Brink’s
revenues have increased every year since 1985, and they have more
than doubled from $754 million in 1996 to $1.6 billion in 2002.
The company’s operating profit in 2002 was $96 million.
The Brink’s name is globally recognized and highly respected throughout the business world, and it has developed an outstanding reputation among homeowners as well. Brink’s Home Security, which began operations in 1983, added its 750,000th customer in 2002. That impressive growth curve reflects the power of the Brink’s brand name backed up by our commitment to provide superior customer service.
Brink’s Home Security’s strategy of attracting and retaining
“Customers For Life” has proven to be the intelligent approach to
this industry. By growing organically instead of by acquisition,
Brink’s Home Security has maintained standardized equipment
that allows it to better and more efficiently respond to homeowners’
calls. The company’s call center was recognized for its exemplary
customer care program in the United States in 2002, but the most
important recognition came from the company’s loyal customers.
Brink’s Home Security’s annual disconnect rate was, again,
one of the lowest, if not the lowest, in the industry. As a result,
the company’s recurring monthly revenue exceeded $21 million
for the first time in 2002.
While many of our competitors have purchased market share via acquisition and free installations, we have cultivated more profitable and sustainable growth by providing outstanding service to high-quality customers with solid credit ratings and an appreciation for the value we provide. The results have been gratifying. In 2002, Brinks Home Security generated $61 million of operating profit on $282 million in revenues.
Cash flow from continuing operations for The Pittston Company was again strong in 2002 – above $300 million for the fourth consecutive year. This healthy cash flow gave us the flexibility to expand and improve our global operations.
Finally, in a year when scandals at several large companies have severely damaged investor confidence, we were reminded of the indispensable value of trust and integrity throughout your Company. Trust is the core of who and what we are, and we never take your trust for granted. We have to earn it every day – just as we do with our customers, who trust and depend on Brink’s, Brink’s Home Security and BAX Global.
We made good progress in 2002 toward attaining our strategic goals through the tireless efforts of our employees and management. I am equally grateful for the counsel and support of our Board of Directors.
Sincerely,
Michael T. Dan
Chairman, President and Chief Executive Officer
The Pittston Company
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