UNITED
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AND EXCHANGE COMMISSION
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The
Brink’s Company
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1801
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Richmond,
VA 23226-8100 USA
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804.289.9709
THE
BRINK’S COMPANY REPORTS
HIGHER
FOURTH-QUARTER AND FULL-YEAR EARNINGS
International
Operations Drive Strong Earnings Growth in Fourth Quarter
Brink’s,
Inc. and Brink’s Home Security Deliver Record Full-Year Profits
Management
Expects Higher Profits in 2008
RICHMOND,
Va., January 31,
2008– The Brink’s Company (NYSE: BCO), a global leader in
security-related services, reported fourth-quarter income from continuing
operations of $54.4 million or $1.16 per share, up from $39.6 million
or 85
cents per share in last year’s fourth quarter. The increased earnings
were driven primarily by strong profit growth at Brink’s, Incorporated
(“Brink’s”). Profits at Brink’s Home Security (“BHS”) improved slightly over
year-ago results.
Fourth-quarter
revenue was $882.8 million, up 18.5% (11% on a constant currency basis)
from
$745.1 million in the fourth quarter of 2006. Approximately 60% of
fourth-quarter 2007 revenue was generated outside North America (“international
operations”). Operating profit was $90.0 million, up 40.2% from $64.2
million in the year-ago period. The positive effect of translating
Brink’s international earnings into U.S. dollars added approximately $5 million
to operating profit in the fourth quarter of 2007.
Michael
T. Dan, chairman, president and chief executive officer of The Brink’s Company,
said: “I’m pleased to report that we concluded another solid year with a very
strong fourth-quarter performance, and I believe we are well-positioned
for
further growth in earnings and cash flow in 2008. At Brink’s,
Incorporated, the strong improvement in fourth-quarter earnings was driven
by
revenue and profit growth in our European and Latin American operations
and
significantly lower safety and security costs worldwide. The outlook
for continued improvement from international operations is promising,
and our
cash logistics business should drive profit growth in North
America.
1
Our
financial goal for this business in 2008 is to deliver annual organic
revenue
growth in the high-single-digit percentage range with operating profit
margins
at or above 8%. Looking beyond this year, to the end of 2010, our
goal is to sustain this rate of revenue growth while boosting operating
margins
to 10%.
“Fourth-quarter
profits at BHS were up slightly versus last year’s strong fourth-quarter due
primarily to ongoing weakness in the housing sector and higher marketing
expenditures. Despite the unfavorable market conditions, strong cost
controls helped BHS achieve record profits for the full year and our
revenue and
subscriber base continued to grow. Looking ahead, and assuming
continued weakness in housing, we believe we can deliver 10% or better
increases
in revenue and profit in 2008 while growing our subscriber base in the
high-single-digit percentage range.”
Dan
added: “The Brink’s Company’s outstanding fourth quarter and
full-year results once again demonstrate the earnings potential of our
two
businesses, and the internal trends we’re seeing point to continued strength in
2008. We have a very strong balance sheet, and are therefore able to
pursue additional growth in our two security businesses as we seek opportunities
to leverage our brand and expertise into new security-related
markets. We are well-positioned to deliver substantial growth in
earnings and cash flow in 2008 and beyond. As long as we continue to
execute, and we have a demonstrated track record of doing so, I’m confident that
the market will recognize this and shareholders will be rewarded. At
the same time, we are reviewing, with the help of our advisors, alternative
options that may further enhance value. The alternatives under review
cover our current strategy and existing proposals from shareholders,
including
additional share repurchases. If our board determines that any of
these options, or some combination thereof, is in the best interests
of all of
our shareholders, we will pursue it at the appropriate time.”
Full-Year
2007
Results
Full-year
2007 revenue from continuing operations was $3.2 billion, up 15.2% (10%
on a
constant currency basis) from $2.8 billion in 2006. In 2007,
approximately 57% of total revenue was generated outside North
America. Full-year operating profit was $274.0 million, up 30.8% from
$209.5 million in 2006. The positive effect of translating Brink’s
international earnings into U.S. dollars added approximately $9 million
to
operating profit in 2007. Income from continuing operations was
$148.6 million or $3.16 per share in 2007, up 31.4% from $113.1 million
or $2.24
per share in 2006.
The
improved year-over-year results reflect strong revenue and profit growth
in both
operating units, especially in Brink’s international operations, and lower costs
related to former operations.
2
Business
Unit Performance:
Fourth-Quarter 2007 Versus 2006
Brink’s,
Incorporated (“Brink’s”)
Brink’s,
the company’s secure transportation and cash management unit, had fourth-quarter
revenue of $756.8 million, up 19.7% (11% on a constant currency basis)
from
$632.1 million in the year-ago quarter. Operating profit rose 39.4%
to $76.4 million, up from $54.8 million last year. Results improved
in all regions, with particular strength in Europe and Latin
America. The fourth-quarter operating profit margin was 10.1%, up
from the 8.7% margin earned in the year-ago quarter. Lower safety and
security costs were another key factor in the improved results.
Capital
expenditures during the quarter totaled $48.4 million, bringing full-year
capital spending to $141.6 million. Capital spending at Brink’s in
2008 is expected to be between $155 million and $165 million.
Brink’s
North America
Fourth-quarter
revenue in North America was $231.8 million, up 7.7% from $215.3 million
in the
fourth quarter of 2006. Operating profit was $19.6 million, up 10.1%
from $17.8 million in the year-ago quarter due to lower employee benefit
and
safety and security costs, which more than offset the effects of reduced
activity in ground operations and Global Services and higher selling
and
marketing expenses in the U.S. The operating profit margin for the
quarter was 8.5%, up from 8.3% in last year’s fourth quarter.
Brink’s
International
Fourth-quarter
revenue from international operations was $525.0 million, up 26% (14%
on a
constant currency basis) from $416.8 million in 2006, reflecting increases
in
all regions. Fourth-quarter operating profit, including a $4 million
benefit from foreign exchange, rose 53.5% to $56.8 million, up from $37.0
million last year. The improvement was due primarily to higher
profits in Europe and Latin America, from higher volumes and operating
improvements. Results were also helped by significantly lower safety
and security costs. The operating profit margin for international
operations was 10.8%, up from 8.9% in last year’s fourth quarter.
EMEA
(Europe, Middle East,
Africa): Fourth-quarter revenue for EMEA was $328.5
million, up 21.0% (8% on a constant currency basis) from $271.5 million
in
2006. Operating profit grew
3
substantially
over the year-ago quarter due primarily to improved performance in several
European countries. Despite strong fourth-quarter results, the operating environment
in Europe
continues
to be challenging due to several
factors including competitive pricing pressures, various regulatory and
labor
issues, and higher security threats. The company is highly focused on
turnaround efforts in underperforming countries and will continue its
aggressive
pursuit of operating efficiencies.
Latin
America: Fourth-quarter revenue in Latin America
increased 36.3% (27% on a constant currency basis) to $179.3 million,
up from
$131.5 million in 2006. Operating profit was up significantly over
last year due primarily to improved performance in Brazil, Colombia and
Chile.
Asia-Pacific: Fourth-quarter
revenue in Asia-Pacific was $17.2 million versus $13.8 million last
year. Operating profit increased over the year-ago period due to
improved Global Services results in several countries.
Brink’s
Home Security (“BHS”)
Fourth-quarter
revenue at BHS was $126.0 million, up 11.5% from $113.0 million in 2006
due
primarily to continued growth in the subscriber base and higher average
monitoring rates. BHS ended the quarter with more than 1.2 million
subscribers, up 8.8% from the year-ago level. Monthly recurring
revenue rose 12.4% to $37.2 million (see Non-GAAP Reconciliations for
a
reconciliation of monthly recurring revenue to reported revenue).
Operating
profit was $29.7 million, up 2.4% from $29.0 million last year. The
fourth-quarter operating profit margin was 23.6%, down from 25.7% due
primarily
to higher sales and marketing expenses and a continued ramp-up of spending
to
support growth in the commercial market.
BHS
installed approximately 44,100 systems for new customers during the quarter,
a
year-over-year installation growth rate of 0.9%, and had 20,400
disconnects. The low installation growth rate reflects ongoing
weakness in the housing market.
The
annualized disconnect rate of 6.7% for the quarter increased over the
year-ago
rate of 6.1%. The disconnect rate in 2008 is expected to range
between 6.5% and 7.0%.
Fourth-quarter
capital expenditures at BHS totaled $42.6 million, bringing full-year
capital
spending to $177.8 million. Total capital spending at BHS in 2008 is
expected to be between $185 million and $195 million.
4
Recent
Events
On
November 28, Monitor Group, an international consulting firm, was retained
to
assist in the company’s ongoing re-examination of strategic
alternatives. The company expects the board to consider analyses and
recommendations from Monitor Group and other advisors during the first
quarter.
On
September 14, the board of directors authorized the purchase of up to
$100
million of the company’s outstanding common shares. During the fourth
quarter, the company purchased 60,500 shares for $3.6 million or $60.30
per
share. Thus far in 2008, through January 25, an additional 165,000
shares were purchased for $9.0 million or $54.06 per share. From
September 14 through January 25, a total of 225,500 shares were
purchased
under this authorization at an
average price of $55.73
per share for a total cost of
$12.6
million.
Costs
Related to Former
Operations Included in Continuing Operations
Fourth-quarter
expenses related to former operations totaled $3.3 million, down from
$7.3
million in 2006 due primarily to lower postretirement medical expenses,
which
are expected to decline further in 2008. The company has a Voluntary
Employees’ Beneficiary Association trust (“VEBA”), which is an investment
vehicle used to fund the company’s obligations for company-sponsored medical
coverage for former coal miners and their dependents. The VEBA
had assets valued at approximately $460 million on December 31,
2007.
Obligations
Related to the
Company’s Primary U.S. Pension Plan and Company-Sponsored Retiree Medical
Benefits
As
a
result of an increase in the discount rate used to value the associated
liabilities as of December 31, 2007 and investment performance in 2007,
the
company anticipates a significant improvement in the funded status of
its
primary U.S. pension plan and the company-sponsored retiree medical benefits
plans.
5
Taxes
The
effective income tax rate of 31.0%
for the fourth quarter of 2007 was higher than the year-ago rate of 28.0%
due to
audit results and a change in the mix of income and losses by
jurisdiction.
The
effective income tax rate of 37.4% for full-year 2007 was lower than
the
prior-year rate of 38.7% largely because of a change in the mix of income
and
losses by jurisdiction. In addition, FASB Interpretation 48 (FIN 48),
which became effective in 2007, established different measurement criteria
for
uncertain income tax positions. The company expects the effective tax
rate for full-year 2008 to be in the range of 37% to 39%.
Discontinued
Operations
The
fourth-quarter loss from discontinued operations was less than 1 cent
per share
versus income of $87.0 million or $1.86 per share in the fourth quarter
of
2006. The year-ago quarter included a gain from an adjustment to the
company’s Health Benefit Act obligations as a result of the enactment of the
Tax
Relief and Health Care Act of 2006.
Net
Income
Fourth-quarter
net income, which includes results from continuing and discontinued operations,
was $54.4 million or $1.15 per share versus $126.6 million or $2.71 per
share in
2006.
This
release contains both historical and forward-looking
information. Words such as “anticipates,” “estimates,”
“expects,” “projects,” “intends,” “plans,” “believes,” “may,” “should” and
similar expressions may identify forward-looking
information. Forward-looking information in this document includes,
but is not limited to, expected revenue growth, cash flow and earnings
for The
Brink’s Company and its subsidiaries in 2008 and through 2010, including annual
percentage revenue growth and operating profit margin at Brink’s and revenue,
profit and subscriber growth at BHS, the outlook for Brink’s international
operations and the cash logistics business in North America, growth
opportunities in the two security businesses and the leveraging of the
Brink’s
brand and expertise in new security-related markets, market recognition
of the
Company’s efforts, the review of alternative strategic options by Monitor Group,
expected capital expenditures for 2008, turnaround efforts and the aggressive
pursuit of operating efficiencies in European countries, ongoing weakness
in the
housing market, the disconnect rate at BHS, the funded status of the
Company’s
primary U.S. pension plan and the company-sponsored retiree medical benefits
plans and the anticipated annual effective tax rate for 2008. The
forward-looking information in this document is subject to known and
unknown
risks, uncertainties and contingencies, which could cause actual results,
performance or achievements to differ materially from those that are
anticipated.
These
risks, uncertainties and contingencies, many of which are beyond the
control of
The Brink’s Company and its subsidiaries, include, but are not limited to the
ability to identify and execute further cost and operational improvements
and
efficiencies in the core businesses, the impact of continuing initiatives
to
control costs and increase profitability, the ability of the businesses
to cost
effectively match customer demand with appropriate resources, the willingness
of
Brink’s and BHS’ customers to absorb future price increases and the actions of
competitors, the Company’s ability to identify strategic opportunities and
integrate them successfully, acquisitions and dispositions made in the
future,
Brink’s ability to integrate recent acquisitions, the results of the pending
strategic review, recently initiated shareholder initiatives, corporate
expenses
due to shareholder initiatives, decisions by the Company’s Board of Directors,
Brink’s ability to perform currency conversion cash handling services in
Venezuela successfully and without adverse operational issues, regulatory
and
labor issues and higher security threats in European countries, the impact
of
restructuring and other actions responding to current market conditions
in
European countries, the return to profitability of operations in jurisdictions
where Brink’s has recorded
6
valuation
adjustments, the input of governmental authorities regarding the non-payment
of
customs duties and value-added tax, the stability of the Venezuelan economy
and
changes in Venezuelan policy regarding exchange rates for dividend remittances,
variations in costs or expenses and performance delays of any public
or private
sector supplier, service provider or customer, positions taken by insurers
with
respect to claims made and the financial condition of insurers, safety
and
security performance, Brink’s loss experience, changes in insurance costs, costs
associated with information technology and other ongoing contractual
obligations, the willingness of police departments to respond to alarms,
BHS’
ability to maintain subscriber growth, the number of household moves,
the level
of home sales or new home construction, potential instability in housing
credit
markets, the willingness of BHS’ customers to pay for private response personnel
or other alternatives to police responses to alarms, estimated reconnection
experience at BHS, costs associated with the purchase and implementation
of cash
processing and security equipment, changes in the scope or method of
remediation
or monitoring of the Company’s former coal operations, the funding levels,
accounting treatment and investment performance of the company’s pension plans
and the VEBA, retirement experience, whether the Company’s assets or the VEBA’s
assets are used to pay benefits, projections regarding the number of
participants in and beneficiaries of the Company’s employee and retiree benefit
plans, the funding and benefit levels of multi-employer plans, actual
medical
and legal expenses relating to benefits, changes in inflation rates (including
medical inflation) and interest rates, changes in mortality and morbidity
assumptions, mandatory or voluntary pension plan contributions, discovery
of new
facts relating to civil suits, the addition of claims or changes in relief
sought by adverse parties, the cash, debt and tax position and growth
needs of
the Company, the demand for capital by the Company and the availability
and cost
of such capital, the satisfaction or waiver of limitations on the use
of
proceeds contained in various of the Company’s financing arrangements, the
nature of the Company’s hedging relationships, the financial performance of the
Company, utilization of third-party advisors and the ability of the Company
to
hire and retain corporate staff, changes in employee obligations, overall
domestic and international economic, political, social and business conditions,
capital markets performance, the strength of the U.S. dollar relative
to foreign
currencies, foreign currency exchange rates, changes in estimates and
assumptions underlying the Company’s critical accounting policies, anticipated
return on assets, inflation, the promulgation and adoption of new accounting
standards and interpretations, seasonality, pricing and other competitive
industry factors, labor relations, fuel and copper prices, new government
regulations and interpretations of existing regulations, legislative
initiatives, judicial decisions, variations in costs or expenses and
the ability
of counterparties to perform. The information included in this
release is representative only as of the date of this release, and The
Brink’s
Company undertakes no obligation to update any information contained
in this
release.
About
The Brink’s Company
The
Brink’s Company (NYSE:BCO) is a
global leader in security-related services that operates two businesses:
Brink’s, Incorporated and Brink’s Home Security. Brink’s,
Incorporated is the world’s premier provider of secure transportation and cash
management services. Brink’s Home Security is one of the largest and
most successful residential alarm companies in North America. For
more information, please visit The Brink’s Company website at www.brinkscompany.com
or call toll free
877-275-7488.
Conference
Call
The
Brink’s Company will host a conference call today, January 31, at 11:00 a.m.
eastern time to discuss this press release. Interested parties can listen
to the
conference call by dialing (877) 407-0778 (domestic) or (201) 689-8565
(international), or via live webcast at www.brinkscompany.com.
Please dial in at least five minutes prior to the start of the call.
Dial-in
replay will be available through February 14, 2008, by calling (877)
660-6853
(domestic) or (201) 612-7415 (international). The conference account
number is 286 and the conference ID for the replay is 269393. A
webcast replay will also be available at www.brinkscompany.com.
7
THE
BRINK’S COMPANY
and
subsidiaries
Condensed
Consolidated Statements of Operations
(Unaudited)
|
Three
Months Ended
|
Years
Ended
|
|||||||||||||||
|
December
31,
|
December
31,
|
|||||||||||||||
|
(In
millions, except per share amounts)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
|
Revenues
|
$ | 882.8 | 745.1 | 3,219.0 | 2,793.3 | |||||||||||
|
Expenses:
|
||||||||||||||||
|
Operating
expenses
|
659.0 | 557.5 | 2,450.8 | 2,131.3 | ||||||||||||
|
Selling,
general and administrative expenses
|
135.8 | 124.3 | 498.8 | 458.4 | ||||||||||||
|
Total
expenses
|
794.8 | 681.8 | 2,949.6 | 2,589.7 | ||||||||||||
|
Other
operating income, net
|
2.0 | 0.9 | 4.6 | 5.9 | ||||||||||||
|
Operating
profit
|
90.0 | 64.2 | 274.0 | 209.5 | ||||||||||||
|
Interest
expense
|
(2.9 | ) | (2.2 | ) | (10.9 | ) | (12.1 | ) | ||||||||
|
Interest
and other income, net
|
3.8 | 2.9 | 10.5 | 16.9 | ||||||||||||
|
Income
from continuing operations
before income taxes
|
||||||||||||||||
|
and
minority
interest
|
90.9 | 64.9 | 273.6 | 214.3 | ||||||||||||
|
Provision
for income taxes
|
28.2 | 18.2 | 102.2 | 82.9 | ||||||||||||
|
Minority
interest
|
8.3 | 7.1 | 22.8 | 18.3 | ||||||||||||
|
Income
from continuing
operations
|
54.4 | 39.6 | 148.6 | 113.1 | ||||||||||||
|
Income
(loss) from discontinued operations, net of tax
|
- | 87.0 | (11.3 | ) | 474.1 | |||||||||||
|
Net
income
|
$ | 54.4 | 126.6 | 137.3 | 587.2 | |||||||||||
|
Basic
earnings per common share:
|
||||||||||||||||
|
Continuing
operations
|
$ | 1.17 | 0.86 | 3.19 | 2.26 | |||||||||||
|
Discontinued
operations
|
- | 1.88 | (0.24 | ) | 9.49 | |||||||||||
|
Net
income
|
1.17 | 2.74 | 2.95 | 11.75 | ||||||||||||
|
Diluted
earnings per common share:
|
||||||||||||||||
|
Continuing
operations
|
$ | 1.16 | 0.85 | 3.16 | 2.24 | |||||||||||
|
Discontinued
operations
|
- | 1.86 | (0.24 | ) | 9.39 | |||||||||||
|
Net
income
|
1.15 | 2.71 | 2.92 | 11.64 | ||||||||||||
|
Weighted-average
common shares outstanding:
|
||||||||||||||||
|
Basic
|
46.7 | 46.2 | 46.5 | 50.0 | ||||||||||||
|
Diluted
|
47.1 | 46.7 | 47.0 | 50.5 | ||||||||||||
8
THE
BRINK’S COMPANY
and
subsidiaries
(Unaudited)
|
Three
Months Ended
|
Years
Ended
|
|||||||||||||||
|
December
31,
|
December
31,
|
|||||||||||||||
|
(In
millions)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
|
Segment
Information
|
||||||||||||||||
|
Revenues:
|
||||||||||||||||
|
Brink’s
|
$ | 756.8 | 632.1 | 2,734.6 | 2,354.3 | |||||||||||
|
Brinks
Home
Security
|
126.0 | 113.0 | 484.4 | 439.0 | ||||||||||||
|
Revenues
|
$ | 882.8 | 745.1 | 3,219.0 | 2,793.3 | |||||||||||
|
Operating
profit:
|
||||||||||||||||
|
Brink’s
|
$ | 76.4 | 54.8 | 223.3 | 184.1 | |||||||||||
|
Brinks
Home
Security
|
29.7 | 29.0 | 114.2 | 100.3 | ||||||||||||
|
Business
segments
|
106.1 | 83.8 | 337.5 | 284.4 | ||||||||||||
|
Corporate
|
(12.8 | ) | (12.3 | ) | (49.6 | ) | (48.4 | ) | ||||||||
|
Former
operations
|
(3.3 | ) | (7.3 | ) | (13.9 | ) | (26.5 | ) | ||||||||
|
Operating
profit
|
$ | 90.0 | 64.2 | 274.0 | 209.5 | |||||||||||
|
Supplemental
Financial Information
|
||||||||||||||||
|
Brink’s:
|
||||||||||||||||
|
Revenues:
|
||||||||||||||||
|
North
America
|
$ | 231.8 | 215.3 | 886.3 | 830.0 | |||||||||||
|
International
|
525.0 | 416.8 | 1,848.3 | 1,524.3 | ||||||||||||
|
Revenues
|
$ | 756.8 | 632.1 | 2,734.6 | 2,354.3 | |||||||||||
|
Operating
profit:
|
||||||||||||||||
|
North
America
|
$ | 19.6 | 17.8 | 70.4 | 69.9 | |||||||||||
|
International
|
56.8 | 37.0 | 152.9 | 114.2 | ||||||||||||
|
Operating
profit
|
$ | 76.4 | 54.8 | 223.3 | 184.1 | |||||||||||
|
Brink’s
Home Security:
|
||||||||||||||||
|
Revenues
|
$ | 126.0 | 113.0 | 484.4 | 439.0 | |||||||||||
|
Operating
profit:
|
||||||||||||||||
|
Recurring
services
|
$ | 54.0 | 49.8 | 206.4 | 184.3 | |||||||||||
|
Investment
in new
subscribers
|
(24.3 | ) | (20.8 | ) | (92.2 | ) | (84.0 | ) | ||||||||
|
Operating
profit
|
$ | 29.7 | 29.0 | 114.2 | 100.3 | |||||||||||
|
Monthly
recurring revenues
(a)
|
$ | 37.2 | 33.1 | |||||||||||||
|
Annualized
disconnect
rate
|
6.7 | % | 6.1 | % | 7.0 | % | 6.4 | % | ||||||||
|
Number
of subscribers (in
thousands):
|
||||||||||||||||
|
Beginning
of
period
|
1,200.2 | 1,098.3 | 1,124.9 | 1,018.8 | ||||||||||||
|
Installations
|
44.1 | 43.7 | 180.8 | 175.0 | ||||||||||||
|
Disconnects
|
(20.4 | ) | (17.1 | ) | (81.8 | ) | (68.9 | ) | ||||||||
|
End
of period
|
1,223.9 | 1,124.9 | 1,223.9 | 1,124.9 | ||||||||||||
|
Average
number of
subscribers
|
1,213.1 | 1,112.2 | 1,176.1 | 1,072.5 | ||||||||||||
|
(a)
|
see
“Non-GAAP Reconciliations” below.
|
9
THE
BRINK’S COMPANY
and
subsidiaries
Supplemental
Financial Information (continued)
(Unaudited)
COSTS
OF FORMER OPERATIONS INCLUDED IN CONTINUING OPERATIONS
|
Three
Months Ended
|
Years
Ended
|
|||||||||||||||
|
December
31,
|
December
31,
|
|||||||||||||||
|
(In
millions)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
|
Company-sponsored
postretirement benefits other
|
||||||||||||||||
|
than
pensions
|
$ | 0.9 | 2.9 | 4.2 | 13.1 | |||||||||||
|
Black
lung
|
0.6 | 0.9 | 3.8 | 3.7 | ||||||||||||
|
Pension
|
0.6 | 1.2 | 1.7 | 4.0 | ||||||||||||
|
Administrative,
legal and other expenses, net
|
1.5 | 2.6 | 4.9 | 7.0 | ||||||||||||
|
Gains
on sale of property and equipment and other income
|
(0.3 | ) | (0.3 | ) | (0.7 | ) | (1.3 | ) | ||||||||
|
Costs
of former operations
|
$ | 3.3 | 7.3 | 13.9 | 26.5 | |||||||||||
|
|
INCOME
(LOSS) FROM DISCONTINUED OPERATIONS
|
|
Three
Months Ended
|
Years
Ended
|
|||||||||||||||
|
December
31,
|
December
31,
|
|||||||||||||||
|
(In
millions)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
|
Brink’s
United Kingdom domestic cash handling operations:
|
||||||||||||||||
|
Gain
on sale
|
$ | 0.8 | - | 1.5 | - | |||||||||||
|
Results
of
operations
|
- | (2.0 | ) | (13.9 | ) | (10.0 | ) | |||||||||
|
BAX
Global:
|
||||||||||||||||
|
Gain
on sale
|
- | (1.0 | ) | - | 586.7 | |||||||||||
|
Results
of
operations - January 2006
|
- | - | - | 7.0 | ||||||||||||
|
Adjustments
to contingent liabilities of former operations:
|
||||||||||||||||
|
Health
Benefit Act liabilities
(a)
|
1.7 | 149.4 | 1.7 | 148.3 | ||||||||||||
|
Other
|
(2.1 | ) | (2.4 | ) | (1.8 | ) | 9.3 | |||||||||
|
Income
(loss) from discontinued operations before
|
||||||||||||||||
|
income
taxes
|
0.4 | 144.0 | (12.5 | ) | 741.3 | |||||||||||
|
Provision
(benefit) for income taxes
|
0.4 | 57.0 | (1.2 | ) | 267.2 | |||||||||||
|
Income
(loss) from discontinued operations
|
$ | - | 87.0 | (11.3 | ) | 474.1 | ||||||||||
|
(a)
|
The
“Tax Relief and Health Care Act of 2006” was enacted in the fourth quarter
of 2006, resulting in a significant reduction in estimated
future premiums
owed to the UMWA Combined Benefit Fund.
|
10
THE
BRINK’S COMPANY
and
subsidiaries
Supplemental
Financial Information (continued)
(Unaudited)
SELECTED
CASH FLOW INFORMATION
|
Three
Months Ended
|
Years
Ended
|
|||||||||||||||
|
December
31,
|
December
31,
|
|||||||||||||||
|
(In
millions)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
|
Depreciation
and amortization:
|
||||||||||||||||
|
Brink’s
|
$ | 30.2 | 23.5 | 109.6 | 92.3 | |||||||||||
|
Brink’s
Home
Security
|
20.3 | 17.9 | 77.7 | 67.6 | ||||||||||||
|
Corporate
|
- | 0.2 | 0.4 | 0.7 | ||||||||||||
|
Depreciation
and
amortization
|
$ | 50.5 | 41.6 | 187.7 | 160.6 | |||||||||||
|
Capital
expenditures:
|
||||||||||||||||
|
Brink’s
|
$ | 48.4 | 33.7 | 141.6 | 113.5 | |||||||||||
|
Brink’s
Home
Security:
|
||||||||||||||||
|
Security
systems
|
40.3 | 37.7 | 165.2 | 150.1 | ||||||||||||
|
Other
|
2.3 | 2.9 | 12.6 | 13.8 | ||||||||||||
|
Corporate
|
- | - | 0.2 | 0.3 | ||||||||||||
|
Capital
expenditures
|
$ | 91.0 | 74.3 | 319.6 | 277.7 | |||||||||||
|
Other
Brink’s Home Security cash flow information:
|
||||||||||||||||
|
Impairment
charges from
subscriber disconnects
|
$ | 12.5 | 11.4 | 50.4 | 47.1 | |||||||||||
|
Amortization
of deferred
revenue
|
(8.6 | ) | (7.6 | ) | (34.2 | ) | (31.2 | ) | ||||||||
|
Deferral
of subscriber
acquisition costs (current year payments)
|
(5.8 | ) | (5.9 | ) | (23.8 | ) | (24.4 | ) | ||||||||
|
Deferral
of revenue from new
subscribers (current year receipts)
|
11.6 | 11.4 | 47.4 | 44.9 | ||||||||||||
11
THE
BRINK’S COMPANY
and
subsidiaries
NON-GAAP
RECONCILIATIONS
(Unaudited)
Monthly
Recurring Revenues
A
reconciliation of monthly recurring revenues to reported Brink’s Home Security
revenues follows:
|
Years
Ended
|
||||||||
|
December
31,
|
||||||||
|
(In
millions)
|
2007
|
2006
|
||||||
|
December:
|
||||||||
|
Monthly
recurring revenues (“MRR”) (a)
|
$ | 37.2 | 33.1 | |||||
|
Amounts
excluded from
MRR:
|
||||||||
|
Amortization
of deferred
revenue
|
2.8 | 2.5 | ||||||
|
Other
revenues
(b)
|
1.6 | 2.1 | ||||||
|
Revenues
on a GAAP
basis
|
$ | 41.6 | 37.7 | |||||
|
Revenues
(GAAP basis):
|
||||||||
|
December
|
$ | 41.6 | 37.7 | |||||
|
January
–
November
|
442.8 | 401.3 | ||||||
|
January
–
December
|
$ | 484.4 | 439.0 | |||||
|
(a)
|
MRR
is calculated based on the number of subscribers at period
end multiplied
by the average fee per subscriber received in the last month
of the period
for contracted monitoring and maintenance services.
|
|
(b)
|
Revenues
that are not pursuant to monthly contractual billings.
|
The
company uses MRR as one factor in the evaluation of BHS’ performance and
believes the presentation of MRR is useful to investors because the measure
is
widely used in the industry to assess the amount of recurring revenues
from
subscriber fees that a monitored security business produces. This
supplemental non-GAAP information should be reviewed in conjunction with
the
company’s consolidated statements of operations.
|
Net
Debt (Cash) reconciled to GAAP measures
|
||||||||
|
December
31,
|
||||||||
|
(In
millions)
|
2007
|
2006
|
||||||
|
Short-term
debt
|
$ | 15.1 | 33.4 | |||||
|
Long-term
debt
|
97.5 | 136.8 | ||||||
|
Debt
|
112.6 | 170.2 | ||||||
|
Less
cash and cash equivalents
|
(196.4 | ) | (137.2 | ) | ||||
|
Net
Debt (Cash)
|
$ | (83.8 | ) | 33.0 | ||||
Net
Debt (Cash) is utilized by management as a measure of the company’s financial
leverage and the company believes that investors also may find Net Debt
(Cash)
to be helpful in evaluating the financial leverage of the
company. This supplemental non-GAAP information should be reviewed in
conjunction with the company’s consolidated balance sheets in the company’s
report on Form 10-K for the year ended December 31, 2007.
12
THE
BRINK’S COMPANY
and
subsidiaries
NON-GAAP
RECONCILIATIONS (continued)
(Unaudited)
Brink’s,
Incorporated Organic Revenue Growth
|
Three
Months Ended
|
%
change
|
Years
Ended
|
%
change
|
|||||||||||||
|
(In
millions)
|
December
31,
|
from
prior period
|
December
31,
|
from
prior period
|
||||||||||||
|
2005
revenues
|
$ | 548.4 | 8 | 2,113.3 | 12 | |||||||||||
|
Effects
on revenue of:
|
||||||||||||||||
|
Organic
Revenue
Growth
|
52.0 | 9 | 173.5 | 8 | ||||||||||||
|
Acquisitions
and dispositions,
net
|
7.8 | 1 | 39.3 | 2 | ||||||||||||
|
Changes
in currency exchange
rates
|
23.9 | 5 | 28.2 | 1 | ||||||||||||
|
2006
revenues
|
632.1 | 15 | 2,354.3 | 11 | ||||||||||||
|
Effects
on revenue of:
|
||||||||||||||||
|
Organic
Revenue
Growth
|
62.7 | 10 | 212.9 | 9 | ||||||||||||
|
Acquisitions
and dispositions,
net
|
6.6 | 1 | 24.8 | 1 | ||||||||||||
|
Changes
in currency exchange
rates
|
55.4 | 9 | 142.6 | 6 | ||||||||||||
|
2007
revenues
|
$ | 756.8 | 20 | 2,734.6 | 16 | |||||||||||
The
supplemental Brink’s, Incorporated Organic Revenue Growth information presented
above is non-GAAP financial information that management uses to evaluate
results
of existing operations without the effects of acquisitions, dispositions
and
currency exchange rates. The company believes that this information
may be helpful to investors in understanding the performance of the company’s
operations. The limitation of this measure is that the effects of
acquisitions, dispositions and changes in values of foreign currencies
cannot be
completely separated from changes in prices (which include the effects
of
inflation) and volume of a unit’s base business. This supplemental
non-GAAP information does not affect net income or any other reported
amounts. This supplemental non-GAAP information should be reviewed in
conjunction with the company’s consolidated statements of
operations.
Tax
Estimates
The
financial information set forth in this release, including tax-related
items,
reflects estimates based on information available at this time. While
The Brink’s Company believes these estimates to be appropriate, these amounts
could differ materially from actual reported amounts in The Brink’s Company’s
Form 10-K for the year ended December 31, 2007. In particular,
determining The Brink’s Company’s actual tax balances and provisions as of
December 31, 2007, and for the year then ended require extensive internal
and
external review of tax data (including consolidating and reviewing the
tax
provisions of numerous domestic and foreign entities) which is being
completed
in the ordinary course of preparing The Brink’s Company’s Form
10-K.
Important
Information
In
connection with its 2008 annual meeting of shareholders, The Brink’s Company
plans to file with the Securities and Exchange Commission (SEC) and mail
to its
shareholders eligible to vote at the 2008 annual meeting of shareholders
a
definitive proxy statement. THE COMPANY ADVISES ITS SECURITY HOLDERS
TO READ THE
DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS FOR THE 2008
ANNUAL
MEETING OF SHAREHOLDERS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN
IMPORTANT INFORMATION. Security holders may obtain a free copy of the
definitive
proxy statement and other documents that the company files with the SEC
at the
SEC’s website at http://www.sec.gov. The definitive proxy statement and these
other documents may also be obtained free of charge from The Brink’s Company
upon request by contacting the Corporate Secretary at 1801 Bayberry Court,
P. O.
Box 18100, Richmond, Virginia 23226-8100.
13
Certain
Information Regarding Participants
The
Brink’s Company, its directors and named executive officers may be deemed to
be
participants in the solicitation of proxies from the company’s security holders
in connection with its 2008 annual meeting of shareholders. Security
holders may
obtain information regarding the names, affiliations and interests of
such
individuals in the company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2006 and its definitive proxy statement dated March
23, 2007,
each of which has been filed with the SEC. Additional information regarding
such
individuals will be included in the definitive proxy statement for the
2008
annual meeting of shareholders. To the extent holdings of the company’s
securities have changed from the amounts included in the definitive proxy
statement dated March 23, 2007, such changes have been reflected on Forms
4 and
5 filed with the SEC and will be reflected in the definitive proxy statement
for
the 2008 annual meeting of shareholders.
#
#
#
14