UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report (Date of Earliest Event Reported): October 30, 2008
THE
BRINK’S COMPANY
(Exact
name of registrant as specified in its charter)
|
Virginia
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1-9148
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54-1317776
|
|
(State
or other jurisdiction of incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
1801
Bayberry Court
P.
O. Box 18100
Richmond,
VA 23226-8100
(Address
and zip code of
principal
executive offices)
Registrant’s
telephone number, including area code: (804) 289-9600
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General
Instruction A.2.):
[ ] Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting
materials pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
[ ] Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
|
Item
2.02.
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Results
of Operations and Financial
Condition.
|
On
October 30, 2008, The Brink’s Company issued a press release regarding its
results for the third quarter ended September 30, 2008. A copy of this release
is being furnished as Exhibit 99 to this Current Report on Form
8-K.
In
accordance with General Instruction B.2 of Form 8-K, the information in this
Current Report on Form 8-K, including Exhibit 99, shall not be deemed “filed”
for the purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or otherwise subject to the liability of that section, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933,
as amended, except as shall be expressly set forth by specific references in
such a filing.
|
Item
9.01.
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Financial
Statements and Exhibits.
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(d)
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Exhibits
|
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99
|
Press
Release, dated October 30, 2008, issued by The Brink’s
Company.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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THE
BRINK’S COMPANY
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|
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(Registrant)
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|
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Date:
October 30, 2008
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By: /s/ Michael J.
Cazer
|
|
Michael
J. Cazer
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Vice
President and
|
|
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Chief
Financial Officer
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EXHIBIT
INDEX
EXHIBIT DESCRIPTION
99 Press
Release, dated October 30, 2008, issued by The Brink’s Company.
Exhibit
99
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The
Brink’s Company
|
|
|
1801
Bayberry Court
|
|
|
P.O.
Box 18100
|
|
|
Richmond,
VA 23226-8100 USA
|
|
|
Tel.
804.289.9600
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|
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Fax
804.289.9770
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PRESS
RELEASE
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|
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FOR
IMMEDIATE RELEASE
|
Contact:
Investor
Relations
804.289.9709
THE
BRINK’S COMPANY REPORTS
HIGHER
THIRD-QUARTER EARNINGS
Earnings
Rise 53% on Profit Growth from International Operations and Home Security
Unit
BHS
Spin-Off Scheduled for October 31
RICHMOND, Va., October 30,
2008 – The Brink’s Company (NYSE: BCO), a global leader in
security-related services, reported third-quarter income from continuing
operations of $46 million or $1.00 per share, up 53% from $30 million or 64
cents per share in last year’s third quarter. The improved results
were driven by higher profits at both Brink’s, Incorporated (“Brink’s”) and
Brink’s Home Security (“BHS”). The year-over-year earnings comparison
was also helped by a lower effective tax rate.
Third-quarter
revenue was $949 million, up 16% (11% on a constant currency basis) from $817
million in 2007. Operating profit rose 30% (26% on a constant
currency basis) to $79 million, up from $61 million last year. At
Brink’s, higher profits from international operations more than offset lower
results in North America. Profits at BHS improved due to continued
growth in the subscriber base and higher monitoring rates.
BHS is
scheduled to be spun off as an independent publicly traded company on October
31, 2008. The new company will trade on the New York Stock Exchange
under the symbol “CFL.” After the spin-off, Brink’s will report
results from BHS and corporate expenses related to the spin-off as discontinued
operations.
Michael
T. Dan, chairman, president and chief executive officer of The Brink’s Company,
said: “Once again, the diversity of Brink’s global operations enabled us to
deliver strong earnings growth in a difficult economic
environment. Revenue increased in all regions, even after excluding
the effect of changes in currency exchange rates. Profits improved in
Europe and Asia, and were especially
1
strong in
Latin America. The outstanding profit growth from international
operations was partially offset by lower profits in North America.”
Regarding
the outlook for Brink’s, Dan added: “For 2008, we are on track to meet or exceed
our goal of high single-digit percentage revenue growth, and our full-year
operating margin should be between 8.5% and 9%. Like most companies,
we’re having difficulty providing meaningful direction on our 2009 performance,
as the likelihood of a global economic slowdown widens the range of potential
operating results. We feel very good about our competitive position,
our growth strategy is sound, and we have a strong balance
sheet. Brink’s is a disciplined company with cost reduction efforts
in place, so I’m confident that we will navigate successfully through the
challenges of 2009. As we gain clarity on the state of the global
economy, we should be able to provide more direction regarding next year’s
revenue and profit goals.”
Bob
Allen, president and chief executive officer of BHS, added: “Brink’s
Home Security again reported solid growth in revenue, operating profit, monthly
recurring revenue and subscribers during a period of continued disruption in the
housing market. On a full-year basis for 2008, we expect to deliver
subscriber growth in the mid-single-digit percentage range, revenue growth of
about 10% and double-digit operating profit growth. Looking forward
to 2009, we expect continued growth in subscribers, revenue and operating
profit.”
Business Unit Performance:
Third-Quarter 2008 Versus 2007
Brink’s,
Incorporated (“Brink’s”)
Brink’s,
the company’s secure transportation and cash management unit, had third-quarter
revenue of $813 million, up 17% (12% on a constant currency basis) from $693
million in the year-ago quarter. Operating profit rose 28% (23% on a
constant currency basis) to $68 million, up from $53 million last
year. The operating profit margin was 8.4% versus 7.7% last
year. The increase in operating profit was due primarily to improved
results in Latin America and Europe.
Capital
expenditures during the quarter totaled $49 million, bringing year-to-date
expenditures to $119 million. Full-year capital spending at Brink’s
is expected to be between $165 million and $175 million.
2
Brink’s
International
Third-quarter
revenue from international operations was $576 million, up 23% (15% on a
constant currency basis) from $469 million in 2007, reflecting increases in all
regions. Operating profit rose 60% (52% on a constant currency basis)
to $56 million, up from $35 million last year, due primarily to higher profits
in Latin American and European operations. The operating profit
margin for international operations was 9.8%, up from 7.5% in last year’s third
quarter.
EMEA (Europe, Middle East,
Africa): Third-quarter revenue for EMEA was $357 million, up
17% (7% on a constant currency basis) from $306 million in
2007. Operating profit increased due primarily to improved
performance in a number of countries and favorable changes in foreign exchange
rates.
Latin
America: Third-quarter revenue in Latin America increased 37%
(30% on a constant currency basis) to $201 million, up from $147 million in
2007. Operating profit increased significantly over last year as
continued growth in Venezuela was supplemented by higher profits in Brazil,
Argentina and Colombia. Revenues from the currency conversion project
in Venezuela, which totaled approximately $4 million in the third quarter and
$50 million for the year-to-date period, are expected to continue to decline in
the fourth quarter as the project nears completion.
Asia-Pacific: Third-quarter
revenue in Asia-Pacific rose 18% (16% on a constant currency basis) to $18
million versus $15 million last year. Operating profit increased due
to improved results throughout the region.
Brink’s
North America
Third-quarter
revenue in North America was $238 million, up 6% from $224 million last
year. Operating profit was $12 million, down 34% from $18 million in
the year-ago quarter. The operating profit margin for the quarter was
5.0%, down from 7.9% last year. The profit decline was due mainly to
higher labor costs, a portion of which is related to increased investment in IT
and marketing personnel as the company builds its Cash Logistics
operations.
Brink’s
Home Security (“BHS”)
Third-quarter
revenue at BHS rose 9% to $135 million, up from $124 million in 2007 due
primarily to continued growth in the subscriber base and higher average
monitoring rates. BHS ended the quarter with approximately 1.3
million subscribers, up 7% from the year-ago
level. Monthly
3
recurring
revenue rose 10% to $40 million (see Non-GAAP Reconciliations for a
reconciliation of monthly recurring revenue to reported revenue).
Operating
profit was $32 million, up 26% from $26 million last year as higher profits from
recurring services offset increased investment in new
subscribers. The third-quarter operating profit margin was 23.8%, up
from 20.5% in 2007.
BHS
installed approximately 42,700 systems for new customers during the quarter
versus approximately 45,700 installations in the year-ago
quarter. The decline in installations reflects the ongoing weakness
in the housing market and the overall economy.
The
annualized disconnect rate for the third quarter was 9.0%, up from 6.9% in the
year-ago quarter. Approximately half of the increase in the rate was
due to higher residential and commercial subscriber
cancellations. The remaining balance was due to multi-family contract
cancellations and technical subscriber adjustments, neither of which affects
impairment charges. BHS expects the full-year disconnect
rate in 2008 to range between 7.5% and 8.0%.
Third-quarter
capital expenditures at BHS totaled $45 million, bringing year-to-date
expenditures to $135 million. Capital expenditures for the full year
are expected to range between $175 million and $185 million.
Corporate
Expenses
Total
corporate expense in the third quarter was $22 million, up from $14 million in
2007. The increase was driven by foreign exchange losses on
intercompany cash movement as a result of the rapid strengthening of the U.S.
dollar and approximately $2 million of expenses related to the spin-off of
BHS. Full-year expenses related to strategic reviews, proxy matters
and the spin-off are expected to range between $18 million and $19
million. Upon completion of the spin-off, approximately $13 million
of these expenses will be recorded in discontinued operations.
Costs Related to Former
Operations Included in Continuing Operations
Third-quarter
income related to former operations was $500,000 compared to expenses of nearly
$4 million in 2007. The improvement was due primarily to lower
pension and postretirement medical expenses.
4
Taxes
The effective income tax rate of 32.9%
for the quarter was significantly lower than the year-ago rate of
44.7%. The decrease in the tax rate for the 2008 quarter is due
primarily to the geographic mix of earnings and the improvement in results of
countries with valuation allowances in non-U.S. jurisdictions. Last
year’s higher rate included adjustments to tax assets and liabilities due to tax
law changes and audit results.
The
Brink’s Company’s effective tax rate for the full-year, which will reflect the
reclassification of BHS results into discontinued operations for all periods, is
expected to be between 24% and 26%. On a similar basis, The Brink’s
Company’s effective tax rate in the fourth quarter of 2008 is expected to be
between 28% and 30%. The Brink’s Company’s effective tax rate for
2009 is expected to be between 31% and 34%.
The
effective full-year tax rate for BHS in 2008 is expected to be between 38% and
40%.
Discontinued
Operations
Third-quarter
income from discontinued operations was $2 million or 3 cents per share versus a
loss of $4 million or 8 cents per share in the third quarter of
2007.
Net
Income
Third-quarter
net income, which includes results from continuing and discontinued operations,
was $48 million or $1.03 per share versus $26 million or 55 cents per share in
2007.
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 release includes,
but is not limited to, the timing and other expected characteristics of the
spin-off of BHS, expected revenue growth, cash flow and earnings for The Brink’s
Company and its subsidiaries in 2008 and 2009, including revenue growth and
operating profit margin at Brink’s and revenue, operating profit and subscriber
growth at BHS, Brink’s ability to navigate through the challenges of 2009,
anticipated revenues from the currency conversion project in Venezuela, expected
capital expenditures for 2008, ongoing weakness in the housing market, the
disconnect rate at BHS, expected expenses in 2008 related to strategic reviews,
proxy matters and the spin-off and the anticipated annual effective tax rate for
2008 and 2009. The forward-looking information in this release 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
impact of a potential global economic slowdown on the Company’s business
opportunities, access to the credit markets and funding requirements for its
pension plans and other employee benefits, the impact of instability in the
housing and credit markets on BHS’s customers and its disconnect rate, the
recent market volatility and its impact on the Company’s customers, the ability
of the Company to complete a successful spin-off of BHS, the satisfaction of all
conditions in order to complete a spin-off of BHS, demand for the services of
Brink’s and BHS, the implementation of investments in technology and value-added
services and cost
5
reduction
efforts and their impact on revenue and profit growth, the ability to identify
and execute further cost and operational improvements and efficiencies in the
core businesses, the ability of the businesses to cost effectively match
customer demand with appropriate resources, the willingness of Brink’s and BHS’
customers to absorb fuel surcharges and other future price increases, 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, corporate
expenses due to the implementation of the spin-off decision and shareholder
initiatives, decisions by the Company’s Board of Directors, regulatory and labor
issues and higher security threats, the impact of actions responding to current
market conditions in the United States, France and other European countries, the
return to profitability of operations in jurisdictions where Brink’s has
recorded 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, the ability
of the Company and its subsidiaries to obtain appropriate insurance coverage at
reasonable prices, 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, risks customarily associated with
operating in foreign countries including changing labor and economic conditions,
political instability, restrictions on repatriation of earnings and capital,
nationalization, expropriation and other forms of restrictive government
actions, costs associated with information technology and other ongoing
contractual obligations, BHS’ ability to maintain subscriber growth, the number
of household moves, the level of home sales or new home construction, the
performance of BHS’ equipment suppliers and dealers, BHS’ ability to
cost-effectively develop or incorporate new systems in a timely manner,
decisions regarding continued support of the developing commercial business, the
ability of the home security industry to dissuade law enforcement and
municipalities from refusing to respond to alarms, 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 timing of the pass-through of certain costs to third
parties and the timing of approvals by governmental authorities relating to the
disposal of the coal assets, changes to estimated liabilities and assets in
actuarial assumptions due to payments made, investment returns, annual actuarial
revaluations, and periodic revaluations of reclamation liabilities, the funding
levels, accounting treatment, investment performance and costs of the Company’s
pension plans and the VEBA, 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, black
lung claims incidence, the number of dependents of mine workers for whom
benefits are provided, actual retirement experience of the former coal
operation’s employees, 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, issuances of permits, 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, October 30, 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 November 13, 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 300060. A
webcast replay will also be available at www.brinkscompany.com.
6
THE
BRINK’S COMPANY
and
subsidiaries
Condensed
Consolidated Statements of Operations
(Unaudited)
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
September
30,
|
September
30
|
|||||||||||||||
|
(In
millions, except per share amounts)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
|
Revenues
|
$ | 948.8 | 817.0 | 2,801.1 | 2,336.2 | |||||||||||
|
Expenses:
|
||||||||||||||||
|
Cost
of revenues
|
718.6 | 624.7 | 2,112.3 | 1,791.8 | ||||||||||||
|
Selling,
general and administrative expenses
|
146.8 | 130.0 | 432.9 | 363.0 | ||||||||||||
|
Total expenses
|
865.4 | 754.7 | 2,545.2 | 2,154.8 | ||||||||||||
|
Other
operating income (expense), net
|
(4.5 | ) | (1.8 | ) | (5.1 | ) | 2.6 | |||||||||
|
Operating profit
|
78.9 | 60.5 | 250.8 | 184.0 | ||||||||||||
|
Interest
expense
|
(3.3 | ) | (2.5 | ) | (9.1 | ) | (8.0 | ) | ||||||||
|
Interest
and other income, net
|
4.6 | 3.0 | 9.7 | 6.7 | ||||||||||||
|
Income from continuing operations
before income taxes
|
||||||||||||||||
|
and minority
interest
|
80.2 | 61.0 | 251.4 | 182.7 | ||||||||||||
|
Provision
for income taxes
|
26.4 | 27.3 | 78.7 | 74.0 | ||||||||||||
|
Minority
interest
|
7.5 | 3.7 | 29.9 | 14.5 | ||||||||||||
|
Income from continuing
operations
|
46.3 | 30.0 | 142.8 | 94.2 | ||||||||||||
|
Income
(loss) from discontinued operations, net of tax
|
1.7 | (4.1 | ) | 4.0 | (11.3 | ) | ||||||||||
|
Net
income
|
$ | 48.0 | 25.9 | 146.8 | 82.9 | |||||||||||
|
Basic
earnings per common share:
|
||||||||||||||||
|
Continuing
operations
|
$ | 1.01 | 0.64 | 3.09 | 2.02 | |||||||||||
|
Discontinued
operations
|
0.03 | (0.09 | ) | 0.08 | (0.24 | ) | ||||||||||
|
Net income
|
1.04 | 0.56 | 3.18 | 1.78 | ||||||||||||
|
Diluted
earnings per common share:
|
||||||||||||||||
|
Continuing
operations
|
$ | 1.00 | 0.64 | 3.06 | 2.00 | |||||||||||
|
Discontinued
operations
|
0.03 | (0.08 | ) | 0.08 | (0.24 | ) | ||||||||||
|
Net income
|
1.03 | 0.55 | 3.15 | 1.76 | ||||||||||||
|
Weighted-average
common shares outstanding:
|
||||||||||||||||
|
Basic
|
46.1 | 46.6 | 46.2 | 46.5 | ||||||||||||
|
Diluted
|
46.6 | 47.1 | 46.7 | 47.0 | ||||||||||||
7
THE
BRINK’S COMPANY
and
subsidiaries
(Unaudited)
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
September
30,
|
September
30
|
|||||||||||||||
|
(In
millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
|
Segment
Information
|
||||||||||||||||
|
Revenues:
|
||||||||||||||||
|
Brink’s
|
$ | 813.4 | 692.7 | 2,404.0 | 1,977.8 | |||||||||||
|
Brinks Home
Security
|
135.4 | 124.3 | 397.1 | 358.4 | ||||||||||||
|
Revenues
|
$ | 948.8 | 817.0 | 2,801.1 | 2,336.2 | |||||||||||
|
Operating
profit:
|
||||||||||||||||
|
Brink’s
|
$ | 68.1 | 53.0 | 202.7 | 146.9 | |||||||||||
|
Brinks Home
Security
|
32.2 | 25.5 | 99.7 | 84.5 | ||||||||||||
|
Business segments
|
100.3 | 78.5 | 302.4 | 231.4 | ||||||||||||
|
Corporate
|
(21.9 | ) | (14.3 | ) | (51.3 | ) | (36.8 | ) | ||||||||
|
Former operations
|
0.5 | (3.7 | ) | (0.3 | ) | (10.6 | ) | |||||||||
|
Operating profit
|
$ | 78.9 | 60.5 | 250.8 | 184.0 | |||||||||||
|
Supplemental
Financial Information
|
||||||||||||||||
|
Brink’s:
|
||||||||||||||||
|
Revenues:
|
||||||||||||||||
|
International
|
$ | 575.8 | 468.5 | 1,701.4 | 1,323.3 | |||||||||||
|
North America
|
237.6 | 224.2 | 702.6 | 654.5 | ||||||||||||
|
Revenues
|
$ | 813.4 | 692.7 | 2,404.0 | 1,977.8 | |||||||||||
|
Operating profit:
|
||||||||||||||||
|
International
|
$ | 56.3 | 35.2 | 166.6 | 96.1 | |||||||||||
|
North America
|
11.8 | 17.8 | 36.1 | 50.8 | ||||||||||||
|
Operating profit
|
$ | 68.1 | 53.0 | 202.7 | 146.9 | |||||||||||
|
Brink’s
Home Security:
|
||||||||||||||||
|
Revenues
|
$ | 135.4 | 124.3 | 397.1 | 358.4 | |||||||||||
|
Operating profit:
|
||||||||||||||||
|
Recurring
services
|
$ | 55.7 | 49.1 | 172.7 | 152.4 | |||||||||||
|
Investment in new
subscribers
|
(23.5 | ) | (23.6 | ) | (73.0 | ) | (67.9 | ) | ||||||||
|
Operating profit
|
$ | 32.2 | 25.5 | 99.7 | 84.5 | |||||||||||
|
Monthly recurring revenues
(a)
|
$ | 39.8 | 36.3 | |||||||||||||
|
Annualized disconnect
rate
|
9.0 | % | 6.9 | % | 7.4 | % | 7.0 | % | ||||||||
|
Number of subscribers (in
thousands):
|
||||||||||||||||
|
Beginning of
period
|
1,271.5 | 1,175.1 | 1,223.9 | 1,124.9 | ||||||||||||
|
Installations
|
42.7 | 45.7 | 131.5 | 136.7 | ||||||||||||
|
Disconnects
|
(28.9 | ) | (20.6 | ) | (70.1 | ) | (61.4 | ) | ||||||||
|
End of period
|
1,285.3 | 1,200.2 | 1,285.3 | 1,200.2 | ||||||||||||
|
Average number of
subscribers
|
1,279.1 | 1,187.7 | 1,259.0 | 1,163.8 | ||||||||||||
|
(a)
|
see
“Non-GAAP Reconciliations”
below.
|
8
THE
BRINK’S COMPANY
and
subsidiaries
Supplemental
Financial Information (continued)
(Unaudited)
SELECTED
CASH FLOW INFORMATION
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
September
30,
|
September
30,
|
|||||||||||||||
|
(In
millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
|
Depreciation
and amortization:
|
||||||||||||||||
|
Brink’s
|
$ | 31.5 | 28.7 | 92.4 | 79.4 | |||||||||||
|
Brink’s Home
Security
|
21.5 | 19.8 | 63.9 | 57.4 | ||||||||||||
|
Corporate
|
- | 0.1 | 0.2 | 0.4 | ||||||||||||
|
Depreciation and
amortization
|
$ | 53.0 | 48.6 | 156.5 | 137.2 | |||||||||||
|
Capital
expenditures:
|
||||||||||||||||
|
Brink’s
|
$ | 48.9 | 35.9 | 119.2 | 93.2 | |||||||||||
|
Brink’s Home
Security:
|
||||||||||||||||
|
Security systems
|
42.3 | 42.2 | 127.9 | 124.9 | ||||||||||||
|
Other
|
2.9 | 5.1 | 7.4 | 10.3 | ||||||||||||
|
Corporate
|
0.1 | 0.1 | 0.2 | 0.2 | ||||||||||||
|
Capital
expenditures
|
$ | 94.2 | 83.3 | 254.7 | 228.6 | |||||||||||
|
Other
Brink’s Home Security cash flow information:
|
||||||||||||||||
|
Impairment charges from
subscriber disconnects
|
$ | 16.7 | 13.6 | 41.4 | 37.9 | |||||||||||
|
Amortization of deferred
revenue
|
(10.5 | ) | (8.9 | ) | (30.5 | ) | (25.6 | ) | ||||||||
|
Deferral of subscriber
acquisition costs (current year payments)
|
(5.8 | ) | (5.9 | ) | (17.9 | ) | (18.0 | ) | ||||||||
|
Deferral of revenue from new
subscribers (current year receipts)
|
10.7 | 11.6 | 34.3 | 35.8 | ||||||||||||
9
THE
BRINK’S COMPANY
and
subsidiaries
NON-GAAP
RECONCILIATIONS
(Unaudited)
Monthly
Recurring Revenues
The
following table reconciles MRR to revenues, its closest GAAP
counterpart:
|
Nine
Months Ended
|
||||||||
|
September
30,
|
||||||||
|
(In
millions)
|
2008
|
2007
|
||||||
|
September:
|
||||||||
|
Monthly
recurring revenues (“MRR”) (a)
|
$ | 39.8 | 36.3 | |||||
|
Amounts excluded from
MRR:
|
||||||||
|
Amortization of deferred revenue
(b)
|
3.4 | 2.8 | ||||||
|
Other revenues
(c)
|
2.0 | 2.6 | ||||||
|
Revenues on a GAAP
basis
|
$ | 45.2 | 41.7 | |||||
|
Revenues
(GAAP basis):
|
||||||||
|
September
|
$ | 45.2 | 41.7 | |||||
|
January – August
|
351.9 | 316.7 | ||||||
|
January –
September
|
$ | 397.1 | 358.4 | |||||
|
(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)
|
Includes
amortization of deferred revenue related to active subscriber accounts as
well as recognition of deferred revenue related to subscriber accounts
that disconnect.
|
|
(c)
|
Revenues
that are not pursuant to monthly contractual billings, including revenues
from such sources as ad-hoc field service calls, product sales and
installation fees not subject to deferral, terminated contract penalty
billings for breached contracts, pass-through revenue (alarm permit fees,
false alarm fines, etc.) and partial month revenues recognized from
customers who disconnected during the last month of the period and are
therefore not included in MRR. This amount is reduced for
adjustments recorded against revenue (primarily customer goodwill credits
and other billing adjustments), and for the amount included in MRR for new
customers added during the last month of the period for those portions of
the month for which revenues were not recognized for such
customers.
|
The
company uses MRR, a non-GAAP measure, to evaluate performance. The
company 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 alarm business
produces. This supplemental non-GAAP information should be reviewed
in conjunction with the company’s consolidated statements of
operations.
10
THE
BRINK’S COMPANY
and
subsidiaries
NON-GAAP
RECONCILIATIONS (continued)
(Unaudited)
Net
Debt (Cash) reconciled to GAAP measures
|
September
30,
|
December
31,
|
|||||||
|
(In
millions)
|
2008
|
2007
|
||||||
|
Short-term
debt
|
$ | 6.2 | 12.4 | |||||
|
Long-term
debt
|
156.1 | 100.2 | ||||||
|
Debt
|
162.3 | 112.6 | ||||||
|
Less
cash and cash equivalents
|
(257.7 | ) | (196.4 | ) | ||||
|
Net Debt (Cash)
|
$ | (95.4 | ) | (83.8 | ) | |||
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-Q for the period ended September 30, 2008.
11
THE
BRINK’S COMPANY
and
subsidiaries
NON-GAAP
RECONCILIATIONS (continued)
(Unaudited)
Brink’s,
Incorporated Organic Revenue Growth
|
Three
Months Ended
|
%
change
|
Nine
Months Ended
|
%
change
|
|||||||||||||
|
(In
millions)
|
September
30,
|
from
prior period
|
September
30,
|
from
prior period
|
||||||||||||
|
2006
revenues
|
$ | 597.9 | 11 | 1,722.2 | 10 | |||||||||||
|
Effects
on revenue of:
|
||||||||||||||||
|
Organic revenue
growth
|
54.0 | 9 | 150.2 | 9 | ||||||||||||
|
Acquisitions and dispositions,
net
|
5.4 | 1 | 18.2 | 1 | ||||||||||||
|
Changes in currency exchange
rates
|
35.4 | 6 | 87.2 | 5 | ||||||||||||
|
2007
revenues
|
692.7 | 16 | 1,977.8 | 15 | ||||||||||||
|
Effects
on revenue of:
|
||||||||||||||||
|
Organic revenue
growth
|
80.3 | 12 | 242.6 | 12 | ||||||||||||
|
Acquisitions and dispositions,
net
|
1.7 | - | 15.8 | 1 | ||||||||||||
|
Changes in currency exchange
rates
|
38.7 | 5 | 167.8 | 9 | ||||||||||||
|
2008
revenues
|
$ | 813.4 | 17 | 2,404.0 | 22 | |||||||||||
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.
# #
#
12