The Brink’s Company (NYSE: BCO), a global leader in security-related
services, reported second-quarter GAAP earnings from continuing
operations of $5 million versus $21 million in 2010 ($.11 versus $.42
per share) on 34% revenue growth. Results include a charge of $10
million ($.13 per share after tax) related to the 2010 exit of
cash-in-transit operations in Belgium.
Non-GAAP earnings from continuing operations were $13 million versus $15
million in 2010 ($.27 per share versus $.30). Non-GAAP organic revenue,
which excludes the impact of acquisitions, dispositions and currency
translation, increased 9%. Results are summarized below.
Second Quarter
First Half
(In millions, except per share amounts)
2011
2010
% Change
2011
2010
% Change
GAAP
Revenues
$
979
729
34
%
$
1,893
1,465
29
%
Segment operating profit (a)
37
44
(17
)
89
79
12
Non-segment expense
(16
)
(13
)
29
(31
)
(24
)
32
Operating profit
20
32
(35
)
57
55
4
Income from continuing operations (b)
5
21
(74
)
24
16
52
Diluted EPS from continuing operations (b)
0.11
0.42
(74
)
0.50
0.32
56
Non-GAAP (c)
Revenues
$
979
729
34
%
$
1,893
1,465
29
%
Segment operating profit (a)
48
42
13
100
82
21
Non-segment expense
(16
)
(15
)
12
(32
)
(27
)
15
Operating profit
32
28
13
68
55
24
Income from continuing operations (b)
13
15
(11
)
28
26
7
Diluted EPS from continuing operations (b)
0.27
0.30
(10
)
0.58
0.53
9
Amounts may not add due to rounding.
(a)
Segment operating profit is a non-GAAP measure that is reconciled to
operating profit, a GAAP measure, on pages 3 and 6. Disclosure of
segment operating profit enables investors to assess operating
performance excluding non-segment income and expense.
(b)
Amounts reported are attributable to shareholders of The Brink’s
Company and exclude earnings related to noncontrolling interests.
(c)
Non-GAAP results are reconciled to GAAP results on pages 14 and 15.
Page 1
Summary Reconciliation of Second-Quarter GAAP to Non-GAAP EPS*
Second Quarter
First Half
2011
2010
2011
2010
GAAP EPS
$
0.11
$
0.42
$
0.50
$
0.32
Exclude income tax charge related to U.S. healthcare legislation
-
-
-
0.28
Adjust quarterly tax rate to full-year average rate
0.01
(0.08
)
-
(0.07
)
Exclude Belgium settlement charge
0.13
-
0.13
-
Exclude Mexico employee benefit settlement loss
0.01
-
0.01
-
Exclude gains on sale of investment securities and acquisition
-
-
(0.06
)
-
Exclude impact of net monetary asset remeasurement in Venezuela
-
(0.02
)
-
0.04
Exclude royalties from former home security unit
-
(0.02
)
-
(0.05
)
Non-GAAP EPS
$
0.27
$
0.30
$
0.58
$
0.53
*Non-GAAP results are reconciled to the applicable GAAP results in
more detail on pages 14 and 15. Amounts may not add due to
rounding.
Non-GAAP earnings declined as a segment operating profit increase of 13%
($6 million) was more than offset by increased borrowing costs ($4
million), higher Non-Segment expenses ($2 million) and higher
noncontrolling interest ($2 million). The segment profit increase was
driven by improvement in Global Services, currency ($6 million) and
acquisitions and dispositions ($2 million), partially offset by
restructuring and severance charges (up $6 million) and accounting
corrections (up $4 million).
Michael T. Dan, chairman, president and chief executive officer, said:
“Second-quarter segment operating results reflect the continuation of
difficult market conditions in North America and Europe, and continued
growth in Latin America and Asia-Pacific operations. The growth in
segment profit includes an increase of $6 million in restructuring
expenses and $4 million in accounting corrections. The non-GAAP segment
margin rate for the quarter was 4.9%, down from 5.8% in 2010. Excluding
results from the Mexico acquisition, which added $110 million of roughly
breakeven revenue, the margin rate was 5.6%.
“Our full-year outlook has not changed. The year-to-date segment margin
rate stands at 5.3% versus 5.6% for the same period in 2010. Last year,
a strong second half pushed the full-year rate to 7.2%. We expect a
strong second half to drive this year’s segment margin to the high end
of the range between 6.5% and 7.0%. It’s important to note that this
outlook includes the addition of about $400 million of revenue from our
Mexico acquisition. Our outlook for annual organic revenue growth
remains unchanged in the mid-to-high single-digit percentage range.
“In addition to normal seasonal strength, our confidence in a
second-half improvement is based in part on the early progress of our
turnaround efforts in Mexico, which we originally expected to be near
break-even profit levels in 2011. We now expect Mexico to be slightly
profitable by year-end and to deliver steadily improving results in 2012
and beyond. We’re also encouraged by the strong performance of our
Global Services business, which operates in all regions and continues to
benefit from the surging global movement of banknotes and precious
metals. Our biggest challenges continue to be in North America and
Europe, where our primary focus is to improve results through
productivity gains, cost controls and growth in high-value services. The
restructuring steps we’ve taken should supplement profit growth in the
second half of 2011.”
Page 2
Second Quarter 2011 vs. 2010
(In millions)
Segment Results – GAAP
Organic
Acquisitions /
Currency
% Change
2Q '10
Change
Dispositions (b)
(c)
2Q '11
Total
Organic
Revenues:
EMEA
$
286
16
(8
)
39
334
16
6
Latin America
185
39
110
27
361
95
21
Asia Pacific
28
8
-
3
39
36
27
International
500
62
102
69
733
47
12
North America
230
1
13
3
247
7
1
Total
$
729
64
115
72
979
34
9
Operating profit:
International
$
34
(2
)
(10
)
4
26
(22
)
(5
)
North America
10
(1
)
1
-
10
1
(6
)
Segment operating profit
44
(2
)
(9
)
4
37
(17
)
(5
)
Non-segment (a)
(13
)
(4
)
-
-
(16
)
29
29
Total
$
32
(6
)
(9
)
4
20
(35
)
(19
)
Segment operating margin:
International
6.8
%
3.6
%
North America
4.5
%
4.2
%
Segment operating margin
6.0
%
3.7
%
Segment Results - Non-GAAP
Organic
Acquisitions /
Currency
% Change
2Q '10
Change
Dispositions (b)
(c)
2Q '11
Total
Organic
Revenues:
EMEA
$
286
16
(8
)
39
334
16
6
Latin America
185
39
110
27
361
95
21
Asia Pacific
28
8
-
3
39
36
27
International
500
62
102
69
733
47
12
North America
230
1
13
3
247
7
1
Total
$
729
64
115
72
979
34
9
Operating profit:
International
$
32
(2
)
1
6
37
16
(5
)
North America
10
(1
)
1
-
10
1
(6
)
Segment operating profit
42
(2
)
2
6
48
13
(5
)
Non-segment
(15
)
(2
)
-
-
(16
)
12
12
Total
$
28
(4
)
2
6
32
13
(14
)
Segment operating margin:
International
6.4
%
5.1
%
North America
4.5
%
4.2
%
Segment operating margin
5.8
%
4.9
%
Amounts may not add due to rounding.
(a)
Includes income and expense not allocated to segments (see page 12
for details).
(b)
Includes operating results and gains/losses on acquisitions, sales
and exit of businesses.
(c)
Revenue and Segment Operating Profit: The “Currency” amount
in the table is the summation of the monthly currency changes,
plus (minus) the U.S. dollar amount of remeasurement currency
gains (losses) of bolivar fuerte-denominated net monetary assets
recorded under highly inflationary accounting rules related to the
Venezuelan operations. The monthly currency change is equal to the
Revenue or Operating Profit for the month in local currency, on a
country-by-country basis, multiplied by the difference in rates
used to translate the current period amounts to U.S. dollars
versus the translation rates used in the year-ago month. The
functional currency in Venezuela is the U.S. dollar under highly
inflationary accounting rules. Remeasurement gains and losses
under these rules are recorded in U.S. dollars but these gains and
losses are not recorded in local currency. Local currency Revenue
and Operating Profit used in the calculation of monthly currency
change for Venezuela have been derived from the U.S. dollar
results of the Venezuelan operations under U.S. GAAP (excluding
remeasurement gains and losses) using current period currency
exchange rates.
Page 3
Second-Quarter Results2011 versus 2010GAAP
and Non-GAAP*
Summary
GAAP:
-
Organic revenue growth 9%, margin 3.7% (down from 6.0%); margin 4.4%
excluding Mexico
-
International organic revenue growth 12%, margin 3.6% (down from
6.8%); margin 4.5% excluding Mexico
-
North America organic revenue growth 1%, margin 4.2% (down from 4.5%)
Non-GAAP:
-
Organic revenue growth 9%, margin 4.9% (down from 5.8%); margin 5.6%
excluding Mexico
-
International organic revenue growth 12%, margin 5.1% (down from
6.4%); margin 6.2% excluding Mexico
-
North America organic revenue growth 1%, margin 4.2% (down from 4.5%)
International Operations
EMEA:
GAAP
-
Revenue up 16% on favorable currency ($39 million) and organic growth
($16 million) offset by revenue loss related to exit of Belgium CIT
business ($9 million)
-
Revenue up 6% on organic basis due to higher volume in France, Germany
and Greece and growth in emerging markets and Global Services
-
Operating profit down $8 million due to $10 million charge related to
exit of Belgium CIT and severance (up $2 million) partially offset by
improved results in Global Services and emerging markets and benefit
of Belgium CIT exit ($2 million)
Non-GAAP
-
Revenue up 16% on favorable currency ($39 million) and organic growth
($16 million), offset by revenue loss related to exit of Belgium CIT
business ($9 million)
-
Revenue up 6% on organic basis due to higher volume in France, Germany
and Greece and growth in emerging markets and Global Services
-
Operating profit up $2 million due to improved results in Global
Services and emerging markets and benefit of Belgium CIT exit ($2
million) partially offset by charges for severance (up $2 million)
Latin America:
GAAP
-
Revenue up 95% due to Mexico acquisition ($110 million), 21% organic
revenue growth ($39 million) driven by inflation-based price increases
across the region and favorable currency ($27 million)
*see reconciliations to GAAP results on pages 14 and 15
Page 4
-
Operating profit down 2% due to restructuring and severance charges
($7 million, including $4 million in Mexico, versus $1 million in
2010), a decrease in Venezuela and accounting corrections (up $2
million), partially offset by organic growth in Chile, Colombia and
Argentina and favorable currency ($3 million)
Non-GAAP
-
Revenue up 95% due to Mexico acquisition ($110 million); 21% organic
revenue growth ($39 million) driven by inflation-based price increases
across the region and favorable currency ($27 million)
-
Operating profit up 12% due to organic growth in Chile, Colombia and
Argentina and favorable currency ($4 million), partially offset by
restructuring and severance charges ($6 million, including $3 million
in Mexico, versus $1 million in 2010), a decrease in Venezuela and
accounting corrections (up $2 million)
-
Organic profit down 6%
Asia-Pacific:
-
Revenue and operating profit up significantly due to growth in Hong
Kong, India and China
North American Operations
-
Revenue up 7% due to Canada acquisition ($13 million) and favorable
currency ($3 million)
-
Organic revenue up 1%
-
Operating profit flat (6% organic decline) with improvement in Canada
offset by lower profits in the U.S. due to lower CIT demand and
continued pricing pressure
Non-segment income (expense)
(see table on page 12)
GAAP
-
Up $4 million due to lower royalty income ($2 million) and higher
general and administrative costs ($1 million)
Non-GAAP
-
Up $2 million due primarily to higher general and administrative costs
($1 million)
Interest Expense
-
Up $4 million due to higher rates on private debt placement and
increased debt related to acquisitions
Interest and Other Income
Page 5
Year-to-Date June 2011 vs. 2010
(In millions)
Segment Results – GAAP
Organic
Acquisitions /
Currency
% Change
YTD '10
Change
Dispositions (b)
(c)
YTD '11
Total
Organic
Revenues:
EMEA
$
585
31
(14
)
39
641
9
5
Latin America
368
70
210
45
693
88
19
Asia Pacific
55
14
-
4
73
32
25
International
1,009
115
196
88
1,407
39
11
North America
456
(1
)
25
5
486
6
-
Total
$
1,465
114
221
93
1,893
29
8
Operating profit:
International
$
58
11
(10
)
12
71
22
19
North America
21
(4
)
-
-
17
(17
)
(20
)
Segment operating profit
79
7
(10
)
12
89
12
8
Non-segment (a)
(24
)
(8
)
-
-
(31
)
32
32
Total
$
55
(1
)
(10
)
12
57
4
(1
)
Segment operating margin:
International
5.8
%
5.1
%
North America
4.5
%
3.5
%
Segment operating margin
5.4
%
4.7
%
Segment Results – Non-GAAP
Organic
Acquisitions /
Currency
% Change
2Q '10
Change
Dispositions (b)
(c)
2Q '11
Total
Organic
Revenues:
EMEA
$
585
31
(14
)
39
641
9
5
Latin America
368
70
210
45
693
88
19
Asia Pacific
55
14
-
4
73
32
25
International
1,009
115
196
88
1,407
39
11
North America
456
(1
)
25
5
486
6
-
Total
$
1,465
114
221
93
1,893
29
8
Operating profit:
International
$
62
11
1
9
83
34
18
North America
21
(4
)
-
-
17
(17
)
(20
)
Segment operating profit
82
7
2
9
100
21
8
Non-segment
(27
)
(4
)
-
-
(32
)
15
15
Total
$
55
3
2
9
68
24
5
Segment operating margin:
International
6.1
%
5.9
%
North America
4.5
%
3.5
%
Segment operating margin
5.6
%
5.3
%
Amounts may not add due to rounding.
See page 3 for footnote explanations.
Page 6
Capital Expenditures
Second-quarter capital expenditures were $42 million versus $34 million
in the year-ago quarter. During the quarter, the company entered into
capital lease agreements of $16 million versus $13 million in the
year-ago quarter.
Year-to-date capital expenditures were $72 million versus $61 million in
the prior year. During the first six months, the company entered into
capital lease agreements of $30 million versus $14 million in the prior
year.
Full-year 2011 capital expenditures are expected to be between $180
million and $190 million, including approximately $30 million in Mexico.
Capital lease agreements in 2011 are expected to be between $40 million
and $50 million.
Income Taxes
2011 Versus 2010
On a GAAP basis, the second-quarter tax expense was $6 million
(effective rate of 36%) versus $6 million (effective rate of 21%) in
2010. Last year’s lower rate was primarily due to an $8 million non-cash
income tax benefit related to a tax settlement.
2011 Forecast
The effective income tax rate for 2011 is expected to be between 36% and
39%.
Recent Events
On June 10, Brink’s announced that it had reached an agreement to settle
previously disclosed litigation related to the exit of CIT operations in
Belgium in November 2010 upon satisfaction of certain conditions. Under
the agreement, if the conditions are satisfied, Brink’s will contribute
7 million euros (approximately $10 million) toward social payments to
former Brink’s Belgium employees in exchange for withdrawal by the
receivers of pending litigation and an agreement not to file additional
claims. These funds are currently being held in escrow. The conditions
of the agreement include a release from liability by affected employees,
the Belgian tax authority and the Belgian social security authority.
Assuming the conditions are met, the settlement is expected to be
completed during the third quarter of 2011. The company recorded a
charge of $10 million ($.13 per share after tax) related to the
settlement.
Brink’s continues to operate in Belgium through its Global Services
unit, which provides secure transport of diamonds, jewelry, precious
metals, banknotes and other commodities.
On July 22, Brink’s completed the sale of its U.S. Document Destruction
business to Shred-It USA, Inc. Terms of the transaction were not
disclosed.
Conference Call
Brink’s will host a conference call on July 28 at 11:00 a.m. Eastern
Time to review second-quarter results. Interested parties can listen by
calling (877) 407-8031 (domestic) or + (201) 689-8031 (international),
or via live webcast at www.Brinks.com.
Please call in at least five minutes prior to the start of the call. A
replay will be available through August 12, 2011, 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 374976. A
webcast replay will also be available at www.Brinks.com.
Page 7
About The Brink’s Company
The Brink’s Company (NYSE:BCO) is the world’s premier provider of secure
transportation and cash management services. For more information,
please visit The Brink’s Company website at www.Brinks.com
or call 804-289-9709.
Non-GAAP Results
Non-GAAP results described in this earnings release are financial
measures that are not required by, or presented in accordance with U.S.
generally accepted accounting principles (“GAAP”). The purpose of the
non-GAAP results is to report financial information without certain
income and expense items and adjust the quarterly non-GAAP tax rates so
that the non-GAAP tax rate in each of the quarters is equal to the
full-year non-GAAP tax rate. For 2011, a forecasted full-year tax rate
is used. The full year non-GAAP tax rate in both years excludes certain
pretax and tax income and expense amounts. The non-GAAP information
provides information to assist comparability and estimates of future
performance. Brink’s believes these measures are helpful in assessing
operations and estimating future results and enable period-to-period
comparability of financial performance. Non-GAAP results should not be
considered as an alternative to revenue, income or earnings per share
amounts determined in accordance with GAAP and should be read in
conjunction with their GAAP counterparts.
Forward-Looking Statements
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, future performance for The
Brink’s Company and its global operations, including organic revenue
growth and segment operating profit margin in 2011, performance in the
second half of 2011, results of the Mexican acquisition, the impact of
restructuring steps on profit growth, anticipated 2011 capital
expenditures and capital leases, the anticipated annual effective tax
rate for 2011, projected non-segment income and expense and interest
expense, projected net income attributable to noncontrolling interests,
and depreciation and amortization for 2011. 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.
Page 8
These risks, uncertainties and contingencies, many of which are beyond
our control, include, but are not limited to continuing market
volatility and commodity price fluctuations and their impact on the
demand for our services, our ability to improve volumes at favorable
pricing levels and increase cost efficiencies in North America, our
ability to obtain favorable pricing levels in Latin America to offset
recent cost increases, the implementation of high-value solutions,
investments in technology and value-added services and their impact on
revenue and profit growth, the ability to identify and execute further
cost and operational improvements and efficiencies in our core
businesses, our ability to integrate successfully recently acquired
companies, including acquisitions in Mexico and Canada, and improve
their operating profit margins, the willingness of our customers to
absorb fuel surcharges and other future price increases, the actions of
competitors, our ability to identify acquisitions and other strategic
opportunities in emerging markets, regulatory and labor issues in many
of our global operations and security threats worldwide, the impact of
turnaround actions responding to current conditions in Europe and our
productivity and cost control efforts in that region, the stability of
the Venezuelan economy and changes in Venezuelan policy regarding
exchange rates, fluctuations in value of the Venezuelan bolivar fuerte,
our ability to obtain necessary information technology and other
services at favorable pricing levels from third party service providers,
variations in costs or expenses and performance delays of any public or
private sector supplier, service provider or customer, our ability to
obtain appropriate insurance coverage, positions taken by insurers with
respect to claims made and the financial condition of insurers, safety
and security performance, our loss experience, changes in insurance
costs, the outcome of pending and future claims and litigation,
including claims in Belgium relating to our former CIT business in that
country, risks customarily associated with operating in foreign
countries including changing labor and economic conditions, currency
devaluations, safety and security issues, political instability,
restrictions on repatriation of earnings and capital, nationalization,
expropriation and other forms of restrictive government actions, costs
associated with the purchase and implementation of cash processing and
security equipment, employee and environmental liabilities in connection
with our former coal operations, black lung claims incidence, the impact
of the Patient Protection and Affordable Care Act on black lung
liability and operations, changes to estimated liabilities and assets in
actuarial assumptions due to payments made, investment returns and
annual actuarial revaluations, the funding requirements, accounting
treatment, investment performance and costs and expenses of our pension
plans, the VEBA and other employee benefits, mandatory or voluntary
pension plan contributions, the nature of our hedging relationships, the
strength of the U.S. dollar relative to foreign currencies and foreign
currency exchange rates, changes in estimates and assumptions underlying
our critical accounting policies, access to the capital and credit
markets, seasonality, pricing and other competitive industry factors.
Additional factors that could cause our results to differ materially
from those described in the forward-looking statements can be found
under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for
the period ended December 31, 2010 and in our other public filings with
the Securities and Exchange Commission. Readers are urged to review and
consider carefully the disclosures we make in our filings with the
Securities and Exchange Commission. 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.
Page 9
The Brink’s Company and subsidiaries
Summary of Selected Results and Outlook (Unaudited)
(In millions)
Outlook:
2011 Revenue: Mid-to-high single-digit percentage organic
growth over 2010
2011 Segment Margin: High end of 6.5% to 7.0% (includes
impact of 2010 acquisitions)
GAAP
Non-GAAP
Full-Year
Full Year 2011
Full-Year
Full Year 2011
2010
Estimate
2010
Estimate
Non-Segment Expense:
General and administrative
$
39
40
$
39
40
Retirement plans
23
25
23
25
Royalty income (a)
(7
)
(2)
(2
)
(2)
Acquisition loss (b)
9
-
-
-
Non-Segment Expense
$
63
63
$
59
63
Effective income tax rate
48
%
36% – 39%
36
%
36% – 39%
Interest Expense
$
15
20 – 24
$
15
20 – 24
Net income attributable to noncontrolling interests
$
16
20 – 24
$
17
20 – 24
Fixed Assets acquired:
Capital expenditures (c)
$
149
180 – 190
$
149
180 – 190
Capital leases
34
40 – 50
34
40 – 50
Total
$
183
220 – 240
$
183
220 – 240
Depreciation and amortization
$
137
160 – 170
$
137
160 – 170
Amounts may not add due to rounding.
(a)
Non-GAAP reflects the elimination of royalties from former home
security unit in 2010.
(b)
Amount is the net of $14 million remeasurement loss on our
previously held noncontrolling interest in Servico Pan Americano
de Proteccion, S.A. de C.V. (“SPP”) in Mexico and a $5 million
bargain purchase gain related to the acquisition of a controlling
interest in SPP.
(c)
The 2011 estimate includes $30 million related to the acquisition
in Mexico.
Page 10
The Brink’s Company and subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In millions, except per share amounts)
Second Quarter
First Half
2011
2010
2011
2010
Revenues
$
979.3
729.4
1,892.6
1,464.8
Costs and expenses:
Cost of revenues
808.6
603.6
1,566.2
1,213.7
Selling, general and administrative expenses
142.0
102.6
263.7
202.6
Total costs and expenses
950.6
706.2
1,829.9
1,416.3
Other operating income (expense)
(8.3
)
8.3
(5.3
)
6.8
Operating profit
20.4
31.5
57.4
55.3
Interest expense
(5.9
)
(2.3
)
(11.7
)
(4.8
)
Interest and other income (expense)
1.1
0.7
5.5
2.1
Income from continuing operations before tax
15.6
29.9
51.2
52.6
Provision for income taxes
5.6
6.3
17.0
30.6
Income from continuing operations
10.0
23.6
34.2
22.0
Income (loss) from discontinued operations, net of tax
2.6
0.8
3.7
(2.6
)
Net income
12.6
24.4
37.9
19.4
Less net income attributable to noncontrolling interests
(4.7
)
(2.9
)
(10.0
)
(6.1
)
Net income attributable to Brink’s
$
7.9
21.5
27.9
13.3
Amounts attributable to Brink’s:
Income from continuing operations
$
5.3
20.7
24.2
15.9
Income (loss) from discontinued operations
2.6
0.8
3.7
(2.6
)
Net income attributable to Brink’s
$
7.9
21.5
27.9
13.3
Earnings (loss) per share attributable to Brink’s common
shareholders (a):
Basic:
Continuing operations
$
0.11
0.42
0.51
0.33
Discontinued operations
0.05
0.02
0.08
(0.05
)
Net income
$
0.17
0.44
0.58
0.27
Diluted:
Continuing operations
$
0.11
0.42
0.50
0.32
Discontinued operations
0.05
0.02
0.08
(0.05
)
Net income
$
0.16
0.44
0.58
0.27
(a) Earnings per share may not add due to rounding.
Weighted-average shares
Basic
47.8
48.8
47.7
48.8
Diluted
48.1
49.1
48.0
49.1
Page 11
The Brink’s Company and subsidiaries
Supplemental Financial Information (Unaudited)
(In millions)
Second Quarter
First Half
2011
2010
2011
2010
NON-SEGMENT INCOME (EXPENSE)
Corporate and former operations:
General and administrative
$
(10.4
)
(9.0
)
(19.9
)
(17.7
)
Retirement costs (primarily former operations)
(6.2
)
(5.9
)
(12.4
)
(10.8
)
Subtotal
(16.6
)
(14.9
)
(32.3
)
(28.5
)
Other amounts not allocated to segments:
Royalty income:
Brand licensing fees from BHS
-
1.9
-
3.7
Other
0.4
0.4
0.7
0.8
Remeasurement of previously held ownership interest to fair value
-
-
0.4
-
Gains on sale of property and other assets
-
-
-
0.3
Subtotal
0.4
2.3
1.1
4.8
Non-segment income (expense)
$
(16.2
)
(12.6
)
(31.2
)
(23.7
)
OTHER OPERATING INCOME (EXPENSE) (a)
Currency exchange transaction gains (losses)
$
(0.2
)
2.7
0.8
(3.7
)
Foreign currency hedge gains (losses)
(0.2
)
-
(0.2
)
-
Share in earnings of equity affiliates
1.2
0.8
2.1
1.6
Settlement charge related to Belgium bankruptcy
(10.1
)
-
(10.1
)
-
Impairment losses
(0.5
)
(0.1
)
(0.5
)
(0.4
)
Remeasurement of previously held ownership interest to fair value
-
-
0.4
-
Gains (losses) on sales of property and other assets
0.9
(0.1
)
0.5
0.7
Royalty income
0.4
2.6
0.7
4.8
Other
0.2
2.4
1.0
3.8
Other operating income (expense)
$
(8.3
)
8.3
(5.3
)
6.8
SELECTED CASH FLOW INFORMATION
Capital expenditures:
International
$
31.4
23.3
53.6
40.4
North America
10.8
11.0
18.0
20.8
Capital expenditures
$
42.2
34.3
71.6
61.2
Depreciation and amortization:
International
$
27.2
22.2
52.7
44.2
North America
14.0
10.7
27.3
21.0
Depreciation and amortization
$
41.2
32.9
80.0
65.2
(a) Includes segment and non-segment other operating income and expense.
Page 12
The Brink’s Company and subsidiaries
Supplemental Financial Information (Unaudited) (continued)
(In millions)
NET DEBT RECONCILED TO AMOUNTS REPORTED UNDER GAAP
June 30, 2011
December 31, 2010
Debt:
Short-term debt
$
41.8
36.5
Long-term debt
356.5
352.7
Total Debt
398.3
389.2
Cash and cash equivalents
155.9
183.0
Less amounts held by certain cash logistics operations (a)
(30.8
)
(38.5
)
Amount available for general corporate purposes
125.1
144.5
Net Debt
$
273.2
244.7
(a)
Title to cash received and processed in certain of our secure cash
logistics operations transfers to us for a short period of time.
The cash is generally credited to customers’ accounts the
following day and we do not consider it as available for general
corporate purposes in the management of our liquidity and capital
resources and in our computation of Net Debt.
Net Debt is a supplemental financial measure that is not required by, or
presented in accordance with GAAP. We use Net Debt as a measure of our
financial leverage. We believe that investors also may find Net Debt to
be helpful in evaluating our financial leverage. Net Debt should not be
considered as an alternative to Debt determined in accordance with GAAP
and should be reviewed in conjunction with our consolidated balance
sheets. Set forth above is a reconciliation of Net Debt, a non-GAAP
financial measure, to Debt, which is the most directly comparable
financial measure calculated and reported in accordance with GAAP, as of
June 30, 2011 and December 31, 2010. At June 30, 2011, Net Debt is $286
million excluding cash and debt in Venezuelan operations.
Page 13
The Brink’s Company and subsidiaries
Non-GAAP Results - Reconciled to Amounts Reported Under GAAP
(Unaudited)
(In millions, except for per share amounts)
GAAP Basis
Gains on
Available-for-Sale
Investments and
Acquisitions (a)
Belgium
Settlement
Charge (b)
Mexico
Employee
Benefit
Settlement
Loss (c)
Adjust
Income
Tax Rate
(d)
Non-GAAP
Basis
Second Quarter 2011
Operating profit:
International
$
26.2
-
10.1
1.0
-
37.3
North America
10.4
-
-
-
-
10.4
Segment operating profit
36.6
-
10.1
1.0
-
47.7
Non-segment
(16.2
)
-
-
-
-
(16.2
)
Operating profit
$
20.4
-
10.1
1.0
-
31.5
Amounts attributable to Brink’s:
Income from continuing operations
$
5.3
-
6.3
0.7
0.7
13.0
Diluted EPS – continuing operations
0.11
-
0.13
0.01
0.01
0.27
First Half 2011
Operating profit:
International
$
71.4
-
10.1
1.0
-
82.5
North America
17.2
-
-
-
-
17.2
Segment operating profit
88.6
-
10.1
1.0
-
99.7
Non-segment
(31.2
)
(0.4
)
-
-
-
(31.6
)
Operating profit
$
57.4
(0.4
)
10.1
1.0
-
68.1
Amounts attributable to Brink’s:
Income from continuing operations
$
24.2
(3.1
)
6.3
0.7
(0.2
)
27.9
Diluted EPS – continuing operations
0.50
(0.06
)
0.13
0.01
-
0.58
Amounts may not add due to rounding.
(a)
To eliminate gains on available-for-sale equity and debt
securities and gain related to acquisition of controlling interest
in a subsidiary that was previously accounted for as an equity
method investment.
(b)
To eliminate settlement charge related to exit of Belgium
cash-in-transit business.
(c)
To eliminate employee benefit settlement loss related to Mexico. A
portion of Brink’s Mexican subsidiaries’ accrued employee
termination benefit was paid in the second quarter of 2011 as a
result of restructuring actions taken. The employee termination
benefit is accounted for under FASB ASC Topic 715, Compensation
– Retirement Benefits. Accordingly, the severance payment
resulted in a settlement loss.
(d)
To adjust effective income tax rate to be equal to the full year
non-GAAP effective income tax rate. The mid-point of the range of
the estimated non-GAAP effective tax rate is 37.5% for the
full-year 2011.
Page 14
The Brink’s Company and subsidiaries
Non-GAAP Results - Reconciled to Amounts Reported Under GAAP
(Unaudited) (Continued)
(In millions, except for per share amounts)
GAAP
Basis
Remeasure
Venezuelan
Net Monetary
Assets (a)
Royalty from
BHS (b)
U.S.
Healthcare
Legislation
Tax Charge
(c)
Adjust
Income Tax
Rate (d)
Non-GAAP
Basis
Second Quarter 2010
Operating profit:
International
$
33.8
(1.7
)
-
-
-
32.1
North America
10.3
-
-
-
-
10.3
Segment operating profit
44.1
(1.7
)
-
-
-
42.4
Non-segment
(12.6
)
-
(1.9
)
-
-
(14.5
)
Operating profit
$
31.5
(1.7
)
(1.9
)
-
-
27.9
Amounts attributable to Brink’s:
Income from continuing operations
$
20.7
(1.0
)
(1.2
)
-
(3.9
)
14.6
Diluted EPS – continuing operations
0.42
(0.02
)
(0.02
)
-
(0.08
)
0.30
First Half 2010
Operating profit:
International
$
58.3
3.2
-
-
-
61.5
North America
20.7
-
-
-
-
20.7
Segment operating profit
79.0
3.2
-
-
-
82.2
Non-segment
(23.7
)
-
(3.7
)
-
-
(27.4
)
Operating profit
$
55.3
3.2
(3.7
)
-
-
54.8
Amounts attributable to Brink’s:
Income from continuing operations
$
15.9
2.0
(2.3
)
13.7
(3.3
)
26.0
Diluted EPS – continuing operations
0.32
0.04
(0.05
)
0.28
(0.07
)
0.53
Amounts may not add due to rounding.
(a)
To reverse remeasurement gains and losses in Venezuela. For
accounting purposes, Venezuela is considered a highly inflationary
economy. Under U.S. GAAP, subsidiaries that operate in Venezuela
record gains and losses in earnings for the remeasurement of
bolivar fuerte-denominated net monetary assets.
(b)
To eliminate royalty income from former home security business.
(c)
To eliminate $13.7 million of tax expense related to the reversal
of a deferred tax asset as a result of U.S. healthcare legislation.
(d)
To adjust the effective income tax rate to be equal to the
full-year non-GAAP effective income tax rate. The non-GAAP
effective tax rate for 2010 was 36%.
Page 15
