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
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