form_10-q.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
x QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15 (d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the
quarterly period ended June 30,
2008
o TRANSITION REPORT PURSUANT TO SECTION
13 OR 15 (d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the
transition period from ________ to ________
Commission
file number 1-9148
|
THE BRINK’S COMPANY
|
|
|
(Exact
name of registrant as specified in its charter)
|
|
|
Virginia
|
|
54-1317776
|
|
|
(State
or other jurisdiction of
|
|
(I.R.S.
Employer
|
|
|
incorporation
or organization)
|
|
Identification
No.)
|
|
1801 Bayberry Court,
Richmond, Virginia 23226-8100
(Address
of principal executive offices) (Zip Code)
(804)
289-9600
(Registrant's
telephone number, including area code)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes x No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definition of “large accelerated filer, accelerated
filer and smaller reporting company” in Rule 12b-2 of the Exchange
Act.
(Check
one): Large Accelerated Filer x Accelerated
Filer ¨ Non-Accelerated
Filer ¨ Smaller
Reporting Company ¨
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes o No x
As of
July 31, 2008, 47,372,320 shares of $1 par value common stock were
outstanding.
Part I - Financial
Information
Item 1. Financial
Statements
THE
BRINK’S COMPANY
and
subsidiaries
Consolidated
Balance Sheets
(Unaudited)
|
|
June
30,
|
|
|
December
31,
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$ |
246.3 |
|
|
|
196.4 |
|
Accounts receivable,
net
|
|
|
526.0 |
|
|
|
491.9 |
|
Prepaid expenses and
other
|
|
|
121.9 |
|
|
|
93.5 |
|
Deferred income
taxes
|
|
|
60.0 |
|
|
|
63.9 |
|
Total current
assets
|
|
|
954.2 |
|
|
|
845.7 |
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
1,185.7 |
|
|
|
1,118.4 |
|
Goodwill
|
|
|
155.7 |
|
|
|
141.3 |
|
Deferred
income taxes
|
|
|
86.5 |
|
|
|
90.1 |
|
Other
|
|
|
206.5 |
|
|
|
198.8 |
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
2,588.6 |
|
|
|
2,394.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$ |
9.3 |
|
|
|
12.4 |
|
Current maturities of long-term
debt
|
|
|
11.6 |
|
|
|
11.0 |
|
Accounts
payable
|
|
|
170.8 |
|
|
|
171.9 |
|
Income taxes
payable
|
|
|
17.5 |
|
|
|
14.9 |
|
Accrued
liabilities
|
|
|
477.5 |
|
|
|
429.7 |
|
Total current
liabilities
|
|
|
686.7 |
|
|
|
639.9 |
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
158.5 |
|
|
|
89.2 |
|
Accrued
pension costs
|
|
|
56.1 |
|
|
|
58.0 |
|
Postretirement
benefits other than pensions
|
|
|
103.6 |
|
|
|
111.9 |
|
Deferred
revenue
|
|
|
181.9 |
|
|
|
178.6 |
|
Deferred
income taxes
|
|
|
34.8 |
|
|
|
29.8 |
|
Minority
interest
|
|
|
79.9 |
|
|
|
68.2 |
|
Other
|
|
|
166.9 |
|
|
|
172.4 |
|
Total liabilities
|
|
|
1,468.4 |
|
|
|
1,348.0 |
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies (notes 4, 5, 8 and 11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
equity:
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
47.4 |
|
|
|
48.4 |
|
Capital in excess of par
value
|
|
|
464.0 |
|
|
|
452.6 |
|
Retained earnings
|
|
|
708.8 |
|
|
|
675.8 |
|
Accumulated other comprehensive
loss
|
|
|
(100.0 |
) |
|
|
(130.5 |
) |
|
|
|
|
|
|
|
|
|
Total shareholders’
equity
|
|
|
1,120.2 |
|
|
|
1,046.3 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders’ equity
|
|
$ |
2,588.6 |
|
|
|
2,394.3 |
|
See
accompanying notes to consolidated financial statements.
THE
BRINK’S COMPANY
and
subsidiaries
Consolidated
Statements of Operations
(Unaudited)
|
|
Three
Months
|
|
|
Six
Months
|
|
|
|
Ended
June 30,
|
|
|
Ended
June 30,
|
|
(In
millions, except per share amounts)
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
931.7 |
|
|
|
778.7 |
|
|
|
1,852.3 |
|
|
|
1,519.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of revenues
|
|
|
712.0 |
|
|
|
602.4 |
|
|
|
1,393.7 |
|
|
|
1,167.1 |
|
Selling,
general and administrative expenses
|
|
|
145.5 |
|
|
|
120.6 |
|
|
|
286.1 |
|
|
|
233.0 |
|
Total expenses
|
|
|
857.5 |
|
|
|
723.0 |
|
|
|
1,679.8 |
|
|
|
1,400.1 |
|
Other
operating income (expense), net
|
|
|
0.4 |
|
|
|
3.5 |
|
|
|
(0.6 |
) |
|
|
4.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
74.6 |
|
|
|
59.2 |
|
|
|
171.9 |
|
|
|
123.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(3.3 |
) |
|
|
(3.0 |
) |
|
|
(5.8 |
) |
|
|
(5.5 |
) |
Interest
and other income, net
|
|
|
3.0 |
|
|
|
2.1 |
|
|
|
5.1 |
|
|
|
3.7 |
|
Income from continuing operations
before income taxes and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
minority interest
|
|
|
74.3 |
|
|
|
58.3 |
|
|
|
171.2 |
|
|
|
121.7 |
|
Provision
for income taxes
|
|
|
18.3 |
|
|
|
21.4 |
|
|
|
52.3 |
|
|
|
46.7 |
|
Minority
interest
|
|
|
7.5 |
|
|
|
3.8 |
|
|
|
22.4 |
|
|
|
10.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations
|
|
|
48.5 |
|
|
|
33.1 |
|
|
|
96.5 |
|
|
|
64.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from discontinued operations, net of income taxes
|
|
|
0.2 |
|
|
|
(4.8 |
) |
|
|
2.3 |
|
|
|
(7.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
48.7 |
|
|
|
28.3 |
|
|
|
98.8 |
|
|
|
57.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
1.05 |
|
|
|
0.71 |
|
|
|
2.09 |
|
|
|
1.38 |
|
Discontinued
operations
|
|
|
0.01 |
|
|
|
(0.10 |
) |
|
|
0.05 |
|
|
|
(0.16 |
) |
Net income
|
|
|
1.06 |
|
|
|
0.61 |
|
|
|
2.14 |
|
|
|
1.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
1.04 |
|
|
|
0.70 |
|
|
|
2.07 |
|
|
|
1.37 |
|
Discontinued
operations
|
|
|
0.01 |
|
|
|
(0.10 |
) |
|
|
0.05 |
|
|
|
(0.15 |
) |
Net income
|
|
|
1.05 |
|
|
|
0.60 |
|
|
|
2.12 |
|
|
|
1.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
46.0 |
|
|
|
46.5 |
|
|
|
46.2 |
|
|
|
46.4 |
|
Diluted
|
|
|
46.5 |
|
|
|
47.1 |
|
|
|
46.7 |
|
|
|
47.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends paid per common share
|
|
$ |
0.10 |
|
|
|
0.10 |
|
|
|
0.20 |
|
|
|
0.1625 |
|
See
accompanying notes to consolidated financial statements.
THE
BRINK’S COMPANY
and
subsidiaries
Consolidated
Statement of Shareholders’ Equity
Six
months ended June 30, 2008
(Unaudited)
|
|
|
|
|
|
|
|
Capital
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
in
Excess
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
of
Par
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
|
|
(In
millions)
|
|
Shares
(a)
|
|
|
Stock
|
|
|
Value
|
|
|
Earnings
|
|
|
Loss
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of December 31, 2007
|
|
|
48.4 |
|
|
$ |
48.4 |
|
|
|
452.6 |
|
|
|
675.8 |
|
|
|
(130.5 |
) |
|
|
1,046.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
98.8 |
|
|
|
- |
|
|
|
98.8 |
|
Other
comprehensive income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
30.5 |
|
|
|
30.5 |
|
Shares
repurchased and retired
|
|
|
(1.0 |
) |
|
|
(1.0 |
) |
|
|
(10.4 |
) |
|
|
(56.6 |
) |
|
|
- |
|
|
|
(68.0 |
) |
Dividends
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(9.1 |
) |
|
|
- |
|
|
|
(9.1 |
) |
Share-based
compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
expense
|
|
|
- |
|
|
|
- |
|
|
|
2.4 |
|
|
|
- |
|
|
|
- |
|
|
|
2.4 |
|
Consideration
received
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from exercise of stock
options
|
|
|
- |
|
|
|
- |
|
|
|
7.3 |
|
|
|
- |
|
|
|
- |
|
|
|
7.3 |
|
Excess tax benefit of stock
compensation
|
|
|
- |
|
|
|
- |
|
|
|
9.1 |
|
|
|
- |
|
|
|
- |
|
|
|
9.1 |
|
Other share-based benefit
programs
|
|
|
- |
|
|
|
- |
|
|
|
3.0 |
|
|
|
(0.1 |
) |
|
|
- |
|
|
|
2.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of June 30, 2008
|
|
|
47.4 |
|
|
$ |
47.4 |
|
|
|
464.0 |
|
|
|
708.8 |
|
|
|
(100.0 |
) |
|
|
1,120.2 |
|
(a)
|
Includes
1.4 million shares at June 30, 2008, held by The Brink’s Company Employee
Benefits Trust that have not been allocated to participants (1.7 million
shares at December 31, 2007).
|
See
accompanying notes to consolidated financial statements.
THE
BRINK’S COMPANY
and
subsidiaries
Consolidated
Statements of Cash Flows
(Unaudited)
|
|
Six
Months
|
|
|
|
Ended
June 30,
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
Net
income
|
|
$ |
98.8 |
|
|
|
57.0 |
|
Adjustments
to reconcile net income to net cash provided (used) by operating
activities:
|
|
|
|
|
|
|
|
|
(Income) loss from discontinued
operations, net of tax
|
|
|
(2.3 |
) |
|
|
7.2 |
|
Depreciation and
amortization
|
|
|
103.5 |
|
|
|
88.6 |
|
Impairment charges for subscriber
disconnects
|
|
|
24.7 |
|
|
|
24.3 |
|
Amortization of deferred
revenue
|
|
|
(20.0 |
) |
|
|
(16.7 |
) |
Deferred income
taxes
|
|
|
9.9 |
|
|
|
20.4 |
|
Provision for uncollectible
accounts receivable
|
|
|
6.5 |
|
|
|
5.3 |
|
Compensation expense for stock
options
|
|
|
2.4 |
|
|
|
2.8 |
|
Other operating,
net
|
|
|
23.5 |
|
|
|
13.8 |
|
Postretirement expense (credits),
net of funding:
|
|
|
|
|
|
|
|
|
Pension
|
|
|
(6.7 |
) |
|
|
3.4 |
|
Other than
pension
|
|
|
(3.8 |
) |
|
|
(4.3 |
) |
Changes in operating assets and
liabilities, net of effects of acquisitions:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(21.6 |
) |
|
|
(1.5 |
) |
Accounts payable, income taxes
payable and accrued liabilities
|
|
|
17.8 |
|
|
|
12.4 |
|
Deferral of subscriber
acquisition cost
|
|
|
(12.1 |
) |
|
|
(12.1 |
) |
Deferral of revenue from new
subscribers
|
|
|
23.6 |
|
|
|
24.2 |
|
Prepaid and other current
assets
|
|
|
(24.2 |
) |
|
|
(32.4 |
) |
Other, net
|
|
|
(3.7 |
) |
|
|
6.3 |
|
Discontinued operations,
net
|
|
|
- |
|
|
|
(1.4 |
) |
Net cash provided by operating
activities
|
|
|
216.3 |
|
|
|
197.3 |
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(160.5 |
) |
|
|
(145.3 |
) |
Acquisitions
|
|
|
(5.4 |
) |
|
|
(10.8 |
) |
Cash
proceeds from disposal
|
|
|
2.5 |
|
|
|
2.7 |
|
Other,
net
|
|
|
2.2 |
|
|
|
2.0 |
|
Discontinued
operations, net
|
|
|
- |
|
|
|
(0.1 |
) |
Net cash used by investing
activities
|
|
|
(161.2 |
) |
|
|
(151.5 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Revolving
credit facilities borrowings, net
|
|
|
70.4 |
|
|
|
4.2 |
|
Long
term debt:
|
|
|
|
|
|
|
|
|
Additions
|
|
|
- |
|
|
|
1.1 |
|
Repayments
|
|
|
(6.1 |
) |
|
|
(6.6 |
) |
Short-term
repayments, net
|
|
|
(4.1 |
) |
|
|
(24.9 |
) |
Repurchase
shares of common stock of The Brink’s Company
|
|
|
(66.5 |
) |
|
|
(0.3 |
) |
Dividends
to:
|
|
|
|
|
|
|
|
|
Shareholders of The Brink’s
Company
|
|
|
(9.1 |
) |
|
|
(7.4 |
) |
Minority interest holders in
subsidiaries
|
|
|
(8.8 |
) |
|
|
(6.4 |
) |
Proceeds
from exercise of stock options
|
|
|
4.9 |
|
|
|
5.9 |
|
Excess
tax benefits associated with stock compensation
|
|
|
8.7 |
|
|
|
4.0 |
|
Discontinued
operations, net
|
|
|
- |
|
|
|
(11.3 |
) |
Net cash used by financing
activities
|
|
|
(10.6 |
) |
|
|
(41.7 |
) |
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash
|
|
|
5.4 |
|
|
|
2.6 |
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents:
|
|
|
|
|
|
|
|
|
Increase
|
|
|
49.9 |
|
|
|
6.7 |
|
Balance at beginning of
period
|
|
|
196.4 |
|
|
|
137.2 |
|
Balance at end of
period
|
|
$ |
246.3 |
|
|
|
143.9 |
|
See
accompanying notes to consolidated financial statements.
THE
BRINK’S COMPANY
and
subsidiaries
Notes
to Consolidated Financial Statements
(Unaudited)
Note
1 – Basis of presentation
The
Brink’s Company (along with its subsidiaries, the “Company”) has two operating
segments:
· Brink’s,
Incorporated (“Brink’s”)
· Brink’s
Home Security, Inc. (“BHS”)
On
February 25, 2008, the board of directors approved a plan to separate the
Company into two independent publicly traded companies through a spin-off of
100% of Brink’s Home Security Holdings, Inc. (“BHSH”), a newly formed subsidiary
of the Company that will hold the shares of BHS prior to the
spin-off. BHSH filed an initial Form 10 with the Securities and
Exchange Commission (the “SEC”) on May 30, 2008, and filed a first amendment to
the Form 10 on July 18, 2008. The Form 10 provides information about
the spin-off, including historical and pro forma financial
information. The Brink's Company will continue to operate
Brink's, its secure transportation and cash management unit. The
spin-off of BHS is expected to take the form of a tax-free stock distribution to
The Brink's Company shareholders and be completed in the fourth quarter of
2008. After the distribution, the Company will report expenses
related to the spin-off and BHS’ results of operations, including previously
reported results, within discontinued operations.
The
Company’s unaudited consolidated financial statements have been prepared in
accordance with U.S. generally accepted accounting principles (“GAAP”) for
interim financial reporting and applicable quarterly reporting regulations of
the SEC. Accordingly, the unaudited consolidated financial statements
do not include all of the information and notes required by GAAP for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for interim
periods are not necessarily indicative of the results that may be expected for
the full year. For further information, refer to the Company’s Annual
Report on Form 10-K for the year ended December 31, 2007.
Management
of the Company has made a number of estimates and assumptions relating to the
reporting of assets and liabilities and the disclosure of contingent assets and
liabilities to prepare these consolidated financial statements. Actual results
could differ materially from those estimates. The most significant
estimates used by management are related to goodwill and other long-lived
assets, pension and other postretirement benefit obligations, legal
contingencies and income taxes.
Accounting
Corrections
During
the second quarter of 2008, the Company determined that the amount of certain
revenue and expenses recognized between December 1, 2001 and March 31, 2008,
related to security systems disconnect at BHS had been understated. The
correction of these understatements increased BHS revenues by $2.0 million, BHS
operating profit by $2.5 million and consolidated income from continuing
operations by $1.6 million in the second quarter of 2008. The Company
also identified and corrected other items which increased income from continuing
operations in the period by $1.8 million. The effect of these corrections was
not material to any prior quarter or annual period.
Recently
Adopted Accounting Standards
In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standard (“SFAS”) 157, Fair Value
Measurements. In February 2008, the FASB issued FASB Staff
Position 157-2, Partial
Deferral of the Effective Date of SFAS 157, which delayed the effective
date of SFAS 157 for all nonrecurring fair value measurements of nonfinancial
assets and nonfinancial liabilities. The Company adopted SFAS 157,
effective January 1, 2008 for financial assets and financial
liabilities. SFAS 157 defines fair value, establishes a framework for
measuring fair value under GAAP, and expands disclosure of fair value
measurements. SFAS 157 emphasizes that fair value is a market-based
measurement, not an entity-specific measurement, and states that a fair value
measurement should be determined based on assumptions that market participants
would use in pricing the asset or liability. The implementation of
SFAS 157, as it relates to the Company’s financial assets and financial
liabilities, did not have a material effect on the Company’s results of
operations or financial position. The Company is currently evaluating
the potential impact, if any, on its nonfinancial assets and
liabilities.
The
Company adopted SFAS 159, The Fair Value Option
for Financial Assets and Liabilities – Including an amendment of FASB Statement
No. 115, effective January 1, 2008. SFAS 159 permits entities
to choose to measure certain financial assets and liabilities at fair value (the
“fair-value option”). Unrealized gains and losses, arising subsequent
to the election of the fair-value option, are reported in
earnings. The Company did not elect the fair-value option for
existing assets or liabilities upon adoption. Therefore, the
implementation of SFAS 159 did not have an effect on the Company’s results of
operations or financial position.
Note
2 – Segment information
The
Company conducts business in two operating segments: Brink’s and
BHS. These segments are identified by the Company based on how
resources are allocated and operating decisions are made. Management
evaluates performance and allocates resources based on operating profit or loss,
excluding corporate allocations.
Brink’s
primary services include:
|
·
|
Cash-in-transit
(“CIT”) armored car transportation
|
|
·
|
Automated
teller machine (“ATM”) replenishment and
servicing
|
|
·
|
Global
Services - arranging secure long-distance transportation of
valuables
|
|
·
|
Cash
Logistics – money processing, supply chain management of cash; from
point-of-sale through transport, vaulting and bank
deposit
|
|
·
|
Guarding
services, including airport
security
|
|
·
|
Secure
Data Solutions - transporting, storing and destroying sensitive
information
|
Brink’s
operates in approximately 50 countries.
BHS
offers monitored security services in North America primarily for
owner-occupied, single-family residences and, to a lesser extent, commercial
properties. BHS typically installs and owns the on-site security
systems, and charges fees to monitor and service the systems.
|
|
Three
Months
|
|
|
Six
Months
|
|
|
|
Ended
June 30,
|
|
|
Ended
June 30,
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Brink’s
|
|
$ |
797.8 |
|
|
|
659.3 |
|
|
|
1,590.6 |
|
|
|
1,285.1 |
|
BHS
|
|
|
133.9 |
|
|
|
119.4 |
|
|
|
261.7 |
|
|
|
234.1 |
|
Revenues
|
|
$ |
931.7 |
|
|
|
778.7 |
|
|
|
1,852.3 |
|
|
|
1,519.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brink’s
|
|
$ |
52.6 |
|
|
|
42.9 |
|
|
|
134.6 |
|
|
|
93.9 |
|
BHS
|
|
|
35.5 |
|
|
|
30.8 |
|
|
|
67.5 |
|
|
|
59.0 |
|
Business
segments
|
|
|
88.1 |
|
|
|
73.7 |
|
|
|
202.1 |
|
|
|
152.9 |
|
Corporate
|
|
|
(13.3 |
) |
|
|
(10.9 |
) |
|
|
(29.4 |
) |
|
|
(22.5 |
) |
Former operations
|
|
|
(0.2 |
) |
|
|
(3.6 |
) |
|
|
(0.8 |
) |
|
|
(6.9 |
) |
Operating profit
|
|
$ |
74.6 |
|
|
|
59.2 |
|
|
|
171.9 |
|
|
|
123.5 |
|
Note
3 – Earnings per share
Shares
used to calculate earnings per share were as follows:
|
|
Three
Months
|
|
|
Six
Months
|
|
|
|
Ended
June 30,
|
|
|
Ended
June 30,
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
46.0 |
|
|
|
46.5 |
|
|
|
46.2 |
|
|
|
46.4 |
|
Effect of dilutive stock
options
|
|
|
0.5 |
|
|
|
0.6 |
|
|
|
0.5 |
|
|
|
0.6 |
|
Diluted
|
|
|
46.5 |
|
|
|
47.1 |
|
|
|
46.7 |
|
|
|
47.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Antidilutive
stock options excluded from denominator
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
0.1 |
|
Shares of
the Company’s common stock held by The Brink’s Company Employee Benefits Trust
(the “Employee Benefits Trust”) that have not been allocated to participants
under the Company’s various benefit plans are excluded from earnings per share
calculations since they are treated as treasury shares for the calculation of
earnings per share. The Employee Benefits Trust held 1.4 million
unallocated shares at June 30, 2008, and 1.9 million unallocated shares at June
30, 2007.
In July
2008, the Company decided to terminate the Employee Benefits
Trust. The termination is expected to be finalized during the third
quarter of 2008. Prior to termination, the shares currently held by
the Employee Benefits Trust will be distributed to the Company, whereupon the
shares will be retired.
Note
4 – Employee and retiree benefits
Pension
plans
The
Company has various defined benefit plans for eligible employees.
The
components of net periodic pension cost (credit) for the Company’s pension plans
were as follows:
|
|
U.S.
Plans
|
|
|
Non-U.S.
Plans
|
|
|
Total
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$ |
- |
|
|
|
- |
|
|
|
2.6 |
|
|
|
2.3 |
|
|
|
2.6 |
|
|
|
2.3 |
|
Interest
cost on projected benefit obligation
|
|
|
11.5 |
|
|
|
11.1 |
|
|
|
3.4 |
|
|
|
2.4 |
|
|
|
14.9 |
|
|
|
13.5 |
|
Return
on assets – expected
|
|
|
(14.7 |
) |
|
|
(13.3 |
) |
|
|
(3.0 |
) |
|
|
(2.4 |
) |
|
|
(17.7 |
) |
|
|
(15.7 |
) |
Amortization
of losses
|
|
|
0.4 |
|
|
|
3.5 |
|
|
|
1.0 |
|
|
|
0.7 |
|
|
|
1.4 |
|
|
|
4.2 |
|
Net
periodic pension cost (credit)
|
|
$ |
(2.8 |
) |
|
|
1.3 |
|
|
|
4.0 |
|
|
|
3.0 |
|
|
|
1.2 |
|
|
|
4.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
months ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$ |
- |
|
|
|
- |
|
|
|
5.0 |
|
|
|
4.3 |
|
|
|
5.0 |
|
|
|
4.3 |
|
Interest
cost on projected benefit obligation
|
|
|
22.9 |
|
|
|
21.9 |
|
|
|
6.6 |
|
|
|
4.8 |
|
|
|
29.5 |
|
|
|
26.7 |
|
Return
on assets – expected
|
|
|
(29.5 |
) |
|
|
(26.7 |
) |
|
|
(6.1 |
) |
|
|
(4.7 |
) |
|
|
(35.6 |
) |
|
|
(31.4 |
) |
Amortization
of losses
|
|
|
0.7 |
|
|
|
6.2 |
|
|
|
1.9 |
|
|
|
1.5 |
|
|
|
2.6 |
|
|
|
7.7 |
|
Net
periodic pension cost (credit)
|
|
$ |
(5.9 |
) |
|
|
1.4 |
|
|
|
7.4 |
|
|
|
5.9 |
|
|
|
1.5 |
|
|
|
7.3 |
|
Postretirement
benefits other than pensions
Company-Sponsored
Plans
The
Company provides postretirement health care benefits (the “Company-sponsored
plans”) for eligible current and former employees in the U.S. and Canada,
including former employees of the former coal operations (the “coal-related”
plans).
The
components of net periodic postretirement cost (credit) related to
Company-sponsored plans were as follows:
|
|
Coal-related
plans
|
|
|
Other
plans
|
|
|
Total
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$ |
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.1 |
|
|
|
- |
|
|
|
0.1 |
|
Interest
cost on accumulated postretirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
benefit
obligations
|
|
|
7.8 |
|
|
|
7.8 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
7.9 |
|
|
|
7.9 |
|
Return
on assets – expected
|
|
|
(9.7 |
) |
|
|
(9.7 |
) |
|
|
- |
|
|
|
- |
|
|
|
(9.7 |
) |
|
|
(9.7 |
) |
Amortization
of losses (gains)
|
|
|
2.0 |
|
|
|
2.8 |
|
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
1.9 |
|
|
|
2.7 |
|
Net
periodic postretirement cost
|
|
$ |
0.1 |
|
|
|
0.9 |
|
|
|
- |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
months ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$ |
- |
|
|
|
- |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
0.1 |
|
|
|
0.2 |
|
Interest
cost on accumulated postretirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
benefit
obligations
|
|
|
15.7 |
|
|
|
15.7 |
|
|
|
0.3 |
|
|
|
0.3 |
|
|
|
16.0 |
|
|
|
16.0 |
|
Return
on assets – expected
|
|
|
(19.3 |
) |
|
|
(19.3 |
) |
|
|
- |
|
|
|
- |
|
|
|
(19.3 |
) |
|
|
(19.3 |
) |
Amortization
of losses (gains)
|
|
|
4.0 |
|
|
|
5.8 |
|
|
|
(0.2 |
) |
|
|
(0.1 |
) |
|
|
3.8 |
|
|
|
5.7 |
|
Curtailment
gain
|
|
|
- |
|
|
|
- |
|
|
|
(2.0 |
) |
|
|
- |
|
|
|
(2.0 |
) |
|
|
- |
|
Net
periodic postretirement cost (credit)
|
|
$ |
0.4 |
|
|
|
2.2 |
|
|
|
(1.8 |
) |
|
|
0.4 |
|
|
|
(1.4 |
) |
|
|
2.6 |
|
In
January 2008, Brink’s announced the freezing of the Canadian postretirement
benefit plan. Some employees will not meet the eligibility
requirement to receive benefits. As a result, the Company recorded a
$2.0 million curtailment gain in the first quarter of 2008.
The
market value of the Voluntary Employees’ Beneficiary Association trust’s assets
at June 30, 2008, was approximately $405 million.
Pneumoconiosis
(Black Lung) Obligations
The
Company is self-insured with respect to almost all of its black lung
obligations. The components of net periodic postretirement benefit
cost related to black lung obligations were as follows:
|
|
Three
Months
|
|
|
Six
Months
|
|
|
|
Ended
June 30,
|
|
|
Ended
June 30,
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
cost on accumulated postretirement
|
|
|
|
|
|
|
|
|
|
|
|
|
benefit
obligations
|
|
$ |
0.6 |
|
|
|
0.7 |
|
|
|
1.3 |
|
|
|
1.3 |
|
Amortization
of losses
|
|
|
0.1 |
|
|
|
0.4 |
|
|
|
0.3 |
|
|
|
0.7 |
|
Net
periodic postretirement cost
|
|
$ |
0.7 |
|
|
|
1.1 |
|
|
|
1.6 |
|
|
|
2.0 |
|
Note
5 – Income taxes
|
|
Three
Months
|
|
|
Six
Months
|
|
|
|
Ended
June 30,
|
|
|
Ended
June 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes (in millions)
|
|
$ |
18.3 |
|
|
|
21.4 |
|
|
|
52.3 |
|
|
|
46.7 |
|
Effective
tax rate
|
|
|
24.6 |
% |
|
|
36.7 |
% |
|
|
30.5 |
% |
|
|
38.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
(benefit) for income taxes (in millions)
|
|
$ |
0.1 |
|
|
|
(1.9 |
) |
|
|
0.9 |
|
|
|
(1.6 |
) |
Effective
tax rate
|
|
|
33.3 |
% |
|
|
28.3 |
% |
|
|
28.1 |
% |
|
|
18.2 |
% |
The
effective income tax rate on continuing operations in the first six months of
2008 was lower than the 35% U.S. statutory tax rate due to a $16.9 million
decrease in the non-U.S. tax provision, primarily due to the geographical mix of
earnings in the foreign jurisdictions and an $8.8 million valuation allowance
release for non-U.S. jurisdictions. The decrease was partially offset
by a $6.5 million tax charge resulting from the decision to spin off BHS and
$2.6 million of state tax expense.
The
effective income tax rate on continuing operations in the first six months of
2007 was higher than the 35% U.S. statutory tax rate primarily due to a
$7.0 million increase in the valuation allowances for non-U.S. jurisdictions
and $1.2 million of state tax expense. This was partially offset
by a $2.2 million benefit related to the Company's foreign tax credit position
and a $2.9 million benefit related to the geographical mix of earnings in
non-U.S. jurisdictions.
Note 6 – Share-based compensation
plans
On April
7, 2008, the Company granted 25,918 restricted stock units under the 2005 Equity
Incentive Plan. The total grant date fair value of these units was
$1.7 million. As of June 30, 2008, there was $1.5 million of total
unrecognized compensation cost related to these units which is expected to be
recognized over a weighted average period of 1.8 years. The units
will be settled exclusively in the Company’s common shares.
On July
10, 2008, the Company granted 530,950 options under the 2005 Equity Incentive
Plan. The options have an exercise price of $64.15 per
share.
On July
11, 2008, the Company granted 13,057 deferred stock units under the Non-Employee
Directors’ Equity Plan. The units will be settled exclusively in the
Company’s common shares.
Note
7 – Capital stock
Common
stock
On
September 14, 2007, the Company’s board of directors authorized the purchase of
up to $100 million of the Company’s outstanding common shares. Under
the program, the Company used $40.6 million to purchase 654,800 shares of common
stock between December 5, 2007, and March 31, 2008, at an average price of
$61.98 per share. The Company used an additional $15.7 million to
purchase 229,000 shares of common stock in the second quarter of 2008, at an
average price of $68.48 per share. As of June 30, 2008, the Company
had $43.7 million under the program available to purchase shares. The
repurchase authorization does not have an expiration date.
Note
8 – Discontinued operations
|
|
Three
Months
|
|
|
Six
Months
|
|
|
|
Ended
June 30,
|
|
|
Ended
June 30,
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results
of Brink’s United Kingdom domestic cash handling operations
(a)
|
|
$ |
- |
|
|
|
(8.3 |
) |
|
|
- |
|
|
|
(10.8 |
) |
Adjustments
to contingent liabilities of former operations
|
|
|
0.3 |
|
|
|
1.6 |
|
|
|
3.2 |
|
|
|
2.0 |
|
Income
(loss) from discontinued operations before income taxes
|
|
|
0.3 |
|
|
|
(6.7 |
) |
|
|
3.2 |
|
|
|
(8.8 |
) |
Provision
(benefit) for income taxes
|
|
|
0.1 |
|
|
|
(1.9 |
) |
|
|
0.9 |
|
|
|
(1.6 |
) |
Income
(loss) from discontinued operations
|
|
$ |
0.2 |
|
|
|
(4.8 |
) |
|
|
2.3 |
|
|
|
(7.2 |
) |
(a)
|
Brink’s
United Kingdom domestic cash handling operations were sold in August
2007. Revenues of the operations were $12.1 million for the
second quarter of 2007 and $23.1 million for the first six months of
2007. Results of Brink’s United Kingdom domestic cash handling
operations included a $7.5 million asset impairment charge in the second
quarter of 2007.
|
Note
9 – Supplemental cash flow information
|
|
Six
Months
|
|
|
|
Ended
June 30,
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Cash
paid for:
|
|
|
|
|
|
|
Interest
|
|
$ |
5.7 |
|
|
|
5.5 |
|
Income taxes, net
|
|
|
41.1 |
|
|
|
36.4 |
|
Note
10 – Comprehensive income
|
|
Three
Months
|
|
|
Six
Months
|
|
|
|
Ended
June 30,
|
|
|
Ended
June 30,
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
48.7 |
|
|
|
28.3 |
|
|
|
98.8 |
|
|
|
57.0 |
|
Other
comprehensive income (loss), net of reclasses and taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit plan experience
loss
|
|
|
2.0 |
|
|
|
4.4 |
|
|
|
3.9 |
|
|
|
8.8 |
|
Benefit plan prior service
cost
|
|
|
0.4 |
|
|
|
0.5 |
|
|
|
0.7 |
|
|
|
0.7 |
|
Foreign currency translation
adjustments
|
|
|
1.0 |
|
|
|
8.1 |
|
|
|
26.8 |
|
|
|
11.7 |
|
Marketable
securities
|
|
|
(0.2 |
) |
|
|
1.0 |
|
|
|
(0.9 |
) |
|
|
1.0 |
|
Other comprehensive
income
|
|
|
3.2 |
|
|
|
14.0 |
|
|
|
30.5 |
|
|
|
22.2 |
|
Comprehensive
income
|
|
$ |
51.9 |
|
|
|
42.3 |
|
|
|
129.3 |
|
|
|
79.2 |
|
Note
11 – Commitments and contingent matters
Operating
leases
The
Company has made residual value guarantees of approximately $72.3 million at
June 30, 2008, related to operating leases, principally for trucks and other
vehicles.
BAX
Global litigation
BAX
Global is defending a claim related to the apparent diversion by a third party
of goods being transported for a customer. Although BAX Global is
defending this claim vigorously and believes that its defenses have merit, it is
possible that this claim ultimately may be decided in favor of the
claimant. If so, the Company believes that the ultimate amount of
reasonably possible unaccrued losses could range from $0 to $14
million. The Company has contractually indemnified the purchaser of
BAX Global for this contingency.
Value-added
taxes (“VAT”) and customs duties
During
2004, the Company determined that one of its non-U.S. Brink’s business units had
not paid customs duties and VAT with respect to the importation of certain goods
and services. The Company was advised that civil and criminal
penalties could be asserted for the non-payment of these customs duties and
VAT. Although no penalties have been asserted to date, they could be
asserted at any time. The business unit has provided the appropriate
government authorities with an accounting of unpaid customs duties and VAT and
has made payments covering its calculated unpaid VAT. The Company
believes that the range of reasonably possible losses is between $0.4 million
and $3.0 million for potential penalties on unpaid VAT and has accrued $0.4
million. The Company believes that the range of possible losses for
unpaid customs duties and associated penalties, none of which has been accrued,
is between $0 and $35 million. The Company believes that the
assertion of the penalties on unpaid customs duties would be excessive and would
vigorously defend against any such assertion. The Company does not
expect to be assessed interest charges in connection with any penalties that may
be asserted. The Company continues to diligently pursue the
resolution of this matter and, accordingly, the Company’s estimate of the
potential losses could change materially in future periods. The
assertion of potential penalties may be material to the Company’s financial
position and results of operations.
Other
The
Company is involved in various other lawsuits and claims in the ordinary course
of business. The Company is not able to estimate the range of losses for
some of these matters. The Company has recorded accruals for losses
that are considered probable and reasonably estimable. The Company
does not believe that the ultimate disposition of any of these matters will
have a material adverse effect on its liquidity, financial position or results
of operations.
THE
BRINK’S COMPANY
and
subsidiaries
ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS
The
Brink’s Company (along with its subsidiaries, the “Company”) has two operating
segments:
·Brink’s, Incorporated
(“Brink’s”)
|
Brink’s
offers transportation and logistics management services for cash and
valuables throughout the world. These services include armored
car transportation, automated teller machine (“ATM”) replenishment and
servicing, currency deposit processing and cash management services
including cash logistics services (“Cash Logistics”), deploying and
servicing safes and safe control devices, including its patented
CompuSafe® service, coin sorting and wrapping, integrated check and cash
processing services (“Virtual Vault Services”), arranging the secure
transportation of valuables (“Global Services”), transporting, storing,
and destroying sensitive information (“Secure Data Solutions”) and
guarding services, including airport security.
|
|
|
·Brink’s Home Security, Inc.
(“BHS”)
|
BHS
offers monitored security services in North America primarily for
owner-occupied, single-family residences. To a lesser extent,
BHS offers security services for commercial and multi-family
properties. BHS typically installs and owns the on-site
security systems and charges fees to monitor and service the
systems.
|
On
February 25, 2008, the board of directors approved a plan to separate the
Company into two independent publicly traded companies through a spin-off of
100% of Brink’s Home Security Holdings, Inc. (“BHSH”), a newly formed subsidiary
of the Company that will hold the shares of BHS prior to the
spin-off. The Brink's Company will continue to operate Brink's, its
secure transportation and cash management unit. BHSH filed an initial
Form 10 with the Securities and Exchange Commission (the “SEC”) on May 30, 2008,
and filed a first amendment to the Form 10 on July 18, 2008. The Form
10 provides information about the spin-off, including historical and pro forma
financial information. The spin-off of BHS is expected to take the
form of a tax-free stock distribution to The Brink's Company shareholders and be
completed in the fourth quarter of 2008. After the distribution, the
Company will report expenses related to the spin-off and BHS’ results of
operations, including previously reported results, within discontinued
operations.
The
Company has significant liabilities associated with its former coal operations
and expects to have ongoing expenses and cash outflows related to its former
coal operations.
|
|
Three
Months
|
|
|
Six
Months
|
|
|
|
Ended
June 30,
|
|
|
Ended
June 30,
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
48.5 |
|
|
|
33.1 |
|
|
|
96.5 |
|
|
|
64.2 |
|
Discontinued
operations
|
|
|
0.2 |
|
|
|
(4.8 |
) |
|
|
2.3 |
|
|
|
(7.2 |
) |
Net income
|
|
$ |
48.7 |
|
|
|
28.3 |
|
|
|
98.8 |
|
|
|
57.0 |
|
The
income (loss) items in the above table are reported after tax.
Income
from continuing operations increased by 47% in the second quarter of 2008 versus
the second quarter of the prior year primarily due to improved performance at
Brink’s and BHS and a lower effective tax rate. Higher corporate
expenses were offset by lower expenses related to former
operations. Brink’s operating profit increased in the second quarter
of 2008 from the prior-year period primarily due to higher operating profit in
Latin America and Europe, Middle East, and Africa (“EMEA”), partially offset by
lower operating profit in North America. BHS continued a trend of
reporting higher operating profit.
Income
from continuing operations increased by 50% in the first half of 2008 versus the
same period of the prior year primarily due to improved performance at Brink’s
and BHS and a lower effective tax rate. Higher corporate expenses
were offset by lower expenses related to former operations. Brink’s
operating profit increased in the first half of 2008 from the prior-year period
primarily due to higher operating profit in Latin America and EMEA, partially
offset by lower operating profit in North America. BHS continued a trend of
reporting higher operating profit.
|
|
Three
Months
|
|
|
|
|
|
Six
Months
|
|
|
|
|
|
|
Ended
June 30,
|
|
|
%
|
|
|
Ended
June 30,
|
|
|
%
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brink’s
|
|
$ |
797.8 |
|
|
|
659.3 |
|
|
|
21 |
|
|
|
1,590.6 |
|
|
|
1,285.1 |
|
|
|
24 |
|
BHS
|
|
|
133.9 |
|
|
|
119.4 |
|
|
|
12 |
|
|
|
261.7 |
|
|
|
234.1 |
|
|
|
12 |
|
Revenues
|
|
$ |
931.7 |
|
|
|
778.7 |
|
|
|
20 |
|
|
|
1,852.3 |
|
|
|
1,519.2 |
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brink’s
|
|
$ |
52.6 |
|
|
|
42.9 |
|
|
|
23 |
|
|
|
134.6 |
|
|
|
93.9 |
|
|
|
43 |
|
BHS
|
|
|
35.5 |
|
|
|
30.8 |
|
|
|
15 |
|
|
|
67.5 |
|
|
|
59.0 |
|
|
|
14 |
|
Business segments
|
|
|
88.1 |
|
|
|
73.7 |
|
|
|
20 |
|
|
|
202.1 |
|
|
|
152.9 |
|
|
|
32 |
|
Corporate
|
|
|
(13.3 |
) |
|
|
(10.9 |
) |
|
|
22 |
|
|
|
(29.4 |
) |
|
|
(22.5 |
) |
|
|
31 |
|
Former operations
|
|
|
(0.2 |
) |
|
|
(3.6 |
) |
|
|
(94 |
) |
|
|
(0.8 |
) |
|
|
(6.9 |
) |
|
|
(88 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
74.6 |
|
|
|
59.2 |
|
|
|
26 |
|
|
|
171.9 |
|
|
|
123.5 |
|
|
|
39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(3.3 |
) |
|
|
(3.0 |
) |
|
|
10 |
|
|
|
(5.8 |
) |
|
|
(5.5 |
) |
|
|
5 |
|
Interest
and other income, net
|
|
|
3.0 |
|
|
|
2.1 |
|
|
|
43 |
|
|
|
5.1 |
|
|
|
3.7 |
|
|
|
38 |
|
Income from continuing operations
before
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income taxes and minority
interest
|
|
|
74.3 |
|
|
|
58.3 |
|
|
|
27 |
|
|
|
171.2 |
|
|
|
121.7 |
|
|
|
41 |
|
Provision
for income taxes
|
|
|
18.3 |
|
|
|
21.4 |
|
|
|
(14 |
) |
|
|
52.3 |
|
|
|
46.7 |
|
|
|
12 |
|
Minority
interest
|
|
|
7.5 |
|
|
|
3.8 |
|
|
|
97 |
|
|
|
22.4 |
|
|
|
10.8 |
|
|
|
107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations
|
|
|
48.5 |
|
|
|
33.1 |
|
|
|
47 |
|
|
|
96.5 |
|
|
|
64.2 |
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from discontinued operations,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of income
taxes
|
|
|
0.2 |
|
|
|
(4.8 |
) |
|
NM
|
|
|
|
2.3 |
|
|
|
(7.2 |
) |
|
NM
|
|
Net income
|
|
$ |
48.7 |
|
|
|
28.3 |
|
|
|
72 |
|
|
|
98.8 |
|
|
|
57.0 |
|
|
|
73 |
|
COMPARISON
OF RESULTS FOR THE SECOND QUARTER
Revenues
- Consolidated
The
Company’s consolidated revenue during the second quarter of 2008 increased from
the prior-year period as a result of growth at both operating
segments. Brink’s revenues in the second quarter of 2008 increased
over the prior-year period due to Organic Revenue Growth (defined below) and
favorable changes in foreign currency exchange rates. Organic Revenue
Growth includes revenues associated with the conversion project, as discussed
below. The conversion project is expected to provide an insignificant
amount of revenues for the remainder of the year. BHS’ revenues
increased year over year primarily as a result of growth in the subscriber base
and higher average monitoring rates.
Operating
Profit - Consolidated
The
Company’s consolidated operating profit in the second quarter of 2008 increased
from the prior-year period as a result of growth from both operating
segments. Brink’s operating profit included significant growth in
Latin America including operating profit from the conversion
project. Operating profit in EMEA was higher than the prior-year
quarter as a result of favorable changes in currency exchange rates and broad
improvement in operating performance throughout the region. North
American operating profit was lower than the prior-year quarter due primarily to
higher labor, fuel and legal settlement expenses. BHS’ operating profit for the
current quarter improved over the prior-year period due to higher profit from
recurring services, partially offset by increased investment in new
subscribers.
Corporate
expense in the second quarter of 2008 included approximately $3 million of
professional and legal costs related to the planned spin-off of
BHS. For the full year, the Company expects to incur $17 million to
$20 million of professional, legal and advisory fees related to the strategic
reviews conducted by the Company, proxy matters and the proposed spin-off of
BHS.
Expenses
related to former operations were lower in the second quarter of 2008 compared
to the same period last year primarily due to lower pension and other
postretirement expenses.
COMPARISON
OF RESULTS FOR THE SIX-MONTH PERIOD
Revenues
- Consolidated
The
Company’s consolidated revenue during the first half of 2008 increased from the
prior-year period as a result of growth at both operating
segments. Brink’s revenues in the first half of 2008 increased over
the prior-year period due to Organic Revenue Growth (defined below) and
favorable changes in foreign currency exchange rates. Organic Revenue Growth
includes revenues associated with the conversion project. BHS’
revenues increased year over year primarily as a result of growth in the
subscriber base and higher average monitoring rates.
Operating
Profit - Consolidated
The
Company’s consolidated operating profit in the first half of 2008 increased from
the prior year period as a result of growth from both operating
segments. Brink’s operating profit included significant growth in
Latin America including significant operating profit from the conversion
project. Operating profit in EMEA was higher than the prior-year
period as a result of favorable changes in currency exchange rates and broad
improvement in operating performance throughout the region. North
American operating profit was lower than the prior-year period due primarily to
higher labor, fuel and legal settlement expenses. BHS’ operating
profit for the current period improved due to higher profit from recurring
services, partially offset by increased investment in new
subscribers.
Corporate
expense in the first half of 2008 included approximately $9 million of
professional, legal and advisory fees incurred related to the strategic reviews
conducted by the Company, proxy matters and the initial steps to implement the
planned spin-off of BHS.
Expenses
related to former operations were lower in the first half of 2008 compared to
the same period last year primarily due to lower pension and other
postretirement expenses.
|
|
Three
Months
|
|
|
|
|
|
Six
Months
|
|
|
|
|
|
|
Ended
June 30,
|
|
|
%
|
|
|
Ended
June 30,
|
|
|
%
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
$ |
563.1 |
|
|
|
440.2 |
|
|
|
28 |
|
|
|
1,125.6 |
|
|
|
854.8 |
|
|
|
32 |
|
North America (a)
|
|
|
234.7 |
|
|
|
219.1 |
|
|
|
7 |
|
|
|
465.0 |
|
|
|
430.3 |
|
|
|
8 |
|
|
|
$ |
797.8 |
|
|
|
659.3 |
|
|
|
21 |
|
|
|
1,590.6 |
|
|
|
1,285.1 |
|
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
$ |
41.7 |
|
|
|
28.2 |
|
|
|
48 |
|
|
|
110.3 |
|
|
|
60.9 |
|
|
|
81 |
|
North America (a)
|
|
|
10.9 |
|
|
|
14.7 |
|
|
|
(26 |
) |
|
|
24.3 |
|
|
|
33.0 |
|
|
|
(26 |
) |
|
|
$ |
52.6 |
|
|
|
42.9 |
|
|
|
23 |
|
|
|
134.6 |
|
|
|
93.9 |
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
(b)
|
|
$ |
31.2 |
|
|
|
26.0 |
|
|
|
20 |
|
|
|
60.9 |
|
|
|
50.7 |
|
|
|
20 |
|
Capital expenditures
(c)
|
|
|
38.8 |
|
|
|
31.1 |
|
|
|
25 |
|
|
|
70.3 |
|
|
|
57.3 |
|
|
|
23 |
|
(a) U.S.
and Canada.
(b)
Depreciation and amortization for the full-year of 2008 is expected to be
between $125 million and $130 million.
(c) Capital
expenditures for the full-year of 2008 are currently expected to range from $165
million to $175 million.
Revenues
– Brink’s
Revenues
at Brink’s were higher in the second quarter and first half of 2008 compared to
the prior-year periods as a result of a combination of the effects of Organic
Revenue Growth (defined below) and favorable changes in currency exchange
rates. Organic Revenue Growth includes revenues from the conversion
project.
Revenues
from Cash Logistics were $133.9 million in the second quarter of 2008 and $104.4
million in the second quarter of 2007 ($279.5 million in the first half of 2008
and $203.1 million in the first half of 2007) and are included in the revenues
shown in the table above. The increase in these revenues was due
primarily to Organic Revenue Growth, including the impact of the conversion
project.
Operating
Profit – Brink’s
Operating
profit in the second quarter and first half of 2008 was higher than in the
prior-year periods primarily as a result of strong performance in Latin America,
including conversion project activities. Operating profit in EMEA was
higher than the prior-year periods as a result of favorable changes in currency
exchange rates and improved operating results in a number of
countries. North American operating profit was lower than in the
prior-year periods due largely to higher spending on labor, fuel, and legal
settlement expenses, partially offset by the benefit of reductions in
postretirement benefit obligations in Canada.
Brink’s
expects to generate operating profit margins of approximately 9% in
2008.
Supplemental
Revenue Analysis
The
following table provides supplemental information related to Organic Revenue
Growth which is not required by U.S. generally accepted accounting principles
(“GAAP”). The Company defines Organic Revenue Growth as the change in
revenue from the prior-year period due to factors such as changes in prices for
products and services (including the effect of fuel surcharges), changes in
business volumes and changes in product mix. Estimates of changes due
to fluctuations in foreign currency exchange rates and the effects of new
acquisitions are excluded from Organic Revenue Growth.
The
supplemental Organic Revenue Growth information presented 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 help investors
evaluate 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 (including price increases due to inflation) and volume of the base
business. This supplemental non-GAAP information does not affect net
income or any other reported amounts. This supplemental non-GAAP
information should be viewed in conjunction with the Company’s consolidated
statements of operations.
Revenue
growth rates for operations outside the U.S. include the effect of changes in
currency exchange rates. On occasion in this report, the change in
revenue versus the prior year has been disclosed using constant currency
exchange rates in order to provide information about growth rates without the
impact of fluctuating foreign currency exchange rates. Growth at
constant-currency exchange rates equates to growth as measured in local
currency. This measurement of growth using constant-currency exchange
rates is higher than growth computed using actual currency exchange rates when
the U.S. dollar is strengthening and lower when the U.S. dollar is
weakening.
|
|
Three
Months
|
|
|
%
change
|
|
|
Six
Months
|
|
|
%
change
|
|
(In
millions)
|
|
Ended
June 30,
|
|
|
from
prior period
|
|
|
Ended
June 30,
|
|
|
from
prior period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
Revenues
|
|
$ |
575.9 |
|
|
|
|
|
|
1,124.3 |
|
|
|
|
Effects
on revenue of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic Revenue
Growth
|
|
|
48.5 |
|
|
|
8 |
|
|
|
96.2 |
|
|
|
8 |
|
Acquisitions and dispositions,
net
|
|
|
6.5 |
|
|
|
1 |
|
|
|
12.8 |
|
|
|
1 |
|
Changes in currency exchange rates
(a)
|
|
|
28.4 |
|
|
|
5 |
|
|
|
51.8 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
Revenues
|
|
|
659.3 |
|
|
|
14 |
|
|
|
1,285.1 |
|
|
|
14 |
|
Effects
on revenue of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic Revenue
Growth
|
|
|
66.4 |
|
|
|
10 |
|
|
|
162.3 |
|
|
|
13 |
|
Acquisitions and dispositions,
net
|
|
|
6.4 |
|
|
|
1 |
|
|
|
14.1 |
|
|
|
1 |
|
Changes in currency exchange rates
(a)
|
|
|
65.7 |
|
|
|
10 |
|
|
|
129.1 |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
Revenues
|
|
$ |
797.8 |
|
|
|
21 |
|
|
|
1,590.6 |
|
|
|
24 |
|
(a) Changes in
currency exchange rates increased segment operating profit by $3.5 million for
the second quarter of 2008 and by $7.4 million for the first half of 2008
compared to the same periods of 2007. The impact for the same periods
of 2007 compared to 2006 was not significant.
COMPARISON
OF RESULTS FOR THE SECOND QUARTER
International
Revenues
increased in the second quarter of 2008 over the prior-year period in all
regions. Revenue increases in EMEA and Latin America were primarily
the result of Organic Revenue Growth and favorable changes in currency exchange
rates. International operating profit in the second quarter of 2008
was higher than the 2007 period primarily due to the effects of strong volumes
in Latin America, including the conversion project, improved results in EMEA and
favorable changes in currency exchange rates.
EMEA. Revenues
increased 23% (6% on a constant currency basis) to $351.5 million in the second
quarter of 2008 from $286.5 million from the same period last
year. Revenues increased largely as a result of Organic Revenue
Growth and favorable changes in currency exchange rates. Operating
profit was higher than the prior-year quarter due to favorable changes in
currency exchange rates and broad improvement in operating performance
throughout the region.
Latin
America. Revenues increased 40% (30% on a constant currency
basis) to $194.1 million in the second quarter of 2008 from $138.3 million in
the second quarter of 2007. Revenues increased primarily due to
higher volumes across the region, normal inflationary price increases and
favorable changes in currency exchange rates. Operating profit
increased significantly as a result of the effects of the conversion project and
solid improvement in Chile and Brazil.
The
Conversion Project
Venezuela
changed its national currency from the bolivar to the bolivar fuerte on January
1, 2008, and Brink’s performed additional cash handling services to assist in
the conversion. Brink’s estimated that it recorded incremental
revenues of approximately $12 million in the second quarter of 2008 and $47
million in the first half of 2008 related to these services. The
Company expects to record approximately $2 million in additional revenues during
the remainder of 2008 associated with the conversion project.
The
conversion project activities utilized existing assets, personnel and other
resources which also serviced normal operations. Due to the temporary
significant increase in volume and special security and reconciliation
procedures, Brink’s increased resources and training and established special
procedures to mitigate risks and, accordingly, increased its
costs. There were higher costs in late 2007 related to this
project.
Asia-Pacific. Revenues
increased 14% (7% on a constant currency basis) to $17.5 million in the second
quarter of 2008 from $15.4 million in the second quarter of
2007. Operating profit in the second quarter of 2008 was lower than
in 2007, mainly due to worse performance in Australia.
North
America
North
American revenues increased 7% to $234.7 million in the second quarter of 2008
compared to $219.1 million in the same period for 2007. Revenues
increased in all service lines. Despite higher revenues, operating
profit in the second quarter of 2008 decreased compared to the same period in
2007 due to higher spending on labor, legal settlement and fuel expenses.
Although fuel costs increased significantly they are a relatively small
percentage of total expenses and are also partially mitigated by fuel-related
price increases and surcharges in billings to customers.
COMPARISON
OF RESULTS FOR THE SIX-MONTH PERIOD
International
Revenues
increased in the first half of 2008 over the prior-year period in all
regions. Revenue increases in EMEA and Latin America were primarily
the result of Organic Revenue Growth (including the conversion project) and
favorable changes in currency exchange rates. International operating
profit in the first half of 2008 was higher than the 2007 period primarily due
to the effects of strong volumes in Latin America, including the conversion
project, improved results in EMEA and favorable changes in currency exchange
rates.
EMEA. Revenues
increased 23% (7% on a constant currency basis) to $683.9 million in the first
half of 2008 from $556.9 million from the same period last
year. Revenues increased as a result of both Organic Revenue Growth
and favorable changes in currency exchange rates. Operating profit
increased compared to the prior-year period due to favorable changes in currency
exchange rates and broad improvement in operating performance throughout the
region.
Latin
America. Revenues increased 51% (40% on a constant currency
basis) to $405.1 million in the first half of 2008 from $267.8 million in the
first half of 2007. Revenues increased primarily due to higher
volumes across the region (including significant volumes from the conversion
project), normal inflationary price increases and favorable changes in currency
exchange rates. Operating profit in the first half of 2008 was
significantly higher than in the first half of 2007 as a result of the effects
of the conversion project and solid improvement in Chile and
Brazil.
Asia-Pacific. Revenues
increased 22% (15% on a constant currency basis) to $36.6 million in the first
half of 2008 from $30.1 million in the first half of 2007. Operating
profit in the first half of 2008 was higher than in 2007, reflecting
improvements in the Company’s Hong Kong Global Services operations.
North
America
North
American revenues increased 8% to $465.0 million in the first half of 2008
compared to $430.3 million in the same period for 2007. Revenues
increased in all service lines. Operating profit in the first half of
2008 decreased $8.7 million compared to the same period in
2007. Operating profit decreased due to higher spending on labor,
fuel and selling, general and administrative expenses. Operating
profit in 2008 also included accruals for legal settlement expenses and a
first-quarter $2.0 million gain from reductions in postretirement benefit
obligations in Canada.
|
|
Three
Months
|
|
|
|
|
|
Six
Months
|
|
|
|
|
|
|
Ended
June 30,
|
|
|
%
|
|
|
Ended
June 30,
|
|
|
%
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
133.9 |
|
|
|
119.4 |
|
|
|
12 |
|
|
|
261.7 |
|
|
|
234.1 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
from recurring services (a)
|
|
$ |
60.2 |
|
|
|
52.5 |
|
|
|
15 |
|
|
|
117.0 |
|
|
|
103.3 |
|
|
|
13 |
|
Investment
in new subscribers (b)
|
|
|
(24.7 |
) |
|
|
(21.7 |
) |
|
|
14 |
|
|
|
(49.5 |
) |
|
|
(44.3 |
) |
|
|
12 |
|
Operating
profit
|
|
$ |
35.5 |
|
|
|
30.8 |
|
|
|
15 |
|
|
|
67.5 |
|
|
|
59.0 |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monthly
recurring revenues (c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
39.3 |
|
|
|
35.1 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flow Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization (d)
|
|
$ |
21.8 |
|
|
|
19.1 |
|
|
|
14 |
|
|
|
42.4 |
|
|
|
37.6 |
|
|
|
13 |
|
Impairment
charges from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subscriber
disconnects
|
|
|
12.8 |
|
|
|
13.1 |
|
|
|
(2 |
) |
|
|
24.7 |
|
|
|
24.3 |
|
|
|
2 |
|
Amortization
of deferred revenue (e)
|
|
|
(11.4 |
) |
|
|
(8.7 |
) |
|
|
31 |
|
|
|
(20.0 |
) |
|
|
(16.7 |
) |
|
|
20 |
|
Deferral
of subscriber acquisition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
costs (current year payments)
(f)
|
|
|
(5.8 |
) |
|
|
(6.3 |
) |
|
|
(8 |
) |
|
|
(12.1 |
) |
|
|
(12.1 |
) |
|
|
- |
|
Deferral
of revenue from new
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subscribers (current year
receipts) (g)
|
|
|
11.6 |
|
|
|
12.1 |
|
|
|
(4 |
) |
|
|
23.6 |
|
|
|
24.2 |
|
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures (h):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security systems
|
|
$ |
(42.4 |
) |
|
|
(41.6 |
) |
|
|
2 |
|
|
|
(85.6 |
) |
|
|
(82.7 |
) |
|
|
4 |
|
Other
|
|
|
(1.9 |
) |
|
|
(2.9 |
) |
|
|
(34 |
) |
|
|
(4.5 |
) |
|
|
(5.2 |
) |
|
|
(13 |
) |
Total
capital expenditures
|
|
$ |
(44.3 |
) |
|
|
(44.5 |
) |
|
|
- |
|
|
|
(90.1 |
) |
|
|
(87.9 |
) |
|
|
3 |
|
(a)
|
Reflects
operating profit generated from the existing subscriber base including the
amortization of deferred revenues. This non-GAAP measure
is discussed below under the caption “Non-GAAP Measures - Profit from
Recurring Services and Investment in New
Subscribers.”
|
(b)
|
Primarily
marketing and selling expenses, net of the deferral of subscriber
acquisition costs (primarily a portion of sales commissions and related
costs) incurred in the acquisition of new subscribers. This
non-GAAP measure is discussed below under the caption “Non-GAAP Measures -
Profit from Recurring Services and Investment in New
Subscribers.”
|
(c)
|
This
non-GAAP measure is reconciled and discussed below under the caption
“Non-GAAP Measures - Monthly Recurring
Revenues.”
|
(d)
|
Includes
amortization of deferred subscriber acquisition
costs. Depreciation and amortization for the full-year of
2008 is expected to be between $85 million and $95
million.
|
(e)
|
Includes
amortization of deferred revenue related to active subscriber accounts as
well as recognition of deferred revenue related to subscriber accounts
that disconnect.
|
(f)
|
Includes
cash payments for incremental sales compensation, fringe benefits and
related costs that are directly attributable to successful customer
acquisition efforts and that are deferred and recognized over the expected
life of the customer relationship.
|
(g)
|
Includes
cash receipts from new subscribers, including connection fees and
equipment installation fees that are deferred and recognized over the
expected life of the customer
relationship.
|
(h)
|
Capital
expenditures for the full-year of 2008 are currently expected to range
from $185 million to $190 million.
|
Revenues
- BHS
The 12%
increase in BHS’ revenues in the second quarter of 2008, and a 12% increase in
the first half of 2008 over the comparable 2007 periods was primarily due to a
larger subscriber base and higher average monitoring rates, partially offset by
a 27% decline in the second quarter and 23% decline in the first half in Brink’s
Home Technologies (“BHT”) pre-wire and trim-out
revenues. Additionally, 1.6 percentage points of the revenue increase
during the second quarter of 2008 was the result of an accounting correction
resulting from the process used to recognize deferred revenues (see note 1 to
the consolidated financial statements). The larger subscriber base
and higher average monitoring and service rates also contributed to a 12%
increase in monthly recurring revenues for June 2008 as compared to June
2007.
Operating
Profit - BHS
Operating
profit increased $4.7 million for the second quarter of 2008 and $8.5 million in
the first half of 2008 compared to the same periods in 2007 due to higher profit
from recurring services, partially offset by increased investment in new
subscribers. Higher investment in new subscribers in the second
quarter of 2008 and the first half of 2008 was primarily the result of increased
advertising and marketing costs incurred to maintain installation volume;
increased compensation expense associated with an increase in the commercial
sales force, and increased automobile reimbursement costs for the total sales
force. Higher profit from recurring services in the second quarter of
2008 and the first half of 2008 was primarily due to incremental revenues
generated from the larger subscriber base, higher average monitoring rates, and
a $2.5 million accounting correction to operating profit
resulting from the process used to recognize deferred revenues and deferred
costs.
Additionally,
BHS recorded other income of $1.9 million during the second quarter of 2007
($2.3 million in the first half of 2007) for final settlement of property damage
and business interruption insurance claims related to Hurricane Katrina,
affecting comparability to the same periods in 2008.
Subscriber
activity
|
|
Three
Months
|
|
|
|
|
|
Six
Months
|
|
|
|
|
|
|
Ended
June 30,
|
|
|
%
|
|
|
Ended
June 30,
|
|
|
%
|
|
(In
thousands)
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of subscribers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of
period
|
|
|
1,249.6 |
|
|
|
1,153.2 |
|
|
|
8 |
|
|
|
1,223.9 |
|
|
|
1,124.9 |
|
|
|
9 |
|
Installations (a)
|
|
|
44.2 |
|
|
|
45.2 |
|
|
|
(2 |
) |
|
|
88.8 |
|
|
|
91.0 |
|
|
|
(2 |
) |
Disconnects (a)
|
|
|
(22.3 |
) |
|
|
(23.3 |
) |
|
|
(4 |
) |
|
|
(41.2 |
) |
|
|
(40.8 |
) |
|
|
1 |
|
End of period (b)
|
|
|
1,271.5 |
|
|
|
1,175.1 |
|
|
|
8 |
|
|
|
1,271.5 |
|
|
|
1,175.1 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
number of subscribers
|
|
|
1,261.4 |
|
|
|
1,165.6 |
|
|
|
8 |
|
|
|
1,248.9 |
|
|
|
1,151.9 |
|
|
|
8 |
|
Annualized
disconnect rate (c)
|
|
|
7.1 |
% |
|
|
8.0 |
% |
|
|
|
|
|
|
6.6 |
% |
|
|
7.1 |
% |
|
|
|
|
(a)
|
Customers
who move from one location and then initiate a new monitoring agreement at
a new location are not included in either installations or
disconnects. Dealer accounts cancelled and charged back to the
dealer during the specified contract term are also excluded from
installations and disconnects. Inactive sites that are returned
to service reduce disconnects.
|
(b)
|
Commercial
subscribers accounted for approximately 5% of total subscribers at June
30, 2008. The Company continues to see the expansion of BHS’
commercial subscriber base as a significant growth
opportunity.
|
(c)
|
The
disconnect rate is a ratio, the numerator of which is the number of
customer cancellations during the period and the denominator of which is
the average number of customers during the period. The gross
number of customer cancellations is reduced for customers who move from
one location and then initiate a new monitoring agreement at a new
location, accounts charged back to the dealers because the customers
cancelled service during the specified contractual term, and inactive
sites that are returned to active service during the
period.
|
Installations
were 2% lower in the second quarter and 2% lower in the first six months of 2008
as compared to the same periods of 2007 primarily due to fewer residential
installations which the Company attributes to the continued slow housing market,
partially offset by a 6% increase for the second quarter of 2008 and 7% in the
first six months of 2008 in commercial installations over the same periods in
the prior year. Overall, installation growth in 2008 is expected to
continue to be hampered by sluggish residential real estate activity in the
U.S.
The
annualized disconnect rate for the second quarter of 2008 was 7.1%, and 6.6% for
the first half of 2008 compared to 8.0% and 7.1% for the same periods of
2007. Disconnect rates have declined as compared to the same periods
in the prior year due to the combined effects of an increase in the disconnect
rate in the second quarter of 2007 resulting from a technical adjustment to the
disconnect statistic, declining household moves as a result of the continued
slow housing market, and higher account write-offs as compared to the prior
year.
Disconnect
rates are typically higher in the second and third calendar quarters of the year
because of an increase in residential moves during summer months. BHS
is continually focused on minimizing customer disconnects; however, the
disconnect rate may not materially improve in the future, as a certain amount of
disconnects cannot be prevented due to external factors, primarily household
moves. In addition, the instability in the housing and credit markets
could affect BHS’ ability to collect receivables from customers which could
increase the disconnect rate, although to date, BHS has not experienced such an
increase.
Non-GAAP
Measures
Monthly
Recurring Revenues
|
|
Six
Months
|
|
|
|
Ended
June 30,
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Monthly
recurring revenues (“MRR”) (a)
|
|
$ |
39.3 |
|
|
|
35.1 |
|
Amounts
excluded from MRR:
|
|
|
|
|
|
|
|
|
Amortization of deferred revenue
(b)
|
|
|
3.4 |
|
|
|
3.1 |
|
Other revenues (c)
|
|
|
1.0 |
|
|
|
2.2 |
|
Revenues
on a GAAP basis:
|
|
|
|
|
|
|
|
|
June
|
|
|
43.7 |
|
|
|
40.4 |
|
January – May
|
|
|
218.0 |
|
|
|
193.7 |
|
January – June
|
|
$ |
261.7 |
|
|
|
234.1 |
|
(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 as one factor of BHS’ performance and believes the presentation
of MRR is useful to investors because the measure is widely used in the industry
to assess the amount of recurring revenues from subscriber fees that a monitored
security business produces. This supplemental non-GAAP information
should be reviewed in conjunction with the Company’s consolidated statements of
operations.
Profit
from Recurring Services and Investment in New Subscribers
Profit
from recurring services reflects the monthly monitoring and service earnings
generated from the existing subscriber base, including the amortization of
deferred revenues and net of all general and administrative
expenses. Impairment charges from subscriber disconnects, and
depreciation and amortization expenses, including the amortization of deferred
subscriber acquisition costs, are also charged to recurring
services. Operating profits from recurring services are affected by
the size of the subscriber base, the amount of operational costs, including
depreciation, the level of subscriber disconnect activity and changes in the
average monthly monitoring fee per subscriber. The Company considers
profit from recurring services to be an important non-GAAP component of its
operating profit. The Company believes this component of operating
profit allows investors and others to understand the operating income from
security systems that have been installed.
Investment
in new subscribers is the net expense (primarily marketing and selling expenses)
incurred to add to the subscriber base every year. The amount of the
investment in new subscribers charged to income may be influenced by several
factors, including the growth rate of new subscriber installations and the level
of costs incurred to attract new subscribers, which can vary widely depending on
the customer acquisition channel. As a result, increases in the rate
of investment (the addition of new subscribers) may have a negative effect on
current operating profit but a positive impact on long-term operating profit,
cash flow and economic value. The Company considers investment in new
subscribers to be an important non-GAAP component of its operating
profit. The Company believes this component of operating profit
allows investors and others to understand the amount of net expenses associated
with the installation of new subscribers.
Profit
from recurring services and investment in new subscribers are reconciled to
operating profit, their closest GAAP counterpart, in the table on page
21.
Corporate
Expense – The Brink’s Company
|
|
Three
Months
|
|
|
|
|
|
Six
Months
|
|
|
|
|
|
|
Ended
June 30,
|
|
|
%
|
|
|
Ended
June 30,
|
|
|
%
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
expense
|
|
$ |
13.3 |
|
|
|
10.9 |
|
|
|
22 |
|
|
|
29.4 |
|
|
|
22.5 |
|
|
|
31 |
|
Corporate
expense included approximately $3 million in the second quarter of 2008 and
approximately $9 million in the first half of 2008 of professional, legal and
advisory fees incurred related to strategic reviews conducted by the Company,
proxy matters and the initial steps to implement the proposed spin-off of
BHS. For the full year, the Company expects to incur $17 million to
$20 million of professional, legal and advisory fees related to the strategic
reviews conducted by the Company, proxy matters and the proposed spin-off of
BHS.
Expenses
related to the spin-off will be classified within discontinued operations once
the spin-off has occurred.
Former
Operations – included in Continuing Operations
|
|
Three
Months
|
|
|
|
|
|
Six
Months
|
|
|
|
|
|
|
Ended
June 30,
|
|
|
%
|
|
|
Ended
June 30,
|
|
|
%
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-sponsored
postretirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
benefits other than
pensions
|
|
$ |
0.1 |
|
|
|
0.9 |
|
|
|
(89 |
) |
|
|
0.4 |
|
|
|
2.4 |
|
|
|
(83 |
) |
Black
lung
|
|
|
0.7 |
|
|
|
1.1 |
|
|
|
(36 |
) |
|
|
1.6 |
|
|
|
2.0 |
|
|
|
(20 |
) |
Pension
|
|
|
(1.6 |
) |
|
|
0.6 |
|
|
NM
|
|
|
|
(3.4 |
) |
|
|
0.5 |
|
|
NM
|
|
Administrative,
legal and other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses, net
|
|
|
1.0 |
|
|
|
1.0 |
|
|
|
- |
|
|
|
2.2 |
|
|
|
2.0 |
|
|
|
10 |
|
|
|
$ |
0.2 |
|
|
|
3.6 |
|
|
|
(94 |
) |
|
|
0.8 |
|
|
|
6.9 |
|
|
|
(88 |
) |
Expenses
from former operations decreased from last year primarily due to lower pension
and other postretirement expenses.
The
Company operates in approximately 50 countries outside the U.S., each with a
local currency other than the U.S. dollar. Because the financial results of the
Company are reported in U.S. dollars, they are affected by changes in the value
of various foreign currencies in relation to the U.S. dollar. Changes in
exchange rates may also affect transactions which are denominated in currencies
other than the functional currency. The diversity of foreign
operations helps to mitigate a portion of the impact that foreign currency
fluctuations in any one country may have on the translated
results. The Company, from time to time, uses foreign currency
forward contracts to hedge transactional risks associated with foreign
currencies. At June 30, 2008, no foreign currency forward contracts
were outstanding.
Translation
adjustments of net monetary assets and liabilities denominated in local
currencies relating to operations in countries with highly inflationary
economies are included in net income, along with all transaction gains or losses
for the period. No subsidiaries operated in highly inflationary
economies for the six months ending June 30, 2008 and
2007. Venezuela’s economy has not been considered to be highly
inflationary in the past five years, but it is reasonably possible that
Venezuela’s economy may be considered highly inflationary again at some time in
the future.
The
Company is exposed to certain risks when it operates in highly inflationary
economies, including the risk that
|
·
|
the
rate of price increases for services will not keep pace with cost
inflation;
|
|
·
|
adverse
economic conditions in the highly inflationary country may discourage
business growth which could affect demand for the Company’s services;
and
|
|
·
|
the
devaluation of the currency may exceed the rate of inflation and reported
U.S. dollar revenues and profits may
decline.
|
Brink’s
Venezuela is also subject to local laws and regulatory interpretations that
determine the exchange rate at which repatriating dividends may be
converted. It is possible that Brink’s Venezuela may be subject to a
less favorable exchange rate on dividend remittances in the
future. The Company’s reported U.S. dollar revenues, earnings and
equity are translated using the official exchange rate of 2.15 bolivar fuerte to
the U.S. dollar. Reported results would be adversely affected if
revenues and operating profits of Brink’s Venezuela were to be reported using a
less favorable currency exchange rate. The Company’s Venezuelan subsidiaries,
which are not wholly owned, held net current assets of $83 million at June 30,
2008.
The
Company is also subject to other risks customarily associated with doing
business in foreign countries, including labor and economic conditions,
political instability, controls on repatriation of earnings and capital,
nationalization, expropriation and other forms of restrictive action by local
governments. The future effects, if any, of these risks on the Company cannot be
predicted.
Other
Operating Income (Expense), Net
Other
operating income (expense), net, is a component of the operating segments’
previously discussed operating profits.
|
|
Three
Months
|
|
|
|
|
|
Six
Months
|
|
|
|
|
|
|
Ended
June 30,
|
|
|
%
|
|
|
Ended
June 30,
|
|
|
%
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hurricane
Katrina insurance settlement gains
|
|
$ |
- |
|
|
|
1.9 |
|
|
|
(100 |
) |
|
|
- |
|
|
|
2.3 |
|
|
|
(100 |
) |
Share
in earnings of equity affiliates
|
|
|
1.1 |
|
|
|
0.7 |
|
|
|
57 |
|
|
|
2.3 |
|
|
|
1.4 |
|
|
|
64 |
|
Royalty
income
|
|
|
0.5 |
|
|
|
0.3 |
|
|
|
67 |
|
|
|
1.1 |
|
|
|
0.7 |
|
|
|
57 |
|
Foreign
currency transaction losses, net
|
|
|
(2.4 |
) |
|
|
(0.4 |
) |
|
|
200 |
+ |
|
|
(5.7 |
) |
|
|
(1.5 |
) |
|
|
200 |
+ |
Gain
(loss) on sale of operating assets, net
|
|
|
(0.1 |
) |
|
|
0.3 |
|
|
NM
|
|
|
|
(0.1 |
) |
|
|
0.6 |
|
|
NM
|
|
Other
|
|
|
1.3 |
|
|
|
0.7 |
|
|
|
86 |
|
|
|
1.8 |
|
|
|
0.9 |
|
|
|
100 |
|
|
|
$ |
0.4 |
|
|
|
3.5 |
|
|
|
(89 |
) |
|
|
(0.6 |
) |
|
|
4.4 |
|
|
NM
|
|
Nonoperating
Income and Expense
Interest
expense
|
|
Three
Months
|
|
|
|
|
|
Six
Months
|
|
|
|
|
|
|
Ended
June 30,
|
|
|
%
|
|
|
Ended
June 30,
|
|
|
%
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
$ |
3.3 |
|
|
|
3.0 |
|
|
|
10 |
|
|
|
5.8 |
|
|
|
5.5 |
|
|
|
5 |
|
Interest
and other income, net
|
|
Three
Months
|
|
|
|
|
|
Six
Months
|
|
|
|
|
|
|
Ended
June 30,
|
|
|
%
|
|
|
Ended
June 30,
|
|
|
%
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$ |
3.2 |
|
|
|
1.5 |
|
|
|
113 |
|
|
|
5.3 |
|
|
|
3.3 |
|
|
|
61 |
|
Other
|
|
|
(0.2 |
) |
|
|
0.6 |
|
|
NM
|
|
|
|
(0.2 |
) |
|
|
0.4 |
|
|
NM
|
|
|
|
$ |
3.0 |
|
|
|
2.1 |
|
|
|
43 |
|
|
|
5.1 |
|
|
|
3.7 |
|
|
|
38 |
|
|
|
Three
Months
|
|
|
Six
Months
|
|
|
|
Ended
June 30,
|
|
|
Ended
June 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes (in millions)
|
|
$ |
18.3 |
|
|
|
21.4 |
|
|
|
52.3 |
|
|
|
46.7 |
|
Effective
tax rate
|
|
|
24.6 |
% |
|
|
36.7 |
% |
|
|
30.5 |
% |
|
|
38.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
(benefit) for income taxes (in millions)
|
|
$ |
0.1 |
|
|
|
(1.9 |
) |
|
|
0.9 |
|
|
|
(1.6 |
) |
Effective
tax rate
|
|
|
33.3 |
% |
|
|
28.3 |
% |
|
|
28.1 |
% |
|
|
18.2 |
% |
The
effective income tax rate on continuing operations in the first six months of
2008 was lower than the 35% U.S. statutory tax rate due to a $16.9 million
decrease in the non-U.S. tax provision, primarily due to the geographical mix of
earnings in the foreign jurisdictions and an $8.8 million valuation allowance
release in non-U.S. jurisdictions. The decrease was partially offset
by a $6.5 million tax charge resulting from the decision to spin-off BHS, and
$2.6 million of state tax expense.
The
effective income tax rate on continuing operations in the first six months of
2007 was higher than the 35% U.S. statutory tax rate primarily due to a
$7.0 million increase in the valuation allowances for non-U.S. jurisdictions
and $1.2 million of state tax expense. This was partially offset
by a $2.2 million benefit related to the Company's foreign tax credit position
and a $2.9 million benefit related to the geographical mix of earnings in
non-U.S. jurisdictions.
The
Company’s effective tax rate may fluctuate materially from period to period due
to changes in the expected geographical mix of earnings, changes in valuation
allowances or accruals for contingencies and other factors. Subject
to the above factors, the Company currently expects that the effective tax rate
on continuing operations for the full year 2008 will approximate 31% to 34%, not
considering the effects of moving the BHS operations to discontinued operations
in the fourth quarter as a result of the expected spin-off.
|
|
Three
Months
|
|
|
|
|
|
Six
Months
|
|
|
|
|
|
|
Ended
June 30,
|
|
|
%
|
|
|
Ended
June 30,
|
|
|
%
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority
interest
|
|
$ |
7.5 |
|
|
|
3.8 |
|
|
|
97 |
|
|
|
22.4 |
|
|
|
10.8 |
|
|
|
107 |
|
The
increase in minority interest in 2008 is primarily due to an increase in the
earnings of Brink’s Venezuelan subsidiaries.
|
|
Three
Months
|
|
|
Six
Months
|
|
|
|
Ended
June 30,
|
|
|
Ended
June 30,
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results
of Brink’s United Kingdom domestic cash handling operations
(a)
|
|
$ |
- |
|
|
|
(8.3 |
) |
|
|
- |
|
|
|
(10.8 |
) |
Adjustments
to contingent liabilities of former operations
|
|
|
0.3 |
|
|
|
1.6 |
|
|
|
3.2 |
|
|
|
2.0 |
|
Income
(loss) from discontinued operations before income taxes
|
|
|
0.3 |
|
|
|
(6.7 |
) |
|
|
3.2 |
|
|
|
(8.8 |
) |
Provision
(benefit) for income taxes
|
|
|
0.1 |
|
|
|
(1.9 |
) |
|
|
0.9 |
|
|
|
(1.6 |
) |
Income
(loss) from discontinued operations
|
|
$ |
0.2 |
|
|
|
(4.8 |
) |
|
|
2.3 |
|
|
|
(7.2 |
) |
(a)
|
Brink’s
United Kingdom domestic cash handling operations were sold in August
2007. Revenues of the operations were $12.1 million for the
second quarter of 2007 and $23.1 million for the first six months of
2007. Results of Brink’s United Kingdom domestic cash handling
operations included a $7.5 million asset impairment charge in the second
quarter of 2007.
|
LIQUIDITY
AND CAPITAL RESOURCES
Cash
flows before financing activities increased by $9.3 million in the first half of
2008 as compared to the first half of 2007. The increase was
primarily due to improved operating performance, partially offset by higher
capital expenditures.
Summary
of Cash Flow Information
|
|
Six
Months
|
|
|
|
|
|
|
Ended
June 30,
|
|
|
|
$ |
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities
|
|
$ |
216.3 |
|
|
|
197.3 |
|
|
|
19.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(160.5 |
) |
|
|
(145.3 |
) |
|
|
(15.2 |
) |
Acquisitions
|
|
|
(5.4 |
) |
|
|
(10.8 |
) |
|
|
5.4 |
|
Other
|
|
|
4.7 |
|
|
|
4.6 |
|
|
|
0.1 |
|
Investing
activities
|
|
|
(161.2 |
) |
|
|
(151.5 |
) |
|
|
(9.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows before financing activities
|
|
$ |
55.1 |
|
|
|
45.8 |
|
|
|
9.3 |
|
Operating
cash flows increased by $19.0 million in the first half of 2008 compared to the
same period in 2007. The increase was primarily due to improved
segment operating profit partially offset by higher professional, legal and
advisory fees for shareholder initiatives and the BHS spin-off, higher U.S.
federal income tax payments and higher cash usage for working capital
needs.
Cash
flows from investing activities decreased by $9.7 million in the first half of
2008 versus the first half of 2007 primarily due to increased capital
expenditures.
Capital
expenditures were as follows:
|
|
Six
Months
|
|
|
|
|
|
|
Ended
June 30,
|
|
|
|
$ |
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
|
|
Brink’s
|
|
$ |
70.3 |
|
|
|
57.3 |
|
|
|
13.0 |
|
BHS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Security systems
|
|
|
85.6 |
|
|
|
82.7 |
|
|
|
2.9 |
|
Other
|
|
|
4.5 |
|
|
|
5.2 |
|
|
|
(0.7 |
) |
Corporate
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
- |
|
Capital
expenditures
|
|
$ |
160.5 |
|
|
|
145.3 |
|
|
|
15.2 |
|
Capital
expenditures for the first half of 2008 were $15.2 million higher than for the
same period in 2007. Brink’s capital expenditures in 2008 were
primarily for new facilities, cash processing and security equipment, armored
vehicles, and information technology. Most of the increase in Brink’s
capital expenditures from the prior-year period was due to changes in currency
exchange rates. BHS capital expenditures were higher in the first
half of 2008.
Capital
expenditures for the full-year 2007 totaled $320 million. Capital
expenditures for the full-year 2008 are currently expected to range from $350
million to $365 million, with $165 million to $175 million for Brink’s and $185
million to $190 million for BHS.
Business
Segment Cash Flows
The
Company’s cash flows before financing activities for each of the operating
segments are presented below.
|
|
Six
Months
|
|
|
|
|
|
|
Ended
June 30,
|
|
|
|
$ |
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows before financing activities
|
|
|
|
|
|
|
|
|
|
|
Business segments:
|
|
|
|
|
|
|
|
|
|
|
Brink’s
|
|
$ |
75.0 |
|
|
|
50.3 |
|
|
|
24.7 |
|
BHS
|
|
|
42.0 |
|
|
|
34.4 |
|
|
|
7.6 |
|
Subtotal of business
segments
|
|
|
117.0 |
|
|
|
84.7 |
|
|
|
32.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and former
operations
|
|
|
(61.9 |
) |
|
|
(38.9 |
) |
|
|
(23.0 |
) |
Cash
flows before financing activities
|
|
$ |
55.1 |
|
|
|
45.8 |
|
|
|
9.3 |
|
Brink’s
Cash
flows before financing activities in the first half of 2008 at Brink’s increased
by $24.7 million primarily due to improved operating profit and lower cash used
for business acquisitions, partially offset by increased capital
expenditures.
BHS
The $7.6
million increase in BHS’ cash flows before financing activities is primarily due
to higher cash flows from operations as a result of higher operating profit,
partially offset by higher amounts used for working capital.
Corporate
and Former Operations
Other
cash outflows related to corporate and former operations increased $23.0 million
in 2008 compared to 2007 due to the increase in professional, legal and advisory
fees related to shareholder initiatives and the BHS spin-off as well as higher
U.S. federal income tax payments.
Summary
of financing activities
|
|
Six
Months
|
|
|
|
Ended
June 30,
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Net
borrowings (repayments) of debt:
|
|
|
|
|
|
|
Short-term debt
|
|
$ |
(4.1 |
) |
|
|
(24.9 |
) |
Revolving
facilities
|
|
|
70.4 |
|
|
|
4.2 |
|
Long-term debt
|
|
|
(6.1 |
) |
|
|
(5.5 |
) |
Net borrowings (repayments) of
debt
|
|
|
60.2 |
|
|
|
(26.2 |
) |
Repurchase
of common stock of the Company
|
|
|
(66.5 |
) |
|
|
(0.3 |
) |
Dividends
to:
|
|
|
|
|
|
|
|
|
Shareholders of the
Company
|
|
|
(9.1 |
) |
|
|
(7.4 |
) |
Minority interests in
subsidiaries
|
|
|
(8.8 |
) |
|
|
(6.4 |
) |
Proceeds
and tax benefits related to stock compensation and other
|
|
|
13.6 |
|
|
|
9.9 |
|
Discontinued
operations, net
|
|
|
- |
|
|
|
(11.3 |
) |
Cash flows from financing
activities
|
|
$ |
(10.6 |
) |
|
|
(41.7 |
) |
During
the first half of 2008, the Company purchased 823,300 shares of its common stock
at an average cost of $63.92 per share. The Company also withheld and retired a
portion of the shares that were due to employees under deferred compensation
distributions and stock option exercises. The shares were withheld to
meet the withholding requirements of approximately $13 million.
The
Company’s operating liquidity needs are typically financed by cash from
operations, short-term debt and the Revolving Facility, described
below.
On May 4,
2007, the board of directors authorized an increase in the Company’s regular
dividend to an annual rate of $0.40 per share, up from an annual rate of $0.25
per share. The Company paid dividends of $0.10 per share in both the
first and second quarters of 2008. On July 11, 2008, the board
declared a regular quarterly dividend of $0.10 per share payable on September 2,
2008. Future dividends are dependent on the earnings, financial
condition, cash flow and business requirements of the Company, as determined by
the board of directors.
The
Company uses a combination of debt, leases and equity to capitalize its
operations.
Reconciliation
of Net Debt (Cash) to GAAP measures
|
|
June
30,
|
|
|
December
31,
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Short-term
debt
|
|
$ |
9.3 |
|
|
|
12.4 |
|
Long-term
debt
|
|
|
170.1 |
|
|
|
100.2 |
|
Debt
|
|
|
179.4 |
|
|
|
112.6 |
|
Less
cash and cash equivalents
|
|
|
(246.3 |
) |
|
|
(196.4 |
) |
Net Debt (Cash)
(a)
|
|
$ |
(66.9 |
) |
|
|
(83.8 |
) |
(a)
|
Net
Debt (Cash) is a non-GAAP measure. Net Debt (Cash) is equal to
short-term debt plus the current and noncurrent portion of long-term debt
(“Debt” in the tables), less cash and cash
equivalents.
|
The
supplemental Net Debt (Cash) information is non-GAAP financial information that
management believes is an important measure to evaluate the Company’s financial
leverage. This supplemental non-GAAP information should be reviewed
in conjunction with the Company’s consolidated balance sheets. The
Company’s Net Debt (Cash) position at June 30, 2008, as compared to December 31,
2007, decreased primarily due to share repurchase activities and higher working
capital usage.
The
Company expects to contribute $50 million to BHS prior to the
spin-off. As a result, the Company expects its Net Debt (Cash) to be
lower after the spin-off.
Debt
The
Company has an unsecured $400 million revolving bank credit facility with a
syndicate of banks (the “Revolving Facility”). The facility allows
the Company to borrow (or otherwise satisfy credit needs) on a revolving basis
over a five-year term ending in 2011. As of June 30, 2008, $311.4
million was available under the revolving credit facility.
The
Company also has an unsecured $150 million credit facility with a bank to
provide letters of credit and other borrowing capacity over a five-year term
ending in December 2009 (the “Letter of Credit Facility”). As of June
30, 2008, $18.6 million was available under this Letter of Credit
Facility. The Company expects to terminate the Letter of Credit
Facility during the third quarter of 2008 in connection with the anticipated
spin-off of BHS. On July 23, 2008, the Company entered into a
definitive agreement for a new unsecured $135 million letter of credit facility
with a bank (the “2008 Facility”) that is expected to become effective in the
third quarter of 2008. The Revolving Facility and the multi-currency
revolving credit facilities described below are also used for the issuance of
letters of credit and bank guarantees.
The
Company has two unsecured multi-currency revolving bank credit facilities with a
total of $50.0 million in available credit, of which approximately $23.7 million
was available at June 30, 2008. When rates are favorable, the Company
also borrows from other banks under short-term uncommitted
agreements. Various foreign subsidiaries maintain other lines of
credit and overdraft facilities with a number of banks.
The
Company’s Brink’s and BHS subsidiaries guarantee the Revolving Facility, the
Letter of Credit Facility and the 2008 Facility. The Revolving
Facility, the Letter of Credit Facility, the 2008 Facility and the
multi-currency revolving bank credit facilities contain various financial and
other covenants. The financial covenants, among other things, limit
the Company’s total indebtedness, limit asset sales, limit the use of proceeds
from asset sales and provide for minimum coverage of interest
costs. The credit agreements do not provide for the acceleration of
payments should the Company’s credit rating be reduced. If the
Company were not to comply with the terms of its various loan agreements, the
repayment terms could be accelerated and the commitments could be
withdrawn. An acceleration of the repayment terms under one agreement
could trigger the acceleration of the repayment terms under the other loan
agreements. The Company was in compliance with all financial
covenants at June 30, 2008.
The
Company has guaranteed $43.2 million of bonds issued by the Peninsula Ports
Authority of Virginia. The guarantee originated as part of the
Company’s former interest in Dominion Terminal Associates, a deep water coal
terminal. The Company continues to pay interest on and guarantee payment of the
$43.2 million principal amount and ultimately will have to pay for the
retirement of the bonds in accordance with the terms of the
guarantee. The bonds bear a fixed interest rate of 6.0% and mature in
2033. The bonds may mature prior to 2033 upon the occurrence of
specified events such as the determination that the bonds are taxable or the
failure of the Company to abide by the terms of its guarantee.
The
Company believes it has adequate sources of liquidity to meet its future
requirements.
Equity
At June
30, 2008, the Company had 100 million shares of common stock authorized and 47.4
million shares issued and outstanding. Shares held by The Brink’s
Company Employee Benefits Trust (the “Employee Benefits Trust”) that have not
been allocated to participants under various benefit plans (1.4 million at June
30, 2008) are excluded from earnings per share calculations since they are
treated as treasury shares for the calculation of earnings per
share.
In July
2008, the Company decided to terminate the Employee Benefits
Trust. The termination is expected to be finalized during the third
quarter of 2008. Prior to termination, the shares currently held by
the Employee Benefits Trust will be distributed to the Company, whereupon the
shares will be retired.
On
September 14, 2007, the Company’s board of directors authorized the purchase of
up to $100 million of the Company’s outstanding common shares. Under
the program, the Company used $40.6 million to purchase 654,800 shares of common
stock between December 5, 2007, and March 31, 2008, at an average price of
$61.98 per share. The Company used an additional $15.7 million to
purchase 229,000 shares of common stock in the second quarter of 2008, at an
average price of $68.48 per share. As of June 30, 2008, the Company
had $43.7 million under the program available to purchase shares. The
repurchase authorization does not have an expiration date.
Commitments
and Contingent Matters
Operating
leases
The
Company has made residual value guarantees of approximately $72.3 million at
June 30, 2008, related to operating leases, principally for trucks and other
vehicles.
BAX
Global litigation
BAX
Global is defending a claim related to the apparent diversion by a third party
of goods being transported for a customer. Although BAX Global is
defending this claim vigorously and believes that its defenses have merit, it is
possible that this claim ultimately may be decided in favor of the
claimant. If so, the Company expects that the ultimate amount of
reasonably possible unaccrued losses could range from $0 to $14
million. The Company has contractually indemnified the purchaser of
BAX Global for this contingency.
Value-added
taxes (“VAT”) and customs duties
During
2004, the Company determined that one of its non-U.S. Brink’s business units had
not paid customs duties and VAT with respect to the importation of certain goods
and services. The Company was advised that civil and criminal
penalties could be asserted for the non-payment of these customs duties and
VAT. Although no penalties have been asserted to date, they could be
asserted at any time. The business unit has provided the appropriate
government authorities with an accounting of unpaid customs duties and VAT and
has made payments covering its calculated unpaid VAT. The Company
believes that the range of reasonably possible losses is between $0.4 million
and $3.0 million for potential penalties on unpaid VAT and has accrued $0.4
million. The Company believes that the range of possible losses for
unpaid customs duties and associated penalties, none of which has been accrued,
is between $0 and $35 million. The Company believes that the
assertion of the penalties on unpaid customs duties would be excessive and would
vigorously defend against any such assertion. The Company does not
expect to be assessed interest charges in connection with any penalties that may
be asserted. The Company continues to diligently pursue the
resolution of this matter and, accordingly, the Company’s estimate of the
potential losses could change materially in future periods. The
assertion of potential penalties may be material to the Company’s financial
position and results of operations.
Other
The
Company is involved in various other lawsuits and claims in the ordinary course
of business. The Company is not able to estimate the range of losses for
some of these matters. The Company has recorded accruals for losses
that are considered probable and reasonably estimable. The
Company does not believe that the ultimate disposition of any of these
matters will have a material adverse effect on its liquidity, financial position
or results of operations.
Item
3. Quantitative and Qualitative Disclosures About Market Risk
The
Company’s operations have activities in approximately 50
countries. These operations expose the Company to a variety of market
risks, including the effects of changes in interest rates, commodity prices and
foreign currency exchange rates. In addition, the Company consumes
various commodities in the normal course of business, exposing it to the effects
of changes in the prices of such commodities. These financial and commodity
exposures are monitored and managed by the Company as an integral part of its
overall risk management program. The diversity of foreign operations helps to
mitigate a portion of the impact that foreign currency rate fluctuations in any
one country may have on the Company’s consolidated results. The Company’s risk
management program considers this favorable diversification effect as it
measures the Company’s exposure to financial markets and, as appropriate, seeks
to reduce the potentially adverse effects that the volatility of certain markets
may have on its operating results. The Company has not had any material change
in its market risk exposures in the six months ended June 30, 2008.
Item
4. Controls and Procedures
Pursuant
to Rule 13a-15(b) under the Securities Exchange Act of 1934, the Company carried
out an evaluation, with the participation of the Company’s management, including
the Company’s Chief Executive Officer and Vice President and Chief Financial
Officer, of the effectiveness of the Company’s disclosure controls and
procedures (as defined under Rule 13a-15(e) under the Securities Exchange Act of
1934) as of the end of the period covered by this report. Based upon
that evaluation, the Company’s Chief Executive Officer
and Vice President and Chief Financial Officer concluded that the Company’s
disclosure controls and procedures are effective in ensuring that information
required to be disclosed by the Company in the reports that it files or submits
under the Securities Exchange Act of 1934, is recorded, processed, summarized
and reported, within the time periods specified in the SEC’s rules and forms,
and that such information is accumulated and communicated to management,
including the Company’s Chief Executive Officer and Vice President and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure.
There has
been no change in the Company’s internal control over financial reporting during
the quarter ended June 30, 2008, that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.
Forward-looking
information
This
document contains both historical and forward-looking
information. Words such as “anticipates,” “estimates,”
“expects,” “projects,” “intends,” “plans,” “believes,” “may,” “should” and
similar expressions may identify forward-looking
information. Forward-looking information in this document includes,
but is not limited to, statements regarding the strategic decision to spin-off
BHS, the tax free nature, timing and other expected characteristics of the
spin-off, expected additional expenses in 2008 related to the spin-off, the
expected termination of the Employee Benefits Trust, the outcome of the issue
relating to the non-payment of customs duties and value-added tax by a non-U.S.
subsidiary of Brink’s, Incorporated, the outcome of pending litigation involving
BAX Global and other pending matters and the anticipated financial impact of the
disposition of these matters, significant liabilities and ongoing expenses and
cash outflows related to former coal operations, anticipated revenues from the
currency conversion project in Venezuela, expected 2008 expenses related to the
Company’s strategic review, proxy matters and proposed spin-off of BHS, expected
operating profit margin at Brink’s, expected installation growth at BHS and the
effects of ongoing weakness in the housing market, the disconnect rate at BHS,
the possibility that Venezuela may be considered highly inflationary again, the
possibility that Brink’s Venezuela may be subject to less favorable exchange
rates on dividend remittances, the anticipated effective tax rate for
2008 and the Company’s tax position and underlying assumptions, expected capital
expenditures, depreciation and amortization for 2008, the anticipated
capital contribution to BHS and its effect on the Company’s Net Debt, the
expected termination of the Letter of Credit Facility and the anticipated
effectiveness of the 2008 Facility, and the adequacy of the Company’s sources of
liquidity. The forward-looking information in this document is
subject to known and unknown risks, uncertainties and contingencies, which could
cause actual results, performance or achievements to differ materially from
those that are anticipated.
These
risks, uncertainties and contingencies, many of which are beyond the control of
The Brink’s Company and its subsidiaries, include, but are not limited to the
ability 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, the
implementation of the termination of the Employee Benefits Trust, demand for the
services of Brink’s and BHS, the implementation of investments in technology and
value-added services and cost 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 impact of continuing
initiatives to control costs and increase profitability, the ability of the
businesses to cost effectively match customer demand with appropriate resources,
the willingness of Brink’s and BHS’ customers to absorb fuel surcharges and
other future price increases and the actions of competitors, the Company’s
ability to identify strategic opportunities and integrate them successfully,
acquisitions and dispositions made in the future, Brink’s ability to integrate
recent acquisitions, corporate expenses due to the implementation of the
spin-off decision and shareholder initiatives, decisions by the Company’s Board
of Directors, Brink’s ability to complete currency conversion cash handling
services in Venezuela successfully and without adverse operational issues,
regulatory and labor issues and higher security threats in European countries,
the impact of 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, potential
instability in housing credit markets, 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
document is representative only as of the date of this document, and The Brink’s
Company undertakes no obligation to update any information contained in this
document.
Part II - Other
Information
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
The
following table provides information about common stock repurchases by the
Company during the quarter ended June 30, 2008.
|
|
|
|
|
|
|
|
|
|
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(d)
Maximum Number
|
|
|
|
|
|
|
|
|
|
(c)
Total Number
|
|
|
(or
Approximate
|
|
|
|
|
|
|
|
|
|
of
Shares Purchased
|
|
|
Dollar
Value) of
|
|
|
|
(a)
Total Number
|
|
|
|
|
|
as
Part of Publicly
|
|
|
Shares
that May Yet
|
|
|
|
of
Shares
|
|
|
(b)
Average Price
|
|
|
Announced
Plans
|
|
|
be
Purchased Under
|
|
Period
|
|
Purchased
(1)
|
|
|
Paid
per Share
|
|
|
or
Programs
|
|
|
the
Plans or Programs
|
|
April
1 through
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2008
|
|
|
219,000 |
|
|
$ |
68.29 |
|
|
|
219,000 |
|
|
$ |
44,456,999 |
|
May
1 through
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2008
|
|
|
10,000 |
|
|
|
72.67 |
|
|
|
10,000 |
|
|
|
43,730,344 |
|
June
1 through
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2008
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
(1)
|
On
September 14, 2007, the Company’s board of directors authorized the
Company to make repurchases of up to $100 million of common stock from
time to time as market conditions warrant and as covenants under existing
agreements permit. The program does not require the Company to
acquire any specific numbers of shares and may be modified or discontinued
at any time.
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|
Item
4. Submission of Matters to a Vote of Security
Holders.
|
|
(a)
|
The
Registrant’s annual meeting of shareholders was held on May 2,
2008.
|
|
(c)
|
The
following persons were elected for terms expiring in 2011, by the
following votes:
|
|
For
|
Withheld
|
Marc
C. Breslawsky
|
42,423,955
|
600,607
|
John
S. Brinzo
|
42,584,549
|
440,013
|
Michael
T. Dan
|
42,362,186
|
662,376
|
Lawrence
J. Mosner
|
42,584,074
|
440,488
|
Carroll
R. Wetzel, Jr.
|
42,354,280
|
670,282
|
The
Non-Employee Directors’ Equity Plan was approved by the following
vote:
For
|
Against
|
Abstentions
|
30,589,802
|
9,607,063
|
329,120
|
The
selection of KPMG LLP as independent registered public accounting firm to audit
the accounts of the Registrant and its subsidiaries for the year 2008 was
approved by the following vote:
For
|
Against
|
Abstentions
|
42,836,158
|
174,587
|
13,816
|
|
(d)
|
On
February 25, 2008, the Company and MMI Investments, L.P. (“MMI”) entered
into a settlement agreement pursuant to which Carroll R. Wetzel, Jr. was
nominated and recommended for election to the Company’s board of directors
at the 2008 annual meeting of shareholders. Upon the
consummation of the Company’s anticipated spin-off of BHSH, Mr. Wetzel
will be appointed to the board of directors of BHSH, provided that Mr.
Wetzel resigns from the Company’s board of directors effective upon
consummation of the spin-off. At that time, Robert J. Strang
will be appointed to the Company’s board of directors as Mr. Wetzel’s
replacement. MMI agreed to withdraw its previously submitted
nominations. In connection with the settlement agreement,
the Company incurred costs in the amount of approximately $1.1
million. For more details on the settlement agreement, please
see the Company’s Proxy Statement on Schedule 14A filed with the SEC on
March 20, 2008.
|
Item
6. Exhibits
Exhibit
Number
10.1
|
$135,000,000
Letter of Credit Agreement, dated as of July 23, 2008, among the
Registrant, certain of its subsidiaries and ABN AMRO Bank
N.V.
|
|
|
10.2
*
|
Key
Employees’ Deferred Compensation Program, as amended and restated as of
July 11, 2008.
|
|
|
10.3
*
|
Form
of Deferred Stock Units Award Agreement for deferred stock units granted
under Non-Employee Directors’ Equity Plan.
|
|
|
10.4
*
|
Directors’
Stock Accumulation Plan, as amended and restated as of November 16,
2007.
|
|
|
31.1
|
Certification
of Michael T. Dan, Chief Executive Officer (Principal Executive Officer)
of The Brink’s Company, pursuant to Rules 13a-14(a) and 15d-14(a)
promulgated under the Securities Exchange Act of 1934, as amended, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
|
31.2
|
Certification
of Michael J. Cazer, Vice President and Chief Financial Officer (Principal
Financial Officer) of The Brink’s Company, pursuant to Rules 13a-14(a) and
15d-14(a) promulgated under the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
|
32.1
|
Certification
of Michael T. Dan, Chief Executive Officer (Principal Executive Officer)
of The Brink’s Company, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
|
32.2
|
Certification
of Michael J. Cazer, Vice President and Chief Financial Officer (Principal
Financial Officer) of The Brink’s Company, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
*
Management contract or compensatory plan or arrangement.
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.
|
THE
BRINK’S COMPANY
|
|
|
|
|
August
1, 2008
|
By: /s/
Michael J. Cazer
|
|
Michael
J. Cazer
|
|
(Vice
President -
|
|
Chief
Financial Officer)
|
|
(principal
financial officer)
|