[LOGO] The Brink's Company
1801 Bayberry Court
P.O. Box 18100
Richmond, VA 23226-8100 USA
PRESS RELEASE Tel. 804.289.9600
Fax 804.289.9760
Contact: FOR IMMEDIATE RELEASE
Investor Relations
804.289.9709
The Brink's Company
Reports Third Quarter Results
RICHMOND, Va., (October 30, 2003) - The Brink's Company (NYSE: BCO) reported
income from continuing operations for the quarter ended September 30, 2003 of
$11.1 million, or $0.21 per share, after deducting costs of $17.2 million ($11.2
million after tax) associated with the retained obligations of former coal
operations. For the same period one year ago, income from continuing operations
was $20.7 million, or $0.38 per share. Last year's third quarter results did not
include similar costs associated with the retained obligations of former coal
operations.
Revenue in the third quarter of 2003 increased 6% over last year's third
quarter to $1.01 billion. All business units reported higher revenues, with
Brink's, Incorporated and BAX Global benefiting from stronger European
currencies relative to the U.S. dollar.
Operating profit in the quarter just ended was $21.9 million after
deducting $17.2 million of costs associated with retained obligations of the
former coal operations. Operating profit of $33.5 million in last year's third
quarter did not include expenses related to the former coal operations for 2002
since such costs had been recorded previously within discontinued operations. In
the current period, the Company reported higher year-over-year operating profits
for its Business and Security Services units as stronger performance at Brink's,
Incorporated and Brink's Home Security more than offset poorer results at BAX
Global, which was affected by lower demand for expedited freight services in the
United States.
-- more -- 1
"We continued to achieve strong performance in our Brink's Home Security
business and saw solidly improved performance in international operations at
Brink's, Incorporated and in BAX Global's Asian operations," said Michael T.
Dan, President and Chief Executive Officer of The Brink's Company. "However,
lower domestic overnight heavy freight volume continued to negatively impact BAX
Global's results here in the U.S.," he added.
In the third quarter last year, the Company received a $5.9 million (before
tax) payment under the Air Transportation Safety and System Stabilization Act.
The benefit from such payment was reported as a non-operating income item.
Results of operations of the Company's natural gas and timber operations
have been reclassified to discontinued operations for all periods presented. The
Company completed the sale of its natural gas operations in August 2003 and
expects to complete the sale of its timber operations by the end of the year.
The Company recorded income from discontinued operations in the third quarter of
2003 of $38.9 million (after tax), or $0.73 per diluted share, primarily related
to a gain on the sale of its natural gas business. As a result, net income for
the quarter ended September 30, 2003 was $50.0 million, or $0.94 per diluted
share, compared with $22.1 million, or $0.41 per diluted share in the prior
year's period.
The provision for income taxes for both the quarter and nine months ended
September 30, 2003 has been reduced from more normal levels primarily as a
result of the recording of a one-time benefit from the completion of an
examination of certain of the Company's prior years' tax returns.
For the nine months ended September 30, 2003, revenues were $2.91 billion
compared with $2.75 billion in the comparable period in 2002. Net income for the
first nine months of 2003 was $54.4 million, or $1.03 per diluted share,
compared with $49.3 million, or $0.92 per diluted share a year ago. Income from
continuing operations was lower in 2003 than in the year earlier period largely
due to the inclusion in 2003 of expenses related to former coal operations. The
reduction in income from continuing operations was more than offset by the gain
included in discontinued operations from the sale of the natural gas business.
-- more -- 2
Third Quarter Business Unit Performance
Brink's, Incorporated ("Brink's")
- ---------------------------------
Brink's revenue of $427.2 million increased 10% during the third quarter as
compared with the prior year's period, with all major geographic regions
contributing to the increase. International revenue this quarter was up more
than 16% over the level of the third quarter a year ago, primarily due to the
effects of the strengthening of European currencies compared to the U.S. dollar.
This positive effect on revenue was partially offset by the effect of a stronger
U.S. dollar relative to South American currencies. North American revenue
increased 2% over the third quarter of 2002.
Brink's operating profit in the quarter ended September 30, 2003 more than
doubled to $33.4 million from last year's weak third quarter, reflecting
significantly improved operations in South America and Europe.
Brink's Home Security
- ---------------------
Revenue increased 9% to $78.9 million in the third quarter as compared to
the same period last year due primarily to growth in the subscriber base.
Operating profits of $18.1 million in the third quarter were 27% higher than in
the prior year's quarter. An increase in operating profit from recurring
services resulted primarily from the growth of the subscriber base, a lower
disconnect rate and more efficient service operations.
The annualized disconnect rate for the current year's quarter improved to
7.4% compared to 7.9% a year earlier. The Company added 32,600 new subscribers
during the quarter, a 22% increase over the number of new subscribers in the
third quarter last year. At September 30, 2003, Brink's Home Security had more
than 813,000 subscribers.
-- more -- 3
BAX Global
- ----------
Worldwide revenue at BAX Global increased to $493.3 million in the third
quarter, 2% higher than in the same period last year. International revenue
increased 11% reflecting the effects of the weaker U.S. dollar relative to
European and Asian currencies and stronger Asia Pacific activity. In the
Americas region, revenue decreased more than 6% in comparison to last year's
third quarter as lower U.S. volume combined with the effects of a shift towards
deferred products from overnight shipments and lower third party air charter
activity to more than offset higher revenues in supply chain management. Last
year's performance was bolstered by the effects of the West Coast dock strike.
BAX Global reported an operating loss of $5.3 million for the third quarter
of 2003 compared to operating profit of $9.9 million in the same period in 2002.
The loss in the current period reflects lower revenue and reduced margins in the
Americas operations.
Disposition of Natural Resources Businesses
In keeping with its strategy of focusing on business and security services,
the Company has continued its efforts to dispose of its remaining natural
resources operations, following its exit from the coal business at the end of
2002.
The Company has recently reached several important milestones in this
process, including:
o The signing of definitive agreements in July to sell its natural gas and
timber assets;
o The closing of the natural gas transaction in August for cash proceeds
of $81 million;
o The signing of definitive agreements in October to sell a majority of its
remaining West Virginia coal assets, and
o The sale on October 16, 2003 of all of its shares in an Australian gold
and nickel mining and exploration company, for approximately $19 million.
-- more -- 4
VEBA and Pension Funding
During the quarter just ended, the Company contributed $50 million to its
Voluntary Employees Beneficiary Association Trust (VEBA), a tax efficient
vehicle for funding the Company's future obligations for postretirement medical
benefits. This contribution raised the value of the assets in the VEBA to
approximately $100 million as of September 30, 2003.
In October, the Company contributed $20 million to its primary pension plan
covering U. S. employees and retirees.
Summary
"The actions we have taken to dispose of non-strategic assets and to
provide funding for our liabilities further demonstrates our resolve to follow
through on a key element of our strategy, " said Michael Dan.
"At Brink's, Incorporated our people have worked hard to return operating
performance to reasonable levels. We expect to sustain this performance in the
fourth quarter. The strong results at Brink's Home Security reflect the skill
and hard work of its more than 2,600 employees. We expect they will continue
this record of achievement. Our people at BAX Global have continued to build on
their past successes in Asia and supply chain management while facing difficult
economic conditions here and in Europe. They are committed to taking further
steps to return to profitability while remaining well-positioned to take
advantage of economic recovery," added Michael Dan.
-- more -- 5
This release contains both historical and forward-looking information.
Statements regarding consummation of the sale of the timber operations and
anticipated performance at each of the operations, among others, involve
forward-looking information which 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. Such
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
satisfaction of closing conditions typical for timber transactions, such as the
ability to obtain insurance, the impact of operational improvements in the
security operations and the timing of any such impact, the ability of Brink's
Home Security to continue to maintain its subscriber growth and low disconnect
rate, the ability to identify and execute cost and operational improvements in
the core businesses, IT costs and costs associated with ongoing contractual
obligations, pension plan and other employee obligations, labor relations,
safety and security performance, overall domestic and international economic,
political, social and business conditions, capital markets performance, the
strength of the U.S. dollar relative to foreign currencies, interest rates,
inflation, new government regulations and legislative initiatives, domestic and
international demand for services of the subsidiaries of The Brink's Company,
pricing and other competitive factors, variations in costs or expenses and
performance delays of any public or private sector supplier, service provider or
customer. The information included in this release is representative only as of
the date of this release, and The Brink's Company undertakes no obligation to
update any information contained in this release.
About The Brink's Company
The Brink's Company (NYSE: BCO) is a global leader in business and security
services. The Company's three main businesses are Brink's, Incorporated, the
world's premier provider of secure transportation and cash management services;
Brink's Home Security, one of the largest and most successful residential alarm
companies in North America; and BAX Global, an industry leader in global supply
chain management and transportation solutions. For more information, please
visit The Brink's Company website at www.brinkscompany.com, or call toll free
877-275-7488.
Conference Call
The Company will host a conference call today, October 30, at 11:00 a.m. eastern
time to discuss this press release. Interested parties can listen to the
conference call by dialing (877) 346-4093 within North America or (706) 679-4453
from outside North America, or via live webcast at www.brinkscompany.com. Please
dial in at least five minutes prior to the start of the call. Dial-in replay
will be available through November 7, 2003 by calling (800) 642-1687 within
North America or (706) 645-9291 outside North America and entering confirmation
number 3551344. A webcast replay will be available at www.brinkscompany.com
through November 14, 2003.
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The Brink's Company
and Subsidiaries
Condensed Consolidated Statements of Operations
(In millions, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
- -----------------------------------------------------------------------------------------------------------------------
Revenues $ 1,005.2 946.5 2,905.4 2,752.3
Expenses:
Operating expenses 858.9 794.4 2,504.3 2,308.1
Selling, general and administrative expenses 131.4 120.9 382.8 346.9
- -----------------------------------------------------------------------------------------------------------------------
Total expenses 990.3 915.3 2,887.1 2,655.0
Other operating income, net 7.0 2.3 14.9 5.0
- -----------------------------------------------------------------------------------------------------------------------
Operating profit 21.9 33.5 33.2 102.3
Interest expense (6.6) (5.3) (19.6) (17.1)
Interest and other income, net 0.7 0.2 6.7 (0.1)
Stabilization Act compensation - 5.9 - 5.9
Minority interest (2.8) (0.6) (5.4) (1.8)
- -----------------------------------------------------------------------------------------------------------------------
Income from continuing operations
before income taxes 13.2 33.7 14.9 89.2
Provision for income taxes 2.1 13.0 2.7 32.9
- -----------------------------------------------------------------------------------------------------------------------
Income from continuing operations 11.1 20.7 12.2 56.3
Income (loss) from discontinued operations,
net of tax 38.9 1.4 42.2 (7.0)
- -----------------------------------------------------------------------------------------------------------------------
Net income $ 50.0 22.1 54.4 49.3
=======================================================================================================================
Basic net income (loss) per common share:
Continuing operations $ 0.21 0.38 0.23 1.06
Discontinued operations 0.73 0.03 0.80 (0.13)
- -----------------------------------------------------------------------------------------------------------------------
$ 0.94 0.41 1.03 0.93
- -----------------------------------------------------------------------------------------------------------------------
Diluted net income (loss) per common share:
Continuing operations $ 0.21 0.38 0.23 1.05
Discontinued operations 0.73 0.03 0.80 (0.13)
- -----------------------------------------------------------------------------------------------------------------------
$ 0.94 0.41 1.03 0.92
=======================================================================================================================
See accompanying notes.
7
The Brink's Company
and Subsidiaries
Condensed Consolidated Balance Sheets
(In millions)
September 30, December 31,
2003 2002
- ----------------------------------------------------------------------------------------------
(Unaudited)
Assets
Current assets $ 882.2 782.0
Property and equipment, net 861.2 871.2
Goodwill, net 238.5 227.9
Voluntary Employees' Beneficiary Association trust 99.9 18.2
Other assets 543.2 560.6
- ----------------------------------------------------------------------------------------------
Total assets $ 2,625.0 2,459.9
==============================================================================================
Liabilities and shareholders' equity
Current liabilities $ 859.2 793.3
Long-term debt 286.6 304.2
Accrued pension costs 120.9 122.6
Other liabilities 884.1 858.6
- ----------------------------------------------------------------------------------------------
Total liabilities 2,150.8 2,078.7
Shareholders' equity 474.2 381.2
- ----------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 2,625.0 2,459.9
==============================================================================================
See accompanying notes.
Segment Information
(In millions)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
- ---------------------------------------------------------------------------------------------------------------
Revenues:
Brink's $ 427.2 387.6 1,229.3 1,188.7
Brink's Home Security 78.9 72.2 229.3 209.6
BAX Global 493.3 483.3 1,430.3 1,343.0
- ---------------------------------------------------------------------------------------------------------------
Business and Security Services 999.4 943.1 2,888.9 2,741.3
Other 5.8 3.4 16.5 11.0
- ---------------------------------------------------------------------------------------------------------------
Revenues $ 1,005.2 946.5 2,905.4 2,752.3
===============================================================================================================
Operating profit (loss):
Brink's $ 33.4 16.1 68.0 67.6
Brink's Home Security 18.1 14.2 52.5 45.0
BAX Global (5.3) 9.9 (13.3) 6.4
- ---------------------------------------------------------------------------------------------------------------
Business and Security Services 46.2 40.2 107.2 119.0
Former coal operations (17.2) - (51.7) -
Corporate and other (7.1) (6.7) (22.3) (16.7)
- ---------------------------------------------------------------------------------------------------------------
Operating profit $ 21.9 33.5 33.2 102.3
===============================================================================================================
See accompanying notes.
8
The Brink's Company
and Subsidiaries
Other Financial Information
(In millions, except as otherwise noted)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
- -----------------------------------------------------------------------------------------------------------
Brink's:
Revenues:
North America $ 179.6 175.6 531.2 516.7
International 247.6 212.0 698.1 672.0
- -----------------------------------------------------------------------------------------------------------
Revenues $ 427.2 387.6 1,229.3 1,188.7
===========================================================================================================
Operating profit:
North America $ 14.3 13.0 35.6 37.1
International 19.1 3.1 32.4 30.5
- -----------------------------------------------------------------------------------------------------------
Segment operating profit $ 33.4 16.1 68.0 67.6
===========================================================================================================
Brink's Home Security:
Revenues $ 78.9 72.2 229.3 209.6
===========================================================================================================
Operating profit:
Recurring services $ 31.7 26.5 93.4 81.1
Investment in new subscribers (13.6) (12.3) (40.9) (36.1)
- -----------------------------------------------------------------------------------------------------------
Segment operating profit $ 18.1 14.2 52.5 45.0
===========================================================================================================
Monthly recurring revenues $ 22.7 20.5
Annualized disconnect rate 7.4% 7.9% 7.1% 7.4%
Number of subscribers (in thousands):
Beginning of period 795.6 738.6 766.7 713.5
Installations 32.6 26.8 88.3 77.7
Disconnects (15.0) (14.7) (41.8) (40.5)
- -----------------------------------------------------------------------------------------------------------
End of period 813.2 750.7 813.2 750.7
Average number of subscribers 804.3 744.2 788.8 732.1
===========================================================================================================
BAX Global:
Revenues:
Americas $ 238.7 255.8 708.9 729.1
International 273.2 245.2 775.9 664.6
Eliminations/other (18.6) (17.7) (54.5) (50.7)
- -----------------------------------------------------------------------------------------------------------
Revenues $ 493.3 483.3 1,430.3 1,343.0
===========================================================================================================
Operating profit (loss):
Americas $ (11.3) 4.0 (31.6) (10.3)
International 8.9 9.3 24.3 25.4
Other (2.9) (3.4) (6.0) (8.7)
- -----------------------------------------------------------------------------------------------------------
Segment operating profit (loss) $ (5.3) 9.9 (13.3) 6.4
===========================================================================================================
Intra-U.S. revenue $ 118.1 124.9 336.1 349.3
Worldwide expedited freight services:
Revenues $ 370.3 375.3 1,078.0 1,038.9
Weight in pounds 391.3 398.1 1,141.6 1,118.6
===========================================================================================================
See accompanying notes.
9
The Brink's Company
and Subsidiaries
Other Financial Information
(In millions)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
- ------------------------------------------------------------------------------------------------------------------------
Depreciation and amortization:
Brink's $ 17.5 15.9 50.5 45.7
Brink's Home Security 12.1 11.3 35.5 32.0
BAX Global 11.9 10.5 36.0 32.0
- ------------------------------------------------------------------------------------------------------------------------
Business and Security Services 41.5 37.7 122.0 109.7
Corporate and other 1.7 0.8 4.9 2.3
- ------------------------------------------------------------------------------------------------------------------------
Depreciation and amortization $ 43.2 38.5 126.9 112.0
========================================================================================================================
Other BHS cash flow information:
Impairment charges from subscriber disconnects $ 9.9 9.4 26.0 24.8
Amortization of deferred revenue (6.7) (6.2) (18.9) (18.0)
Deferred subscriber acquisition costs
(current year payments) (4.8) (4.5) (13.7) (12.9)
Deferred revenue from new subscribers
(current year receipts) 7.5 6.9 20.7 20.2
========================================================================================================================
Capital expenditures:
Brink's $ 19.3 21.6 54.2 55.1
Brink's Home Security 25.9 22.3 71.9 63.0
BAX Global 5.6 6.0 18.6 15.8
- ------------------------------------------------------------------------------------------------------------------------
Business and Security Services 50.8 49.9 144.7 133.9
Corporate and other 1.0 2.9 2.4 5.1
- ------------------------------------------------------------------------------------------------------------------------
Capital expenditures $ 51.8 52.8 147.1 139.0
========================================================================================================================
See accompanying notes.
10
The Brink's Company
and Subsidiaries
Notes to Financial Information
(Unaudited)
(1) The Brink's Company (along with its subsidiaries, the "Company") has
three operating segments within its "Business and Security Services"
businesses:
o Brink's, Incorporated ("Brink's")
o Brink's Home Security, Inc. ("BHS")
o BAX Global Inc. ("BAX Global")
The Company also has significant assets, including approximately $100
million of assets held by its Voluntary Employees' Beneficiary
Association trust ("VEBA"), and liabilities associated with its former
coal operations and expects to have significant ongoing net expenses
and cash outflows related to former coal operations.
As discussed in more detail below, the Company sold its natural gas
business in the third quarter of 2003, sold a portion of its gold
assets in the fourth quarter of 2003, and has agreed to sell its timber
business and substantially all of its remaining coal properties located
in West Virginia. The timber and coal transactions are expected to
close in late 2003.
(2) Prior to 2003, expenses related to former coal operations were
classified as part of discontinued operations. In 2003, the Company
began recognizing coal-related expenses as a part of continuing
operations.
Costs of former coal operations included in continuing operations
Three Months Ended Nine Months Ended
September 30, September 30,
(In millions) 2003 2003
---------------------------------------------------------------------------------------
Company-sponsored postretirement
benefits other than pensions $ 12.5 37.2
Black lung 1.4 4.3
Pension (0.4) (0.7)
Administrative, legal and other
expenses, net 2.6 6.4
Idle and closed mine expense, net of
other income 1.1 4.5
---------------------------------------------------------------------------------------
$ 17.2 51.7
=======================================================================================
In addition to the above, the Company will continue to record
adjustments to coal-related contingent liabilities within discontinued
operations.
11
(3) The Company contributed $50 million in the third quarter of 2003 and
$32 million in the second quarter of 2003 to its Voluntary Employees'
Beneficiary Association trust ("VEBA"), and at September 30, 2003, the
Company's VEBA held approximately $100 million. The VEBA is designed to
tax efficiently fund certain retiree medical liabilities, primarily for
retired coal miners and their dependents.
(4) The Company closed the sale of its natural gas business in August 2003
and received approximately $81 million in net cash proceeds. At the
effective date of sale, the natural gas business had approximately $24
million carrying value of net assets.
In July 2003, the Company agreed to sell its timber business for
approximately $38 million in cash. The sale of the timber business is
contingent upon various closing conditions and is expected to close in
late 2003. At September 30, 2003, the timber business had approximately
$7 million in the carrying value of net assets and approximately $5
million in future operating lease obligations that are not expected to
transfer to the buyers.
Discontinued operations in the third quarter of 2003 includes an
after-tax gain on the sale of the natural gas business as well as the
after-tax results of operations for the natural gas and timber
businesses. In the first half of 2003, the Company recorded a charge in
discontinued operations related to a revision of the estimated
withdrawal liabilities for coal-related multi-employer pension plans.
In 2002, the Company revised its estimate of coal operating losses to
be incurred during the disposal period.
Summary of Discontinued Operations
Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2003 2002 2003 2002
-------------------------------------------------------------------------------------------------
Gain on sale of natural gas business $ 57.3 - 57.3 -
Results from operations:
Natural gas 2.3 2.3 11.2 6.6
Timber 0.1 (0.2) 0.3 (0.7)
Adjustments to Coal
contingent liabilities (0.1) - (3.6) -
Coal operating losses during
the disposal period - - - (15.0)
-------------------------------------------------------------------------------------------------
59.6 2.1 65.2 (9.1)
Income taxes (20.7) (0.7) (23.0) 2.1
-------------------------------------------------------------------------------------------------
$ 38.9 1.4 42.2 (7.0)
=================================================================================================
(5) Brink's, Incorporated's North American operating income in the third
quarter of 2003 includes a $4.7 million gain on the sale of operating
assets, and $3.5 million of costs associated with the closure of its
former headquarters in Darien, Connecticut.
12
In the second quarter of 2003, the Company accepted $19.8 million in
full settlement of the notes receivable and royalty obligations
received as part of the consideration in the sale of its former
Virginia coal operations. The Company recognized a $2.6 million pretax
gain, classified as part of other nonoperating income, net, on the
settlement in the second quarter of 2003.
Stabilization Act compensation of $5.9 million received in third
quarter 2002 represents amounts received by the Company from the U.S.
government pursuant to the Air Transportation Safety and System
Stabilization Act.
In October 2003, the Company sold its 23.3% interest in MPI Mines Ltd.
for approximately $19 million in cash. A gain of approximately $10
million will be reported as other operating income in continuing
operations in the fourth quarter of 2003. The Company considers its
remaining gold assets a noncore business. The Company includes the
operating results of its gold business in continuing operations within
corporate and other.
In October 2003, a definitive agreement to sell substantially all of
the Company's coal properties in West Virginia was reached.
(6) The effective tax rate was 15.9% in the third quarter of 2003 compared
with 38.6% in the 2002 third quarter. The lower rate was primarily due
to the reduction of deferred tax liabilities as a result of the
favorable resolution of certain U.S. tax issues.
(7)
Three Months Ended Nine Months Ended
September 30, September 30,
(In millions) 2003 2002 2003 2002
------------------------------------------------------------------------------------------
Weighted average common shares outstanding:
Basic 53.3 52.2 53.0 52.0
Diluted 53.4 52.5 53.0 52.3
==========================================================================================
The Company redeemed its preferred stock in the third quarter of 2002.
Dividends paid to preferred stockholders prior to the redemption and a
$0.6 million premium on the redemption of the preferred stock reduced
diluted earnings per share by $0.01 per share in the third quarter of
2002 and by $0.02 per share in the first nine months of 2002.
13
(8) Reconciliation of non-GAAP measures.
(a) A reconciliation of monthly recurring revenues to reported BHS revenues
follows:
Nine Months Ended
September 30,
(In millions) 2003 2002
----------------------------------------------------------------------
September:
Monthly recurring revenues ("MRR") (a) $ 22.7 20.5
Amounts excluded from MRR:
Amortization of deferred revenue 2.1 1.9
Other revenues (b) 1.6 1.6
----------------------------------------------------------------------
Revenues on a GAAP basis 26.4 24.0
======================================================================
Revenues (GAAP basis):
September 26.4 24.0
January - August 202.9 185.6
----------------------------------------------------------------------
January - September $ 229.3 209.6
======================================================================
(a) MRR is calculated based on the number of subscribers at period end
multiplied by the average fee per subscriber received in the last
month of the period for contracted monitoring and maintenance
services.
(b) Revenues that are not pursuant to monthly contractual billings.
The Company believes the presentation of MRR is useful to investors
because the measure is used to assess the amount of recurring revenues
a home security business produces.
(b) A reconciliation of after-tax coal-related expenses to reported
coal-related expenses follows:
Three Months Ended Nine Months Ended
September 30, September 30,
(In millions) 2003 2003
-------------------------------------------------------------------------------
Coal-related expenses, before tax $ 17.2 51.7
Income taxes 6.0 18.1
-------------------------------------------------------------------------------
Coal-related expenses, after tax $ 11.2 33.6
===============================================================================
The Company believes the presentation of coal-related expenses,
after-tax, is useful to investors to assess the effect on income from
continuing operations, an after-tax measure, of the transition from the
accounting treatment in 2002 for retained coal-related expenses under
APB No. 30, "Reporting the Results of Operations - Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions", to the
accounting treatment in 2003 as an expense classified as part of
continuing operations.
(9) Certain prior period amounts have been reclassified to conform to the
current period's financial statement presentation.
# # #
14