[LOGO] The Brink's Company
1801 Bayberry Court
P.O. Box 18100
Richmond, VA 23226-8100 USA
Tel. 804.289.9600
Fax 804.289.9758
PRESS RELEASE
Contact: FOR IMMEDIATE RELEASE
Investor Relations
804.289.9709
The Brink's Company Records $2.1 Million Charge
in Second Quarter for Foreign Duties and VAT Penalties;
Reduces Estimated Range of Duty Penalties
Richmond, Va. (August 9, 2004) - The Brink's Company (NYSE: BCO) reported
today in its Quarterly Report on Form 10-Q for the second quarter that,
following the receipt of additional information and a financial analysis of the
situation, it recorded $2.1 million of expense for unpaid foreign duties and
penalties for unpaid value-added taxes of one of Brink's, Incorporated's
non-U.S. business units and revised its previously disclosed preliminary range
of reasonably possible losses for penalties to be between $0 and approximately
$50 million for unpaid customs duties.
The $2.1 million charge to earnings comprises the following:
Three Months Ended
(In millions) June 30, 2004
- --------------------------------------------------------------------------------
Penalties on unpaid value-added taxes $ 0.4
Duties 0.9
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Amount charged to operating expenses 1.3
Interest expense on unpaid value-added taxes and customs duties 0.8
- --------------------------------------------------------------------------------
$ 2.1
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The Company evaluates many factors to determine whether it should recognize
or disclose a loss contingency, including the probability of an unfavorable
outcome and the ability to make a reasonable estimate of the amount of loss. The
Company believes that the range of probable penalties related to unpaid
value-added taxes is between $0.4 million and $3 million and that no amount
within that range is a better estimate than any other amount within the range.
Accordingly, the Company has accrued $0.4 million for these penalties.
-more-
The Company has concluded that a loss related to penalties on unpaid
customs duties is not probable. The Company believes that the range of
reasonably possible losses related to these penalties is between $0 and
approximately $50 million. The Company believes that the assertion of these
penalties would be excessive and would vigorously defend against any such
assertion.
The Company intends to pursue diligently the timely 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. These
penalties could be asserted at any time. Although the Company has accrued $0.8
million of interest for the unpaid value-added taxes and customs duties, the
Company does not expect to be assessed interest charges in connection with any
penalties that may be asserted.
The Company's investigation is ongoing. The Company has begun implementing
measures designed to prevent similar situations in the future. The Company
believes that the circumstances giving rise to this matter are isolated to this
particular business unit.
This press release is meant to be read in conjunction with and is qualified in
its entirety by the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2004 filed earlier today, which contains detailed disclosure
regarding the investigation described in this release and its potential
ramifications. This release contains both historical and forward-looking
information. Statements regarding possible outcomes resulting from the failure
to pay value-added tax and customs duties and the results of the ongoing
investigation, including ultimate amounts to be paid, possible accruals, changes
in estimates and financial impact on the Company involve forward-looking
information, which is subject to known and unknown risks, uncertainties and
contingencies. These risks, uncertainties and contingencies could cause actual
results 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 evaluation of remedial alternatives, guidance received from
third parties, the ongoing nature of the investigation and the impact of
governmental inquiries, if any. 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 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 freight
transportation and global supply chain management solutions. For more
information, please visit The Brink's Company website at www.brinkscompany.com,
or call toll free 877-275-7488.
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