Exhibit 99.1
[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
Reports Improved Third Quarter 2004 Results
BAX Global Posts Strong Profit Increase as Freight Volumes Improve;
Brink's, Incorporated Profitability Boosted by International Operations;
Brink's Home Security Continues Solid Performance Record
RICHMOND, Va., (November 3, 2004) - The Brink's Company (NYSE: BCO) today
reported after-tax income from continuing operations for the third quarter of
2004 of $37.7 million or $0.68 per diluted share compared to $11.5 million or
$0.22 per diluted share in the prior-year period.
Revenue in the third quarter of 2004 increased 20% over last year's third
quarter to $1.20 billion, reflecting improvement in each of the Company's
business units. Revenues at Brink's, Incorporated and BAX Global also benefited
from stronger European currencies relative to the U.S. dollar.
The Company reported operating profit of $58.7 million for the quarter
ended September 30, 2004, up from $22.4 million in the year earlier period. The
operating profit increase reflects strong performance in International
operations at Brink's, Incorporated, continued subscriber growth and solid
operational execution at Brink's Home Security and increased freight volumes in
the Americas and Asia at BAX Global. Operating profit for the recent quarter
also benefited from a reduction in costs from former coal operations, partially
offset by higher corporate expenses in comparison to a year ago.
-more- 1
Net income for the third quarter of 2004 was $38.1 million, or $0.68 per
diluted share, down from $50.0 million, or $0.94 per diluted share, in the prior
year's period, which included $38.5 million or $0.72 per diluted share of income
from discontinued operations mainly related to the sale of natural gas
operations.
"Our businesses turned in another solid quarter of improved performance,
building on the momentum of earlier in the year," said Michael T. Dan, Chairman,
President and Chief Executive Officer of The Brink's Company. "BAX Global once
again posted strong profit gains, particularly in the Americas where we
continued to see increased shipping volumes mainly related to the improving U.S.
economy. Brink's, Incorporated achieved solid revenue and profit growth driven
by exceptional performance in a few international subsidiaries. Meanwhile,
Brink's Home Security produced record profits in the quarter by further
leveraging its best-in-class business model," added Mr. Dan.
For the nine months ended September 30, 2004, revenues were $3.42 billion
compared with $2.89 billion in the first nine months of 2003. Operating profit
for the first nine months was $130.2 million in 2004 compared with $35.6 million
in 2003. Net income for the first nine months of 2004 was $82.5 million, or
$1.50 per diluted share, compared with $54.4 million, or $1.03 per diluted
share, a year ago.
Third Quarter Business Unit Performance
Brink's, Incorporated ("Brink's")
- ---------------------------------
Brink's revenue of $492.7 million increased 15% for the third quarter as
compared with the prior year's period. International revenue in the quarter
increased 25% over the third quarter a year ago due to stronger revenues in
South America, France and Greece combined with the net benefit of currency
translation. North American revenue increased 3% over the third quarter of 2003,
mainly due to higher revenues in Canada.
-more- 2
Brink's operating profit in the quarter ended September 30, 2004 increased
to $44.7 million, up from the $33.4 million recorded in the third quarter last
year. The increase in operating profit reflects better business conditions in
Europe and South America. In particular, revenues and profits benefited from
competitor difficulties, a surge in consumer cash needs, and a spike in the
economy of Greece during the Olympics in Europe and improved performance in
South America, especially in Venezuela. Operating profit in North America
declined slightly, as improved performance in Cash Logistics, Coin Processing
and Global Services was offset by lower results from armored car operations in
the U.S.
Brink's Home Security
- ---------------------
Revenue at Brink's Home Security increased 11% to $87.6 million in the
third quarter of 2004, as compared to the same period last year, due to growth
in the subscriber base and higher per subscriber monthly revenues. Operating
profit in the third quarter was a record $20.2 million, 12% higher than in the
prior year's third quarter. An increase in operating profit from recurring
services resulted primarily from the growth of the subscriber base.
The annualized disconnect rate for the third quarter of 2004 was 7.1%, down
from 7.4% in the year-ago quarter. Brink's Home Security installed 38,100 new
subscribers during the quarter, a 17% increase over the number of new
subscribers added in the third quarter of 2003, and ended the quarter with
approximately 896,000 subscribers generating monthly recurring revenue of $25.2
million. (See Non-GAAP Reconciliations for a reconciliation of monthly recurring
revenue to reported revenue.)
-more- 3
BAX Global
- ----------
Revenue at BAX Global increased to $614.7 million in the third quarter, 25%
higher than in the same period last year. In the Americas region, revenue
increased 25% in comparison to last year's third quarter due to higher export
activity, growth in BAX Global's freight forwarder service and a continued
improvement in U.S. shipping volumes, including an increase in higher priced
expedited freight as a result of an improving economy. International revenue
increased 24%, reflecting robust Asia-Pacific activity, and the effects of the
weaker U.S. dollar relative to European and some Asia-Pacific currencies.
Operating profit at BAX Global improved to $14.6 million for the third
quarter of 2004 from a loss of $5.3 million in the same period in 2003. The
current quarter's performance reflects much improved results from North American
operations, continued solid results from logistics and freight forwarding
activities in Asia-Pacific and a modest improvement in operating profit in
Europe. BAX Global's improved operating performance was partially offset by
higher corporate and other costs and the recording, within the operating results
for the Americas, of an impairment charge of $4.7 million for information
technology investments that were determined to be uneconomic.
Other Costs and Expenses
The Company's costs of former coal operations, which consist primarily of
costs for Company-sponsored medical coverage for former miners and their
dependents, declined to $10.9 million in the third quarter of 2004 from $17.2
million in the prior-year period. The decrease is due to the benefits of the
Medicare legislation enacted late last year, lower idle and closed mine expense,
lower administrative, legal and other expenses and the recording of $2.3 million
of expected earnings on assets held in the Company's Voluntary Employees'
Beneficiary Association (VEBA) trust.
-more- 4
Corporate expenses increased in the quarter ended September 30, 2004 to
$9.9 million from $6.6 million in the prior-year period primarily due to an
increase in costs associated with the documentation and testing of internal
controls required by the Sarbanes-Oxley Act of 2002.
During the recently concluded quarter, the Company's effective tax rate was
much lower than the currently expected full-year rate of 39%, primarily as a
result of the recording of benefits from the resolution of tax contingencies
with several authorities.
Funding of VEBA and Pension Plan
The Company made a cash contribution of $50 million to its VEBA trust
during the third quarter of 2004, bringing the fair value of the assets in the
VEBA to approximately $159 million at September 30, 2004. The Company also made
a voluntary contribution of $11 million to its U.S. pension plan during the
third quarter of 2004. These contributions reflect the Company's continued
commitment to use its strong cash flow to tax-efficiently manage its
liabilities.
Financing
In October, the Company completed a new five-year, $400 million syndicated
revolving credit facility to replace a similar facility that was due to expire
in September 2005.
Summary
"The Brink's Company posted another strong quarter, as each of our three
services businesses capitalized on growth in their markets and better economic
conditions, while working to achieve the benefits of operational discipline and
service excellence," said Mr. Dan.
"Looking forward, we are focused on growth through expansion of existing
products and services, further market penetration, and development of additional
value-added solutions for our customers, supported by our security and service
levels which are second to none," he added. "BAX Global should see further
-more- 5
improvement from better business conditions in the U.S. At Brink's, Incorporated
the emphasis will continue to be on maintaining excellence in our traditional
business lines while expanding Cash Logistics and other value-added services. We
anticipate that the fourth quarter will be a good one for Brink's, but it will
be a challenge to match the strong international performance posted in the third
quarter. Brink's Home Security will focus on further growth and outstanding
service levels in its industry-leading residential alarm business while building
its capabilities and presence in the commercial segment," said Mr. Dan.
-more- 6
This release contains both historical and forward-looking information. Words
such as "anticipates," "estimates," "expects," "projects," "intends," "plans,"
"believes," "may" and similar expressions may identify forward-looking
information. Forward-looking information in this document includes, but is not
limited to, statements regarding the investigation into the non-payment of
customs duties and value-added tax by a non-U.S. subsidiary of Brink's,
Incorporated, including related accruals and contingencies and the amount of any
penalties and the impact on the financial condition of The Brink's Company,
Brink's, Incorporated's fourth quarter performance, continued improvement at BAX
Global, the expansion of cash logistics and other value-added services at
Brink's, Incorporated, and the growth of the residential and commercial segments
of Brink's Home Security. The forward-looking information in this document is
subject to known and unknown risks, uncertainties and contingencies that could
cause actual results 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 evaluation of remedial alternatives, guidance received from
third parties, the impact of governmental inquiries, if any, the ongoing nature
of the investigation, the impact of operational improvements in the security
operations and the timing of any such impact, the ability of the businesses to
meet demand appropriately, the ability of Brink's Home Security to continue to
maintain its subscriber growth and low disconnect rate, the return of customers
to overnight shipping, 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 (including local initiatives relating to police response to alarms),
domestic and international demand for services of the subsidiaries of The
Brink's Company, the financial stability of companies with payment obligations
under the Health Benefit Act, 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 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.
Conference Call
The Company will host a conference call today, November 3, at 11:00 a.m. eastern
time to discuss this press release. Interested parties can listen to the
conference call by dialing 800-392-9565 within North America or 706-634-5450
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 12, 2004 by calling 800-642-1687 within North
America or 706-645-9291 outside North America. The conference ID for the replay
is 1659885. A webcast replay will be available at www.brinkscompany.com through
November 19, 2004.
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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,
2004 2003 2004 2003
- -------------------------------------------------------------------------------------------------------------------------
Revenues $1,195.0 999.4 3,421.0 2,888.9
Expenses:
Operating expenses 995.4 853.3 2,883.8 2,487.5
Selling, general and administrative expenses 141.5 130.6 413.4 380.7
- -------------------------------------------------------------------------------------------------------------------------
Total expenses 1,136.9 983.9 3,297.2 2,868.2
Other operating income, net 0.6 6.9 6.4 14.9
- -------------------------------------------------------------------------------------------------------------------------
Operating profit 58.7 22.4 130.2 35.6
Interest expense (6.0) (6.6) (17.6) (19.4)
Interest and other income, net 2.4 0.7 6.7 6.6
Minority interest (3.4) (2.8) (8.1) (5.4)
- -------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes 51.7 13.7 111.2 17.4
Provision for income taxes 14.0 2.2 43.7 3.5
- -------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 37.7 11.5 67.5 13.9
Income from discontinued operations, net of tax 0.4 38.5 15.0 40.5
- -------------------------------------------------------------------------------------------------------------------------
Net income $ 38.1 50.0 82.5 54.4
=========================================================================================================================
Basic net income per common share:
Continuing operations $ 0.69 0.22 1.24 0.26
Discontinued operations - 0.72 0.28 0.77
- -------------------------------------------------------------------------------------------------------------------------
$ 0.69 0.94 1.52 1.03
=========================================================================================================================
Diluted net income per common share:
Continuing operations $ 0.68 0.22 1.23 0.26
Discontinued operations - 0.72 0.27 0.77
- -------------------------------------------------------------------------------------------------------------------------
$ 0.68 0.94 1.50 1.03
=========================================================================================================================
8
The Brink's Company
and Subsidiaries
Supplemental Financial Information
(In millions)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
- -----------------------------------------------------------------------------------------------------------------------
SEGMENT INFORMATION
Revenues:
Brink's $ 492.7 427.2 1,416.0 1,229.3
Brink's Home Security 87.6 78.9 255.5 229.3
BAX Global 614.7 493.3 1,749.5 1,430.3
- -----------------------------------------------------------------------------------------------------------------------
Revenues $ 1,195.0 999.4 3,421.0 2,888.9
=======================================================================================================================
Operating profit (loss):
Brink's $ 44.7 33.4 102.8 68.0
Brink's Home Security 20.2 18.1 59.4 52.5
BAX Global 14.6 (5.3) 30.1 (13.3)
- -----------------------------------------------------------------------------------------------------------------------
Business and Security Services 79.5 46.2 192.3 107.2
Former coal operations (10.9) (17.2) (33.5) (51.7)
Corporate (9.9) (6.6) (28.6) (19.9)
- -----------------------------------------------------------------------------------------------------------------------
Operating profit $ 58.7 22.4 130.2 35.6
=======================================================================================================================
SELECTED CASH FLOW INFORMATION
Depreciation and amortization:
Brink's $ 19.4 17.5 57.9 50.5
Brink's Home Security 12.9 12.1 38.0 35.5
BAX Global 10.4 11.9 31.7 36.0
Corporate and other 0.1 0.5 0.5 2.0
- -----------------------------------------------------------------------------------------------------------------------
Depreciation and amortization $ 42.8 42.0 128.1 124.0
=======================================================================================================================
Capital expenditures:
Brink's $ 17.5 19.3 49.8 54.2
Brink's Home Security 30.7 25.9 86.8 71.9
BAX Global 5.8 5.6 16.5 18.6
Corporate 0.4 0.1 0.8 0.1
- -----------------------------------------------------------------------------------------------------------------------
Capital expenditures $ 54.4 50.9 153.9 144.8
=======================================================================================================================
Other Brink's Home Security cash flow information:
Impairment charges from subscriber disconnects $ 10.5 9.9 29.4 26.0
Amortization of deferred revenue (6.8) (6.7) (19.5) (18.9)
Deferral of subscriber acquisition costs
(current year payments) (5.0) (4.8) (14.4) (13.7)
Deferral of revenue from new subscribers
(current year receipts) 9.1 7.5 25.9 20.7
=======================================================================================================================
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The Brink's Company
and Subsidiaries
Supplemental Financial Information (continued)
(In millions)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
- -----------------------------------------------------------------------------------------------------------------
Brink's:
Revenues:
North America $ 184.3 179.6 545.3 531.2
International 308.4 247.6 870.7 698.1
- -----------------------------------------------------------------------------------------------------------------
Revenues $ 492.7 427.2 1,416.0 1,229.3
=================================================================================================================
Operating profit:
North America $ 14.1 14.3 40.0 35.6
International 30.6 19.1 62.8 32.4
- -----------------------------------------------------------------------------------------------------------------
Operating profit $ 44.7 33.4 102.8 68.0
=================================================================================================================
Brink's Home Security:
Revenues $ 87.6 78.9 255.5 229.3
=================================================================================================================
Operating profit:
Recurring services $ 37.2 31.7 108.0 93.4
Investment in new subscribers (17.0) (13.6) (48.6) (40.9)
- -----------------------------------------------------------------------------------------------------------------
Operating profit $ 20.2 18.1 59.4 52.5
=================================================================================================================
Monthly recurring revenues (see non-GAAP
reconciliation below) $ 25.2 22.7
Annualized disconnect rate 7.1% 7.4% 6.9% 7.1%
Number of subscribers (in thousands):
Beginning of period 874.1 795.6 833.5 766.7
Installations 38.1 32.6 107.8 88.3
Disconnects (15.7) (15.0) (44.8) (41.8)
- -----------------------------------------------------------------------------------------------------------------
End of period 896.5 813.2 896.5 813.2
Average number of subscribers 885.4 804.3 864.5 788.8
=================================================================================================================
BAX Global:
Revenues:
Americas $ 297.6 238.7 841.6 708.9
International 339.1 273.2 969.5 775.9
Eliminations (22.0) (18.6) (61.6) (54.5)
- -----------------------------------------------------------------------------------------------------------------
Revenues $ 614.7 493.3 1,749.5 1,430.3
=================================================================================================================
Operating profit (loss):
Americas $ 8.1 (11.3) 12.3 (31.6)
International 10.7 8.9 30.6 24.3
Corporate and other (4.2) (2.9) (12.8) (6.0)
- -----------------------------------------------------------------------------------------------------------------
Operating profit (loss) $ 14.6 (5.3) 30.1 (13.3)
=================================================================================================================
Intra-America revenue $ 145.8 118.1 404.6 336.1
Worldwide expedited freight services:
Revenues $ 467.3 370.3 1,320.1 1,078.0
Weight in pounds 466.9 384.1 1,328.8 1,119.9
=================================================================================================================
10
The Brink's Company
and Subsidiaries
Supplemental Financial Information (continued)
(In millions)
(Unaudited)
COSTS OF FORMER COAL OPERATIONS INCLUDED IN CONTINUING OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
- ---------------------------------------------------------------------------------------------------------------------------
Company-sponsored postretirement benefits other
than pensions $ 9.3 12.5 27.9 37.2
Black lung 1.0 1.4 3.7 4.3
Pension 0.3 (0.4) 1.4 (0.7)
Administrative, legal and other expenses, net 1.8 2.6 6.1 6.4
Idle and closed mine expense 0.3 2.1 0.7 6.9
Gains on sale of property and equipment and other income (1.8) (1.0) (6.3) (2.4)
- ---------------------------------------------------------------------------------------------------------------------------
$ 10.9 17.2 33.5 51.7
===========================================================================================================================
INCOME FROM DISCONTINUED OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
- ---------------------------------------------------------------------------------------------------------------------------
Gain (loss) on sales of:
Natural Gas $ - 57.3 - 57.3
Timber - - 20.7 -
Gold - - (0.9) -
Results from operations:
Natural Gas - 2.3 - 11.2
Timber - 0.1 (0.5) 0.3
Gold - (0.6) (1.2) (2.5)
Adjustments to contingent liabilities of former operations:
Withdrawal liability - - 8.1 (3.0)
Other 0.7 - (2.9) (0.6)
- ---------------------------------------------------------------------------------------------------------------------------
Income from discontinued operations before income taxes 0.7 59.1 23.3 62.7
Income tax expense 0.3 20.6 8.3 22.2
- ---------------------------------------------------------------------------------------------------------------------------
Income from discontinued operations $ 0.4 38.5 15.0 40.5
===========================================================================================================================
11
The Brink's Company
and Subsidiaries
Supplemental Financial Information (continued)
(In millions)
(Unaudited)
NON-GAAP RECONCILIATIONS
Monthly Recurring Revenues
A reconciliation of monthly recurring revenues to reported BHS revenues follows:
Nine Months Ended
September 30,
(In millions) 2004 2003
- --------------------------------------------------------------------------
September:
Monthly recurring revenues ("MRR") (a) $ 25.2 22.7
Amounts excluded from MRR:
Amortization of deferred revenue 2.2 2.1
Other revenues (b) 1.9 1.6
- --------------------------------------------------------------------------
Revenues on a GAAP basis 29.3 26.4
==========================================================================
Revenues (GAAP basis):
September 29.3 26.4
January - August 226.2 202.9
- --------------------------------------------------------------------------
January - September $ 255.5 229.3
==========================================================================
(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 widely used in the industry to assess the amount of recurring
revenues from subscriber fees that a home security business produces.
Net Debt and Net Financings
September 30, December 31,
(In millions) 2004 2003
- --------------------------------------------------------------------------
Short-term debt and current maturities
of long-term debt $ 57.6 53.0
Long-term debt 182.5 221.5
- --------------------------------------------------------------------------
Debt 240.1 274.5
Less cash and cash equivalents (150.1) (128.7)
- --------------------------------------------------------------------------
Net Debt 90.0 145.8
Securitization facility 70.0 77.0
- --------------------------------------------------------------------------
Net Financings $ 160.0 222.8
==========================================================================
The Company believes that Net Debt and Net Financings are useful measures of the
Company's financial leverage.
12
OTHER
Value-added taxes and customs duties
One of the Company's non-U.S. Brink's, Incorporated business units has not paid
foreign customs duties and value-added taxes with respect to the importation of
certain goods and services. The Company has been advised that there may be civil
and criminal penalties asserted for the non-payment of these custom duties and
value-added taxes. To date no penalties have been asserted.
As a result of its investigation, the Company recorded charges in the second
quarter of 2004 of $1.3 million to operating earnings and $0.8 million to
interest expense. Based on the most recent information developed from its
ongoing investigation, the Company has recorded reductions to the expense and
reduced the range of possible penalties. A summary of the impact of this
situation on earnings for the three and nine month periods is provided below.
Three Months Ended Nine Months Ended
(In millions) September 30, 2004 September 30, 2004
- --------------------------------------------------------------------------------
Penalties on unpaid value-added taxes $ - 0.4
Duties (0.2) 0.7
- --------------------------------------------------------------------------------
Amount charged to operating expenses (0.2) 1.1
Interest expense on unpaid value-added
taxes and customs duties (0.1) 0.7
- --------------------------------------------------------------------------------
$ (0.3) 1.8
================================================================================
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.
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 customs duties penalties is between $0 and
approximately $35 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 diligently pursue 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 $0.7
million of interest on 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 implemented 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.
# # #
13