Exhibit 99
[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 HIGHER FIRST-QUARTER EARNINGS
Results Improve at Brink's, Incorporated
Profits Also Boosted by Legacy Cost Reductions and Investment Income
RICHMOND, Va., May 3, 2006 - The Brink's Company (NYSE: BCO), a global
provider of security and risk management services, reported first-quarter income
from continuing operations of $24.2 million or 42 cents per share, up from $10.5
million or 19 cents per share in last year's first quarter. The improved results
reflect profit growth at the company's two operating units, higher investment
income and lower expenses related to former coal operations.
First-quarter revenue from continuing operations was $663.6 million, up 10%
from $601.1 million in the first-quarter of 2005. Operating profit from
continuing operations was $44.1 million, up 52% from $29.0 million in the
year-ago period.
Michael T. Dan, chairman, president and chief executive officer of The
Brink's Company, said: "First-quarter earnings reflect improved results in both
operating units. Profits at Brink's, Incorporated were up on strong results in
the U.S. and South America. Last year's restructuring efforts have reduced costs
in Europe, but the benefits of these cost improvements were offset by ongoing
weakness in the United Kingdom and certain other European countries. We continue
to expect Brink's, Incorporated to generate an annual operating margin for 2006
approaching 7% with percentage revenue growth in the high single-digits.
First-quarter results at Brink's Home Security also improved, and we continue to
expect that annual sales and profit growth in this business will exceed 10%."
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Dan added: "The proceeds from the sale of BAX Global enabled us to
contribute $225 million to the VEBA, which substantially reduces our ongoing
coal legacy expenses. We also reduced debt by $160 million during the quarter
and recently delivered on our promise to return cash to shareholders by spending
$530 million on stock repurchases. Our focus going forward is on improving
results in Europe and exploring new growth opportunities."
First-Quarter Business Unit Performance: 2006 Versus 2005
---------------------------------------------------------
Brink's, Incorporated ("Brink's")
Brink's, the company's secure transportation and cash management unit, had
first-quarter revenue of $558.9 million, up 10% from $509.2 million in 2005.
Operating profit was $39.6 million, up 31% from $30.3 million last year. The
improvement in revenue and operating margin was largely attributable to better
performance in U.S. and South American operations. Profits were also helped by a
reduction in worldwide safety and security costs. Results in Europe remain weak
and year-over-year profits were marginally lower.
Brink's North America
North American revenue was $201.3 million, up 8% from $186 million in 2005.
Operating profit rose 45% to $18.4 million, up from $12.7 million. The revenue
increase was due primarily to core business growth. The profit increase was
driven by broad improvement in North American operations, reduced pension
expenses and lower safety and security costs.
Net expenses in the first quarter related to employee benefits declined by
$3.3 million due to the freezing of U.S. pension plan benefits as of December
31, 2005. For the full year, net expenses related to these employee benefits are
expected to decrease by $13 million to $14 million compared to 2005.
Despite a substantial increase in fuel costs, Brink's first-quarter
operating profit was not significantly affected as fuel surcharges offset most
of the cost increase. However, if fuel prices remain at current levels or
increase, the added costs may impact operating profits.
Brink's International
First-quarter revenue from international operations was $357.6 million, up
11% from $323.2 million in 2005, reflecting increases in all regions. Operating
profit was $21.2 million, up 20% from $17.6 million last year due primarily to
continued strong performance in South America.
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Europe. Revenue from European operations was $238.5 million, up 7% from
$223.9 million in 2005. In 2005, Brink's acquired operations in Luxembourg,
Scotland, Ireland, Poland, Hungary, and the Czech Republic. The incremental
impact of these acquisitions on first-quarter 2006 revenue was approximately
$21.5 million. Operating profit for the quarter was slightly lower than
disappointing year-ago levels. Improved results in France and
restructuring-related cost reductions were offset by continued weakness in other
countries, especially the United Kingdom. Acquisitions had no significant impact
on operating profit in either period.
South America. Revenue in South America increased 23% to $100.7 million, up
from $82.1 million in 2005 due primarily to higher volume across the region.
Operating profit rose 18% due to higher volume and productivity improvements in
most countries, partially offset by an operating loss in Brazil.
Asia-Pacific. Due to improved performance in Hong Kong and Japan, revenue
in the Asia-Pacific region rose 7% to $18.4 million, up from $17.2 million in
2005. Operating profit was relatively flat. Generally favorable results in most
of the region were offset by lower profits in Australia.
A customer in the Asia-Pacific region recently indicated that it does not
intend to continue to use Brink's services. Brink's is in discussions with the
customer and, depending on the outcome of these discussions, the company may
record impairment and restructuring charges, currently estimated to be up to $10
million, as well as income tax valuation allowances.
Brink's Home Security ("BHS")
First-quarter revenue at BHS rose 14% to $104.7 million, up from $91.9
million in 2005 due primarily to continued growth in the subscriber base and
slightly higher average monitoring rates. Operating profit was $23.4 million, up
4% from $22.5 million in the year-ago quarter as higher profit from recurring
services was partially offset by increased investment in new subscribers and
incremental costs related to the company's new monitoring facility in Knoxville,
Tenn., which began operating on February 28. Rising fuel costs during the first
quarter did not have a significant impact on operating profit, since a large
portion of these costs are capitalized as part of the cost of new installations.
BHS continues to increase its presence in residential markets through its
relationships with major home builders. In new construction markets, there is a
longer time lag between BHS' initial investment and customer activation than is
the case with existing home markets. As a result, investment in new subscribers
continued to grow faster than revenue generated by monitored activations. BHS is
addressing this imbalance by raising prices, improving efficiency and focusing
on home buyers who are likely to initiate monitoring more quickly.
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The annualized disconnect rate in the first-quarter of 2006 was 5.5%, down
slightly from 5.8% in last year's first quarter.
Brink's Home Security installed 43,100 new subscribers during the quarter,
a 10% increase over the number of new subscribers added in the first-quarter of
2005, and ended the quarter with approximately 1,048,000 subscribers generating
monthly recurring revenue of $30.1 million (see Non-GAAP Reconciliations for a
reconciliation of monthly recurring revenue to reported revenue).
Costs Related to Former Operations Included in Continuing Operations
--------------------------------------------------------------------
First-quarter costs related to former operations totaled $6.9 million, down
from $13.2 million in 2005. The $6.3 million decrease was due primarily to lower
postretirement medical benefit expenses resulting from the effect of a $225
million contribution to the Voluntary Employees' Beneficiary Association trust
("VEBA") on January 31, 2006. The VEBA, which is a financing vehicle used to pay
medical benefit obligations related to former coal miners and their dependents,
had assets of approximately $422 million on March 31.
Recent Events
-------------
On January 31, The Brink's Company announced the sale of its BAX Global
operating unit to Deutsche Bahn AG for $1.1 billion in cash. Net proceeds after
the payment of taxes and transaction costs are expected to be approximately $1.0
billion. The company immediately contributed $225 million to the VEBA and
reduced debt during the quarter by approximately $160 million. On March 31, The
Brink's Company had $813 million in cash and marketable securities and $156
million in outstanding debt. During the quarter, the company earned interest
income of $5.8 million versus $0.9 million in the year-ago period.
On April 11, the company completed a "Dutch auction" self-tender offer that
resulted in the repurchase of 10,355,263 shares of its common stock for
approximately $530.2 million or $51.20 per share. Following the April 11 share
repurchase, the company had approximately 48.3 million shares of common stock
outstanding.
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Discontinued Operations
-----------------------
First-quarter income from discontinued operations was $379.2 million or
$6.50 per share versus $3.1 million or 5 cents per share in the first quarter of
2005. First-quarter revenue from discontinued operations (through January 31)
was $230.0 million versus $623.5 million for the three months ending March
31,2005. Results from discontinued operations in 2006 include a pretax gain of
$585 million related to the January 31 sale of the company's BAX Global air
freight unit.
Net Income
----------
First-quarter net income, which includes results from continuing and
discontinued operations, was $403.4 million or $6.92 per share versus $13.6
million or 24 cents per share in the first quarter of 2005.
This release contains both historical and forward-looking information. Words
such as "anticipates," "estimates," "expects," "projects," "intends," "plans,"
"believes," "may," "should" and similar expressions may identify forward-looking
information. Forward-looking information in this document includes, but is not
limited to, statements regarding expected sales growth and profit improvement
for the company and its subsidiaries in 2006, including Brink's annual operating
margin, the possible loss of a Brink's customer in the Asia-Pacific region and
the impact of such a loss on the company, expected improvements in Brink's,
Incorporated's European operations, the exploration of new growth opportunities
and expected decreases in pension related expenses. 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 ability to identify and execute further cost and operational
improvements in the core businesses, the ability of the businesses to meet
demand appropriately, Brink's ability to integrate recent acquisitions, the
performance of Brink's operations in Europe, decisions by a Brink's customer in
the Asia-Pacific area regarding the continued use of Brink's services and any
transition arrangements that might be made with the customer, the ability of
Brink's to replace the lost business, Brink's ability to adjust operationally to
the loss of the customer, positions taken by insurers with respect to claims
made, the migration to various new financial software packages by Brink's and
BHS, IT costs and costs associated with ongoing contractual obligations, the
willingness of police departments to respond to alarms, the number of household
moves, the level of new home construction, costs associated with the operation
of the new Knoxville facility (including the ability to retain qualified
personnel at reasonable costs), the potential recall of a product used by BHS,
labor relations, safety and security performance, strategic initiatives and
acquisition opportunities, the company's tax position, the cash and debt
position of the company, the funding levels and investment performance of the
pension plans, retirement experience, changes in mortality and morbidity
assumptions, 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,
fuel prices, interest rates, inflation, new government regulations and
legislative initiatives, 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.
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About The Brink's Company
The Brink's Company (NYSE:BCO) is a global leader in security and risk
management services and operates two businesses: Brink's, Incorporated and
Brink's Home Security. Brink's, Incorporated is the world's premier provider of
secure transportation and cash management services. Brink's Home Security is one
of the largest and most successful residential alarm companies in North America.
For more information, please visit The Brink's Company website at
http://www.brinkscompany.com/ or call toll free 877-275-7488.
Conference Call
The Brink's Company will host a conference call today, May 3, at 11:00 a.m.
eastern time to discuss this press release. Interested parties can listen to the
conference call by dialing 1-877-407-0778 within North America or 201-689-8565
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 May 17, 2006, by calling 1-877-660-6853 within North
America or 201-612-7415 outside North America. The conference pass code is 286
and the conference ID for the replay is 199248. A webcast replay will also be
available at www.brinkscompany.com.
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THE BRINK'S COMPANY
and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months
Ended March 31,
(In millions, except per share amounts) 2006 2005
- --------------------------------------------------------------------------------
Revenues $ 663.6 601.1
Expenses:
Operating expenses 514.7 486.4
Selling, general and administrative expenses 106.6 87.2
- --------------------------------------------------------------------------------
Total expenses 621.3 573.6
Other operating income, net 1.8 1.5
- --------------------------------------------------------------------------------
Operating profit 44.1 29.0
Interest expense (4.3) (4.1)
Interest and other income, net 5.4 0.8
Minority interest (3.9) (3.6)
- --------------------------------------------------------------------------------
Income from continuing operations before income taxes 41.3 22.1
Income tax expense 17.1 11.6
- --------------------------------------------------------------------------------
Income from continuing operations 24.2 10.5
Income from discontinued operations, net of tax 379.2 3.1
- --------------------------------------------------------------------------------
Net income $ 403.4 13.6
================================================================================
Basic net income per common share:
Continuing operations $ 0.42 0.19
Discontinued operations 6.57 0.05
- --------------------------------------------------------------------------------
Net Income $ 6.99 0.24
================================================================================
Diluted net income per common share:
Continuing operations $ 0.42 0.19
Discontinued operations 6.50 0.05
- --------------------------------------------------------------------------------
Net Income $ 6.92 0.24
================================================================================
Weighted-average common shares outstanding:
Basic 57.7 55.7
Diluted 58.3 56.5
- --------------------------------------------------------------------------------
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THE BRINK'S COMPANY
and Subsidiaries
(Unaudited)
Three Months
Ended March 31,
(In millions) 2006 2005
- --------------------------------------------------------------------------------
Segment Information
Revenues:
Brink's $ 558.9 509.2
Brink's Home Security 104.7 91.9
- --------------------------------------------------------------------------------
Revenues $ 663.6 601.1
================================================================================
Operating profit:
Brink's $ 39.6 30.3
Brink's Home Security 23.4 22.5
- --------------------------------------------------------------------------------
Business segments 63.0 52.8
Former operations (6.9) (13.2)
Corporate (12.0) (10.6)
- --------------------------------------------------------------------------------
Operating profit $ 44.1 29.0
================================================================================
Supplemental Financial Information
Brink's:
Revenues:
North America $ 201.3 186.0
International 357.6 323.2
- --------------------------------------------------------------------------------
Revenues $ 558.9 509.2
================================================================================
Operating profit:
North America $ 18.4 12.7
International 21.2 17.6
- --------------------------------------------------------------------------------
Operating profit $ 39.6 30.3
================================================================================
Brink's Home Security:
Revenues $ 104.7 91.9
================================================================================
Operating profit:
Recurring services $ 43.6 41.5
Investment in new subscribers (20.2) (19.0)
- --------------------------------------------------------------------------------
Operating profit $ 23.4 22.5
================================================================================
Monthly recurring revenues (a) $ 30.1 26.9
Annualized disconnect rate 5.5% 5.8%
Number of subscribers (in thousands):
Beginning of period 1,018.8 921.4
Installations 43.1 39.3
Disconnects (14.2) (13.6)
- --------------------------------------------------------------------------------
End of period 1,047.7 947.1
Average number of subscribers 1,032.5 933.6
================================================================================
(a) See "Non-GAAP Reconciliations" below.
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THE BRINK'S COMPANY
and Subsidiaries
Supplemental Financial Information (continued)
(Unaudited)
COSTS OF FORMER OPERATIONS INCLUDED IN CONTINUING OPERATIONS
Three Months
Ended March 31,
(In millions) 2006 2005
- --------------------------------------------------------------------------------
Company-sponsored postretirement benefits other than pensions $ 4.4 9.4
Black lung 1.0 1.2
Pension 0.6 1.0
Administrative, legal and other expenses, net 1.5 2.3
Gains on sale of property and equipment and other income (0.6) (0.7)
- --------------------------------------------------------------------------------
Costs of former operations $ 6.9 13.2
================================================================================
INCOME FROM DISCONTINUED OPERATIONS
Three Months
Ended March 31,
(In millions) 2006 2005
- --------------------------------------------------------------------------------
BAX Global:
Gain on sale (a) $ 584.6 -
Results of operations (b) 7.0 6.9
Adjustments to contingent liabilities of other former operations (1.2) (3.4)
- --------------------------------------------------------------------------------
Income from discontinued operations before income taxes 590.4 3.5
Income tax expense 211.2 0.4
- --------------------------------------------------------------------------------
Income from discontinued operations $ 379.2 3.1
================================================================================
(a) The gain on sale is expected to change in the future as working capital
adjustments, which could revise the amount of proceeds on the sale, are
finalized.
(b) The results of BAX Global's operations are included in the company's net
income through January 31, 2006, the date of the sale. The one month of
results in 2006 excludes depreciation charges of $3.3 million in accordance
with SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets."
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THE BRINK'S COMPANY
and Subsidiaries
Supplemental Financial Information (continued)
(Unaudited)
SELECTED CASH FLOW INFORMATION
Three Months
Ended March 31,
(In millions) 2006 2005
- ----------------------------------------------------------------------------------------------------------
Depreciation and amortization:
Brink's $ 23.2 21.2
Brink's Home Security 15.8 13.9
Corporate 0.1 0.2
- ----------------------------------------------------------------------------------------------------------
Depreciation and amortization $ 39.1 35.3
==========================================================================================================
Capital expenditures:
Brink's $ 19.9 31.4
Brink's Home Security (a) 42.1 43.2
Corporate 0.1 0.1
- ----------------------------------------------------------------------------------------------------------
Capital expenditures $ 62.1 74.7
==========================================================================================================
(a) Capital expenditures at BHS in the first quarter of 2006 include $5.3
million for the development of the new Knoxville, Tennessee, facility.
Capital expenditures at BHS in the first quarter of 2005 include $10.2
million for the purchase of BHS's headquarters in Irving, Texas. The
facility was previously leased.
Other Brink's Home Security cash flow information:
Impairment charges from subscriber disconnects $ 10.7 8.8
Amortization of deferred revenue (7.3) (6.5)
Deferral of subscriber acquisition costs (current year payments) (6.1) (5.0)
Deferral of revenue from new subscribers (current year receipts) 11.0 9.6
==========================================================================================================
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THE BRINK'S COMPANY
and Subsidiaries
NON-GAAP RECONCILIATIONS
(Unaudited)
Monthly Recurring Revenues
A reconciliation of monthly recurring revenues to reported Brink's Home Security
revenues follows:
Three Months
Ended March 31,
(In millions) 2006 2005
- --------------------------------------------------------------------------------
March:
Monthly recurring revenues ("MRR") (a) $ 30.1 26.9
Amounts excluded from MRR:
Amortization of deferred revenue 2.5 2.3
Other revenues (b) 3.1 2.2
- --------------------------------------------------------------------------------
Revenues on a GAAP basis $ 35.7 31.4
================================================================================
Revenues (GAAP basis):
March $ 35.7 31.4
January - February 69.0 60.5
- --------------------------------------------------------------------------------
January - March $ 104.7 91.9
================================================================================
(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 monitored security service business
produces. This supplemental non-GAAP information should be viewed in conjunction
with the company's consolidated statement of operations.
Net Debt reconciled to GAAP measures
March 31, December 31,
(In millions) 2006 2005
- --------------------------------------------------------------------------------
Short-term debt and current maturities of
long-term debt $ 26.0 61.0
Long-term debt 129.7 251.9
- --------------------------------------------------------------------------------
Debt 155.7 312.9
Less cash and cash equivalents (237.2) (96.2)
Less current marketable securities (576.3) -
- --------------------------------------------------------------------------------
Net Debt (a) $ (657.8) 216.7
================================================================================
(a) The company's Net Debt was negative at March 31, 2006 because its cash and
current marketable securities exceeded its debt. The company used $530.2
million to repurchase common stock under its self-tender offer in April
2006.
The company believes that Net Debt is a useful measure of the company's
financial leverage. This supplemental non-GAAP information should be viewed in
conjunction with the company's condensed consolidated balance sheets.
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THE BRINK'S COMPANY
and Subsidiaries
NON-GAAP RECONCILIATIONS (continued)
(Unaudited)
Three Months Ended % change
(In millions) March 31, from 2005
- --------------------------------------------------------------------------------
2005 revenues:
Brink's $ 509.2 N/A
BHS 91.9 N/A
- --------------------------------------------------------------------------------
$ 601.1 N/A
================================================================================
Effects on revenue of acquisitions
and dispositions, net:
Brink's $ 21.5 4
BHS - -
- --------------------------------------------------------------------------------
$ 21.5 4
================================================================================
Effects on revenue of changes in
currency exchange rates:
Brink's $ (16.6) (3)
BHS 0.1 -
- --------------------------------------------------------------------------------
$ (16.5) (3)
================================================================================
Organic Revenue Growth:
Brink's $ 44.8 9
BHS 12.7 14
- --------------------------------------------------------------------------------
$ 57.5 10
================================================================================
2006 revenues:
Brink's $ 558.9 10
BHS 104.7 14
- --------------------------------------------------------------------------------
$ 663.6 10
================================================================================
The supplemental Organic Revenue Growth information presented above is non-GAAP
financial information that management believes is an important measure to
evaluate results of existing operations without the effects of acquisitions,
dispositions and currency exchange rates. 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 and volume of a
unit's 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.
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THE BRINK'S COMPANY
and Subsidiaries
OTHER
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 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.
# # #
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