Brink’s Reports Fourth-Quarter Results

The Brink’s Company (NYSE: BCO), a global leader in security-related services, reported fourth-quarter earnings and full-year 2011 earnings.

Fourth-Quarter Highlights

GAAP:
  • Revenue $997 million, up 13% (9% organic growth), EPS: $.36 vs. $.40
  • Segment profit $72 million, up 1% (margin 7.3% vs. 8.2%)
  • International margin 8.9% vs. 8.3%, North America 2.3% vs. 7.7%

Non-GAAP:
  • Revenue $997 million, up 13% (9% organic growth), EPS: $.56 vs. $.80
  • Segment profit $74 million, down 13% (margin 7.4% vs. 9.6%)
  • International margin 8.9% vs. 10.4%, North America 2.6% vs. 7.5%
  • U.S. retirement costs excluded from non-GAAP results

Other:
  • Management reiterates strategy and 2012 outlook
  • Mexico acquisition profitable, on track for continued improvement
  • 2012 U.S. pension plan contribution to be funded with company stock

Tom Schievelbein, interim president and chief executive officer, said: “Fourth-quarter results reflect continued strong growth in Latin America that was more than offset by the persistence of disappointing results in North America and Europe, both of which continue to face difficult market conditions. Our near-term goal is to improve profits by demonstrating meaningful progress against our three primary strategic objectives-- growing high-value services, investing in emerging markets, and maximizing profits in North America and Europe.

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“We’re confident that continued expansion of our Global Services business will drive growth in high-value services, and our Mexico acquisition is on track to contribute to continued profit growth in Latin America.

“In North America, we’ve taken steps to reduce costs and improve efficiency and customer service. These and other actions should boost profits by $10 million to $20 million on an annualized basis. Similar actions in Europe should lead to a slight improvement in 2012, with additional improvement in 2013 and later years. We are committed to creating value for shareholders, and will accelerate efforts to deliver on this commitment. In 2012, we expect our segment margin rate to be in a range between 6.5% and 7.0%. Annual organic revenue growth should be 5% to 8% and we anticipate unfavorable currency impact of 3% to 5%.”
 
Summary Reconciliation of GAAP to Non-GAAP EPS
  Fourth Quarter   Full Year
2011   2010 2011   2010
GAAP EPS $ 0.36 $ 0.40 $ 1.52 $ 1.17
Exclude U.S. retirement plan expenses 0.09 0.07 0.37 0.28
Exclude costs related to former CEO retirement 0.05 - 0.05 -
Exclude Belgium exit charges - 0.16 0.13 0.16
Exclude gains on asset sales, acquisitions and dispositions - 0.12 (0.20 ) 0.12
U.S. healthcare legislation charge - - - 0.29
Adjust quarterly tax rate to full-year average rate 0.05 0.05 - -
Other 0.01 - 0.03 (0.02 )
Non-GAAP EPS* $ 0.56 $ 0.80 $ 1.90 $ 1.99
                             

*Non-GAAP results are reconciled to the applicable GAAP results in more detail on pages 13 - 17. Amounts may not add due to rounding.
 
Summary of Fourth-Quarter and Full-Year Results
  Fourth Quarter     Full Year
(In millions, except per share amounts)   2011     2010   % Change   2011     2010   % Change
 
 

GAAP
Revenues $ 997 881 13

 %

 
$ 3,886 3,122 24

 %

 
Segment operating profit(a) 72 72 1 231 209 11
Non-segment expense (21 ) (25 ) (16 ) (60 ) (63 ) (4 )
Operating profit 51 47 10 171 146 17
Income from continuing operations (b) 17 19 (10 ) 73 57 29
Diluted EPS from continuing operations (b) 0.36 0.40 (10 ) 1.52 1.17 30

 

Non-GAAP (c)
Revenues $ 997 881 13

 %

 
$ 3,886 3,122 24

 %

 
Segment operating profit (a) 74 85 (13 ) 247 225 10
Non-segment expense (11 ) (10 ) 3 (41 ) (36 ) 12
Operating profit 63 74 (15 ) 206 188 9
Income from continuing operations (b) 27 38 (29 ) 92 96 (5 )
Diluted EPS from continuing operations (b)     0.56     0.80     (30 )       1.90     1.99     (5 )  
Amounts may not add due to rounding.
 
(a)

Segment operating profit is a non-GAAP measure that is reconciled to operating profit, a GAAP measure, on pages 8 and 9. Disclosure of segment operating profit enables investors to assess operating performance excluding non-segment income and expense.
(b) Amounts reported are attributable to shareholders of The Brink’s Company and exclude earnings related to noncontrolling interests.
(c)

Non-GAAP results are reconciled to GAAP results on pages 13 – 17.
 

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Segment Overview – Fourth Quarter

Fourth-quarter revenue increased 13% (9% organic), reflecting organic growth in all regions except North America. The 13% decline in non-GAAP segment profit reflects a segment margin of 7.4%, down from 9.6% in 2010. The primary driver of the decline was higher security costs, which affected all regions. Security costs were exceptionally low in 2010, but were more in line with historical norms in 2011.

Latin America, which now represents 38% of total revenue and is the company’s fastest growing segment, generated a 34% revenue increase to $393 million. This increase included the Mexico acquisition and 23% organic growth, which was driven by retroactive price increases in Venezuela and additional price and volume increases in other countries. Profit was up 26% due mainly to organic growth in Venezuela, Mexico and Argentina. Mexico operations were profitable for the quarter and year, and slightly ahead of expectations.

North America profit declined sharply in the fourth quarter, from $18 million to $6 million, due to higher security costs and the continuation of price and volume pressure, especially in the U.S. The non-GAAP segment margin was 2.6%, down from 7.5% in the year-ago quarter. Brink’s is continuing to resist pricing at levels that it feels are inconsistent with its commitment to provide the highest levels of service in the industry. Brink’s has lost and may continue to lose volume as a result of this strategy, but is accelerating actions to reduce costs, improve efficiency and add new business. These and other actions are expected to lift annual profits by $10 million to $20 million. Revenue in North America rose 5% to $244 million due to the Canadian acquisition last year, which was slightly profitable in its first year as part of Brink’s.

Profit from the EMEA region improved slightly over a year-ago quarter that included a $13 million charge related to the exit of the CIT business in Belgium. Non-GAAP profit fell by $13 million due mainly to higher security costs. Revenue improved slightly to $320 million.

In Asia-Pacific, revenue grew 3% to $40 million while profit fell slightly due to higher security costs.

Non-Segment Expenses

Non-segment expenses declined from $25 million to $21 million. The 2010 results included a Mexico acquisition-related loss ($9 million) and 2011 included the former CEO’s retirement costs ($4 million). On a non-GAAP basis, these expenses were relatively flat at $11 million.

Capital Expenditures

Fourth-quarter capital expenditures were $78 million versus $46 million in 2010. During the quarter, Brink’s entered into capital lease agreements for new assets of $3 million versus $14 million in 2010.

Full-year 2011 capital expenditures were $196 million versus $149 million in 2010. During 2011, the company entered into capital lease agreements for new assets of $43 million versus $34 million in 2010.

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Capital expenditures in 2012 are expected to be between $210 million and $220 million, including approximately $30 million in Mexico. Capital lease agreements for new assets are expected to be between $30 million and $40 million.

Income Taxes

On a GAAP basis, fourth-quarter tax expense was $22 million versus $21 million in 2010 (45% effective rate in both years). The full-year 2011 tax expense was $59 million (38% effective rate) versus $67 million in 2010 (48% effective rate). The full-year 2011 effective rate was favorably affected by an $8 million valuation allowance release in the U.S., partially offset by tax expense resulting from repatriation and the mix of earnings. The full-year 2010 effective rate was unfavorably affected by a $9 million non-deductible charge on the Mexico acquisition and a $14 million tax charge related to U.S. healthcare legislation.

On a non-GAAP basis, the full-year 2011 rate was 39% versus the 2010 rate of 36%. The lower 2010 non-GAAP rate was primarily due to an income tax benefit related to a tax settlement. The full-year rate in 2012 is expected to be between 37% and 40%.

Pension Plan Contribution

Brink’s plans to fund its 2012 contribution to its U.S. pension fund with company stock, and is considering using stock to fund additional contributions in future years. The company expects to file a shelf registration statement for $150 million of common stock in the first quarter.

Conference Call

Brink’s will host a conference call on February 2 at 11:00 a.m. Eastern Time to review fourth-quarter results. Interested parties can listen by calling (877) 407-8031 (domestic) or + (201) 689-8031 (international), or via live webcast at www.Brinks.com. Please call in at least five minutes prior to the start of the call. A replay will be available through February 16, 2012, by calling (877) 660-6853 (domestic) or + (201) 612-7415 (international). The conference account number is 286 and the conference ID for the replay is 386287. A webcast replay will also be available at www.Brinks.com.

About The Brink’s Company

The Brink’s Company (NYSE:BCO) is the world’s premier provider of secure transportation and cash management services. For more information, please visit The Brink’s Company website at www.Brinks.com or call 804-289-9709.

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Non-GAAP Results

Non-GAAP results described in this earnings release are financial measures that are not required by, or presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The purpose of the non-GAAP results is to report financial information without certain income and expense items and adjust the quarterly non-GAAP tax rates so that the non-GAAP tax rate in each of the quarters is equal to the full-year non-GAAP tax rate. The full year non-GAAP tax rate in both years excludes certain pretax and tax income and expense amounts. The non-GAAP information provides information to assist comparability and estimates of future performance. Brink’s believes these measures are helpful in assessing operations and estimating future results and enable period-to-period comparability of financial performance. In addition, Brink’s believes the measures will help investors assess the ongoing operation and provides an alternative for valuing our legacy liabilities. Non-GAAP results should not be considered as an alternative to revenue, income or earnings per share amounts determined in accordance with GAAP and should be read in conjunction with their GAAP counterparts.

Forward-Looking Statements

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 release includes, but is not limited to, future performance for The Brink’s Company and its global operations, including organic revenue growth and segment operating profit margin in 2012, growth of high-value services, including our Global Services business, the performance of investments in emerging markets, including Mexico, maximizing profits in North American and Europe, including the effects of actions taken to reduce costs and improve efficiency and customer service, the effects of our pricing strategy in North America, anticipated 2012 capital expenditures and capital lease agreements, the anticipated annual effective tax rate for 2012, a planned stock contribution to the U.S. pension fund and shelf registration statement in connection with possible future contributions, projected non-segment expense and interest expense, projected net income attributable to noncontrolling interests, and depreciation and amortization for 2012. The forward-looking information in this release is subject to known and unknown risks, uncertainties and contingencies, which could cause actual results, performance or achievements to differ materially from those that are anticipated.

These risks, uncertainties and contingencies, many of which are beyond our control, include, but are not limited to continuing market volatility and commodity price fluctuations and their impact on the demand for our services, our ability to continue profit growth in Mexico and the rest of Latin America, our ability to maintain or improve volumes at favorable pricing levels and increase cost efficiencies in the United States, the effect of current macro-economic uncertainty on our operations in Europe, investments in information technology and value-added services and their impact on revenue and profit growth, the strength of the U.S. dollar relative to foreign currencies and foreign currency exchange rates, the implementation of high-value solutions, the ability to identify and execute further cost and operational improvements and efficiencies in our core businesses, our ability to integrate successfully recently acquired companies and improve their operating profit margins, the willingness of our customers to absorb fuel surcharges and other future price increases, the actions of competitors, our ability to identify acquisitions and other strategic opportunities in emerging markets, regulatory and labor issues in many of our global operations and security threats worldwide, the impact of turnaround actions responding to current conditions in Europe and our productivity and cost control efforts in that region, the stability of the Venezuelan economy and changes in Venezuelan policy regarding exchange rates, fluctuations in value of the Venezuelan bolivar fuerte, our ability to obtain necessary information technology and other services at favorable pricing levels from third party service providers, variations in costs or expenses and performance delays of any public or private sector supplier, service provider or customer, our ability to obtain appropriate insurance coverage, positions taken by insurers with respect to claims made and the financial condition of insurers, safety and security performance, our loss experience, changes in insurance costs, the outcome of pending and future claims and litigation, risks customarily associated with operating in foreign countries including changing labor and economic conditions, currency devaluations, safety and security issues, political instability, restrictions on repatriation of earnings and capital, nationalization, expropriation and other forms of restrictive government actions, costs associated with the purchase and implementation of cash processing and security equipment, employee and environmental liabilities in connection with our former coal operations, black lung claims incidence, the impact of the Patient Protection and Affordable Care Act on black lung liability and operations, changes to estimated liabilities and assets in actuarial assumptions due to payments made, investment returns, interest rates and annual actuarial revaluations, the funding requirements, accounting treatment, investment performance and costs and expenses of our pension plans, the VEBA and other employee benefits, mandatory or voluntary pension plan contributions, the nature of our hedging relationships, changes in estimates and assumptions underlying our critical accounting policies, access to the capital and credit markets, seasonality, pricing and other competitive industry factors. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the period ended December 31, 2010 and in our other public filings with the Securities and Exchange Commission. Readers are urged to review and consider carefully the disclosures we make in our filings with the Securities and Exchange Commission. 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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FINANCIAL STATEMENTS AND SELECTED INFORMATION
             
         

Page
 
Outlook Summary

7
 
Segment Results – Fourth-Quarter

8
 
Segment Results – Full-Year

9
 
Condensed Consolidated Statements of Income

10
 
Non-Segment Income (Expense)

11
 
Other Operating Income (Expense)

11
 
Selected Cash Flow Information

12
 
Non-GAAP Amounts Reconciled to GAAP

13
             

Page 6
     
The Brink’s Company and subsidiaries
Outlook Summary (Unaudited)

(In millions)
 
  GAAP   Non-GAAP
Full-Year   Full Year 2012 Full-Year   Full Year 2012
  2011 Estimate   2011 Estimate
Organic revenue growth
International 12 % 7% – 10% 12 % 7% – 10%
North America - - - -
Total 8 % 5% – 8% 8 % 5% – 8%
 
Currency impact on r evenue
International 5 % (4)% – (6)% 5 % (4)% – (6)%
North America 1 % - 1 % -
Total 4 % (3)% – (5)% 4 % (3)% – (5)%
 
Segment margin
International 6.9 % 7.0% – 8.0% 7.3 % 7.0% – 8.0%
North America 3.2 % 4.5% – 5.5% 3.6 % 4.5% – 5.5%
Total 5.9 % 6.5% – 7.0% 6.3 % 6.5% – 7.0%
 
Non-segment expense:
General and administrative $ 43 43 $ 43 43
Retirement plans 25 47 - -
Royalty income (2 ) (2) (2 ) (2)
CEO retirement costs (a) 4 - - -
Gains on acquisitions and asset dispositions (b)   (10 ) -   -   -
Non-segment expense $ 60  

89
$ 41   41
 
Effective income tax rate 38 % 37% – 40% 39 % 37% – 40%
 
Interest expense $ 24 23 – 26 $ 24 23 – 26
 

Net income attributable to noncontrolling interests
$ 24 24 – 28 $ 23 24 – 28
 
Fixed assets acquired:
Capital expenditures $ 196 210 – 220 $ 196 210 – 220
Capital leases (c)   43   30 – 40   43   30 – 40
Total $ 239   240 – 260 $ 239   240 – 260
 
Depreciation and amortization $ 162 175 – 190 $ 162 175 – 190
 
Amounts may not add due to rounding.
 
(a)  

To eliminate costs related to the retirement of the former CEO.
(b) To eliminate gain recognized on the sale of the U.S. document destruction business ($6.7 million), gains related to acquisition of controlling interest in subsidiaries that were previously accounted for as equity or cost method investments ($2.5 million), and gains on sales of former operating assets ($0.5 million).
(c) Includes capital leases for newly acquired assets only. Sales leaseback transactions that occurred during 2011 of $18 million for assets that were originally purchased and included as capital expenditures have been excluded from “Fixed assets acquired -- capital leases.”

Page 7
             
The Brink’s Company and subsidiaries
Fourth Quarter 2011 vs. 2010 (Unaudited)

(In millions)
 

Segment Results – GAAP
                           
Organic Acquisitions / Currency % Change
4Q '10 Change Dispositions (b) (c) 4Q '11 Total   Organic
Revenues:
EMEA $ 315 11 (2 ) (4 ) 320 2 4
Latin America 294 66 49 (16 ) 393 34 23
Asia Pacific   39   2   -     (1 ) 40   3 4
International 648 79 47 (20 ) 753 16 12
North America   233   -   12     (1 ) 244   5 -
Total $ 881   79   58     (21 ) 997   13 9
Operating profit:
International $ 54 (4 ) 19 (2 ) 67 24 (7 )
North America   18   (13 ) -     -   6   (69 ) (71 )
Segment operating profit 72 (16 ) 19 (2 ) 72 1 (23 )
Non-segment (a)   (25 ) (5 ) 9     -   (21 ) (16 ) 18
Total $ 47   (21 ) 27     (2 ) 51   10 (45 )
 
Segment operating margin:
International 8.3 % 8.9 %
North America   7.7 % 2.3 %
Segment operating margin   8.2 %                 7.3 %        

 

Segment Results - Non-GAAP
                         
    Organic   Acquisitions /   Currency     % Change
  4Q '10 Change Dispositions (b) (c) 4Q '11 Total   Organic
Revenues:
EMEA $ 315 11 (2 ) (4 ) 320 2 4
Latin America 294 66 49 (16 ) 393 34 23
Asia Pacific     39   2   -   (1 ) 40   3 4
International 648 79 47 (20 ) 753 16 12
North America     233   -   12   (1 ) 244   5 -
Total   $ 881   79   58   (21 ) 997   13 9
Operating profit:
International $ 67 (3 ) 5 (2 ) 67 - (5 )
North America     18   (11 ) -   -   6   (63 ) (65 )
Segment operating profit 85 (15 ) 5 (2 ) 74 (13 ) (17 )
Non-segment (a)     (10 ) -   -   -   (11 ) 3 3
Total   $ 74   (15 ) 5   (2 ) 63   (15 ) (20 )
 
Segment operating margin:
International 10.4 % 8.9 %
North America   7.5 % 2.6 %
Segment operating margin     9.6 %               7.4 %        
 
Amounts may not add due to rounding.
 
(a)  

Includes income and expense not allocated to segments (see page 11 for details).
(b) Includes operating results and gains/losses on acquisitions, sales and exit of businesses.
(c)

Revenue and Segment Operating Profit: The “Currency” amount in the table is the summation of the monthly currency changes, plus (minus) the U.S. dollar amount of remeasurement currency gains (losses) of bolivar fuerte-denominated net monetary assets recorded under highly inflationary accounting rules related to the Venezuelan operations. The monthly currency change is equal to the Revenue or Operating Profit for the month in local currency, on a country-by-country basis, multiplied by the difference in rates used to translate the current period amounts to U.S. dollars versus the translation rates used in the year-ago month. The functional currency in Venezuela is the U.S. dollar under highly inflationary accounting rules. Remeasurement gains and losses under these rules are recorded in U.S. dollars but these gains and losses are not recorded in local currency. Local currency Revenue and Operating Profit used in the calculation of monthly currency change for Venezuela have been derived from the U.S. dollar results of the Venezuelan operations under U.S. GAAP (excluding remeasurement gains and losses) using current period currency exchange rates.

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The Brink’s Company and subsidiaries
Full Year 2011 vs. 2010 (Unaudited)

(In millions)
 
Segment Results – GAAP
                         
Organic Acquisitions / Currency % Change
  YTD '10 Change Dispositions (b) (c) YTD '11 Total   Organic
Revenues:
EMEA $ 1,200 59 (25 ) 63 1,297 8 5
Latin America 877 182 364 38 1,461 66 21
Asia Pacific     127   22   -   6   154   22 17
International 2,204 262 339 106 2,911 32 12
North America     918   -   49   8   974   6 -

Total
  $ 3,122   263   388   114   3,886   24 8
Operating profit:
International $ 165 10 12 13 200 21 6
North America     44   (15 ) 1   1   31   (29 ) (33 )
Segment operating profit 209 (4 ) 13 14 231 11 (2 )
Non-segment (a)     (63 ) (15 ) 18   -   (60 ) (4 ) 24
Total   $ 146   (19 ) 31   14   171   17 (13 )
 
Segment operating margin:
International 7.5 % 6.9 %
North America   4.8 % 3.2 %
Segment operating margin     6.7 %                 5.9 %        
 

Segment Results – Non-GAAP
                       
  Organic   Acquisitions /   Currency     % Change
YTD '10 Change Dispositions (b) (c) YTD '11 Total   Organic
Revenues:
EMEA $ 1,200 59 (25 ) 63 1,297 8 5
Latin America 877 182 364 38 1,461 66 21
Asia Pacific   127   22   -   6   154   22 17
International 2,204 262 339 106 2,911 32 12
North America   918   -   49   8   974   6 -
Total $ 3,122   263   388   114   3,886   24 8
Operating profit:
International $ 181 11 10 10 212 17 6
North America   43   (10 ) 1   1   35   (20 ) (24 )
Segment operating profit 225 - 12 10 247 10 -
Non-segment (a)   (36 ) (4 ) -   -   (41 ) 12 12
Total $ 188   (4 ) 12   10   206   9 (2 )
 
Segment operating margin:
International 8.2 % 7.3 %
North America   4.7 % 3.6 %
Segment operating margin   7.2 %                 6.3 %        

Amounts may not add due to rounding. See page 8 for footnote explanations.
 

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The Brink’s Company and subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

(In millions, except per share amounts)
 
Fourth Quarter Full Year
2011 2010 2011 2010
 
Revenues $ 997.1 880.6 3,885.5 3,121.5
 
Costs and expenses:
Cost of revenues 800.4 696.2 3,174.3 2,536.4
Selling, general and administrative expenses   142.8   119.1   543.1   429.3  
Total costs and expenses 943.2 815.3 3,717.4 2,965.7
Other operating income (expense)   (2.5 ) (18.4 ) 3.2   (9.5 )
 
Operating profit 51.4 46.9 171.3 146.3
 
Interest expense (5.8 ) (5.8 ) (24.0 ) (14.8 )
Interest and other income (expense)   2.3   5.4   9.1   8.1  
Income from continuing operations before tax 47.9 46.5 156.4 139.6
Provision for income taxes   21.5   21.0   59.4   67.1  
 
Income from continuing operations 26.4 25.5 97.0 72.5
 
Income (loss) from discontinued operations, net of tax   (1.5 ) 0.7   1.5   0.3  
 
Net income 24.9 26.2 98.5 72.8
 
Less net income attributable to noncontrolling interests   (9.1 ) (6.3 ) (24.0 ) (15.7 )
 
Net income attributable to Brink’s $ 15.8   19.9   74.5   57.1  
 
Amounts attributable to Brink’s:
Income from continuing operations $ 17.3 19.2 73.0 56.8
Income (loss) from discontinued operations   (1.5 ) 0.7   1.5   0.3  
 
Net income attributable to Brink’s $ 15.8   19.9   74.5   57.1  
 
Earnings (loss) per share attributable to Brink’s common shareholders (a):
Basic:
Continuing operations $ 0.36 0.40 1.52 1.18
Discontinued operations   (0.03 ) 0.02   0.03   0.01  
Net income $ 0.33   0.42   1.56   1.18  
 
 
Diluted:
Continuing operations $ 0.36 0.40 1.52 1.17
Discontinued operations   (0.03 ) 0.02   0.03   0.01  
Net income $ 0.33   0.42   1.55   1.18  

(a) Earnings per share may not add due to rounding.
 
Weighted-average shares
Basic 48.0 47.5 47.8 48.2
Diluted 48.2 47.7 48.1 48.4
 

Page 10
       

The Brink’s Company and subsidiaries

Supplemental Financial Information (Unaudited)

(In millions)
 
Fourth Quarter Full Year
2011 2010 2011 2010

NON-SEGMENT INCOME (EXPENSE)
 
Corporate and former operations:
General and administrative $ (15.3 ) (11.2 ) (46.6 ) (38.6 )
Retirement costs (former operations and frozen plans)   (6.2 ) (6.0 ) (24.8 ) (22.7 )
Subtotal (21.5 ) (17.2 ) (71.4 ) (61.3 )
 
Other amounts not allocated to segments:
Royalty income:
Brand licensing fees from BHS - - - 4.9
Other 0.3 0.8 1.7 2.1
Business acquisitions and dispositions:
Remeasurement of previously held ownership interest to fair value - (13.7 ) 0.4 (13.7 )
Bargain purchase of Mexican CIT business - 5.1 2.1 5.1
Gain on sale of U.S. Document Destruction business - - 6.7 -
Gains on sale of property and other assets   0.2   -   0.7   0.3  
Subtotal 0.5 (7.8 ) 11.6 (1.3 )
 
Non-segment income (expense) $ (21.0 ) (25.0 ) (59.8 ) (62.6 )
 
 
OTHER OPERATING INCOME (EXPENSE) (a)
 
Share in earnings of equity affiliates $ 1.4 0.9 4.8 3.9
Royalty income 0.3 0.8 1.7 7.6
Gains (losses) on sales of property and other assets - - 1.2 1.2
Impairment losses (3.9 ) (0.2 ) (4.7 ) (0.7 )
Business acquisitions and dispositions:
Gain on sale of U.S. Document Destruction business - - 6.7 -
Bargain purchase of Mexican CIT business - 5.1 2.1 5.1
Remeasurement of previously held ownership interest to fair value - (13.7 ) 0.4 (13.7 )
Deconsolidation of Brink’s Belgium and write-down to fair value - (13.4 ) - (13.4 )
Settlement charge related to Belgium bankruptcy - - (10.1 ) -
Foreign currency items:
Transaction gains (losses) (2.8 ) 0.9 (4.2 ) (4.0 )
Hedge gains 0.6 - 2.2 -
Other   1.9   1.2   3.1   4.5  
Other operating income (expense) $ (2.5 ) (18.4 ) 3.2   (9.5 )
 

(a) Includes segment and non-segment other operating income and expense.
 

Page 11
           
The Brink’s Company and subsidiaries
Supplemental Financial Information (Unaudited)

(In millions)
 
Fourth Quarter Full Year
2011 2010 2011 2010
SELECTED CASH FLOW INFORMATION
 
Capital expenditures
International $ 59.2 39.5 144.8 110.7
North America   18.3 6.8 51.4 38.1
Capital expenditures 77.5 46.3 196.2 148.8
 
Capital Leases (a)
International 0.6 0.2 7.6 4.1
North America   2.4 13.3 35.4 29.8
Capital leases 3.0 13.5 43.0 33.9
 
Total
International 59.8 39.7 152.4 114.8
North America   20.7 20.1 86.8 67.9
Total $ 80.5 59.8 239.2 182.7
 

(a) Represents the amount of property and equipment acquired using capital leases. Since the assets are acquired without using cash, the amounts are not included in the consolidated cash flow statement. Amounts are provided here to assist in the comparison of assets acquired in the current year versus prior years.
 
Depreciation and amortization
International $ 26.9 24.9 105.8 92.6
North America   15.0 11.7 56.6 44.0
Depreciation and amortization $ 41.9 36.6 162.4 136.6
 

Page 12
The Brink’s Company and subsidiaries
Non-GAAP Results Reconciled to GAAP (Unaudited)

(In millions, except for per share amounts)
               
 
Gains on Mexico
Acquisitions Employee
and Asset Belgium Benefit CEO U.S. Adjust

 
Dispositions Settlement Settlement Retirement Retirement Income Tax Non-GAAP
     

GAAP Basis
  (a)   Charge (b)   Losses (c)   Costs (d)   Plans (e)   Rate (f)   Basis
   
First Quarter 2011
Operating profit:
International $ 45.2 - - - - - - 45.2
North America   6.8   -   - - - 0.7 -   7.5  
Segment operating profit 52.0 - - - - 0.7 - 52.7
Non-segment   (15.0 ) (0.4 ) - - - 6.2 -   (9.2 )
Operating profit $ 37.0 (0.4 ) - - - 6.9 - 43.5
 
Amounts attributable to Brink’s:
Income from continuing operations $ 18.9 (3.0 ) - - - 4.4 (1.5 ) 18.8
Diluted EPS – continuing operations     0.39     (0.06 )   -   -   -   0.09   (0.03 )   0.39  
 
Second Quarter 2011
Operating profit:
International $ 26.2 - 10.1 1.0 - - - 37.3
North America   10.4   -   - - - 0.8 -   11.2  
Segment operating profit 36.6 - 10.1 1.0 - 0.8 - 48.5
Non-segment   (16.2 ) -   - - - 6.2 -   (10.0 )
Operating profit $ 20.4 - 10.1 1.0 - 7.0 - 38.5
 
Amounts attributable to Brink’s:
Income from continuing operations $ 5.3 - 6.4 0.7 - 4.4 0.2 17.0
Diluted EPS – continuing operations     0.11     -     0.13   0.01   -   0.09   -     0.35  
 
Third Quarter 2011
Operating profit:
International $ 61.4 - - 0.7 - - - 62.1
North America   8.7   -   - - - 0.8 -   9.5  
Segment operating profit 70.1 - - 0.7 - 0.8 - 71.6
Non-segment   (7.6 ) (9.3 ) - - - 6.2 -   (10.7 )
Operating profit $ 62.5 (9.3 ) - 0.7 - 7.0 - 60.9
 
Amounts attributable to Brink’s:
Income from continuing operations $ 31.5 (6.6 ) - 0.5 - 4.4 (1.1 ) 28.7
Diluted EPS – continuing operations     0.66     (0.14 )   -   0.01   -   0.09   (0.02 )   0.60  
 

See page 14 for notes.
 

Page 13
The Brink’s Company and subsidiaries
Non-GAAP Results Reconciled to GAAP (Unaudited)

(In millions, except for per share amounts)
               
 
Gains on Mexico
Acquisitions Employee
and Asset Belgium Benefit CEO U.S. Adjust

 
Dispositions Settlement Settlement Retirement Retirement Income Tax Non-GAAP
     

GAAP Basis
  (a)   Charge (b)   Losses (c)   Costs (d)   Plans (e)   Rate (f)   Basis
   
Fourth Quarter 2011
Operating profit:
International $ 66.9 - - 0.4 - - - 67.3
North America   5.5   -   - - - 0.9 - 6.4  
Segment operating profit 72.4 - - 0.4 - 0.9 - 73.7
Non-segment   (21.0 ) -   - - 4.1 6.2 - (10.7 )
Operating profit $ 51.4 - - 0.4 4.1 7.1 - 63.0
 
Amounts attributable to Brink’s:
Income from continuing operations $ 17.3 - - 0.3 2.6 4.5 2.4 27.1
Diluted EPS – continuing operations     0.36     -     -   0.01   0.05   0.09   0.05   0.56  
 
Full Year 2011
Operating profit:
International $ 199.7 - 10.1 2.1 - - - 211.9
North America   31.4   -   - - - 3.2 - 34.6  
Segment operating profit 231.1 - 10.1 2.1 - 3.2 - 246.5
Non-segment   (59.8 ) (9.7 ) - - 4.1 24.8 - (40.6 )
Operating profit $ 171.3 (9.7 ) 10.1 2.1 4.1 28.0 - 205.9
 
Amounts attributable to Brink’s:
Income from continuing operations $ 73.0 (9.6 ) 6.4 1.5 2.6 17.7 - 91.6
Diluted EPS – continuing operations     1.52     (0.20 )   0.13   0.03   0.05   0.37   -   1.90  

Amounts may not add due to rounding.
 
(a)   To eliminate gain recognized on the sale of the U.S. document destruction business, gains on available-for-sale equity and debt securities, gains related to acquisition of controlling interest in subsidiaries that were previously accounted for as equity or cost method investments, and gains on sales of former operating assets, as follows:
 
    First Quarter 2011   Third Quarter 2011   Full Year 2011
Operating   Operating   Operating  
  Profit EPS Profit EPS Profit EPS
Sale of U.S. Document Destruction business $ - - (6.7) (0.09) (6.7) (0.09)
Gains on available-for-sale equity and debt securities - (0.05) - - - (0.05)
Acquisition of controlling interests (0.4) (0.01) (2.1) (0.04) (2.5) (0.05)
Sale of former operating assets   - - (0.5) (0.01) (0.5) (0.01)
$ (0.4) (0.06) (9.3) (0.14) (9.7) (0.20)
 
(b)   To eliminate settlement charge related to exit of Belgium cash-in-transit business.
(c)

To eliminate employee benefit settlement loss related to Mexico. Portions of Brink’s Mexican subsidiaries’ accrued employee termination benefit were paid in the second and third quarters of 2011. The employee termination benefit is accounted for under FASB ASC Topic 715, Compensation – Retirement Benefits. Accordingly, the severance payments resulted in settlement losses.
(d) To eliminate the costs related to the retirement of the former CEO.
(e) To eliminate expenses related to U.S. retirement liabilities.
(f) To adjust effective income tax rate to be equal to the full-year non-GAAP effective income tax rate. The non-GAAP effective tax rate for 2011 is 38.6%.
 

Page 14
 
The Brink’s Company and subsidiaries
Non-GAAP Results Reconciled to GAAP (Unaudited)

(In millions, except for per share amounts)
 
     

GAAPBasis
 

RemeasureVenezuelanNetMonetaryAssets (a)
 

Royalty(b)
 

ExitBelgiumCITBusiness(c)
 

MexicoAcquisition(d)
 

Non-SegmentAssetSales (e)

U.S.RetirementPlans (f)
 

U.S.HealthcareLegislationTax Charge(g)
 

AdjustIncomeTaxRate (h)
 

Non-GAAPBasis
                 
First Quarter 2010
Operating profit:
International $ 24.5 4.9 - - - - - - - 29.4
North America   10.4   -   -   - - - (0.3 ) - -   10.1  
Segment operating profit 34.9 4.9 - - - - (0.3 ) - - 39.5
Non-segment   (11.1 ) -   (1.8 ) - - - 4.9   - -   (8.0 )
Operating profit $ 23.8 4.9 (1.8 ) - - - 4.6 - - 31.5
 
Amounts attributable to Brink’s:
Income from continuing operations $ (4.8 ) 3.0 (1.1 ) - - - 2.9 13.7 0.6 14.3
Diluted EPS – continuing operations     (0.10 )   0.06     (0.02 )   -   -   - 0.06     0.28   0.01     0.29  
 
Second Quarter 2010
Operating profit:
International $ 33.8 (1.7 ) - - - - - - - 32.1
North America   10.3   -   -   - - - (0.1 ) - -   10.2  
Segment operating profit 44.1 (1.7 ) - - - - (0.1 ) - - 42.3
Non-segment   (12.6 ) -   (1.9 ) - - - 5.9   - -   (8.6 )
Operating profit $ 31.5 (1.7 ) (1.9 ) - - - 5.8 - - 33.7
 
Amounts attributable to Brink’s:
Income from continuing operations $ 20.7 (1.0 ) (1.2 ) - - - 3.6 - (3.8 ) 18.3
Diluted EPS – continuing operations     0.42     (0.02 )   (0.02 )   -   -   - 0.07     -   (0.08 )   0.37  
 
Third Quarter 2010
Operating profit:
International $ 52.6 - - - - - - - - 52.6
North America   5.4   -   -   - - - (0.1 ) - -   5.3  
Segment operating profit 58.0 - - - - - (0.1 ) - - 57.9
Non-segment   (13.9 ) -   (1.2 ) - - - 5.9   - -   (9.2 )
Operating profit $ 44.1 - (1.2 ) - - - 5.8 - - 48.7
 
Amounts attributable to Brink’s:
Income from continuing operations $ 21.7 - (0.7 ) - - - 3.6 - 0.9 25.5
Diluted EPS – continuing operations     0.45     -     (0.01 )   -   -   - 0.08     -   0.02     0.53  
 

See page 16 for notes.
 

Page 15
 
The Brink’s Company and subsidiaries
Non-GAAP Results Reconciled to GAAP (Unaudited)

(In millions, except for per share amounts)
 
     

GAAPBasis
 

RemeasureVenezuelanNetMonetaryAssets (a)
 

Royalty(b)
 

ExitBelgiumCITBusiness(c)
 

MexicoAcquisition(d)
 

Non-SegmentAssetSales (e)
 

U.S.RetirementPlans (f)
 

U.S.HealthcareLegislationTax Charge(g)
 

AdjustIncomeTaxRate (h)
 

Non-GAAPBasis
                   
Fourth Quarter 2010
Operating profit:
International $ 53.9 - - 13.4 - - - - - 67.3
North America   18.0   - -   - - -   (0.5 ) - - 17.5  
Segment operating profit 71.9 - - 13.4 - - (0.5 ) - - 84.8
Non-segment   (25.0 ) - -   - 8.6 -   6.0   - - (10.4 )
Operating profit $ 46.9 - - 13.4 8.6 - 5.5 - - 74.4
 
Amounts attributable to Brink’s:
Income from continuing operations $ 19.2 - - 7.8 8.6 (3.0 ) 3.4 - 2.3 38.3
Diluted EPS – continuing operations     0.40     -   -     0.16   0.18   (0.06 )   0.07     -   0.05   0.80  
 
Full Year 2010
Operating profit:
International $ 164.8 3.2 - 13.4 - - - - - 181.4
North America   44.1   - -   - - -   (1.0 ) - - 43.1  
Segment operating profit 208.9 3.2 - 13.4 - - (1.0 ) - - 224.5
Non-segment   (62.6 ) - (4.9 ) - 8.6 -   22.7   - - (36.2 )
Operating profit $ 146.3 3.2 (4.9 ) 13.4 8.6 - 21.7 - - 188.3
 
Amounts attributable to Brink’s:
Income from continuing operations $ 56.8 2.0 (3.0 ) 7.8 8.6 (3.0 ) 13.5 13.7 - 96.4
Diluted EPS – continuing operations     1.17     0.04   (0.06 )   0.16   0.18   (0.06 )   0.28     0.29   -   1.99  

Amounts may not add due to rounding.
(a)   To reverse remeasurement gains and losses in Venezuela. For accounting purposes, Venezuela is considered a highly inflationary economy. Under U.S. GAAP, subsidiaries that operate in Venezuela record gains and losses in earnings for the remeasurement of bolivar fuerte-denominated net monetary assets.
(b) To eliminate royalty income from former home security business.
(c) To eliminate loss on exit of Beligum cash-in-transit business.
(d) To eliminate loss recognized related to acquisition of controlling interest in subsidiary previously accounted for as cost method investment and bargain purchase gain in Mexico.
(e) To eliminate exchange of marketable equity securities.
(f) To eliminate expenses related to U.S. retirement liabilities.
(g) To eliminate $13.7 million of tax expense related to the reversal of a deferred tax asset as a result of U.S. healthcare legislation.
(h) To adjust the effective income tax rate to be equal to the full-year non-GAAP effective income tax rate. The non-GAAP effective tax rate for 2010 was 36.2%.

Page 16
 
The Brink’s Company and subsidiaries
Non-GAAP Results Reconciled to GAAP (Unaudited)

(In millions, except for per share amounts)
 
 
   

GAAP

Basis
  Change to Parallel Rate (a)  

Venezuelan

Currency

Losses (b)
 

Acquisition Gain (c)
 

Royalty (d)
 

Non-Segment Asset Sales (e)
  U.S. Retirement Plans (f)   Adjust Income Tax Rate (g)   Non-GAAP Basis
                 
Full Year 2009
Revenues:
EMEA $ 1,257.5 - - - - - - - 1,257.5
Latin America 904.7 (237.9 ) - - - - - - 666.8
Asia Pacific   78.7   -   - -   -   -   -   -   78.7  
International 2,240.9 (237.9 ) - - - - - - 2,003.0
North America   894.1   -   - -   -   -   -   -   894.1  
Revenues: $ 3,135.0   (237.9 ) - -   -   -   -   -   2,897.1  
Operating profit:
International $ 156.8 (43.0 ) 4.5 - - - - - 118.3
North America   56.6   -   - -   -   -   (2.0 ) -   54.6  
Segment operating profit 213.4 (43.0 ) 4.5 - - - (2.0 ) - 172.9
Non-segment   (46.6 ) -   22.5 (14.9 ) (6.8 ) (9.6 ) 20.7   -   (34.7 )
Operating profit $ 166.8   (43.0 ) 27.0 (14.9 ) (6.8 ) (9.6 ) 18.7   -   138.2  
 
Amounts attributable to Brink’s:
Income from continuing operations $ 195.7 (23.2 ) 25.2 (14.9 ) (4.3 ) (5.9 ) 11.7 (117.6 ) 66.7
Diluted EPS – continuing operations     4.11     (0.49 )   0.53   (0.31 )   (0.09 )   (0.12 )   0.25     (2.48 )   1.40  
 
 
Amounts may not add due to rounding.
 
(a)   To reduce revenues and segment operating income to reflect the 2009 results of Venezuelan subsidiaries had they been translated using the parallel currency exchange rate in effect at the time. The average parallel exchange rate used for the non-GAAP full-year earnings was 6.00 bolivar fuertes to the U.S. dollar, compared to an average rate of 2.21 bolivar fuertes to the U.S. dollar that was used for the GAAP financial statements. The official rate of 2.15 bolivar fuertes to the U.S. dollar was used for translation of Venezuela for most of 2009 until the parallel rate was adopted during December. The use of the weaker rate to translate 2009’s non-GAAP revenues and earnings of the Venezuelan subsidiaries decreased each measure by 63%.
(b) To eliminate currency losses incurred in Venezuela related to increases in cash held in U.S. dollars by Venezuelan subsidiaries. These losses would not have been incurred had the operations been translated at the parallel rate.
(c) To eliminate gains/losses recognized related to acquisitions of controlling interests in subsidiaries that were previously accounted for as equity method investments.
(d) To eliminate royalty income from former home security business.
(e) To eliminate 2009 non-segment gains on sales of property and other assets and 2010 exchange of marketable equity securities.
(f) To eliminate expenses related to U.S. retirement liabilities.
(g) The full-year 2009 non-GAAP tax expense excludes $118 million of income tax benefits related to the reduction in the amount of valuation allowance needed for U.S. deferred tax assets as a result of improved investments in retirement plans and improved credit markets as well as the tax effect of the other pretax non-GAAP adjustments. The full-year non-GAAP effective income tax rate for 2009 was 36.8%. Each of the 2009 quarters has been adjusted to reflect the full-year 2009 effective income tax rate of 36.8% on a non-GAAP basis.
 

Page 17
 
The Brink’s Company and subsidiaries
Other Reconciliations to GAAP (Unaudited)

(In millions)
 
NON-GAAP CASH FLOWS FROM OPERATING ACTIVITIES – RECONCILED TO AMOUNTS REPORTED UNDER U.S. GAAP
 
    Years Ended December 31,
2011     2010
Cash flows from operating activities – GAAP $ 247.0 235.3
Decrease (increase) in certain customer obligations (a) 11.7 (38.5 )
Cash outflows (inflows) related to discontinued operations (b)   (1.4 ) 9.9  
 
Cash flows from operating activities – Non-GAAP $ 257.3   206.7  
 
 
(a) To eliminate the change in the balance of customer obligations related to cash received and processed in certain of our secure cash logistics operations. The title to this cash transfers to us for a short period of time. The cash is generally credited to customers’ accounts the following day and we do not consider it as available for general corporate purposes in the management of our liquidity and capital resources.
 
(b) To eliminate cash flows related to our discontinued operations.
 
Non-GAAP cash flows from operating activities are supplemental financial measures that are not required by, or presented in accordance with GAAP. The purpose of the non-GAAP cash flows from operating activities is to report financial information excluding the impact of cash received and processed in certain of our secure cash logistics operations and without cash flows from discontinued operations. Brink’s believes these measures are helpful in assessing cash flows from operations, enable period-to-period comparability and are useful in predicting future operating cash flows. Non-GAAP cash flows from operating activities should not be considered as an alternative to cash flows from operating activities determined in accordance with GAAP and should be read in conjunction with our consolidated statements of cash flows.
 
   
NET DEBT RECONCILED TO GAAP December 31,
2011     2010
Debt:
Short-term debt $ 25.4 36.5
Long-term debt   364.0   352.7  
Total Debt   389.4   389.2  
 
Cash and cash equivalents 182.9 183.0
Less amounts held by certain cash logistics operations (a)   (25.1 ) (38.5 )
Amount available for general corporate purposes   157.8   144.5  
 
Net Debt $ 231.6   244.7  
 
 
(a) Title to cash received and processed in certain of our secure cash logistics operations transfers to us for a short period of time. The cash is generally credited to customers’ accounts the following day and we do not consider it as available for general corporate purposes in the management of our liquidity and capital resources and in our computation of Net Debt.
 
Net Debt is a supplemental financial measure that is not required by, or presented in accordance with GAAP. We use Net Debt as a measure of our financial leverage. We believe that investors also may find Net Debt to be helpful in evaluating our financial leverage. Net Debt should not be considered as an alternative to Debt determined in accordance with GAAP and should be reviewed in conjunction with our consolidated balance sheets. Set forth above is a reconciliation of Net Debt, a non-GAAP financial measure, to Debt, which is the most directly comparable financial measure calculated and reported in accordance with GAAP, as of December 31, 2011, and December 31, 2010. Net Debt excluding cash and debt in Venezuelan operations was $242 million at December 31, 2011, and $251 million at December 31, 2010.
 

Page 18
 
The Brink’s Company and subsidiaries
Other Reconciliations to GAAP (Unaudited)

(In millions)
               
 
DISCOUNTED CASH FLOWS AT PLAN DISCOUNT RATES – RECONCILED TO AMOUNTS REPORTED UNDER U.S. GAAP
 
December 31, 2011

Primary U.S.

pension plan (b)

UMWA

plans (c)

Other unfunded

U.S. plans
Total
 
Funded status of U.S. retirement plans – GAAP $ 279 262 87 628
Present value of projected earnings of plan assets (a)   (82 ) (57 ) - (139 )
 
Discounted cash flows at plan discount rates – Non-GAAP $ 197   205   87 489  
 
Plan discount rate 4.60 % 4.40 %
Expected return of assets 8.25 % 8.50 %
 
 
(a) Under GAAP, the funded status of a benefit plan is reduced by the fair market value of plan assets at the balance sheet date, and the present value of the projected earnings on plan assets does not reduce the funded status at the balance sheet date. The non-GAAP measure presented above additionally reduces the funded status as computed under GAAP by the present value of projected earnings of plan assets using the expected return on asset assumptions of the respective plan.
(b) For the primary U.S. pension plan, we are required by ERISA regulations to maintain minimum funding levels, and as a result, we estimate we will be required to make minimum required contributions from 2012 to 2017. We have estimated that we will achieve the required funded ratio after the 2017 contribution.
(c) There are no minimum funding requirements for the UMWA plans because they are not covered by ERISA funding regulations. Using assumptions at the end of 2011, we project that the plan assets plus expected earnings on those investments will cover the benefit payments for these plans until 2023. We project that Brink’s will be required to contribute cash to the plan beginning in 2023 to pay beneficiaries.
 
Discounted cash flows at plan discount rates are supplemental financial measures that are not required by, or presented in accordance with GAAP. The purpose of the discounted cash flows at plan discount rate is to present our retirement obligations after giving effect to the benefit of earning a return on plan assets. We believe this measure is helpful in assessing the present value of future funding requirements of the company in order to meet plan benefit obligations. Discounted cash flows at plan discount rates should not be considered as an alternative to the funded status of the U.S. retirement plans at December 31, 2011, as determined in accordance with GAAP and should be read in conjunction with our consolidated balance sheets.
 

Page 19

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