EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1 exhibit_99-1.htm

EXHIBIT 99.1
PRESS RELEASE
The Brink’s Company
1801 Bayberry Court
P.O. Box 18100
Richmond, VA 23226-8100 USA
Tel. 804.289.9600
Fax 804.289.9770



FOR IMMEDIATE RELEASE
Contact:
Investor Relations
804.289.9709



Brink’s Reports Second-Quarter Results
GAAP EPS $.27 vs. $.71; Non-GAAP $.44 vs. $.48
International Profit Improves, North America Profit Declines
Management Reaffirms Full-Year Outlook
 
 
RICHMOND, Va., July 25, 2013 – The Brink’s Company (NYSE: BCO), a global leader in security-related services, today reported second-quarter earnings.

 
Second-Quarter Highlights
GAAP:
 
·
Revenue up 6% (8% organic growth), EPS $.27 vs. $.71
 
·
Segment profit up 4% (6% organic increase), margin 5.5% vs. 5.6%
 
·
International profit up 16% (19% organic increase), margin 6.4% vs. 5.9%
 
·
North America profit down 40% (40% organic decrease), margin 2.8% vs. 4.8%

Non-GAAP: 
 
 
·
Revenue up 6% (8% organic growth), EPS $.44 vs. $.48
 
·
Segment profit up 5% (7% organic increase), margin 5.9% vs. 6%
 
·
International profit up 16% (19% organic increase), margin 6.5% vs. 6.1%
 
·
North America profit down 29% (29% organic decrease), margin 4.1% vs. 5.7%

Tom Schievelbein, chairman, president and chief executive officer, said: “Second-quarter results were in line with our full-year expectations as profit growth from international operations, driven primarily by Latin America, was offset by ongoing weakness in North America.  We expect continued improvement in international operations to enable us to achieve a full-year non-GAAP segment margin rate between 6% and 6.5% on organic revenue growth of 5% to 8%.”

 
1
 


Summary Reconciliation of Second-Quarter GAAP to Non-GAAP EPS*
  
   
Second Quarter
    
First Half
  
   
2013
    
2012
    
2013
    
2012
  
GAAP EPS
   $ 0.27     $ 0.71     $ 0.33     $ 1.16  
   Exclude Venezuela monetary asset remeasurement losses
     -       -       0.17       -  
   Exclude U.S. retirement plan expenses
     0.17       0.16       0.34       0.37  
   Exclude employee benefit settlement and severance losses
     0.01       -       0.01       0.02  
   Exclude additional European operations to be exited
     0.01       0.01       0.02       0.02  
   Exclude gains and losses on acquisitions and dispositions
     -       (0.02 )     (0.02 )     (0.04 )
   Exclude tax benefit from change in retiree health care funding strategy
     -       (0.43 )     -       (0.43 )
   Adjust quarterly tax rate to full-year average rate
     (0.01 )     0.05       (0.05 )     0.07  
Non-GAAP EPS
   $ 0.44     $ 0.48     $ 0.79     $ 1.16  


Summary of Second-Quarter Results*
  
   
Second Quarter
    
First Half
  
(In millions, except for per share amounts)
  
2013
    
2012
    
% Change
    
2013
    
2012
    
% Change
  
                                     
                                     
GAAP
                                    
Revenues
   $ 991       936       6 %   $ 1,962       1,871       5 %
Segment operating profit(a)
     55       53       4       89       125       (29 )
Non-segment expense
     (22 )     (21 )     1       (39 )     (46 )     (15 )
Operating profit
     33       31       6       50       79       (36 )
Income from continuing operations(b)
     13       34       (62 )     16       56       (72 )
Diluted EPS from continuing operations(b)
     0.27       0.71       (62 )     0.33       1.16       (72 )
                                                 
Non-GAAP
                                                
Revenues
   $ 988       933       6 %   $ 1,957       1,867       5 %
Segment operating profit(a)
     59       56       5       110       131       (16 )
Non-segment expense
     (11 )     (12 )     (3 )     (19 )     (21 )     (11 )
Operating profit
     47       44       7       91       110       (17 )
Income from continuing operations(b)
     22       24       (9 )     39       57       (31 )
Diluted EPS from continuing operations(b)(c)
     0.44       0.48       (8 )     0.79       1.16       (32 )

(a)  
Segment operating profit is a non-GAAP measure.  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)  
Revenues and earnings of discontinued operations have been reclassified from continued operations for all prior periods.  In addition, Non-GAAP revenues and earnings exclude operations we intend to exit during 2013 that have not yet met the accounting definition of a discontinued operation.  As a result, the consolidated revenues and earnings from continuing operations reported herein on a GAAP and Non-GAAP basis are different from amounts previously reported.

*Non-GAAP results are reconciled to the applicable GAAP results on pages 10-12.  Amounts may not add due to rounding.

 
2
 


The Brink’s Company and subsidiaries
Second Quarter 2013 vs. 2012 (Unaudited)
(In millions)

Segment Results – GAAP

 
              
Acquisitions /
                          
         
Organic
    
Dispositions
    
Currency
          
% Change
  
   
2Q '12
    
Change
    
(a)
    
(b)
    
2Q '13
    
Total
    
Organic
  
Revenues:
                                          
Latin America
   $ 376       55       4       (21 )     414       10       14  
EMEA
     284       10       -       3       296       4       3  
Asia Pacific
     39       5       -       (1 )     43       10       13  
  International
     698       69       4       (19 )     752       8       10  
  North America
     238       2       -       (1 )     239       -       1  
Total
   $ 936       71       4       (20 )     991       6       8  
Operating profit:
                                                        
International
   $ 41       8       -       (2 )     48       16       19  
North America
     11       (5 )     -       -       7       (40 )     (40 )
  Segment operating profit
     53       3       -       (2 )     55       4       6  
  Non-segment
     (21 )     1       (1 )     -       (22 )     1       (3 )
Total
   $ 31       4       (1 )     (2 )     33       6       12  
                                                         
Segment operating margin:
                                                        
International
     5.9 %                             6.4 %                
North America
     4.8 %                             2.8 %                
Segment operating margin
     5.6 %                             5.5 %                

Segment Results – Non-GAAP*
 
               
Acquisitions /
                    
         
Organic
    
Dispositions
    
Currency
          
% Change
  
   
2Q '12
    
Change
    
(a)
    
(b)
    
2Q '13
    
Total
    
Organic
  
Revenues:
                                          
Latin America
   $ 376       55       4       (21 )     414       10       14  
EMEA
     281       9       -       3       293       4       3  
Asia Pacific
     39       5       -       (1 )     43       10       13  
  International
     696       69       4       (19 )     750       8       10  
  North America
     238       2       -       (1 )     239       -       1  
Total
   $ 933       71       4       (20 )     988       6       8  
Operating profit:
                                                        
International
   $ 42       8       -       (2 )     49       16       19  
North America
     14       (4 )     -       -       10       (29 )     (29 )
  Segment operating profit
     56       4       -       (2 )     59       5       7  
  Non-segment
     (12 )     -       -       -       (11 )     (3 )     (3 )
Total
   $ 44       4       -       (2 )     47       7       10  
                                                         
Segment operating margin:
                                                        
International
     6.1 %                             6.5 %                
North America
     5.7 %                             4.1 %                
Segment operating margin
     6.0 %                             5.9 %                

(a)  
Includes operating results and gains/losses on acquisitions, sales and exits of businesses.  Also includes impairment charges related to businesses that we expect to dispose of in the near term.
(b)  
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.

*Non-GAAP results are reconciled to the applicable GAAP results on pages 10-12.  Amounts may not add due to rounding.


 
3
 


The Brink’s Company and subsidiaries
    Year-to-Date June 2013 vs. 2012 (Unaudited)
(In millions)

Segment Results – GAAP

               
Acquisitions /
                    
         
Organic
    
Dispositions
    
Currency
          
% Change
  
   
YTD '12
    
Change
    
(a)
    
(b)
    
YTD '13
    
Total
    
Organic
  
Revenues:
                                          
Latin America
   $ 762       100       7       (43 )     827       8       13  
EMEA
     559       14       -       3       576       3       3  
Asia Pacific
     76       12       -       (2 )     85       12       15  
  International
     1,397       126       7       (43 )     1,488       6       9  
  North America
     474       2       -       (1 )     474       -       -  
Total
   $ 1,871       128       7       (44 )     1,962       5       7  
Operating profit:
                                                        
International
   $ 107       (5 )     1       (18 )     85       (21 )     (5 )
North America
     17       (13 )     -       -       4       (74 )     (74 )
  Segment operating profit
     125       (18 )     1       (18 )     89       (29 )     (15 )
  Non-segment
     (46 )     7       -       -       (39 )     (15 )     (15 )
Total
   $ 79       (11 )     1       (18 )     50       (36 )     (14 )
                                                         
Segment operating margin:
                                                        
International
     7.7 %                             5.7 %                
North America
     3.6 %                             0.9 %                
Segment operating margin
     6.7 %                             4.5 %                

Segment Results – Non-GAAP*

               
Acquisitions /
                    
         
Organic
    
Dispositions
    
Currency
          
% Change
  
   
YTD '12
    
Change
    
(a)
    
(b)
    
YTD '13
    
Total
    
Organic
  
Revenues:
                                          
Latin America
   $ 762       100       7       (43 )     827       8       13  
EMEA
     554       14       -       3       571       3       3  
Asia Pacific
     76       12       -       (2 )     85       12       15  
  International
     1,393       126       7       (43 )     1,483       7       9  
  North America
     474       2       -       (1 )     474       -       -  
Total
   $ 1,867       128       7       (44 )     1,957       5       7  
Operating profit:
                                                        
International
   $ 110       (6 )     1       (5 )     100       (9 )     (5 )
North America
     22       (11 )     -       -       10       (53 )     (53 )
  Segment operating profit
     131       (17 )     1       (5 )     110       (16 )     (13 )
  Non-segment
     (21 )     2       -       -       (19 )     (11 )     (11 )
Total
   $ 110       (15 )     1       (5 )     91       (17 )     (14 )
                                                         
Segment operating margin:
                                                        
International
     7.9 %                             6.7 %                
North America
     4.6 %                             2.2 %                
Segment operating margin
     7.0 %                             5.6 %                

 
Amounts may not add due to rounding.  See page 3 for footnote explanations.

 
4
 

Non-Segment Expenses
Non-segment expenses increased slightly from $21 million to $22 million due to an acquisition gain ($1 million) recognized during 2012.  On a non-GAAP basis, these expenses declined from $12 million to $11 million due to lower general and administrative costs.

Capital Expenditures and Capital Leases
Year-to-date capital expenditures and capital lease additions were $80 million in both periods.  Full-year fixed asset acquisitions are expected to be approximately $205 million versus $203 million in 2012.

Income Taxes
On a GAAP basis, the second-quarter tax expense was $11 million (effective rate of 40%) versus the year-ago quarter’s tax benefit of $9 million (negative effective rate of 34%).  This quarter’s higher rate reflects the nondeductible remeasurement charge resulting from the Venezuela devaluation recorded in the first quarter, as well as additional devaluation amounts forecasted for 2013.  The prior year’s lower rate reflected a non-cash tax benefit related to a change in retiree health care funding strategy.  The effective GAAP tax rate for 2013 is expected to be between 49% and 52%.
Non-GAAP earnings for the second quarter reflect an effective tax rate of 37.5%, which is the midpoint of the estimated non-GAAP full-year range of 36% to 39%.  Non-GAAP results exclude the aforementioned nondeductible remeasurement charge.

Conference Call
Brink’s will host a conference call on July 25 at 11:00 a.m. Eastern Time to review second-quarter results.  Interested parties can listen by calling (800) 860-2442 (domestic), (412) 858-4600 (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 August 8, 2013, by calling (877) 344-7529 (domestic) or + (412) 317-0088 (international).  The conference account number is 10030160.  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.

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.   For 2013, a forecasted full-year tax rate is used.  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 operations.  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.

 
5
 


Forward-Looking Statements
This release contains both historical and forward-looking information.  Words such as “anticipates,” “assumes,” “estimates,” “expects,” “projects,” “predicts,” “intends,” “plans,” “believes,” “potential,” “may,” “should” and similar expressions may identify forward-looking information.  Forward-looking information in this release includes, but is not limited to, anticipated revenue, segment operating profit, segment margin, non-segment expense, interest expense, income tax rate, non-controlling interest expense, capital expenditures, productivity investments and improvement, capital leases and depreciation and amortization for 2013, future devaluation in Venezuela, anticipated results in the Company’s segments and regions, and pending acquisitions, dispositions and related transactions.  Forward-looking information in this document is subject to known and unknown risks, uncertainties and contingencies, which are difficult to predict or quantify, and 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 Latin America,
·
our ability to maintain or improve volumes at favorable pricing levels and increase cost efficiencies in the United States and Europe,
·
investments in information technology and value-added services and their impact on revenue and profit growth,
·
our ability to develop and implement solutions for our customers and gain market acceptance of those solutions,
·
our ability to maintain an effective IT infrastructure and safeguard confidential information,
·
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,
·
the strength of the U.S. dollar relative to foreign currencies and foreign currency exchange rates,
·
the stability of the Venezuelan economy, changes in Venezuelan policy regarding foreign-owned businesses,
·
changes in currency restrictions and in foreign exchange rates,
·
fluctuations in value of the Venezuelan bolivar fuerte,
·
regulatory and labor issues in many of our global operations, including negotiations with organized labor and the possibility of work stoppages,
·
our 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,
·
costs related to dispositions and market exits,
·
our ability to identify acquisitions and other strategic opportunities in emerging markets,
·
the willingness of our customers to absorb fuel surcharges and other future price increases,
·
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,
·
security threats worldwide and losses of customer valuables,
·
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 the Company’s ongoing 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,
·
our ability to realize deferred tax assets,
·
the outcome of pending and future claims and litigation,
·
public perception of the Company’s business and reputation,
·
access to the capital and credit markets,
·
seasonality, pricing and other competitive industry factors, and
·
the promulgation and adoption of new accounting standards and interpretations, new government regulations and interpretations of existing regulations.

This list of risks, uncertainties and contingencies is not intended to be exhaustive.  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, 2012, and in our other public filings with the Securities and Exchange Commission.  The forward-looking information included in this document is representative only as of the date of this document and The Brink’s Company undertakes no obligation to update any information contained in this document.


 
6
 

The Brink’s Company and subsidiaries
Outlook Summary (Unaudited)
(In millions)

       
GAAP
      
Non-GAAP
           
2013
          
2013
       
2012
  
Estimate
      
2012
  
Estimate
Organic revenue growth
                    
 
International
  
11%
  
7% - 9%
      
11%
  
7% - 9%
 
North America
  
(2)%
  
0% - 2%
      
(2)%
  
0% - 2%
   
Total
  
7%
  
5% - 8%
      
7%
  
5% - 8%
                         
Currency impact on revenue
                    
 
International
  
(7)%
  
(3%) – (5%)
      
(7)%
  
(3%) – (5%)
 
North America
  
flat
  
flat
      
flat
  
flat
   
Total
  
(5)%
  
(2%) – (4%)
      
(5)%
  
(2%) – (4%)
                         
Segment margin
                    
 
International(a)
  
7.9%
  
6.0% - 7.0%
      
7.9%
  
7.0% - 8.0%
 
North America(b)
  
3.4%
  
1% - 2%
      
4.4%
  
2% - 3%
   
Total
  
6.8%
  
5.0% - 5.5%
      
7.0%
  
6.0% - 6.5%
                         
Non-segment expense
                    
 
General and administrative
$
44 
  
43 
    
$
44 
  
43 
 
Retirement plans(b)
  
47 
  
41 
      
-
  
-
 
Royalty income
  
(2)
  
(2)
      
(2)
  
(2)
   
Total
$
89 
  
82 
    
$
42 
  
41 
                         
Effective income tax rate(a)
  
17%
  
49% – 52%
      
36%
  
36% – 39%
                         
Interest expense
$
24 
  
24 – 27
    
$
23 
  
24 – 27
                         
Interest and other income (expense)(c)
$
7 
  
2 – 3
    
$
5 
  
2 – 3
                         
Net income attributable to
                    
 
noncontrolling interests(a)
$
21 
  
3 – 5
    
$
19 
  
17 – 20
                         
Fixed assets acquired
                    
 
Capital expenditures
$
185 
  
195 
    
$
185 
  
195 
 
Capital leases(d)
  
18 
  
10 
      
18 
  
10 
   
Total
$
203 
  
205 
    
$
203 
  
205 
                         
Depreciation and amortization
$
166 
  
180 – 190
    
$
166 
  
180 – 190
                         


(a)  
Actual and projected 2013 remeasurement losses on net monetary assets in Venezuela have been excluded from non-GAAP results.
(b)  
Costs related to U.S. retirement plans have been excluded from non-GAAP results including $9 million in 2012 and $12 million in 2013 related to North America, and $47 million in 2012 and $41 million in 2013 related to Non-segment.
(c)  
$2.4 million of gains on sales of securities have been excluded from 2012’s non-GAAP results.
(d)  
Includes capital leases for newly acquired assets only.


Amounts may not add due to rounding.

 
7
 

The Brink’s Company and subsidiaries
Condensed Consolidated Statements of Income (Loss) (Unaudited)
(In millions, except per share amounts)

     
Second Quarter
  
First Half
  
   
2013
    
2012
    
2013
    
2012
  
                           
Revenues
   $ 990.5       935.6     $ 1,962.0       1,871.1  
                                   
Costs and expenses:
                                
Cost of revenues
     810.0       767.1       1,620.1       1,521.6  
Selling, general and administrative expenses
     147.4       135.9       282.9       271.4  
Total costs and expenses
     957.4       903.0       1,903.0       1,793.0  
Other operating income (expense)
     0.1       (1.2 )     (8.6 )     0.9  
                                   
Operating profit
     33.2       31.4       50.4       79.0  
                                   
Interest expense
     (6.1 )     (5.4 )     (12.1 )     (11.7 )
Interest and other income (expense)
     0.4       0.9       0.9       4.8  
Income from continuing operations before tax
     27.5       26.9       39.2       72.1  
Provision (benefit) for income taxes
     11.0       (9.1 )     16.3       7.6  
                                   
Income from continuing operations
     16.5       36.0       22.9       64.5  
                                   
Loss from discontinued operations, net of tax
     (4.5 )     (3.9 )     (23.8 )     (8.6 )
                                   
Net income (loss)
     12.0       32.1       (0.9 )     55.9  
                                   
Less net income attributable to noncontrolling interests
     (3.3 )     (1.6 )     (7.0 )     (8.4 )
                                   
Net income (loss) attributable to Brink’s
   $ 8.7       30.5     $ (7.9 )     47.5  
                                   
Amounts attributable to Brink’s
                                
Continuing operations
   $ 13.2       34.4     $ 15.9       56.1  
Discontinued operations
     (4.5 )     (3.9 )     (23.8 )     (8.6 )
                                   
Net income (loss) attributable to Brink’s
   $ 8.7       30.5     $ (7.9 )     47.5  
                                   
Earnings (loss) per share attributable to Brink’s common shareholders(a)
                                
Basic:
                                
Continuing operations
   $ 0.27       0.71     $ 0.33       1.16  
Discontinued operations
     (0.10 )      (0.08 )     (0.49 )     (0.18 )
Net income (loss)
   $ 0.18       0.63     $ (0.16 )     0.98  
                                   
Diluted:
                                
Continuing operations
   $ 0.27       0.71     $ 0.33       1.16  
Discontinued operations
     (0.09 )     (0.08 )     (0.49 )     (0.18 )
Net income (loss)
   $ 0.18       0.63     $ (0.16 )     0.98  
                                   
Weighted-average shares
                                
Basic
     48.6       48.5       48.6       48.3  
Diluted
     48.9       48.6       48.9       48.5  
                                   
(a) Earnings per share may not add due to rounding.           
 
                                
                                   

 
8
 

The Brink’s Company and subsidiaries
Supplemental Financial Information  (Unaudited)
(In millions)

   
Second Quarter
    
First Half
  
   
2013
    
2012
    
2013
    
2012
  
DISCONTINUED OPERATIONS
                        
                         
Discontinued European operations(a):
                        
     Loss from operations(b)
   $ (4.3 )     (4.9 )   $ (23.4 )     (10.1 )
     Loss on sale
     (0.2 )     -       (0.7 )     -  
Adjustments to contingencies of former operations
     1.2       -       1.2       0.1  
Loss from discontinued operations before income taxes
     (3.3 )     (4.9 )     (22.9 )     (10.0 )
Provision (benefit) for income taxes
     1.2       (1.0 )     0.9       (1.4 )
Loss from discontinued operations, net of tax
   $ (4.5 )     (3.9 )   $ (23.8 )     (8.6 )

(a)  
Discontinued operations include cash-in-transit operations in Germany, Poland, and Turkey, and guarding operations in France, Morocco, and Germany.  Revenues from these European operations were $21.7 million in the three months and $45.8 million in the six months ended June 30, 2013, and $31.6 million in the three months and $62.9 million in the six months ended June 30, 2012.  No interest expense was included in discontinued operations in the first six months ended June 30, 2013 and 2012.
(b)  
As of June 30, 2013, loss from operations includes $16.2 million of severance expenses which will be required to be paid to terminate certain employees of the German cash-in-transit operations after the sale of the business is completed.  We intend to contribute a portion of the cost to fund the severance payments to the business prior to the execution of the sale transaction.

 

 

   
First Half
  
SELECTED CASH FLOW INFORMATION
  
2013
    
2012
  
             
Property and equipment acquired during the period
            
Capital expenditures
            
International
   $ 60.1       43.7  
North America
     19.6       27.2  
Capital expenditures
     79.7       70.9  
                 
Capital leases(a)
                
International
     -       2.7  
North America
     0.5       6.0  
Capital leases
     0.5       8.7  
                 
Total
                
International
     60.1       46.4  
North America
     20.1       33.2  
Total
   $ 80.2       79.6  
                 
Depreciation and amortization
                
International
   $ 55.9       50.3  
North America
     32.7       30.9  
Depreciation and amortization
   $ 88.6       81.2  

(a)
Represents the amount of property and equipment acquired using capital leases.  Because these assets are acquired without using cash, the acquisitions are not reflected 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.  Sales leaseback transactions are excluded from "Capital leases" in this table.

 

 

 
9
 

The Brink’s Company and subsidiaries
Non-GAAP Results Reconciled to GAAP (Unaudited)
(In millions, except for per share amounts)

   
GAAP Basis
  
Additional European Operations to be Exited
(a)
  
Gains and Losses on Acquisitions and Dispositions
(b)
  
Monetary Asset Remeasurement Losses in Venezuela
(c)
  
Employee Benefit Settlement and Severance Losses
(d)
  
U.S. Retirement Plans
(e)
  
Adjust Income Tax Rate
(f)
  
Non-GAAP Basis
                                     
     
Second Quarter 2013
Revenue:
                                
 
Latin America
$
 413.6 
  
 -
  
 -
  
 -
  
 -
  
 -
  
 -
  
 413.6 
 
EMEA
  
 295.7 
  
 (2.3)
  
 -
  
 -
  
 -
  
 -
  
 -
  
 293.4 
 
Asia Pacific
  
 42.5 
  
 -
  
 -
  
 -
  
 -
  
 -
  
 -
  
 42.5 
   
International
  
 751.8 
  
 (2.3)
  
 -
  
 -
  
 -
  
 -
  
 -
  
 749.5 
 
North America
  
 238.7 
  
 -
  
 -
  
 -
  
 -
  
 -
  
 -
  
 238.7 
   
Revenue
$
 990.5 
  
 (2.3)
  
 -
  
 -
  
 -
  
 -
  
 -
  
 988.2 
                                     
Operating profit:
                                
 
International
$
 48.0 
  
 0.4 
  
 -
  
 -
  
 0.5 
  
 -
  
 -
  
 48.9 
 
North America
  
 6.8 
  
 -
  
 -
  
 -
  
 -
  
 2.9 
  
 -
  
 9.7 
   
Segment operating profit
  
 54.8 
  
 0.4 
  
 -
  
 -
  
 0.5 
  
 2.9 
  
 -
  
 58.6 
 
Non-segment
  
 (21.6)
  
 -
  
 -
  
 -
  
 -
  
 10.2 
  
 -
  
 (11.4)
   
Operating profit
$
 33.2 
  
 0.4 
  
 -
  
 -
  
 0.5 
  
 13.1 
  
 -
  
 47.2 
                                     
Amounts attributable to Brink’s:
                                
Income from continuing operations
$
 13.2 
  
 0.4 
  
 -
  
 -
  
 0.4 
  
 8.2 
  
 (0.7)
  
 21.5 
Diluted EPS – continuing operations
  
 0.27 
  
 0.01
  
 -
  
 -
  
 0.01 
  
 0.17 
  
 (0.01)
  
 0.44 
                                     
     
First Half 2013
Revenue:
                                
 
Latin America
$
 826.5
  
 -
  
 -
  
 -
  
 -
  
 -
  
 -
  
 826.5
 
EMEA
  
 575.8
  
 (4.6)
  
 -
  
 -
  
 -
  
 -
  
 -
  
 571.2
 
Asia Pacific
  
 85.4
  
 -
  
 -
  
 -
  
 -
  
 -
  
 -
  
 85.4
   
International
  
 1,487.7
  
 (4.6)
  
 -
  
 -
  
 -
  
 -
  
 -
  
 1,483.1
 
North America
  
 474.3
  
 -
  
 -
  
 -
  
 -
  
 -
  
 -
  
 474.3
   
Revenue
$
 1,962.0
  
 (4.6)
  
 -
  
 -
  
 -
  
 -
  
 -
  
 1,957.4
                                     
Operating profit:
                                
 
International
$
 84.6
  
 0.9 
  
 -
  
 13.4 
  
 0.8 
  
 -
  
 -
  
 99.7
 
North America
  
 4.4
  
 -
  
 -
  
 -
  
 -
  
 5.8 
  
 -
  
 10.2
   
Segment operating profit
  
 89.0
  
 0.9 
  
 -
  
 13.4 
  
 0.8
  
 5.8 
  
 -
  
 109.9
 
Non-segment
  
 (38.6)
  
 -
  
 (1.1)
  
 -
  
 -
  
 20.7 
  
 -
  
 (19.0)
   
Operating profit
$
 50.4
  
 0.9 
  
 (1.1)
  
 13.4 
  
 0.8 
  
 26.5 
  
 -
  
 90.9
                                     
Amounts attributable to Brink’s:
                                
Income from continuing operations
$
 15.9
  
 1.0 
  
 (1.1)
  
 8.4 
  
 0.6 
  
 16.6 
  
 (2.6)
  
 38.8
Diluted EPS – continuing operations
  
 0.33
  
 0.02 
  
 (0.02)
  
 0.17 
  
 0.01 
  
 0.34 
  
 (0.05)
  
 0.79

(a)  
To eliminate results of additional European operations we intend to exit in 2013.  Operations do not currently meet requirements to be classified as discontinued operations.
(b)  
To eliminate a $1.1 million adjustment to the amount of gain recognized on a 2010 business acquisition in Mexico as a result of a favorable adjustment to the purchase price received in the first quarter of 2013.
(c)  
To eliminate currency exchange losses related to a 16% devaluation of the official exchange rate in Venezuela from 5.3 to 6.3 bolivar fuertes to the U.S. dollar in February 2013.
(d)  
To eliminate employee benefit settlement losses in Mexico.
(e)  
To eliminate expenses related to U.S. retirement plans.
(f)  
To adjust effective income tax rate in the interim period to be equal to the midpoint of the estimated range of the full-year non-GAAP effective income tax rate.  The midpoint of the estimated range of the full-year non-GAAP effective tax rate for 2013 is 37.5%.

Amounts may not add due to rounding.

 
10
 



The Brink’s Company and subsidiaries
Non-GAAP Results Reconciled to GAAP (Unaudited)
(In millions, except for per share amounts)

   
GAAP Basis
    
Additional European Operations to be Exited
(a)
      
Gains and Losses on Acquisitions and Dispositions
(b)
    
Employee Benefit Settlement and Severance Losses
(c)
    
U.S. Retirement Plans
(d)
    
Tax Benefit on Change in Health Care Funding Strategy
(e)
    
Adjust Income Tax Rate
(f)
    
Non-GAAP Basis
  
                                                   
 
Second Quarter 2012
  
Revenues:
                                                  
Latin America
   $ 375.9       -         -       -       -       -       -       375.9  
EMEA
     283.6       (2.2 )       -       -       -       -       -       281.4  
Asia Pacific
     38.5       -         -       -       -       -       -       38.5  
International
     698.0       (2.2 )       -       -       -       -       -       695.8  
North America
     237.6       -         -       -       -       -       -       237.6  
Revenue
   $ 935.6       (2.2 )       -       -       -       -       -       933.4  
                                                                   
Operating profit:
                                                                  
International
   $ 41.3       0.7         -       0.3       -       -       -       42.3  
North America
     11.4       -         -       -       2.2       -       -       13.6  
Segment operating profit
     52.7       0.7         -       0.3       2.2       -       -       55.9  
Non-segment
     (21.3 )     -         (0.9 )     -       10.5       -       -       (11.7 )
Operating profit
   $ 31.4       0.7         (0.9 )     0.3       12.7       -       -       44.2  
                                                                   
Amounts attributable to Brink’s:
                                                                  
Income from continuing operations
   $ 34.4       0.7         (0.9 )     0.2       7.6       (20.9 )     2.4       23.5  
Diluted EPS – continuing operations
     0.71       0.01         (0.02 )     -       0.16       (0.43 )     0.05       0.48  
                                                                   
 
First Half 2012
  
                                                                   
Revenues:
                                                                  
Latin America
   $ 762.2       -         -       -       -       -       -       762.2  
EMEA
     558.8       (4.6 )       -       -       -       -       -       554.2  
Asia Pacific
     76.1       -         -       -       -       -       -       76.1  
International
     1,397.1       (4.6 )
 
     -       -       -       -       -       1,392.5  
North America
     474.0       -         -       -       -       -       -       474.0  
Revenue
   $ 1,871.1       (4.6 )       -       -       -       -       -       1,866.5  
                                                                   
Operating profit:
                                                                  
International
   $ 107.4       1.3         -       1.1       -       -       -       109.8  
North America
     17.2       -         -       -       4.4       -       -       21.6  
Segment operating profit
     124.6       1.3         -       1.1       4.4       -       -       131.4  
Non-segment
     (45.6 )     -         (0.9 )     -       25.2       -       -       (21.3 )
Operating profit
   $ 79.0       1.3         (0.9 )     1.1       29.6       -       -       110.1  
                                                                   
Amounts attributable to Brink’s:
                                                                  
Income from continuing operations
   $ 56.1       1.4         (2.1 )     0.8       17.8       (20.9 )     3.4       56.5  
Diluted EPS – continuing operations
     1.16       0.02         (0.04 )     0.02       0.37       (0.43 )     0.07       1.16  

See page 12 for footnote explanations.
 


 
11
 


The Brink’s Company and subsidiaries
Non-GAAP Results Reconciled to GAAP (Unaudited)
(In millions, except for per share amounts)

   
GAAP Basis
    
Additional European Operations to be Exited
(a)
    
Gains and Losses on Acquisitions and Dispositions
(b)
    
Employee Benefit Settlement and Severance Losses
(c)
    
U.S. Retirement Plans
(d)
    
Tax Benefit on Change in Health Care Funding Strategy
(e)
    
Adjust Income Tax Rate
(f)
    
Non-GAAP Basis
  
                                                 
   
Full Year 2012
  
Revenue:
                                                
Latin America
   $ 1,579.4       -       -       -       -       -       -       1,579.4  
EMEA
     1,135.1       (9.2 )     -       -       -       -       -       1,125.9  
Asia Pacific
     158.9       -       -       -       -       -       -       158.9  
International
     2,873.4       (9.2 )     -       -       -       -       -       2,864.2  
North America
     945.4       -       -       -       -       -       -       945.4  
Revenues
   $ 3,818.8       (9.2 )     -       -       -       -       -       3,809.6  
                                                                 
Operating profit:
                                                                
International
   $ 229.8       3.6       (8.5 )     3.9       -       -       -       228.8  
North America
     32.5       -       -       -       8.8       -       -       41.3  
Segment operating profit
     262.3       3.6       (8.5 )     3.9       8.8       -       -       270.1  
Non-segment
     (88.9 )     -       (0.8 )     -       47.4       -       -       (42.3 )
Operating profit
   $ 173.4       3.6       (9.3 )     3.9       56.2       -       -       227.8  
                                                                 
Amounts attributable to Brink’s:
                                                                
Income from continuing operations
   $ 109.1       3.9       (14.0 )     2.8       33.8       (21.1 )     -       114.5  
Diluted EPS – continuing operations
     2.24       0.08       (0.29 )     0.06       0.70       (0.43 )     -       2.36  

(a)  
To eliminate results of additional European operations we intend to exit in 2013.  Operations do not currently meet requirements to be classified as discontinued operations.
(b)  
To eliminate:
·  
Gains related to the sale of investments in mutual fund securities ($1.9 million in the first quarter and $0.5 million in the third quarter).  Proceeds from the sales were used to fund the settlement of pension obligations related to our former chief executive officer, and former chief administrative officer.
·  
Gains and losses related to business acquisitions and dispositions.  A $0.9 million gain was recognized in the second quarter and a $0.1 million loss was recognized in the third quarter.  In the fourth quarter of 2012, tax expense included a benefit of $7.5 million related to a reduction in an income tax accrual established as part of the 2010 acquisition of subsidiaries in Mexico, and pretax income included a $2.1 million favorable adjustment to the local profit sharing accrual as a result of the change in tax expectation.
·  
Third-quarter gain on the sale of real estate in Venezuela ($7.2 million).
·  
Selling costs related to certain operations expected to be sold in the near term and costs related to an acquisition completed in first quarter 2013.  A $0.8 million loss was recognized in the fourth quarter.
(c)  
To eliminate employee benefit settlement and acquisition-related severance losses (Mexico and Argentina).  Employee termination benefits in Mexico are accounted for under FASB ASC Topic 715, Compensation – Retirement Benefits.
(d)  
To eliminate expenses related to U.S. retirement plans.
(e)  
To eliminate tax benefit related to change in retiree health care funding strategy.
(f)  
To adjust effective income tax rate in the interim period to be equal to the full-year non-GAAP effective income tax rate.  The full-year non-GAAP effective tax rate for 2012 was 36.2%.

Amounts may not add due to rounding.
 

 
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The Brink’s Company and subsidiaries
Other Reconciliations to GAAP (Unaudited)
(In millions)

NON-GAAP CASH FLOWS FROM OPERATING ACTIVITIES – RECONCILED TO U.S. GAAP
  
   
First Half
  
   
2013
    
2012
  
Cash flows from operating activities – GAAP
   $ 41.1     $ 30.3  
Decrease (increase) in certain customer obligations(a)
     (14.8 )     20.4  
Cash outflows (inflows) related to discontinued operations(b)
     10.2       9.9  
                 
Cash flows from operating activities – Non-GAAP
   $ 36.5     $ 60.6  

(a)  
To eliminate the change in the balance of customer obligations related to cash received and processed in certain of our Cash Management Services 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 is a supplemental financial measure that is 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 Management Service 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 U.S. GAAP
            
   
June 30,
    
December 31,
  
   
2013
    
2012
  
Debt:
            
Short-term debt
   $ 94.1     $ 26.7  
Long-term debt
     432.8       362.6  
Total Debt
     526.9       389.3  
                 
Less:
                
Cash and cash equivalents
     239.8       201.7  
Amounts held by Cash Management Services operations(a)
     (56.1 )     (44.0 )
Cash and cash equivalents available for general corporate purposes
     183.7       157.7  
                 
Net Debt
   $ 343.2     $ 231.6  

(a)
Title to cash received and processed in certain of our Cash Management Services 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.  Net Debt excluding cash and debt in Venezuelan operations was $411 million at June 30, 2013, and $280 million at December 31, 2012.




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