Management’s Discussion and AnalysisLiquidity and Capital ResourcesBusiness Segment Cash FlowsThe Company’s cash flows before financing activities for each of the operating segments are presented below.
OverviewCash flows before financing activities from Business and Security Services were just under $100 million per year in each of the last three years. Sales of natural resource interests also provided significant cash during 2003 and 2002. The Company made voluntary contributions to its VEBA in 2003 and to its U.S. pension plan in the last two years. Significant cash payments were also made in the last three years for retained liabilities associated with the former coal operations. 2002 also had significant cash outflows associated with the final year of operation of the coal business amid poor market conditions. Brink’sCash flows before financing activities at Brink’s increased in 2003 due to higher operating profit, offset by a year-over-year increase in the amount of cash used for working capital needs and costs to relocate its headquarters. In addition, $10 million in higher proceeds from the sale of operating assets were partially offset by $7 million in cash outflows primarily related to a 2003 acquisition in Belgium. Cash flows before financing activities at Brink’s in 2002 were above 2001 primarily due to an increase in cash generated by working capital during 2002 and an improvement in operating performance. BHSThe slight year-over-year increase in cash flows before financing activities at BHS in both 2003 and 2002 is primarily due to higher operating results partially offset by an increase in capital expenditures reflecting growth in installations of home security systems. BAX GlobalCash flows before financing activities at BAX Global in 2003 decreased $9.4 million from 2002 reflecting lower operating results in 2003. Partially offsetting 2003’s lower operating results was a reduction in the amount of cash used to cover working capital needs and lower capital and aircraft heavy maintenance expenditures. The decrease in cash flows before financing activities at BAX Global in 2002 as compared to 2001 is primarily due to $15.5 million of higher aircraft heavy maintenance expenditures and a decrease in cash provided from changes in working capital levels, partially offset by improved operating results and lower capital expenditures. Cash flows before financing for BAX Global in 2001 included $3.9 million of proceeds from the sale of marketable securities. Corporate and Former OperationsAs mentioned above, the Company sold substantially all of its natural resource interests in 2003 and 2002, and contributed cash to its VEBA and U.S. pension plan. The increase in other cash outflows for 2003 compared to 2002 reflects cash spent in 2003 associated with retained liabilities of the former coal operations (these types of payments were included in discontinued operations in 2002 and 2001). Discontinued OperationsHigher natural gas prices improved the natural gas business’ cash flows in 2003 compared to 2002. Discontinued operations’ cash flow before financing activities for 2002 and 2001 reflected cash spent associated with retained liabilities and operating losses resulting from weak coal market conditions; spending associated with retained liabilities was included in continuing operations in 2003. Discontinued operations’ cash flow before financing was lower in 2002 than 2001 primarily due to a larger operating loss resulting from weak coal market conditions, necessary spending on the development of a deep mine, lower FBLET refunds and payments of litigation settlements. Discontinued operations’ cash flows before financing in 2001 included $23.4 million of FBLET refunds. |
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