UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(cid:95)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2011
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
OR
Commission file number 001-09148
THE BRINK’S COMPANY
(Exact name of registrant as specified in its charter)
Virginia
(State or other jurisdiction of
incorporation or organization)
P.O. Box 18100,
1801 Bayberry Court
Richmond, Virginia
(Address of principal executive offices)
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
The Brink’s Company Common Stock, Par Value $1
Securities registered pursuant to Section 12(g) of the Act: None
54-1317776
(I.R.S. Employer
Identification No.)
23226-8100
(Zip Code)
(804) 289-9600
Name of each exchange on
which registered
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes (cid:95)
No (cid:133)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes (cid:133)
No (cid:95)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes (cid:95)
No (cid:133)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes (cid:95) No (cid:133)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (cid:133)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of
“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer (cid:95)
Accelerated filer (cid:133)
Non-accelerated filer (cid:133)
Smaller reporting company (cid:133)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes (cid:133)
No (cid:95)
As of February 21, 2012, there were issued and outstanding 46,873,022 shares of common stock. The aggregate market value of shares of common stock held by non-
affiliates as of June 30, 2011, was $1,383,834,551.
Documents incorporated by reference: Part III incorporates information by reference from portions of the Registrant’s definitive 2012 Proxy Statement to be filed
pursuant to Regulation 14A.
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THE BRINK’S COMPANY
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2011
TABLE OF CONTENTS
PART I
Page
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Business ..................................................................................................................................................................... 1
Risk Factors ................................................................................................................................................................ 9
Unresolved Staff Comments ................................................................................................................................... 14
Properties ................................................................................................................................................................. 14
Legal Proceedings .................................................................................................................................................... 15
Mine Safety Disclosures ........................................................................................................................................... 15
Executive Officers of the Registrant......................................................................................................................... 16
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities ............................................................................................................................. 17
Selected Financial Data ............................................................................................................................................ 19
Management’s Discussion and Analysis of Financial Condition and Results of Operations .................................... 20
Quantitative and Qualitative Disclosures About Market Risk .................................................................................. 68
Financial Statements and Supplementary Data ........................................................................................................ 70
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ................................. 117
Controls and Procedures ......................................................................................................................................... 117
Other Information ................................................................................................................................................... 117
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Directors, Executive Officers and Corporate Governance ...................................................................................... 118
Executive Compensation ........................................................................................................................................ 118
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ................ 118
Certain Relationships and Related Transactions, and Director Independence ........................................................ 118
Principal Accountant Fees and Services ................................................................................................................. 118
PART IV
Item 15.
Exhibits and Financial Statement Schedules .......................................................................................................... 119
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PART I
ITEM 1. BUSINESS
Based in Richmond, Virginia, The Brink’s Company is a premier provider of secure logistics and security solutions, including the
transportation of valuables, cash logistics and other security-related services to banks and financial institutions, retailers, government agencies,
mints, jewelers and other commercial operations around the world. Other services provided are armored transportation, automated teller
machine (“ATM”) replenishment and servicing; network infrastructure services; secure global transportation of valuables (“Global Services”);
currency deposit processing and cash management services. Cash management services include cash logistics services (“Cash Logistics”);
deploying and servicing safes and safe control devices (e.g. our patented CompuSafe® service); coin sorting and wrapping, integrated check
and cash processing services (“Virtual Vault Services”); providing bill payment acceptance and processing services to utility companies and
other billers (“Payment Services”); and guarding services (including airport security or “Aviation Security”). The Brink’s Company, along
with its subsidiaries, is referred to as “we,” “our,” “Brink’s,” or “the Company” throughout this Form 10-K.
Brink’s brand and reputation span across the globe. Our international network serves customers in more than 100 countries and employs
approximately 71,000 people. Our operations include approximately 1,100 facilities and 12,900 vehicles. Our globally recognized brand,
global infrastructure, expertise, longevity and heritage are important competitive advantages. Over the past several years, we have changed
from a conglomerate (with operations in the U.S. monitored home security, heavy-weight freight transportation, coal and other natural resource
industries) into a company focused solely on the security industry.
Our operating segments consist of four geographies: Latin America; Europe, Middle East, and Africa (“EMEA”); Asia Pacific; and North
America, which are aggregated into two reportable segments: International and North America. Financial information related to our two
reportable segments (International and North America) and non-segment income and expenses is included in the consolidated financial
statements on pages 70–116.
A significant portion of our business is conducted internationally, with 81% of our $3.9 billion in revenues earned outside the United States.
Financial results are reported in U.S. dollars and are affected by fluctuations in the relative value of foreign currencies. Our business is also
subject to other risks customarily associated with operating in foreign countries including changing labor and economic conditions, political
instability, restrictions on repatriation of earnings and capital, as well as nationalization, expropriation and other forms of restrictive
government actions. The future effects of these risks cannot be predicted. Additional information about risks associated with our foreign
operations is provided on pages 9, 45 and 69.
We have significant liabilities associated with our retirement plans, a portion of which has been funded. See pages 53–56 and 59–63 for more
information on these liabilities. Additional risk factors are described on pages 9–12.
Available Information and Corporate Governance Documents
The following items are available free of charge on our website (www.brinks.com) as soon as reasonably possible after filing or furnishing
them with the Securities and Exchange Commission (the “SEC”):
Annual reports on Form 10-K
Quarterly reports on Form 10-Q
Current reports on Form 8-K, and amendments to those reports
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In addition, the following documents are also available free of charge on our website:
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(cid:120)
Corporate governance policies
Business Code of Ethics
The charters of the following committees of our Board of Directors (the “Board”): Audit and Ethics, Compensation and
Benefits, and Corporate Governance and Nominating
Printed versions of these items will be mailed free of charge to shareholders upon request. Such requests can be made by contacting the
Corporate Secretary at 1801 Bayberry Court, P. O. Box 18100, Richmond, Virginia 23226-8100.
1
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
General
Our 2011 segment operating profit was $231 million on revenues of $3.9 billion, resulting in a segment operating profit margin of 5.9%.
Revenues
(In billions)
$3.1
$ 0 .9
$3.1
$ 0 .9
$ 2 .2
$ 2 .2
$3.9
$ 1.0
$ 2 .9
GAAP
250
200
150
100
50
0
Segment Operating Profit
(In millions)
$213
$ 5 7
$209
$ 4 4
$ 15 7
$ 16 5
$231
$ 3 1
$ 2 0 0
2009
2010
2011
2009
2010
2011
International North America
International North America
Revenues
(In billions)
$2.9
$ 0 .9
$ 2 .0
$3.1
$ 0 .9
$ 2 .2
$3.9
$ 1.0
$ 2 .9
2009
2010
2011
International North America
*Reconciliation to GAAP results is found on page 42
Amounts may not add due to rounding.
Non-GAAP*
300
250
200
150
100
50
0
Segment Operating Profit
(In millions)
$225
$ 4 3
$ 18 1
$247
$ 3 5
$ 2 12
$173
$ 5 5
$ 118
2009
2010
2011
International North America
2
Brink’s operations are located around the world with the majority of our revenues (75%) and segment operating profits (86%) earned outside of
North America.
Re ve nue by Region
(In millions)
$154
$1,461
$974
$1,297
North America
Europe , Middle East, and Africa
Latin America
Asia Pacific
Se gment O pe rating Profit
(In millions)
$31
$200
North America
Inte rnational
Brink’s serves customers in over 100 countries. We have ownership interests in operations in approximately 50 countries and have agency
relationships with other companies in other countries to complete our global network. Brink’s ownership interests in subsidiaries and affiliated
companies ranged from 36% to 100% at December 31, 2011. In some instances, local laws limit the extent of Brink’s ownership interest.
International operations have three regions: Latin America; Europe, Middle East and Africa (“EMEA”); and Asia Pacific. On a combined
basis, international operations generated 2011 revenues of $2.9 billion (75% of total) and segment operating profit of $200 million (86% of
total).
Brink’s Latin America generated $1.5 billion in revenues in 2011 (38%) and operates 275 branches in 12 countries. Its largest
operations are in Mexico, Brazil, Venezuela and Colombia. Mexico had $415 million or 28% of Latin American revenues (11% of
total) in 2011. Brazil accounted for $387 million or 26% of Latin American revenues (10% of total) in 2011. Venezuela accounted
for $269 million or 18% of Latin American revenues (7% of total) in 2011.
Brink’s EMEA generated $1.3 billion in revenues in 2011 (33% of Brink’s total 2011 revenues) and operates 262 branches in 26
countries. Its largest operations are in France, Germany and the Netherlands. In 2011, France accounted for $567 million or 44% of
EMEA revenues (15% of total).
Brink’s Asia-Pacific generated $154 million in revenues in 2011 (4%) and operates 110 branches in ten countries.
North American operations include 147 branches in the U.S. and 59 branches in Canada. North American operations generated 2011 revenues
of $974 million (25% of total) and segment operating profit of $31 million (14% of total).
3
The largest nine Brink’s operations (U.S., France, Mexico, Brazil, Venezuela, Canada, Colombia, Germany and the Netherlands) accounted for
$3.0 billion or 77% of total 2011 revenues.
(In millions)
2011
% total % change
2010
% total % change
2009
% total % change
Revenues by region:
Latin America:
Mexico
Brazil
Venezuela
Other
Total
EMEA
France
Other
Total
Asia Pacific
Total International
North America
$
415.2
386.8
269.2
389.5
1,460.7
567.2
729.7
1,296.9
153.7
2,911.3
974.2
11
10
7
10
38
15
19
33
4
75
25
fav
28
45
16
66
6
9
8
22
32
6
$
51.7
303.3
185.9
336.5
877.4
533.0
666.8
1,199.8
126.5
2,203.7
917.8
2
10
6
11
28
17
21
38
4
71
29
Total Revenues
Amounts may not add due to rounding.
$
3,885.5
100
24
$
3,121.5
100
-
18
(51)
24
(3)
(13)
4
(5)
61
(2)
3
-
$
-
257.6
376.1
271.0
904.7
615.2
642.3
1,257.5
78.7
2,240.9
894.1
-
8
12
9
29
20
20
40
2
71
29
$
3,135.0
100
-
33
7
6
13
(12)
(3)
(7)
10
-
(4)
(1)
Geographic financial information related to revenues and long-lived assets is included in the consolidated financial statements on page 86.
Services
Our primary services include:
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Cash-in-transit (“CIT”) – armored vehicle transportation
Automated teller machine (“ATM”) – replenishment and servicing, network infrastructure services
Global Services – transportation of valuables globally
Cash Logistics – supply chain management of cash
Payment Services – consumers pay utility and other bills at payment locations
Guarding Services – including airport security
Brink’s typically provides customized services under separate contracts designed to meet the distinct needs of customers. Contracts usually
cover an initial term of at least one year and range up to five years, depending on the service. The contracts generally remain in effect after the
initial term until canceled by either party.
Core Services (54% of total revenue in 2011)
CIT and ATM Services are core services we provide to customers throughout the world. Core services generated approximately
$2.1 billion of revenues in 2011.
CIT – Serving customers since 1859, our success in CIT is driven by a combination of rigorous security practices, high-
quality customer service, risk management and logistics expertise. CIT services generally include the secure transportation
of:
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(cid:120)
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cash between businesses and financial institutions such as banks and credit unions,
cash, securities and other valuables between commercial banks, central banks and investment banking and
brokerage firms, and
new currency, coins, bullion and precious metals for central banks and other customers.
ATM Services – We manage nearly 92,000 ATM units worldwide for banks and other cash dispensing operators. We
provide cash replenishment, monitoring and forecasting capabilities, deposit pickup and processing services. Advanced
online tools deliver consolidated electronic reports for simplified reconciliation. We assist financial institutions in
managing the processes and infrastructure that are critical to the deployment of ATM networks and electronic payment
networks.
4
High-value Services (36% of total revenue in 2011)
Our core services, combined with our brand and global infrastructure, provide a substantial platform from which we offer additional
high-value services. High-value services generated approximately $1.4 billion of revenues in 2011.
Global Services – Serving customers in more than 100 countries, Brink’s is a leading global provider of secure logistics
for valuables including diamonds, jewelry, precious metals, securities, currency, high-tech devices, electronics and
pharmaceuticals. The comprehensive suite of services provides packing, pickup, secure storage, inventory management,
customs clearance, consolidation and secure transport and delivery through a combination of armored vehicles and secure
air and sea transportation to leverage our extensive global network. Our specialized diamond and jewelry operations have
offices in the major diamond and jewelry centers of the world.
Cash Logistics – Brink’s offers a fully integrated approach to managing the supply chain of cash, from point-of-sale
through transport, vaulting, bank deposit and related credit. Cash Logistics services include:
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money processing and cash management services,
deploying and servicing “intelligent” safes and safe control devices, including our patented CompuSafe(cid:163) service,
integrated check and cash processing services (“Virtual Vault”), and
check imaging services
Money processing services generally include counting, sorting and wrapping currency. Other currency management
services include cashier balancing, counterfeit detection, account consolidation and electronic reporting. Retail and bank
customers use Brink’s to count and reconcile coins and currency, prepare bank deposit information and replenish coins and
currency in specific denominations.
Brink’s offers a variety of advanced technology applications, including online cash tracking, cash inventory management,
check imaging for real-time deposit processing, and a variety of other web-based information tools that enable banks and
other customers to reduce costs while improving service to their customers.
Brink’s CompuSafe(cid:163) service offers customers an integrated, closed-loop system for preventing theft and managing cash.
We market CompuSafe services to a variety of cash-intensive customers such as convenience stores, gas stations,
restaurants, retail chains and entertainment venues. Once the specialized safe is installed, the customer’s employees
deposit currency into the safe’s cassettes, which can only be removed by Brink’s personnel. Upon removal, the cassettes
are securely transported to a vault for processing where contents are verified and transferred for deposit. Our CompuSafe
system features currency-recognition and counterfeit-detection technology, multi-language touch screens and an electronic
interface between the point-of-sale, back-office systems and external banks. Our electronic reporting interface with
external banks enables our CompuSafe service customers to receive same-day credit on their cash balances, even if the cash
remains on the customer’s premises.
Virtual Vault services combine CIT, Cash Logistics, vaulting and electronic reporting technologies to help banks expand
into new markets while minimizing investment in vaults and branch facilities. In addition to secure storage, we process
deposits, provide check imaging and reconciliation services, currency inventory management, ATM replenishment orders,
and electronically transmit debits and credits.
We believe the quality and scope of our cash processing and information systems differentiate our Cash Logistics services
from competitive offerings.
Payment Services – We provide bill payment acceptance and processing services to utility companies and other billers.
Consumers can pay their bills at our payment locations or locations that we operate on behalf of billers and bank customers.
Commercial Security Systems – In certain markets in Asia-Pacific and Europe, we provide commercial security system
services. The services include the design and installation of the security systems, including alarms, motion detectors,
closed-circuit televisions, digital video recorders, access control systems including card and biometric readers, electronic
locks, and optical turnstiles. Monitoring services may also be provided after systems have been installed.
5
Other Security Services (10% of total revenue in 2011)
Security and Guarding – We protect airports, offices, warehouses, stores, and public venues with electronic surveillance,
access control, fire prevention and highly trained patrolling personnel.
Our guarding services are generally offered in European markets, including France, Germany, Luxembourg and Greece. A
significant portion of this business involves long-term contracts related primarily to guarding services at airports and
embassies. Generally, other guarding contracts are for a one-year period, the majority of which are extended. Our security
officers are typically stationed at customer sites, and responsibilities include detecting and deterring specific security
threats.
Growth Strategy
Our growth strategy is summarized below:
(cid:120) Maximize profits in developed markets (primarily North America and Europe)
(cid:120)
(cid:120)
Accelerate productivity and cost control efforts.
Invest in higher-margin solutions; shift revenue mix to High-value Services (primarily Cash Logistics and Global
Services).
(cid:120)
(cid:120)
Invest in emerging markets that meet internal metrics for projected growth, profitability and return on investment.
Invest in adjacent security-related markets where we can create value for customers with our brand, security expertise, global
infrastructure and other competitive advantages. Current examples include commercial security and payment processing.
Industry and Competition
Brink’s competes with large multinational, regional and smaller companies throughout the world. Our largest multinational competitors are
G4S plc (headquartered in the U.K.); Loomis AB, formerly a division of Securitas AB (Sweden); Prosegur, Compania de Seguridad, S.A.
(Spain); and Garda World Security Corporation (Canada).
We believe the primary factors in attracting and retaining customers are security expertise, service quality, and price. Our competitive
advantages include:
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brand name recognition
reputation for a high level of service and security
risk management and logistics expertise
global infrastructure and customer base
proprietary cash processing and information systems
proven operational excellence
high-quality insurance coverage and general financial strength
Our cost structure is generally competitive, although certain competitors may have lower costs due to a variety of factors, including lower
wages, less costly employee benefits, or less stringent security and service standards.
Although we face competitive pricing pressure in many markets, we resist competing on price alone. We believe our high levels of service and
security, as well as value added solutions differentiate us from competitors.
The availability of high-quality and reliable insurance coverage is an important factor in our ability to attract and retain customers and manage
the risks inherent in our business. We purchase insurance coverage for losses in excess of what we consider to be prudent levels of self-
insurance. Our insurance policies cover losses from most causes, with the exception of war, nuclear risk and certain other exclusions typical in
such policies.
Insurance for security is provided by different groups of underwriters at negotiated rates and terms. Premiums fluctuate depending on market
conditions. The security loss experience of Brink’s and, to a limited extent, other armored carriers affects our premium rates.
Revenues are generated from charges per service performed or based on the value of goods transported. As a result, revenues are affected by
the level of economic activity in various markets as well as the volume of business for specific customers. CIT and ATM contracts usually
cover an initial term of at least one year and in many cases one to three years, and generally remain in effect thereafter until canceled by either
party. Contracts for Cash Logistics are typically longer. Costs are incurred when preparing to serve a new customer or to transition away from
6
an existing customer. Operating profit is generally stronger in the second half of the year, particularly in the fourth quarter, as economic
activity is typically stronger during this period.
As part of the spin-off of our former monitored home security business, Brink’s Home Security Holdings, Inc. (“BHS”), we agreed to not
compete with BHS in the United States, Canada and Puerto Rico with respect to certain activities related to BHS’s security system monitoring
and surveillance business until October 31, 2013.
Service Mark and Patents
BRINKS is a registered service mark in the U.S. and certain foreign countries. The BRINKS mark, name and related marks are of material
significance to our business. We own patents expiring in 2012 for certain coin sorting and counting machines. We also own patents for safes,
including our integrated CompuSafe(cid:163) service, which expire between 2015 and 2022. These patents provide us with important advantages;
however, we are not dependent on the existence of these patents.
We have licensed the Brink’s name to a limited number of companies, including a distributor of security products (padlocks, door hardware,
etc.) offered for sale to consumers through major retail chains.
Government Regulation
Our U.S. operations are subject to regulation by the U.S. Department of Transportation with respect to safety of operations, equipment and
financial responsibility. Intrastate operations in the U.S. are subject to state regulation. Our International operations are regulated to varying
degrees by the countries in which we operate.
Employee Relations
At December 31, 2011, our company had approximately 71,000 full-time and contract employees, including approximately 8,000 employees in
the United States (of whom approximately 800 were classified as part-time employees) and approximately 63,000 employees outside the
United States. At December 31, 2011, Brink’s was a party to twelve collective bargaining agreements in North America with various local
unions covering approximately 2,000 employees. The agreements have various expiration dates from 2012 to 2015. Outside of North
America, approximately 56% of branch employees are members of labor or employee organizations. We believe our employee relations are
satisfactory.
Acquisitions
We have grown in the last several years partially as a result of acquiring security-related businesses in various markets to meet our Growth
Strategy objectives. Our largest recent acquisitions were in Brazil and India in 2009 and Mexico and Canada in 2010. In addition, we made
some smaller but strategically important acquisitions. We did not make any significant acquisitions in 2011. Below is a summary of our recent
acquisitions. See note 6 to the consolidated financial statements for more information on these acquisitions.
2009
Brazil. We acquired two businesses, Sebival-Seguranca Bancaria Industrial e de Valores Ltda. and Setal Servicos Especializados, for $48
million in January 2009. The acquisitions expanded our CIT and payment processing operations into the mid-western region of Brazil.
India. We acquired additional shares of Brink’s Arya, a CIT and Global Services business, in September 2009, increasing our ownership from
40% to 78% for $22 million.
China. We acquired a majority stake in ICD Limited, a commercial security business in the Asia-Pacific region in September 2009. ICD
designs, installs, maintains and manages commercial security systems with offices in Hong Kong, India, Singapore and Australia, and has
approximately 200 employees.
2010
France. We acquired Est Valeurs S.A., a provider of CIT and cash services in Eastern France, in March 2010. Est Valeurs employs
approximately 100 people and had 2009 revenue of $13 million.
Russia. We acquired a majority stake in a Russian cash processing business in April 2010 that complements a Russian CIT business that was
acquired in January 2009. With principal operations in Moscow and approximately 500 employees, the combined operations offer a full range
of CIT, ATM, money processing and Global Services operations for domestic and international markets.
Mexico. We acquired a controlling interest in Servicio Pan Americano de Proteccion, S.A. de C.V. (“SPP”), a CIT, ATM and money
processing business, for $60 million in November 2010. We previously owned a 20.86% interest in SPP and we acquired an additional 78.89%
of the outstanding shares. In compliance with Mexican law, the remaining 0.25% noncontrolling interest is held by a Mexican trust. SPP is the
7
largest secure logistics company in Mexico and this acquisition expands our operations in one of the world’s largest CIT markets. SPP has
approximately $400 million in annual revenues with approximately 12,000 full-time and contract employees, 80 branches and 1,350 armored
vehicles across its nationwide network of CIT, ATM and money processing operations.
Canada. We acquired Threshold Financial Technologies Inc. (“Threshold”) from Versent Corporation for $39 million in December 2010.
Threshold is a leading provider of payments solutions in Canada, specializing in managed ATM and transaction processing services for
financial institutions and retailers. Threshold’s annual revenue is approximately $48 million, about half of which is generated by providing
outsourced ATM network administration and transaction processing solutions. The company, which employs approximately 125 people, also
owns and operates a network of private-label ATMs in Canada.
2011
There were no significant acquisitions in 2011.
2012
France. We acquired Kheops, SAS, a provider of logistics software and related services, for approximately $17 million in January 2012. This
acquisition gives us proprietary control of software used primarily in our cash-in-transit and money processing operations in France.
DISCONTINUED OPERATIONS
Former Businesses
We have significant liabilities related to benefit plans that pay medical costs for retirees of our former coal operations. A portion of these
liabilities has been funded. We expect to have ongoing expenses within continuing operations and future cash outflow for these liabilities. See
notes 3 and 17 to the consolidated financial statements for more information.
8
ITEM 1A. RISK FACTORS
We operate in highly competitive industries.
We compete in industries that are subject to significant competition and pricing pressures in most markets. Because we believe we have
competitive advantages such as brand name recognition and a reputation for a high level of service and security, we resist competing on price
alone. However, continued pricing pressure from competitors or failure to achieve pricing based on the competitive advantages identified
above could affect our customer base or pricing structure and have an adverse effect on our business, financial condition, results of operations
and cash flows. In addition, given the highly competitive nature of our industries, it is important to develop new solutions and product and
service offerings to help retain and expand our customer base. Failure to develop, sell and execute new solutions and offerings in a timely and
efficient manner could also negatively affect our ability to retain our existing customer base or pricing structure and have an adverse effect on
our business, financial condition, results of operations and cash flows.
Decreased use of cash could have a negative impact on our business.
The proliferation of payment options other than cash, including credit cards, debit cards, stored-value cards, mobile payments and on-line
purchase activity, could result in a reduced need for cash in the marketplace and a decline in the need for physical bank branches and retail
stores. To mitigate this risk, we are developing new lines of business, but there is a risk that these initiatives may not offset the risks associated
with our traditional cash-based business.
We have significant operations outside the United States.
We currently serve customers in more than 100 countries, including approximately 50 countries where we operate subsidiaries. Eighty-one
percent (81%) of our revenue in 2011 came from operations outside the U.S. We expect revenue outside the U.S. to continue to represent a
significant portion of total revenue. Business operations outside the U.S. are subject to political, economic and other risks inherent in operating
in foreign countries, such as:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
the difficulty of enforcing agreements, collecting receivables and protecting assets through foreign legal systems;
trade protection measures and import or export licensing requirements;
difficulty in staffing and managing widespread operations;
required compliance with a variety of foreign laws and regulations;
enforcement of our global compliance program in foreign countries with a variety of laws, cultures and customs;
varying permitting and licensing requirements in different jurisdictions;
foreign ownership laws;
changes in the general political and economic conditions in the countries where we operate, particularly in emerging markets;
threat of nationalization and expropriation;
higher costs and risks of doing business in a number of foreign jurisdictions;
laws or other requirements and restrictions associated with organized labor;
limitations on the repatriation of earnings;
fluctuations in equity, revenues and profits due to changes in foreign currency exchange rates, including measures taken by
governments to devalue official currency exchange rates;
inflation levels exceeding that of the U.S; and
inability to collect for services provided to government entities which have become illiquid or have difficulty paying their debts.
We are exposed to certain risks when we operate in countries that have high levels of inflation, including the risk that:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
the rate of price increases for services will not keep pace with the cost of inflation;
adverse economic conditions may discourage business growth which could affect demand for our services;
the devaluation of the currency may exceed the rate of inflation and reported U.S. dollar revenues and profits may decline; and
these countries may be deemed “highly inflationary” for U.S. generally accepted accounting principles (“GAAP”) purposes.
We manage these risks by monitoring current and anticipated political and economic developments, monitoring adherence to our global
compliance program and adjusting operations as appropriate. Changes in the political or economic environments of the countries in which we
operate could have a material adverse effect on our business, financial condition, results of operations and cash flows.
9
Our growth strategy may not be successful.
One element of our growth strategy is to extend our brand, strengthen our brand portfolio and expand our geographic reach through active
programs of selective acquisitions. While we may identify numerous acquisition opportunities, our due diligence examinations and positions
that we may take with respect to appropriate valuations and other transaction terms and conditions may hinder our ability to successfully
complete acquisitions to achieve our strategic goals. In addition, acquisitions present risks of failing to achieve efficient and effective
integration, strategic objectives and anticipated revenue improvements and cost savings. There can be no assurance that:
(cid:120)
(cid:120)
(cid:120)
we will be able to acquire attractive businesses on favorable terms,
all future acquisitions will be accretive to earnings, or
future acquisitions will be rapidly and efficiently integrated into existing operations.
We have significant retirement obligations. Poor investment performance of retirement plan holdings could unfavorably affect our
liquidity and results of operations.
We have substantial pension and retiree medical obligations, a portion of which have been funded. The amount of these obligations is
significantly affected by factors that are not in our control, including interest rates used to determine the present value of future payment
streams, investment returns, medical inflation rates, participation rates and changes in laws and regulations. Our liabilities for these plans
increased significantly in 2008 primarily as a result of a decline in value of plan investments. To improve the funded status of The Brink’s
Company Pension-Retirement Plan, we made a voluntary $150 million cash and stock contribution in 2009. The funded status of the plan was
approximately 71% as of December 31, 2011. Based on actuarial assumptions at the end of 2011, we expect that we will be required to make
contributions totaling $228 million to The Brink’s Company Pension-Retirement Plan over a six-year period ending in 2017. This could
adversely affect our liquidity and our ability to use our resources to make acquisitions and to otherwise grow our business. The net periodic
costs of our retirement plans in 2010 and 2011 were adversely affected by the investment losses sustained in 2008, and although plan
investments have partially recovered in the last two years, we anticipate that expenses in future years will continue to be affected as the
unrecognized losses are recognized into earnings. If these investments have additional losses, our future cash requirements and costs for these
plans will be further adversely affected.
Earnings of our Venezuelan operations may not be transferred to non-Venezuelan subsidiaries for the foreseeable future, which will
restrict our ability to use these earnings and cash flows for general corporate purposes such as reducing our debt.
Under a June 2010 law in Venezuela, exchanging local currency for U.S. dollars requires the approval of the government’s central bank.
Approved transactions may not exceed $350,000 per legal entity per month. We believe the law will limit the repatriation of cash from
Venezuela for the foreseeable future, and as a result, will reduce the amount of cash in the future that could be used for general corporate
purposes, including reducing our debt. At December 31, 2011, our Venezuelan subsidiaries held $1.3 million of cash and short-term
investments denominated in U.S. dollars and $8.9 million of cash denominated in bolivar fuertes.
Our earnings and cash flow could be materially affected by increased losses of customer valuables.
We purchase insurance coverage for losses of customer valuables for amounts in excess of what we consider prudent deductibles and/or
retentions. Insurance is provided by different groups of underwriters at negotiated rates and terms. Coverage is available to us in major
insurance markets, although premiums charged are subject to fluctuations depending on market conditions. Our loss experience and that of
other armored carriers affects premium rates charged to us. We are self-insured for losses below our coverage limits and recognize expense up
to these limits for actual losses. Our insurance policies cover losses from most causes, with the exception of war, nuclear risk and various other
exclusions typical for such policies. The availability of high-quality and reliable insurance coverage is an important factor in order for us to
obtain and retain customers and to manage the risks of our business. If our losses increase, or if we are unable to obtain adequate insurance
coverage at reasonable rates, our financial condition, results of operations and cash flows could be materially and adversely affected.
We have risks associated with confidential individual information.
In the normal course of business, we collect, process and retain sensitive and confidential information about individuals. Despite the security
measures we have in place, our facilities and systems, and those of third-party service providers, could be vulnerable to security breaches, acts
of vandalism, computer viruses, misplaced or lost data, programming or human errors or other similar events. Any security breach involving
the misappropriation, loss or other unauthorized disclosure of confidential information, whether by us or by third-party service providers, could
damage our reputation, expose us to the risks of litigation and liability, disrupt our business or otherwise have a material adverse effect on our
business, financial condition, results of operations and cash flows.
10
Negative publicity to our name or brand could lead to a loss of revenue or profitability.
We are in the security business and our success and longevity are based to a large extent on our reputation for trust and integrity. Our
reputation or brand, particularly the trust placed in us by our customers, could be negatively impacted in the event of perceived or actual
breaches in our ability to conduct our business ethically, securely and responsibly. Any damage to our brand could have a material adverse
effect on our business, financial condition, results of operations and cash flows.
Failures of our IT system could have a material adverse effect on our business.
We are heavily dependent on our information technology (IT) infrastructure. Significant problems with our infrastructure, such as telephone or
IT system failure, computer viruses or other third-party tampering with IT systems, or failure to develop new technology platforms to support
new initiatives and product and service offerings, could halt or delay our ability to service our customers, hinder our ability to conduct and
expand our business and require significant remediation costs. In addition, we continue to evaluate and implement upgrades to our IT systems.
We are aware of inherent risks associated with replacing these systems, including accurately capturing data and system disruptions, and believe
we are taking appropriate action to mitigate these risks through testing, training, and staging implementation. However, there can be no
assurances that we will successfully launch these systems as planned or that they will occur without disruptions to our operations. Any of these
events could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We may not realize the expected benefits of strategic acquisitions because of integration difficulties and other challenges, which may
adversely affect our financial condition, results of operations or cash flows.
Our ability to realize the anticipated benefits from recent acquisitions will depend, in part, on successfully integrating each business with our
company as well as improving operating performance and profitability through our management efforts and capital investments. The risks to a
successful integration and improvement of operating performance and profitability include, among others, failure to implement our business
plan, unanticipated issues in integrating operations with ours, unanticipated changes in laws and regulations, labor unrest resulting from union
operations, regulatory, environmental and permitting issues, the effect on our internal controls and compliance with the regulatory requirements
under the Sarbanes-Oxley Act of 2002, and difficulties in fully identifying and evaluating potential liabilities, risks and operating issues. The
occurrence of any of these events may adversely affect our expected benefits of the recent acquisitions and may have a material adverse effect
on our financial condition, results of operations or cash flows.
Restructuring charges may be required in the future.
There is a possibility we will take restructuring actions in one or more of our markets in the future to reduce expenses if a major customer is
lost, if recurring operating losses continue, or if one of the risks described above in connection with our foreign operations materializes. These
actions could result in significant restructuring charges at these subsidiaries, including recognizing impairment charges to write down assets,
and recording accruals for employee severance and operating leases. These charges, if required, could significantly and materially affect
results of operations and cash flows.
We operate in regulated industries.
Our U.S. operations are subject to regulation by the U.S. Department of Transportation with respect to safety of operations and equipment and
financial responsibility. Intrastate operations in the U.S. are subject to regulation by state regulatory authorities and interprovincial operations
in Canada are subject to regulation by Canadian and provincial regulatory authorities. Our international operations are regulated to varying
degrees by the countries in which we operate. Many countries have permit requirements for security services and prohibit foreign companies
from providing different types of security services.
Changes in laws or regulations could require a change in the way we operate, which could increase costs or otherwise disrupt operations. In
addition, failure to comply with any applicable laws or regulations could result in substantial fines or revocation of our operating permits and
licenses. If laws and regulations were to change or we failed to comply, our business, financial condition, results of operations and cash flows
could be materially and adversely affected.
Our inability to access capital or significant increases in our cost of capital could adversely affect our business.
Our ability to obtain adequate and cost-effective financing depends on our credit ratings as well as the liquidity of financial markets. A
negative change in our ratings outlook or any downgrade in our current investment-grade credit ratings by the rating agencies could adversely
affect our cost and/or access to sources of liquidity and capital. Additionally, such a downgrade could increase the costs of borrowing under
available credit lines. Disruptions in the capital and credit markets could adversely affect our ability to access short-term and long-term capital.
Our access to funds under short-term credit facilities is dependent on the ability of the participating banks to meet their funding commitments.
11
Those banks may not be able to meet their funding commitments if they experience shortages of capital and liquidity. Longer disruptions in the
capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives, or failures of significant financial
institutions could adversely affect our access to capital needed for our business.
We have retained obligations from the sale of BAX Global.
In January 2006 we sold BAX Global. We retained some of the obligations related to these operations, primarily for taxes owed prior to the
date of sale and for any amounts paid related to one pending litigation matter for which we paid $11.5 million in 2010. In addition, we
provided indemnification customary for these sorts of transactions. Future unfavorable developments related to these matters could require us
to record additional expenses or make cash payments in excess of recorded liabilities. The occurrence of these events could have a material
adverse affect on our financial condition, results of operations and cash flows.
We are subject to covenants for our credit facilities and for our unsecured notes.
Our credit facilities as well as our unsecured notes are subject to financial covenants, including a limit on the ratio of debt to earnings before
interest, taxes, depreciation, and amortization, limits on the ability to pledge assets, limits on the total amount of indebtedness we can incur,
limits on the use of proceeds of asset sales and minimum coverage of interest costs. Although we believe none of these covenants are presently
restrictive to operations, the ability to meet the financial covenants can be affected by changes in our results of operations or financial
condition. We cannot provide assurance that we will meet these covenants. A breach of any of these covenants could result in a default under
existing credit facilities. Upon the occurrence of an event of default under any of our credit facilities, the lenders could cause amounts
outstanding to be immediately payable and terminate all commitments to extend further credit. The occurrence of these events would have a
significant effect on our liquidity and cash flows.
Our effective income tax rate could change.
We serve customers in more than 100 countries, including approximately 50 countries where we operate subsidiaries, all of which have
different income tax laws and associated income tax rates. Our effective income tax rate can be significantly affected by changes in the mix of
pretax earnings by country and the related income tax rates in those countries. In addition, our effective income tax rate is significantly
affected by the ability to realize deferred tax assets, including those associated with net operating losses. Changes in income tax laws, income
apportionment, or estimates of the ability to realize deferred tax assets, could significantly affect our effective income tax rate, financial
position and results of operations.
We have certain environmental and other exposures related to our former coal operations.
We may incur future environmental and other liabilities that are presently unknown in connection with our former coal operations, which could
materially and adversely affect our financial condition, results of operations and cash flows.
We may be exposed to certain regulatory and financial risks related to climate change.
Growing concerns about climate change may result in the imposition of additional environmental regulations to which we are subject. Some
form of federal regulation may be forthcoming with respect to greenhouse gas emissions (including carbon dioxide) and/or "cap and trade"
legislation. The outcome of this legislation may result in new regulation, additional charges to fund energy efficiency activities or other
regulatory actions. Compliance with these actions could result in the creation of additional costs to us, including, among other things,
increased fuel prices or additional taxes or emission allowances. We may not be able to recover the cost of compliance with new or more
stringent environmental laws and regulations from our customers, which could adversely affect our business. Furthermore, the potential effects
of climate change and related regulation on our customers are highly uncertain and may adversely affect our operations.
12
Forward-Looking Statements
This document contains both historical and forward-looking information. Words such as “anticipates,” “estimates,” “expects,” “projects,”
“intends,” “plans,” “believes,” “may,” “should” and similar expressions may identify forward-looking information. Forward-looking
information in this document includes, but is not limited to, statements regarding future performance of The Brink’s Company and its global
operations, including organic revenue growth and segment operating profit margin in 2012, the pursuit of growth through acquisitions in
developed, emerging and adjacent markets, employee relations, expenses and cash outflows related to former operations, the percentage of total
revenues from outside the United States, future contributions to our Pension-Retirement Plan, the repatriation of cash from our Venezuelan
operations, the outcome of pending litigation and the anticipated financial effect of the disposition of these matters, the pursuit of higher margin
business opportunities, investments in information technology, profit growth in Mexico and Latin America, improved margins in North
America and Europe, growth of our Global Services business, the acquisition of new vehicles in the United States with capital leases, expected
non-segment income and expenses, 2012 projected interest expense, the realization of deferred tax assets, our anticipated effective tax rate for
2012 and our tax position, the reinvestment of earnings on operations outside the United States, net income attributable to noncontrolling
interests, projected currency impact on revenue, capital expenditures, capital leases and depreciation and amortization, the funding of our
acquisition strategy and pension obligations, the trend of capital expenditures exceeding depreciation and amortization, the ability to meet
liquidity needs, future payment of bonds issued by the Peninsula Ports Authority of Virginia, the registration and issuance of shares of common
stock to satisfy pension contribution requirements, estimated contractual obligations for the next five years and beyond, projected contributions,
expenses and payouts for the U.S. retirement plans and the non-U.S. pension plans and the expected long-term rate of return and funded status
of the primary U.S. pension plan, expected liability for and future contributions to the UMWA plans, liability for black lung obligations, the
projected impact of a new excise tax on the UMWA plans, our ability to obtain U.S. dollars to operate our business in Venezuela at the SITME
rate, the effect of accounting rule changes, the performance of counterparties to hedging agreements, the recognition of unrecognized tax
positions, future amortizations into net periodic pension cost, the deductibility of goodwill, projected minimum repayments of long-term debt,
the replacement of operating leases, future minimum lease payments, and the recognition of costs related to stock option grants. Forward-
looking information in this document 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 maintain or improve volumes at favorable
pricing levels and increase cost efficiencies in the United States, our ability to continue profit growth in Mexico and the rest of Latin America,
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, security threats worldwide, labor issues, including the possibility of work stoppages, 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 retirement plans, the VEBA and other employee benefits, projections regarding the number of
participants in and beneficiaries of our employee and retiree benefit plans, mandatory or voluntary retirement plan and VEBA contributions,
the number of dependents of mine workers for whom benefits are provided, actual retirement experience of the former coal operation’s
employees, actual medical and legal expenses relating to benefits, changes in inflation rates (including medical inflation) and interest rates,
changes in mortality and morbidity assumptions, discovery of new facts relating to civil suits, the addition of claims or changes in relief sought
by adverse parties, our cash, debt and tax position and growth needs, our demand for capital and the availability and cost of such capital, the
nature of our hedging relationships, changes in employee obligations, overall domestic and international economic, political, social and
business conditions, capital markets performance, changes in estimates and assumptions underlying our critical accounting policies, as more
fully described in the section “Application of Critical Accounting Policies” but including the likelihood that net deferred tax assets will be
realized, discount rates, expectations of future performance and anticipated return on assets, the timing of deductibility of expenses and
inflation, the promulgation and adoption of new accounting standards and interpretations, seasonality, new government regulations and
13
interpretations of existing regulations, legislative initiatives, judicial decisions, issuances of permits, variations in costs or expenses and the
ability of counterparties to perform. The 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.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
We have property and equipment in locations throughout the world. Branch facilities generally have office space to support operations, a vault
to securely process and store valuables and a garage to house armored vehicles and serve as a vehicle terminal. Many branches have additional
space to repair and maintain vehicles.
We own or lease armored vehicles, panel trucks and other vehicles that are primarily service vehicles. Our armored vehicles are of
bullet-resistant construction and are specially designed and equipped to provide security for the crew and cargo.
The following table discloses leased and owned facilities and vehicles for Brink’s most significant operations as of December 31, 2011.
(cid:3) (cid:3)(cid:3) (cid:3)(cid:3)
(cid:3)Region
U.S.
Canada
North America
Latin America
EMEA
Asia Pacific
International
Total
Leased
148
47
195
351
238
113
702
897
Facilities
Owned
28
12
40
106
44
-
150
190
Total
Leased
176
59
235
457
282
113
852
1,087
2,018
504
2,522
554
786
2
1,342
3,864
Vehicles
Owned
224
52
276
5,249
2,961
590
8,800
9,076
Total
2,242
556
2,798
5,803
3,747
592
10,142
12,940
As of December 31, 2011, we had approximately 14,800 units for our CompuSafe® service installed worldwide, of which approximately
13,400 units were located in the U.S. In 2011, revenues from our CompuSafe® service represented approximately 8% of North America’s
revenues.
14
ITEM 3. LEGAL PROCEEDINGS
Our former cash-in-transit operation in Belgium (Brink’s Belgium) filed for bankruptcy in November 2010, after a restructuring plan was
rejected by local union employees, and was placed in bankruptcy on February 2, 2011. On December 7, 2010, the court-appointed provisional
administrators of Brink’s Belgium filed a claim in the Commercial Court of Brussels for €20 million against Brink’s Security International, Inc.
(“BSI”), a subsidiary of Brink’s and the majority shareholder of Brink’s Belgium. The claim alleged that BSI has a binding obligation to
support the operations and liabilities of Brink’s Belgium based on a letter of future financial support issued in connection with the statutory
audit of Brink’s Belgium’s 2009 accounts.
In June 2011, BSI entered into a settlement agreement related to this claim. Under the terms of the settlement agreement, BSI agreed to
contribute, upon the satisfaction of certain conditions, €7 million toward social payments to former Brink’s Belgium employees in exchange for
the bankruptcy receivers requesting withdrawal of the pending litigation and agreeing not to file additional claims. The conditions of the
settlement agreement included a release from liability by affected employees, the Belgian tax authority and the Belgian social security
authority. After these conditions were satisfied, the settlement was finalized in September 2011 and the request to withdraw the litigation is
pending before the court. We recorded a pretax charge of €7 million in the second quarter of 2011 (approximately $10 million) related to this
claim.
In addition, we are involved in various other lawsuits and claims in the ordinary course of business. We are not able to estimate the range of
losses for some of these matters. We have recorded accruals for losses that are considered probable and reasonably estimable. We do not
believe that the ultimate disposition of any of these matters will have a material adverse effect on our liquidity, financial position or results of
operations.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
15
Executive Officers of the Registrant
The following is a list as of February 20, 2012, of the names and ages of the executive and other officers of Brink’s indicating the principal
positions and offices held by each. There are no family relationships among any of the officers named.
Name
Executive Officers:
Thomas C. Schievelbein
Joseph W. Dziedzic
Frank T. Lennon
McAlister C. Marshall, II
Ronald F. Rokosz
Matthew A. P. Schumacher
Other Officers:
Jonathan A. Leon
Lisa M. Landry
Michael J. McCullough
Arthur E. Wheatley
Age
Positions and Offices Held
Held Since
Interim President and Chief Executive Officer
58
43 Vice President and Chief Financial Officer
70 Vice President and Chief Administrative Officer
42 Vice President and General Counsel
66 Vice President – International
53 Controller
45 Treasurer
46 Vice President - Tax
41
69 Vice President – Risk Management and Insurance
Secretary
2011
2009
2005
2008
2011
2001
2008
2009
2009
1988
Executive and other officers of Brink’s are elected annually and serve at the pleasure of the Board.
Mr. Schievelbein is the interim President and Chief Executive Officer of the Company and has held that position since December 2011, prior to
which he served as the interim Executive Chairman of the Company from November 2011 to December 2011. He has also served as a director
of the Company since March 2009. He is the retired President of Northrop Grumman Newport News, a subsidiary of the Northrop Grumman
Corporation, a global defense company, and has been a business consultant since November 2004. Mr. Schievelbein served as President of
Northrop Grumman Newport News from November 2001 until his retirement in November 2004. Mr. Schievelbein currently also serves as a
director of Huntington Ingalls Industries, Inc., McDermott International, Inc. and New York Life Insurance Company.
Mr. Dziedzic is the Vice President and Chief Financial Officer of the Company. Mr. Dziedzic was hired in May 2009 and appointed to this
position in August 2009. Before joining Brink’s, Mr. Dziedzic was Chief Financial Officer for GE Aviation Services, a producer, seller and
servicer of jet engines, turboprop and turbo shaft engines and related replacement parts, from March 2006 to May 2009.
Mr. Marshall was appointed Vice President and General Counsel of the Company in September 2008 and also held the office of Secretary from
September 2008 to July 2009. Prior to joining Brink’s, Mr. Marshall was the Vice President, General Counsel and Secretary at Tredegar
Corporation, a manufacturer of plastic films and aluminum extrusions, from October 2006 to September 2008.
Messrs. Lennon, Schumacher and Wheatley have served in their present positions for more than the past five years.
Mr. Rokosz was appointed Vice President-International of the Company in November 2011. He also serves as Executive Vice President and
Chief Operating Officer of Brink’s, Incorporated, a position he has held since January 2009. Prior to this position, Mr. Rokosz was President,
Brink’s International of Brink’s, Incorporated from October 2006 to January 2009.
Mr. Leon is the Company’s Treasurer. Mr. Leon was hired in June 2008 and appointed to this position in July 2008. Before joining Brink’s,
Mr. Leon was the Assistant Treasurer for Universal Corporation, a leaf tobacco merchant and processor, from January 2007 to June 2008.
Prior to this position, Mr. Leon was the Assistant Treasurer for the Company from July 2005 to January 2007.
Ms. Landry was appointed Vice President-Tax of the Company in July 2009. Prior to this position, Ms. Landry was Director of Taxes and
Chief Tax Counsel of Brink’s from December 2006 to July 2009.
Mr. McCullough was appointed Secretary of the Company on July 10, 2009. Prior to this position, Mr. McCullough was Assistant General
Counsel and Director of Corporate Governance and Compliance from October 2006 to July 2009, and served as Assistant Secretary from July
2007 to July 2009.
16
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock trades on the New York Stock Exchange under the symbol “BCO.” As of February 17, 2012, there were 1,859
shareholders of record of common stock.
The dividends declared and the high and low prices of our common stock for each full quarterly period within the last two years are as
follows:
(cid:3) (cid:3)(cid:3) (cid:3)(cid:3)
Dividends declared per common share
Stock prices:
High
Low
(cid:3)
$
$
1 st
2011 Quarters
3 rd
2 nd
4 th
1 st
2010 Quarters(cid:3)
2 nd
3 rd
4 th
0.1000
0.1000
0.1000
0.1000
$ 0.1000
0.1000
0.1000
0.1000
33.24
26.24
34.46
26.75
31.91
21.71
31.37
21.53
$ 28.93
23.37
29.59
19.00
23.75
18.30
27.42
22.55
See note 16 to the consolidated financial statements for a description of limitations of our ability to pay dividends in the future.
17
The following graph compares the cumulative 5-year total return provided to shareholders of The Brink’s Company’s common stock compared
to the cumulative total returns of the S&P Midcap 400 index and the S&P Midcap 400 Commercial Services & Supplies Index. The graph
tracks the performance of a $100 investment in our common stock and in each index from December 31, 2006, through December 31, 2011.
The performance of The Brink’s Company’s common stock assumes that the shareholder reinvested all dividends received during the period
and reinvested the proceeds of a hypothetical sale of shares received from the spin-off of our former monitored security business on October
31, 2008. The graphs presented in the Form 10-Ks for 2009 and 2010 incorrectly overstated the company’s cumulative total returns for the
years after 2007 for the spin-off. The graphs correctly assumed a reinvestment of the hypothetical sale of shares received in the spin-off, but
incorrectly assumed a proportionate retroactive decline in all of the stock prices in the period before the October 31, 2008 spin-off. The graph
below corrects this error.
*$100 invested on 12/31/06 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.
Copyright© 2012 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.
Source: Zacks Investment Research, Inc.
Comparison of Five-Year Cumulative Total Return Among
Brink’s Common Stock, the S&P MidCap 400 Index and
the S&P Midcap 400 Commercial Services & Supplies Index (1)
(cid:3) (cid:3)(cid:3)
(cid:3)
Years Ended December 31,
2006
2007
2008
2009
2010
2011
$ 100.00
100.00
100.00
76.63
The Brink's Company
S&P Midcap 400 Index
68.84
76.09
S&P Midcap 400 Commercial Services & Supplies Index
Copyright © 2011, Standard & Poor's, a division of The McGraw-Hill Companies, Inc. All rights reserved.
(1) For the line designated as “The Brink’s Company” the graph depicts the cumulative return on $100 invested in The Brink’s Company’s common
stock. For the S&P Midcap 400 Index and the S&P Midcap 400 Commercial Services & Supplies Index, cumulative returns are measured on an
annual basis for the periods from December 31, 2006, through December 31, 2011, with the value of each index set to $100 on December 31, 2006.
Total return assumes reinvestment of dividends and the reinvestment of proceeds from the sale of the shares received related to the spin-off of our
former monitored security business on October 31, 2008. We chose the S&P Midcap 400 Index and the S&P Midcap 400 Commercial Services &
Supplies Index because we are included in these indices, which broadly measure the performance of mid-size companies in the United States
market.
93.98
107.97
102.12
79.13
119.77
111.71
70.42
94.57
91.59
80.27
117.68
121.63
18
ITEM 6. SELECTED FINANCIAL DATA
Five Years in Review
(In millions, except per share amounts)
2011
2010
2009
2008
2007
Revenues and Income
Revenues
Segment operating profit
Non-segment income (expense)
Operating profit
Income attributable to Brink’s:
Income from continuing operations
Income from discontinued operations (a)
Net income attributable to Brink’s
Financial Position
Property and equipment, net
Total assets
Long-term debt, less current maturities
Brink’s shareholders’ equity
Supplemental Information
Depreciation and amortization
Capital expenditures
Earnings per share attributable to Brink’s common shareholders
Basic:
Continuing operations
Discontinued operations (a)
Net income
Diluted:
Continuing operations
Discontinued operations (a)
Net income
Cash dividends
Weighted-average Shares
Basic
Diluted
(a)
$
$
$
$
$
$
$
$
$
$
$
3,885.5
3,121.5
3,135.0
3,163.5
2,734.6
231.1
(59.8)
171.3
73.0
1.5
74.5
208.9
(62.6)
146.3
56.8
0.3
57.1
213.4
(46.6)
166.8
195.7
4.5
200.2
271.9
(43.4)
228.5
131.8
51.5
183.3
223.3
(62.3)
161.0
78.4
58.9
137.3
749.2
2,406.2
335.3
408.0
698.9
2,270.5
323.7
516.2
549.5
1,879.8
172.3
534.9
534.0
1,815.8
173.0
214.0
1,118.4
2,394.3
89.2
1,046.3
162.4
196.2
136.6
148.8
135.1
170.6
122.3
165.3
110.0
141.8
1.52
0.03
1.56
1.52
0.03
1.55
1.18
0.01
1.18
1.17
0.01
1.18
4.14
0.10
4.23
4.11
0.10
4.21
2.85
1.11
3.96
2.82
1.10
3.93
1.68
1.27
2.95
1.67
1.25
2.92
0.4000
0.4000
0.4000
0.4000
0.3625
47.8
48.1
48.2
48.4
47.2
47.5
46.3
46.7
46.5
47.0
Income from discontinued operations reflects the operations and gains and losses, if any, on disposal of our former home security and air freight
businesses. Expenses related to retirement obligations are recorded as a component of continuing operations after the respective disposal dates.
Adjustments to contingent liabilities are recorded within discontinued operations.
19
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE BRINK’S COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2011
TABLE OF CONTENTS
Page
OPERATIONS .................................................................................................................................................................... 21
RESULTS OF OPERATIONS
Consolidated Review ........................................................................................................................................................ 25
Segment Operating Results ............................................................................................................................................... 28
Non-segment Income (Expense) ....................................................................................................................................... 35
Other Operating Income (Expense) ................................................................................................................................... 36
Nonoperating Income (Expense) ....................................................................................................................................... 37
Income Taxes .................................................................................................................................................................... 38
Noncontrolling Interests .................................................................................................................................................... 39
Income from Discontinued Operations ............................................................................................................................. 40
Outlook ............................................................................................................................................................................. 41
Non-GAAP Results – Reconciled to Amounts Reported under GAAP ............................................................................ 42
Foreign Operations ............................................................................................................................................................ 45
LIQUIDITY AND CAPITAL RESOURCES
Overview ........................................................................................................................................................................... 46
Operating Activities .......................................................................................................................................................... 46
Investing Activities ........................................................................................................................................................... 48
Financing Activities .......................................................................................................................................................... 49
Capitalization .................................................................................................................................................................... 49
Off Balance Sheet Arrangements ...................................................................................................................................... 52
Contractual Obligations .................................................................................................................................................... 53
Contingent Matters ............................................................................................................................................................ 56
APPLICATION OF CRITICAL ACCOUNTING POLICIES
Deferred Tax Asset Valuation Allowance ......................................................................................................................... 57
Goodwill, Other Intangible Assets and Property and Equipment Valuations .................................................................... 58
Retirement and Postemployment Benefit Obligations ....................................................................................................... 59
Foreign Currency Translation ............................................................................................................................................ 64
RECENT ACCOUNTING PRONOUNCEMENTS ......................................................................................................... 66
20
OPERATIONS
The Brink’s Company
The Brink’s Company offers transportation and logistics management services for cash and valuables throughout the world. These services
include:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
armored car transportation, which we refer to as cash in transit (“CIT”)
automated teller machine (“ATM”) - replenishment and servicing, network infrastructure services
arranging secure transportation of valuables over long distances and around the world (“Global Services”)
currency deposit processing and cash management services. Cash management services include cash logistics services (“Cash
Logistics”), deploying and servicing safes and safe control devices (e.g., our patented CompuSafe® service), coin sorting and
wrapping, integrated check and cash processing services (“Virtual Vault Services”)
providing bill payment acceptance and processing services to utility companies and other billers (“Payment Services”)
security and guarding services (including airport security)
(cid:120)
(cid:120)
Executive Summary
Non-GAAP Financial Measures
We provide an analysis of our operations below on both a generally accepted accounting principles (“GAAP”) and non-GAAP basis. The
purpose of the non-GAAP information is to report our financial information
(cid:120)
(cid:120)
(cid:120)
without certain income and expense items in 2009, 2010 and 2011,
as if our results from Venezuela had been translated at the less-favorable parallel exchange rate in 2009, and
after adjusting tax expense for certain items.
The non-GAAP financial measures are intended to provide information to assist comparability and estimates of future performance. The
adjustments are described in detail and are reconciled to our GAAP results on pages 42–44.
2011 versus 2010
GAAP
Our revenues increased $764 million or 24% and our operating profit increased $25 million or 17% in 2011. Revenues increased due to our
2010 acquisitions in Mexico and Canada, organic growth in our International segment and favorable changes in currency exchange rates.
Operating profit increased primarily due to the factors described below.
Our income from continuing operations in 2011 increased 29% compared to 2010 primarily due to:
(cid:120)
higher operating profit from:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
the positive impact of changes in currency exchange rates ($14 million),
organic improvement in Latin America ($12 million),
2011 net gains on acquisitions and asset dispositions ($10 million),
2010 net losses related to an acquisition ($9 million),
lower losses from the 2010 exit ($6 million) and deconsolidation ($13 million) of the Belgium CIT business, and
the impact of our 2010 acquisition in Mexico, as well as
(cid:120)
lower tax expense due to an income tax charge in 2010 related to U.S. healthcare legislation ($14 million).
These positive factors more than offset:
(cid:120)
lower operating profit from:
(cid:120)
(cid:120)
(cid:120)
lower profits in North America ($13 million),
a 2011 settlement loss related to the Belgium bankruptcy ($10 million), and
lower royalty income from our former home security business ($5 million),
(cid:120)
(cid:120)
increased borrowing costs ($9 million),
higher net income attributable to noncontrolling interests ($8 million).
Segment results also reflected increased security costs across all regions.
Our earnings per share from continuing operations was $1.52, up from $1.17 in 2010.
21
Non-GAAP
Our revenues increased $764 million or 24% and our operating profit increased $18 million or 9% in 2011. Revenues increased due to our
acquisitions in Mexico and Canada, organic growth in our International segment and favorable changes in currency exchange rates. Operating
profit increased primarily due to the factors described below.
Our income from continuing operations in 2011 decreased 5% primarily due to:
(cid:120)
(cid:120)
(cid:120)
lower operating profit in North America ($9 million),
increased borrowing costs ($9 million), and
higher net income attributable to noncontrolling interests ($6 million).
These negative factors more than offset higher operating profit from:
organic improvement in Latin America ($13 million),
the positive impact of currency exchange rates ($10 million),
lower losses from the 2010 exit of the Belgium CIT business ($6 million), and
the impact of our 2010 acquisition in Mexico.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Segment results also reflected increased security costs across all regions.
Our earnings per share from continuing operations was $1.90, down from $1.99 in 2010.
2010 versus 2009
GAAP
Our revenues decreased $14 million or less than 1% and our operating profit declined $21 million or 12% in 2010. Revenues were lower
mainly due to the unfavorable impact of currency exchange rates related primarily to a change in the way we translate our Venezuelan results
to U.S. dollars. Revenues also declined due to exiting a French guarding business in 2009 and a CIT business in Belgium in 2010. Revenues
were favorably affected in 2010 by organic growth in our International segment and incremental revenues from the acquisition of a CIT
business in Mexico. Operating profit declined primarily due to the factors described below.
Our income from continuing operations in 2010 was lower than 2009 primarily due to:
an income tax valuation allowance reversal in 2009 ($118 million),
lower operating profit from:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
an unfavorable currency effect ($44 million), related primarily to the reporting of 2010 results from Venezuela at a less
favorable exchange rate,
a gain in 2009 related to an acquisition in India ($14 million),
losses recognized related to the exit of the CIT business in Belgium ($13 million),
lower profits in North America ($13 million),
a net loss related to the 2010 Mexican acquisition ($9 million), and
lower gains on sales of assets ($8 million), as well as
(cid:120)
an income tax charge in 2010 related to U.S. healthcare legislation ($14 million).
These negative factors more than offset:
(cid:120)
higher operating profit from
(cid:120)
(cid:120)
organic improvements in Latin America ($50 million) and
organic improvements in Europe ($25 million), as well as
a non-cash income tax benefit related to an income tax settlement ($7 million).
(cid:120)
Segment results also reflected improved Global Services performance and lower security costs in all regions.
Our earnings per share from continuing operations was $1.17, down from $4.11 in 2009.
Non-GAAP
Our revenues increased $224 million or 8% and our operating profit increased $50 million or 36% in 2010. Revenues increased mainly due to
improved performance on an organic basis in our International segment, reflecting inflation-based price increases in Latin America. Revenues
also increased due to the acquisition of a CIT business in Mexico, partially offset by exiting a guarding business in France during 2009 and a
CIT business in Belgium during 2010. Operating profit increased due to the factors described below.
Our income from continuing operations in 2010 was higher than 2009 primarily due to higher operating profit from:
(cid:120)
higher profits in Europe ($27 million), and
22
(cid:120)
organic improvement in Latin America ($18 million).
These positive factors were offset by lower operating profit in North America.
Segment results also reflected improved Global Services performance and lower security costs in all regions.
Our earnings per share from continuing operations was $1.99, up from $1.40 in 2009.
Outlook for 2012
GAAP
Our organic revenue growth rate for 2012 is expected to be in the 5% to 8% range, and our operating segment margin is expected to be in the
6.5% to 7.0% range. Our International organic revenue growth rate for 2012 is expected to be in the 7% to 10% range, and our International
segment margin is expected to be in the 7.0% to 8.0% range. Our North America organic revenue growth rate for 2012 is expected to be flat,
and our North America segment margin is expected to be in the 3.6% to 4.6% range.
Non-GAAP
Our outlook for non-GAAP revenues is the same as our outlook for GAAP revenues.
Our operating segment margin is expected to be in the 6.5% to 7.0% range. Our International segment margin is expected to be in the 7.0% to
8.0% range and our North America segment margin is expected to be in the 4.5% to 5.5% range.
During 2012, we intend to pursue higher margin business opportunities and continue to invest in information technology. We expect continued
profit growth in Mexico and the rest of Latin America during 2012. We expect North America and Europe to improve margins in 2012, and we
expect our Global Services growth to continue across all regions. See page 41 for a summary of our 2012 Outlook.
Definition of Organic Growth
Organic growth represents the change in revenues or operating profit between the current and prior period, excluding the effect of the following
items: acquisitions and dispositions, changes in currency exchange rates (as described on page 28) and the remeasurement of net monetary
assets in Venezuela under highly inflationary accounting.
Business and Strategy Overview
We have four geographic operating segments: Europe, Middle East, and Africa (“EMEA”); Latin America; Asia Pacific; and North America,
which are aggregated into two reportable segments: International and North America. Our North America segment includes operations in the
U.S. and Canada.
We believe that Brink’s has significant competitive advantages including:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
brand name recognition
reputation for a high level of service and security
risk management and logistics expertise
global infrastructure and customer base
proprietary cash processing and information systems
proven operational excellence
high-quality insurance coverage and general financial strength
We focus our time and resources on service quality, protecting and strengthening our brand, and addressing our risks. We are a premium
provider of services in most of the markets we serve. Our marketing and sales efforts are enhanced by the “Brink’s” brand, so we seek to
protect and build its value. Since our services focus on handling, transporting, protecting, and managing valuables, we strive to understand and
manage risk. Overlaying our approach is an understanding that we must be disciplined and patient enough to charge prices that reflect the
value provided, the risk assumed and the need for an adequate return for our investors.
Business environments around the world change constantly. We must adapt to changes in competitive landscapes, regional economies and
each customer’s level of business. We balance underlying business risk and the effects of changing demand on the utilization of our resources.
As a result, we operate largely on a decentralized basis so local management can react quickly to changes in the business environment.
We measure financial performance on a long-term basis. The key financial measures are:
(cid:120)
(cid:120)
(cid:120)
Return on capital
Revenue and earnings growth
Cash flow generation
23
These and similar measures are critical components of our incentive compensation plans and performance evaluations.
Because of our emphasis on managing risks while providing a high level of service, we focus our marketing and selling efforts on customers
who appreciate the value and breadth of our services, information and risk management capabilities, and financial strength.
In order to earn an adequate return on capital, we focus on the effective and efficient use of resources as well as appropriate pricing levels. We
attempt to maximize the amount of business that flows through our branches, vehicles and systems in order to obtain the lowest costs possible
without compromising safety, security or service. Due to our higher investment in people and processes, we generally charge higher prices
than competitors that do not provide the same level of service and risk management.
The industries we serve have been consolidating. As a result, the demands and expectations of customers in these industries have grown.
Customers are increasingly seeking suppliers, such as Brink’s, with broad geographic solutions, sophisticated outsourcing capabilities and
financial strength.
Operating results may vary from period to period. Since revenues are generated from charges per service performed or based on the value of
goods transported, they can be affected by both the level of economic activity and the volume of business for specific customers. As contracts
generally run for one or more years, costs are incurred to prepare to serve, or to transition away, from a customer. We also periodically incur
costs to reduce operations when volumes decline, including costs to reduce the number of employees and close or consolidate branch and
administrative facilities. In addition, safety and security costs can vary depending on performance, cost of insurance coverage, and changes in
crime rates (i.e., attacks and robberies).
Cash Logistics is a fully integrated solution that proactively manages the supply chain of cash from point-of-sale through bank deposit. The
process includes cashier balancing and reporting, deposit processing and consolidation, and electronic information exchange (including “same-
day” credit capabilities). Retail customers use Brink’s Cash Logistics services to count and reconcile coins and currency in a secure
environment, to prepare bank deposit information, and to replenish customer coins and currency in proper denominations.
Because Cash Logistics involves a higher level of service and more complex activities, customers are charged higher prices, which result in
higher margins. The ability to offer Cash Logistics to customers differentiates Brink’s from many of its competitors. Management is focused
on continuing to grow Cash Logistics revenue.
Brink’s revenues and related operating profit are generally higher in the second half of the year, particularly in the fourth quarter, because of
generally increased economic activity associated with the holiday season.
Former Businesses
We have significant liabilities associated with our former coal operations, primarily related to retirement plans, which are partially funded by
plan trusts.
Information about our liabilities related to former operations is contained in the following sections of this report:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Non-segment Income (Expense) on page 35
Liquidity and Capital Resources – Contractual Obligations – on page 53
Application of Critical Accounting Policies – on page 57
Notes 3 and 17 to the consolidated financial statements, which begin on page 87
24
RESULTS OF OPERATIONS
Consolidated Review
Years Ended December 31,
(In millions, except per share amounts)
Revenues
Segment operating profit (a)
Non-segment expense
Operating profit
Income from continuing operations (b)
Diluted EPS from continuing operations (b)
Amounts may not add due to rounding.
2011
GAAP
2010
% Change
2010
2011
2009
Non-GAAP (c)
2011
2010
2009
% Change
2010
2011
$
3,885.5
231.1
(59.8)
171.3
73.0
1.52
3,121.5
208.9
(62.6)
146.3
56.8
1.17
3,135.0
213.4
(46.6)
166.8
195.7
4.11
$
24
11
(4)
17
29
30
-
(2)
34
(12)
(71)
(72)
3,885.5
246.5
(40.6)
205.9
91.6
1.90
3,121.5
224.5
(36.2)
188.3
96.4
1.99
2,897.1
172.9
(34.7)
138.2
66.7
1.40
24
10
12
9
(5)
(5)
8
30
4
36
45
42
(a) Segment operating profit is a non-GAAP measure when presented in any context other than prescribed by Accounting Standards Codification Topic 280,
Segment Reporting. The tables on pages 28 and 31 reconcile the measurement to operating profit, a GAAP measure. Disclosure of total segment operating
profit enables investors to assess the total operating performance of Brink’s excluding non-segment income and expense. Forward-looking estimates
related to total segment operating profit and non-segment income (expense) for 2012 are provided on page 41.
(b) Amounts reported in this table are attributable to the shareholders of Brink’s and exclude earnings related to noncontrolling interests.
(c) Non-GAAP earnings information is contained on pages 42 –44, including reconciliation to amounts reported under GAAP.
Summary Reconciliation of Non-GAAP EPS
Years Ended December 31,
GAAP EPS
Excludes U.S. retirement plan expenses
Exclude costs related to former CEO retirement
Exclude Belgium exit charges
Exclude gains on asset sales, acquisitions and dispositions
Exclude Venezuela related items
U.S. healthcare legislation charge
Exclude U.S. tax valuation allowance release
Other
Non-GAAP EPS
2011
1.52
0.37
0.05
0.13
(0.20)
-
-
-
0.03
1.90
$
$
2010
1.17
0.28
-
0.16
0.12
-
0.29
-
(0.02)
1.99
2009
4.11
0.25
-
-
(0.43)
0.04
-
(2.48)
(0.09)
1.40
Amounts may not add due to rounding. Non-GAAP results are reconciled in more detail to the applicable GAAP results on pages 42–44.
Revenues
GAAP
2011 versus 2010
Revenues in 2011 increased $764 million or 24% due to:
(cid:120)
(cid:120)
(cid:120)
our 2010 acquisitions in Mexico and Canada ($414 million),
organic growth in our International segment ($262 million), and
favorable exchange rate variances ($114 million);
partially offset by the exit of unprofitable CIT business in Belgium ($30 million). See page 23 for our definition of “organic.”
Revenues increased 8% on an organic basis due mainly to higher average selling prices (including the effects of inflation in several Latin
American countries).
2010 versus 2009
Revenues in 2010 decreased $14 million or less than 1% due to:
(cid:120)
(cid:120)
(cid:120)
unfavorable changes in currency exchange rates ($273 million), related primarily to the reporting of 2010 results from Venezuela at a
less favorable exchange rate,
the sale of guarding operations in France in 2009 ($48 million), and
the exit of an unprofitable CIT business in Belgium ($8 million);
partially offset by organic growth ($228 million) and the effect of businesses acquired in 2010 and 2009 ($88 million). See page 23 for our
definition of “organic.”
Revenues increased 7% on an organic basis due mainly to higher average selling prices (including the effects of inflation-based price increases
in several Latin American countries).
25
Non-GAAP
2011 versus 2010
The analysis of non-GAAP revenues is the same as the analysis of GAAP revenues.
2010 versus 2009
Revenues in 2010 increased 8% primarily due to organic growth ($157 million) and revenues from businesses acquired in 2010 and 2009 ($88
million).
Revenues increased 5% on an organic basis due mainly to higher average selling prices (including the effects of inflation-based price increases
in several Latin American countries).
Operating Profit
GAAP
2011 versus 2010
Operating profit increased 17% due mainly to:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
the positive impact of changes in currency exchange rates ($14 million),
organic improvement in Latin America ($12 million),
2011 net gains on acquisitions and asset dispositions ($10 million),
2010 net losses related to acquisitions ($9 million),
lower losses from the 2010 exit ($6 million) and deconsolidation ($13 million) of the Belgium CIT business, and
the impact of our 2010 acquisition in Mexico;
partially offset by lower profits in North America ($13 million), a settlement loss related to the Belgium bankruptcy ($10 million), and lower
royalties from our former home security business ($5 million).
Results were also affected by increased security costs in all regions.
2010 versus 2009
Operating profit decreased 12% due mainly to:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
an unfavorable currency effect ($44 million), related primarily to the reporting of 2010 results from Venezuela at a less favorable
exchange rate,
a $14 million gain in 2009 related to an acquisition in India,
losses recognized related to the exit of the CIT business in Belgium ($13 million),
lower profits in North America ($13 million),
a net loss related to a 2010 acquisition in Mexico ($9 million), and
lower gains related to asset sales ($8 million);
partially offset by growth on an organic basis in our International segment.
Results were also affected by price and volume pressure across most of our global markets and lower security costs in all regions.
Non-GAAP
2011 versus 2010
Operating profit increased 9% due mainly to:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
organic improvement in Latin America ($13 million),
positive impact of currency exchange rates ($10 million),
the exit from the Belgium CIT business ($6 million), and
the impact of our 2010 acquisition in Mexico.
These positive factors more than offset lower profits in North America ($9 million).
Results were also affected by increased security costs in all regions.
2010 versus 2009
Operating profit increased 36% due mainly to growth on an organic basis in our International segment ($49 million), partially offset by lower
profits in North America ($12 million).
Results were also affected by price and volume pressure across most of our global markets and lower security costs in all regions.
26
Income from continuing operations and net income, and related per share amounts
(attributable to Brink’s)
GAAP
2011 versus 2010
Income from continuing operations and net income (and related per share amounts) was higher in 2011 compared to 2010. The above described
positive factors affecting operating profit, as well as lower tax expense due to a $14 million income tax charge in 2010 related to U.S.
healthcare legislation, were partially offset by increased borrowing costs ($9 million) and higher income attributable to noncontrolling interests
($8 million).
2010 versus 2009
Income from continuing operations and net income (and related per share amounts) was lower in 2010 compared to 2009. In addition to the
above described factors affecting operating profit, income from continuing operations attributable to Brink’s and earnings per share decreased
primarily due to a $118 million income tax valuation allowance reversal in 2009 and a $14 million income tax charge in 2010 related to U.S.
healthcare legislation. These factors were partially offset by a $7 million non-cash income tax benefit related to an income tax settlement.
Non-GAAP
2011 versus 2010
Income from continuing operations and net income (and related per share amounts) was lower in 2011 compared to 2010 primarily as a result
of increased borrowing costs ($9 million), higher income attributable to noncontrolling interests ($6 million) and an increase in the non-GAAP
tax rate which more than offset higher operating profit described above.
2010 versus 2009
Income from continuing operations and net income (and related per share amounts) was higher in 2010 compared to 2009 primarily as a result
of the higher operating profit described above.
27
Segment Operating Results
GAAP
(In millions)
Revenues:
International:
Latin America
EMEA
Asia Pacific
International
North America
Total
Operating profit:
International
North America
Segment operating profit
Non-segment (a)
Total
Segment operating margin:
International
North America
Segment operating margin
Non-GAAP
(In millions)
Revenues:
International:
Latin America
EMEA
Asia Pacific
International
North America
Total
Operating profit:
International
North America
Segment operating profit
Non-segment (a)
Total
Segment operating margin:
International
North America
$
877.4
1,199.8
126.5
2,203.7
917.8
$
3,121.5
164.8
44.1
208.9
(62.6)
146.3
7.5%
4.8%
6.7%
$
$
$
877.4
1,199.8
126.5
2,203.7
917.8
$
3,121.5
$
$
181.4
43.1
224.5
(36.2)
188.3
8.2%
4.7%
Segment Review
2011 versus 2010
2010
Organic
Change
Acquisitions /
Dispositions (b)
Currency
(c)
2011
Total
Organic
% Change
181.9
58.9
21.5
262.3
0.2
262.5
10.1
(14.5)
(4.4)
(15.0)
(19.4)
363.8
(24.5)
-
339.3
48.5
387.8
11.8
1.3
13.1
17.8
30.9
37.6
62.7
5.7
106.0
7.7
113.7
13.0
0.5
13.5
-
13.5
66
8
22
32
6
24
21
(29)
11
(4)
17
21
5
17
12
-
8
6
(33)
(2)
24
(13)
1,460.7
1,296.9
153.7
2,911.3
974.2
3,885.5
199.7
31.4
231.1
(59.8)
171.3
6.9%
3.2%
5.9%
2010
Organic
Change
Acquisitions /
Dispositions (b)
Currency
(c)
2011
Total
Organic
% Change
181.9
58.9
21.5
262.3
0.2
262.5
10.5
(10.3)
0.2
(4.4)
(4.2)
363.8
(24.5)
-
339.3
48.5
387.8
10.2
1.3
11.5
-
11.5
37.6
62.7
5.7
106.0
7.7
113.7
9.8
0.5
10.3
-
10.3
66
8
22
32
6
24
17
(20)
10
12
9
21
5
17
12
-
8
6
(24)
-
12
(2)
1,460.7
1,296.9
153.7
2,911.3
974.2
3,885.5
211.9
34.6
246.5
(40.6)
205.9
7.3%
3.6%
7.2%
Includes income and expense not allocated to segments (see page 35 for details).
Includes operating results and gains/losses on acquisitions, sales and exit of businesses.
Segment operating margin
Amounts may not add due to rounding.
(a)
(b)
(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.
6.3%
28
Total Segment Operating Profit
Segment Review
2011 versus 2010
GAAP
Segment operating profit increased 11% as the positive impact of changes in currency exchange rates in our International segment, organic
improvement in Latin America, lower losses from the exit and deconsolidation of the Belgium CIT business and the impact of our 2010
acquisition in Mexico were partially offset by lower profits in North America, a settlement loss in Belgium and increased security costs.
Non-GAAP
Segment operating profit increased 10% as the positive impact of changes in currency exchange rates in our International segment, organic
improvement in Latin America, lower losses from the CIT business in Belgium and the impact of our 2010 acquisition in Mexico were partially
offset by increased security costs and lower profits in North America.
International Segment
Total International
GAAP
Revenues in 2011 for our International segment were 32% higher ($708 million) than 2010 as:
(cid:120)
(cid:120)
(cid:120)
revenues in Latin America were 66% higher ($583 million), including the positive effect of the Mexico acquisition,
revenues in EMEA were 8% higher ($97 million), and
revenues in Asia Pacific were 22% higher ($27 million).
Operating profit in our International segment was 21% higher ($35 million) as all regions increased despite higher security costs.
Non-GAAP
The analysis of International non-GAAP revenues is the same as the analysis of International GAAP revenues.
Operating profit in our International segment was 17% higher ($31 million) as all regions increased despite higher security costs.
Latin America
GAAP
Revenue in Latin America increased 66% ($583 million) due to:
(cid:120)
(cid:120)
(cid:120)
incremental revenues from our acquisition in Mexico ($364 million),
organic revenue growth ($182 million), and
the favorable effect of currency exchange rates ($38 million).
The 21% revenue growth on an organic basis ($182 million) was due to inflation-based price increases across the region.
Operating profit increased $26 million due to organic profit growth ($12 million) primarily in Argentina, Venezuela, Chile and Colombia, and
the favorable effect of currency exchange rates ($10 million). Profit growth also occurred from our 2010 acquisition in Mexico.
Non-GAAP
The analysis of Latin America non-GAAP revenues is the same as the analysis of Latin America GAAP revenues.
Operating profit increased $24 million due primarily to organic growth in Argentina, Venezuela, Chile and Colombia ($13 million) and the
favorable effect of currency exchange rates ($7 million). Profit growth also occurred from our 2010 acquisition in Mexico.
EMEA
GAAP
EMEA revenues increased by 8% ($97 million) due mainly to:
(cid:120)
(cid:120)
the favorable effect of currency exchange rates ($63 million) and
organic growth ($59 million);
partially offset by revenue lost due to the exit of Belgium CIT business in late 2010 ($30 million).
Revenue increased on an organic basis by 5% driven by the continued growth of Global Services, as well as improvements in Germany,
France, Greece and emerging markets.
29
EMEA operating profit increased $8 million due mainly to:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
a 2010 loss on the deconsolidation of the Belgium CIT business ($13 million),
lower losses from the 2010 exit of the Belgium CIT business ($6 million),
the favorable effect of currency exchange rates ($3 million),
profits from a special project in Germany, and
improvements in Global Services and emerging markets.
The operating profit improvements were partially offset by:
(cid:120)
(cid:120)
(cid:120)
a 2011 settlement loss related to the Belgium bankruptcy ($10 million),
increased security costs, and
impairment charges in Germany and Russia ($4 million).
Non-GAAP
The analysis of EMEA non-GAAP revenues is the same as the analysis of EMEA GAAP revenues.
EMEA operating profit increased $5 million driven by:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
lower losses from the exit of Belgium CIT business ($6 million),
the favorable effect of currency exchange rates ($3 million),
profits from a special project in Germany, and
improvements in Global Services and emerging markets.
The operating profit improvements were partially offset by:
(cid:120)
(cid:120)
increased security costs, and
impairment charges in Germany and Russia ($4 million).
Asia-Pacific
Revenue in Asia Pacific increased 22% ($27 million) primarily due to Global Services’ performance during the year, reflecting increased
commodities volumes, as well as the favorable effect of currency exchange rates ($6 million).
Operating profit increased $2 million driven by organic growth ($1 million).
North American Segment
GAAP
Revenues in North America increased 6% ($56 million) primarily due to our 2010 acquisition in Canada ($51 million) and the favorable effect
of currency exchange rates ($8 million). Revenue remained flat on an organic basis due to continued CIT volume and pricing pressures.
Underlying this flat trend has been a decline in CIT volumes and pricing, partially offset by increased revenue from our CompuSafe® Service
and fuel surcharges.
Operating profit declined $13 million or 29% mainly due to CIT volume and pricing pressure as well as increased security costs.
Non-GAAP
The analysis of North America non-GAAP revenues is the same as the analysis of North America GAAP revenues.
Operating profit declined $9 million or 20% mainly due to CIT volume and pricing pressure as well as increased security costs.
30
Segment Review
2010 versus 2009
2009
Organic
Change
Acquisitions /
Dispositions (b)
Currency
(c)
2010
Total
Organic
% Change
170.7
32.9
17.8
221.4
6.5
227.9
80.1
(13.4)
66.7
(15.0)
51.7
99.6
32.9
17.8
150.3
6.5
156.8
48.5
(12.4)
36.1
(1.5)
34.6
$
904.7
1,257.5
78.7
2,240.9
894.1
$
3,135.0
$
$
$
156.8
56.6
213.4
(46.6)
166.8
7.0%
6.3%
6.8%
666.8
1,257.5
78.7
2,003.0
894.1
$
2,897.1
$
$
118.3
54.6
172.9
(34.7)
138.2
5.9%
6.1%
6.0%
(3)
(5)
61
(2)
3
-
5
(22)
(2)
34
(12)
32
(5)
61
10
3
8
53
(21)
30
4
36
19
3
23
10
1
7
51
(24)
31
32
31
15
3
23
8
1
5
41
(23)
21
4
25
51.7
(44.6)
24.6
31.7
-
31.7
(4.3)
-
(4.3)
(23.5)
(27.8)
51.7
(44.6)
24.6
31.7
-
31.7
9.1
-
9.1
-
9.1
(249.7)
(46.0)
5.4
(290.3)
17.2
(273.1)
(67.8)
0.9
(66.9)
22.5
(44.4)
59.3
(46.0)
5.4
18.7
17.2
35.9
5.5
0.9
6.4
-
6.4
877.4
1,199.8
126.5
2,203.7
917.8
3,121.5
164.8
44.1
208.9
(62.6)
146.3
7.5%
4.8%
6.7%
877.4
1,199.8
126.5
2,203.7
917.8
3,121.5
181.4
43.1
224.5
(36.2)
188.3
8.2%
4.7%
7.2%
GAAP
(In millions)
Revenues:
International:
Latin America
EMEA
Asia Pacific
International
North America
Total
Operating profit:
International
North America
Segment operating profit
Non-segment (a)
Total
Segment operating margin:
International
North America
Segment operating margin
Non-GAAP
(In millions)
Revenues:
International:
Latin America
EMEA
Asia Pacific
International
North America
Total
Operating profit:
International
North America
Segment operating profit
Non-segment (a)
Total
Segment operating margin:
International
North America
Segment operating margin
Amounts may not add due to rounding.
See page 28 for footnotes.
31
Total Segment Operating Profit
Segment Review
2010 versus 2009
GAAP
Segment operating profit decreased 2% as the unfavorable impact of currency exchange rates in our International segment, lower profits in
North America and losses recognized on the exit of unprofitable CIT business in Belgium were mostly offset by organic growth.
Non-GAAP
Segment operating profit increased 30% as growth on an organic basis in the International segment and the net positive effect from acquisitions
and dispositions was partially offset by lower profits in North America.
International Segment
Total International
GAAP
Revenues in 2010 for our International segment were 2% lower ($37 million) than 2009 as:
(cid:120)
(cid:120)
revenues in EMEA were 5% lower ($58 million), and
revenues in Latin America were 3% lower ($27 million);
partially offset by 61% ($48 million) higher revenues in Asia Pacific.
Operating profit in our International segment was 5% higher ($8 million) as better results in EMEA and Asia Pacific were mostly offset by
lower profits in Latin America.
Non-GAAP
Revenues in 2010 for our International segment were 10% higher ($201 million) than 2009 as:
(cid:120)
(cid:120)
revenues in Latin America were 32% higher ($211 million), including the positive effect of businesses acquired in 2010, and
revenues in Asia Pacific were 61% higher ($48 million), including the positive effect of businesses acquired in 2009;
partially offset by 5% lower ($58 million) revenues in EMEA.
Operating profit in our International segment was 53% higher as all regions increased.
Latin America
GAAP
Revenue in Latin America decreased 3% ($28 million), as the unfavorable effect of currency exchange rates ($250 million) more than offset the
incremental revenues from our acquisition in Mexico ($52 million) and growth on an organic basis.
The 19% revenue growth on an organic basis ($171 million) was due to inflation-based price increases across the region.
Operating profit decreased $13 million due primarily to the unfavorable effect of currency exchange rates ($65 million), partially offset by
organic growth throughout the region and lower security costs.
Non-GAAP
Revenue in Latin America increased 32% ($210 million) due to incremental revenues from our acquisition in Mexico ($52 million), inflation-
based price increases and the favorable effect of currency exchange rates ($59 million) primarily in Venezuela, Brazil and Colombia.
The inflation-based price increases were also the primary reason for the organic revenue increase of 15%.
Operating profit increased $29 million due primarily to organic growth and lower security costs.
EMEA
GAAP
EMEA revenues decreased by 5% ($58 million) due mainly to:
negative currency translation ($46 million),
loss of revenue resulting from the sale of certain guarding operations in France in 2009 ($48 million),
loss of guarding contracts in France ($9 million), and
loss of revenue resulting from fourth quarter 2010 exit of CIT business in Belgium ($8 million);
(cid:120)
(cid:120)
(cid:120)
(cid:120)
partially offset by organic revenue growth.
32
Revenue improved on an organic basis by 3% driven by the 2010 rebound of Global Services, as well as increases in Germany and emerging
markets.
EMEA operating profit increased ($14 million) driven by:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
lower severance ($7 million),
2009 included accounting corrections in Belgium ($6 million),
characterization of a French business tax as an income tax ($6 million),
lower security costs,
the sale of guarding operations in France,
improved results in Global Services,
lower losses resulting from the exit of unprofitable CIT business in Belgium, and
lower software impairment charges.
The operating profit improvements were partially offset by $13 million of charges related to the exit of our CIT business in Belgium (write-off
of our carrying value of the investment and advances to the subsidiary) as well as higher costs to support our expansion and growth in emerging
markets.
Non-GAAP
The analysis of EMEA non-GAAP revenues is the same as the analysis of EMEA GAAP revenues.
EMEA operating profit increased in total ($27 million) as well as on an organic basis ($25 million) driven by:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
lower severance ($7 million),
2009 included accounting corrections in Belgium ($6 million),
characterization of a French business tax as an income tax ($6 million),
improved safety and security performance,
the sale of guarding operations in France,
improved results in Global Services,
lower losses from the exit of unprofitable CIT business in Belgium, and
lower software impairment charges;
partially offset by higher costs to support our expansion and growth in emerging markets.
Deconsolidation of Brink’s Belgium
Our cash-in-transit subsidiary in Belgium (Brink’s Belgium) filed for bankruptcy in November 2010 after a restructuring plan was rejected by
local union employees. We deconsolidated the subsidiary in November 2010, when the court-appointed trustee assumed control of the
subsidiary, as we no longer controlled or provided funding for the subsidiary. See a more detailed discussion in the Contingent Matters section
on page 56.
A summary of the revenues and operating losses for Brink’s Belgium in the two years ending December 31, 2010, is as follows:
(cid:3) (In millions) (cid:3)
Revenues
Operating loss (a)
(a) Operating loss includes severance charges of $2 million in 2010 and $2 million in 2009.
(b) Operating loss includes accounting corrections of $6 million, which relate to prior periods.
2010
35.2
7.6
$
2009 (b)
51.3
9.4
Asia-Pacific
Revenue in Asia Pacific increased 61% ($48 million) primarily due to Global Services’ strong finish of the year, reflecting increased
commodities volumes along with some improvements in the diamond and jewelry business, as well as third-quarter 2009 acquisitions in India
($16 million) and China ($9 million).
Operating profit increased $7 million driven by organic growth ($5 million) and the 2009 acquisitions ($2 million).
North American Segment
GAAP
Revenues in North America increased 3% ($24 million) on favorable currency rates in Canada ($17 million). Revenue increased slightly (1%
or $7 million) on an organic basis despite continued CIT volume and pricing pressures.
33
Operating profit declined $13 million or 22% mainly due to CIT volume and pricing pressure, partially offset by lower security costs and
Global Services improvement.
Non-GAAP
The analysis of North America non-GAAP revenues is the same as the analysis of North America GAAP revenues.
Operating profit declined $12 million or 21% mainly due to CIT volume and pricing pressure, partially offset by lower security costs and
Global Services improvement.
Armored Vehicle Leases
Since March 2009, we have acquired armored vehicles in the U.S. either by purchasing or by leasing under agreements that we have accounted
for as capital leases. We currently expect to continue acquiring new vehicles in the U.S. with capital leases. The cost of vehicles under capital
lease is recognized as depreciation and interest expense. Because of the shift in the way we acquire vehicles in the U.S, our depreciation and
interest related to the U.S. fleet is higher and our rental expense is lower compared to earlier periods and we expect this trend to continue.
34
Non-segment Income (Expense) (a)
GAAP
(In millions)
Corporate and former operations:
General and administrative
Retirement costs (primarily former operations)
Subtotal
Other amounts not allocated to segments:
Royalty income:
Brand licensing fees from BHS
Other
Business acquisitions and dispositions:
Remeasurement of previously held ownership interests to fair value
Bargain purchase of Mexican CIT business
Gains on sale of U.S. Document Destruction business
Currency exchange transaction gains (losses)
Gains on sale of property and other assets
Subtotal
Years Ended December 31,
2009
2010
2011
% change
2011
2010
$
(46.6)
(24.8)
(71.4)
(38.6)
(22.7)
(61.3)
(36.7)
(20.7)
(57.4)
21
9
16
5
10
7
-
1.7
0.4
2.1
6.7
-
0.7
11.6
4.9
2.1
(13.7)
5.1
-
-
0.3
(1.3)
6.8
1.8
14.9
-
-
(22.3)
9.6
10.8
$
(59.8)
(62.6)
(46.6)
(100)
(19)
NM
(59)
fav
-
fav
NM
(4)
(28)
17
NM
fav
-
(100)
(97)
NM
34
Non-segment income (expense)
(a)
Includes corporate, former operations and other amounts not allocated to segment results.
Non-segment expenses in 2011 were $3 million or 4% lower than 2010, mainly due to favorable factors including:
(cid:120)
(cid:120)
(cid:120)
the 2010 net loss related to the Mexico acquisition ($9 million),
the 2011 gain on the sale of the U.S. Document Destruction business ($7 million), and
the 2011 adjustment to the bargain purchase gain on the Mexico acquisition ($2 million);
partially offset by unfavorable factors including:
(cid:120)
(cid:120)
(cid:120)
higher general and administrative costs ($8 million) in 2011, including $4 million related to the retirement of the former CEO,
lower royalty income from our former home security business ($5 million), and
higher retirement costs ($2 million).
Non-segment expenses in 2010 were $16 million or 34% higher than 2009, mainly due to unfavorable factors including:
(cid:120)
(cid:120)
(cid:120)
a 2010 net loss related to the Mexico acquisition ($9 million),
the 2009 gain from business acquisitions in India and Panama ($15 million), and
lower 2010 gains on the sale of property and other assets ($9 million);
partially offset by favorable factors such as the 2009 currency exchange transaction losses ($22 million), including a $23 million charge related
to dividends from Venezuela.
Outlook for 2012
We estimate that non-segment expenses on a GAAP basis will be approximately $89 million in 2012. See page 41 for a summary of our 2012
Outlook.
35
Non-GAAP
(In millions)
Corporate general and administrative
Other amounts not allocated to segments:
Royalty income:
Currency exchange transaction gains (losses)
Gains on sale of property and other assets
Non-segment income (expense)
Years Ended December 31,
2009
2011
2010
% change
2011
2010
$
(42.5)
(38.6)
(36.7)
1.7
-
0.2
(40.6)
$
2.1
-
0.3
(36.2)
1.8
0.2
-
(34.7)
10
(19)
-
(33)
12
5
17
(100)
fav
4
Non-segment expenses on a non-GAAP basis in 2011 were $4 million or 12% higher than 2010, mainly due to increased general and
administrative costs ($4 million).
Non-segment expenses on a non-GAAP basis in 2010 were $2 million or 4% higher than 2009 due to higher general and administrative
expenses ($2 million).
Outlook for 2012
We estimate that non-segment expenses on a non-GAAP basis will be approximately $41 million in 2012. See page 41 for a summary of our
2012 Outlook.
Other Operating Income (Expense)
Other operating income (expense) includes segment and non-segment other operating income and expense.
(In millions)
Share in earnings of equity affiliates
Royalty income (a)
Gains (losses) on sale of property and other assets
Impairment losses
Business acquisitions and dispositions:
Gain on sale of U.S. Document Destruction business
Bargain purchase of Mexican CIT business
Remeasurement of previously held ownership interest to fair value
Deconsolidation of Brink’s Belgium and write-down to fair value
Settlement loss related to Belgium bankruptcy
Foreign currency items:
Transaction losses
Hedge gains
Other
Other operating income (expense)
Years Ended December 31,
2010
2011
2009
% change
2011
2010
$
$
4.8
1.7
1.2
(4.7)
6.7
2.1
0.4
-
(10.1)
(4.2)
2.2
3.1
3.2
3.9
7.6
1.2
(0.7)
-
5.1
(13.7)
(13.4)
-
(4.0)
-
4.5
(9.5)
4.5
8.6
9.4
(2.7)
-
-
14.9
-
-
(41.4)
-
3.2
(3.5)
23
(78)
-
unfav
fav
(59)
fav
(100)
unfav
5
fav
(31)
NM
(13)
(12)
(87)
(74)
-
fav
NM
unfav
-
(90)
-
41
unfav
(a) Includes royalty income in 2010 and 2009 from our former home-security business.
2011 versus 2010
Other operating income increased in 2011 primarily as a result of favorable factors including:
(cid:120)
(cid:120)
(cid:120)
gains related to business acquisitions in 2011 ($3 million) versus net losses on acquisitions in 2010 ($9 million),
a charge related to the deconsolidation of the Belgium CIT business in 2010 ($13 million), and
a gain on the sale of the U.S. Document Destruction business in 2011 ($7 million);
partially offset by unfavorable factors including:
(cid:120)
(cid:120)
(cid:120)
a settlement loss in 2011 related to the Belgium bankruptcy ($10 million),
lower third-party royalty income ($6 million) as 2010 included royalties from our former home security business ($5 million), and
increased impairment charges ($4 million).
2010 versus 2009
Other operating expense increased in 2010 primarily as a result of unfavorable factors including:
(cid:120)
(cid:120)
(cid:120)
a net loss related to business acquisitions in 2010 ($9 million) versus gains related to business acquisitions in 2009 ($15 million),
a charge related to the deconsolidation of the Belgium CIT business ($13 million), and
lower gains on sales of property and other assets ($8 million);
partially offset by favorable factors such as higher 2009 currency exchange transaction losses ($37 million), including a charge related to
dividends from Venezuela ($23 million).
36
Nonoperating Income and Expense
Interest Expense
(In millions)
Interest expense
Years Ended December 31,
2010
2009
2011
$
24.0
14.8
11.3
% change
2011
62
2010
31
Interest expense was higher in 2011 as a result of higher interest rates from the January 2011 issuance of $100 million in unsecured private
placement notes and increased borrowings due to 2010 acquisitions.
We renegotiated our $400 million revolving credit facility in July 2010. Interest expense was higher in 2010 as a result of higher interest rate
spreads above LIBOR and other costs related to the new facility. Interest expense was also higher due to higher average borrowings on our
revolving credit facility resulting from repurchases of our common stock and acquisitions.
Outlook for 2012
We expect our interest expense to be $23 million to $26 million in 2012 versus $24 million in 2011. See page 41 for a summary of our 2012
Outlook.
Interest and Other Income
(In millions)
Interest income
Gain on available-for-sale securities
Other
Total
Years Ended December 31,
% change
2011
5.9
4.4
(1.2)
9.1
$
$
2010
4.1
3.8
0.2
8.1
2009
10.8
-
-
10.8
2011
44
16
unfav
12
2010
(62)
fav
fav
(25)
Interest and other income (expense) was slightly higher in 2011 primarily due to $2 million of higher interest income. We also recognized $4.4
million in gains on available-for-sale securities in 2011.
Interest income was lower in 2010 primarily due to lower average levels of cash and cash equivalents in Venezuela resulting from dividends of
cash in the fourth quarter 2009 and first half 2010 as well as overall lower interest rates in 2010. Interest income also decreased due to
translating Venezuelan operations using a weaker exchange rate in 2010 compared to 2009. We recognized a $4.0 million gain in 2010 on
available-for-sale securities.
37
Income Taxes
(cid:3)(cid:3)
(cid:3) Summary Rate Reconciliation – GAAP(cid:3)
(cid:3)(cid:3)(cid:3)(cid:3)
(cid:3) (In percentages)(cid:3)
(cid:3)
U.S. federal tax rate
Increases (reductions) in taxes due to:
Adjustments to valuation allowances
Foreign income taxes
Medicare subsidy for retirement plans
Nontaxable acquisition (gains) losses
Nondeductible repatriation charge
French business tax
Other
(cid:3) Income tax rate on continuing operations(cid:3)
(cid:3)(cid:3)(cid:3)
(cid:3) Summary Rate Reconciliation – Non-GAAP (a)(cid:3)
(cid:3)(cid:3)(cid:3)(cid:3)
(cid:3) (In percentages) (cid:3)
(cid:3)
U.S. federal tax rate
Increases (reductions) in taxes due to:
Adjustments to valuation allowances
Tax settlement
French business tax
Other
(cid:3) Income tax rate on Non-GAAP continuing operations (cid:3)
(cid:3) (a)(cid:3) See pages 42–44 for a reconciliation of non-GAAP results to GAAP.
(cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3)
2011
Years Ended December 31,(cid:3)
2010
35.0 %
(0.8)
2.1
-
(0.5)
-
2.8
(0.6)
38.0 %
35.0 %
10.5
(7.4)
9.8
2.1
-
2.8
(4.8)
48.0 %
2009
35.0 %
(68.2)
(3.5)
(0.9)
(2.9)
4.7
-
(0.9)
(36.7)%
(cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3)
2011
35.0 %
(0.7)
-
2.4
1.9
38.6 %
Years Ended December 31,(cid:3)
2010
35.0 %
7.1
(4.5)
2.5
(4.1)
36.0 %
2009
35.0 %
3.4
-
-
(1.7)
36.7 %
Overview
Our effective tax rate has varied in the past three years from the statutory U.S. federal rate due to various factors, including
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
changes in judgment about the need for valuation allowances
changes in the geographical mix of earnings
a nondeductible Venezuela repatriation charge
nontaxable acquisition gains and losses
changes in laws in the U.S. and France
timing of benefit recognition for uncertain tax positions
state income taxes
We establish or reverse valuation allowances for deferred tax assets depending on all available information including historical and expected
future operating performance of our subsidiaries. Changes in judgment about the future realization of deferred tax assets can result in
significant adjustments to the valuation allowances. Based on our historical and future expected taxable earnings, we believe it is more likely
than not that we will realize the benefit of the deferred tax assets, net of valuation allowances.
Outlook
The effective income tax rate for 2012 is expected to be between 37% and 40%. Our effective tax rate may fluctuate materially from these
estimates due to changes in the amount of income or expense that is permanently excluded from tax returns, income or deductions on tax
returns permanently excluded from book earnings, changes in the expected geographical mix of earnings, legislative changes, changes in
valuation allowances or accruals for contingencies and other factors. See page 41 for a summary of our 2012 Outlook.
Continuing Operations
2011 Compared to U.S. Statutory Rate
The effective income tax rate on continuing operations in 2011 was higher than the 35% U.S. statutory tax rate largely due to a $6.2 million
increase in our valuation allowance position as a result of our assessment of historical and future taxable income and the characterization of a
$4.4 million French business tax as an income tax, partially offset by a $3.4 million net income tax benefit related to a repatriation of cash to
the U.S.
2010 Compared to U.S. Statutory Rate
The effective income tax rate on continuing operations in 2010 was higher than the 35% U.S. statutory tax rate largely due to a $13.7 million
reduction in deferred tax assets as a result of U.S. healthcare legislation enacted in 2010, a $7.4 million increase in our valuation allowance
position as a result of our assessment of historical and future taxable income, the characterization of a $3.9 million French business tax as an
38
income tax based upon legislative changes effective January 1, 2010, and $3.0 million nondeductible loss on the Mexico acquisition, partially
offset by a $7.0 million non-cash income tax benefit relate to a tax settlement.
2009 Compared to U.S. Statutory Rate
The effective income tax rate on continuing operations in 2009 was lower than the 35% U.S. statutory tax rate due to $117.8 million in lower
tax expense primarily resulting from the reversal of a U.S. valuation allowance and $4.9 million in lower taxes due to the nontaxable India
gain, partially offset by $7.9 million in higher taxes due to the nondeductible Venezuela repatriation charge. (See Application of Critical
Accounting Policies—Deferred Tax Asset Valuation Allowance on page 57 for an explanation of a description of our accounting policy,
assumptions used and a sensitivity analysis).
Other
As of December 31, 2011, we have not recorded U.S. federal deferred income taxes on approximately $318 million of undistributed earnings of
foreign subsidiaries and equity affiliates in accordance with Accounting Principles Board Opinion 23, Accounting for Income Taxes – Special
Areas, as amended. We expect that these earnings will be permanently reinvested in operations outside the U.S. It is not practical to compute
the estimated deferred tax liability on these earnings.
Noncontrolling Interests
(In millions)
Years Ended December 31,
2010
2009
2011
Net income attributable to noncontrolling interests
$
24.0
15.7
31.7
% change
2011
53
2010
(50)
The increase in net income attributable to noncontrolling interests in 2011 was primarily due to an increase in net income of our Venezuelan,
Chilean and Colombian subsidiaries.
The decrease in net income attributable to noncontrolling interests in 2010 was primarily due to a decrease in the earnings of our Venezuelan
subsidiaries as a result of reporting 2010 results at a less favorable exchange rate.
Outlook for 2012.
We expect net income attributable to noncontrolling interests on a GAAP and non-GAAP basis to be $24 million to $28 million in 2012 as
compared to $24 million on a GAAP basis and $23 million on a non-GAAP basis in 2011. Our 2012 outlook reflects expected increased
earnings from non-wholly owned subsidiaries, including Venezuela. See page 41 for a summary of our 2012 Outlook.
39
Income from Discontinued Operations
(In millions)
Adjustments to contingencies of former operations:
Gain from FBLET refunds
BAX Global indemnification
Insurance recoveries related to BAX Global indemnification
Workers’ compensation
Other
Income (loss) from discontinued operations before income taxes
Provision (credit) for income taxes
Income from discontinued operations, net of tax
2011
4.2
-
1.2
(1.4)
(1.8)
2.2
0.7
1.5
$
$
Years Ended December 31,
2010
-
1.7
1.6
(7.2)
0.8
(3.1)
(3.4)
0.3
2009
19.7
(13.2)
-
(1.5)
1.8
6.8
2.3
4.5
Federal Black Lung Excise Tax (“FBLET”) refunds
The Energy Improvement and Extension Act of 2008 enabled taxpayers to file claims for FBLET refunds for periods prior to those open under
the statute of limitations previously applicable to us. In 2009, we received $23.9 million of FBLET refunds and recognized the majority of
these refunds as a pretax gain of $19.7 million in 2009. In the second quarter of 2011, the statute of limitations expired and we recognized a
pretax gain of $4.2 million for the remaining portion of the refund.
BAX Global
BAX Global, a former business unit, had been defending a claim related to the apparent diversion by a third party of goods being transported
for a customer. On April 23, 2010, the Dutch Supreme Court denied the final appeal of BAX Global, letting stand the lower court ruling that
BAX Global is liable for this claim. We had contractually indemnified the purchaser of BAX Global for this contingency. We recognized €9
million ($13.2 million) related to this matter in discontinued operations in 2009, made an $11.5 million payment in 2010 in satisfaction of the
judgment, and reversed $1.7 million of expense in 2010. We recovered a portion of the loss from insurance companies ($1.2 million in 2011
and $1.6 million in 2010).
40
Outlook
(In millions)
Organic revenue growth
International
North America
Total
Currency impact on revenue
International
North America
Total
Segment margin
International
North America (a)
Total
Non-segment expense:
General and administrative
Retirement plans
Royalty income
CEO retirement costs (b)
Gains on acquisitions and asset dispositions (c)
Non-segment Expense
Effective income tax rate
Interest expense
Net income attributable to
noncontrolling interests
Fixed assets acquired:
Capital expenditures
Capital leases (d)
Total
Depreciation and amortization
Amounts may not add due to rounding.
GAAP
Full-Year
2011
Full-Year 2012
Estimate
Non-GAAP
Full-Year
2011
Full-Year 2012
Estimate
12 %
-
8 %
5 %
1 %
4 %
6.9 %
3.2 %
5.9 %
43
25
(2)
4
(10)
60
38 %
24
7% – 10%
-
5% – 8%
(4)% – (6)%
-
(3)% – (5)%
7.0% – 8.0%
3.6% – 4.6%
6.5% – 7.0%
43
47
(2)
-
-
89
37% – 40%
23 – 26
24
24 – 28
196
43
239
162
210 – 220
30 – 40
240 – 260
175– 190
$
$
$
$
$
$
$
12 %
-
8 %
5 %
1 %
4 %
7.3 %
3.6 %
6.3 %
43
-
(2)
-
-
41
39 %
24
7% – 10%
-
5% – 8%
(4)% – (6)%
-
(3)% – (5)%
7.0% – 8.0%
4.5% – 5.5%
6.5% – 7.0%
43
-
(2)
-
-
41
37% – 40%
23 – 26
23
24 – 28
196
43
239
162
210 – 220
30 – 40
240 – 260
175– 190
$
$
$
$
$
$
$
(a) The non-GAAP full-year 2012 estimate of North America Segment margin excludes $9 million of expense related to U.S. retirement plans that have
been frozen, which amount has been included as an expense in the 2012 GAAP margin estimate.
(b) To eliminate costs related to the retirement of the former CEO.
(c) 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).
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.”
(d)
For more information about our outlook, see:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
page 23 for organic revenue growth,
page 23 for segment operating margin,
page 35 non-segment expenses,
page 38 for effective income tax rate,
page 37 for interest expense,
page 39 for net income attributable to noncontrolling interests,
page 48 for property and equipment acquired during the year, and
page 48 for depreciation and amortization.
41
Non-GAAP Results – Reconciled to Amounts Reported under GAAP
Non-GAAP results described in this filing are financial measures that are not required by, or presented in accordance with GAAP.
Purpose of Non-GAAP Information
The purpose of the non-GAAP information is to report our financial information
(cid:120)
(cid:120)
(cid:120)
without certain income and expense items described below in 2009, 2010 and 2011,
as if our results from Venezuela had been translated at the less-favorable parallel exchange rate in 2009, and
after adjusting tax expense for items described below.
The non-GAAP information provides information to assist comparability and estimates of future performance. We believe these measures are
helpful in assessing operations and estimating future results and enable period-to-period comparability of financial performance. 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.
(In millions, except for per share amounts)
GAAP Basis
Gains on
Acquisitions
and Asset
Dispositions
(a)
Belgium
Settlement
Charge (b)
Mexico
Employee
Benefit
Settlement
Loss (c)
CEO
Retirement
Costs (d)
U.S.
Retirement
Plans (e)
Adjust
Income Tax
Rate (f)
Non-GAAP
Basis
Operating profit:
International
North America
Segment operating profit
Non-segment
Amounts attributable to Brink’s:
Income from continuing operations
Diluted EPS – continuing operations
Amounts may not add due to rounding.
Full Year 2011
$
$
$
199.7
31.4
231.1
(59.8)
171.3
73.0
1.52
-
-
-
(9.7)
(9.7)
(9.6)
(0.20)
10.1
-
10.1
-
10.1
6.4
0.13
2.1
-
2.1
-
2.1
-
-
-
4.1
4.1
1.5
0.03
2.6
0.05
-
3.2
3.2
24.8
28.0
17.7
0.37
-
-
-
-
-
-
-
211.9
34.6
246.5
(40.6)
205.9
91.6
1.90
(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
the 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:
(In millions, except per share amounts)
Sale of U.S. Document Destruction business
Gains on available-for-sale equity and debt securities
Acquisition of controlling interests
Sale of former operating assets
Full Year 2011
Operating
Profit
$
$
(6.7)
-
(2.5)
(0.5)
(9.7)
EPS
(0.09)
(0.05)
(0.05)
(0.01)
(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%.
42
Non-GAAP Results – Reconciled to Amounts Reported Under GAAP (Continued)
Remeasure
Venezuelan
Net
Monetary
Assets (a)
GAAP
Basis
Royalty
(b)
Exit
Belgium
CIT
business
(c)
Mexico
Acquisition
(d)
Non-
Segment
Asset
Sales (e)
U.S.
Retirement
Plans (f)
U.S.
Healthcare
Legislation
Tax Charge
(g)
Adjust
Income
Tax Rate
(h)
Non-
GAAP
Basis
Operating profit:
International
North America
Segment operating profit
Non-segment
Operating profit
Amounts attributable to Brink’s:
Income from continuing operations
Diluted EPS – continuing operations
Amounts may not add due to rounding.
$ 164.8
44.1
208.9
(62.6)
$ 146.3
3.2
-
3.2
-
3.2
-
-
-
(4.9)
(4.9)
13.4
-
13.4
-
13.4
Full Year 2010
-
-
-
8.6
8.6
-
-
-
-
-
$
56.8
1.17
2.0
0.04
(3.0)
(0.06)
7.8
0.16
8.6
0.18
(3.0)
(0.06)
-
(1.0)
(1.0)
22.7
21.7
13.5
0.28
-
-
-
-
-
13.7
0.29
-
-
-
-
-
-
-
181.4
43.1
224.5
(36.2)
188.3
96.4
1.99
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
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.
To eliminate royalty income from former home security business.
To eliminate loss on exit of Belgium cash-in-transit business.
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.
To eliminate exchange of marketable equity securities.
To eliminate expenses related to U.S. retirement liabilities.
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.
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%.
43
Non-GAAP Results – Reconciled to Amounts Reported Under GAAP (Continued)
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
Revenues:
Latin America
EMEA
Asia Pacific
International
North America
Revenues:
Operating profit:
International
North America
Segment operating profit
Non-segment
Operating profit
Amounts attributable to Brink’s:
Income from continuing operations
Diluted EPS – continuing operations
Amounts may not add due to rounding.
$
$
$
$
$
904.7
1,257.5
78.7
2,240.9
894.1
3,135.0
156.8
56.6
213.4
(46.6)
166.8
(237.9)
-
-
(237.9)
-
(237.9)
(43.0)
-
(43.0)
-
(43.0)
195.7
4.11
(23.2)
(0.49)
-
-
-
-
-
-
4.5
-
4.5
22.5
27.0
25.2
0.53
Full Year 2009
-
-
-
-
-
-
-
-
-
(14.9)
(14.9)
-
-
-
-
-
-
-
-
-
(6.8)
(6.8)
-
-
-
-
-
-
-
-
-
(9.6)
(9.6)
-
-
-
-
-
-
-
(2.0)
(2.0)
20.7
18.7
-
-
-
-
-
-
-
-
-
-
-
666.8
1,257.5
78.7
2,003.0
894.1
2,897.1
118.3
54.6
172.9
(34.7)
138.2
(14.9)
(0.31)
(4.3)
(0.09)
(5.9)
(0.12)
11.7
0.25
(117.6)
(2.48)
66.7
1.40
(a)
(b)
(c)
(d)
(e)
(f)
(g)
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%.
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.
To eliminate gains/losses recognized related to acquisitions of controlling interests in subsidiaries that were previously accounted for as equity method
investments.
To eliminate royalty income from former home security business.
To eliminate 2009 non-segment gains on sales of property and other assets and 2010 exchange of marketable equity securities.
To eliminate expenses related to U.S. retirement liabilities.
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%.
44
Foreign Operations
We currently serve customers in more than 100 countries, including approximately 50 countries where we operate subsidiaries.
We are subject to risks customarily associated with doing business in foreign countries, including labor and economic conditions, political
instability, controls on repatriation of earnings and capital, nationalization, expropriation and other forms of restrictive action by local
governments. Changes in the political or economic environments in the countries in which we operate could have a material adverse effect on
our business, financial condition and results of operations. The future effects, if any, of these risks are unknown.
Our international operations conduct a majority of their business in local currencies. Because our financial results are reported in U.S. dollars,
they are affected by changes in the value of various local currencies in relation to the U.S. dollar. Brink’s Venezuela is subject to local laws and
regulatory interpretations that determine the exchange rate at which repatriating dividends may be converted. See Application of Critical
Accounting Policies—Foreign Currency Translation on page 64 for a description of our accounting methods and assumptions used to include
our Venezuelan operation in our consolidated financial statements, and a description of the accounting for subsidiaries operating in highly
inflationary economies.
Changes in exchange rates may also affect transactions which are denominated in currencies other than the functional currency. From time to
time, we use foreign currency forward and swap contracts to hedge transactional risks associated with foreign currencies, as discussed in Item
7A on page 68. At December 31, 2011, the notional value of our outstanding foreign currency contracts was $72.8 million with average
contract maturities of less than 1 month. The foreign currency contracts primarily offset exposures in the Mexican peso and the euro. These
contracts are not designated as hedges for accounting purposes, and accordingly, changes in their fair value are recorded immediately in
earnings. We recognized gains of $1.0 million on our foreign currency contracts in 2011. At December 31, 2011, the fair value of these
outstanding contracts was an asset of $0.4 million which was included in prepaid and other on the consolidated balance sheet.
45
LIQUIDITY AND CAPITAL RESOURCES
Overview
Over the last three years, we have used cash generated from our continuing operations to
(cid:120)
(cid:120)
invest in the infrastructure of our business (new facilities, cash sorting and other equipment for our cash logistics operations,
armored trucks, CompuSafe® units, and customer-facing and back-office information technology) ($516 million),
acquire businesses ($178 million) including $101 million in 2010, primarily in Mexico and Canada, and $75 million in BRIC
(Brazil, Russia, India and China) countries in 2009,
(cid:120) make voluntary contributions to our primary U.S. pension plan ($92 million in 2009),
(cid:120)
(cid:120)
pay dividends ($56 million), and
repurchase shares of our common stock ($41 million)
We entered into a new master lease agreement in late 2009 to finance the acquisition of new armored vehicles in the U.S. Vehicles acquired
under the 2009 lease agreement have been accounted for as capital leases. Vehicles acquired under the previous master lease agreement were
accounted for as operating leases.
Outlook
(cid:120) We continue to consider acquisition opportunities in the secure transportation and cash logistics industry and in adjacent security
markets. We may use our cash from operations and borrowings to fund the purchase of these acquisitions.
(cid:120) We expect our capital expenditures in 2012 to increase from the amounts spent in 2011 as we continue to invest in armored
vehicles, facilities and technology. We expect capital expenditures to decrease in North America, and increase in our
International segment.
(cid:120) We will be required to make contributions of $32 million to our primary U.S. pension plan in 2012. Based on current
assumptions, we expect to make additional contributions totalling $197 million during the next five years. We intend to
contribute company stock for some or all of the required 2012 contribution and we may choose to contribute company stock for
future required contributions.
Operating Activities
(In millions)
Cash flows from operating activities
Non-GAAP basis
(Decrease) increase in certain customer obligations (a)
Contribution to primary U.S. pension plan, net of current tax benefit (b)
Discontinued operations (c)
$
Years Ended December 31,
$ change
2011
2010
2009
2011
2010
257.3
(11.7)
-
1.4
247.0
206.7
38.5
-
(9.9)
235.3
$
245.6
-
(73.9)
23.5
195.2
50.6
(50.2)
-
11.3
11.7
(38.9)
38.5
73.9
(33.4)
40.1
GAAP basis
$
(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 the net-of-tax cash contributions to the primary U.S. pension plan in 2009 ($92.4 million cash contribution, net of the related $18.5 million
current tax benefit).
(c) 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, without cash flows from discontinued operations and excluding the
2009 cash contributions to the primary U.S. pension plan, net of related current tax benefits. 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.
46
2011 versus 2010
On a GAAP basis, operating cash flows increased by $11.7 million in 2011 compared to 2010 as a result of a $0.4 million increase in cash
flows from continuing operations and an $11.3 million decrease in cash used by discontinued operations. Cash flows from discontinued
operations improved because the prior year period included $11.5 million in cash outflow for a legal claim associated with BAX Global, a
former business unit. Cash from continuing operations increased $0.4 million due to higher operating profit and an increase in cash flows from
working capital, partially offset by a $50.2 million decrease in cash flows due to change in customer obligations for cash held by logistics and a
$10 million legal settlement payment related to the exit of our Belgium CIT business and an increase in interest payments. The amount of cash
generated by operating profit was higher than the increase in operating profit primarily because noncash depreciation and amortization
expenses were higher in 2011 compared to 2010 driven by fixed assets acquired in 2010 and the Mexican acquisition in November 2010.
On a Non-GAAP basis, cash flows from operating activities increased by $50.6 million. The increase in cash flows was primarily due to higher
operating profit and an increase in cash flows from working capital, partially offset by a $10 million legal settlement payment related to the exit
of our Belgium CIT business and an increase in interest payments. The amount of cash generated by operating profit was higher than the
increase in operating profit primarily because noncash depreciation and amortization expenses were higher in 2011 compared to 2010 driven by
new fixed asset acquisitions in the second half of 2010 and the Mexican acquisition in November 2010.
Mr. Michael Dan, former president and CEO, retired in December 2011 and was paid $5.2 million as provided for under his succession
agreement. Mr. Dan is also owed an $11.6 million pension benefit payment in 2012, of which $10.1 million was paid in January 2012. These
pension benefits have been funded by assets in an existing grantor trust. He will also receive in 2012 a distribution of company stock for his
accumulated deferred compensation, net of minimum tax withholding.
2010 versus 2009
On a GAAP basis, operating cash flows increased by $40.1 million in 2010 compared to 2009 as a result of a $73.5 million increase in cash
flows from continuing operations, offset by a $33.4 million decrease in cash flow from discontinued operations.
Operating cash flows from continuing operations were higher in 2010 mainly due to a $92.4 million cash contribution made in 2009 to our U.S.
pension plan. Our operating cash flows in 2009 also included $43 million of income tax refunds, much of which were primarily the result of
tax deductions associated with the U.S. pension cash contribution and $57.6 million of Brink’s common stock that was also contributed to the
plan. In certain cash logistics operations, title to the cash we receive and process transfers to us for a short period of time but is then generally
credited to customers’ accounts the following day. We do not consider this cash as available for general corporate purposes. The increase in
amounts owed to customers for these cash processing operations contributed $38.5 million to the increase in operating cash flows.
The decrease in cash flows provided by discontinued operations resulted from the receipt of $23.7 million Federal Black Lung Excise Tax cash
refunds in 2009 compared to an $11.5 million 2010 payment for a legal claim associated with BAX Global, a former business unit.
(cid:3)
On a Non-GAAP basis, cash flows from operations declined by $38.9 million in 2010 compared to 2009. The decrease was primarily due to
the effects of receiving $43 million in income tax refunds in 2009 as well as an increase in the use of cash for working capital needs in 2010.
47
Investing Activities
(In millions)
Cash flows from investing activities
Capital expenditures
Acquisitions
Other
Investing activities
Years Ended December 31,
2009
2010
2011
$ change
2011
2010
$
$
(196.2)
(3.0)
27.4
(171.8)
(148.8)
(100.7)
(5.9)
(255.4)
(170.6)
(74.6)
4.1
(241.1)
$
$
(47.4)
97.7
33.3
83.6
21.8
(26.1)
(10.0)
(14.3)
The cash used by investing activities in 2011 was lower than 2010 as a result of $100.7 million of cash used in 2010 to purchase new
businesses, primarily operations in Mexico and Canada, offset by higher capital expenditures in 2011, as described below. In addition, we had
higher proceeds from the sale of investments and other property in 2012.
Cash flows from investing activities decreased by $14.3 million in 2010 primarily due to a $26.1 million increase in cash used to acquire
businesses, partially offset by a $21.8 million decrease in capital expenditures as a result of an increase in the use of capital leases to acquire
armored vehicles and CompuSafe® units in North America.
Capital expenditures and depreciation and amortization are as follows:
(cid:3)
(In millions)
Property and Equipment Acquired during the year
Capital expenditures:
International
North America
Capital expenditures
Capital leases (b):
International
North America
Capital leases
Total:
International
North America
Total
Depreciation and amortization
International
North America
Depreciation and amortization
Outlook
2012
Years Ended December 31,
2009
2010
2011
$ change
2011
2010
$
$
$
$
$
$
$
$
(a)
(a)
210 – 220
144.8
51.4
196.2
110.7
38.1
148.8
103.1
67.5
170.6
(a)
(a)
30 – 40
7.6
35.4
43.0
4.1
29.8
33.9
13.4
-
13.4
(a)
(a)
240 – 260
152.4
86.8
239.2
114.8
67.9
182.7
116.5
67.5
184.0
(a)
(a)
175 – 190
105.8
56.6
162.4
92.6
44.0
136.6
97.5
37.6
135.1
$
$
$
$
$
$
$
$
34.1
13.3
47.4
3.5
5.6
9.1
37.6
18.9
56.5
13.2
12.6
25.8
7.6
(29.4)
(21.8)
(9.3)
29.8
20.5
(1.7)
0.4
(1.3)
(4.9)
6.4
1.5
(a) Not provided.
(b) Represents the amount of property and equipment acquired using capital leases. Amounts are provided here to assist in the comparison of assets acquired
in the current year versus prior years.
Capital expenditures in 2011 were primarily for information technology, armored vehicles and new cash processing and security equipment.
Capital expenditures in 2011 increased when compared to 2010 primarily due to an increase in our International segment. The increase in our
International segment is largely due to capital expenditures in Mexico.
Capital expenditures in 2010 were primarily for new cash processing and security equipment, armored vehicles, information technology and
CompuSafe® units. Capital expenditures in 2010 decreased mainly due to lower expenditures in our North America segment. The decrease in
our North America segment was due to an increase in leasing armored vehicles and CompuSafe® units.
Capital expenditures have exceeded depreciation and amortization in the last several years and this trend is expected to continue in the next
several years as a result of growth in the infrastructure of our operations, including new branch facilities and leasehold improvements, growth
in technology investments, and investment in the safety and security of our operations.
48
Financing Activities
Summary of Financing Activities
(cid:3)(cid:3) (cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3) (In millions)(cid:3)
(cid:3)
Cash provided (used) by financing activities
Borrowings and repayments:
Short-term debt
Long-term revolving credit facilities
Issuance of private placement notes
Other long-term debt
Borrowings (repayments)
Debt financing costs
Repurchase shares of common stock of Brink's
Cash proceeds from sale-leaseback transactions
Dividends attributable to:
Shareholders of Brink’s
Noncontrolling interests in subsidiaries
Proceeds and tax benefits related to stock compensation and other
(cid:3) Cash flows from financing activities(cid:3)
(cid:3)(cid:3)
$
$
2011
(7.6)
(113.9)
100.0
(32.2)
(53.7)
(0.6)
-
17.6
(18.7)
(16.1)
4.3
(67.2)
Years Ended December 31,(cid:3)
2010
27.1
121.2
-
(15.9)
132.4
(2.5)
(33.7)
1.2
(18.9)
(18.4)
(0.1)
60.0
2009
(0.9)
(10.1)
-
(11.3)
(22.3)
-
(6.9)
13.6
(18.4)
(13.7)
1.1
(46.6)
Debt repayments
In 2011, our net repayments were $53.7 million as compared to net borrowings of $132.4 million in 2010. The change resulted primarily from
borrowings in 2010 to fund business acquisitions and the repurchase of common stock. In 2011, on a net basis, we repaid a portion of our debt
as cash flows from operating activities exceeded the net cash used by our investing activities.
Share purchases
In 2010, we purchased 1,682,845 shares of our common stock for $33.7 million at an average price of $20.03 per share. In 2009, we purchased
234,456 shares of our common stock at an average cost of $26.20 per share. We also used $0.8 million in early 2009 to settle share purchases
initiated in December 2008. In 2011, we did not purchase any shares of our common stock.
Dividends
We paid dividends of $0.10 per share in each of the last 12 quarters. Future dividends are dependent on our earnings, financial condition,
shareholders’ equity levels, our cash flow and business requirements, as determined by the board of directors.
Capitalization
We use a combination of debt, leases and equity to capitalize our operations.
As of December 31, 2011, debt as a percentage of capitalization (defined as total debt and equity) was 45% compared to 40% at December 31,
2010. The increase resulted from a reduction in equity compared to the end of 2010 primarily as a result of actuarial losses caused by lower
discount rates for retirement plans exceeding net income during 2011.
Summary of Debt, Equity and Other Liquidity Information
(In millions)
Debt:
Multi-currency revolving facilities
Revolving Facility
Letter of Credit Facilities
2010 Credit Facility
Private Placement Notes
Dominion Terminal Associates bonds
Capital leases
Other
Debt
Total equity
(a)
Amount available
under credit facilities
December 31,
2011
$
$
37.2
290.0
24.8
20.0
-
-
-
-
372.0
Outstanding Balance
December 31,
2011
9.8
110.0
-
-
100.0
43.2
95.4
31.0
389.4
482.4
$
$
$
2010
11.0
217.2
-
-
-
43.2
64.2
53.6
389.2
583.1
$ change (a)
$
$
$
(1.2)
(107.2)
-
-
100.0
-
31.2
(22.6)
0.2
(100.7)
In addition to cash borrowings and repayments, the change in the debt balance also includes changes in currency exchange rates and new capital lease
agreements
49
Net Debt and Reconciliation to GAAP Measures
(cid:3)
(In millions)
Debt:
Short-term
Long-term
Total Debt
Cash and cash equivalents
Less amounts held by cash logistics operations (a)
Cash available for general corporate purposes
Net Debt
(a)
December 31,
2011
2010
$ change
$
25.4
364.0
389.4
182.9
(25.1)
157.8
36.5
352.7
389.2
183.0
(38.5)
144.5
$
(11.1)
11.3
0.2
(0.1)
13.4
13.3
$
231.6
244.7
$
(13.1)
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 non-GAAP 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.
Net debt was slightly lower at the end of 2011 compared to 2010 as a result of cash flows from operating activities exceeding cash flow from
investing activities.
Liquidity Needs
Our operating liquidity needs are typically financed by cash from operations, short-term debt and the Revolving Facility (our debt facilities are
described below). We have certain limitations and considerations related to the cash and borrowing capacity that are reported in our
consolidated financial statements. Based on our current cash on hand, amounts available under our credit facilities and current projections of
cash flows from operations, we believe that we will be able to meet our liquidity needs for more than the next twelve months.
Limitations on dividends from foreign subsidiaries. A significant portion of our operations are outside the U.S. which may make it difficult to
repatriate cash for use in the U.S. See Item 1A., Risk Factors, for more information on the risks associated with having businesses outside the
U.S.
Incremental taxes. We have approximately $126 million of cash held by subsidiaries that we consider to be permanently invested and for
which we do not expect to repatriate to the U.S. If we decided to repatriate this cash to the U.S., we may have to accrue and pay additional
income taxes. Given the number of foreign operations and the complexities of the tax law, it is not practical to estimate the potential tax
liability, but the amount of taxes owed could be material depending on how and when the repatriation occurred.
Venezuela. In 2010, Venezuela began limiting conversions of bolivar fuertes to U.S. dollars to $350,000 per legal entity per month. As a
result, we do not anticipate repatriation of cash from our Venezuelan operations to the U.S. for the foreseeable future. This may limit our
ability to use funds earned in Venezuela for general corporate purposes, including reducing our debt. At December 31, 2011, our Venezuelan
subsidiaries held $1.3 million of cash and short-term investments denominated in U.S. dollars and $8.9 million of cash denominated in bolivar
fuertes.
Pension contributions. We intend to contribute company stock to satisfy some or all of the $31.5 million in contributions that are required for
2012 instead of using cash. We may also use company stock in the future to satisfy future contributions. The contributions after 2012 total
$197 million based on current assumptions.
Debt
On January 6, 2012, we amended our unsecured revolving bank credit facility (the “Revolving Facility”). The amendment provides for an
increase in the amount of the Revolving Facility from $400 million to $480 million at more favorable pricing and extends the maturity date
from July 2014 to January 2017. The Revolving Facility’s interest rate is based on LIBOR plus a margin, alternate base rate plus a margin, or
competitive bid. The Revolving Facility allows us to borrow or issue letters of credit (or otherwise satisfy credit needs) on a revolving basis
over the term of the facility. As of December 31, 2011, $290 million was available under the Revolving Facility. Amounts outstanding under
the Revolving Facility as of December 31, 2011, were denominated primarily in U.S. dollars and to a lesser extent in Canadian dollars.
50
The margin on LIBOR borrowings under the Revolving Facility, which ranged from 1.225% to 2.325% depending on our credit rating, was
1.75% at December 31, 2011. Under the amended Revolving Facility, the margin on LIBOR borrowings can range from 0.9% to 1.575% and
was 1.20% at January 6, 2012. The margin on alternate base rate borrowings under the Revolving Facility ranged from 0.225% to 1.325%.
Under the amended Revolving Facility, the alternate base rate borrowings can range from 0.0% to 0.575%. We also pay an annual facility fee
on the Revolving Facility based on our credit rating. The facility fee, which ranged from 0.15% to 0.55%, was 0.375% at December 31, 2011.
Under the amended Revolving Facility, the facility fee can range from 0.10% to 0.30% and was 0.175% at January 6, 2012.
On January 24, 2011, we issued $100 million in unsecured notes through a private placement debt transaction (the “Notes”). The Notes
comprise $50 million in series A notes with a fixed interest rate of 4.57% and $50 million in series B notes with a fixed interest rate of 5.20%.
The Notes are due in January 2021 with principal payments under the series A notes to begin in January 2015. The proceeds of $100 million
were utilized to pay down the Revolving Facility.
As of December 31, 2011, we had three unsecured multi-currency revolving bank credit facilities with a total of $70 million in available credit,
of which approximately $37 million was available. A $20 million facility expires in December 2012, another $20 million facility expires in
May 2014 and a $30 million facility expires in October 2014. Interest on these facilities is based on LIBOR plus a margin. The margin ranges
from 1.0% to 2.50%. We also have the ability to borrow from other banks, at the banks’ discretion, under short-term uncommitted agreements.
Various foreign subsidiaries maintain other lines of credit and overdraft facilities with a number of banks.
We have two unsecured letter of credit facilities totaling $139 million, of which approximately $25 million was available at December 31,
2011. A $54 million facility expires in December 2014 and an $85 million facility expires in June 2015. The Revolving Facility and the multi-
currency revolving credit facilities are also used for issuance of letters of credit and bank guarantees. On January 24, 2012, we entered into a
$25 million unsecured letter of credit facility that will expire in December 2014.
We also have an unsecured bilateral committed credit facility (the “2010 Credit Facility”) with a total of $20 million in available credit that
expires in March 2012. Interest on this facility is based on LIBOR plus a margin, which ranges from 1.75% to 2.25%. As of December 31,
2011, $20 million was available under the 2010 Credit Facility.
The Revolving Facility, the Notes, the three unsecured multi-currency revolving bank credit facilities, the two letter of credit facilities and the
2010 Credit Facility contain subsidiary guarantees and various financial and other covenants. The financial covenants, among other things,
limit our total indebtedness, limit priority debt, limit asset sales, limit the use of proceeds from asset sales and provide for minimum coverage
of interest costs. The credit agreements do not provide for the acceleration of payments should our credit rating be reduced. If we were not to
comply with the terms of our various credit agreements, the repayment terms could be accelerated and the commitments could be withdrawn.
An acceleration of the repayment terms under one agreement could trigger the acceleration of the repayment terms under the other loan
agreements. We were in compliance with all financial covenants at December 31, 2011.
We have $43 million of bonds issued by the Peninsula Ports Authority of Virginia recorded as debt on our balance sheet. Although we are not
the primary obligor of the debt, we have guaranteed the debt and we believe that we will ultimately pay this obligation. The guarantee
originated as part of a former interest in Dominion Terminal Associates, a deep water coal terminal. We continue to pay interest on the debt.
The bonds bear a fixed interest rate of 6.0% and mature in 2033. The bonds may mature prior to 2033 upon the occurrence of specified events
such as the determination that the bonds are taxable or if we fail to abide by the terms of the guarantee.
Equity
At December 31, 2011, we had 100 million shares of common stock authorized and 46.9 million shares issued and outstanding.
Share Purchases
In 2009, we purchased 234,456 shares of common stock for $6.1 million at an average price of $26.20 per share. In 2010, we purchased
1,682,845 shares of our common stock for $33.7 million at an average price of $20.03 per share. We did not purchase any common stock in
2011.
Dividends
We paid regular quarterly dividends on our common stock during the last three years. On January 19, 2012, the board declared a regular
quarterly dividend of 10 cents per share payable on March 1, 2012. Future dividends are dependent on the earnings, financial condition,
shareholder equity levels, cash flow and business requirements, as determined by the board of directors.
Shelf Registration of Common Stock
We intend to register $150 million in new common stock in 2012. We intend to issue shares in 2012 to satisfy some or all of the required
contributions to our primary U.S. pension plan. We may also issue shares in the future to satisfy future contributions.
51
Preferred Stock
At December 31, 2011, we had the authority to issue up to 2.0 million shares of preferred stock, par value $10 per share.
Off Balance Sheet Arrangements
We have operating leases that are described in the notes to the consolidated financial statements. See note 14 for operating leases that have
residual value guarantees or other terms that cause the agreement to be considered a variable interest. We use operating leases to lower our
cost of financings. We believe that operating leases are an important component of our capital structure.
52
Contractual Obligations
The following table reflects our contractual obligations as of December 31, 2011.
(In millions)
2012
2013
2014
2015
2016
Estimated Payments Due by Period
Contractual obligations:
Long-term debt obligations
Capital lease obligations
Operating lease obligations
Purchase obligations:
Service contracts
Other
Other long-term liabilities reflected on the
Company’s balance sheet under GAAP:
Primary U.S. pension plan
Other retirement obligations:
UMWA plans
Black lung and other plans
Workers compensation
and other claims
Uncertain tax positions
Other
Total
$
$
7.1
21.6
80.3
6.9
1.5
2.5
18.3
63.6
1.4
-
97.7
16.7
50.2
1.2
-
7.9
14.9
33.1
0.6
-
7.9
13.7
20.5
0.1
-
Later
Years
145.5
10.2
49.0
-
-
Total
268.6
95.4
296.7
10.2
1.5
31.5
41.5
51.1
47.0
42.4
14.9
228.4
-
7.2
27.0
3.3
0.8
187.2
-
5.8
9.7
-
0.8
143.6
-
5.5
6.1
-
0.8
229.3
-
5.2
3.7
-
0.8
113.2
-
5.0
3.3
-
0.8
93.7
528.5
60.6
21.5
-
8.6
838.8
528.5
89.3
71.3
3.3
12.6
1,605.8
U.S. Pension Plans
Pension benefits provided to eligible U.S. employees were frozen on December 31, 2005, and are not provided to employees hired after 2005 or
to those covered by a collective bargaining agreement. There are approximately 20,400 beneficiaries in the plans. Based on current
assumptions we will begin annual contributions to the plan in 2012 which will continue for six years, totaling $228.4 million. We intend to
make the 2012 contribution at least in part through the use of shares of our common stock. We may also contribute shares in the future to
satisfy future contributions.
UMWA Plans
Retirement benefits related to former coal operations include medical benefits provided by the Pittston Coal Group Companies Employee
Benefit Plan for UMWA Represented Employees. There are approximately 4,400 beneficiaries in the UMWA plans. The company does not
expect to make additional contributions to these plans until 2023.
Black Lung
Under the Federal Black Lung Benefits Act of 1972, Brink’s is responsible for paying lifetime black lung benefits to miners and their
dependents for claims filed and approved after June 30, 1973. There are approximately 800 black lung beneficiaries.
Other
We have a plan that provides retirement health care benefits to certain eligible salaried employees. Benefits under this plan are not indexed for
inflation.
Assumptions for U.S. Retirement Obligations
We have made various assumptions to estimate the amount of payments to be made in the future. The most significant assumptions include:
Changing discount rates and other assumptions in effect at measurement dates (normally December 31)
Investment returns of plan assets
Addition of new participants (historically immaterial due to freezing of pension benefits and exit from coal business)
(cid:120)
(cid:120)
(cid:120)
(cid:120) Mortality rates
Change in laws
(cid:120)
The Contractual Obligations table above represents payments projected to be paid with our corporate funds and does not represent payments
projected to be made to beneficiaries with retirement plan assets.
53
Funded Status of U.S. Retirement Plans
(In millions)
U.S. pension plans
Beginning funded status
Net periodic pension credit (a)
Payment from Brink’s
Benefit plan experience (loss) gain
Other
Ending funded status
UMWA plans
Beginning funded status
Net periodic postretirement credit (cost) (a)
Benefit plan experience loss
Other
Ending funded status
Actual
2011
(191.7)
18.8
-
(133.1)
0.7
(305.3)
(164.1)
1.5
(97.6)
(1.4)
(261.6)
$
$
$
$
Black lung and other plans
Beginning funded status
Net periodic postretirement cost (a)
Payment from Brink’s
Benefit plan experience loss
Ending funded status
(a) Excludes amounts reclassified from accumulated other comprehensive income.
(62.2)
(2.8)
7.0
(2.9)
(60.9)
$
$
2012
2013
Projected
2014
2015
2016
(305.3)
16.4
31.5
(4.3)
13.2
(248.5)
(261.6)
(1.3)
-
-
(262.9)
(60.9)
(2.4)
7.2
-
(56.1)
(248.5)
16.2
41.5
0.1
2.4
(188.3)
(262.9)
(2.0)
-
-
(264.9)
(56.1)
(2.3)
5.8
-
(52.6)
(188.3)
22.3
51.1
(0.8)
0.8
(114.9)
(264.9)
(2.8)
-
-
(267.7)
(52.6)
(2.1)
5.5
-
(49.2)
(114.9)
28.1
47.0
(0.6)
0.8
(39.6)
(267.7)
(3.8)
-
-
(271.5)
(49.2)
(2.0)
5.2
-
(46.0)
(39.6)
33.3
42.4
0.1
0.8
37.0
(271.5)
(4.7)
-
-
(276.2)
(46.0)
(1.9)
5.0
-
(42.9)
Summary of Total Expenses Related to All U.S. Retirement Liabilities
This table summarizes actual and projected expense (income) related to U.S. retirement liabilities. Most expenses are allocated to non-segment
results, with the balance allocated to North American operations. The market value of the investments used to pay benefits for our retirement
plans significantly declined in 2008. Expenses related to our U.S. pension plans are expected to increase over the next few years as market
losses are amortized into earnings from other comprehensive income.
(In millions)
U.S. pension plans
UMWA plans
Black lung and other plans
Total
Amounts allocated to:
North America segment
Non-segment
Total
Actual
2011
9.4
13.2
5.4
28.0
3.2
24.8
28.0
$
$
$
$
2012
27.7
22.9
5.2
55.8
8.9
46.9
55.8
2013
25.1
22.6
5.0
52.7
9.5
43.2
52.7
Projected
2014
13.4
22.5
4.9
40.8
5.0
35.8
40.8
2015
4.1
22.5
4.7
31.3
1.4
29.9
31.3
2016
(3.9)
22.6
4.5
23.2
(1.7)
24.9
23.2
Summary of Total Payments from U.S. Plans to Participants
This table summarizes actual and estimated payments from the plans to participants.
(In millions)
Payments from U.S. Plans to participants
U.S. pension plans
UMWA plans
Black lung and other plans
Total
2012
2013
Projected
2014
2015
2016
55.6
36.9
7.2
99.7
46.1
37.5
5.8
89.4
46.0
37.4
5.5
88.9
47.2
37.5
5.2
89.9
48.7
36.9
5.0
90.6
Actual
2011
39.7
39.1
7.0
85.8
$
$
54
Summary of Total Payments from Brink’s to U.S. Plans
This table summarizes actual and estimated payments from Brink’s to U.S. retirement plans.
Actual and Projected Payments to Plans from Brink's
Actual and Projected Funded Status
Primary
U.S.
Pension
Plan
Other U.S.
Pension
Plan
UMWA
Plans
Black
Lung and
Other
Plans
-
150.0
-
- (cid:3)
(cid:3)
31.5
41.5
51.1
47.0
42.4
14.7
0.2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
228.4
1.9
4.2
0.8
0.7
13.2
2.4
0.8
0.8
0.8
0.8
0.8
0.8
1.4
0.9
0.7
0.7
0.7
0.7
0.7
0.6
0.6
0.6
0.5
0.5
0.5
0.4
0.4
0.4
0.4
0.3
0.3
0.3
0.2
0.2
0.2
0.2
0.2
0.1
0.1
0.1
0.1
0.1
0.1
0.1
-
-
-
-
-
-
-
-
-
33.7
-
0.5
-
-
-
-
-
-
-
-
-
-
-
-
-
26.4
29.4
28.4
27.2
26.3
25.6
24.8
23.9
23.1
22.2
21.2
20.3
19.4
18.5
17.6
16.7
15.8
14.8
13.8
12.7
11.8
10.5
9.6
8.7
7.8
7.0
6.2
5.4
4.8
4.2
3.6
3.1
2.7
2.3
2.0
1.7
1.4
7.6
528.5
7.1
7.6
5.9
7.0
7.2
5.8
5.5
5.2
5.0
4.6
4.4
4.2
3.9
3.6
3.4
3.2
3.0
2.8
2.6
2.4
2.2
2.0
1.8
1.7
1.5
1.4
1.3
1.2
1.1
1.0
0.9
0.8
0.7
0.6
0.6
0.5
0.4
0.4
0.3
0.3
0.3
0.2
0.2
0.2
0.2
0.1
0.1
0.1
0.1
0.1
0.1
0.1
-
89.3
U.S.
Pension
Plans
UMWA
Plans
Black
Lung and
Other
Plans
(329.2)
(152.3)
(191.7)
(305.3)
(248.5)
(188.3)
(114.9)
(39.6)
37.0
90.9
133.6
179.1
228.6
281.0
337.0
396.8
460.8
529.3
602.4
680.6
764.3
853.8
949.6
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(207.5)
(157.5)
(164.1)
(261.6)
(262.9)
(264.9)
(267.7)
(271.5)
(276.2)
(282.0)
(289.1)
(297.5)
(307.5)
(319.0)
(332.2)
(320.0)
(304.0)
(288.4)
(273.3)
(258.4)
(243.7)
(229.1)
(214.8)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(48.6)
(47.1)
(62.2)
(60.9)
(56.1)
(52.6)
(49.2)
(46.0)
(42.9)
(39.9)
(36.8)
(33.7)
(30.7)
(28.3)
(25.5)
(23.4)
(21.3)
(19.4)
(17.6)
(15.9)
(14.3)
(12.8)
(11.5)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
Total
9.0
162.3
6.7
7.7
51.9
49.7
57.4
53.0
48.2
20.1
5.4
5.0
5.3
4.5
4.1
30.3
33.1
31.9
30.5
29.3
28.4
27.4
26.2
25.3
24.2
23.0
22.0
21.0
20.0
18.9
17.9
16.9
15.7
14.6
13.5
12.5
11.1
10.1
9.1
8.2
7.4
6.5
5.7
5.1
4.4
3.7
3.2
2.8
2.4
2.1
1.8
1.5
7.6
879.9
Total
(585.3)
(356.9)
(418.0)
(627.8)
(567.5)
(505.8)
(431.8)
(357.1)
(282.1)
(231.0)
(192.3)
(152.1)
(109.6)
(66.3)
(20.7)
53.4
135.5
221.5
311.5
406.3
506.3
611.9
723.3
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(In millions)
Actual payments
2008
2009
2010
2011
Projected payments
$
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
2055
2056
2057
2058
2059
2060 and thereafter
Total projected payments
$
(a) Information not provided
The amounts in the tables above are based on a variety of estimates, including actuarial assumptions as of December 31, 2011. The estimated
amounts will change in the future to reflect payments made, investment returns, actuarial revaluations, and other changes in estimates. Actual
amounts could differ materially from the estimated amounts.
55
Discounted Cash Flows at Plan Discount Rates – Reconciled to Liability Amounts Reported under U.S. GAAP
(In millions)
Funded status of U.S. retirement plans – GAAP
Present value of projected earnings of plan assets (a)
Discounted cash flows at plan discount rates – Non-GAAP
$
$
Plan discount rate
Expected return of assets
Primary U.S. pension
plan (b)
UMWA Plans (c)
Other unfunded U.S.
plans
December 31, 2011
278.8
(81.6)
197.2
4.60%
8.25%
261.6
(57.1)
204.5
4.40%
8.50%
87.4
-
87.4
Total
627.8
(138.7)
489.1
(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 our future funding requirements 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.
Contingent Matters
Bankruptcy of Brink’s Belgium
Our former cash-in-transit subsidiary in Belgium (Brink’s Belgium) filed for bankruptcy in November 2010 after a restructuring plan was
rejected by local union employees and was placed into bankruptcy on February 2, 2011. We continue to operate our Global Services unit in
Belgium, which provides secure transport of diamonds, jewellery, precious metals, banknotes and other commodities.
In December 2010, the court-appointed provisional administrators of Brink’s Belgium filed a claim for €20 million against a subsidiary of
Brink’s. In June 2011, the Brink’s subsidiary entered into a settlement agreement related to this claim. Under the terms of the settlement
agreement, the Brink’s subsidiary agreed to contribute, upon the satisfaction of certain conditions, €7 million toward social payments to former
Brink’s Belgium employees in exchange for the bankruptcy receivers requesting withdrawal of the pending litigation and agreeing not to file
additional claims. The conditions of the settlement agreement included a release from liability by affected employees, the Belgian tax authority
and the Belgian social security authority. These conditions were satisfied and the settlement was finalized during the third quarter of 2011. We
recorded a pretax charge of €7 million (approximately $10 million) in the second quarter of 2011 related to this claim.
Other
We are involved in various other lawsuits and claims in the ordinary course of business. We are not able to estimate the range of losses for
some of these matters. We have recorded accruals for losses that are considered probable and reasonably estimable. We do not believe that the
ultimate disposition of any of these matters will have a material adverse effect on our liquidity, financial position or results of operations.
56
APPLICATION OF CRITICAL ACCOUNTING POLICIES
The application of accounting principles requires the use of assumptions, estimates and judgments. We make assumptions, estimates and
judgments based on, among other things, knowledge of operations, markets, historical trends and likely future changes, similarly situated
businesses and, when appropriate, the opinions of advisors with relevant knowledge and experience. Reported results could have been
materially different had we used a different set of assumptions, estimates and judgments.
Deferred Tax Asset Valuation Allowance
Deferred tax assets result primarily from net operating losses and the net tax effects of temporary differences between the carrying amount of
assets and liabilities for financial statement and income tax purposes, as determined under enacted tax laws and rates.
Accounting Policies
We establish valuation allowances in accordance with FASB ASC Topic 740, Income Taxes, when we estimate it is not more likely than not
that a deferred tax asset will be realized. We decide to record valuation allowances primarily based on an assessment of historical earnings and
future taxable income that incorporates prudent, feasible tax-planning strategies. We assess deferred tax assets on an individual jurisdiction
basis. Changes in tax statutes, the timing of deductibility of expenses or expectations for future performance could result in material
adjustments to our valuation allowances, which would increase or decrease tax expense. Our valuation allowances are as follows.
Valuation Allowances
(cid:3)(cid:3)
(cid:3) (cid:3)(cid:3)
(cid:3) (In millions)(cid:3)
(cid:3)
U.S.
Non-U.S.
Total
(cid:3)
(cid:3)
December 31,
2011
8.2
35.7
43.9
$
$
2010
15.7
30.2
45.9
Application of Accounting Policies
U.S. Deferred Tax Assets
We have $390 million of net deferred tax assets at December 31, 2011, and $354 million related to U.S. jurisdictions. We changed our
judgment about the need for a deferred tax asset valuation allowance for foreign tax credit carryforwards in the U.S. as a result of tax planning
strategies to repatriate non-U.S. earnings to enable us to utilize the credit carryfoward. As a result, we reversed $7.9 million of valuation
allowances in 2011 that were originally recorded in 2010. Other than foreign tax credits, there were no significant changes to our U.S.
valuation allowances in 2011.
We used various estimates and assumptions to evaluate the need for the valuation allowance in the U.S. These included
(cid:120)
(cid:120)
(cid:120)
projected revenues and operating income for our U.S. entities,
estimated required contributions to our U.S. retirement plans, and
interest rates on projected U.S. borrowings.
Had we used different assumptions, we might have made different conclusions about the need for valuation allowances. For example, using
different assumptions in 2011 and 2010 we might have concluded that we require a valuation allowance offsetting our U.S. deferred tax assets
at the end of 2011 and 2010.
Non-U.S. Deferred Tax Assets
We changed our judgment about the need for valuation allowances for deferred tax assets in certain non-U.S. jurisdictions as a result of
improvements in operating results and an improved outlook about the future operating performance in those jurisdictions. As a result, we
reversed $0.3 million of valuation allowances in 2011 and $0.9 million of valuation allowances in 2010 through continuing operations.
57
Goodwill, Other Intangible Assets and Property and Equipment Valuations
Accounting Policies
At December 31, 2011, we had property and equipment of $749.2 million, goodwill of $231.4 million and other intangible assets of $63.8
million, net of accumulated depreciation and amortization. We review these assets for possible impairment using the guidance in FASB ASC
Topic 350, Intangibles - Goodwill and Other, for goodwill and other intangible assets and FASB ASC Topic 360, Property, Plant and
Equipment, for property and equipment. Our review for impairment requires the use of significant judgments about the future performance of
our operating subsidiaries. Due to the many variables inherent in the estimates of the fair value of these assets, differences in assumptions could
have a material effect on the impairment analyses.
Application of Accounting Policies
Goodwill
We review goodwill for impairment annually and whenever events or circumstances make it more likely than not that impairment may have
occurred. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets
and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. We
perform a qualitative assessment in order to determine whether it is more likely than not that the fair value of each reporting unit is less than its
carrying amount. As part of this assessment, we review qualitative factors such as the amount of excess fair value from the most recent
quantitative analysis, changes in the reporting unit carrying values, changes in market conditions as well as other factors specific to each
reporting unit. If fair value is required to be determined for any reporting unit, we estimate the fair value using a discounted cash flow
methodology. The fair value of each reporting unit is compared to its carrying value to determine if impairment is indicated.
For the 2011 assessment, we have determined that qualitative factors are present which indicate that the fair value of each reporting unit
exceeds its carrying value. As a result, we have not updated our quantitative assessment of fair value for the reporting units. Due to a history
of profitability and cash flow generation along with expectations for future cash flows, we have determined that the fair value of the Latin
America and Asia Pacific reporting units substantially exceeds carrying value. However, during our qualitative assessment, we noted factors
that would indicate that the fair value of two of the reporting units, North America and EMEA, may no longer be substantially in excess of fair
value. This decline is driven primarily by lower than previously anticipated performance in both of these reporting units. North America and
EMEA have $20.1 million and $126.4 million in goodwill, respectively, as of December 31, 2011.
The qualitative assessment performed is inherently subjective, with a number of factors based on assumptions and judgments. Changes in
assumptions and results due to economic conditions, industry factors and reporting unit performance could result in different assessments of the
fair value and could result in impairment charges in the future.
Indefinite-lived intangibles
We review indefinite-lived intangibles for impairment annually and whenever events or circumstances make it more likely than not that
impairment may have occurred. An indefinite-lived intangible is also evaluated each reporting period to determine whether events and
circumstances continue to support an indefinite useful life. The annual impairment test is performed by comparing the carrying value of the
intangible to its estimated fair value. We have had no significant impairments of indefinite-lived intangibles in the last three years.
Other Intangible Assets and Property and Equipment
We review long-lived assets besides goodwill and other indefinite-lived intangibles for impairment whenever events or changes in
circumstances indicate that the related carrying amounts may not be recoverable. For purposes of assessing impairment, assets are grouped at
the lowest levels for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. To
determine whether impairment has occurred, we compare estimates of the future undiscounted net cash flows of groups of assets to their
carrying value.
58
Retirement and Postemployment Benefit Obligations
We provide benefits through defined benefit pension plans and retiree medical benefit plans and under statutory requirements.
Accounting Policy
We account for pension and other retirement benefit obligations under FASB ASC Topic 715, Compensation – Retirement Benefits. We
account for postemployment benefit obligations, including workers’ compensation obligations, under FASB ASC Topic 712, Compensation –
Nonretirement Postemployment Benefits.
To account for these benefits, we make assumptions of expected return on assets, discount rates, inflation, demographic factors and changes in
the laws and regulations covering the benefit obligations. Because of the inherent volatility of these items and because the obligations are
significant, changes in the assumptions could have a material effect on our liabilities and expenses related to these benefits.
Our most significant retirement plans include our primary U.S. pension plan and the retiree medical plans of our former coal business that were
collectively bargained with the United Mine Workers of America (the “UMWA”). The critical accounting estimates that determine the
carrying values of liabilities and the resulting annual expense are discussed below.
59
Application of Accounting Policy
Discount Rate Assumptions
For plans accounted under FASB ASC Topic 715, we discount estimated future payments using discount rates based on market conditions at
the end of the year. In general, our liability changes in an inverse relationship to interest rates. That is, the lower the discount rate, the higher
the associated plan obligation.
We derive the discount rates used to measure the present value of our benefit obligations using the cash flow matching method. Under this
method, we compare the plan’s projected payment obligations by year with the corresponding yields on the Mercer Yield Curve. Each year’s
projected cash flows are then discounted back to their present value at the measurement date and an overall discount rate is determined. The
overall discount rate is then rounded to the nearest tenth of a percentage point.
The discount rates for the primary U.S. pension plan, UMWA retiree medical plans and Black Lung obligations were:
Primary U.S. Plan
UMWA Plans
Black Lung
2011
2010
2009
2011
2010
2009
2011
2010
2009
Discount rate:
Retirement cost
Benefit obligation at year end
5.3 %
4.6 %
5.9 %
5.3 %
6.7 %
5.9 %
5.3 %
4.4 %
5.9 %
5.3 %
6.2 % (cid:3)
5.9 % (cid:3)
4.8 %
4.2 %
5.3 %
4.8 %
6.3 %
5.4 %
Sensitivity Analysis
The discount rate we select at year end affects the valuations of plan obligations at year end and calculations of net periodic expenses for the
following year.
The tables below compare hypothetical plan obligation valuations for our largest plans as of December 31, 2011, actual expenses for 2011 and
projected expenses for 2012 assuming we had used discount rates that were one percentage point lower or higher.
Plan Obligations at December 31, 2011
(In millions)
Primary U.S. pension plan
UMWA plans
Actual 2011 and Projected 2012 Expense (Income)
Hypothetical
1% lower
$
1,111.6
588.3
(cid:3)
(cid:3)
(cid:3)
Actual
964.2
529.6
Hypothetical
1% higher
845.8
480.6
(In millions, except percentages)
Years Ending December 31,
Primary U.S. pension plan
Discount rate assumption
Retirement cost (credit)
UMWA plans
Discount rate assumption
Retirement cost
(cid:3)
(cid:3)
$
$
Hypothetical sensitivity analysis
for discount rate assumption
Hypothetical sensitivity analysis
for discount rate assumption
Actual
2011
1% lower
2011
1% higher
2011
Projected
2012
1% lower
2012
1% Higher
2012
5.3 %
8.0
5.3 %
13.2
4.3 %
19.0
4.3 %
14.3
6.3 %
(1.3)
6.3 %
12.1
4.6 %
22.5
4.4 %
22.9
$
$
3.6 %
32.9
3.4 %
24.0
5.6 %
13.6
5.4 %
21.8
60
Expected-Return-on-Assets Assumption
Our expected-return-on-assets assumption, which affects our net periodic benefit cost, reflects the long-term average rate of return we expect
the plan assets to earn. We select the expected-return-on-assets assumption using advice from our investment advisor and actuary considering
each plan’s asset allocation targets and expected overall investment manager performance and a review of the most recent long-term historical
average compounded rates of return, as applicable. We selected 8.25% as the expected-return-on-assets assumption for our primary U.S. plan
and 8.50% for our UMWA retiree medical plans as of December 31, 2011. We selected 8.75% for both plans as of December 31, 2010.
Over the last ten years, the annual returns of our primary U.S. pension plan have averaged, on a compounded basis, 5.5%, net of fees, while the
20-year and 25-year compounded annual return averaged 8.5%, and the 29-year compounded annual return averaged 12.1%.
Sensitivity Analysis
Effect of using different expected-rate-of-return assumptions. Our 2011 and projected 2012 expense would have been different if we had used
different expected-rate-of-return assumptions. For every hypothetical change of one percentage point in the assumed long-term rate of return
on plan assets (and holding other assumptions constant), our 2011 and 2012 expense would be as follows.
(In millions, except percentages)
Years Ending December 31,
Expected-return-on-asset assumption
Primary U.S. pension plan
UMWA plans
Primary U.S. pension plan
UMWA plans
(cid:3)
(cid:3)
(cid:3)
Hypothetical sensitivity analysis
for expected-return-on asset
assumption
Hypothetical sensitivity analysis
for expected-return-on asset
assumption
Actual
2011
1% lower
2011
1% higher
2011
Projected
2012
1% lower
2012
1% Higher
2012
8.75 %
8.75 %
8.0
13.2
$
7.75 %
7.75 %
15.5
16.1
9.75 %
9.75 %
0.7
10.3
8.25 %
8.50 %
22.5
22.9
$
7.25 %
7.50 %
29.8
25.4
9.25 %
9.50 %
15.2
20.4
Effect of improving or deteriorating actual future market returns. Our funded status at December 31, 2012, and our 2013 expense will be
different from currently projected amounts if our projected 2012 returns are better or worse than the returns we have assumed for each plan.
(In millions, except percentages)
Hypothetical sensitivity analysis of 2012 asset return
better or worse than expected
Years Ending December 31,
Projected
Return on investments in 2012(cid:3)
Primary U.S. pension plan(cid:3)
UMWA plans
Projected Funded Status at December 31, 2012
Primary U.S. pension plan
UMWA plans
2013 Expense
Primary U.S. pension plan
UMWA plans
(cid:3)
(cid:3)
$
$
8.25 %
8.50 %
(234)
(263)
24
23
Better
return
16.50 %
17.00 %
(178)
(242)
21
19
Worse
return
- %
- %
(291)
(284)
26
26
61
Effect of using fair market value of assets to determine expense. For our defined-benefit pension plans, we calculate expected investment
returns by applying the expected long-term rate of return to the market-related value of plan assets. In addition, our plan asset actuarial gains
and losses that are subject to amortization are based on the market-related value.
The market-related value of the plan assets is different from the actual or fair-market value of the assets. The actual or fair-market value is, at a
point in time, the value of the assets that is available to make payments to pensioners and to cover any transaction costs. The market-related
value recognizes changes in fair-value from the expected value on a straight-line basis over five years. This recognition method spreads the
effects of year-over-year volatility in the financial markets over several years.
Our expenses related to our primary U.S. pension plan would have been different if our accounting policy were to use the fair market value of
plan assets instead of the market-related value to recognize investment gains and losses.
(In millions)
Years Ending December 31,
Expense (Income)
Based on market-related value of assets
Actual
2011
Projected
2012
Projected
2013
Hypothetical (a)
2011
2012
2013
Primary U.S. pension plan
(a) Assumes that our accounting policy was to use the fair market value of assets instead of the market-related value of assets to determine our expense related
30.2
21.7
22.5
24.2
20.9
8.0
$
$
to our primary U.S. pension plan.
For our UMWA plans, we calculate expected investment returns by applying the expected long-term rate of return to the fair market value of
the assets at the beginning of the year. This method is likely to cause the expected return on assets, which is recorded in earnings, to fluctuate
more than had we used the accounting methodology of our defined-benefit pension plans.
Medical Inflation Assumption
We estimate the trend in health care cost inflation to predict future cash flows related to our retiree medical plans. Our assumption is based on
recent plan experience and industry trends.
For the UMWA plans, our largest postretirement plans, we have assumed a medical inflation rate of 7% for 2012, and we project this rate to
decline to 5% by 2018. The average annual medical inflation rate of the company over the last three years was 7.6%. If we had assumed that
medical inflation rates were one percentage point higher in each future year, the plan obligation for these plans at December 31, 2011, would
have been approximately $60.1 million higher and the expense for 2011 would have been $2.5 million higher. If we had assumed that the
medical inflation rates were one percentage point lower, the plan obligation at December 31, 2011, would have been approximately $51.1
million lower and the related 2011 expenses would have been $2.1 million lower.
(cid:3)
If we had projected medical inflation rates to decline from 7% to 4.5% by 2027, instead of our projected decline to 5% by 2018, the plan
obligation for the UMWA retiree medical benefit plan would have been $25.5 million higher for 2011 and our expense would be $3.0 million
higher for 2012.
In addition, the Patient Protection and Affordable Care Act could substantially change the health care and insurance industries in the U.S.,
which could increase our costs.
Excise Tax on Administrators by Patient Protection and Affordable Care Act
A 40% excise tax will be imposed on high-cost health plans (“Cadillac plans”) beginning in 2018. The tax will apply to plan costs that exceed
a certain threshold level for individuals and for families, which will be indexed to inflation. There will be higher limits for high-risk
professions, among which is mining. Even though the tax is not assessed directly to an employer but rather to the benefits plan administrator,
the cost is expected to be passed through to plan sponsors as higher premiums or higher claims administration fees, increasing the plan
sponsor’s obligations. We project that this excise tax will impact our UMWA plans and have accordingly included a 4.2% increase
(approximately $21.3 million) to our UMWA plans’ obligation. We are currently unable to reduce the benefit levels of our UMWA medical
plans to avoid this excise tax because these benefit levels are required by the Coal Industry Retiree Health Benefit Act of 1992.
62
Black Lung
The Patient Protection and Affordable Care Act, which was enacted in March 2010, contains an amendment to the laws governing federal
black lung benefits for coal miners. The amendment creates a presumption that benefits should be awarded to current or former coal miners
that have accumulated 15 or more years of coal mine employment if they are able to prove that they have a disabling pulmonary disease.
Previously, miners were required to demonstrate that their disabling pulmonary disease was caused by black lung disease, and not by some
other cause such as smoking or old age. Under the amendment, the burden of proof becomes the employer’s to establish that the disabling
pulmonary disease is not black lung disease or that the miner’s disease did not result from coal mine employment. We expect that the
amendment may increase the approval rates for coal miners applying to receive black lung benefits, however, the rates have not been
significantly affected to date.
We remeasured our black lung obligation as of March 31, 2010, to reflect an estimate of the increase in approval rates as a result of the
amendment. The obligation increased $19.3 million as a result of the remeasurement, from $42.3 million before the remeasurement to $61.6
million. The liability could change in the future if the approval rates used in the estimates of the liabilities are either too high or too low. These
estimated amounts will change in the future to reflect payments made, actuarial revaluations, and other changes in estimates. Actual amounts
could differ materially from the currently estimated amounts.
Workers’ Compensation
Besides the effects of changes in medical costs, worker’s compensation costs are affected by the severity and types of injuries, changes in state
and federal regulations and their application and the quality of programs which assist an employee’s return to work. Our liability for future
payments for workers’ compensation claims is evaluated annually with the assistance of an actuary.
Numbers of Participants
The valuations of all of these benefit plans are affected by the life expectancy of the participants. Accordingly, we rely on actuarial information
to predict the number and life expectancy of participants. We use the following mortality table for our major plans.
(cid:3) Plan(cid:3)
(cid:3)(cid:3)UMWA plans(cid:3)
(cid:3) Black Lung(cid:3)
(cid:3) Primary U.S. pension (cid:3)
Mortality table
RP-2000 Separate, Healthy Blue Collar
RP-2000 Combined Annuitant/Non-Annuitant Blue Collar
RP-2000 Combined Active and Retiree, Healthy Blue Collar
The number of participants by major plan in the past five years is as follows:
(cid:3) Plan(cid:3)
UMWA plans(cid:3)
Black Lung
U.S. pension
2011
4,400
800
20,400
2010
4,600
800
21,000
2009
4,700
700
21,100
Number of participants
(cid:3)
(cid:3)
(cid:3)
(cid:3)
2007
5,000
800
22,500
2008
4,900
700
21,500
Since we are no longer operating in the coal industry, we anticipate that the number of participants in the UMWA retirement medical plan will
decline over time due to mortality. Since the U.S. pension plan has been frozen, the number of its participants will also decline over time.
63
Foreign Currency Translation
The majority of our subsidiaries outside the U.S. conduct business in their local currencies. Our financials report results in U.S. dollars, which
include the results of these subsidiaries.
Accounting Policy
Our accounting policy for foreign currency translation is different depending on whether the economy in which our foreign subsidiary operates
has been designated as highly inflationary or not. Economies with a three-year cumulative inflation rate of more than 100% are considered as
highly inflationary. At the end of 2009, we did not have any subsidiaries operating in highly inflationary economies. Effective January 1,
2010, we began accounting for our Venezuelan subsidiaries as operating in a highly inflationary economy.
Non-Highly Inflationary Economies
Assets and liabilities of foreign subsidiaries in non-highly inflationary economies are translated into U.S. dollars using rates of exchange at the
balance sheet date. Translation adjustments are recorded in other comprehensive income (loss). Revenues and expenses are translated at rates
of exchange in effect during the year. Transaction gains and losses are recorded in net income.
Highly Inflationary Economies
Foreign subsidiaries that operate in highly inflationary countries must use the reporting currency (the U.S. dollar) as the functional currency.
Local-currency monetary assets and liabilities are remeasured into dollars each balance sheet date, with remeasurement adjustments and other
transaction gains and losses recognized in earnings. Non-monetary assets and liabilities do not fluctuate with changes in local currency
exchange rates to the dollar.
Application of Accounting Policy
Venezuela
Our Venezuelan operations constitute a material portion of our overall consolidated operations, and accounted for $269 million or 7% of total
Brink’s revenues in 2011. Our operating margins in Venezuela have varied depending on the mix of business during any year and have been
up to three times our overall international segment operating margin rate.
Beginning January 1, 2010, we designated Venezuela’s economy as highly inflationary for accounting purposes, and we consolidated our
Venezuelan results using our accounting policy for subsidiaries operating in highly inflationary economies.
Since 2003, the Venezuelan government has controlled the exchange of local currency into other currencies, including the U.S. dollar.
(cid:120)
(cid:120)
From 2003 to the present the government has maintained an official exchange rate. The rate is available only for transactions that
have been approved by the government’s currency control agency, known as CADIVI, or if the purpose of the conversion is to
purchase goods or services that are on a list of approved items. The official rate was 2.15 bolivar fuertes to the dollar in 2008 and
2009. In January 2010, the official currency was devalued and split into two separate official rates, one for priority items such as
food, and another rate for other imports and other purposes. The ability to exchange funds at either of these rates requires CADIVI’s
approval, unless the purpose of the conversion was to purchase goods or services that were on lists of approved items. The new rates
were 2.6 and 4.3 bolivar fuertes to the dollar. In January 2011, the government eliminated the 2.6 rate such that the official rate was at
a single rate of 4.3 bolivar fuertes to the dollar.
In addition to the official rate, a parallel market exchange rate was available until a June 2010 law disallowed the use of the parallel
rate. Prior to June 2010, the parallel rate could be used to convert local cash into dollars. The average parallel bolivar fuerte to dollar
rate was 4.2 in 2008, 6.0 in 2009 and 6.9 in the first five months of 2010.
We remeasured bolivar fuerte-denominated net monetary assets at each balance sheet date using the parallel rate until June 9, 2010, when the
Venezuelan government replaced the parallel rate with a new exchange process that requires each transaction be approved by the government’s
central bank (the “SITME” rate). On a daily basis, the central bank publishes ranges of prices at which it may approve transactions to purchase
dollar-denominated bonds, resulting in an exchange rate range of 4.3 to 5.3 bolivar fuertes to the U.S. dollar. To date, approved transactions
have been at the upper end of the range. To the extent we need to obtain U.S. dollars, we currently expect our U.S. dollar-denominated
transactions to be settled at a rate of 5.3 bolivar fuertes to the U.S. dollar. We have used this rate to remeasure our bolivar fuerte-denominated
monetary assets and liabilities into U.S. dollars at December 31, 2011, resulting in bolivar fuerte-denominated net monetary assets at December
31, 2011, of $56.7 million. We did not recognize any remeasurement gains or losses in 2011 as the SITME rate did not change.
Under the SITME process, approved transactions may not exceed $350,000 per legal entity per month. We believe that we will be able to
continue to obtain sufficient U.S. dollars to purchase imported supplies and fixed assets to operate our business in Venezuela. We believe the
64
repatriation of cash invested in Venezuela will be limited in the future. We have also been successful at converting bolivar fuertes to U.S.
dollars through other legal channels, at a rate not as favorable as the SITME rate.
At December 31, 2011, our Venezuelan subsidiaries held $1.3 million of cash and short-term investments denominated in U.S. dollars and $8.9
million of cash denominated in bolivar fuertes. On an equity-method basis, we had investments in our Venezuelan operations of $75.4 million
at December 31, 2011.
65
RECENT ACCOUNTING PRONOUNCEMENTS
Recently Adopted Accounting Standards
We adopted the accounting principles established by Accounting Standards Update (“ASU”) 2009-16, Transfers and Servicing: Accounting for
Transfers of Financial Assets, effective January 1, 2010. This ASU removes the concept of a qualifying special-purpose entity (“QSPE”) from
SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities, and removes the exception from
applying Financial Accounting Standards Board (“FASB”) Interpretation 46R, Consolidation of Variable Interest Entities. This statement also
clarifies the requirements for isolation and limitations on portions of financial assets that are eligible for sale accounting. The adoption of this
new guidance did not have a material effect on our financial statements.
We adopted the accounting principles established by ASU 2009-17, Consolidations: Improvements to Financial Reporting by Enterprises
Involved with Variable Interest Entities, effective January 1, 2010. This ASU requires an ongoing reassessment and replaces the quantitative-
based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest
entity (“VIE”) with a primarily qualitative analysis. The qualitative analysis is based on identifying the party that has both the power to direct
the activities that most significantly affect the VIE’s economic performance (the “power criterion”) and the obligation to absorb losses from or
the right to receive benefits of the VIE that could potentially be significant to the VIE (the “losses/benefit criterion”). The party that meets both
these criteria is deemed to have a controlling financial interest. The party with the controlling financial interest is considered to be the primary
beneficiary and as a result is required to consolidate the VIE. The adoption of this new guidance did not have a material effect on our financial
statements.
In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements. ASU 2010-06 both expands and
clarifies the disclosure requirements related to fair value measurements. Entities are required to disclose separately the amounts of significant
transfers in and out of Level 1 and Level 2 of the fair value valuation hierarchy and describe the reasons for the transfers. Additionally, entities
are required to disclose information about purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair-
value measurements. The new guidance also clarifies existing fair-value measurement disclosure guidance about the level of disaggregation,
inputs, and valuation techniques. We adopted the new disclosures effective January 1, 2010, except for the Level 3 rollforward disclosures. We
did not have any significant transfers in and out of Level 1 and Level 2 of the fair value valuation hierarchy during 2010. See note 9 for the
required disclosures for a 2011 transfer of certain of our fixed-rate bonds from Level 1 to Level 2 in the fair valuation hierarchy. We adopted
the Level 3 rollforward disclosures effective January 1, 2011. The adoption of the Level 3 disclosures did not have a material effect on our
financial statements as the only Level 3 valuations were for investments held by our retirement plans. Since these valuations have been
estimated using net asset value per share, we are not required to make the Level 3 rollforward disclosures required by ASU 2010-06.
We adopted the accounting principles established by ASU 2010-09, Subsequent Events: Amendments to Certain Recognition and Disclosure
Requirements, effective January 1, 2010. Under this amended guidance, SEC filers are no longer required to disclose the date through which
subsequent events have been evaluated in originally issued and revised financial statements.
In January 2010, the FASB issued ASU 2010-02, Accounting and Reporting for Decreases in Ownership of a Subsidiary—a Scope
Clarification, which clarifies the scope of the decrease in ownership provisions of Accounting Standards Codification (“ASC”) 810-10,
Consolidation, and related guidance. The ASU clarified that the standard applies to a subsidiary or group of assets that is a business, a
subsidiary that is a business that is transferred to an equity method investee or joint venture, or an exchange of a group of assets that constitutes
a business for a noncontrolling interest in an entity (including an equity method investee or joint venture). The ASU also expands the
disclosures required upon deconsolidation of a subsidiary to disclose the valuation techniques used to measure the fair value of any retained
investment in the former subsidiary, the nature of continuing involvement after the former subsidiary has been deconsolidated or derecognized
and whether the transaction resulting in deconsolidation was with a related party or if the deconsolidated entity will become a related party.
Finally, the ASU also requires that entities disclose valuation techniques used to measure the fair value of previously held equity interests prior
to acquiring control in a business combination achieved in stages. We adopted this guidance effective January 1, 2010. The adoption of this
new guidance did not have a material effect on our financial statements.
In May 2010, the FASB issued ASU 2010-19, Foreign Currency Issues: Multiple Foreign Currency Exchange Rates, which codified an SEC
Staff Announcement made at the March 18, 2010, Emerging Issues Task Force (“EITF”) meeting. The Staff Announcement provides the SEC
staff’s view on certain exchange rates related to investments in Venezuela. The use of different rates for remeasurement and translation
purposes causes Venezuelan reported balances for financial reporting purposes and the actual U.S. dollar denominated balances to be different.
The SEC staff indicated that any differences between the amounts reported for financial reporting purposes and actual U.S. dollar denominated
balances that may have existed prior to the application of the highly inflationary accounting requirements (January 1, 2010, for calendar year-
end registrants including Brink’s) should be recognized in the income statement, unless the issuer can document that the difference was
previously recognized as a cumulative translation adjustment, in which case the difference should be recognized as a currency translation
adjustment. We adopted the guidance effective March, 31, 2010, and recognized these differences as a currency translation adjustment as of
January 1, 2010, upon the adoption of highly inflationary accounting in Venezuela. See related disclosures in Note 1.
66
In December 2010, the FASB ratified EITF 10-G, Disclosure of Supplementary Pro Forma Information for Business Combinations. EITF 10-G
affects public entities that have entered into material business combinations and requires that pro forma disclosures reflect the assumption that
the business combination had occurred as of the beginning of the prior annual period. It also requires a description of nonrecurring pro forma
adjustments. EITF 10-G is effective and should be applied prospectively for business combinations completed during periods beginning after
December 15, 2010, with early adoption permitted. We were required to adopt the new rule in 2011, but we early adopted this standard for
acquisitions occurring in 2010. The adoption of this guidance did not have a material effect on our financial statements.
We adopted the accounting principles established by ASU 2009-13, Multiple-Deliverable Revenue Arrangements, effective January 1, 2011.
ASU 2009-13 establishes a selling price hierarchy for determining the selling price of a deliverable in a multiple-deliverable arrangement. In
addition, the revised guidance requires additional disclosures about the methods and assumptions used to evaluate multiple-deliverable
arrangements and to identify the significant deliverables within those arrangements. The adoption of this guidance did not have a material
effect on our financial statements.
We adopted the accounting principles established by ASU 2009-14, Certain Revenue Arrangements that Include Software Elements, effective
January 1, 2011. ASU 2009-14 amends ASC Topic 985 to exclude from its scope tangible products that contain both software and non-
software components that function together to deliver a product’s essential functionality. The adoption of this guidance did not have a material
effect on our financial statements.
In September 2011, the FASB issued ASU 2011-08, Testing Goodwill for Impairment. Under the revised guidance, entities testing goodwill
for impairment have the option of performing a qualitative assessment before calculating the fair value of the reporting unit (i.e., Step 1 of the
goodwill impairment test). If entities determine, on the basis of qualitative factors, that it is more likely than not that the fair value of the
reporting unit is less than the carrying amount, the two-step impairment test would be required. The ASU also requires that the same qualitative
factors be considered when determining whether an interim test of goodwill impairment is necessary and for determining whether it is
necessary to perform Step 2 for reporting units with zero or negative carrying amounts. The option to carry forward an entity’s detailed
calculation of fair value of the reporting unit if certain conditions were met has been removed. Although the ASU is effective for fiscal years
beginning after December 15, 2011, we adopted this guidance for the 2011 reporting year for our annual October 1 goodwill impairment test.
The adoption of this guidance did not have a material effect on our financial statements.
Standards Not Yet Adopted
In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and
Disclosure Requirements in U.S. GAAP and IFRS, which became effective for us on January 1, 2012. ASU 2011-04 changes how fair value
guidance is applied in certain circumstances and expands the disclosure requirements around fair value measurements. For entities with fair
value measurements classified as Level 3, required disclosures include a quantitative disclosure of the unobservable inputs and assumptions
used in the measurement, a description of the valuation processes in place, a narrative description of the sensitivity of the fair value to changes
in unobservable inputs and interrelationships between those inputs, and quantitative disclosures about unobservable inputs used in fair value
measurements other than those valuations that use net asset value as a practical expedient. The adoption of this guidance will not have a
material effect on our financial statements but may increase the disclosures related to our Level 3 fair value measurements.
In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income, which became effective for us on January 1,
2012. Under ASU 2011-05, an entity has the option to present the components of comprehensive income either in a single continuous
statement of comprehensive income or in two separate but consecutive statements. The ASU does not change the items that must be reported as
other comprehensive income. Whether presenting two separate statements or one continuous statement, the ASU required entities to present
reclassifications from other comprehensive income in the statement reporting net income. In December 2011, however, the FASB deferred this
requirement when it issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassification of Items Out of
Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05, which has the same effective date as ASU 2011-05.
Companies must continue to disclose reclassifications from other comprehensive income on the statement that reports other comprehensive
income, or in the notes to the financial statements. We have determined that the standards will not affect our annual financial statements.
However, we will be required to include a statement of comprehensive income in our quarterly financial statements beginning in 2012.
67
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We currently serve customers in more than 100 countries, including approximately 50 countries where we operate subsidiaries. These
operations expose us to a variety of market risks, including the effects of changes in interest rates, commodity prices and foreign currency
exchange rates. These financial and commodity exposures are monitored and managed by us as an integral part of its overall risk management
program.
We periodically use various derivative and non-derivative financial instruments, as discussed below, to hedge our interest rate, commodity
prices and foreign currency exposures when appropriate. The risk that counterparties to these instruments may be unable to perform is
minimized by limiting the counterparties used to major financial institutions with investment grade credit ratings. We do not expect to incur a
loss from the failure of any counterparty to perform under the agreements. We do not use derivative financial instruments for purposes other
than hedging underlying financial or commercial exposures.
The sensitivity analyses discussed below for the market risk exposures were based on the facts and circumstances in effect at December 31,
2011. Actual results will be determined by a number of factors that are not under management’s control and could vary materially from those
disclosed.
Interest Rate Risk
We use both fixed and floating rate debt and leases to finance our operations. Floating rate obligations, including our Revolving Facility,
expose us to fluctuations in cash flows due to changes in the general level of interest rates. Fixed rate obligations, including our Dominion
Terminal Associates debt and our unsecured notes, are subject to fluctuations in fair values as a result of changes in interest rates.
Based on the contractual interest rates on the floating rate debt at December 31, 2011, a hypothetical 10% increase in rates would increase cash
outflows by approximately $0.6 million over a twelve-month period. In other words, our weighted average interest rate on our floating rate
instruments was 2.9% per annum at December 31, 2011. If that average rate were to increase by 0.3 percentage points to 3.2%, the cash
outflows associated with these instruments would increase by $0.6 million annually. The effect on the fair values on our Dominion Terminal
Associates (“DTA”) debt and on our unsecured notes for a hypothetical 10% decrease in the yield curve from year-end 2011 levels would result
in a $3.3 million increase for our DTA debt and a $2.8 million increase for our unsecured notes in the fair values of the debt.
68
Foreign Currency Risk
We have exposure to the effects of foreign currency exchange rate fluctuations on the results of all of our foreign operations. Our foreign
operations generally use local currencies to conduct business but their results are reported in U.S. dollars.
Our business in Venezuela represents approximately 7% of our revenues. Currently, Venezuela operates in a highly inflationary economy and
its currency is fixed to the U.S. dollar. However, there is a risk that the Venezuelan government will devalue the local currency in the future,
which would reduce the value of our business and result in the recognition of a loss.
The investment in our Venezuelan subsidiaries, and cash and other monetary assets held by these subsidiaries are as follows:
(In millions)
Equity-method investment in Venezuelan subsidiaries (a)
Net monetary assets held by our Venezuelan subsidiaries
Cash and short-term investments denominated in U.S. dollars
Net monetary assets denominated in bolivar fuertes:
Cash and cash equivalents
Accounts receivable, accounts payable and other, net
$
$
$
Total
$
(a) The amount represents retained earnings net of currency translation adjustments of the business.
December 31,
2011
75.4
1.3
8.9
47.8
56.7
2010
50.6
3.3
18.2
12.8
31.0
We are exposed periodically to the foreign currency rate fluctuations that affect transactions not denominated in the functional currency of
domestic and foreign operations. To mitigate these exposures, we, from time to time, enter into foreign currency forward and swap contracts.
At December 31, 2011, the notional value of our outstanding foreign currency contracts was $72.8 million with average contract maturities of
less than one month. The foreign currency contracts primarily offset exposures in the Mexican peso and the euro. We do not use derivative
financial instruments to hedge investments in foreign subsidiaries since such investments are long-term in nature.
The effects of a hypothetical simultaneous 10% appreciation in the U.S. dollar from year-end 2011 levels against all other currencies of
countries in which we have continuing operations are as follows:
(In millions)
Effect on Earnings
Translation of 2011 earnings into U.S. dollars
Transaction gains (losses)
Effect on Other Comprehensive Income (Loss):
Translation of net assets of foreign subsidiaries
Hypothetical Effects
Increase/ (decrease)
(cid:3)
$
(13.5)
0.6
(72.7)
The hypothetical foreign currency effects above detail the consolidated effect attributable to Brink’s of a simultaneous change in the value of a
large number of foreign currencies relative to the U. S. dollar. The foreign currency exposure effect related to a change in an individual
currency could be significantly different.
69
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
THE BRINK’S COMPANY
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2011
TABLE OF CONTENTS
Page
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING ........... 71
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ..................................................... 72
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets ............................................................................................................................................ 74
Consolidated Statements of Income .................................................................................................................................. 75
Consolidated Statements of Comprehensive Income (Loss) ............................................................................................. 76
Consolidated Statements of Equity ................................................................................................................................... 77
Consolidated Statements of Cash Flows ........................................................................................................................... 78
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Summary of Significant Accounting Policies ..................................................................................................... 79
Note 2 – Segment Information .......................................................................................................................................... 85
Note 3 – Retirement Benefits ............................................................................................................................................ 87
Note 4 – Income Taxes ..................................................................................................................................................... 96
Note 5 – Property and Equipment ..................................................................................................................................... 99
Note 6 – Acquisitions ........................................................................................................................................................ 99
Note 7 – Goodwill and Other Intangible Assets .............................................................................................................. 102
Note 8 – Other Assets ..................................................................................................................................................... 104
Note 9 – Fair Value of Financial Instruments ................................................................................................................. 104
Note 10 – Accrued Liabilities ......................................................................................................................................... 105
Note 11 – Other Liabilities .............................................................................................................................................. 105
Note 12 – Long-Term Debt ............................................................................................................................................. 106
Note 13 – Accounts Receivable ...................................................................................................................................... 108
Note 14 – Operating Leases ............................................................................................................................................ 108
Note 15 – Share-Based Compensation Plans .................................................................................................................. 109
Note 16 – Capital Stock .................................................................................................................................................. 112
Note 17 – Income from Discontinued Operations ........................................................................................................... 113
Note 18 – Supplemental Cash Flow Information ............................................................................................................ 114
Note 19 – Other Operating Income (Expense) ................................................................................................................ 114
Note 20 – Interest and Other Nonoperating Income (Expense) ....................................................................................... 114
Note 21 – Other Commitments and Contingencies ......................................................................................................... 115
Note 22 – Selected Quarterly Financial Data (unaudited) ............................................................................................... 116
70
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in
Rule 13a-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable
assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those
systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2011. In making this assessment,
management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal
Control – Integrated Framework.”
Based on this assessment, our management believes that, as of December 31, 2011, our internal control over financial reporting is effective
based on the COSO criteria.
KPMG LLP, the independent registered public accounting firm which audits our consolidated financial statements, has issued an attestation
report of our internal control over financial reporting. KPMG’s attestation report appears on page 72.
71
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
The Brink’s Company:
We have audited The Brink’s Company’s (the Company) internal control over financial reporting as of December 31, 2011, based on criteria
established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal
Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based
on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides
a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, The Brink’s Company maintained, in all material respects, effective internal control over financial reporting as of December 31,
2011, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated
balance sheets of The Brink’s Company and subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of income,
comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended December 31, 2011, and our report
dated February 27, 2012 expressed an unqualified opinion on those consolidated financial statements.
/s/ KPMG LLP
Richmond, Virginia
February 27, 2012
72
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
The Brink’s Company:
We have audited the accompanying consolidated balance sheets of The Brink’s Company and subsidiaries (the Company) as of December 31,
2011 and 2010, and the related consolidated statements of income, comprehensive income (loss), equity, and cash flows for each of the years in
the three-year period ended December 31, 2011. These consolidated financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The
Brink’s Company and subsidiaries as of December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), The Brink’s
Company’s internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 27,
2012 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
/s/ KPMG LLP
Richmond, Virginia
February 27, 2012
73
THE BRINK’S COMPANY
and subsidiaries
Consolidated Balance Sheets
(In millions, except per share amounts)
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, (net of allowance: 2011 – $8.9; 2010 – $7.2)
Prepaid expenses and other
Deferred income taxes
Total current assets
Property and equipment, net
Goodwill
Other intangibles
Deferred income taxes
Other
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings
Current maturities of long-term debt
Accounts payable
Accrued liabilities
Total current liabilities
Long-term debt
Accrued pension costs
Retirement benefits other than pensions
Deferred income taxes
Other
Total liabilities
Commitments and contingent liabilities (notes 3, 4, 12, 14, 17 and 21)
Equity:
The Brink’s Company (“Brink’s”) shareholders:
Common stock, par value $1 per share:
Shares authorized: 100.0
Shares issued and outstanding: 2011 – 46.9; 2010 – 46.4
Capital in excess of par value
Retained earnings
Accumulated other comprehensive income (loss)
Benefit plan adjustments
Foreign currency translation
Unrealized gains on available-for-sale securities
Accumulated other comprehensive loss
Brink’s shareholders
Noncontrolling interests
Total equity
December 31,
2011
2010
$
182.9
550.5
134.1
66.4
933.9
749.2
231.4
63.8
350.8
77.1
183.0
525.1
121.0
48.3
877.4
698.9
244.3
83.2
276.0
90.7
$
2,406.2
2,270.5
$
25.4
28.7
159.5
488.5
702.1
335.3
369.6
315.4
23.0
178.4
1,923.8
46.9
559.5
589.5
(680.1)
(110.7)
2.9
(787.9)
408.0
74.4
482.4
36.5
29.0
141.5
469.0
676.0
323.7
266.8
218.6
30.6
171.7
1,687.4
46.4
542.6
537.5
(550.7)
(64.0)
4.4
(610.3)
516.2
66.9
583.1
Total liabilities and equity
$
2,406.2
2,270.5
See accompanying notes to consolidated financial statements.
74
THE BRINK’S COMPANY
and subsidiaries
Consolidated Statements of Income
(In millions, except per share amounts)
Revenues
Costs and expenses:
Cost of revenues
Selling, general and administrative expenses
Total costs and expenses
Other operating income (expense)
Operating profit
Interest expense
Interest and other income (expense)
Income from continuing operations before tax
Provision (benefit) for income taxes
Income from continuing operations
Income from discontinued operations, net of tax
Net income
Less net income attributable to noncontrolling interests
Net income attributable to Brink’s
Income attributable to Brink’s:
Continuing operations
Discontinued operations
Net income attributable to Brink’s
Earnings per share attributable to Brink’s common shareholders:
Basic:
Continuing operations
Discontinued operations
Net income
Diluted:
Continuing operations
Discontinued operations
Net income
Weighted-average shares
Basic
Diluted
See accompanying notes to consolidated financial statements.
2011
Years Ended December 31,
2010
2009
$
3,885.5
3,121.5
3,135.0
3,174.3
543.1
3,717.4
3.2
171.3
(24.0)
9.1
156.4
59.4
97.0
1.5
98.5
(24.0)
74.5
73.0
1.5
74.5
1.52
0.03
1.56
1.52
0.03
1.55
47.8
48.1
$
$
$
$
$
2,536.4
429.3
2,965.7
(9.5)
146.3
(14.8)
8.1
139.6
67.1
72.5
0.3
72.8
(15.7)
57.1
56.8
0.3
57.1
1.18
0.01
1.18
1.17
0.01
1.18
48.2
48.4
2,534.5
430.2
2,964.7
(3.5)
166.8
(11.3)
10.8
166.3
(61.1)
227.4
4.5
231.9
(31.7)
200.2
195.7
4.5
200.2
4.14
0.10
4.23
4.11
0.10
4.21
47.2
47.5
75
THE BRINK’S COMPANY
and subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(In millions)
Net income
Other comprehensive income (loss):
Benefit plan adjustments:
Net experience gains (losses) arising during the year
Deferred profit sharing
Tax benefit (provision) related to net experience gains and losses arising during the year
Reclassification adjustment for amortization of prior net experience loss included in net income
Tax benefit related to reclassification adjustment
Prior service cost (credit) from plan amendment during the year
Tax benefit (provision) related to prior service cost (credit) from plan amendment during the year
Reclassification adjustment for amortization of prior service cost (credit) included in net income
Tax provision (benefit) related to reclassification adjustment
Benefit plan adjustments, net of tax
Foreign currency:
Translation adjustments arising during the year
Reclassification from available-for-sale securities
Tax benefit (provision) related to translation adjustments
Reclassification adjustment for deconsolidation of a former subsidiary
Foreign currency translation adjustments, net of tax
(cid:3)
(cid:3) Available-for-sale securities:
Unrealized net gains (losses) on available-for-sale securities arising during the year
Reclassification to foreign currency
Tax benefit (provision) related to unrealized net gains and losses on available-for-sale securities
Reclassification adjustment for net (gains) losses realized in net income
Tax provision (benefit) related to reclassification adjustment
Unrealized net gains (losses) on available-for-sale securities, net of tax
Other comprehensive income (loss)
(cid:3)
(cid:3)
(cid:3)
(cid:3)Amounts attributable to Brink’s:
Other comprehensive income (loss)
Net income
Benefit plan adjustments
Foreign currency
Available-for-sale securities
Other comprehensive income (loss)
Comprehensive income (loss) attributable to Brink’s
(cid:3)
(cid:3)Amounts attributable to noncontrolling interests:
Net income
Foreign currency
Available-for-sale securities
Other comprehensive income (loss)
Comprehensive income (loss) attributable to noncontrolling interests
(cid:3)
(cid:3)(cid:3)(cid:3)(cid:3) (cid:3)(cid:3) (cid:3)(cid:3) (cid:3)(cid:3)
Comprehensive income (loss)(cid:3)
(cid:3)(cid:3)See accompanying notes to consolidated financial statements.
Years Ended December 31,
2009
2010
2011
$
98.5
72.8
231.9
(253.6)
0.4
89.4
48.5
(16.5)
-
-
3.5
(1.1)
(129.4)
(50.5)
-
1.7
-
(48.8)
2.1
-
-
(4.4)
0.9
(1.4)
(179.6)
(67.8)
(0.4)
24.1
37.8
(13.5)
(19.3)
7.1
2.7
(0.9)
(30.2)
4.6
(0.6)
(0.1)
(2.0)
1.9
5.4
0.6
(1.7)
(3.8)
1.1
1.6
(26.7)
68.2
-
(0.3)
28.2
(9.5)
-
-
1.2
(0.1)
87.7
(92.4)
-
(0.7)
-
(93.1)
2.1
-
-
-
-
2.1
(3.3)
$
$
(81.1)
46.1
228.6
74.5
(129.4)
(46.7)
(1.5)
(177.6)
(103.1)
24.0
(2.1)
0.1
(2.0)
22.0
57.1
(30.2)
(3.3)
1.2
(32.3)
24.8
15.7
5.2
0.4
5.6
21.3
200.2
87.7
(40.3)
2.6
50.0
250.2
31.7
(52.8)
(0.5)
(53.3)
(21.6)
$
(81.1)(cid:3)
46.1
228.6
76
THE BRINK’S COMPANY
and subsidiaries
Consolidated Statements of Equity
Years Ended December 31, 2011, 2010 and 2009
(In millions)
Balance as of December 31, 2008
Net income
Other comprehensive income (loss)
Shares repurchased (see note 16)
Shares contributed to pension plan (see note 16)
Dividends to:
Brink’s common shareholders ($0.40 per share)
Noncontrolling interests
Share-based compensation
Stock options and awards:
Compensation expense
Consideration from exercise of stock options
Excess tax benefit of stock compensation
Other share-based benefit programs
Adjustment to spin-off of BHS
Business acquisitions
Balance as of December 31, 2009
Net income
Other comprehensive income (loss)
Shares repurchased (see note 16)
Dividends to:
Brink’s common shareholders ($0.40 per share)
Noncontrolling interests
Share-based compensation
Stock options and awards:
Compensation expense
Consideration from exercise of stock options
Excess tax benefit of stock compensation
Other share-based benefit programs
Business acquisitions
Balance as of December 31, 2010
Net income
Other comprehensive loss
Dividends to:
Brink’s common shareholders ($0.40 per share)
Noncontrolling interests
Share-based compensation
Stock options and awards:
Compensation expense
Consideration from exercise of stock options
Excess tax benefit of stock compensation
Other share-based benefit programs
Business acquisitions
Capital contributions from noncontrolling interest
Balance as of December 31, 2011
$
Shares
45.7
-
-
(0.2)
2.3
-
-
-
0.1
-
-
-
-
47.9
-
-
(1.7)
-
-
-
0.4
-
(0.2)
-
46.4
-
-
-
-
-
0.6
-
(0.1)
-
-
46.9
$
Common
Stock
45.7
-
-
(0.2)
2.3
-
-
-
0.1
-
-
-
-
47.9
-
-
(1.7)
-
-
-
0.4
-
(0.2)
-
46.4
-
-
-
-
-
0.6
-
(0.1)
-
-
46.9
(cid:3) See accompanying notes to consolidated financial statements.
Capital
in Excess
of Par
Value
486.3
-
-
(2.5)
55.3
Retained
Earnings
310.0
200.2
-
(3.4)
-
-
-
(18.4)
-
6.6
1.2
0.1
3.2
-
-
550.2
-
-
(19.5)
-
-
6.2
6.1
0.7
(1.1)
-
542.6
-
-
-
-
6.2
11.1
1.1
(1.5)
-
-
559.5
-
-
-
(0.4)
26.8
-
514.8
57.1
-
(12.5)
(18.9)
-
-
-
-
(3.0)
-
537.5
74.5
-
(18.7)
-
-
-
-
(3.8)
-
-
589.5
Accumulated
Other
Attributable
to
Comprehensive Noncontrolling
Loss
Interests
(628.0)
-
50.0
-
-
-
-
-
-
-
-
-
-
(578.0)
-
(32.3)
-
-
-
-
-
-
-
-
(610.3)
-
(177.6)
-
-
-
-
-
-
-
-
(787.9)
91.3
31.7
(53.3)
-
-
-
(13.7)
-
-
-
-
-
4.9
60.9
15.7
5.6
-
-
(18.4)
-
-
-
-
3.1
66.9
24.0
(2.0)
-
(16.1)
-
-
-
-
0.8
0.8
74.4
Total
305.3
231.9
(3.3)
(6.1)
57.6
(18.4)
(13.7)
6.6
1.3
0.1
2.8
26.8
4.9
595.8
72.8
(26.7)
(33.7)
(18.9)
(18.4)
6.2
6.5
0.7
(4.3)
3.1
583.1
98.5
(179.6)
(18.7)
(16.1)
6.2
11.7
1.1
(5.4)
0.8
0.8
482.4
77
THE BRINK’S COMPANY
and subsidiaries
Consolidated Statements of Cash Flows
(In millions)
Years Ended December 31,
2011
2010
2009
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
$
98.5
(Income) loss from discontinued operations, net of tax
Depreciation and amortization
Stock compensation expense
Deferred income taxes
Deconsolidation of Brink’s Belgium and write-down to fair value
Gains and losses:
Sales of available-for-sale securities
Sales of property and other assets
Acquisitions of controlling interests
Bargain purchase gain
Impairment losses
Retirement benefit funding (more) less than expense:
Pension
Other than pension
Other operating
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable
Accounts payable, income taxes payable and accrued liabilities
Prepaid and other current assets
Other
Discontinued operations
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Acquisitions
Available-for-sale securities:
Purchases
Sales
Cash proceeds from sale of property, equipment and investments
Other
Net cash used by investing activities
Cash flows from financing activities:
Borrowings (repayments) of debt:
Short-term debt
Long-term revolving credit facilities
Issuance of private placement notes
Other long-term debt:
Borrowings
Repayments
Cash proceeds from sale-leaseback transactions
Debt financing costs
Repurchase shares of common stock of Brink’s
Dividends to:
Shareholders of Brink’s
Noncontrolling interests in subsidiaries
Proceeds from exercise of stock options
Excess tax benefits associated with stock compensation
Minimum tax withholdings associated with stock compensation
Other
Net cash provided (used) by financing activities
Effect of exchange rate changes on cash
Cash and cash equivalents:
Increase (decrease)
Balance at beginning of period
Balance at end of period
See accompanying notes to consolidated financial statements
(1.5)
162.4
6.2
(31.4)
-
(4.4)
(7.9)
(0.4)
(2.1)
4.7
4.6
11.6
10.8
(50.9)
49.4
(14.4)
10.4
1.4
247.0
(196.2)
(3.0)
(0.5)
12.9
14.4
0.6
(171.8)
(7.6)
(113.9)
100.0
-
(32.2)
17.6
(0.6)
-
(18.7)
(16.1)
5.9
1.1
(2.7)
-
(67.2)
(8.1)
(0.1)
183.0
182.9
$
78
72.8
(0.3)
136.6
6.2
(2.3)
13.4
(3.8)
(1.2)
13.7
(5.1)
0.7
(4.2)
16.6
7.6
(37.7)
38.9
(14.4)
7.7
(9.9)
235.3
(148.8)
(100.7)
(3.0)
1.3
4.9
(9.1)
(255.4)
27.1
121.2
-
3.6
(19.5)
1.2
(2.5)
(33.7)
(18.9)
(18.4)
1.3
0.6
(1.8)
(0.2)
60.0
0.1
40.0
143.0
183.0
231.9
(4.5)
135.1
6.6
(91.0)
-
-
(9.4)
(14.9)
-
2.7
(102.7)
15.3
4.3
8.9
(16.4)
3.5
2.3
23.5
195.2
(170.6)
(74.6)
(11.1)
4.7
10.5
-
(241.1)
(0.9)
(10.1)
-
0.6
(11.9)
13.6
-
(6.9)
(18.4)
(13.7)
1.3
0.3
(0.4)
(0.1)
(46.6)
(15.4)
(107.9)
250.9
143.0
THE BRINK’S COMPANY
and subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Summary of Significant Accounting Policies
Basis of Presentation
The Brink’s Company (along with its subsidiaries, “we,” “our,” “Brink’s” or the “Company”), based in Richmond, Virginia, is a leading
provider of secure transportation, cash logistics and other security-related services to banks and financial institutions, retailers, government
agencies, mints, jewelers and other commercial operations around the world. Brink’s is the oldest and largest secure transportation and cash
logistics company in the U.S., and a market leader in many other countries.
Principles of Consolidation
The consolidated financial statements include the accounts of Brink’s and the subsidiaries it controls. Control is determined based on
ownership rights or, when applicable, based on whether we are considered to be the primary beneficiary of a variable interest entity. Our
interest in 20%- to 50%-owned companies that are not controlled are accounted for using the equity method (“equity affiliates”), unless we do
not sufficiently influence the management of the investee. Other investments are accounted for as cost-method investments or as available-
for-sale. All significant intercompany accounts and transactions have been eliminated in consolidation.
Accounting Adjustments
Accounting adjustments that correct earnings reported for previous years have been included in our 2011 earnings. The adjustments
decreased income from continuing operations in 2011 by $7.8 million, after tax. Prior years’ financial results have not been restated because
the amounts are not material. The adjustments did not affect earnings trends for the consolidated financial statements including our operating
segments. Cash flows were not affected by these accounting corrections.
Revenue Recognition
Revenue is recognized when services related to armored car transportation, ATM servicing, cash logistics, coin sorting and wrapping and the
secure transportation of valuables are performed. Customer contracts have prices that are fixed and determinable and we assess the
customer’s ability to meet the contractual terms, including payment terms, before entering into contracts. Customer contracts generally are
automatically extended after the initial contract period until either party terminates the agreement. Taxes collected from customers and
remitted to governmental authorities are not included in revenues in the consolidated statements of income.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits and investments with original maturities of three months or less. Cash and
cash equivalents includes amounts held by certain of our cash processing businesses for customers which, under local regulations, the title
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. We record a liability for the amounts owed
to customers (see note 10).
Available-for-sale Securities
We have securities held as of December 31, 2011 and 2010 designated as available-for-sale securities for purposes of FASB ASC Topic 320,
Investments – Debt and Equity Securities. The securities are classified as current assets if expected to be sold within a year. Unrealized gains
and losses on available-for-sale securities are generally reported in accumulated other comprehensive income (loss) until realized. Realized
gains and losses as well as declines in value judged to be other-than-temporary are reported in interest and other income.
Trade Accounts Receivable
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is our best
estimate of the amount of probable credit losses on our existing accounts receivable. We determine the allowance based on historical write-
off experience. We review our allowance for doubtful accounts quarterly. Account balances are charged off against the allowance after all
means of collection have been exhausted and the potential for recovery is considered remote.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is calculated principally on the straight-line method based on the estimated useful
lives of individual assets or classes of assets.
Leased property and equipment meeting capital lease criteria are capitalized at the lower of the present value of the related lease payments or
the fair value of the leased asset at the inception of the lease. Amortization is calculated on the straight-line method based on the lease term.
79
Leasehold improvements are recorded at cost. Amortization is calculated principally on the straight-line method over the lesser of the
estimated useful life of the leasehold improvement or lease term. Renewal periods are included in the lease term when the renewal is
determined to be reasonably assured.
Part of the costs related to the development or purchase of internal-use software is capitalized and amortized over the estimated useful life of
the software. Costs that are capitalized include external direct costs of materials and services to develop or obtain the software, and internal
costs, including compensation and employee benefits for employees directly associated with a software development project.
Estimated Useful Lives
Buildings
Building leasehold improvements
Vehicles
Capitalized software
Other machinery and equipment
Years
16 to 25
3 to 10
3 to 10
3 to 5
3 to 10
Expenditures for routine maintenance and repairs on property and equipment are charged to expense. Major renewals, betterments and
modifications are capitalized and depreciated over the lesser of the remaining life of the asset or, if applicable, the lease term.
Goodwill and Other Intangible Assets
Goodwill is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible net assets of businesses
acquired. Intangible assets arising from business acquisitions include customer lists, customer relationships, covenants not to compete,
trademarks and other identifiable intangibles. At December 31, 2011, finite-lived intangible assets have remaining useful lives ranging from
1 to 15 years and are amortized based on the pattern in which the economic benefits are used or on a straight-line basis.
Impairment of Long-Lived Assets
Goodwill is not amortized but is tested at least annually for impairment at the reporting unit level, which is at the operating segment level or
one level below an operating segment. Goodwill is assigned to one or more reporting units at the date of acquisition. Our reporting units are
Latin America; EMEA; Asia Pacific and North America. The goodwill impairment test is performed at October 1 of each year. We perform a
qualitative assessment in order to determine whether it is more likely than not that the fair value of each reporting unit is less than its carrying
amount. If we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we perform a two-
step test for that reporting unit. The first step identifies whether there is potential impairment by comparing the fair value of a reporting unit
to the carrying amount, including goodwill. If the fair value of a reporting unit is less than its carrying amount, the second step of the
impairment test is required to measure the amount of any impairment loss. Indefinite-lived intangibles are also tested for impairment at least
annually by comparing the carrying value of indefinite-lived intangible asset to their estimated fair values. We base our estimates of fair
value on projected future cash flows.
We completed goodwill impairment tests during each of the last three years with no impairment charges required. We have had no
significant impairments of indefinite-lived intangibles in the last three years.
Long-lived assets other than goodwill and other indefinite-lived intangibles are reviewed for impairment when events or changes in
circumstances indicate the carrying value of an asset may not be recoverable.
For long-lived assets other than goodwill that are to be held and used in operations, an impairment is indicated when the estimated total
undiscounted cash flow associated with the asset or group of assets is less than carrying value. If impairment exists, an adjustment is made to
write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value.
Retirement Benefit Plans
We account for retirement benefit obligations under FASB ASC Topic 715, Compensation – Retirement Benefits. We derive the discount
rates used to measure the present value of our benefit obligations using the cash flow matching method. Under this method, we compare the
plan’s projected payment obligations by year with the corresponding yields on the Mercer Yield Curve. Each year’s projected cash flows are
discounted to a present value at the measurement date and an overall discount rate is determined. The overall discount rate is then rounded to
the nearest tenth of a percentage point. We use a similar approach to select the discount rates for major non-U.S. plans. For other non-U.S.
plans, discount rates are developed based on a bond index within the country of domicile.
We select the expected long-term rate of return assumption for our U.S. pension plan and retiree medical plans using advice from an
investment advisor and an actuary. The selected rate considers plan asset allocation targets, expected overall investment manager
performance and long-term historical average compounded rates of return.
Benefit plan experience gains and losses are recognized in other comprehensive income (loss). Accumulated net benefit plan experience
gains and losses that exceed 10% of the greater of a plan’s benefit obligation or plan assets at the beginning of the year are amortized into
earnings from other comprehensive income (loss) on a straight-line basis. The amortization period for pension plans is the average remaining
80
service period of employees expected to receive benefits under the plans. The amortization period for other retirement plans is primarily the
average remaining life expectancy of inactive participants.
Income Taxes
Deferred tax assets and liabilities are recorded to recognize the expected future tax benefits or costs of events that have been, or will be,
reported in different years for financial statement purposes than tax purposes. Deferred tax assets and liabilities are determined based on the
difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which these
items are expected to reverse. We recognize tax benefits related to uncertain tax positions if we believe it is more likely than not the benefit
will be realized. We review our deferred tax assets to determine if it is more-likely-than-not that they will be realized. If we determine it is
not more-likely-than-not that a deferred tax asset will be realized, we record a valuation allowance to reverse the previously recognized tax
benefit.
Foreign Currency Translation
Our consolidated financial statements are reported in U.S. dollars. Our foreign subsidiaries maintain their records primarily in the currency
of the country in which they operate.
The method of translating local currency financial information into U.S. dollars depends on whether the economy in which our foreign
subsidiary operates has been designated as highly inflationary or not. Economies with a three-year cumulative inflation rate of more than
100% are considered highly inflationary.
Assets and liabilities of foreign subsidiaries in non-highly inflationary economies are translated into U.S. dollars using rates of exchange at
the balance sheet date. Translation adjustments are recorded in other comprehensive income (loss). Revenues and expenses are translated at
rates of exchange in effect during the year. Transaction gains and losses are recorded in net income.
Foreign subsidiaries that operate in highly inflationary countries use the U.S. dollar as their functional currency. Local-currency monetary
assets and liabilities are remeasured into U.S. dollars using rates of exchange as of each balance sheet date, with remeasurement adjustments
and other transaction gains and losses recognized in earnings. Non-monetary assets and liabilities do not fluctuate with changes in local
currency exchange rates to the dollar.
Venezuela
Our Venezuelan operations accounted for $269 million or 7% of total Brink’s revenues in 2011. Our operating margins in Venezuela have
varied depending on the mix of business during any year and have been up to three times our overall international segment operating margin
rate.
In December 2009, we repatriated dividends generated by our Venezuelan operations that had been unpaid over the last several years using
the legal parallel market exchange rate. We decided to repatriate our dividends using the parallel rate due to significant delays in receiving
the needed government approval to repatriate dividends at the official rate. We began translating our financial statements for our Venezuelan
operations using the parallel rate, effective December 21, 2009, the date of our decision, since we expected to pay future dividends using the
parallel rate. This is consistent with the guidance issued by the International Practices Task Force of the Center for Audit Quality (the
“IPTF”) and U.S. GAAP. This guidance provides that, in the absence of unusual circumstances, the rate used for dividend remittances should
be used to translate foreign financial statements.
In 2009, we recognized foreign currency translation losses because we changed to the parallel rate for purposes of translating our Venezuelan
financial position. We recognized foreign currency translation losses in other comprehensive income (loss) in 2009 of
(cid:120)
(cid:120)
(cid:120)
$85 million attributable to Brink’s
$54 million attributable to noncontrolling interests, and
$139 million in total.
The economy in Venezuela has had significant inflation in the last several years. In determining whether Venezuela is a highly inflationary
economy, we previously used the consumer price index ("CPI") which is based on the inflation rates for the metropolitan area of Caracas,
Venezuela. Beginning January 1, 2008, a national consumer price index ("NCPI") was developed for the entire country of Venezuela.
However, because inflation data was not available to compute a cumulative three-year inflation rate for Venezuela using only NCPI, we used
a blended NCPI and CPI rate to determine whether the three-year cumulative inflation rate had exceeded 100% at December 31, 2009.
At December 31, 2009, the blended three-year cumulative inflation rate was approximately 100.5%. As a result, beginning January 1, 2010,
we designated Venezuela’s economy as highly inflationary for accounting purposes, and we consolidated our Venezuelan results using our
accounting policy for subsidiaries operating in highly inflationary economies. We remeasured bolivar fuerte-denominated net monetary assets
at each balance sheet date using the parallel rate until June 9, 2010, when the Venezuelan government replaced the parallel rate with a new
exchange process that requires each transaction be approved by the government’s central bank (the “SITME” rate). On a daily basis, the
81
central bank publishes ranges of prices at which it may approve transactions to purchase dollar-denominated bonds, resulting in an exchange
rate range of 4.3 to 5.3 bolivar fuertes to the U.S. dollar. To date, approved transactions have been at the upper end of the range. To the
extent we need to obtain U.S. dollars, we currently expect our U.S. dollar-denominated transactions to be settled at a rate of 5.3 bolivar
fuertes to the U.S. dollar. We have used this rate to remeasure our bolivar fuerte-denominated monetary assets and liabilities into U.S. dollars
at December 31, 2011, resulting in bolivar fuerte-denominated net monetary assets at December 31, 2011, of $56.7 million. We did not
recognize any remeasurement gains or losses as the SITME rate did not change in 2011.
Under the SITME process, approved transactions may not exceed $350,000 per legal entity per month. We believe that we will be able to
continue to obtain sufficient U.S. dollars to purchase imported supplies and fixed assets to operate our business in Venezuela. We believe the
repatriation of cash invested in Venezuela will be limited in the future. We have also been successful at converting bolivar fuertes to U.S.
dollars through other legal channels, at a rate not as favorable as the SITME rate.
At December 31, 2011, our Venezuelan subsidiaries held $1.3 million of cash and short-term investments denominated in U.S. dollars and
$8.9 million of cash denominated in bolivar fuertes. On an equity-method basis, we had investments in our Venezuelan operations of $75.4
million at December 31, 2011.
Concentration of Credit Risks
We routinely assess the financial strength of significant customers and this assessment, combined with the large number and geographic
diversity of our customers, limits our concentration of risk with respect to accounts receivable. Financial instruments which potentially
subject us to concentrations of credit risks are principally cash and cash equivalents and accounts receivables. Cash and cash equivalents are
held by major financial institutions.
Use of Estimates
In accordance with U.S. generally accepted accounting principles (“GAAP”), we have made a number of estimates and assumptions relating
to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial
statements. Actual results could differ materially from those estimates. The most significant estimates are related to goodwill, intangibles
and other long-lived assets, pension and other retirement benefit assets and obligations, legal contingencies, deferred tax assets, purchase
price allocations and foreign currency translation.
Fair-value estimates. We have various financial instruments included in our financial statements. Financial instruments are carried in our
financial statements at either cost or fair value. We estimate fair value of assets using the following hierarchy using the highest level
possible:
Level 1: Quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities.
Level 2: Observable prices that are based on inputs not quoted on active markets, but are corroborated by market data.
Level 3: Unobservable inputs are used when little or no market data is available.
82
New Accounting Standards
Recently Adopted Accounting Standards
We adopted the accounting principles established by Accounting Standards Update (“ASU”) 2009-16, Transfers and Servicing: Accounting
for Transfers of Financial Assets, effective January 1, 2010. This ASU removes the concept of a qualifying special-purpose entity
(“QSPE”) from SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities, and removes the
exception from applying Financial Accounting Standards Board (“FASB”) Interpretation 46R, Consolidation of Variable Interest Entities.
This statement also clarifies the requirements for isolation and limitations on portions of financial assets that are eligible for sale accounting.
The adoption of this new guidance did not have a material effect on our financial statements.
We adopted the accounting principles established by ASU 2009-17, Consolidations: Improvements to Financial Reporting by Enterprises
Involved with Variable Interest Entities, effective January 1, 2010. This ASU requires an ongoing reassessment and replaces the quantitative-
based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest
entity (“VIE”) with a primarily qualitative analysis. The qualitative analysis is based on identifying the party that has both the power to direct
the activities that most significantly affect the VIE’s economic performance (the “power criterion”) and the obligation to absorb losses from
or the right to receive benefits of the VIE that could potentially be significant to the VIE (the “losses/benefit criterion”). The party that meets
both these criteria is deemed to have a controlling financial interest. The party with the controlling financial interest is considered to be the
primary beneficiary and as a result is required to consolidate the VIE. The adoption of this new guidance did not have a material effect on
our financial statements.
In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements. ASU 2010-06 both expands and
clarifies the disclosure requirements related to fair value measurements. Entities are required to disclose separately the amounts of significant
transfers in and out of Level 1 and Level 2 of the fair value valuation hierarchy and describe the reasons for the transfers. Additionally,
entities are required to disclose information about purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3
fair-value measurements. The new guidance also clarifies existing fair-value measurement disclosure guidance about the level of
disaggregation, inputs, and valuation techniques. We adopted the new disclosures effective January 1, 2010, except for the Level 3
rollforward disclosures. We did not have any significant transfers in and out of Level 1 and Level 2 of the fair value valuation hierarchy
during 2010. See note 9 for the required disclosures for a 2011 transfer of certain of our fixed-rate bonds from Level 1 to Level 2 in the fair
valuation hierarchy. We adopted the Level 3 rollforward disclosures effective January 1, 2011. The adoption of the Level 3 disclosures did
not have a material effect on our financial statements as the only Level 3 valuations were for investments held by our retirement plans. Since
these valuations have been estimated using net asset value per share, we are not required to make the Level 3 rollforward disclosures required
by ASU 2010-06.
We adopted the accounting principles established by ASU 2010-09, Subsequent Events: Amendments to Certain Recognition and Disclosure
Requirements, effective January 1, 2010. Under this amended guidance, SEC filers are no longer required to disclose the date through which
subsequent events have been evaluated in originally issued and revised financial statements.
In January 2010, the FASB issued ASU 2010-02, Accounting and Reporting for Decreases in Ownership of a Subsidiary—a Scope
Clarification, which clarifies the scope of the decrease in ownership provisions of Accounting Standards Codification (“ASC”) 810-10,
Consolidation, and related guidance. The ASU clarified that the standard applies to a subsidiary or group of assets that is a business, a
subsidiary that is a business that is transferred to an equity method investee or joint venture, or an exchange of a group of assets that
constitutes a business for a noncontrolling interest in an entity (including an equity method investee or joint venture). The ASU also expands
the disclosures required upon deconsolidation of a subsidiary to disclose the valuation techniques used to measure the fair value of any
retained investment in the former subsidiary, the nature of continuing involvement after the former subsidiary has been deconsolidated or
derecognized and whether the transaction resulting in deconsolidation was with a related party or if the deconsolidated entity will become a
related party. Finally, the ASU also requires that entities disclose valuation techniques used to measure the fair value of previously held
equity interests prior to acquiring control in a business combination achieved in stages. We adopted this guidance effective January 1, 2010.
The adoption of this new guidance did not have a material effect on our financial statements.
In May 2010, the FASB issued ASU 2010-19, Foreign Currency Issues: Multiple Foreign Currency Exchange Rates, which codified an SEC
Staff Announcement made at the March 18, 2010, Emerging Issues Task Force (“EITF”) meeting. The Staff Announcement provides the
SEC staff’s view on certain exchange rates related to investments in Venezuela. The use of different rates for remeasurement and translation
purposes causes Venezuelan reported balances for financial reporting purposes and the actual U.S. dollar denominated balances to be
different. The SEC staff indicated that any differences between the amounts reported for financial reporting purposes and actual U.S. dollar
denominated balances that may have existed prior to the application of the highly inflationary accounting requirements (January 1, 2010, for
calendar year-end registrants including Brink’s) should be recognized in the income statement, unless the issuer can document that the
difference was previously recognized as a cumulative translation adjustment, in which case the difference should be recognized as a currency
translation adjustment. We adopted the guidance effective March, 31, 2010, and recognized these differences as a currency translation
adjustment as of January 1, 2010, upon the adoption of highly inflationary accounting in Venezuela. See related disclosures in Note 1.
83
In December 2010, the FASB ratified EITF 10-G, Disclosure of Supplementary Pro Forma Information for Business Combinations. EITF 10-
G affects public entities that have entered into material business combinations and requires that pro forma disclosures reflect the assumption
that the business combination had occurred as of the beginning of the prior annual period. It also requires a description of nonrecurring pro
forma adjustments. EITF 10-G is effective and should be applied prospectively for business combinations completed during periods
beginning after December 15, 2010, with early adoption permitted. We were required to adopt the new rule in 2011, but we early adopted
this standard for acquisitions occurring in 2010. The adoption of this guidance did not have a material effect on our financial statements.
We adopted the accounting principles established by ASU 2009-13, Multiple-Deliverable Revenue Arrangements, effective January 1, 2011.
ASU 2009-13 establishes a selling price hierarchy for determining the selling price of a deliverable in a multiple-deliverable arrangement. In
addition, the revised guidance requires additional disclosures about the methods and assumptions used to evaluate multiple-deliverable
arrangements and to identify the significant deliverables within those arrangements. The adoption of this guidance did not have a material
effect on our financial statements.
We adopted the accounting principles established by ASU 2009-14, Certain Revenue Arrangements that Include Software Elements, effective
January 1, 2011. ASU 2009-14 amends ASC Topic 985 to exclude from its scope tangible products that contain both software and non-
software components that function together to deliver a product’s essential functionality. The adoption of this guidance did not have a
material effect on our financial statements.
In September 2011, the FASB issued ASU 2011-08, Testing Goodwill for Impairment. Under the revised guidance, entities testing goodwill
for impairment have the option of performing a qualitative assessment before calculating the fair value of the reporting unit (i.e., Step 1 of the
goodwill impairment test). If entities determine, on the basis of qualitative factors, that it is more likely than not that the fair value of the
reporting unit is less than the carrying amount, the two-step impairment test would be required. The ASU also requires that the same
qualitative factors be considered when determining whether an interim test of goodwill impairment is necessary and for determining whether
it is necessary to perform Step 2 for reporting units with zero or negative carrying amounts. The option to carry forward an entity’s detailed
calculation of fair value of the reporting unit if certain conditions were met has been removed. Although the ASU is effective for fiscal years
beginning after December 15, 2011, we adopted this guidance for the 2011 reporting year for our annual October 1 goodwill impairment test.
The adoption of this guidance did not have a material effect on our financial statements.
Standards Not Yet Adopted
In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and
Disclosure Requirements in U.S. GAAP and IFRS, which became effective for us on January 1, 2012. ASU 2011-04 changes how fair value
guidance is applied in certain circumstances and expands the disclosure requirements around fair value measurements. For entities with fair
value measurements classified as Level 3, required disclosures include a quantitative disclosure of the unobservable inputs and assumptions
used in the measurement, a description of the valuation processes in place, a narrative description of the sensitivity of the fair value to
changes in unobservable inputs and interrelationships between those inputs, and quantitative disclosures about unobservable inputs used in
fair value measurements other than those valuations that use net asset value as a practical expedient. The adoption of this guidance will not
have a material effect on our financial statements but may increase the disclosures related to our Level 3 fair value measurements.
In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income, which became effective for us on January 1,
2012. Under ASU 2011-05, an entity has the option to present the components of comprehensive income either in a single continuous
statement of comprehensive income or in two separate but consecutive statements. The ASU does not change the items that must be reported
as other comprehensive income. Whether presenting two separate statements or one continuous statement, the ASU required entities to
present reclassifications from other comprehensive income in the statement reporting net income. In December 2011, however, the FASB
deferred this requirement when it issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassification
of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05, which has the same effective date
as ASU 2011-05. Companies must continue to disclose reclassifications from other comprehensive income on the statement that reports other
comprehensive income, or in the notes to the financial statements. We have determined that the standards will not affect our annual financial
statements. However, we will be required to include a statement of comprehensive income in our quarterly financial statements beginning in
2012.
84
Note 2 – Segment Information
We identify our operating segments based on how resources are allocated and operating decisions are made. Management evaluates
performance and allocates resources based on operating profit or loss, excluding non-segment expenses. Under the criteria set forth in
FASB ASC 280, Segment Reporting, we have four geographic operating segments, which are aggregated into two reportable segments:
International and North America. We currently serve customers in more than 100 countries, including approximately 50 countries where
we operate subsidiaries.
The primary services of the reportable segments include:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Cash-in-transit (“CIT”) – armored vehicle transportation
Automated teller machine (“ATM”) – replenishment and servicing, network infrastructure services
Global Services – transportation of valuables globally
Cash Logistics – supply chain management of cash
Payment Services – consumers pay utility and other bills at payment locations
Guarding Services – including airport security
(In millions)
Revenues by Business Segment
International
North America
Total
Operating Profit by Business Segment
International
North America
Business segments
Non-segment
Total
Capital Expenditures by Business Segment
International
North America
Total
(cid:3)
(cid:3)Depreciation and Amortization by Business Segment
Depreciation and amortization of property and equipment:
International
North America
Property and equipment
Amortization of intangible assets:
International
North America
Total
(In millions)
Assets held by Business Segment
International
North America
Business Segments
Non-segment
(cid:3) Total(cid:3)
2011
Years Ended December 31,
2010
2009
2,911.3
974.2
3,885.5
2,203.7
917.8
3,121.5
2,240.9
894.1
3,135.0
199.7
31.4
231.1
(59.8)
171.3
144.8
51.4
196.2
96.9
54.6
151.5
8.9
2.0
162.4
2011
1,565.9
468.6
2,034.5
371.7
2,406.2
164.8
44.1
208.9
(62.6)
146.3
110.7
38.1
148.8
84.5
43.0
127.5
8.1
1.0
136.6
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
December 31,
2010
1,531.7
426.8
1,958.5
312.0
2,270.5
156.8
56.6
213.4
(46.6)
166.8
103.1
67.5
170.6
(cid:3)
88.5
36.6
125.1
9.0
1.0
135.1
2009
1,265.5
335.4
1,600.9
278.9
1,879.8
$
$
$
$
$
$
$
$
$
$
85
(In millions)
Long-Lived Assets by Geographic Area (a)
Non-U.S.:
France
Mexico
Brazil
Venezuela
Other
Subtotal
United States
Total
2011
December 31,
2010
$
$
149.9
123.9
100.9
43.5
425.4
843.6
200.8
1,044.4
159.9
118.5
99.8
38.3
424.5
841.0
185.4
1,026.4
2009
167.2
-
96.5
33.2
372.8
669.7
162.9
832.6
(a) Long-lived assets include property and equipment, net; goodwill; and other intangible assets, net.
(In millions)
Revenues by Geographic Area (a)
Outside the U.S.:
France
Mexico
Brazil
Venezuela
Other
Subtotal
United States
Total
2011
Years Ended December 31,
2010
2009
$
$
567.2
415.2
386.8
269.2
1,513.6
3,152.0
733.5
3,885.5
533.0
51.7
303.3
185.9
1,304.1
2,378.0
743.5
3,121.5
615.2
-
257.6
376.1
1,154.5
2,403.4
731.6
3,135.0
(a) Revenues are recorded in the country where service is initiated or performed. No single customer represents more than 10% of total revenue.
(cid:3) (cid:3)(cid:3)
(In millions)
Net assets outside the U.S.
Latin America
Europe, Middle East and Africa
Asia Pacific
Other
Total
(cid:3) (In millions)(cid:3)
(cid:3)
(cid:3) Information about Unconsolidated Equity Affiliates held by International Segment
(cid:3) Carrying value of investments at year end(cid:3)
(cid:3) Share of earnings included in Brink's consolidated earnings during the year
(cid:3) Undistributed earnings at year end (cid:3)
(cid:3)(cid:3)
$
$
$
2011
376.9
285.2
98.6
(68.3)
692.4
2011
12.8
4.8
7.1
December 31, (cid:3)
2010
346.4
271.2
94.8
75.2
787.6
2010
11.5
3.9
5.7
2009
261.1
300.9
87.8
34.8
684.6
2009
10.2
4.5
5.3
86
Note 3 – Retirement Benefits
Defined-benefit Pension Plans
Summary
We have various defined-benefit pension plans covering eligible current and former employees. Benefits under most plans are based on
salary and years of service. There are limits to the amount of benefits which can be paid to participants from a U.S. qualified pension plan.
We maintain a nonqualified U.S. plan to pay benefits for those eligible current and former employees in the U.S. whose benefits exceed the
regulatory limits.
Components of Net Periodic Pension Cost
(In millions)
Years Ended December 31,
U.S. Plans
Non-U.S. Plans
Total
2011
2010
2009
2011
2010
2009
2011
2010
2009
Service cost
Interest cost on projected benefit obligation
Return on assets – expected
Amortization of losses
Settlement loss
Net periodic pension cost (credit)
$
$
-
46.2
(65.0)
28.2
-
9.4
-
46.5
(66.8)
19.5
-
(0.8)
- $
47.7
(61.2)
9.1
0.3
(4.1) $
10.2
16.9
(12.0)
4.3
2.2
21.6
6.6
13.4
(10.6)
3.2
0.1
12.7
6.1 $
12.2
(9.0)
3.5
-
12.8 $
10.2
63.1
(77.0)
32.5
2.2
31.0
6.6
59.9
(77.4)
22.7
0.1
11.9
6.1
59.9
(70.2)
12.6
0.3
8.7
Obligations and Funded Status
Changes in the projected benefit obligation (“PBO”) and plan assets for our pension plans are as follows:
(In millions)
Years Ended December 31,
Benefit obligation at beginning of year
Service cost
Interest cost
Plan participant contributions
Plan settlements
Acquisition
Benefits paid
Actuarial (gains) losses
Foreign currency exchange effects
Benefit obligation at end of year
Fair value of plan assets at beginning of year
Return on assets – actual
Plan participant contributions
Employer contributions:
Plan settlements
Acquisition
Benefits paid
Foreign currency effects
Fair value of plan assets at end of year
Funded status
Included in:
Noncurrent asset
Current liability, included in accrued liabilities
Noncurrent liability
Net pension liability
$
$
$
$
$
$
$
U.S. Plans
Non-U.S. Plans
Total
2011
2010
2011
2010
2011
2010
890.1
-
46.2
-
-
-
(39.7)
94.1
-
990.7
698.4
26.0
-
0.7
-
-
(39.7)
-
685.4
810.5
-
46.5
-
-
-
(38.0)
71.1
-
890.1
658.2
77.4
-
0.8
-
-
(38.0)
-
698.4
289.6
10.2
16.9
3.5
(2.8)
-
(15.9)
15.9
(10.5)
306.9
218.6
7.9
3.5
25.7
(2.8)
-
(15.9)
(6.5)
230.5
223.4
6.6
13.4
2.9
(0.5)
39.0
(8.8)
15.7
(2.1)
289.6
188.9
22.2
2.9
15.3
(0.5)
0.6
(8.8)
(2.0)
218.6
1,179.7
10.2
63.1
3.5
(2.8)
-
(55.6)
110.0
(10.5)
1,297.6
917.0
33.9
3.5
26.4
(2.8)
-
(55.6)
(6.5)
915.9
1,033.9
6.6
59.9
2.9
(0.5)
39.0
(46.8)
86.8
(2.1)
1,179.7
847.1
99.6
2.9
16.1
(0.5)
0.6
(46.8)
(2.0)
917.0
(305.3)
(191.7)
(76.4)
(71.0)
(381.7)
(262.7)
-
13.2
292.1
305.3
-
1.4
190.3
191.7
(12.3)
11.2
77.5
76.4
(8.6)
3.1
76.5
71.0
(cid:3)
(cid:3)
(12.3)
24.4
369.6
381.7
(8.6)
4.5
266.8
262.7
87
Other Changes in Plan Assets and Benefit Recognized in Other Comprehensive Income
(In millions)
Years Ended December 31,
U.S. Plans
Non-U.S. Plans
Total
2011
2010
2011
2010
2011
2010
Benefit plan experience loss recognized in
accumulated other comprehensive income (loss):
Beginning of year
Net experience gains (losses) arising during the year
Reclassification adjustment for amortization of
experience losses included in net income
End of year
Benefit plan prior service (cost) credit recognized in
accumulated other comprehensive income (loss):
Beginning of year
Reclassification adjustment for amortization of
prior service credit included in net income
End of year
$
$
$
$
(408.4)
(133.1)
28.2
(513.3)
(367.4)
(60.5)
19.5
(408.4)
(19.6)
(20.0)
5.0
(34.6)
(17.4)
(4.1)
1.9
(19.6)
(428.0)
(153.1)
33.2
(547.9)
(384.8)
(64.6)
21.4
(428.0)
-
-
-
-
-
-
(7.6)
(8.9)
(7.6)
(8.9)
1.5
(6.1)
1.3
(7.6)
1.5
(6.1)
1.3
(7.6)
Approximately $44.6 million of experience loss and $1.4 million of prior service cost are expected to be amortized from accumulated other
comprehensive income (loss) into net periodic pension cost during 2012.
The net experience losses in 2011 were primarily due to the lower discount rate of the U.S. plans as well as the actual return on assets being
lower than expected. The net experience losses in 2010 were primarily due to the lower discount rate of the U.S. plans, partially offset by the
actual return on assets being higher than expected.
Information Comparing Plan Assets to Plan Obligations
Information comparing plan assets to plan obligations as of December 31, 2011 and 2010 are aggregated below. The accumulated benefit
obligation (“ABO”) differs from the PBO in that the ABO is based on the benefit earned through the date noted. The PBO includes
assumptions about future compensation levels for plans that have not been frozen.
(In millions)
December 31,
U.S. Plans
Non-U.S. Plans
Total
2011
2010
2011
2010
2011
2010
Pension plans with an accumulated benefit obligation in excess of plan assets:
Fair value of plan assets
Accumulated benefit obligation
Projected benefit obligation
$
685.4
990.7
990.7
698.4
890.1
890.1
117.5
179.8
206.4
24.1
78.1
95.0
802.9
1,170.5
1,197.1
722.5
968.2
985.1
The ABO for our U.S. pension plans was $990.7 million in 2011 and $890.1 million in 2010. The ABO for our Non-U.S. pension plans was
$278.8 million in 2011 and $259.8 million in 2010.
Assumptions
The weighted-average assumptions used in determining the net pension cost and benefit obligations for our pension plans were as follows:
Discount rate:
Pension cost
Benefit obligation at year end
U.S. Plans
Non-U.S. Plans
2011
2010
2009
2011
2010
2009
5.3 %
4.6 %
5.9 %
5.3 %
6.6 %
5.9 %
5.8 %
5.4 %
6.2 %
5.8 %
6.2 %
6.2 %
Expected return on assets – pension cost
8.75 %
8.75 %
8.75 %
5.16 %
5.54 %
5.78 %
Average rate of increase in salaries (a):
Pension cost
Benefit obligation at year end
N/A
N/A
N/A
N/A
N/A
N/A
3.3 %
3.2 %
3.1 %
3.3 %
4.0 %
3.1 %
(a)
Salary scale assumptions are determined through historical experience and vary by age and industry. The U.S. plan benefits are frozen. Pension benefits
will not increase due to future salary increases.
The RP-2000 Combined Healthy Blue Collar mortality table and the RP-2000 Combined Healthy White Collar mortality table were used to
estimate the expected lives of participants in the U.S. pension plans. Expected lives of participants in non-U.S. pension plans were estimated
using mortality tables in the country of operation.
88
Cash Flows
Estimated Contributions from the Company into Plan Assets
Our policy is to fund at least the minimum actuarially determined amounts required by applicable regulations. We expect to contribute $31.5
million to our primary U.S. pension plan, approximately $13.2 million to our nonqualified U.S. pension plan and $26.9 million to our non-
U.S. pension plans in 2012.
On August 20, 2009, we made a voluntary $150 million contribution to our primary U.S. retirement plan to improve the funded status of the
plan. The contribution was comprised of $92.4 million of cash and 2,260,738 newly issued shares of our common stock valued for purposes
of the contribution at $25.48 per share, or $57.6 million in the aggregate. Because we considered the contribution to be a significant event
for the plan, we remeasured our projected benefit obligation and plan assets related to our primary U.S. pension plan as of July 1, 2009. As
part of the remeasurement we changed the discount rate from 6.2% to 6.8%.
At the time we made the voluntary $150 million contribution we changed the method of valuing assets for funding purposes from the fair-
market-value basis to the asset-smoothing basis. We elected the asset-smoothing basis to reduce the volatility of future required contributions
to the plan.
Estimated Future Benefit Payments from Plan Assets to Beneficiaries
Our projected benefit payments at December 31, 2011, for each of the next five years and the aggregate five years thereafter are as follows:
(In millions)
2012
2013
2014
2015
2016
2017 through 2021
U.S. Plans
Non-U.S. Plans
$
$
55.6
46.1
46.0
47.2
48.7
272.7
18.7
11.1
12.8
12.0
13.4
85.6
Total
74.3
57.2
58.8
59.2
62.1
358.3
89
Retirement Benefits Other than Pensions
Summary
We provide retirement health care benefits for eligible current and former U.S. and Canadian employees, including former employees of our
former U.S. coal operation. Retirement benefits related to our former coal operation include medical benefits provided by the Pittston Coal
Group Companies Employee Benefit Plan for UMWA Represented Employees (the “UMWA plans”) as well as costs related to Black Lung
obligations.
Components of Net Periodic Postretirement Cost
The components of net periodic postretirement cost related to retirement benefits other than pensions were as follows:
(In millions)
UMWA plans
Black lung and other plans
Total
Years Ended December 31,
2011
2010
2009
2011
2010
2009
2011
2010
2009
Interest cost on APBO
Return on assets – expected
Amortization of losses
Net periodic postretirement cost
$
$
24.0
(25.5)
14.7
13.2
27.1
(25.3)
16.0
17.8
25.8
(22.6)
16.7
19.9
$
$
2.8
-
2.6
5.4
2.9
-
1.8
4.7
2.8
-
0.1
2.9
$
$
26.8
(25.5)
17.3
18.6
30.0
(25.3)
17.8
22.5
28.6
(22.6)
16.8
22.8
Obligations and Funded Status
Changes in the accumulated postretirement benefit obligation (“APBO’) and plan assets related to retirement health care benefits are as
follows:
(In millions)
Years Ended December 31,
UMWA plans
2011
2010
APBO at beginning of year
Interest cost
Plan amendments
Benefits paid
Medicare subsidy received
Actuarial (gains) losses, net
Foreign currency exchange effects and other
APBO at end of year
Fair value of plan assets at beginning of year
Employer contributions:
Return on assets – actual
Benefits paid
Medicare subsidy received
Fair value of plan assets at end of year
Funded status
Included in:
Current, included in accrued liabilities
Noncurrent
(cid:3) Retirement benefits other than pension liability (cid:3)
$
$
$
$
$
$
$
Black lung and other
Plans
2011
62.2
2.8
-
(7.0)
-
2.9
-
60.9
-
7.0
-
(7.0)
-
-
2010
47.1
2.9
19.3
(5.9)
-
(1.3)
0.1
62.2
-
5.9
-
(5.9)
-
-
Total
2011
2010
536.5
26.8
-
(46.1)
3.4
69.9
-
590.5
310.2
7.0
(5.1)
(47.5)
3.4
268.0
512.6
30.0
19.3
(43.7)
3.2
15.0
0.1
536.5
308.0
5.9
37.1
(44.0)
3.2
310.2
474.3
24.0
-
(39.1)
3.4
67.0
-
529.6
310.2
-
(5.1)
(40.5)
3.4
268.0
465.5
27.1
-
(37.8)
3.2
16.3
-
474.3
308.0
-
37.1
(38.1)
3.2
310.2
(261.6)
(164.1)
(60.9)
(62.2)
(322.5)
(226.3)
-
261.6
261.6
-
164.1
164.1
7.1
53.8
60.9
7.7
54.5
62.2
7.1
315.4
322.5
7.7
218.6
226.3
90
Other Changes in Plan Assets and Benefit Recognized in Other Comprehensive Income
Changes in accumulated other comprehensive income (loss) of our retirement benefit plans other than pensions are as follows:
(In millions)
Years Ended December 31,
Benefit plan experience gain (loss) recognized in
accumulated other comprehensive income (loss):
Beginning of year
Net experience gains (losses) arising during the year
Reclassification adjustment for amortization of
experience losses included in net income
End of year
Benefit plan prior service cost recognized in
accumulated other comprehensive income (loss):
Beginning of year
Prior service cost from plan amendments
during the year
Reclassification adjustment for amortization or curtailment
recognition of prior service credit included in net income
End of year
$
$
$
$
UMWA plans
Black lung and other
Plans
Total
2011
2010
2011
2010
2011
2010
(240.1)
(97.6)
14.7
(323.0)
(251.6)
(4.5)
16.0
(240.1)
(7.6)
(2.9)
0.6
(9.9)
(9.3)
1.3
0.4
(7.6)
(247.7)
(100.5)
15.3
(332.9)
(260.9)
(3.2)
16.4
(247.7)
-
-
-
-
-
-
-
-
(15.3)
2.6
(15.3)
2.6
-
(19.3)
-
(19.3)
2.0
(13.3)
1.4
(15.3)
2.0
(13.3)
1.4
(15.3)
We estimate that $22.4 million of experience loss and $2.0 million of prior service cost will be amortized from accumulated other
comprehensive income (loss) into net periodic postretirement cost during 2012.
We recognized net experience losses in 2011 associated with the UMWA obligations primarily related to lower discount rate, an excise tax on
high-cost health plans, and the return on assets being lower than expected. We recognized net experience losses in 2010 associated with the
UMWA obligations primarily related to the lower discount rate and mortality losses, partially offset by the return on assets being higher than
expected.
Excise Tax on Administrators by Patient Protection and Affordable Care Act
A 40% excise tax will be imposed on high-cost health plans (“Cadillac plans”) beginning in 2018. The tax will apply to plan costs that
exceed a certain threshold level for individuals and for families, which will be indexed to inflation. There will be higher limits for high-risk
professions, among which is mining. Even though the tax is not assessed directly to an employer but rather to the benefits plan administrator,
the cost is expected to be passed through to plan sponsors as higher premiums or higher claims administration fees, increasing the plan
sponsor’s obligations. We project that this excise tax will impact our UMWA plans and have accordingly included a 4.2% increase
(approximately $21.3 million) to our UMWA plans’ obligation. We are currently unable to reduce the benefit levels of our UMWA medical
plans to avoid this excise tax because these benefit levels are required by the Coal Industry Retiree Health Benefit Act of 1992.
Assumptions
The APBO for each of the plans was determined using the unit credit method and an assumed discount rate as follows:
Weighted-average discount rate:
Postretirement cost:
UMWA plans
Black lung
Weighted-average
Benefit obligation at year end:
UMWA plans
Black lung
Weighted-average
Expected return on assets
2011
2010
2009
5.3 %
4.8 %
5.2 %
4.4 %
4.2 %
4.4 %
8.75 %
5.9 %
5.3 %
5.8 %
5.3 %
4.8 %
5.2 %
8.75 %
6.2 %
6.3 %
6.2 %
5.9 %
5.4 %
5.9 %
8.75 %
The RP-2000 Separate, Healthy Blue Collar and Combined Annuitant/Non-Annuitant Blue Collar mortality tables are primarily used to
estimate expected lives of participants.
2010 Health Care Reform
The Patient Protection and Affordable Care Act, which was enacted in March 2010, contains an amendment to the laws governing federal
black lung benefits for coal miners. The amendment creates a presumption that benefits should be awarded to current or former coal miners
that have accumulated 15 or more years of coal mine employment if they are able to prove that they have a disabling pulmonary disease.
Previously, miners were required to demonstrate that their disabling pulmonary disease was caused by black lung disease, and not by some
other cause such as smoking or old age. Under the amendment, the burden of proof becomes the employer’s to establish that the disabling
pulmonary disease is not black lung disease or that the miner’s disease did not result from coal mine employment. We expect that the
91
amendment may increase the approval rates for coal miners applying to receive black lung benefits, however, the rates have not been
significantly affected to date.
We remeasured our black lung obligation as of March 31, 2010, to reflect an estimate of the increase in approval rates as a result of the
amendment. The obligation increased $19.3 million as a result of the remeasurement, from $42.3 million before the remeasurement to $61.6
million. The liability could change in the future if the approval rates used in the estimates of the liabilities are either too high or too low.
These estimated amounts will change in the future to reflect payments made, actuarial revaluations, and other changes in estimates. Actual
amounts could differ materially from the currently estimated amounts.
Health Care Cost Trend Rates
For UMWA plans, the assumed health care cost trend rate used to compute the 2011 APBO is 7.0% for 2012, declining to 5.0% in 2018 and
thereafter (in 2010: 7.0% for 2011 declining to 5.0% in 2017 and thereafter). For the black lung obligation, the assumed health care cost
trend rate used to compute the 2011 APBO was 5.0%. Other plans in the U.S. provide for fixed-dollar value coverage for eligible participants
and, accordingly, are not adjusted for inflation.
The table below shows the estimated effects of a one percentage-point change in the assumed health care cost trend rates for each future year.
(cid:3) (cid:3)
(cid:3) (In millions)(cid:3)
(cid:3)Higher (lower):
Service and interest cost in 2011
APBO at December 31, 2011
Effect of Change in Assumed Health Care Trend Rates
Increase 1%
Decrease 1%
$
2.5
60.1
(2.1)
(51.1)
The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Medicare Act”) provides for a prescription drug benefit
under Medicare as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially
equivalent to Medicare prescription drug benefits. Because of the broadness of coverage provided under our plan, we believe that the plan
benefits are at least actuarially equivalent to the Medicare benefits. The estimated effect of the legislation has been recorded as a reduction to
the APBO, as permitted by FSP 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement
and Modernization Act of 2003, included in FASB ASC Topic 715, Compensation – Retirement Benefits. The estimated value of the
projected federal subsidy assumes no changes in participation rates and assumes that the subsidy is received in the year after claims are paid.
The estimated reduction in per capita claim costs for participants over 65 years old was 8.8%.
Our net periodic postretirement costs were approximately $4.5 million lower in 2011, $4.5 million lower in 2010 and $4.3 million lower in
2009 due to the Medicare Act as a result of lower interest cost and amortization of losses. The estimated net present value of the subsidy,
reflected as a reduction to the APBO, was approximately $60.2 million at December 31, 2011, and $50.2 million at December 31, 2010.
Cash Flows
Estimated Contributions from the Company to Plan Assets
Based on the funded status and assumptions at December 31, 2011, we expect the Company to contribute cash to the plans to pay 2012
beneficiary payments for black lung and other plans. We do not expect to contribute cash to our UMWA plans since these plans have
sufficient amounts held in trust to pay for beneficiary payments for 2012. Our UMWA plans are not covered by ERISA or other funding
laws or regulations that require these plans to meet funding ratios.
Estimated Future Benefit Payments from Plan Assets to Beneficiaries
Our projected benefit payments at December 31, 2011, for each of the next five years and the aggregate five years thereafter are as follows:
(In millions)
2012
2013
2014
2015
2016
2017 through 2021
Before Medicare Subsidy
UMWA plans
Black lung and other plans
Subtotal
Medicare
Subsidy
Net Projected
Payments
$
40.2
40.9
40.9
41.0
40.5
191.9
7.2
5.8
5.5
5.2
5.0
20.7
47.4
46.7
46.4
46.2
45.5
212.6
(3.3)
(3.4)
(3.5)
(3.5)
(3.6)
(18.3)
44.1
43.3
42.9
42.7
41.9
194.3
92
Retirement Plan Assets
U.S. Plans
The fair values of the investments of our U.S. pension plans have been estimated using quoted prices in active markets for all investments
other than the hedge fund of funds, which is estimated using the net asset value per share of the investments. Except for the hedge fund of
funds, which is categorized as a Level 3 valuation, the fair values of all investments of our U.S. pension plans are based on Level 1 valuation
inputs.
(In millions, except percentages)
U.S. Pension Plans
Cash, cash equivalents and receivables
Equity securities:
U.S. large-cap (a)
U.S. small/mid-cap (a)
International (a)
Fixed-income securities:
Long duration (b)
High yield (c)
Emerging markets (d)
Other types of investments:
Hedge fund of funds (e)
Total
UMWA Plans
Equity securities:
U.S. large-cap (a)
U.S. small/mid-cap (a)
International (a)
Fixed-income securities:
Core fixed income (f)
High yield (c)
Emerging markets (d)
Multi asset real return (g)
December 31, 2011
%
Actual
Allocation
%
Target
Allocation
Total Fair
Value
December 31, 2010
%
Actual
Allocation
%
Target
Allocation
Total Fair
Value
(cid:3)
$
(cid:3)
$
$
3.5
209.9
55.2
79.8
158.0
55.2
27.0
96.8
685.4
101.8
23.5
33.5
-
22.6
11.2
35.5
-
31
8
12
23
8
4
14
100
38
9
13
-
8
4
13
-
30
8
12
23
8
4
15
100
37
9
14
-
8
4
13
(cid:3)(cid:3) (cid:3)(cid:3)
0.1
210.7
62.2
85.9
156.4
57.2
27.8
98.1
698.4
117.0
28.4
44.7
41.4
25.6
12.7
-
(cid:3)
(cid:3)(cid:3)
-
30
9
12
23
8
4
14
100
38
9
15
13
8
4
-
-
30
8
12
23
8
4
15
100
37
9
14
13
8
4
-
Other types of investments:
Hedge fund of funds (e)
Total
(a)
(b)
(c)
(d)
(e)
(f)
(g)
$
15
100
15
100
13
100
39.9
268.0
40.4
310.2
15
100
These categories include actively managed mutual funds that track various indices such as the S&P 500 Index, the Russell 2500 Index and the MSCI All
Country World Ex-U.S. Index.
This category represents an actively managed mutual fund that seeks to duplicate the risk and return characteristics of a long-term fixed-income
securities portfolio with an approximate duration of 10 to 13 years by using a long duration bond portfolio, including interest-rate swap agreements and
Treasury futures contracts, for the purpose of managing the overall duration of this fund.
This category represents an actively managed mutual fund that invests primarily in fixed-income securities rated below investment grade, including
corporate bonds and debentures, convertible and preferred securities and zero-coupon obligations. The fund’s average weighted maturity may vary and
will generally not exceed ten years.
This category represents an actively managed mutual fund that invests primarily in U.S.-dollar-denominated debt securities of government, government-
related and corporate issuers in emerging market countries, as well as entities organized to restructure the outstanding debt of such issuers.
This category represents an actively managed mutual fund that invests in different hedge-fund investments, with various strategies. The fund holds
approximately 40 separate hedge-fund investments. Strategies included (1) long-short equity, (2) event-driven and distressed-debt, (3) global macro, (4)
credit hedging, (5) multi-strategy, and (6) fixed-income arbitrage. Its investment objective is to seek to achieve an attractive risk-adjusted return with
moderate volatility and moderate directional market exposure over a full market cycle.
This category represents an actively managed mutual fund that invests in funds with investments in mortgage backed securities, corporate bonds and
investment grade securities. The category seeks to provide returns and a risk profile of the Barclays Capital U.S. Aggregate Bond Index.
This category represents an actively managed mutual fund that invests primarily in fixed income and equity securities and commodity linked
instruments. The category seeks total returns that exceed the rate of inflation over a full market cycle regardless of market conditions.
Assets of our U.S. plans are invested with an objective of maximizing the total return, taking into consideration the liabilities of the plan, and
minimizing the risks that could create the need for excessive contributions. Plan assets are invested primarily using actively managed
accounts with asset allocation targets listed in the tables below. Our policy does not permit the purchase of Brink’s common stock if
immediately after any such purchase the aggregate fair market value of the plan assets invested in Brink’s common stock exceeds 10% of the
aggregate fair market value of the assets of the plan, except as permitted by an exemption under ERISA. The plans rebalance their assets on a
monthly basis if actual allocations of assets are outside predetermined ranges. Among other factors, the performance of asset groups and
investment managers will affect the long-term rate of return.
All of the investments of our U.S. retirement plans can be redeemed daily, except for the hedge fund of funds, which can be redeemed
quarterly, subject to any restrictions imposed by the underlying hedge funds.
93
Non-U.S. Plans
Except for investments in our Netherlands pension plan, the fair values of the investments of our non-U.S. pension plans have been estimated
using quoted prices in active markets and are therefore based on Level 1 valuation inputs. The fair values for the Netherlands plan
investments have been estimated using the net asset value per share of the investments and are based on Level 2 valuation inputs.
(In millions, except percentages)
Non-U.S. Pension Plans
Cash and cash equivalents
Equity securities:
U.S. equity funds (a)
Canadian equity funds (a)
European equity funds (a)
Asia-pacific equity funds (a)
Emerging markets (a)
Other non-U.S. equity funds (a)
Total equity securities
Fixed-income securities:
Global credit (b)
Canadian fixed-income funds (c)
European fixed-income funds (d)
High-yield (e)
Emerging markets (f)
Long-duration (g)
Total fixed-income securities
Other types of investments:
Convertible securities (h)
Other
Total other types of investments
December 31, 2011
%
Actual
Allocation
%
Target
Allocation
Total Fair
Value
December 31, 2010
%
Actual
Allocation
%
Target
Allocation
Total Fair
Value
(cid:3)
$
$
1.0
21.8
26.5
5.3
1.1
3.2
28.7
86.6
28.9
17.9
5.9
9.9
5.5
63.9
132.0
7.3
3.6
10.9
230.5
-
-
38
40
57
55
5
100
5
100
0.3
28.1
28.2
16.6
3.0
5.7
11.7
93.3
23.7
17.5
3.7
8.2
4.5
53.5
111.1
7.4
6.5
13.9
218.6
-
-
43
48
52
52
5
100
-
100
Total
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
These categories are comprised of equity index actively managed funds that track various indices such as S&P 500 Composite Total Return Index,
Russell 1000 and 2000 Indices, MSCI Europe Ex-UK Index, S&P/TSX Total Return Index, MSCI EAFE Index and others.
This category represents investment-grade corporate bonds of U.S. and European issuers from diverse industries.
This category seeks to achieve a return that exceeds the Scotia Capital Markets Universe Bond Index.
This category is designed to generate income and exhibit volatility similar to that of the Sterling denominated bond market. This category primarily
invests in investment grade or better securities.
This category consists of global high-yield bonds. This category invests in lower rated and unrated fixed income, floating rate and other debt securities
issued by European and American companies.
This category consists of a diversified portfolio of listed and unlisted debt securities issued by governments, financial institutions, companies or other
entities domiciled in emerging market countries.
This category is designed to achieve a return consistent with holding longer term debt instruments. This category invests in interest rate and inflation
derivatives, government-issued bonds, real-return bonds, and futures contracts.
This category invests in convertible securities of global issuers from diverse industries.
Asset allocation strategies for our non-U.S. plans are designed to accumulate a diversified portfolio among markets and asset classes in order
to reduce market risk and increase the likelihood that pension assets are available to pay benefits as they are due. Assets of non-U.S. pension
plans are invested primarily using actively managed accounts. The weighted-average asset allocation targets are listed in the table above, and
reflect limitations on types of investments held and allocations among assets classes, as required by local regulation or market practice of the
country where the assets are invested. Most of the investments of our non-U.S. retirement plans can be redeemed at least monthly, except for
a portion of “Other” in the above table, which can be redeemed quarterly or are in the process of liquidation.
94
Changes in 2010 and 2011 of plan assets measured at fair value using significant unobservable inputs (Level 3) for our retirement plans are as
follows:
(cid:3) (In millions)(cid:3)
(cid:3)
Balance at December 31, 2009
Actual return on plan assets:
Relating to assets still held at the reporting date
Relating to assets sold during the period
Purchases, sales and settlements, net
Transfers in and/or out of Level 3
(cid:3) Balance at December 31, 2010(cid:3)
(cid:3)
Actual return on plan assets:
Relating to assets still held at the reporting date
Relating to assets sold during the period
Purchases, sales and settlements, net
Transfers in and/or out of Level 3
(cid:3) Balance at December 31, 2011(cid:3)
U.S. Pension Plans
UMWA Plans
Non-U.S. Pension Plans
$
$
87.3
1.3
-
9.5
-
98.1
(1.3)
-
-
-
96.8
(cid:3)
40.0
0.4
-
-
-
40.4
(0.5)
-
-
-
39.9
1.5
(0.4)
-
(0.3)
-
0.8
-
(0.2)
-
-
0.6
Multi-employer Pension Plans
We contribute to multi-employer pension plans in a few of our non-U.S. subsidiaries. Due to the improvement in the funded status of the
plans, we do not have any multi-employer pension expense for continuing operations in 2011. Multi-employer pension expense was $2.3
million in 2010 and $2.1 million in 2009.
Savings Plans
We sponsor various defined contribution plans to help eligible employees provide for retirement. We record expense for amounts that we
contribute on behalf of employees, usually in the form of matching contributions. Our expense related to these plans is as follows:
(cid:3) (In millions)(cid:3)
(cid:3)(cid:3)Years Ended December 31,(cid:3)
(cid:3)U.S. 401(K)
Other plans
(cid:3) Total(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3) (cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3)
2011
16.9
3.9
20.8
$
$
2010
16.3
4.0
20.3
2009
13.4
3.4
16.8
95
Note 4 – Income Taxes
(cid:3) (cid:3)(cid:3)
(cid:3) (In millions)(cid:3)
(cid:3)
Income (loss) from continuing operations before income taxes
U.S.
Foreign
(cid:3) Income from continuing operations before income taxes(cid:3)
Income tax expense (benefit) from continuing operations
Current tax expense (benefit)
U.S. federal
State
Foreign
(cid:3) Current tax expense(cid:3)
(cid:3)
Deferred tax expense (benefit)
U.S. federal
State
Foreign
Deferred tax benefit
(cid:3) Income tax expense (benefit) of continuing operations(cid:3)
(cid:3) (cid:3)(cid:3)
(cid:3) (In millions)(cid:3)
(cid:3)
Comprehensive provision (benefit) for income taxes allocable to
Continuing operations
Discontinued operations
Other comprehensive income (loss)
Equity
(cid:3) Comprehensive provision (benefit) for income taxes(cid:3)
(cid:3)
$
$
$
$
(cid:3)
$
$
2011
(27.0)
183.4
156.4
3.0
(0.1)
87.9
90.8
(21.3)
(1.0)
(9.1)
(31.4)
59.4
2011
59.4
0.7
(74.4)
(1.1)
(15.4)
Years Ended December 31,
2010
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(2.0)
141.6
139.6
4.3
0.2
64.9
69.4
(7.8)
-
5.5
(2.3)
67.1
Years Ended December 31,
2010
(cid:3)
(cid:3)
67.1
(3.4)
(16.1)
(0.7)
46.9
(cid:3)
(cid:3)
2009
37.0
129.3
166.3
(29.1)
(0.8)
59.8
29.9
(72.3)
(8.1)
(10.6)
(91.0)
(61.1)
2009
(61.1)
2.3
10.6
(0.1)
(48.3)
Rate Reconciliation
The following table reconciles the difference between the actual tax rate on continuing operations and the statutory U.S. federal income tax
rate of 35%.
(cid:3)(cid:3)(cid:3)
(cid:3) (cid:3)(cid:3)
(cid:3) (In percentages) (cid:3)
(cid:3)
U.S. federal tax rate
Increases (reductions) in taxes due to:
Adjustments to valuation allowances
Foreign income taxes
Medicare subsidy for retirement plans
Tax settlement
French business tax (a)
Nontaxable acquisition-related (gains) losses
Taxes on undistributed earnings of foreign affiliates
State income taxes, net
Nondeductible repatriation charge
Other
(cid:3)
2011
35.0 %
Years Ended December 31,
2010
35.0 %
2009
35.0 %
(0.8)
2.1
-
-
2.8
(0.5)
0.2
(0.7)
-
(0.1)
38.0 %
10.5
(7.4)
9.8
(5.0)
2.8
2.1
1.1
(0.4)
-
(0.5)
48.0 %
(68.2)
(3.5)
(0.9)
-
-
(2.9)
(1.1)
0.2
4.7
-
(36.7)%
(cid:3) Actual income tax rate on continuing operations (cid:3)
(a) Effective January 1, 2010, a French business tax previously reported as a pretax expense is reported as income tax expense due to the tax being
changed from an asset-based tax to an income-based tax.
96
Components of Deferred Tax Assets and Liabilities
(cid:3) (cid:3)
(cid:3) (In millions)(cid:3)
(cid:3)
Deferred tax assets
Retirement benefits other than pensions
Pension liabilities
Workers’ compensation and other claims
Property and equipment, net
Other assets and liabilities
Net operating loss carryforwards
Alternative minimum and other tax credits (a)
Subtotal
(cid:3) Valuation allowances (cid:3)
(cid:3) Total deferred tax assets (cid:3)
(cid:3)
Deferred tax liabilities
Property and equipment, net
Other assets and miscellaneous
Deferred tax liabilities
Net deferred tax asset
Included in:
Current assets
Noncurrent assets
Current liabilities, included in accrued liabilities
Noncurrent liabilities
$
$
$
2011
112.7
138.3
42.8
0.2
106.8
44.9
37.7
483.4
(43.9)
439.5
12.5
37.0
49.5
390.0
December 31,
(cid:3)
(cid:3)
2010
(cid:3)(cid:3)
82.0
91.2
33.2
0.4
99.7
38.6
46.8
391.9
(45.9)
346.0
10.6
45.8
56.4
289.6
66.4
350.8
(4.2)
(23.0)
390.0
48.3
276.0
(4.1)
(30.6)
289.6
(cid:3) Net deferred tax asset (cid:3)
(a) U.S. alternative minimum tax credits of $36.8 million have an unlimited carryforward period and the remaining credits of $0.9 million have various
$
carryforward periods.
Valuation Allowances
Valuation allowances relate to deferred tax assets in various federal, state and non-U.S. jurisdictions. Based on our historical and expected
future taxable earnings, and a consideration of available tax-planning strategies, we believe it is more likely than not that we will realize
the benefit of the existing deferred tax assets, net of valuation allowances, at December 31, 2011.
(cid:3) (cid:3)
(cid:3) (In millions)(cid:3)
(cid:3)
Valuation allowances:
Beginning of year(cid:3)
Expiring tax credits
Acquisitions and dispositions
Changes in judgment about deferred tax assets (a)
Other changes in deferred tax assets, charged to:
$
2011
45.9
(0.3)
0.3
(8.2)
Years Ended December 31,
2010
45.4
(0.6)
(10.0)
(0.9)
2009
183.6
(0.7)
0.3
(119.8)
Income from continuing operations
Income from discontinued operations
Other comprehensive income (loss) (b)
Foreign currency exchange effects(cid:3)
End of year(cid:3)
$
Changes in judgment about valuation allowances are based on a recognition threshold of “more-likely-than-not.”Amounts are based on beginning-of-
year balances of deferred tax assets that could potentially be realized in future years. Amounts are recognized in income from continuing operations.
In 2009, includes $117.8 million related to U.S. federal and state income taxes.
In 2009, includes a $25.4 million reversal related to net experience gains of U.S. retirement plans recognized in 2009.
(cid:3)
(a)
(b)
7.6
-
-
(1.4)
43.9
14.9
(1.1)
0.1
(1.9)
45.9
7.1
1.7
(28.3)
1.5
45.4
97
4.2
6.9
10.8
23.0
44.9
2009
19.3
1.0
(1.0)
1.3
(0.4)
(1.2)
-
-
19.0
Undistributed Foreign Earnings
As of December 31, 2011, we have not recorded U.S. federal deferred income taxes on approximately $318 million of undistributed
earnings of foreign subsidiaries and equity affiliates. It is expected that these earnings will be permanently reinvested in operations outside
the U.S. It is not practical to compute the estimated deferred tax liability on these earnings.
Net Operating Losses
The gross amount of the net operating loss carryforwards as of December 31, 2011, was $255.4 million. The tax benefit of net operating
loss carryforwards, before valuation allowances, as of December 31, 2011, was $44.9 million, and expires as follows:
(cid:3) (In millions)(cid:3)
(cid:3)
Years of expiration
2012-2016
2017-2021
2022 and thereafter
Unlimited
(cid:3) (cid:3)
Federal
$
$
-
-
-
-
-
State
0.5
0.1
8.0
-
8.6
Foreign
Total
(cid:3)(cid:3)
(cid:3)
3.7
6.8
2.8
23.0
36.3
Uncertain Tax Positions
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(cid:3) (cid:3)(cid:3)
(cid:3)(cid:3)
(cid:3)(cid:3)(In millions)(cid:3)
(cid:3)
Uncertain tax positions:
Beginning of year
Increases related to prior-year tax positions
Decreases related to prior-year tax positions
Increases related to current-year tax positions
Settlements
Effect of the expiration of statutes of limitation
Increases (decreases) related to business combinations and dispositions
Foreign currency exchange effects
End of year
(cid:3)
(cid:3)
$
$
2011
19.4
0.8
(1.6)
1.3
-
(1.2)
(0.7)
(0.8)
17.2
Years Ended December 31,
2010
19.0
0.1
(1.3)
1.9
(7.0)
(1.6)
8.3
-
19.4
Included in the balance of unrecognized tax benefits at December 31, 2011, are potential benefits of approximately $14.9 million that, if
recognized, will reduce the effective tax rate on income from continuing operations. Also included in the balance of unrecognized tax
benefits at December 31, 2011, are benefits of approximately $0.8 million that, if recognized, will reduce the effective tax rate on income
from discontinued operations.
We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties included in
income tax expense amounted to $1.2 million in 2011, $1.1 million in 2010, and $0.9 million in 2009. We had accrued penalties and
interest of $5.9 million at December 31, 2011, and $4.5 million at December 31, 2010.
We file income tax returns in the U.S. federal and various state and foreign jurisdictions. With a few exceptions, as of December 31, 2011,
we were no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2008.
Additionally, due to statute of limitations expirations and audit settlements, it is reasonably possible that approximately $3.3 million of
currently remaining unrecognized tax positions may be recognized by the end of 2012.
98
Note 5 – Property and Equipment
The following table presents our property and equipment that is classified as held and used:
(cid:3) (cid:3)(cid:3)(cid:3)
(In Millions)
Land
Buildings
Leasehold improvements
Vehicles
Capitalized software (a)
Other machinery and equipment
(cid:3)
December 31,
2011
2010
$
69.5
232.8
203.7
389.5
147.8
628.3
1,671.6
(922.4)
749.2
76.1
210.6
196.4
349.7
116.3
580.3
1,529.4
(830.5)
698.9
Accumulated depreciation and amortization
Property and equipment, net
(a) Amortization of capitalized software costs included in continuing operations was $15.9 million in 2011, $12.8 million in 2010 and $13.6 million in
$
2009.
Note 6 – Acquisitions
We acquired security operations in various countries over the last three years. We accounted for the acquisitions as business combinations
using the acquisition method. Under the acquisition method of accounting, assets acquired and liabilities assumed from these operations
are recorded at fair value on the date of acquisition. The consolidated statements of income include the results of operations for each
acquired entity from the date of acquisition.
Businesses acquired in 2012
We acquired Kheops, SAS, a provider of logistics software and related services, for approximately $17 million in January 2012. This
acquisition gives us proprietary control of software used primarily in our cash-in-transit and money processing operations in France.
Businesses acquired in 2011
There were no significant acquisitions in 2011.
Businesses acquired in 2010
Servicio Pan Americano de Proteccion, S.A. de C.V.
Mexican Cash in Transit (“CIT”), ATM and money processing business
On November 17, 2010, we acquired a controlling interest in Servicio Pan Americano de Proteccion, S.A. de C.V. (“SPP”) for $59.8
million in cash. In 2011, this purchase price was reduced for final working capital adjustments to $58.7 million. We previously owned a
20.86% interest in SPP and we acquired an additional 78.89% of the outstanding shares through our existing Mexican ownership structure.
In compliance with Mexican law, the remaining 0.25% noncontrolling interest is held by a third-party Mexican trust. SPP is the largest
secure logistics company in Mexico and this acquisition expands our operations in one of the world’s largest CIT markets. SPP has
approximately 12,000 full-time and contract employees, 80 branches and 1,350 armored vehicles across its nationwide network of CIT,
ATM and money processing operations.
We recognized a loss of $13.7 million in 2010 on the conversion from the cost method of accounting to consolidation. The loss represents
the difference between the fair value and the book value of our previously held 20.86% investment as of the acquisition date. The 2010 loss
was included in other operating income of non-segment income (expense). The fair value of the previously held noncontrolling interest in
SPP, a private entity, was estimated to be $9.7 million by applying a market approach. This fair value measurement is based on significant
inputs that are not observable in the market and thus represents a Level 3 measurement as described in ASC 820 Fair Value Measurements
and Disclosures, Section 820-10-35. Key assumptions include adjustments because of the lack of control and lack of marketability that
market participants would consider when estimating the fair value of the noncontrolling interest in SPP. The lack of marketability discount
was determined using a Black-Scholes put option model and the discount for lack of control was determined based on identified control
premiums on recent comparable transactions.
We recognized a $5.1 million bargain purchase gain in 2010 related to acquisition of the additional 78.89% ownership interest in SPP. In
2011, when we completed purchase accounting, we recognized an additional $2.1 million bargain purchase gain. The gain is equal to the
difference between the fair value of the net assets acquired and the fair value of the purchase consideration (see table below). In both 2010
and 2011, the gain was included in other operating income of non-segment income (expense).
99
During 2010, we provisionally estimated fair values for the assets purchased and liabilities assumed as of the date of the acquisition. We
made significant estimates and assumptions to estimate the fair values. The amounts reported were considered provisional as we were
completing the valuation work required to allocate the purchase price. We finalized the analysis in 2011 and present the adjustments to the
purchase accounting adjustments below.
(In millions)
Estimated Fair
Value at
November 17, 2010
Purchase
Price
Adjustments (a)
Revised Fair
Value as of
November 17, 2010
Fair value of purchase consideration
Cash paid for 78.89% of shares
Fair value of noncontrolling interest
Fair value of previously held 20.86% noncontrolling interest
Fair value of purchase consideration
(a)
$
$
59.8
0.1
9.7
69.6
(1.1)
(0.1)
-
(1.2)
58.7
-
9.7
68.4
In accordance with the purchase agreement, the purchase price was adjusted subsequent to closing based on the working capital held as of the
acquisition date.
(In millions)
Fair value of net assets acquired
Amounts Recognized as of
Acquisition Date
(Provisional) (a)
Measurement
Period
Adjustments (b)
Amounts Recognized as of
Acquisition Date
(Final)
$
Cash
Accounts receivable
Other current assets
Property and equipment, net
Indefinite-lived intangible asset (trade name)
Other noncurrent assets
Current liabilities
Noncurrent liabilities
Fair value of net assets acquired
Less: Fair value of purchase consideration
Bargain purchase gain
(a) As previously reported in Brink’s 2010 Annual Report on Form 10-K.
(b) These measurement period adjustments were recorded to reflect changes in the estimated fair value of the associated assets and liabilities and better
(0.1)
-
(0.9)
-
-
-
(0.8)
2.7
0.9
(1.2)
2.1
12.1
58.8
11.4
106.4
12.1
18.7
(75.9)
(68.0)
75.6
68.4
7.2
12.2
58.8
12.3
106.4
12.1
18.7
(75.1)
(70.7)
74.7
69.6
5.1
$
reflect market participant assumptions about facts and circumstances existing as of the acquisition date. The measurement period adjustments did not
result from events after the acquisition date. We have not recast the acquisition adjustments to the 2010 financial statements as we do not consider
them material.
100
Threshold
Canadian payment solutions provider
On December 23, 2010, we acquired Threshold Financial Technologies Inc. (“Threshold”) from Versent Corporation for $38.8 million.
Based in Mississauga, Canada, Threshold is a leading provider of payments solutions, specializing in managed ATM and transaction
processing services for financial institutions and retailers throughout Canada. Threshold’s annual revenue is approximately $48 million,
about half of which is generated by providing outsourced ATM network administration and transaction processing solutions. The
company, which employs approximately 125 people, also owns and operates a network of private-label ATMs in Canada.
During 2010, we provisionally estimated fair values for the assets purchased and liabilities assumed as of the date of the acquisition. We
made significant estimates and assumptions to estimate the fair values. The amounts reported were considered provisional as we were
completing the valuation work required to allocate the purchase price. We finalized the analysis in 2011 and present the adjustments to the
purchase accounting adjustments below.
(In millions)
Amounts Recognized as of
Acquisition Date
(Provisional) (a)
Measurement
Period
Adjustments (b)
Amounts Recognized as of
Acquisition Date
(Final)
$
Cash
Accounts receivable
Other current assets
Property and equipment, net
Identifiable intangible assets
Goodwill (c)
Current liabilities
Noncurrent liabilities
Fair value of net assets acquired
(a) As previously reported in Brink’s 2010 Annual Report on Form 10-K.
(b) These measurement period adjustments were recorded to reflect changes in the estimated fair value of the associated assets and liabilities and better
-
-
-
5.8
(5.1)
0.4
(0.8)
(0.3)
-
0.5
5.0
2.5
16.4
11.2
13.3
(5.0)
(5.1)
38.8
0.5
5.0
2.5
10.6
16.3
12.9
(4.2)
(4.8)
38.8
$
reflect market participant assumptions about facts and circumstances existing as of the acquisition date. The measurement period adjustments did not
result from events after the acquisition date. We have not recast the acquisition adjustments to the 2010 financial statements as we do not consider them
material.
(c) Consists of intangible assets that do not qualify for separate recognition, combined with synergies expected from integrating Threshold’s operations into
our existing Canadian operations. All of the goodwill has been assigned to the North America reporting unit and is not expected to be deductible for tax
purposes.
Other acquisitions in 2010
On March 1, 2010, we acquired Est Valeurs S.A., a provider of CIT and cash services in Eastern France. Est Valeurs employs
approximately 100 people and had 2009 revenue of $13 million.
On April 22, 2010, we acquired a majority stake in a Russian cash processing business that complements the company’s existing Russian
CIT business. With principal operations in Moscow and approximately 500 employees, the operations offer a full range of CIT, ATM,
money processing and Global Services operations for domestic and international markets.
101
Note 7 – Goodwill and Other Intangible Assets
Goodwill and other intangible assets resulted from acquiring businesses. The changes in the carrying amount of goodwill and other
intangible assets by reportable segment for the years ended December 31, 2011 and 2010 are as follows:
(In millions)
International:
Goodwill
Other intangibles:
Customer relationships
Indefinite-lived trade names
Finite-lived trade names
Other
International other intangibles
North America:
Goodwill
Other intangibles:
Customer relationships
Finite-lived trade names
Other - Threshold acquisition (a)
North America other intangibles
Total goodwill
Total other intangibles
(a)
Beginning
Balance
Acquisitions/
Dispositions
Amortization
Expense
Adjustments
Currency
Ending
Balance
December 31, 2011
$
224.0
49.6
13.7
0.8
1.0
65.1
20.3
1.4
-
16.7
18.1
244.3
83.2
$
1.8
2.3
-
-
0.7
3.0
(0.4)
(0.2)
-
-
(0.2)
1.4
2.8
-
(7.6)
-
(0.5)
(0.8)
(8.9)
-
(2.0)
-
-
(2.0)
-
(10.9)
(1.3)
(13.2)
211.3
-
0.1
-
-
0.1
0.4
9.6
1.6
(16.3)
(5.1)
(0.9)
(5.0)
(4.1)
(1.7)
(0.1)
(0.1)
(6.0)
(0.2)
0.1
-
(0.4)
(0.3)
40.2
12.1
0.2
0.8
53.3
20.1
8.9
1.6
-
10.5
(13.4)
(6.3)
231.4
63.8
In 2010, an estimate for intangible assets was recorded in one category as the final purchase price allocation was not completed. In 2011, the final
purchase price allocation was completed and the intangible asset amount was recorded to the appropriate asset category, which includes customer
relationships and finite-lived trade names (Other Intangibles) and capitalized software (Property and Equipment).
Beginning
Balance
Acquisitions
Amortization
Expense
Adjustments
Currency
December 31, 2010
(In millions)
International:
Goodwill
Other intangibles:
Customer relationships
Indefinite-lived trade names
Finite-lived trade names
Other
International other intangibles
North America:
Goodwill
Other intangibles:
Customer relationships
Other – Threshold acquisition
North America other intangibles
$
206.5
61.9
2.1
1.6
1.4
67.0
7.2
2.4
-
2.4
Total goodwill
Total other intangibles
213.7
69.4
$
Ending
Balance
224.0
49.6
13.7
0.8
1.0
65.1
20.3
1.4
16.7
18.1
244.3
83.2
-
(7.0)
-
(0.7)
(0.4)
(8.1)
-
(1.0)
-
(1.0)
-
(9.1)
7.1
(8.3)
(0.4)
(0.1)
-
(8.8)
-
-
-
-
7.1
(8.8)
(3.9)
0.7
(0.1)
-
-
0.6
0.2
-
0.4
0.4
(3.7)
1.0
14.3
2.3
12.1
-
-
14.4
12.9
-
16.3
16.3
27.2
30.7
102
The following table summarizes our other intangible assets:
December 31, 2011
December 31, 2010
(In millions)
International:
Customer relationships
Indefinite-lived trade names
Finite-lived trade names
Other
North America:
Customer relationships
Finite-lived trade names
Other – Threshold Acquisition
Total
Gross Carrying Accumulated
Amortization
Amount
Net Carrying
Amount
Gross Carrying Accumulated Net Carrying
Amortization
Amount
Amount
$
$
75.9
12.1
2.0
3.6
12.7
1.6
-
107.9
(35.7)
-
(1.8)
(2.8)
(3.8)
-
-
(44.1)
40.2
12.1
0.2
0.8
8.9
1.6
-
63.8
$
$
79.9
13.7
2.2
3.3
5.0
-
16.7
120.8
(30.3)
-
(1.4)
(2.3)
(3.6)
-
-
(37.6)
49.6
13.7
0.8
1.0
1.4
-
16.7
83.2
Our estimated aggregate amortization expense for finite-lived intangibles recorded at December 31, 2011, for each of the five succeeding
years is as follows:
(In millions)
Amortization expense
2012
$
8.7
2013
7.0
2014
6.2
2015
5.5
2016
4.9
103
Note 8 – Other Assets
(cid:3)(cid:3)(cid:3)
(cid:3)(cid:3)(In millions)(cid:3)
(cid:3)Equity method investment in unconsolidated entities
Available-for-sale securities
Other
(cid:3) Other assets(cid:3)
Note 9 – Fair Value of Financial Instruments
2011
12.8
8.9
55.4
77.1
$
$
December 31,
2010
11.5
29.6
49.6
90.7
Investments in Available-for-sale Securities
We have available-for-sale securities that are carried at fair value in the financial statements, some of which are classified as current assets.
For these investments, fair value was estimated based on quoted prices categorized as a Level 1 valuation, except for non-U.S. debt
securities. These securities were valued at December 31, 2010, using a discounted cash flow methodology using yields and discount rates
based on our best estimate of rates a market participant would use. Due to the high level of judgment involved in this valuation, we have
categorized these investments as Level 3.
December 31,
(In millions)
Cost
Mutual funds
Non-U.S. debt securities
Equity securities
Total
Gross Unrealized Gains
Mutual funds
Non-U.S. debt securities
Equity securities
Total
Gross Unrealized Losses
Mutual funds
Non-U.S. debt securities
Equity securities
Total
Fair Value
Mutual funds
Non-U.S. debt securities
Equity securities
Total
2011
16.9
-
-
16.9
3.1
-
-
3.1
-
-
-
-
20.0
-
-
20.0
$
$
$
$
$
$
$
$
2010
16.9
3.6
3.7
24.2
3.4
-
2.2
5.6
-
(0.2)
-
(0.2)
20.3
3.4
5.9
29.6
The table below presents a reconciliation for investments measured and recognized at fair value on a recurring basis using significant
unobservable inputs (Level 3):
(In millions)
Beginning balance
Total gain and (loss), realized and unrealized:
Included in interest and other income
Included in other comprehensive income (loss)
Purchases
Sales
Ending balance
December 31,
2010
3.1
-
0.3
-
-
3.4
2009
-
-
(0.6)
3.7
-
3.1
2011
3.4
2.6
0.3
-
(6.3)
-
$
$
104
Fixed-Rate Debt
The fair value estimate of our obligation related to the fixed-rate Dominion Terminal Associates (“DTA”) bonds at December 31, 2010, is
based on quoted prices in an active market (a Level 1 valuation). During the third quarter of 2011, the market for these bonds was not
active and we therefore transferred these bonds from Level 1 to Level 2. At December 31, 2011, the fair value estimate of these bonds is
based on price information for these DTA bonds observed in a less-active market.
At December 31, 2011, the fair value estimate of our unsecured notes is based on the present value of future cash flows, discounted at rates
for similar instruments at the valuation date.
The fair value and carrying value of our DTA bonds and of our unsecured notes are as follows:
(In millions)
DTA bonds
Carrying value
Fair value
Unsecured notes issued in a private placement
Carrying value
Fair value
December 31,
2011
December 31,
2010
$
43.2
44.0
100.0
106.4
43.2
42.9
-
-
Other Financial Instruments
Other financial instruments include cash and cash equivalents, short-term fixed rate deposits, accounts receivable, floating rate debt,
accounts payable and accrued liabilities. The financial statement carrying amounts of these items approximate the fair value due to their
short-term nature.
Note 10 – Accrued Liabilities
(cid:3) (cid:3)(cid:3)
(cid:3)(In millions) (cid:3)
(cid:3)
December 31,
2011
2010
(cid:3)
Payroll and other employee liabilities
Taxes, except income taxes
Retirement benefits (see note 3)
Workers’ compensation and other claims
Amounts held by cash logistics operations (a)
Income taxes payable
(cid:3)Other (cid:3)
Accrued liabilities (cid:3)
(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
156.4
96.8
31.5
27.0
25.1
14.7
137.0
488.5
161.4
92.8
12.2
19.9
38.5
17.2
127.0
469.0
$
$
credited to customers’ accounts the following day and we record a liability while the cash is in our possession.
Note 11 – Other Liabilities
(cid:3) (cid:3)
(cid:3)(cid:3)(In millions)(cid:3)
Workers’ compensation and other claims
Noncurrent tax liability
(cid:3) Other(cid:3)
Other liabilities(cid:3)
2011
44.3
20.9
113.2
178.4
$
$
December 31,
2010
55.1
19.6
97.0
171.7
105
Note 12 – Long-Term Debt
(In millions)
Bank credit facilities:
Revolving Facility (year-end weighted average interest
rate of 2.1% in 2011 and 2.1% in 2010)
Private Placement Notes (Series A interest rate of 4.6%, Series B interest
rate of 5.2%), due 2021
Other non-U.S. dollar-denominated facilities (year-end weighted
average interest rate of 6.9% in 2011 and 5.7% in 2010)
Dominion Terminal Associates 6.0% bonds, due 2033
Capital leases (average rates: 4.3% in 2011 and 4.3% in 2010)
Total long-term debt
Included in:
Current liabilities
Noncurrent liabilities
Total long-term debt
December 31,
2011
2010
$
110.0
100.0
15.4
43.2
95.4
364.0
28.7
335.3
364.0
$
$
$
217.2
-
28.1
43.2
64.2
352.7
29.0
323.7
352.7
On January 6, 2012, we amended our unsecured revolving bank credit facility (the “Revolving Facility”). The amendment provides for an
increase in the amount of the Revolving Facility from $400 million to $480 million at more favorable pricing and extends the maturity date
from July 2014 to January 2017. The Revolving Facility’s interest rate is based on LIBOR plus a margin, alternate base rate plus a margin,
or competitive bid. The Revolving Facility allows us to borrow or issue letters of credit (or otherwise satisfy credit needs) on a revolving
basis over the term of the facility. As of December 31, 2011, $290 million was available under the Revolving Facility. Amounts
outstanding under the Revolving Facility as of December 31, 2011, were denominated primarily in U.S. dollars and to a lesser extent in
Canadian dollars.
The margin on LIBOR borrowings under the Revolving Facility, which ranged from 1.225% to 2.325% depending on our credit rating, was
1.75% at December 31, 2011. Under the amended Revolving Facility, the margin on LIBOR borrowings can range from 0.9% to 1.575%
and was 1.20% at January 6, 2012. The margin on alternate base rate borrowings under the Revolving Facility ranged from 0.225% to
1.325%. Under the amended Revolving Facility, the alternate base rate borrowings can range from 0.0% to 0.575%. We also pay an
annual facility fee on the Revolving Facility based on our credit rating. The facility fee, which ranged from 0.15% to 0.55%, was 0.375%
at December 31, 2011. Under the amended Revolving Facility, the facility fee can range from 0.10% to 0.30% and was 0.175% at January
6, 2012.
On January 24, 2011, we issued $100 million in unsecured notes through a private placement debt transaction (the “Notes”). The Notes
comprise $50 million in series A notes with a fixed interest rate of 4.57% and $50 million in series B notes with a fixed interest rate of
5.20%. The Notes are due in January 2021 with principal payments under the series A notes to begin in January 2015. The proceeds of
$100 million were utilized to pay down the Revolving Facility.
As of December 31, 2011, we had three unsecured multi-currency revolving bank credit facilities with a total of $70 million in available
credit, of which approximately $37 million was available. A $20 million facility expires in December 2012, another $20 million facility
expires in May 2014 and a $30 million facility expires in October 2014. Interest on these facilities is based on LIBOR plus a margin. The
margin ranges from 1.0% to 2.50%. We also have the ability to borrow from other banks, at the banks’ discretion, under short-term
uncommitted agreements. Various foreign subsidiaries maintain other lines of credit and overdraft facilities with a number of banks.
We have two unsecured letter of credit facilities totaling $139 million, of which approximately $25 million was available at December 31,
2011. A $54 million facility expires in December 2014 and an $85 million facility expires in June 2015. The Revolving Facility and the
multi-currency revolving credit facilities are also used for issuance of letters of credit and bank guarantees. On January 24, 2012, we
entered into a $25 million unsecured letter of credit facility that will expire in December 2014.
We also have an unsecured bilateral committed credit facility (the “2010 Credit Facility”) with a total of $20 million in available credit that
expires in March 2012. Interest on this facility is based on LIBOR plus a margin, which ranges from 1.75% to 2.25%. As of December
31, 2011, $20 million was available under the 2010 Credit Facility.
106
Minimum repayments of long-term debt are as follows:
(In millions)
2012
2013
2014
2015
2016
Later years
Total
Capital leases
Other long-term debt
$
$
21.6
18.3
16.7
14.9
13.7
10.2
95.4
7.1
2.5
97.7
7.9
7.9
145.5
268.6
Total
28.7
20.8
114.4
22.8
21.6
155.7
364.0
The Revolving Facility, the Notes, the three unsecured multi-currency revolving bank credit facilities, the two letter of credit facilities and
the 2010 Credit Facility contain subsidiary guarantees and various financial and other covenants. The financial covenants, among other
things, limit our total indebtedness, limit priority debt, limit asset sales, limit the use of proceeds from asset sales and provide for minimum
coverage of interest costs. The credit agreements do not provide for the acceleration of payments should our credit rating be reduced. If
we were not to comply with the terms of our various credit agreements, the repayment terms could be accelerated and the commitments
could be withdrawn. An acceleration of the repayment terms under one agreement could trigger the acceleration of the repayment terms
under the other loan agreements. We were in compliance with all financial covenants at December 31, 2011.
We have $43 million of bonds issued by the Peninsula Ports Authority of Virginia recorded as debt on our balance sheet. Although we are
not the primary obligor of the debt, we have guaranteed the debt and we believe that we will ultimately pay this obligation. The guarantee
originated as part of a former interest in Dominion Terminal Associates, a deep water coal terminal. We continue to pay interest on the
debt. The bonds bear a fixed interest rate of 6.0% and mature in 2033. The bonds may mature prior to 2033 upon the occurrence of
specified events such as the determination that the bonds are taxable or if we fail to abide by the terms of the guarantee.
At December 31, 2011, we had undrawn letters of credit and guarantees totaling $140.2 million, including $114.2 million issued under the
letter of credit facilities, $21.7 million issued under the multi-currency revolving bank credit facilities, and $4.3 million issued under other
credit facilities. These letters of credit primarily support our obligations under various self-insurance programs and credit facilities.
Capital Leases
Property and equipment acquired under capital leases are included in property and equipment as follows:
(cid:3)
(cid:3)(cid:3)(cid:3)
(cid:3)(cid:3)(In millions)(cid:3)
(cid:3)Asset class:
Buildings
Vehicles
Machinery and equipment
Less: accumulated amortization
(cid:3)(cid:3)(cid:3) Total(cid:3)
$
2011
6.0
89.9
37.3
133.2
(30.0)
$
103.2
December 31,
2010
8.8
54.8
25.3
88.9
(21.7)
67.2
107
Note 13 – Accounts Receivable
(cid:3) (cid:3)
(cid:3)(cid:3)(In millions)(cid:3)
(cid:3)Trade
Other
Total accounts receivable
(cid:3) Allowance for doubtful accounts(cid:3)
(cid:3)Accounts receivable, net
(cid:3) (cid:3)
(cid:3) (In millions)(cid:3)
Allowance for doubtful accounts:
Beginning of year
Provision for uncollectible accounts receivable
Write offs less recoveries
Foreign currency exchange effects
End of year
(cid:3)
Note 14 – Operating Leases
December 31,
$
2011
506.0
53.4
559.4
(8.9)
$
550.5
2011
7.2
4.0
(1.4)
(0.9)
8.9
$
$
Years Ended December 31,
2010
7.1
0.5
(0.9)
0.5
7.2
2010
493.6
38.7
532.3
(7.2)
525.1
2009
6.8
1.2
(1.2)
0.3
7.1
We lease facilities, vehicles, computers and other equipment under long-term operating and capital leases with varying terms. Most of the
operating leases contain renewal and/or purchase options. We expect that in the normal course of business, the majority of operating leases
will be renewed or replaced by other leases.
As of December 31, 2011, future minimum lease payments under noncancellable operating leases with initial or remaining lease terms in
excess of one year are included below.
(In millions)
Facilities
Vehicles
Other
2012
2013
2014
2015
2016
Later
$
58.7
48.1
40.1
28.1
18.6
48.4
$
242.0
17.5
13.0
8.6
4.2
1.4
0.1
44.8
4.1
2.5
1.5
0.8
0.5
0.5
9.9
Total
80.3
63.6
50.2
33.1
20.5
49.0
296.7
In North America, most vehicles that were added to the fleet prior to March 1, 2009, were obtained pursuant to operating leases that had
residual value guarantees. Vehicles added to the fleet after March 1, 2009, were either purchased or were financed under capital lease.
Our maximum residual value guarantee under operating lease agreements was $27.6 million at December 31, 2011. If we continue to
renew the leases and pay the lease payments for the vehicles that have been included in the above table, this residual value guarantee will
reduce to zero at the end of the final renewal period.
Net rent expense included in continuing operations amounted to $112.6 million in 2011, $104.7 million in 2010 and $101.4 million in
2009.
108
Note 15 – Share-Based Compensation Plans
We have share-based compensation plans to retain employees and nonemployee directors and to more closely align their interests with those
of our shareholders.
The 2005 Equity Incentive Plan (the “2005 Plan”) permits grants of stock options, restricted stock units, stock appreciation rights,
performance stock and other share-based awards to employees.
We also provide share-based awards to directors through the Non-Employee Directors’ Equity Plan (the “Directors’ Plan”). To date, we have
granted only deferred stock units under the Directors’ Plan. There are also outstanding stock options granted to directors under a prior plan,
the Non-Employee Directors’ Stock Option Plan (the “Prior Directors’ Plan”).
There are 1.5 million shares underlying share-based plans that are authorized, but not yet granted.
General Terms
Options are granted at a price not less than the average quoted market price on the date of grant. Options granted to employees have a
maximum term of six years. All grants of options and restricted stock units to employees under the 2005 Plan are subject to a minimum
vesting period of one year and either vest ratably over three years from the date of grant or at the end of the third year. Compensation
expense related to options and restricted stock units is recognized from the grant date to the earlier of the retirement eligible date or the stated
vesting date, and is classified as selling, general and administrative expenses in the consolidated statements of income.
In general, options continue to be exercisable following termination of employment for 90 days, if such options were exercisable at the time
of termination. Upon termination of employment by reason of the employee’s retirement or permanent and total disability, options held by
the employee remain outstanding and continue in accordance with their terms. In the event of the employee’s death while employed or after
retirement or permanent and total disability, options held by the employee fully vest at the time of the employee’s death (or, if later, on the
first anniversary of the grant date) and remain exercisable by the employee’s beneficiary or estate for three years following the employee’s
death or their earlier expiration in accordance with their terms. If a change in control were to occur (as defined in the plan document), all
outstanding options fully vest and become exercisable.
Restricted stock unit awards granted under the 2005 Plan have specific terms and conditions contained in award agreements entered into with
employees. In general, restricted stock units are canceled following termination of employment. Upon termination of employment by reason
of the employee’s retirement or permanent and total disability, restricted stock units held by the employee remain outstanding and continue in
accordance with their terms. In the event of the employee’s death while employed or after retirement or permanent and total disability, any
restrictions on restricted stock units held by the employee are removed at the time of the employee’s death (or, if later, on the first anniversary
of the grant date). If a change in control were to occur, all restrictions on outstanding restricted stock units are removed, subject to limitations
on distribution imposed by Internal Revenue Code Section 409A.
Under the Prior Directors’ Plan, options granted had a maximum term of ten years and vested in full at the end of six months. Under the
Directors’ Plan, directors have been granted deferred stock units that entitle them (at the earlier of one year from the date of grant, upon
termination of service from the board or upon a change on control) to receive an equivalent amount of Brink’s common stock six months
after termination of service from the board. Compensation cost for deferred stock units is recognized in its entirety at the grant date.
109
Option Activity
The table below summarizes the activity in all plans for options of our common stock.
Shares
(in thousands)
Weighted- Average
Exercise Price Per Share
Weighted-Average
Remaining Contractual
Term (in years)
Aggregate
Intrinsic Value
(in millions)
Outstanding at December 31, 2008
Granted
Exercised
Forfeited or expired
Outstanding at December 31, 2009
Granted
Exercised
Forfeited or expired
Outstanding at December 31, 2010
Granted
Exercised
Forfeited or expired
Outstanding at December 31, 2011
Of the above, as of December 31, 2011:
Exercisable
Expected to vest in future periods (a)
(cid:3)
3,322
289
(79)
(97)
3,435
367
(372)
(75)
3,355
290
(562)
(116)
2,967
2,397
555
$
$
$
$
28.95
27.59
16.50
34.08
28.98
19.05
17.50
31.71
29.10
31.47
20.66
29.47
30.92
32.03
26.18
(a) The number of options expected to vest takes into account an estimate of expected forfeitures.
(cid:3)
(cid:3)(cid:3)
2.5
1.9
4.8
$
$
$
3.0
1.4
1.6
The intrinsic value of a stock option is the difference between the market price of the shares underlying the option and the exercise price of
the option. The market price at December 31, 2011, was $26.88 per share. The total intrinsic value of options exercised was $5.6 million
($9.99 per share) in 2011, $2.9 million ($7.86 per share) in 2010, and $0.9 million ($11.62 per share) in 2009. The total fair value of options
that vested during 2011 was $3.2 million, during 2010 was $5.1 million, and during 2009 was $6.7 million.
There were 2.4 million shares of exercisable options with a weighted-average exercise price of $32.03 per share at December 31, 2011.
There were 2.6 million shares of exercisable options with a weighted-average exercise price of $30.10 per share at December 31, 2010, and
2.4 million shares of exercisable options with a weighted-average exercise price of $27.41 per share at December 31, 2009.
Method and Assumptions Used to Estimate Fair Value of Options
The fair value of each stock option grant is estimated at the time of grant using the Black-Scholes option-pricing model. For those awards
subject to a ratable vesting schedule, fair value is measured for each separately vesting portion of the award as if the award were comprised of
three separate individual awards.
110
The fair value of options granted during the three years ended December 31, 2011, was calculated using the following estimated weighted-
average assumptions.
Options Granted
Number of shares underlying options, in thousands
Weighted-average exercise price per share
Assumptions used to estimate fair value
Expected dividend yield (a):
Weighted-average
Expected volatility (b):
Weighted-average
Range
Risk-free interest rate (c):
Weighted-average
Range
Expected term in years (d):
Weighted-average
Range
Weighted-average fair value estimates at grant date:
In millions
Fair value per share
Years Ended December 31,
2011
290
31.47
(cid:3)(cid:3)
(cid:3)(cid:3)
2010
367
19.05
(cid:3)
(cid:3)
2009
289
27.59
(cid:3)
$ (cid:3)
1.3 %
2.1 %
1.4 %
36 %
36 % – 37 %
36 %
35 % – 39 %
36 %
35 % – 39 %
1.2 %
0.5 % – 1.9 %
1.4 %
0.6 % – 1.9 %
1.8 %
0.9 % – 2.4 %
1.9 –
3.8
5.3
1.9 –
3.8
5.3
1.9 –
3.8
5.3
$
$
2.4
8.17
1.7
4.65
2.1
7.24
(a) The expected dividend yield is the calculated yield on Brink’s common stock at the time of the grant.
(b) The expected volatility was estimated after reviewing the historical volatility of our stock using daily close prices.
(c) The risk-free interest rate was based on U.S. Treasury debt yields at the time of the grant.
(d) The expected term of the options was based on historical option exercise, expiration and post-vesting cancellation behaviors.
Nonvested Share Activity
(in thousands of shares, except per share amounts)
Balance as of January 1, 2009
Granted
Cancelled awards
Vested
Balance as of December 31, 2009
Granted
Cancelled awards
Vested
Balance as of December 31, 2010
Granted
Cancelled awards
Vested
2005
Plan
55.6
178.4
(1.3)
(18.5)
214.2
167.6
(5.6)
(76.7)
299.5
Number of shares
Directors’
Plan
Total
Weighted-Average
Grant-Date
Fair Value (a)
15.3
22.7
-
(15.3)
22.7
29.1
-
(22.7)
29.1
$
70.9
201.1
(1.3)
(33.8)
236.9
196.7
(5.6)
(99.4)
328.6
36.27
26.90
26.80
35.71
28.45
19.24
22.52
29.12
22.84
143.7
(16.5)
(127.1)
299.6
15.8
-
(29.1)
15.8
159.5
(16.5)
(156.2)
315.4
30.43
23.65
24.13
25.99
(a)
Balance as of December 31, 2011
Fair value is measured at the date of grant based on the average of the high and low per share quoted sales price of Brink’s common stock, adjusted for a
discount on units that do not receive or accrue dividends.
$
As of December 31, 2011, $0.9 million of total unrecognized compensation cost related to previously granted stock options is expected to be
recognized over a weighted-average period of 1.5 years.
Other Share-Based Compensation
We have a deferred compensation plan that allows participants to defer a portion of their compensation into common stock units. Units may
be redeemed by employees for an equal number of shares of Brink’s common stock. Employee accounts held 947,878 units at December 31,
2011, and 869,745 units at December 31, 2010.
We have a stock accumulation plan for our non-employee directors denominated in Brink’s common stock units. Directors’ accounts held
55,293 units at December 31, 2011, and 50,619 units at December 31, 2010.
111
Note 16 – Capital Stock
Common Stock
At December 31, 2011, we had 100 million shares of common stock authorized and 46.9 million shares issued and outstanding.
Share Purchases
We purchased and retired 234,456 shares of Brink’s common stock in 2009 for $6.1 million (average price of $26.20 per share) and
1,682,845 shares in 2010 for $33.7 million (average price of $20.03 per share). We did not purchase any shares of our common stock in
2011.
Shares Contributed to U.S. Pension Plan
On August 20, 2009, we made a voluntary $150 million contribution to our primary U.S. retirement plan. The contribution was comprised of
$92.4 million of cash and 2,260,738 newly issued shares of our common stock valued for purposes of the contribution at $25.48 per share, or
$57.6 million in the aggregate.
Dividends
We paid regular quarterly dividends on our common stock during the last three years. On January 19, 2012, the board declared a regular
quarterly dividend of 10 cents per share payable on March 1, 2012. Future dividends are dependent on the earnings, financial condition,
shareholder equity levels, cash flow and business requirements, as determined by the board of directors.
Shelf Registration of Common Stock
We intend to register $150 million in new common stock in 2012. We intend to issue shares in 2012 to satisfy some or all of the required
contributions to our primary U.S. pension plan. We may also issue shares in the future to satisfy future contributions.
Preferred Stock
At December 31, 2011, we had the authority to issue up to 2.0 million shares of preferred stock with a par value of $10 per share.
Shares Used to Calculate Earnings per Share
(cid:3)
(cid:3)
(cid:3) (In millions) (cid:3)
(cid:3)(cid:3)Weighted-average shares (cid:3)
Basic (a)
Effect of dilutive stock awards
Diluted (a)
2011
47.8
0.3
48.1
Years Ended December 31,
2010
48.2
0.2
48.4
2009
47.2
0.3
47.5
(cid:3)
(cid:3)Antidilutive stock awards excluded from denominator
(a) We have deferred compensation plans for directors and certain of our employees. Amounts owed to participants are denominated in common stock units.
Each unit represents one share of common stock. The number of shares used to calculate basic earnings per share includes the weighted-average units
credited to employees and directors under the deferred compensation plans. Additionally, non-participating restricted stock units are also included in the
computation of basic weighted average shares when the requisite service period has been completed. Accordingly, basic and diluted shares include
weighted-average units of 1.1 million in 2011, 1.0 million in 2010 and 0.8 million in 2009.
2.2
2.3
2.5
112
Note 17 – Income from Discontinued Operations
(In millions)
Adjustments to contingencies of former operations:
Gain from FBLET refunds
BAX Global indemnification
Insurance recoveries related to BAX Global indemnification
Workers’ compensation
Other
Income (loss) from discontinued operations before income taxes
Provision (credit) for income taxes
Income from discontinued operations, net of tax
2011
4.2
-
1.2
(1.4)
(1.8)
2.2
0.7
1.5
$
$
Years Ended December 31,
2010
-
1.7
1.6
(7.2)
0.8
(3.1)
(3.4)
0.3
2009
19.7
(13.2)
-
(1.5)
1.8
6.8
2.3
4.5
Federal Black Lung Excise Tax (“FBLET”) refunds
The Energy Improvement and Extension Act of 2008 enabled taxpayers to file claims for FBLET refunds for periods prior to those open
under the statute of limitations previously applicable to us. In 2009, we received $23.9 million of FBLET refunds and recognized the
majority of these refunds as a pretax gain of $19.7 million in 2009. In the second quarter of 2011, the statute of limitations expired and we
recognized a pretax gain of $4.2 million for the remaining portion of the refund.
BAX Global
BAX Global, a former business unit, had been defending a claim related to the apparent diversion by a third party of goods being
transported for a customer. On April 23, 2010, the Dutch Supreme Court denied the final appeal of BAX Global, letting stand the lower
court ruling that BAX Global is liable for this claim. We had contractually indemnified the purchaser of BAX Global for this
contingency. We recognized €9 million ($13.2 million) related to this matter in discontinued operations in 2009, made an $11.5 million
payment in 2010 in satisfaction of the judgment, and reversed $1.7 million of expense in 2010. We recovered a portion of the loss from
insurance companies ($1.2 million in 2011 and $1.6 million in 2010).
113
Note 18 – Supplemental Cash Flow Information
(In millions)
Cash paid for:
Interest
Income taxes, net
2011
Years Ended December 31,
2010
$
22.3
79.8
13.7
65.5
2009
10.3
12.6
We acquired armored vehicles, CompuSafe® units and other equipment under capital lease arrangements in the last three years including
$43.0 million in 2011, $33.9 million in 2010 and $13.4 million in 2009. Some of the assets acquired under these leases were part of sales-
leaseback transactions of assets that were previously owned. Proceeds from sale of these assets were $17.6 million in 2011, $1.2 million in
2010 and $13.6 million in 2009. The proceeds approximated net book value on the dates of the transactions, and the related gains and
losses on these transactions were not material.
Note 19 – Other Operating Income (Expense)
(In millions)
Share in earnings of equity affiliates
Royalty income
Gains (losses) on sale of property and other assets
Impairment losses
Business acquisitions and dispositions:
Gain on sale of U.S. Document Destruction business
Bargain purchase of Mexican CIT business
Remeasurement of previously held ownership interest to fair value
Deconsolidation of Brink’s Belgium and write-down to fair value
Settlement loss related to Belgium bankruptcy
Foreign currency items:
Transaction - gains (losses)
Hedge gains
Other
Other operating income (expense)
2011
4.8
1.7
1.2
(4.7)
6.7
2.1
0.4
-
(10.1)
(4.2)
2.2
3.1
3.2
$
$
Note 20– Interest and Other Nonoperating Income (Expense)
Years Ended December 31,
2010
3.9
7.6
1.2
(0.7)
-
5.1
(13.7)
(13.4)
-
(4.0)
-
4.5
(9.5)
(In millions)
Interest income
Gain on available-for-sale securities
Other
Total
2011
5.9
4.4
(1.2)
9.1
$
$
Years Ended December 31,
2010
4.1
3.8
0.2
8.1
2009
4.5
8.6
9.4
(2.7)
-
-
14.9
-
-
(41.4)
-
3.2
(3.5)
2009
10.8
-
-
10.8
We recognized $4.4 million in gains on the sale of debt securities ($2.6 million) and equity securities ($1.8 million) in 2011. We
recognized a $4.0 million gain in 2010 on the exchange of the securities we held for shares of equity securities in two other publicly held
companies and a small amount of cash.
114
Note 21 – Other Commitments and Contingencies
Bankruptcy of Brink’s Belgium
Our former cash-in-transit subsidiary in Belgium (Brink’s Belgium) filed for bankruptcy in November 2010 after a restructuring plan was
rejected by local union employees and was placed into bankruptcy on February 2, 2011. We continue to operate our Global Services unit in
Belgium, which provides secure transport of diamonds, jewellery, precious metals, banknotes and other commodities.
Deconsolidation. Brink’s Belgium continued to provide cash-in-transit services for customers after the bankruptcy filing for approximately
three months under the management of a court-appointed trustee. We no longer control or provide funding for the subsidiary. In accordance
with FASB ASC Topic 810, Consolidation, we deconsolidated the subsidiary in November 2010, when the trustee assumed control of the
subsidiary. We estimated that the fair value of our investment at the date of deconsolidation was zero. Our carrying value of the investment
and advances to the subsidiary at the date of the deconsolidation was $11.7 million, which we wrote off as a result of the deconsolidation,
resulting in a pretax loss. We also have incurred approximately $1.7 million of other charges related to the bankruptcy of the subsidiary. The
losses related to deconsolidation and other charges have been recorded in Other Operating Income (Expense) in the consolidated statements
of income.
Legal Dispute. In December 2010, the court-appointed provisional administrators of Brink’s Belgium filed a claim for €20 million against a
subsidiary of Brink’s. In June 2011, the Brink’s subsidiary entered into a settlement agreement related to this claim. Under the terms of the
settlement agreement, the Brink’s subsidiary agreed to contribute, upon the satisfaction of certain conditions, €7 million toward social
payments to former Brink’s Belgium employees in exchange for the bankruptcy receivers requesting withdrawal of the pending litigation and
agreeing not to file additional claims. The conditions of the settlement agreement included a release from liability by affected employees, the
Belgian tax authority and the Belgian social security authority. These conditions were satisfied and the settlement was finalized during the
third quarter of 2011. We recorded a pretax charge of €7 million (approximately $10 million) in the second quarter of 2011 related to this
claim.
Other
We are involved in various other lawsuits and claims in the ordinary course of business. We are not able to estimate the range of losses for
some of these matters. We have recorded accruals for losses that are considered probable and reasonably estimable. We do not believe that
the ultimate disposition of any of these matters will have a material adverse effect on our liquidity, financial position or results of operations.
Purchase Obligations
At December 31, 2011, we had noncancellable commitments for $11.7 million in equipment purchases, and information technology and other
services.
115
Note 22 – Selected Quarterly Financial Data (unaudited)
(cid:3)(cid:3)
(cid:3)(cid:3)(cid:3)
(cid:3)(In millions, except per share amounts)
Revenues
Segment operating profit
Operating profit
Amounts attributable to Brink’s:
Income (loss) from:
Continuing operations
Discontinued operations
Net income (loss) attributable to Brink’s
Depreciation and amortization
Capital expenditures
Earnings (loss) per share attributable to Brink’s
common shareholders:
Basic
Continuing operations
Discontinued operations
Net income
Diluted
Continuing operations
Discontinued operations
Net income
(cid:3)(cid:3)
$
$
$
$
$
$
$
$
2011 Quarters
1 st
2 nd
3 rd
(cid:3)
4 th
2010 Quarters
1 st
2 nd
3 rd
4 th
913.3
52.0
37.0
979.3
36.6
20.4
995.8
70.1
62.5
997.1 $
72.4
51.4
735.4
34.9
23.8
729.4
44.1
31.5
776.1
58.0
44.1
880.6
71.9
46.9
18.9
1.1
20.0
38.8
29.4
0.40
0.02
0.42
0.39
0.02
0.41
5.3
2.6
7.9
41.2
42.2
0.11
0.05
0.17
0.11
0.05
0.16
31.5
(0.7)
30.8
40.5
47.1
0.66
(0.02)
0.64
0.66
(0.02)
0.64
17.3 $
(1.5)
15.8 $
41.9 $
77.5
(4.8)
(3.4)
(8.2)
32.3
26.9
0.36 $
(0.03)
0.33 $
(0.10)
(0.07)
(0.17)
0.36 $
(0.03)
0.33 $
(0.10)
(0.07)
(0.17)
20.7
0.8
21.5
32.9
34.3
0.42
0.02
0.44
0.42
0.02
0.44
21.7
2.2
23.9
34.8
41.3
0.45
0.05
0.50
0.45
0.05
0.50
19.2
0.7
19.9
36.6
46.3
0.40
0.02
0.42
0.40
0.02
0.42
Earnings per share amounts for each quarter are required to be computed independently. As a result, their sum may not equal the annual
earnings per share.
2011
In the second quarter of 2011, we recognized a $10.1 million settlement charge related to our exit of the Belgium cash-in-transit business. In
the third quarter of 2011, we recognized a $6.7 million pretax gain related to the sale of our U.S Document Destruction business. Fourth-
quarter 2011 results include a $4.1 million pretax charge related to the retirement of our former CEO.
2010
In the first quarter of 2010, we recognized an income tax charge of $13.7 million related to U.S. healthcare legislation which was enacted in
that quarter. Fourth-quarter 2010 results included a $13.4 million charge related to the deconsolidation of our former subsidiary in Belgium
and a $8.6 million net loss on our acquisition of a controlling interest of a cash-in-transit business in Mexico.
116
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, we carried out an evaluation, with the participation of our
management, including our Chief Executive Officer and Vice President and Chief Financial Officer, of the effectiveness of our disclosure
controls and procedures (as defined under Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by
this report. Based upon that evaluation, our Chief Executive Officer and Vice President and Chief Financial Officer concluded that our
disclosure controls and procedures are effective in ensuring that information required to be disclosed by us in the reports that we file or
submit under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported, within the time periods specified in the
SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive
Officer and Vice President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
(b) Internal Controls over Financial Reporting
See pages 71 and 72 for Management’s Annual Report on Internal Control over Financial Reporting and the Attestation Report of the
Registered Public Accounting Firm.
(c) Changes in Internal Controls over Financial Reporting
There has been no change in our internal control over financial reporting during the quarter ended December 31, 2011, that has materially
affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
ITEM 9B. OTHER INFORMATION
Not applicable.
117
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
We have adopted a Business Code of Ethics that applies to all of the directors, officers and employees (including the Chief Executive
Officer, Chief Financial Officer and Controller) and have posted the Business Code of Ethics on our website. We intend to satisfy the
disclosure requirement under Item 5.05 of Form 8-K relating to amendments to or waivers from any provision of the Business Code of
Ethics applicable to the Chief Executive Officer, Chief Financial Officer or Controller by posting this information on the website. The
internet address is www.brinks.com.
Our Chief Executive Officer is required to make, and he has made, an annual certification to the New York Stock Exchange (“NYSE”)
stating that he was not aware of any violation by us of the corporate governance listing standards of the NYSE. Our Chief Executive Officer
made his annual certification to that effect to the NYSE as of May 19, 2011. In addition, we are filing, as exhibits to this Annual Report on
Form 10-K, the certification of our principal executive officer and principal financial officer required under sections 906 and 302 of the
Sarbanes-Oxley Act of 2002 to be filed with the Securities and Exchange Commission regarding the quality of our public disclosure.
The information regarding executive officers is included in this report following Item 4, under the caption “Executive Officers of the
Registrant.” Other information required by Item 10 is incorporated by reference to our definitive proxy statement to be filed pursuant to
Regulation 14A within 120 days after December 31, 2011.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by reference to our definitive proxy statement to be filed pursuant to Regulation 14A
within 120 days after December 31, 2011.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The information required by Item 12 is incorporated by reference to our definitive proxy statement to be filed pursuant to Regulation 14A
within 120 days after December 31, 2011.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by Item 13 is incorporated by reference to our definitive proxy statement to be filed pursuant to Regulation 14A
within 120 days after December 31, 2011.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by Item 14 is incorporated by reference to our definitive proxy statement to be filed pursuant to Regulation 14A
within 120 days after December 31, 2011.
118
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
1.
All financial statements – see pages 70 – 116.
2.
3.
Financial statement schedules – not applicable.
Exhibits – see exhibit index.
Undertaking
For the purposes of complying with the amendments to the rules governing Form S-8 (effective July 13, 1990) under the Securities Act of
1933, the undersigned Registrant hereby undertakes as follows, which undertaking shall be incorporated by reference into Registrant’s
Registration Statements on Form S-8 Nos. 2-64258, 33-2039, 33-21393, 33-53565, 333-78631, 333-70758, 333-70772, and 333-146673.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of
such issue.
119
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on February 27, 2012.
By
The Brink’s Company
(Registrant)
/s/ T. C. Schievelbein
(Thomas C. Schievelbein,
Interim President and
Chief Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated, on February 27, 2012.
Signature
/s/ T. C. Schievelbein
Thomas C. Schievelbein
/s/ J.W. Dziedzic
Joseph W. Dziedzic
/s/ M. A. P. Schumacher
Matthew A.P. Schumacher
*
Betty C. Alewine
*
Paul G. Boynton
*
Marc C. Breslawsky
*
Reginald D. Hedgebeth
*
Michael J. Herling
*
Murray D. Martin
*
Ronald L. Turner
Title
Director, Interim President
and Chief Executive Officer
(Principal Executive Officer)
Vice President
and Chief Financial Officer
(Principal Financial Officer)
Controller
(Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
* By:
/s/ T. C. Schievelbein,
Thomas C. Schievelbein, Attorney-in-Fact
120
Exhibit Index
Each exhibit listed as a previously filed document is hereby incorporated by reference to such document.
Exhibit
Number
Description
2(i)
3(i)
3(ii)
10(a)*
Shareholders’ Agreement, dated as of January 10, 1997, between Brink’s Security International, Inc., and Valores
Tamanaco, C.A. Exhibit 10(w) to the Registrant’s Annual Report on Form 10-K for the year ended December 31,
1998.
(a)
(b)
Amended and Restated Articles of Incorporation of the Registrant. Exhibit 3(i) to the Registrant’s
Current Report on Form 8-K filed November 20, 2007.
Articles of Amendment to the Amended and Restated Articles of Incorporation of the Registrant. Exhibit
3(i) to the Registrant’s Current Report on Form 8-K filed May 10, 2011.
Amended and Restated Bylaws of the Registrant. Exhibit 3(ii) to the Registrant’s Amendment No. 1 to Current
Report on Form 8-K filed November 21, 2011.
Amended and Restated Key Employees Incentive Plan, amended and restated as of May 6, 2011. Exhibit 10.1 to
the Registrant’s Current Report on Form 8-K filed May 10, 2011.
10(b)*
Key Employees’ Deferred Compensation Program, as amended and restated as of February 3, 2012.
10(c)*
(i)
Pension Equalization Plan as amended and restated, effective as of October 22, 2008. Exhibit 10.2 to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 (the “Third
Quarter 2008 Form 10-Q”).
(ii)
Rabbi Trust Agreement, dated as of December 22, 2011, by and between the Registrant and Wells Fargo
Bank, N.A., as Trustee. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed December 29,
2011.
10(d)*
10(e)*
Executive Salary Continuation Plan. Exhibit 10(e) to the Registrant’s Annual Report on Form 10-K for the year
ended December 31, 1991 (the “1991 Form 10-K”).
2005 Equity Incentive Plan, as amended and restated as of February 19, 2010. Exhibit 10(f) to the Registrant’s
Form 10-K for the year ended December 31, 2009 (the “2009 Form 10-K”).
10(f)*
(i)
Form of Option Agreement for options granted before 2010 under 2005 Equity Incentive Plan. Exhibit
99 to the Registrant’s Current Report on Form 8-K filed July 13, 2005.
(ii)
(iii)
(iv)
(v)
(vi)
Form of Option Agreement for options granted in 2010 under 2005 Equity Incentive Plan. Exhibit 10.2
to the Registrant’s Current Report on Form 8-K filed July 12, 2010.
Terms and Conditions for options granted in 2011 under 2005 Equity Incentive Plan. Exhibit 10.1 to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (the “Second Quarter
2011 Form 10-Q”).
Form of Restricted Stock Units Award Agreement for restricted stock units granted before 2010 under
2005 Equity Incentive Plan. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed July 13,
2009.
Form of Restricted Stock Units Award Agreement for restricted stock units granted in 2010 under 2005
Equity Incentive Plan. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed July 12, 2010.
Terms and Conditions for restricted stock units granted in 2011 under 2005 Equity Incentive Plan.
Exhibit 10.2 to the Second Quarter 2011 Form 10-Q.
10(g)*
Management Performance Improvement Plan, as amended and restated as of February 19, 2010. Exhibit 10(h) to
the 2009 Form 10-K.
121
10(h)*
Change in Control Agreement dated as of February 25, 2010, between the Registrant and Frank T. Lennon. Exhibit
10.3 to the Registrant’s Current Report on Form 8-K filed February 25, 2010.
10(i)*
(i)
Form of severance agreement between the Registrant and Frank T. Lennon. Exhibit 10(o)(ii) to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 1997.
(ii)
Form of Amendment No. 1 to severance agreement. Exhibit 10(j)(ii) to the Registrant’s Annual Report
on Form 10-K for the year ended December 31, 2008 (the “2008 Form 10-K”).
10(j)*
(i)
Employment Agreement dated as of May 4, 1998, among the Registrant, Brink’s, Incorporated and
Michael T. Dan. Exhibit 10(a) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998.
(ii)
(iii)
(iv)
(v)
Amendment No. 1 to Employment Agreement among the Registrant, Brink’s, Incorporated and Michael
T. Dan. Exhibit 10 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30,
2002.
Amendment No. 2 to Employment Agreement among the Registrant, Brink’s, Incorporated and Michael
T. Dan. Exhibit 10 to the Registrant’s Current Report on Form 8-K filed March 10, 2006.
Amendment No. 3 to Employment Agreement among the Registrant, Brink’s, Incorporated and Michael
T. Dan. Exhibit 10(k)(iv) to the 2008 Form 10-K.
Amendment No. 4 to Employment Agreement among the Registrant, Brink’s, Incorporated and Michael
T. Dan. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed May 13, 2009.
Succession Agreement, dated November 13, 2011, between the Registrant and Michael T. Dan. Exhibit 10.1 to the
Registrant’s Current Report on Form 8-K filed November 14, 2011.
Change in Control Agreement dated as of February 25, 2010, between the Registrant and Michael T. Dan. Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed February 25, 2010.
Change in Control Agreement dated as of February 25, 2010, between the Registrant and Joseph W. Dziedzic.
Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed February 25, 2010.
Change in Control Agreement dated as of February 25, 2010, between the Registrant and McAlister C. Marshall, II.
Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed February 25, 2010.
Form of Indemnification Agreement entered into by the Registrant with its directors and officers. Exhibit 10(l) to
the 1991 Form 10-K.
Non-Employee Directors’ Stock Option Plan, as amended and restated as of July 8, 2005. Exhibit 10.2 to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.
Directors’ Stock Accumulation Plan, as amended and restated as of September 12, 2008. Exhibit 10.1 to the Third
Quarter 2008 Form 10-Q.
Non-Employee Directors’ Equity Plan. Annex B to the Proxy Statement for the Registrant’s 2008 Annual Meeting
of Shareholders.
10(k)*
10(l)*
10(m)*
10(n)*
10(o)*
10(p)*
10(q)*
10(r)*
10(s)*
(i)
Form of Award Agreement for deferred stock units granted in 2008 under the Non-Employee Directors’
Equity Plan. Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June
30, 2008.
(ii)
Form of Award Agreement for deferred stock units granted in 2009, 2010 and 2011 under the Non-
Employee Directors Equity Plan. Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2009 (the “Second Quarter 2009 Form 10-Q”).
122
10(t)*
Plan for Deferral of Directors’ Fees, as amended and restated as of November 14, 2008. Exhibit 10(y) to the 2008
Form 10-K.
10(u)
(i)
Trust Agreement for The Brink’s Company Employee Welfare Benefit Trust. Exhibit 10(t) to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999.
(ii)
First Amendment of The Brink’s Company Employee Welfare Benefit Trust, dated as of November 1,
2001. Exhibit 10(t)(ii) to the to the Registrant’s Annual Report on Form 10-K for the year ended
December 31, 2007 (the “2007 Form 10-K”).
(iii)
Second Amendment of The Brink’s Company Employee Welfare Benefit Trust, dated as of September
30, 2003. Exhibit 10(t)(iii) to the 2007 Form 10-K.
10(v)
(i)
$43,160,000 Bond Purchase Agreement, dated September 17, 2003, among the Peninsula Ports Authority
of Virginia, Dominion Terminal Associates, Pittston Coal Terminal Corporation and the Registrant.
Exhibit 10.1 to the Second Quarter 2009 Form 10-Q.
(ii)
(iii)
(iv)
(v)
(vi)
Loan Agreement between the Peninsula Ports Authority of Virginia and Dominion Terminal Associates,
dated September 1, 2003. Exhibit 10.2(ii) to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2003 (the “Third Quarter 2003 Form 10-Q”).
Indenture and Trust between the Peninsula Ports Authority of Virginia and Wachovia Bank, National
Association (“Wachovia”), as trustee, dated September 1, 2003. Exhibit 10.2(iii) to the Third Quarter
2003 Form 10-Q.
Parent Company Guaranty Agreement, dated September 1, 2003, made by the Registrant for the benefit
of Wachovia. Exhibit 10.2(iv) to the Third Quarter 2003 Form 10-Q.
Continuing Disclosure Undertaking between the Registrant and Wachovia, dated September 24, 2003.
Exhibit 10.2(v) to the Third Quarter 2003 Form 10-Q.
Coal Terminal Revenue Refunding Bond (Dominion Terminal Associates Project – Brink’s Issue) Series
2003. Exhibit 10.2(vi) to the Third Quarter 2003 Form 10-Q.
$85,000,000 Amended and Restated Letter of Credit Agreement, dated as of June 17, 2011, among the Registrant,
Pittston Services Group Inc., Brink’s Holding Company, Brink’s, Incorporated, and The Royal Bank of Scotland
N.V. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed June 20, 2011.
$30,000,000 Amended and Restated Credit Agreement, dated as of October 3, 2011, among the Registrant, Pittston
Services Group Inc., Brink’s Holding Company, Brink’s, Incorporated, The Royal Bank of Scotland N.V. and RBS
Securities Inc. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed October 5, 2011.
10(w)
10(x)
10(y)
(i)
$400,000,000 Credit Agreement, dated as of July 16, 2010, among the Registrant, as Parent Borrower
and as a Guarantor, the subsidiary borrowers referred to therein, as Subsidiary Borrowers, certain of
Parent Borrower’s subsidiaries, as Guarantors, Wells Fargo Bank, National Association, as
Administrative Agent, an Issuing Lender, Swingline Lender and a Revolving A Lender, Bank of Tokyo-
Mitsubishi UFJ Trust Company and Societe Generale, as Co-Documentation Agents and Revolving A
Lenders, Bank of America, N.A. and JPMorgan Chase Bank, N.A., as Co-Syndication Agents and
Revolving A Lenders, and various other Revolving A Lenders and Revolving B Lenders named therein.
Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed July 20, 2010.
(ii)
First Amendment to Credit Agreement, dated as of January 6, 2012, among the Registrant, as Parent
Borrower and as a Guarantor, the subsidiary borrowers referred to therein, as Subsidiary Borrowers,
certain of Parent Borrower’s subsidiaries, as Guarantors, Wells Fargo Bank, National Association, as
Administrative Agent, and the various lenders named therein. Exhibit 10.1 to the Registrant’s Current
Report on Form 8-K filed January 9, 2012.
10(z)
$54,000,000 Continuing Agreement for Standby Letters of Credit, dated as of December 10, 2010, between the
Registrant and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch. Exhibit 10.1 to the Registrant’s
Current Report on Form 8-K filed December 13, 2010.
123
10(aa)
10(bb)
10(cc)
10(dd)
10(ee)
10(ff)
Note Purchase Agreement, dated as of January 24, 2011, among the Registrant, Pittston Services Group Inc.,
Brink’s Holding Company, Brink’s, Incorporated, and the purchasers party thereto. Exhibit 10.1 to the Registrant’s
Current Report on Form 8-K filed January 26, 2011.
$25,000,000 Committed Letter of Credit Issuance and Reimbursement Agreement, dated as of January 24, 2012, by
and between the Registrant and HSBC Bank USA, N.A. Exhibit 10.1 to the Registrant’s Current Report on Form
8-K filed January 26, 2012.
Stock Purchase Agreement, dated as of November 15, 2005, by and among BAX Holding Company, BAX Global
Inc., The Brink’s Company and Deutsche Bahn AG. Exhibit 2.1 to the Registrant’s Current Report on Form 8-K
filed November 16, 2005.
Separation and Distribution Agreement between the Registrant and Brink’s Home Security Holdings, Inc. dated as
of October 31, 2008. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed November 5, 2008.
Tax Matters Agreement between the Registrant and Brink’s Home Security Holdings, Inc. dated as of October 31,
2008. Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed November 5, 2008.
Non-Competition and Non-Solicitation Agreement between the Registrant and Brink’s Home Security Holdings,
Inc. dated as of October 31, 2008. Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed November 5,
2008.
10(gg)
Employee Matters Agreement between the Registrant and Brink’s Home Security Holdings, Inc. dated as of
October 31, 2008. Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed November 5, 2008.
21
23
24
31
32
99(a)*
101
Subsidiaries of the Registrant.
Consent of Independent Registered Public Accounting Firm.
Powers of Attorney.
Rule 13a-14(a)/15d-14(a) Certifications.
Section 1350 Certifications.
Excerpt from Pension-Retirement Plan relating to preservation of assets of the Pension-Retirement Plan upon a
change in control. Exhibit 99(a) to the 2008 Form 10-K.
Interactive Data File (Annual Report on Form 10-K, for the year ended December 31, 2011, furnished in XBRL
(eXtensible Business Reporting Language).
Attached as Exhibit 101 to this report are the following documents formatted in XBRL: (i) the Consolidated
Balance Sheets at December 31, 2011, and December 31, 2010, (ii) the Consolidated Statements of Income for the
years ended December 31, 2011, 2010 and 2009, (iii) the Consolidated Statements of Comprehensive Income
(Loss) for the years ended December 31, 2011, 2010 and 2009, (iv) the Consolidated Statements of Equity for the
years ended December 31, 2011, 2010 and 2009, (v) the Consolidated Statements of Cash Flows for the years
ended December 31, 2011, 2010 and 2009, and (vi) the Notes to Consolidated Financial Statements, tagged as
blocks of text. Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file
is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the
Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and
otherwise is not subject to liability under these sections.
*Management contract or compensatory plan or arrangement.
124
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