UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
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)
54-1317776
(I.R.S. Employer
Identification No.)
P.O. Box 18100, 1801 Bayberry Court, Richmond, Virginia 23226-8100
(Address of principal executive offices) (Zip Code)
(804) 289-9600
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $1.00 per share
Trading Symbol(s)
BCO
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
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 ☒ No ☐
Yes ☐ No ☒
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See
definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
As of February 23, 2021, there were issued and outstanding 49,511,653 shares of common stock. The aggregate market value of shares of common stock held by non-affiliates as of June 30,
2020, was $2,264,674,991 based on the closing sale price as reported on the New York Stock Exchange.
Documents incorporated by reference: Part III of this annual report incorporates by reference portions of the Registrant’s definitive 2021 Proxy Statement to be filed pursuant to Regulation 14A.
THE BRINK’S COMPANY
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2020
TABLE OF CONTENTS
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Executive Officers of the Registrant
PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
PART IV
Item 15.
Item 16.
Exhibits and Financial Statement Schedules
Form 10-K Summary
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PART I
ITEM 1. BUSINESS
Overview
The Brink’s Company is the global leader in total cash management, route-based logistics and payment solutions including cash-in-transit, ATM services, cash management
services, including vault outsourcing, money processing, and intelligent safe services, and international transportation of valuables. Our customers include financial
institutions, retailers, government agencies (including central banks), mints, jewelers and other commercial operations around the world. Our global network serves
customers in more than 100 countries. We have controlling ownership interests in companies in 52 countries and agency relationships with companies in additional
countries. We employ approximately 76,500 people and our operations include approximately 1,300 facilities and 16,300 vehicles.
During the fourth quarter of 2020, we implemented changes to our organizational and management structure primarily related to our acquisition of the majority of the cash
operations of U.K.-based G4S plc ("G4S") that resulted in changes to our operating segments. Previously, our business was managed and reported in three operating
segments: North America, South America and Rest of World. We now mange our business in four segments, and segment results are reported by these four segments. The
four segments are as follows:
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North America – operations in the U.S. and Canada, including the Brink’s Global Services ("BGS") line of business,
Latin America – operations in Latin American countries where we have an ownership interest, including the BGS line of business. This segment includes
operations in Mexico, which was previously reported in the North America segment,
Europe – operations in European countries that primarily provide services outside of the BGS line of business. This segment includes the BGS line of business
within these country operations, and
Rest of World – operations in European countries that primarily provide BGS services. This segment includes other lines of business within these country
operations. This segment also includes operations in the Middle East, Africa and Asia as well as BGS activity in Latin American countries where we do not have
an ownership interest.
Brink’s was founded in 1859 and The Brink’s Company was first incorporated in 1930 under the laws of the State of Delaware (at that time, the Company was named The
Pittston Company). It succeeded to the business of a Virginia corporation in 1986 and was renamed The Brink’s Company in 2003. Our headquarters are located in
Richmond, Virginia. The Brink’s Company, along with its subsidiaries, is referred to as “we,” “our,”, “us,” “Brink’s,” or “the Company” throughout this Form 10-K.
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Mission and Strategy
Our Mission
Introduced in 2019, our mission defines what we want to achieve. It reads:
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Keep the use of cash as easy, secure and affordable as other payment methods for retailers.
Streamline cash management for financial institutions.
Provide consumers safe, private and convenient payment options in the digital age.
Protect, store and transport high-value assets in a changing world.
Our Strategy
Our strategy has three components: Accelerate Profitable Growth, Close the Gap, and Introduce Differentiated Services.
We will Accelerate Profitable Growth by expanding high-value services, growing revenue and account share with both large and small financial institutions, penetrating
unvended retail markets and exploring core and adjacent acquisition opportunities.
We will Close the Gap with operational excellence by exceeding customer expectations, leading our industry in safety and security, and continuing to improve productivity
in fleet, money processing and sales. We are on track in our efforts to improve internal productivity, optimize cost and achieve industry-leading margins.
We will Introduce Differentiated Services by strengthening and leveraging our IT capabilities and operating systems and offering end-to-end cash supply chain managed
services. Our IT initiatives will drive improved service levels and operational efficiencies.
To execute our strategy, we manage the business with 3-year plans. Strategic Plan 1 (or SP1) guided us through 2019 and focused on performance and culture. Actions taken
in SP1 include internal breakthrough initiatives, such as more efficient vehicles, one-person crews, route optimization, telematics, device monitoring and management, and
more effective IT processes leading to lower operating costs. We also completed multiple business acquisitions.
We are currently executing Strategic Plan 2 (or SP2), which goes through 2022 and is designed to expand our role in the cash ecosystem. It focuses on delivering efficiency
initiatives, implementing operational excellence and increasing sales of existing services (Strategy 1.0), growing through acquisitions (Strategy 1.5) and creating more value
for current and new customers by providing a broader array of high-margin, technology-driven services (Strategy 2.0).
Strategy 2.0 includes the development and implementation of solutions that integrate technology and managed services, such as cloud-based applications, track and trace,
customer portals, cash forecasting, and subscription-based pricing, with Brink’s cash-in-transit and money processing services, to deliver complete cash management
solutions that are intended to: (1) be competitive with debit and credit payment alternatives and provide retail customers with faster access to working capital, or (2) provide
critical device management and managed services that offer financial institutions an attractive outsourcing option.
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Services
We design customized services to meet the cash and valuables supply chain needs of our customers. We enter into contracts with our customers to establish pricing and
other terms. Cash-in-transit 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 management services are typically longer. Following are descriptions of our service offerings:
Core Services (52% of total revenues in 2020)
Cash-in-transit ("CIT") and ATM services are core services we provide to customers throughout the world. We charge customers per service performed or based on the value
of goods transported. Revenues are affected by the level of economic activity in various markets as well as the volume of business for specific customers. Core services
generated approximately $1.9 billion of revenues in 2020 ($2.0 billion in 2019 and $1.7 billion in 2018).
Cash-in-transit services – 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. Cash-in-transit services generally include the secure transportation of:
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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
new currency, coins, bullion and precious metals for central banks and other customers
ATM services – We manage approximately 130,000 ATMs worldwide. We provide customers who own and operate ATMs a variety of service options. Basic
ATM management services include cash replenishment and first and second line maintenance. We also provide comprehensive services for ATM management
including cash replenishment, replenishment forecasting, cash optimization, ATM remote monitoring, service call dispatching, transaction processing, installation
services, and first and second line maintenance.
High-Value Services (44% of total revenues in 2020)
Our Core Services, combined with our brand and global infrastructure, provide a broad platform from which we offer additional high-value services, which generated
approximately $1.6 billion of revenues in 2020 ($1.6 billion in 2019 and $1.6 billion in 2018).
Global services - Brink’s Global Services ("BGS") is the leading global provider of secure transport of highly-valued commodities including diamonds, jewelry,
precious metals, securities, banknotes, currency, high-tech devices, electronics and pharmaceuticals. Our specialized diamond and jewelry operations have offices
in the world’s major diamond and jewelry centers. Serving customers in more than 100 countries, BGS provides secure transportation services including pick-up,
packaging, customs clearance, secure vault storage and inventory management. BGS uses a combination of armored vehicles and secure air and sea
transportation.
Cash management services - We offer a variety of cash management services, depending on customers’ unique needs. These include:
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money processing (e.g., counting, sorting, wrapping, checking condition of bills, etc.) and other cash management services
services related to deploying and servicing “intelligent” safes and safe control devices, including our patented CompuSafe service
check imaging services
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Other cash 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 fully integrated approach to managing customers' supply chain of cash. These services include logistical support from point-of-sale through
transport, vaulting, bank deposit and related credit reporting. We also offer a variety of technology applications including online cash tracking, cash inventory
management, check imaging for real-time deposit processing, and a variety of other web-based tools that enable banks and other customers to reduce costs while
improving service to their customers. We believe the quality and scope of our money processing and information systems differentiate our cash management
services from competitive offerings.
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Brink’s CompuSafe service –We manage approximately 49,900 installed Compusafe devices worldwide. Brink’s CompuSafe service provides an
integrated, closed-loop system for minimizing theft and managing cash. We market CompuSafe services to a variety of cash-intensive customers
including convenience stores, gas stations, restaurants, retail chains and entertainment venues. In a majority of instances, 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 or in some instances,
securely by customer employees. Upon removal, the cassettes are securely transported to a vault for processing where contents are verified and
transferred for deposit. Our CompuSafe service features currency-recognition and counterfeit-detection technology, multi-language touch screens and in
some instances, an electronic interface between the point-of-sale, back-office systems and external banks. Our electronic reporting interface with external
banks enables customers to receive same-day credit on their cash balances, even if the cash remains on the customer’s premises.
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Vaulting services. Vaulting services combine cash-in-transit services, cash management services, vaulting and electronic reporting technologies to help
banks expand into new markets while minimizing investment in vaults and branch facilities. In addition to providing secure storage, we process deposits,
provide check imaging and reconciliation services, perform currency inventory management, process ATM replenishment orders and electronically
transmit banking transactions.
Payment services – We provide convenient payment services, including bill payment and collection services, and Brink’s Money™ prepaid cards and corporate
debit cards.
Bill payment and collection services include bill payment acceptance and processing services on behalf of utility companies and other billers. Consumers
can pay bills and manage accounts at retail agent locations that we operate on behalf of utility companies, banks and a small number of leased payment
locations. This service is offered at over 8,500 locations in Brazil, Colombia, Panama and Mexico.
We offer Brink’s Money™ general purpose reloadable prepaid cards and corporate debit cards to consumers, employers and small and medium size
businesses in the U.S. Our general purpose reloadable cards are sold to consumers through our direct-to-consumer marketing efforts, and our payroll cards
are sold to employers who use them to pay employees electronically, while our business expense cards are sold to small businesses that set controls on
employee spending. Brink’s Money™ cards can be used at stores, restaurants, online retailers, and at ATMs worldwide. These products are targeted
toward the millions of unbanked and under-banked Americans and small businesses looking for alternative financial products.
Other Security Services (4% of total revenues in 2020)
Guarding – We protect airports, offices, warehouses, stores, and public venues with or without electronic surveillance, access control, fire prevention and trained
patrolling personnel. Other security services generated approximately $0.2 billion of revenues in 2020 ($0.1 billion in 2019 and $0.2 billion in 2018).
We offer security and guarding services in Luxembourg, Greece and Brazil. A portion of this business involves long-term contracts related primarily to security
services at airports and embassies. Generally, guarding contracts are for a one-year period, and the majority of contracts are extended.
Commercial security systems – We provide commercial security system services in designated markets in Europe. Our security system design and installation
services include alarms, motion detectors, closed-circuit televisions, digital video recorders, and access control systems, including card and biometric readers,
electronic locks, and turnstiles. We may also provide monitoring services after systems have been installed.
Industry and Competition
Brink’s competes with large multinational, regional and smaller companies throughout the world. Our largest multinational competitors are Loomis 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 network and customer base
proven operational excellence, and
high-quality insurance coverage and financial strength
Although we face competitive pricing pressure in many markets, we resist competing on price alone. We believe our high levels of service, security expertise and value-
added solutions differentiate us from competitors.
Seasonality
Our revenues and earnings are typically higher in the second half of the year, particularly in the fourth quarter, due to generally increased activity associated with the holiday
season.
Insurance Coverage
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.
4
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 for safes and related services, iDeposit and Daily Credit processes, including our integrated CompuSafe service, which expire between 2022 and 2033. These
patents provide us with important advantages. However, we are not dependent on the existence of these patents.
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We have licensed the Brink’s name to a limited number of companies, including a company that provides residential smart home and home security services and a distributor
of security products (padlocks, door hardware, etc.) to customers through major retail chains.
Government Regulation
Our business is subject to regulation by various federal, state and foreign governmental agencies. Various federal, state and local agencies in the U.S. and other countries in
which we operate regulate certain aspects of our business, including safety of operations, equipment and financial responsibility. Movement of valuable shipments are
generally subject to import/export regulations. We are also subject to certain firearm regulations in connection with our armored logistics operations. We must comply with
licensing, permits and registration requirements imposed by various federal, state and local governmental agencies in the U.S. and other countries in which we operate. Our
permits and licensing requirements vary by jurisdictions based on the scope of business conducted and applicable laws and regulations.
Human Capital Management
Culture and Values
At Brink’s, the following values underpin our company culture: Safety, Integrity, Engagement, Continuous Improvement, Customer Focus, and, our newest value, Diversity
and Inclusion. Our values guide the way we work and are the cornerstone of our winning culture. They ensure that we work safely to protect ourselves and others, consider
the customer first in all we do, display the highest standards of ethics, engage and empower employees, continually find new ways to improve the way we work, and foster a
diverse and inclusive workplace.
Workforce Demographics
We have a culturally and geographically diverse workforce that serves customers in more than 100 countries. Based upon business demand, we have a need for a flexible
workforce. In certain geographic regions, statutory employee protections may limit our ability to increase or decrease our workforce without significant expense.
At December 31, 2020, our company had approximately 73,700 full-time and 2,800 part-time employees. Approximately 86% of our employees, approximately 65,500, are
outside the United States. Of our approximately 11,000 employees in the United States, approximately 700 were classified as part-time employees. Certain employees in the
United States provide corporate services throughout the various regions in which we operate.
A part of our second three-year Strategic Plan, or SP2, includes strategic acquisitions. We previously announced the acquisition of the majority of the cash operations of
G4S. As of December 31, 2020, we had completed substantially all of this transaction, including acquiring a number of employees, which at year-end remained at
approximately 18,700 employees. These employees consist of full time and contract employees. In general, these employees were added to our local compensation and
benefit programs, except where existing contractual and statutory obligations required continuation of other programs. All management employees have successfully
completed an induction program to ensure that they are aligned with the Company’s compensation, performance management, talent management and compliance policies.
Employee Safety and Wellness
Employee safety is of paramount importance as we strive to bring every employee home safe every night. During 2020, we shifted Company priorities to adapt to the
immediate needs of the COVID-19 pandemic by, among other things, prioritizing the health and safety of our employees, their families and our customers, while
maintaining our essential services to our customers. This included investing in additional personal protective equipment, enhanced cleaning protocols, and work protocols
aimed at minimizing unnecessary social contact both in our workplaces and while serving our customers.
Diversity, Equity and Inclusion
With the significant focus on racial injustice in the U.S., and the ripple effects around the world in 2020, we reflected on how best to demonstrate and reinforce our
commitment to diversity, equity and inclusion (“DE&I”) to our employees and stakeholders. With input from our Board and internal and external stakeholders, we increased
the emphasis on DE&I in our Values, which underpin all that we stand for and guide how we work together. We hired our first DE&I leader and welcomed him in early 2021
to continue to evolve our DE&I strategy, define our goals, evaluate our progress, and guide our communications. In 2020, we joined the CEO Action for Diversity and
Inclusion, an organization that works to advance diversity and inclusion in the workplace. We continued to expand the scope and programs of our Women’s Leadership
Forum, established in 2018 to promote women’s leadership in the Company’s U.S., Canada and Mexico businesses. We established UNITY as a new Business Resource
Group for Black employees in the U.S. Our Business Resource Groups are supported with an executive sponsor, and we are thoughtfully considering expanding them in both
scope and reach in the future.
In early 2021, we signed the UN Global Compact, affirming our commitment to meet fundamental responsibilities in the areas of human rights, labor and the environment.
More information on our Environmental, Social and Governance Priorities can be found on our Sustainability page on our brinks.com website.
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Labor Relations
North America – At December 31, 2020 we employed approximately 12,700 employees. We have no union employees in the U.S. At December 31, 2020, Brink’s
was a party to nine collective bargaining agreements in Canada with various local unions covering approximately 1,300 employees. The agreements have various
expiration dates from 2021 to 2024.
Outside of North America, approximately 53% of our employees are represented by trade union organizations and/or covered by collective bargaining agreements.
Latin America – At December 31, 2020, we employed approximately 31,500 employees, 71% of whom are covered by various collective bargaining agreements
with expiration dates from 2021-2023.
Europe – At December 31, 2020, we employed approximately 16,500 employees, 49% of whom are covered by various collective bargaining agreements with
expiration dates from 2021-2023.
Rest of World – At December 31, 2020, we employed approximately 15,800 employees, 20% of whom are covered by various collective bargaining agreements
with expiration dates from 2021-2023.
We believe our employee relations are satisfactory.
Business Divestitures
Below is a summary of the significant businesses we exited in the last three years. These divestitures did not meet the criteria for classification as discontinued operations.
Operating results for these businesses are included in continuing operations for all periods presented, as applicable. We continue to operate our global services business in
each of these countries.
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In the first quarter of 2020, we sold 100% of our ownership interest in a French security services company.
In the second quarter of 2019, we exited a top-up prepaid mobile phone business in Brazil.
In the second quarter of 2018, we sold 100% of our ownership interest in a French airport security services company.
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Business Acquisitions
On February 26, 2020, we announced that we agreed to acquire the majority of the cash management operations of G4S, with closings planned in multiple phases in 2020. In
March 2020, we acquired 100% of the capital stock of G4S International Logistics Group Limited, a company that directly or indirectly owns controlling interests in
multiple businesses providing secure international transportation of valuables. In the second quarter of 2020, we acquired cash management operations from G4S located in
the Netherlands, Belgium, Ireland, Hong Kong, Cyprus, Romania, the Czech Republic, Malaysia, the Dominican Republic and the Philippines. In the third quarter of 2020,
we acquired operations in Indonesia, Estonia, Latvia and Lithuania. For the majority of the acquisitions in the second and third quarters of 2020, we acquired 100% of the
ownership interests. In Malaysia, the Dominican Republic, the Philippines and Indonesia, we acquired ownership interests of less than 100%. We believe that we meet the
accounting criteria for consolidating these subsidiaries. In the aggregate, the purchase consideration for the G4S acquisitions in 2020 is $709.7 million. The operations we
have acquired in 2020, which represent approximately 90% of the total estimated purchase price, generate approximately $740 million in annual revenues.
In January 2019, we acquired 100% of the capital stock of Rodoban Transportes Aereos e Terrestres Ltda., Rodoban Servicos e Sistemas de Seguranca Ltda., and Rodoban
Seguranca e Transporte de Valores Ltda. (together "Rodoban") for $134 million. Rodoban provides CIT, money processing and ATM services primarily in southeastern
Brazil. Also in 2019, we acquired three business operations in three countries for an aggregate purchase price of approximately $50 million. Below is a brief description of
each of these additional three business acquisitions completed in 2019:
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In June 2019, we acquired 100% of the capital stock of Balance Innovations, LLC and its wholly owned subsidiary, Balance Innovations Services, Inc. (together
"BI"). BI develops and licenses software that provides real-time data to optimize operations for general retail and convenience store industries throughout the
United States and Canada.
In June 2019, we acquired 100% of the capital stock of Comercio Eletronico Facil Ltda. ("COMEF"), a Brazil-based company. COMEF offers bank
correspondent services and bill payment processing to consumers.
In September 2019, we acquired 100% of the capital stock of Transportadora de Valores del Sur Limitada and its wholly owned subsidiary, TVS Pagos,
Recaudos y Procesos S.A.S. (together "TVS"). TVS provides CIT and money processing services in Colombia.
In August 2018, we acquired 100% of the capital stock of Dunbar Armored, Inc. ("Dunbar") for approximately $541 million. Dunbar is a U.S. cash management business. In
December 2018, we acquired 60% of the shares of Worldbridge Secure Logistics Co., Ltd. ("Worldbridge"), a Cambodian company that provides CIT and money processing
services.
See Note 7 to the consolidated financial statements for more detailed information on the acquired assets and liabilities from these acquisitions.
In November 2018, we completed the acquisition of the 42% noncontrolling interest in our consolidated subsidiary, Brink's de Colombia, S.A. We now own 100% of the
shares of this subsidiary, and we accounted for this increase in ownership interest as an equity transaction.
Reorganization and Restructuring
In the fourth quarter of 2016, management implemented restructuring actions across our global business operations and our corporate functions (“2016 Reorganization and
Restructuring”). As a result of these actions, we recognized $18.1 million in related 2016 costs and an additional $17.3 million in 2017 under this restructuring related to
severance, asset-related adjustments, a benefit program termination and lease terminations. We recognized an additional $13.0 million of costs in 2018 under this
restructuring for severance and asset-related adjustments. The actions under the 2016 Reorganization and Restructuring were substantially completed in 2018, with
cumulative pretax charges of approximately $48 million. Severance actions from this restructuring reduced our global workforce by approximately 800 positions.
Other Restructurings
Management periodically implements restructuring actions in targeted sections of our business. As a result of these actions, we recognized net costs of $7.6 million in 2018
and $28.8 million in 2019, primarily severance costs and charges related to the modification of share-based compensation awards in 2019. We recognized $66.6 million net
costs in operating profit and $0.6 million costs in interest and other nonoperating income (expense) in 2020, primarily severance costs. For the current restructuring actions,
we expect to incur additional costs between $4 million and $6 million in future periods.
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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”):
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Annual reports on Form 10-K
Quarterly reports on Form 10-Q
Current reports on Form 8-K, and amendments to those reports
The following documents are also available free of charge on our website:
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Corporate Governance Policies
Code of Ethics
The charters of the following committees of our Board of Directors (the “Board”): Audit and Ethics, Compensation and Benefits, Corporate Governance and
Nominating, and Finance and Strategy
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.
Additional information about the Company may be found elsewhere in this report and in the Company's other public filings, which are available without charge through the
SEC's website at http://www.sec.gov.
8
ITEM 1A. RISK FACTORS
Business Risks
Our strategy may not be successful.
Our strategy has three pillars: accelerate profitable growth, close the gap with competitors and introduce differentiated services. We may not be successful in growing
revenue in high-margin lines of business, increasing our market share with existing customers or winning new business with smaller financial institutions and the retail
market. Although we are improving productivity and optimizing costs, we may not be able to achieve industry-leading margins. We also may not be successful in
strengthening and leveraging our IT capabilities to improve service levels and drive efficiencies. If we are unable to achieve our strategic objectives and anticipated
operating profit improvements, our results of operations and cash flows may be adversely affected.
We operate in highly competitive industries.
We compete in industries that are subject to significant competition and pricing pressures in most markets. In addition, our business model requires significant fixed costs
associated with offering many of our services including costs to operate a fleet of armored vehicles and a network of secure branches. 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 result in lost volume of business 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.
Our business success depends on retaining our leadership team and attracting and retaining qualified personnel.
Our future success depends, in part, on the continuing services and contributions of our leadership team to execute on our strategic plan and to identify and pursue new
opportunities. Our future success also depends, in part, on our continued ability to attract and retain highly skilled and qualified personnel. Any turnover in senior
management or inability to attract and retain qualified personnel could have a negative effect on our results of operations. Turnover in key leadership positions within the
Company may adversely affect our ability to manage the company efficiently and effectively, could be disruptive and distracting to management and may lead to additional
departures of current personnel, any of which could have a material adverse effect on our business and results of operations.
Decreased use of cash could have a negative impact on our business.
While cash remains one of the most popular form of consumer payment in the U.S. and globally, the growth of payment options other than cash could reduce the need for
services related to cash, thereby affecting our financial results. We are developing new services that offer current and prospective customers with opportunities to streamline
their cash processing costs, making cash more competitive with other forms of payment. There is a risk that these initiatives may not offset the risks associated with our
traditional cash-based business and that our business, financial condition, results of operations and cash flows could be negatively impacted.
We may not be successful in pursuing strategic investments or acquisitions or realize the expected benefits of those transactions because of integration difficulties and
other challenges.
While we may identify opportunities for acquisitions and investments to support our growth strategy, our due diligence examinations and positions that we may take with
respect to appropriate valuations for acquisitions and divestitures and other transaction terms and conditions may hinder our ability to successfully complete business
transactions to achieve our strategic goals. We compete with others within and outside our industry for suitable acquisition candidates. This competition may increase the
price for acquisitions and reduce the number of acquisition candidates available to us. As a result, our ability to acquire businesses in the future, and to acquire such
businesses on favorable terms, may be limited. Our ability to realize the anticipated benefits from 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,
unfavorable customer reactions, 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. In order to finance such acquisitions, we may need to obtain additional funds either
through public or private financings, including bank and other secured and unsecured borrowings and the issuance of debt or equity securities. There can be no assurance
that such financings would be available to us on reasonable terms or that any future issuances of securities in connection with acquisitions will not be dilutive to our
shareholders. The occurrence of any of these events may adversely affect our expected benefits of any acquisitions and may have a material adverse effect on our financial
condition, results of operations or cash flows.
9
Negative publicity to our name or brand could lead to a loss of revenues 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. In addition, we have licensing arrangements that permit certain entities to use Brink’s name and/or other intellectual property in connection with their
businesses. If any of these entities experienced an actual or perceived breach in its ability to conduct its business ethically, securely or responsibly, it could have a negative
effect on our name and/or brand. Any damage to our brand could have a material adverse effect on our business, financial condition, results of operations and cash flows.
The ongoing COVID-19 pandemic is expected to adversely affect our business, financial condition and results of operations, the extent of which depends on many
factors that are uncertain or not yet identifiable.
The ongoing COVID-19 pandemic has created volatility, uncertainty and economic disruption for Brink’s, our customers and vendors, and the markets in which we do
business. During 2020 and continuing into 2021, our operational performance and economic activity in the countries in which we operate have been significantly impacted
by pandemic-related health conditions and the associated government, customer and consumer actions. These actions have led to reduced customer volumes, changes to our
operating procedures and increases to our costs to provide services. We have taken and continue to take actions to adjust the way we operate and reduce our costs through
restructuring activities and operational changes to address these impacts and align to future anticipated revenue levels. We are continually assessing the impact that the
COVID-19 pandemic, and the actions taken in response to it, will have on our employees, businesses and segments, customers and vendors and the industries that we serve.
The full impact depends on many factors that are uncertain or not yet identifiable. We expect these factors will continue to impact our financial condition and our results of
operations for a duration that is currently unknown.
The factors that have affected us and may continue to affect us could include, among other things, (i) the duration of the COVID-19 pandemic and the types and magnitude
of adverse impacts on regional economies, individually, and the global economy, as a whole; (ii) the health and welfare of our employees and that of our customers, vendors
and suppliers; (iii) business and government actions in response to the pandemic, including moratoriums by governments and regulators on rule making and regulatory and
legal proceedings, limitations on employee actions by regulators and unions, and stay at home, social distancing measures and travel bans; (iv) the impact on the
development and implementation of strategic initiatives and the integration of acquired businesses, including those acquired from G4S; (v) the response of our customers or
prospective customers to the pandemic, including suspensions or terminations of existing contracts; (vi) the varying demand for the types of services we offer in the
countries in which we offer them; (vii) our ability to continue to effectively market our services; (viii) our ability to resume services as needed; (ix) the type, size,
profitability and geographic locations of our operations; (x) the ability of our customers to pay, to make timely payments or to pay in full; and (xi) the timing of developing
and distributing effective vaccines, treatments or cures. Any of these events, and others we have not yet identified, could cause or contribute to the risks and uncertainties
facing the Company and our customers and could materially adversely affect our business or portions thereof, and our financial condition, results of operations and/or stock
price.
The ongoing COVID-19 pandemic could adversely impact the health and welfare of our employees, including our executive officers , which could have a material
adverse effect on our ability to serve our customers and our results of operations.
Our customer-facing employees are necessary to conduct many of our services. If the health and welfare of customer-facing employees or employees providing critical
corporate functions (including our executive officers) deteriorates, the number of employees so afflicted becomes significant, or an employee with skills and knowledge that
cannot be replicated in our organization is impaired due to the COVID-19 pandemic, our ability to win business and provide services, as well as employee morale, customer
relationships, business prospects, and results of operations of one or more of our segments, or the Company as a whole, could be materially adversely affected.
We have certain environmental and other exposures related to our former coal operations.
We may incur future environmental and other liabilities 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.
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Operational Risks
We have significant operations outside the United States.
We currently serve customers in more than 100 countries, including 52 countries where we operate subsidiaries. Sixty-nine percent (69%) of our revenues in 2020 came
from operations outside the U.S. We expect revenues outside the U.S. to continue to represent a significant portion of total revenues. Business operations outside the U.S.
are subject to political, economic and other risks inherent in operating in foreign countries, such as:
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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.
We are exposed to certain risks when we operate in countries that have high levels of inflation, including the risk that:
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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.
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 other 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.
We may be unable to achieve, or may be delayed in achieving, our initiatives to drive efficiency and control costs.
We have launched a number of initiatives, including the reorganization and restructuring actions described on page 7, to improve efficiencies and reduce operating
costs. Although we have achieved annual cost savings associated with these initiatives, we may be unable to sustain the cost savings that we have achieved. In addition, if
we are unable to achieve, or have any unexpected delays in achieving additional cost savings, our results of operations and cash flow may be adversely affected. Even if we
meet our goals as a result of these initiatives, we may not receive the expected financial benefits of these initiatives.
Financial Risks
We have significant retirement obligations. Poor investment performance of retirement plan holdings and / or lower interest rates used to discount the obligations 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
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streams, investment returns, medical inflation rates, participation rates and changes in laws and regulations. The funded status of the primary U.S. pension plan was
approximately 83% as of December 31, 2020. Based on our actuarial assumptions at the end of 2020, we do not expect to make contributions until 2022. A change in
assumptions could result in funding obligations that could adversely affect our liquidity and our ability to use our resources to make acquisitions and to otherwise grow our
business.
We have $714 million of actuarial losses recorded in accumulated other comprehensive income (loss) at the end of 2020. These losses relate to changes in actuarial
assumptions that have increased the net liability for benefit plans. These losses have not been recognized in earnings. These losses will be recognized in earnings in future
periods to the extent they are not offset by future actuarial gains. Our projections of future cash requirements and expenses for these plans could be adversely affected if our
retirement plans have additional actuarial losses.
We have significant deferred tax assets in the United States that may not be realized.
Deferred tax assets are future tax deductions that result primarily from the net tax effects of temporary differences between the carrying amount of assets and liabilities for
financial statement and income tax purposes. At December 31, 2020, we had $234 million of U.S. deferred tax assets, net of valuation allowances, primarily related to our
retirement plan obligations. These future tax deductions may not be realized if tax rules change in the future, or if forecasted U.S. operational results or any other U.S.
projected future taxable income is insufficient. Consequently, not realizing our U.S. deferred tax assets may significantly and materially affect our financial condition,
results of operations and cash flows.
Our effective income tax rate could change.
We operate subsidiaries in 52 countries, 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 are subject to the regular
examination of our income tax returns by various tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the
adequacy of our provision for income taxes. There can be no assurance that the outcomes from these examinations will not have a material adverse effect on our business.
It is possible that we will incur restructuring charges in the future.
It is possible that we will take restructuring actions, including in connection with acquisitions, in one or more of our markets in the future to reduce expenses. 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. These charges, if required, could significantly and materially affect results of operations and cash flows.
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 quality as well as the liquidity of financial markets. A negative change in our ratings
outlook or any downgrade in our 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 current credit facilities is dependent on the ability of the participating banks to meet their funding
commitments. 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 are subject to covenants for our credit facilities and our unsecured notes.
Our senior secured credit facility, senior unsecured notes, letter of credit facilities and bank guarantee facilities contain various financial and other covenants. The financial
covenants include a limit on the ratio of net debt to earnings before interest, taxes, depreciation and amortization and a limit on the ratio of earnings before interest, taxes,
depreciation and amortization to interest expense. Other covenants, among other things, limit our ability to provide liens, restrict fundamental changes, limit transactions
with affiliates and unrestricted subsidiaries, restrict changes to our fiscal year and to organization documents, limit asset dispositions, limit the use of proceeds from asset
sales, limit sale and leaseback transactions, limit investments, limit the ability to incur debt, restrict certain payments to shareholders, limit negative pledges and limit the
ability to change the nature of our business. Although we believe none of these covenants are presently restrictive to operations, the ability to meet financial and other
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 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.
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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 companies in our industry affects premium rates. We are not 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 obtaining and retaining customers and
managing 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.
Information Technology Risks
Risks associated with information technology can expose Brink’s to business disruptions, cybersecurity breaches and regulatory violations.
We rely on our information technology ("IT") infrastructure. If there were to be significant problems with our infrastructure, such as IT datacenter or system failure, or
failure to develop new technology platforms to support new initiatives and product and service offerings, it could halt or delay our ability to service our customers, hinder
our ability to conduct and expand our business and require significant remediation costs. Our data security risks will increase as we employ emerging technologies, mobile
applications, third-party service providers and cloud-based services. If any of these risks were to materialize, it could have a material adverse effect on our business,
financial condition, results of operations and cash flows.
In addition, in the normal course of business, we collect, process and retain sensitive and confidential information. Hacking, phishing attacks, ransomware, insider
threats, physical breaches or other actions may cause confidential information belonging to Brink’s, its employees or customers to be misused. If risks such as these
materialize, we may incur significant challenges and costs related to coordination with third-party service providers in order to resolve related issues. If our third-party
providers do not respond in a timely manner to our needs, disaster recovery, business continuity and crisis management activities could be negatively impacted. We have
programs in place that are intended to detect, contain and respond to cybersecurity breaches and that provide employee awareness training regarding cyber risks; however,
due to evolving and advanced sophisticated attack vectors, cyber attacks remain increasingly difficult to detect and we may not be able to successfully defend against them.
Any cybersecurity breach, 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.
As a global company we must adhere to applicable laws and regulations in numerous regions regarding data privacy, data protection, and data security. Privacy and data
protection laws vary between countries and are subject to interpretation, which may create inconsistent or conflicting requirements. The European Union’s General Data
Protection Regulation (“GDPR”) greatly increases the jurisdictional reach of European Union law and became effective in May 2018. GDPR imposes requirements related
to the handling of personal data, mandates public disclosure of significant data breaches, and provides for substantial penalties for non-compliance. Our efforts to comply
with GDPR and other privacy and data protection laws may impose significant costs that are likely to increase over time, and we could incur substantial penalties or
litigation related to violation of existing or future data privacy laws, which could have a material adverse effect on our business, financial condition, results of operations and
cash flows.
General Risks
The Company could be negatively affected as a result of the actions of activist or hostile stockholders.
Shareholder activism, which could take many forms and arise in a variety of situations, has been increasing among publicly traded companies. Shareholder activism,
including potential proxy contests, requires significant time and attention by management and the Board of Directors, potentially hindering the Company’s ability to execute
its strategic plan and negatively affecting the trading value of our common stock. Additionally, shareholder activism could give rise to perceived uncertainties as to the
Company’s future direction, adversely affect its relationships with key executives, customers and other business partners, or make it more difficult to attract and retain
qualified personnel. Also, the Company has been, and may in the future be, required to incur significant legal fees and other expenses related to activist shareholder matters.
Any of these impacts could materially and adversely affect the Company and operating results.
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Forward-Looking Statements
This document contains both historical and forward-looking information. Words such as “anticipates,” “assumes,” “estimates,” “expects,” “projects,” “predicts,” “intends,”
“plans,” “potential,” “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: anticipated savings from reorganization
and restructuring activities; completion of integration of acquisitions, impacts of the COVID pandemic, collection of receivables related to the internal loss in the U.S.
Global Services business; support for the Venezuela business; realization of deferred tax assets; the anticipated financial effect of pending litigation; the ability to meet
liquidity needs; expenses and payouts for the U.S. retirement plans and the non-U.S. pension and benefit 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; and expected future payments under
contractual obligations. Forward-looking information in this document is subject to known and unknown risks, uncertainties, and contingencies, which are difficult to
quantify and which could cause actual results, performance or achievements to differ materially from those that are anticipated.
These risks, uncertainties and contingencies, many of which are beyond our control, include, but are not limited to:
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our ability to improve profitability and execute further cost and operational improvements and efficiencies in our core businesses;
our ability to improve service levels and quality in our core businesses;
market volatility and commodity price fluctuations;
seasonality, pricing and other competitive industry factors;
investment in information technology and its impact on revenue and profit growth;
our ability to maintain an effective IT infrastructure and safeguard confidential information;
our ability to effectively develop and implement solutions for our customers;
risks associated with operating in foreign countries, including changing political, labor and economic conditions, regulatory issues (including the imposition of
international sanctions, including by the U.S. government), currency restrictions and devaluations, restrictions on and cost of repatriating earnings and capital,
impact on the Company's financial results as a result of jurisdictions determined to be highly inflationary, and restrictive government actions, including
nationalization;
labor issues, including negotiations with organized labor and work stoppages;
pandemics (including the ongoing COVID-19 pandemic and related impacts and restrictions on the actions of businesses and consumers, including suppliers and
customers), acts of terrorism, strikes or other extraordinary events that negatively affect global or regional cash commerce;
anticipated cash needs in light of our current liquidity position and the impact of COVID-19 on our liquidity;
the strength of the U.S. dollar relative to foreign currencies and foreign currency exchange rates;
our ability to identify, evaluate and complete acquisitions and other strategic transactions and to successfully integrate acquired companies;
costs related to dispositions and product or market exits;
our ability to obtain appropriate insurance coverage, positions taken by insurers relative to claims and the financial condition of insurers;
safety and security performance and loss experience;
employee, environmental and other liabilities in connection with former coal operations, including black lung claims;
the impact of the Patient Protection and Affordable Care Act on legacy liabilities and ongoing operations;
funding requirements, accounting treatment, and investment performance of our pension plans, the VEBA and other employee benefits;
changes to estimated liabilities and assets in actuarial assumptions;
the nature of hedging relationships and counterparty risk;
access to the capital and credit markets;
our ability to realize deferred tax assets;
the outcome of pending and future claims, litigation, and administrative proceedings;
public perception of our business, reputation and brand;
changes in estimates and assumptions underlying our critical accounting policies; and
the promulgation and adoption of new accounting standards, new government regulations and interpretation of existing standards and regulations.
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.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
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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, 2020.
Segments
North America
Latin America
Europe
Rest of World
Corporate Items
Total
ITEM 3. LEGAL PROCEEDINGS
Leased
Facilities
Owned
Total
Leased
Vehicles
Owned
Total
227
331
195
362
7
1,122
39
93
37
12
—
181
266
424
232
374
7
1,303
3,398
564
2,006
509
—
6,477
823
4,796
1,980
2,212
—
9,811
4,221
5,360
3,986
2,721
—
16,288
For a discussion of legal proceedings, see Note 23 to the consolidated financial statements, “Other Commitments and Contingencies,” in Part II, Item 8 of this 10-K, which
is incorporated herein by reference.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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Executive Officers of the Registrant
The following is a list as of March 1, 2021, of the names and ages of the executive officers of The Company indicating the principal positions and offices held by
each. There are no family relationships among any of the officers named.
Name
Douglas A. Pertz
Ronald J. Domanico
Michael F. Beech
Rohan Pal
Dominik Bossart
Simon J. Davis
Dana C. O'Brien
James K. Parks
Raphael J. Shemanski
Age
Positions and Offices Held
Held Since
66 Director, President and Chief Executive Officer
62 Executive Vice President, Chief Financial Officer
59 Executive Vice President
55 Executive Vice President, Chief Information Officer and Chief Digital Officer
46 Senior Vice President
56 Senior Vice President and Chief Human Resources Officer
53 Senior Vice President, General Counsel and Assistant Secretary
52 Senior Vice President
58 Senior Vice President
2016
2016
2014
2019
2019
2019
2019
2020
2019
Executive and other officers of the Company are elected annually and serve at the pleasure of the Board.
Mr. Pertz was appointed President and Chief Executive Officer of the Company in June 2016. Before joining the Company, Mr. Pertz served as President and CEO of Recall
Holdings Limited, a global provider of digital and physical information management and security services, from 2013 until 2016. Prior to joining Recall, Mr. Pertz served as
a partner with Bolder Capital, LLC (a private equity firm) from 2011 to 2013.
Mr. Domanico was appointed Executive Vice President and Chief Financial Officer of the Company in July 2016. Mr. Domanico also served as Treasurer from January
through April 2017. Before joining Brink’s, Mr. Domanico served as Senior Vice President, strategic initiatives and capital markets at Recall Holdings Limited, a global
provider of digital and physical information management and security services. From 2010 to 2014, he was Senior Vice President and CFO for HD Supply, one of the largest
industrial distributors in North America.
Mr. Beech was appointed Executive Vice President of the Company in December 2014. Since 2019, he has had oversight responsibility for the Company's Latin America
segment (including Mexico) and has led the Company's global safety and security since 2016. From 2016 to 2019, he had oversight responsibility for the Company's
operations in Brazil and Mexico. From December 2014 to July 2016, Mr. Beech had oversight responsibility for the operations in the countries that composed the Company's
former Largest 5 Markets segment.
Mr. Pal has served as Executive Vice President, Chief Information Officer and Chief Digital Officer of the Company since July 2019 and was Senior Vice President, Chief
Information Officer and Chief Digital Officer of the Company from July 2016 to July 2019. Before joining Brink’s, Mr. Pal served as Senior Vice President and Chief
Information Officer/Chief Technology Officer at Recall Holdings Limited, a global provider of digital and physical information management and security services, from
June 2013 to June 2016.
Mr. Bossart was appointed as Senior Vice President in July 2019. He has oversight responsibility for the Company's operations in the countries that comprise the Company's
Rest of World segment and its Brink's Global Services business. From 2014 to 2019, he led the Brink’s Global Services business in the Americas and the Company’s cash-
in-transit business in South America (with the exception of Mexico and Brazil).
Mr. Davis was appointed as the Company’s Senior Vice President and Chief Human Resources Officer in January 2019. From July 2018 to January 2019, he served as
Senior Vice President of Human Resources for the Brink’s U.S. business. Prior to joining Brink’s, Mr. Davis served as Chief Human Resources Officer for Johnson Controls
International, a diversified technology company, from 2015 to October 2017.
Ms. O’Brien was appointed as the Company's Senior Vice President and General Counsel in March 2019. Prior to joining Brink’s, she served as Senior Vice President and
General Counsel of Centerpoint Energy, an electric and natural gas utility company, from May 2014 to April 2019 and served as Centerpoint’s Corporate Secretary from
May 2014 to October 2017.
Mr. Parks was appointed as the Company’s Senior Vice President in December 2020. He has oversight responsibility for the Company's operations in Europe. From January
to December 2020 Mr. Parks was Senior Vice President, Strategy Deployment & Execution. From 2018 to January 2020, he was Senior Vice President, Integration. From
2015 to 2018 he served as the President and General Manager of Brink’s Canada.
Mr. Shemanski was appointed Senior Vice President in July 2019. He has oversight responsibility for the Company's North America operations. He joined Brink’s as Senior
Vice President and President of Brink’s U.S. in 2017 and had responsibility for the Company's U.S. operations from 2017 to 2019. Prior to joining Brink’s, he served in
various leadership roles at Johnson Controls International, a diversified technology company. From 2014 through 2017 he served as group Vice President and General
Manager of Johnson Controls International's global automotive aftermarket business group.
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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 23, 2021, there were 1,179 shareholders of record of common stock.
The number of record holders does not include beneficial owners of our securities who shares are held in the names of various security brokers dealers and registered
clearing agencies.
Share Repurchase Program
On February 6, 2020, we announced that the Board authorized a $250 million share repurchase authorization that expires on December 31, 2021. The authorization replaces
our previous $200 million repurchase program, authorized by the board of directors in May 2017, which expired December 31, 2019. Under the $200 million repurchase
program, we repurchased 1.3 million shares for approximately $94 million, or an average cost of $69.35 per share. There was approximately $106 million remaining
available under the $200 million repurchase program when it expired. Under the $250 million repurchase program, we are not obligated to repurchase any specific dollar
amount or number of shares. The timing and volume of share repurchases may be executed at the discretion of management on an opportunistic basis, or pursuant to trading
plans or other arrangements. Share repurchases under this program may be made in the open market, in privately negotiated transactions, or otherwise.
In August 2020, we entered into an accelerated share repurchase arrangement ("ASR") with a financial institution. In exchange for a $50 million up-front payment at the
beginning of the purchase period, the financial institution delivered to us 849,978 shares of our common stock for an average repurchase price of $58.83 per share. The
shares received were retired in the period they were delivered to us, and the up-front payment was accounted for as a reduction to shareholders' equity in the condensed
consolidated balance sheet. For purposes of calculating earnings per share, we reported the ASR as a repurchase of our common stock in August 2020 and as a forward
contract indexed to our common stock. The ASR met all of the applicable criteria for equity classification, and, as a result, was not accounted for as a derivative instrument.
In September 2020, the ASR purchase period was subsequently terminated early and we received and retired an additional 246,676 shares under the ASR, resulting in an
overall average repurchase price of $45.59 per share.
At December 31, 2020, $200 million remains available under the $250 million repurchase program.
The following table provides information about common stock repurchases by the Company during the quarter then ended December 31, 2020.
Period
October 1 through
October 31, 2020
November 1 through
November 30, 2020
December 1 through
December 31, 2020
(a) Total Number of Shares
Purchased
(1)
(b) Average Price Paid
per Share
(c) Total Number of Shares
Purchased as Part of Publicly
Announced Plans or Programs
(d) Maximum Number (or Approximate
Dollar Value) of Shares that May Yet be
Purchased Under the Plans or Programs
— $
—
—
—
—
—
— $
—
—
—
—
—
(1) On February 6, 2020, the Company’s board of directors authorized the Company to repurchase up to $250,000,000 of common stock from time to time as market conditions warrant and as
covenants under existing agreements permit. The program does not require the Company to acquire any specific numbers of shares and may be modified or discontinued at any time. At
December 31, 2020, $200,000,000 remains available under this program. The program will expire on December 31, 2021.
18
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 common stocks of a selected peer group of companies. Given our unique service offerings, we do not believe that any single
published industry index is appropriate for comparing shareholder return. Therefore, the peer group used in the performance graph combines publicly traded companies in
the logistics services industry that have similar operational characteristics, such as route-based delivery of services. The companies included in the peer group are Cintas
Corporation, Iron Mountain, Inc., ServiceMaster Global Holdings, Inc., Stericycle, Inc., UniFirst Corporation and Waste Management, Inc.
The graph tracks the performance of a $100 investment in our common stock and in each index from December 31, 2015, through December 31, 2020. The performance of
The Brink’s Company’s common stock assumes that the shareholder reinvested all dividends received during the period.
*$100 invested on 12/31/15 in stock or index, including reinvestment of dividends
Fiscal Year ending December 31.
Source: Zacks Investment Research, Inc.
Comparison of Five-Year Cumulative Total Return
(a)
2015
2016
2017
2018
2019
2020
Years Ended December 31,
The Brink's Company
S&P MidCap 400 Index
Peer Group
$
100.00
100.00
100.00
144.72
120.74
117.41
278.53
140.35
144.89
230.68
124.80
144.99
325.89
157.49
196.20
262.08
179.00
224.05
(a)
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 at December 31, 2015. The cumulative return for each index
is measured on an annual basis for the periods from December 31, 2015, through December 31, 2020, with the value of each index set to $100 on December 31, 2015. Total return assumes reinvestment of
dividends. We chose the S&P Midcap 400 Index and our custom peer group as we are included in the S&P Midcap 400 Index and we believe the custom peer group has more similar characteristics to our company
for the factors noted above.
19
ITEM 6. SELECTED FINANCIAL DATA
Five Years in Review
(In millions, except for per share amounts)
Revenues
Operating profit
Income (loss) attributable to Brink’s
Continuing operations
Discontinued operations
Net income (loss) 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 (loss) per share attributable to Brink’s common shareholders
Basic:
Continuing operations
Discontinued operations
Net income (loss)
Diluted:
Continuing operations
Discontinued operations
Net income (loss)
Cash dividends
Weighted-average Shares
Basic
Diluted
GAAP Basis
(a)
2020
2019
(a)
2018
(a)
2017
(a)
2016
$
$
$
$
$
$
$
$
3,690.9
213.5
3,683.2
236.8
3,488.9
274.7
3,347.0
273.9
3,020.6
184.5
16.8
(0.8)
16.0
838.2
5,135.6
2,334.2
128.8
28.3
0.7
29.0
763.3
3,763.8
1,554.8
191.8
(33.3)
—
(33.3)
699.4
3,236.0
1,471.6
153.7
16.9
(0.2)
16.7
640.9
3,059.6
1,139.6
317.4
36.2
(1.7)
34.5
531.0
1,994.8
247.6
337.1
206.8
118.5
185.0
164.8
162.3
155.1
146.6
174.5
131.6
112.2
0.33
(0.02)
0.32
0.33
(0.02)
0.31
0.60
50.4
50.8
0.56
0.01
0.58
0.55
0.01
0.57
0.60
50.2
51.1
(0.65)
—
(0.65)
(0.65)
—
(0.65)
0.60
50.9
50.9
0.33
(0.01)
0.33
0.33
(0.01)
0.32
0.55
50.7
51.8
0.72
(0.03)
0.69
0.72
(0.03)
0.68
0.40
50.0
50.6
(In millions, except for per share amounts)
2020
2019
2018
2017
2016
Non-GAAP Basis*
Non-GAAP revenues
Non-GAAP operating profit
Amounts attributable to Brink’s
Non-GAAP income from continuing operations
Non-GAAP diluted EPS – continuing operations
$
$
$
3,690.9
381.3
3,679.7
391.6
3,437.5
346.9
3,192.9
281.4
2,908.4
215.8
190.8
3.76
199.0
3.89
179.4
3.46
157.2
3.03
115.6
2.28
(a)
In 2020, we acquired multiple business operations from G4S for an aggregate purchase price of approximately $710 million. In 2019, we acquired four business operations for an aggregate purchase price of
approximately $184 million. In 2018, we acquired two business operations for an aggregate purchase price of approximately $542 million. In 2017, we acquired six business operations in five countries for an
aggregate purchase price of approximately $361 million. We also entered into a new $1.5 billion senior secured credit facility and issued $600 million in senior unsecured notes in 2017. The senior secured credit
facility was amended in 2019 and increased to $1.8 billion. In 2020, the senior secured credit facility was amended further and increased to $2.39 billion. See Note 7 and Note 15 to the consolidated financial
statements for more detailed information on the business acquisitions and debt.
*Reconciliations to GAAP results begin on page 37.
20
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
AS OF DECEMBER 31, 2020 AND 2019
AND FOR EACH OF THE YEARS IN THE THREE-YEAR PERIOD ENDED DECEMBER 31, 2020
TABLE OF CONTENTS
OPERATIONS
RESULTS OF OPERATIONS
Analysis of Results
Income and Expense Not Allocated to Segments
Other Operating Income and Expense
Nonoperating Income and Expense
Income Taxes
Noncontrolling Interests
Non-GAAP Results Reconciled to GAAP
Foreign Operations
LIQUIDITY AND CAPITAL RESOURCES
Overview
Operating Activities
Investing Activities
Financing Activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Capitalization
Off Balance Sheet Arrangements
Contractual Obligations
Contingent Matters
APPLICATION OF CRITICAL ACCOUNTING POLICIES
Deferred Tax Asset Valuation Allowance
Business Acquisitions
Goodwill, Other Intangible Assets and Property and Equipment Valuations
Retirement and Postemployment Benefit Obligations
Foreign Currency Translation
21
Page
22
23
30
33
34
35
36
37
41
43
43
44
46
46
47
49
50
52
53
54
55
56
60
OPERATIONS
The Brink’s Company offers secure transportation and route-based logistics management services for cash and valuables throughout the world. These services include:
•
•
•
•
•
•
•
Cash-in-transit services – armored vehicle transportation of valuables
ATM services – replenishing and maintaining customers’ automated teller machines; providing network infrastructure services
Global services – secure international transportation of valuables
Cash management services
◦
◦
◦
◦
Currency and coin counting and sorting; deposit preparation and reconciliations; other cash management services
Safe and safe control device installation and servicing (including our patented CompuSafe service)
Vaulting services
Check imaging services
®
Payment services – bill payment and collection services on behalf of utility companies and other billers at any of our Brink’s or Brink’s – operated payment
locations in Brazil, Colombia, Panama and Mexico, and Brink’s Money™ general purpose reloadable prepaid cards and corporate debit cards in the U.S.
Commercial security systems services – design and installation of security systems in designated markets in Europe
Guarding services – protection of airports, offices, and certain other locations in Europe and Brazil with or without electronic surveillance, access control, fire
prevention and highly trained patrolling personnel
During the fourth quarter of 2020, we implemented changes to our organizational and management structure primarily related to our acquisition of the majority of the cash
operations of G4S that resulted in changes to our operating segments. Previously, our business was managed and reported in three operating segments: North America,
South America and Rest of World. We now mange our business in four segments, and segment results are reported by these four segments. The four segments are as follows:
•
•
•
•
North America – operations in the U.S. and Canada, including the Brink’s Global Services ("BGS") line of business,
Latin America – operations in Latin American countries where we have an ownership interest, including the BGS line of business. This segment includes
operations in Mexico, which was previously reported in the North America segment,
Europe – operations in European countries that primarily provide services outside of the BGS line of business. This segment includes the BGS line of business
within these country operations, and
Rest of World – operations in European countries that primarily provide BGS services. This segment includes other lines of business within these country
operations. This segment also includes operations in the Middle East, Africa and Asia as well as BGS activity in Latin American countries where we do not have
an ownership interest.
Prior period information has been revised to reflect our current segment structure.
We believe that Brink’s has significant competitive advantages including:
•
•
•
•
•
•
brand name recognition
reputation for a high level of service and security
risk management and logistics expertise
global network and customer base
proven operational excellence, and
high-quality insurance coverage and financial strength
We focus our time and resources on service quality, protecting and strengthening our brand, and addressing our risks. Our marketing and sales efforts are enhanced by the
“Brink’s” brand, so we seek to protect and build its value. Because our services focus on handling, transporting, protecting and managing valuables, we strive to understand
and manage risk.
In order to earn an adequate return on capital, we focus on the effective and efficient use of resources in addition to our pricing discipline. 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.
Operating results may vary from period to period. Because 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. We also periodically incur costs to change the scale of our operations
when volumes increase or decrease. Incremental costs incurred usually relate to increasing or decreasing the number of employees and increasing or decreasing branches or
administrative facilities. In addition, security costs can vary depending on performance, the cost of insurance coverage, and changes in crime rates (i.e., attacks and
robberies).
Brink’s revenues and related operating profit are generally higher in the second half of the year, particularly in the fourth quarter, due to generally increased economic
activity associated with the holiday season.
22
RESULTS OF OPERATIONS
Analysis of Results
Consolidated Results
GAAP and 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 operating profit, income from continuing operations and earnings per share without certain income and
expense items that do not reflect the regular earnings of our operations. The non-GAAP financial measures are intended to provide investors with a supplemental
comparison of our operating results and trends for the periods presented. Our management believes these measures are also useful to investors as such measures allow
investors to evaluate our performance using the same metrics that our management uses to evaluate past performance and prospects for future performance. We do not
consider these items to be reflective of our core operating performance due to the variability of such items from period-to-period in terms of size, nature and
significance. The non-GAAP adjustments used to reconcile our GAAP results are described in detail on pages 30-32 and are reconciled to comparable GAAP measures on
pages 37-40.
Definition of Organic Growth Organic growth represents the change in revenues or operating profit between the current and prior period excluding the effect of acquisitions
and dispositions and changes in currency exchange rates. See definitions on page 25.
(In millions, except for per share amounts)
GAAP
Revenues
Cost of revenues
Selling, general and administrative expenses
Operating profit
Income (loss) from continuing operations
(a)
Diluted EPS from continuing operations
(a)
(b)
Non-GAAP
Non-GAAP revenues
Non-GAAP operating profit
Non-GAAP income from continuing operations
Non-GAAP diluted EPS from continuing operations
(a)
(a)
Years Ended December 31,
2020
2019
% change
2020
$
$
$
$
3,690.9
2,877.3
584.5
213.5
16.8
0.33
3,690.9
381.3
190.8
3.76
3,683.2
2,832.1
604.9
236.8
28.3
0.55
3,679.7
391.6
199.0
3.89
—
2
(3)
(10)
(41)
(40)
—
(3)
(4)
(3)
(a) Amounts reported in this table are attributable to the shareholders of Brink’s and exclude earnings related to noncontrolling interests.
(b) Non-GAAP results are reconciled to the applicable GAAP results on pages 37–40.
GAAP Basis
Analysis of Consolidated Results: 2020 versus 2019
Consolidated Revenues Revenues increased $7.7 million primarily due to the favorable impact of acquisitions and dispositions ($520.2 million), partially offset by the
unfavorable impact of currency exchange rates ($233.2 million) and organic decreases in North America ($123.8 million), Europe ($102.8 million), Latin America ($31.2
million), and Rest of World ($17.5 million). The unfavorable currency impact was driven by the Brazilian real, Argentine peso, and Mexican peso. Revenues decreased 8%
on an organic basis due the impact of the COVID-19 pandemic in the second, third, and fourth quarter of 2020. See above for our definition of “organic.”
Consolidated Costs and Expenses Cost of revenues increased 2% to $2,877.3 million primarily due to the impact of acquisitions and higher costs related to restructuring
actions, primarily in the second quarter of 2020, partially offset by organic decreases in labor and other operational costs, including cost saving actions taken in response to
COVID-19, and changes in currency exchange rates. Selling, general and administrative costs decreased 3% to $584.5 million due to organic decreases in labor and other
operational costs, including cost saving actions taken in response to COVID-19, changes in currency exchange rates, and lower charges incurred related to an internal loss in
the U.S. global services operations, partially offset by the impact of acquisitions.
Consolidated Operating Profit Operating profit decreased $23.3 million due mainly to:
•
•
•
unfavorable changes in currency exchange rates ($49.9 million) driven by the Argentine peso, Brazilian real, and Mexican peso, partially offset by lower costs
related to the impact of highly inflationary accounting in Argentina,
organic decreases in Europe ($31.5 million), North America ($13.6 million), and Latin America ($5.7 million), and
higher charges incurred related to an increase in reorganization and restructuring charges ($37.8 million), included in “Other items not allocated to segments”,
partially offset by:
•
•
the favorable impact of business acquisitions and dispositions ($64.5 million), excluding intangible amortization and acquisition-related charges,
an organic increase in Rest of World ($21.2 million),
23
•
•
lower corporate expenses on an organic basis ($17.2 million), and
the following items included in "Other items not allocated to segments":
◦
◦
lower charges incurred, primarily bad debt expense, related to an internal loss in the U.S. global services operations ($14.0 million),
lower costs related to business acquisitions and dispositions ($3.0 million), including the impact of acquisition-related charges and intangible asset
amortization in 2020.
Consolidated Income from Continuing Operations Attributable to Brink’s and Related Per Share Amounts Income from continuing operations attributable to Brink’s
shareholders decreased $11.5 million to $16.8 million primarily due to the operating profit decrease mentioned above, higher interest expense ($5.9 million), and higher
income attributable to noncontrolling interests ($1.7 million), partially offset by lower interest and other non-operating expense ($15.0 million) and lower income tax
expense ($4.4 million). Diluted earnings per share from continuing operations was $0.33, down from $0.55 in 2019.
Non-GAAP Basis
Analysis of Consolidated Results: 2020 versus 2019
Non-GAAP Consolidated Revenues Non-GAAP revenues increased $11.2 million primarily due to the favorable impact of acquisitions ($519.7 million), partially offset by
the unfavorable impact of currency exchange rates ($233.2 million) and organic decreases in North America ($123.8 million), Europe ($102.8 million), Latin America
($31.2 million), and Rest of World ($17.5 million). The unfavorable currency impact was driven by the Brazilian real, Argentine peso, and Mexican peso. Revenues
decreased 7% on an organic basis due the impact of the COVID-19 pandemic in the second, third, and fourth quarter of 2020. See above for our definition of “organic.”
Non-GAAP Consolidated Operating Profit Non-GAAP operating profit decreased $10.3 million due mainly to:
•
•
unfavorable changes in currency exchange rates ($62.4 million) driven by the Argentine peso, Brazilian real, and Mexican peso, and
organic decreases in Europe ($31.5 million), North America ($13.6 million), and Latin America ($5.7 million),
partially offset by:
•
•
•
the favorable impact of business acquisitions and dispositions ($64.5 million), excluding intangible amortization and acquisition-related charges,
an organic increase in Rest of World ($21.2 million), and
lower corporate expenses on an organic basis ($17.2 million)
Non-GAAP Consolidated Income from Continuing Operations Attributable to Brink’s and Related Per Share Amounts Non-GAAP income from continuing operations
attributable to Brink’s shareholders decreased $8.2 million to $190.8 million due to the operating profit decrease mentioned above, higher interest expense ($9.8 million),
higher non-controlling interest ($2.4 million), partially offset by lower interest and other non-operating expense ($13.4 million) and lower income tax expense ($0.9
million). Diluted earnings per share from continuing operations was $3.76, down from $3.89 in 2019.
24
Revenues and Operating Profit by Segment
(In millions)
Revenues:
North America
Latin America
Europe
Rest of World
Segment revenues
(e)
Other items not allocated to segments
(d)
Revenues - GAAP
Operating profit:
North America
Latin America
Europe
Rest of World
Segment operating profit
Corporate
(c)
Operating profit - non-GAAP
Other items not allocated to segments
Operating profit (loss) - GAAP
(d)
Amounts may not add due to rounding.
2019
Organic
Change
Acquisitions /
(a)
Dispositions
Currency
(b)
2020
Total
Organic
% Change
$
$
$
$
1,370.4
1,319.8
549.6
439.9
3,679.7
3.5
3,683.2
104.1
296.9
42.6
75.7
519.3
(127.7)
391.6
(154.8)
236.8
(123.8)
(31.2)
(102.8)
(17.5)
(275.3)
(4.0)
(279.3)
(13.6)
(5.7)
(31.5)
21.2
(29.6)
17.2
(12.4)
(28.5)
(40.9)
15.9
23.9
291.2
188.7
519.7
0.5
520.2
1.1
3.3
37.7
22.4
64.5
—
64.5
3.0
67.5
(1.1)
(240.6)
15.8
(7.3)
(233.2)
—
(233.2)
0.1
(60.9)
2.4
(2.2)
(60.6)
(1.8)
(62.4)
12.5
(49.9)
1,261.4
1,071.9
753.8
603.8
3,690.9
—
3,690.9
91.7
233.6
51.2
117.1
493.6
(112.3)
381.3
(167.8)
213.5
(8)
(19)
37
37
—
(100)
—
(12)
(21)
20
55
(5)
(12)
(3)
8
(10)
(9)
(2)
(19)
(4)
(7)
unfav
(8)
(13)
(2)
(74)
28
(6)
(13)
(3)
18
(17)
(a) Non-GAAP amounts include the impact of prior year comparable period results for acquired and disposed businesses. GAAP results also include the impact of acquisition-related intangible amortization,
restructuring and other charges, and disposition related gains/losses.
The amounts in the “Currency” column consist of the effects of Argentina devaluations under highly inflationary accounting and the sum of monthly currency changes. Monthly currency changes represent the
accumulation throughout the year of the impact on current period results of changes in foreign currency rates from the prior year period.
Corporate expenses are not allocated to segment results. Corporate expenses include salaries and other costs to manage the global business and to perform activities required by public companies.
See pages 30–32 for more information.
Segment revenues equal our total reported non-GAAP revenues.
(b)
(c)
(d)
(e)
Analysis of Segment Results: 2020 versus 2019
North America
Revenues decreased 8% ($109.0 million) primarily due to a 9% organic decrease ($123.8 million) and the unfavorable impact of currency exchange rates ($1.1 million)
related to the Canadian dollar, partially offset by the favorable impact of acquisitions ($15.9 million). Organic revenue decreased primarily from lower volumes due to the
second, third, and fourth quarter impact of the COVID-19 pandemic throughout the segment. Operating profit decreased 12% ($12.4 million) driven by an organic decrease
($13.6 million), partially offset by the favorable impact of acquisitions ($1.1 million) and currency exchange rates ($0.1 million). The organic decrease was due to the
impact of the COVID-19 pandemic, partially offset by labor and other operational cost saving actions, including those taken in response to COVID-19 and government
COVID-19 assistance in Canada.
Latin America
Revenues decreased 19% ($247.9 million) primarily due to the unfavorable impact of currency exchange rates ($240.6 million) primarily from the Brazilian real, Argentine
peso, and Mexican peso, and an organic decrease of 2% ($31.2 million), partially offset by the favorable impact of acquisitions and dispositions ($23.9 million). The organic
decrease was due to lower volumes across the region due to the COVID-19 pandemic, partially offset by organic growth in Argentina driven by inflation-based price
increases. Operating profit was down 21% ($63.3 million) driven by unfavorable currency ($60.9 million) and an organic decrease of 2% ($5.7 million), offset by the
favorable impact of acquisitions and dispositions ($3.3 million). The organic decrease was driven by Mexico and Chile, primarily due to the impact of the COVID-19
pandemic, partially offset by organic growth in Argentina.
Revenues increased 37% ($204.2 million) due to the favorable impact of acquisitions and dispositions ($291.2 million) and currency exchange rates ($15.8 million),
partially offset by a 19% organic decrease ($102.8 million). The organic decrease was primarily due to lower volumes throughout the region, especially in France, driven by
the impact of the COVID-19 pandemic. Operating profit increased 20% ($8.6 million) due to the favorable impact of acquisitions and dispositions ($37.7 million) and
currency exchange rates ($2.4 million), partially offset by an organic decrease ($31.5 million). The organic decrease was primarily due to the impact of the COVID-19
pandemic, partially offset by labor and other operational cost saving actions, including those taken in response to COVID-19. Results were also helped by government
COVID-19 assistance in several countries in the second, third, and fourth quarters, which offset the impact of revenue declines and delays in executing cost reduction
actions.
Europe
25
Revenues increased 37% ($163.9 million) due to the favorable impact of acquisitions and dispositions ($188.7 million), partially offset by a 4% organic decrease ($17.5
million) and the unfavorable impact of currency exchange rates ($7.3 million). The organic decrease was primarily due to lower volumes throughout the region driven by the
impact of the COVID-19 pandemic, partially offset by higher global services revenue. Operating profit increased 55% ($41.4 million) due to the favorable impact of
acquisitions and dispositions ($22.4 million) and an organic increase ($21.2 million), partially offset by the unfavorable impact of currency exchange rates ($2.2 million).
The organic increase was primarily due to global services growth and the impact of labor and other operational cost saving actions, including those taken in response to
COVID-19. Results were also helped by government COVID-19 assistance in several countries in the second, third, and fourth quarters, which offset the impact of revenue
declines and delays in executing cost reduction actions.
Rest of World
26
Analysis of Results: 2019 versus 2018
Consolidated Results
(In millions, except for per share amounts)
GAAP
Revenues
Cost of revenues
Selling, general and administrative expenses
Operating profit
Income (loss) from continuing operations
(a)
Diluted EPS from continuing operations
(a)
(b)
Non-GAAP
Non-GAAP revenues
Non-GAAP operating profit
Non-GAAP income from continuing operations
Non-GAAP diluted EPS from continuing operations
(a)
(a)
Years Ended December 31,
2019
2018
% change
2019
$
$
$
$
3,683.2
2,832.1
604.9
236.8
28.3
0.55
3,679.7
391.6
199.0
3.89
3,488.9
2,703.3
509.2
274.7
(33.3)
(0.65)
3,437.5
346.9
179.4
3.46
6
5
19
(14)
fav
fav
7
13
11
12
(a) Amounts reported in this table are attributable to the shareholders of Brink’s and exclude earnings related to noncontrolling interests.
(b) Non-GAAP results are reconciled to the applicable GAAP results on pages 37–40.
Deconsolidation of Venezuela
Due to political and economic conditions in Venezuela, in the second quarter of 2018 we determined that we no longer met the accounting criteria for control over our
Venezuelan operations. We expect these conditions to continue for the foreseeable future. Consequently, we began reporting the results of our investment in our Venezuelan
subsidiaries using the cost method of accounting. We determined the fair value of our cost method investment in, and receivables from, our Venezuelan subsidiaries to be
insignificant based on our expectations of dividend payments and settlements of such receivables in future periods. As a result, we deconsolidated our Venezuela
subsidiaries and recognized a pretax loss of $126.7 million in the second quarter of 2018. This loss is excluded from our non-GAAP results.
GAAP Basis
Analysis of Consolidated Results: 2019 versus 2018
Consolidated Revenues Revenues increased $194.3 million as the favorable impact of acquisitions ($287.9 million) and organic growth in Latin America ($192.9 million),
North America ($19.8 million), Rest of World ($6.6 million), and Europe ($2.3 million) were partially offset by the unfavorable impact of currency exchange rates ($267.8
million) and the deconsolidation of Venezuela operations ($51.4 million) in the second quarter of 2018. The unfavorable currency impact was driven by the Argentine peso,
Brazilian real and the euro. Revenues increased 5% on an organic basis due mainly to higher average selling prices in Argentina (including the effects of inflation) and
organic revenue growth in Mexico due to price increases and volume growth. See above for our definition of “organic.”
Consolidated Costs and Expenses Cost of revenues increased 5% to $2,832.1 million primarily due to the impact of acquisitions, including integration costs, and inflation-
based organic increases in labor and other operational costs, partially offset by changes in currency exchange rates and the deconsolidation of Venezuela operations in the
second quarter of 2018. Selling, general and administrative costs increased 19% to $604.9 million due primarily to the impact of acquisitions, including integration costs,
corporate expenses, charges related to internal loss in the U.S. global services operations, and inflation-based organic increases in labor and other administrative costs,
partially offset by changes in currency exchange rates.
Consolidated Operating Profit Operating profit decreased $37.9 million due mainly to:
•
the following items included in "Other items not allocated to segments":
◦
◦
◦
◦
higher costs related to business acquisitions and dispositions ($47.6 million), primarily from the impact of acquisition-related charges and intangible
asset amortization in 2019,
net charges incurred, primarily bad debt and third party costs, related to an internal loss in the U.S. global services operations ($20.9 million),
deconsolidation of Venezuela in the second quarter of 2018 ($12.5 million), and
higher costs related to reorganization and restructuring ($8.2 million)
•
•
unfavorable changes in currency exchange rates ($72.6 million) driven by the Argentine peso and Brazilian real, slightly offset by the effect of Venezuela
devaluations prior to deconsolidation, and
higher corporate expenses ($29.1 million on an organic basis),
partially offset by:
•
•
organic increases in Latin America ($101.4 million), North America ($16.1 million), Rest of World ($1.6 million), and Europe ($1.4 million), and
the favorable operating impact of business acquisitions and dispositions ($34.7 million), excluding intangible asset amortization and acquisition-related charges.
27
Consolidated Income from Continuing Operations Attributable to Brink’s and Related Per Share Amounts Income from continuing operations attributable to Brink’s
shareholders increased $61.6 million to $28.3 million primarily due to the second quarter of 2018 loss on deconsolidation of Venezuela operations ($126.7 million), lower
income tax expense ($9.0 million), and lower income attributable to noncontrolling interests ($1.6 million), partially offset by the operating profit decrease mentioned above,
higher interest expense ($23.9 million), and higher interest and other nonoperating expense ($13.9 million). Diluted earnings per share from continuing operations was
$0.55, up from negative $0.65 in 2018.
Non-GAAP Basis
Analysis of Consolidated Results: 2019 versus 2018
Non-GAAP Consolidated Revenues Non-GAAP revenues increased $242.2 million as the favorable impact of acquisitions ($288.4 million) and organic growth in Latin
America ($192.9 million), North America ($19.8 million), Rest of World ($6.6 million), and Europe ($2.3 million) were partially offset by the unfavorable impact of
currency exchange rates ($267.8 million). The unfavorable currency impact was driven by the Argentine peso, Brazilian real and the euro. Non-GAAP revenues increased
6% on an organic basis due mainly to higher average selling prices in Argentina (including the effects of inflation) and organic revenue growth in Mexico from price
increases and volume growth. See above for our definition of “organic.”
Non-GAAP Consolidated Operating Profit Non-GAAP operating profit increased $44.7 million due mainly to:
•
•
organic increases in Latin America ($101.4 million), North America ($16.1 million), Rest of World ($1.6 million), and Europe ($1.4 million), and
the favorable operating impact of business acquisitions and dispositions ($34.7 million),
partially offset by:
•
•
unfavorable changes in currency exchange rates ($81.4 million) driven by the Argentine peso and Brazilian real, and
higher corporate expenses ($29.1 million on an organic basis).
Non-GAAP Consolidated Income from Continuing Operations Attributable to Brink’s and Related Per Share Amounts Non-GAAP income from continuing operations
attributable to Brink’s shareholders increased $19.6 million to $199.0 million due to the operating profit increase mentioned above, lower income tax expense ($3.7 million)
and lower income attributable to noncontrolling interests ($2.5 million), partially offset by higher interest expense ($19.2 million) and higher interest and other nonoperating
expense ($12.1 million). Diluted earnings per share from continuing operations was $3.89, up from $3.46 in 2018.
28
Revenues and Operating Profit by Segment: 2019 versus 2018
(In millions)
Revenues:
North America
Latin America
Europe
Rest of World
Segment revenues
(e)
Other items not allocated to segments
(d)
Revenues - GAAP
Operating profit:
North America
Latin America
Europe
Rest of World
Segment operating profit
Corporate
(c)
Operating profit - non-GAAP
Other items not allocated to segments
Operating profit (loss) - GAAP
(d)
Amounts may not add due to rounding.
See page 25 for footnotes.
2018
Organic
Change
Acquisitions /
(a)
Dispositions
Currency
(b)
2019
Total
Organic
% Change
$
$
$
$
1,101.0
1,281.6
612.6
442.3
3,437.5
51.4
3,488.9
70.9
254.9
43.0
74.1
442.9
(96.0)
346.9
(72.2)
274.7
19.8
192.9
2.3
6.6
221.6
(47.4)
174.2
16.1
101.4
1.4
1.6
120.5
(29.1)
91.4
(43.8)
47.6
253.2
69.7
(35.1)
0.6
288.4
(0.5)
287.9
17.2
16.1
0.5
0.9
34.7
—
34.7
(47.6)
(12.9)
(3.6)
(224.4)
(30.2)
(9.6)
(267.8)
—
(267.8)
(0.1)
(75.5)
(2.3)
(0.9)
(78.8)
(2.6)
(81.4)
8.8
(72.6)
1,370.4
1,319.8
549.6
439.9
3,679.7
3.5
3,683.2
104.1
296.9
42.6
75.7
519.3
(127.7)
391.6
(154.8)
236.8
24
3
(10)
(1)
7
(93)
6
47
16
(1)
2
17
33
13
unfav
(14)
2
15
—
1
6
(92)
5
23
40
3
2
27
30
26
61
17
Analysis of Segment Results: 2019 versus 2018
North America
Revenues increased 24% ($269.4 million) primarily due to the favorable impact of acquisitions ($253.2 million), primarily from the Dunbar acquisition, and 2% organic
growth ($19.8 million), slightly offset by the unfavorable impact of currency exchange rates ($3.6 million) from the Canadian dollar. Organic revenue growth increased
primarily from price increases in the U.S. Operating profit increased $33.2 million primarily due to organic growth in the U.S. and the favorable impact of acquisitions
($17.2 million), primarily from the Dunbar acquisition. Organic profit growth in the U.S. was driven by price increases and productivity improvements related to
breakthrough initiatives and Dunbar acquisition synergies.
Latin America
Revenues increased 3% ($38.2 million) due to 15% organic growth ($192.9 million) and the favorable impact of acquisitions ($69.7 million), primarily from the Rodoban
acquisition, mostly offset by the unfavorable impact of currency exchange rates ($224.4 million) primarily from the Argentine peso and Brazilian real. The organic growth
was driven by inflation-based price increases and volume growth in Argentina and volume growth and price increases in Mexico and Brazil. Operating profit was up $42.0
million due to organic growth ($101.4 million), and the favorable impact of acquisitions and dispositions ($16.1 million), primarily from the Rodoban acquisition, partially
offset by unfavorable currency ($75.5 million) driven by the Argentine peso and Brazilian real. The organic profit increase was driven by organic revenue growth in
Argentina and growth in Mexico and Brazil. Organic profit growth in Mexico was driven by higher volumes, price increases, and labor related productivity improvements.
The growth in Brazil was driven primarily by $12 million in lower social taxes due to recovery of overpayments and a lower rate, along with volume growth and
productivity improvements.
Europe
Revenues decreased 10% ($63.0 million) due to the unfavorable impact of acquisitions and dispositions ($35.1 million), primarily related to the disposition of the French
airport security services company in the second quarter of 2018, and the unfavorable impact of currency exchange rates ($30.2 million), partially offset by an organic
increase ($2.3 million). Operating profit decreased 1% ($0.4 million) due to the unfavorable impact of currency exchange rates ($2.3 million), mostly offset by organic
growth ($1.4 million), primarily related to France, and the favorable impact of acquisitions and dispositions ($0.5 million).
Rest of World
Revenues decreased 1% ($2.4 million) due to the unfavorable impact of currency exchange rates ($9.6 million), mostly offset by an organic increase ($6.6 million) and the
favorable impact of acquisitions and dispositions ($0.6 million). Operating profit increased 2% ($1.6 million) due to organic growth ($1.6 million) and the favorable impact
of acquisitions and dispositions ($0.9 million), partially offset by unfavorable currency ($0.9 million). The organic increase was primarily related to Israel, partially offset by
a decrease in Asia Pacific.
29
Income and Expense Not Allocated to Segments
Corporate Expenses
Corporate expenses include costs to manage the global business and to perform activities required of public companies, as well as currency transaction gains and losses.
(In millions)
General, administrative and other expenses
Foreign currency transaction gains (losses)
Reconciliation of segment policies to GAAP
Corporate items
Years Ended December 31,
2019
2018
2020
% change
2020
2019
$
$
(116.3)
(6.5)
10.5
(112.3)
(123.2)
(4.8)
0.3
(127.7)
(99.4)
(2.2)
5.6
(96.0)
(6)
35
fav
(12)
24
unfav
(95)
33
Corporate expenses in 2020 were $15.4 million lower than the prior year primarily due to a reduction in bad debt expense resulting from the reconciliation of segment
policies to U.S. GAAP, cost savings initiated as a result of the COVID crisis, including lower IT expenses, and lower stock and other incentive compensation expense. The
bad debt expense decrease excludes the impact of the internal loss in our U.S. global services operations presented separately in Other Items Not Allocated to Segments in
the table below. Corporate expenses include corporate headquarters costs, regional management costs, currency transaction gains and losses, costs related to global
initiatives and adjustments to reconcile segment accounting policies to U.S. GAAP. The reconciliation of segment policies to U.S. GAAP represents adjustments to bad debt
expense reported within the segments to bad debt expense required on a consolidated basis under U.S. GAAP.
Other Items Not Allocated to Segments
(In millions)
Revenues:
Venezuela operations
Acquisitions and dispositions
Internal loss
Revenues
Operating profit:
Venezuela operations
Reorganization and Restructuring
Acquisitions and dispositions
Argentina highly inflationary impact
Internal loss
Reporting compliance
Operating profit
Years Ended December 31,
2019
2020
2018
% change
2020
2019
$
$
$
$
—
—
—
—
—
(66.6)
(83.1)
(10.7)
(6.9)
(0.5)
(167.8)
—
(0.5)
4.0
3.5
—
(28.8)
(88.5)
(14.5)
(20.9)
(2.1)
(154.8)
51.4
—
—
51.4
2.3
(20.6)
(41.4)
(8.0)
—
(4.5)
(72.2)
—
(100)
(100)
(100)
—
unfav
(6)
(26)
(67)
(76)
8
(100)
unfav
fav
(93)
(100)
40
unfav
81
unfav
(53)
unfav
2020 versus 2019
The impact of other items not allocated to segments on operating profit was a larger loss ($167.8 million in 2020 versus $154.8 million in the prior year). The change was
primarily due to higher charges from reorganization and restructuring activities in the current year, partially offset by a reduction in net charges in 2020 related to the internal
loss in the U.S. global services operations, lower net costs related to acquisitions and dispositions activities and a decline in costs related to the impact of highly inflationary
accounting in Argentina.
30
Venezuela operations Prior to the deconsolidation of our Venezuelan subsidiaries effective June 30, 2018, we excluded from our segment results all of our Venezuela
operating results due to the Venezuelan government's restrictions that prevented us from repatriating funds. In light of these unique circumstances, our operations in
Venezuela have been largely independent of the rest of our global operations. As a result, the Chief Executive Officer, the Company's Chief Operating Decision maker
("CODM"), assessed segment performance and made resource decisions by segment excluding Venezuela operating results. Additionally, management believed excluding
Venezuela from segment results made it possible to more effectively evaluate the company’s performance between periods. Prior to the deconsolidation, Venezuela operating
results included remeasurement gains and losses on monetary assets and liabilities related to currency devaluations. We recognized remeasurement gains of $2.2 million in
2018.
Factors considered by management in excluding Venezuela results included:
•
•
•
•
•
Continued inability to repatriate cash to redeploy to other operations or dividend to shareholders
Highly inflationary environment
Fixed exchange rate policy
Continued currency devaluations and
Difficulty raising prices and controlling costs
Reorganization and Restructuring
2016 Restructuring
In the fourth quarter of 2016, management implemented restructuring actions across our global business operations and our corporate functions. As a result of these actions,
we recognized $18.1 million in related 2016 costs and an additional $17.3 million in 2017 under this restructuring for costs related to severance, asset-related adjustments, a
benefit program termination and lease terminations. We recognized an additional $13.0 million in 2018 under this restructuring for severance costs and asset-related
adjustments. The actions under this program were substantially completed in 2018, with cumulative pretax charges of approximately $48 million. Severance actions from
this restructuring reduced our global workforce by approximately 800 positions.
Other Restructurings
Management periodically implements restructuring actions in targeted sections of our business. As a result of these actions, we recognized net costs of $7.6 million in 2018
and $28.8 million in 2019, primarily severance costs and charges related to the modification of share-based compensations awards in 2019. We recognized $66.6 million net
costs in operating profit and $0.6 million costs in interest and other nonoperating income (expense) in 2020, primarily severance costs. When completed, the current
restructuring actions will reduce our workforce by 1,000 to 1,200 positions and result in in annualized cost savings of $22 million to $27 million. For the current
restructuring actions, we expect to incur additional costs between $4 million and $6 million in future periods.
Due to the unique circumstances around these charges, they have not been allocated to segment results and are excluded from non-GAAP results. Charges related to the
employees, assets, leases and contracts impacted by these restructuring actions were excluded from the segments and corporate expenses as shown in the table below.
(In millions)
Reportable Segments:
North America
Latin America
Europe
Rest of World
Total reportable segments
Corporate items
Total
Years Ended December 31,
2019
2020
2018
% change
2020
2019
$
$
(13.7)
(20.4)
(23.6)
(7.1)
(64.8)
(1.8)
(66.6)
(3.1)
(9.5)
(5.1)
(1.9)
(19.6)
(9.2)
(28.8)
(0.7)
(3.9)
(14.4)
(0.5)
(19.5)
(1.1)
(20.6)
unfav
unfav
unfav
unfav
unfav
(80)
unfav
unfav
unfav
(65)
unfav
1
unfav
40
31
Acquisitions and dispositions Part of our strategy is the pursuit of accretive business acquisitions. In 2020, we acquired multiple business operations from G4S at different
times during the year. In 2019, we completed four business acquisitions in the U.S., Brazil and Colombia. In 2018, we completed one business acquisition in the U.S. and
acquired a controlling interest in a business in Cambodia. We also completed the acquisition of the noncontrolling interest in our Colombian subsidiary. Certain acquisition
and disposition items that are not considered part of the ongoing activities of the business and are special in nature are consistently excluded from non-GAAP results. These
items are described below:
2020 Acquisitions and Dispositions Items
•
Amortization expense for acquisition-related intangible assets was $35.1 million in 2020.
• We incurred $23.5 million in integration costs related primarily to Dunbar and G4S in 2020.
•
•
Transaction costs related to business acquisitions were $19.3 million in 2020.
Restructuring costs related to acquisitions were $4.7 million in 2020.
2019 Acquisitions and Dispositions Items
• We incurred $43.1 million in integration costs related to Dunbar, Rodoban, TVS and COMEF in 2019.
•
•
•
•
Amortization expense for acquisition-related intangible assets was $27.8 million in 2019.
Transaction costs related to business acquisitions were $7.9 million in 2019.
Restructuring costs related to acquisitions, primarily Rodoban and Dunbar, were $5.6 million in 2019.
In 2019, we recognized $2.2 million in net charges, primarily asset impairment and severance costs, related to the exit from our top-up prepaid mobile phone
business in Brazil.
Compensation expense related to the retention of key Dunbar employees was $1.5 million in 2019.
•
2018 Acquisitions and Dispositions Items
Amortization expense for acquisition-related intangible assets was $17.7 million in 2018.
Integration costs in 2018 related to acquisitions in France and the U.S. were $8.1 million.
2018 transaction costs related to business acquisitions were $6.7 million.
•
•
•
• We incurred 2018 severance charges related to our acquisitions in Argentina, France, U.S. and Brazil of $5.0 million.
•
• We recognized a net gain in 2018 ($2.6 million, net of statutory employee benefit) on the sale of real estate in Mexico.
Compensation expense related to the retention of key Dunbar employees was $4.1 million in 2018.
Argentina highly inflationary impact Beginning in the third quarter of 2018, we designated Argentina's economy as highly inflationary for accounting purposes. As a
result, Argentine peso-denominated monetary assets and liabilities are now remeasured at each balance sheet date to the currency exchange rate then in effect, with currency
remeasurement gains and losses recognized in earnings. In addition, nonmonetary assets retain a higher historical basis when the currency is devalued. The higher historical
basis results in incremental expense being recognized when the nonmonetary assets are consumed. In the second half of 2018, we recognized $8.0 million in pretax charges
related to highly inflationary accounting, including currency remeasurement losses of $6.2 million. In 2019, we recognized $14.5 million in pretax charges related to highly
inflationary accounting, including currency remeasurement losses of $11.3 million. In 2020, we recognized $10.7 million in pretax charges related to highly inflationary
accounting, including currency remeasurement losses of $7.7 million. These amounts are excluded from segment and non-GAAP results.
Internal loss A former non-management employee in our U.S. global services operations embezzled funds from Brink's in prior years. Except for a small deductible
amount, the amount of the internal loss related to the embezzlement was covered by our insurance. In an effort to cover up the embezzlement, the former employee
intentionally misstated the underlying accounts receivable subledger data. In 2019, we incurred $4.5 million in costs (primarily third party expenses) to reconstruct the
accounts receivables subledger. In 2020, we incurred an additional $0.3 million in costs related to this activity.
In the third quarter of 2019, we were able to identify $4.0 million of revenues billed and collected in prior periods which had never been recorded in the general ledger. We
also identified and recorded $0.3 million in bank fees, which had been incurred in prior periods. The rebuild of the subledger was completed during the third quarter of 2019.
Based on the reconstructed subledger, we were able to analyze and quantify the uncollected receivables from prior periods. Although we plan to attempt to collect these
receivables, we estimated an increase to bad debt expense of $13.7 million in the third quarter of 2019.
The estimate of the allowance for doubtful accounts was adjusted in the fourth quarter of 2019 for an additional $6.4 million and again in 2020 for an additional $6.6
million. This estimate will be adjusted in future periods, if needed, as assumptions related to the collectability of these accounts receivable change. As of December 31,
2020, we had recorded an allowance of $13.1 million on $14.2 million of accounts receivable, or 92%. We have defined accounts receivable impacted by the embezzlement
as accounts receivable recorded as of and prior to the third quarter of 2019. Due to the unusual nature of this internal loss and the related errors in the subledger data, along
with the fact that management has excluded these amounts when evaluating internal performance, we have excluded these net charges from segment and non-GAAP results.
Reporting compliance Certain compliance costs (primarily third party expenses) are excluded from segment and non-GAAP results. These costs relate to the
implementation and January 1, 2019 adoption of the new lease accounting standard ($0.5 million in 2020, $1.8 million in 2019 and $2.7 million in 2018). We also incurred
$0.3 million in 2019 and $1.8 million in 2018 in costs related to mitigation of material weaknesses. We did not incur any such costs in 2020.
32
Other Operating Income and Expense
Amounts below represent consolidated other operating income and expense.
(In millions)
Foreign currency items:
Transaction losses
Derivative instrument gains (losses)
Gains on sale of property and other assets
Impairment losses
Share in earnings of equity method affiliates
Royalty income
Other
Other operating income (expense)
Years Ended December 31,
2019
2020
2018
% change
2020
2019
$
$
(11.2)
(3.0)
0.9
(11.6)
0.8
4.8
3.7
(15.6)
(22.9)
6.9
5.8
(7.7)
0.9
5.1
2.5
(9.4)
(13.9)
7.7
4.0
(6.5)
1.9
4.5
0.6
(1.7)
(51)
unfav
(84)
51
(11)
(6)
48
66
65
(10)
45
18
(53)
13
fav
unfav
2020 versus 2019
We reported other operating expense of $15.6 million in 2020 versus other operating expense of $9.4 million in the prior year. The change was primarily due to lower gains
on the sales of property and other assets and higher impairment losses in 2020 partially offset by lower net losses on foreign currency items in 2020 as compared to 2019.
The foreign currency items above do not include business acquisition-related currency items which are reported in Interest and Other Nonoperating Income (Expense).
33
Nonoperating Income and Expense
Interest Expense
(In millions)
Interest expense
Years Ended December 31,
2019
2020
2018
% change
2020
2019
$
96.5
90.6
66.7
7
36
Interest expense was higher in 2020 primarily due to higher borrowing levels due to business acquisitions. See Note 15 for further information.
Loss on deconsolidation of Venezuela operations
(In millions)
Years Ended December 31,
2019
2018
2020
% change
2020
2019
Loss on deconsolidation of Venezuela operations
$
—
—
126.7
—
(100)
See Note 1 to the consolidated financial statements for more information about the loss on deconsolidation of our Venezuelan operations.
Interest and Other Nonoperating Income (Expense)
(In millions)
(c)
(a)
(b)
Interest income
Gain (loss) on equity securities
Foreign currency transaction losses
Derivative instrument losses
Retirement benefit cost other than service cost
Interest on Colombia tax claim
Non-income taxes on intercompany billings
(f)
Venezuela operations
Gain on lease termination
Gain on a disposition of a subsidiary
Other
(d)
(g)
(h)
(e)
Interest and other nonoperating income (expense)
Years Ended December 31,
2019
2018
2020
% change
2020
2019
$
$
5.6
10.6
(3.6)
(7.0)
(37.9)
—
(4.6)
—
—
4.1
(4.9)
(37.7)
5.6
(2.9)
—
—
(52.7)
(1.1)
(4.2)
(0.9)
5.2
—
(1.7)
(52.7)
6.9
3.2
(15.5)
—
(39.7)
—
(2.6)
(0.6)
—
11.2
(1.7)
(38.8)
—
fav
—
—
(28)
fav
10
fav
fav
fav
188
(28)
(19)
unfav
(100)
—
33
unfav
62
50
fav
(100)
—
36
The gain in 2020 is primarily related to the market value increase of our investment in MoneyGram International, Inc.
(a)
(b) Amounts in 2020 represent currency transaction losses on contingent consideration payable related to G4S business acquisitions. Prior to the July 1, 2018 highly inflationary designation for accounting purposes,
(c)
(d)
(e)
(f)
currency transaction losses incurred by Brink's Argentina related to its U.S. dollar-denominated payables to the sellers of Maco Transporatadora and Maco Litoral.
Represents loss on foreign currency forward contracts related to acquisition of business operations from G4S.
Related to an unfavorable court ruling in 2019 on a non-income tax claim in Colombia. The court ruled that Brink's must pay interest accruing from 2009 to the current date. The principal amount of the claim was less
than $1 million and was recognized in selling, general and administrative expenses in 2019.
Certain of our Latin American subsidiaries incur non-income taxes related to the billing of intercompany charges. These intercompany charges do not impact Latin America segment results and are eliminated in our
consolidation.
Charges incurred for providing financial support to Brink's Venezuelan subsidiaries after the June 30, 2018 deconsolidation. We do not expect any future funding of the Venezuela business, as long as current U.S.
sanctions remain in effect.
(g) Gain on termination of a mining lease obligation related to former coal operations. We have no remaining mining leases.
(h) Gains on the sale of our former French airport security services subsidiary in the second quarter of 2018 (adjusted downward by $0.4 million in the fourth quarter of 2020) and on our former French security services
subsidiary in the first quarter of 2020 (adjusted downward by $0.2 million in the fourth quarter of 2020).
Interest and other nonoperating income (expense) was higher in 2020 compared to 2019 primarily due to higher retirement benefit costs in 2019, mainly due to settlement
charges in the U.S. frozen pension plan.
34
Income Taxes
Summary Rate Reconciliation – GAAP
(In percentages)
U.S. federal tax rate
Increases (reductions) in taxes due to:
(a)
Venezuela deconsolidation and devaluations
Foreign rate differential
Taxes on cross border income, net of credits
Tax on accelerated U.S. income
Adjustments to valuation allowances
Foreign income taxes
Tax reform
French business tax
State income taxes, net
Share-based compensation
Acquisition costs
Other
Income tax rate on continuing operations
2020
2019
2018
21.0 %
—
12.9
11.0
—
6.6
10.6
—
3.7
(1.6)
(3.1)
6.0
4.3
71.4 %
21.0 %
—
17.3
9.3
(7.9)
16.0
13.7
—
3.0
(2.2)
(4.8)
—
(0.2)
65.2 %
21.0 %
62.4
39.3
22.6
—
13.1
18.9
(4.9)
8.0
(1.3)
(14.4)
—
—
164.7 %
(a)
In 2019, we recognized a benefit of $7.3 million related to a previously recognized $23.5 million current tax expense that accelerated U.S. taxable income in 2015.
Summary Rate Reconciliation – Non-GAAP
(a)
(In percentages)
U.S. federal tax rate
Increases (reductions) in taxes due to:
Foreign rate differential
Adjustments to valuation allowances
French business tax
Other
Income tax rate on Non-GAAP continuing operations
(a)
See pages 37–40 for a reconciliation of non-GAAP results to GAAP.
Overview
2020
2019
2018
21.0 %
5.2
(0.2)
1.0
4.8
31.8 %
21.0 %
7.4
4.0
1.0
(2.0)
31.4 %
21.0 %
7.6
2.0
1.2
2.4
34.2 %
Our effective tax rate has varied in the past three years from the statutory U.S. federal rate due to various factors, including
•
•
•
•
•
•
•
changes in judgment about the need for valuation allowances
changes in the geographical mix of earnings
changes in laws in the U.S., France, Mexico, and Argentina
U.S. tax on accelerated taxable income
timing of benefit recognition for uncertain tax positions
state income taxes
tax benefit for distributions of share-based payments
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.
Continuing Operations
2020 Compared to U.S. Statutory Rate
The effective income tax rate on continuing operations in 2020 was greater than the 21% U.S. statutory tax rate primarily due to the geographical mix of earnings, book
losses for which no tax benefit can be recorded, nondeductible expenses in Mexico, taxes on cross border payments and the characterization of a French business tax as an
income tax, partially offset by the significant tax benefits related to the distribution of share-based payments.
35
2019 Compared to U.S. Statutory Rate
The effective income tax rate on continuing operations in 2019 was greater than the 21% U.S. statutory tax rate primarily due to the geographical mix of earnings, book
losses for which no tax benefit can be recorded, nondeductible expenses in Mexico, taxes on cross border payments and the characterization of a French business tax as an
income tax, partially offset by the significant tax benefits related to the distribution of share-based payments and a U.S. tax benefit recorded on deferred deductions.
Noncontrolling Interests
(In millions)
Years Ended December 31,
2019
2020
2018
% change
2020
2019
Net income attributable to noncontrolling interests
$
5.9
4.2
5.8
40
(28)
Compared to 2019, the increase in net income attributable to noncontrolling interests to $5.9 million in 2020 is primarily due to the G4S acquisitions that closed in the
second and third quarters of 2020. Compared to 2018, the decrease in net income attributable to noncontrolling interests to $4.2 million in 2019 was primarily due to the
deconsolidation of our Venezuelan subsidiaries effective June 30, 2018, and the acquisition of the Colombian noncontrolling interests in the fourth quarter of 2018
See Note 1 to the consolidated financial statements for more information about the deconsolidation of our Venezuelan subsidiaries.
36
Non-GAAP Results Reconciled to GAAP
Non-GAAP results described in this filing are financial measures that are not required by or presented in accordance with GAAP. The purpose of the Non-GAAP results is to
report financial information from the primary operations of our business by excluding the effects of certain income and expenses that do not reflect the ordinary earnings of
our operations. The specific items excluded have not been allocated to segments, are described in detail on pages 30–32, and are reconciled to comparable GAAP measures
below. The full-year Non-GAAP tax rate in each year excludes certain pretax and income tax amounts. Amounts reported for prior periods have been updated in this report
to present information consistently for all periods presented.
The Non-GAAP financial measures are intended to provide investors with a supplemental comparison of our operating results and trends for the periods presented. Our
management believes these measures are also useful to investors as such measures allow investors to evaluate our performance using the same metrics that our management
uses to evaluate past performance and prospects for future performance. We do not consider these items to be reflective of our operating performance as they result from
events and circumstances that are not a part of our core business. Additionally, non-GAAP results are utilized as performance measures in certain management incentive
compensation plans.
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.
Effective Income Tax Rate
GAAP
(a)
$
(c)
(d)
(b)
(b)
(b)(k)
Retirement plans
Venezuela operations
Reorganization and Restructuring
Acquisitions and dispositions
Tax reform
Tax on accelerated income
Argentina highly inflationary impact
Internal loss
Reporting compliance
Gain on lease termination
Loss on deconsolidation of Venezuela
operations
(b)
(g)
(b)
(e)
(f)
(b)
Non-GAAP
Pre-tax
income
2020
Income
tax
Effective tax
rate
Pre-tax
income
2019
Income
tax
Effective tax
rate
Pre-tax
income
2018
Income
tax
79.3
33.8
—
67.1
91.5
—
—
10.6
6.9
0.5
—
—
289.7
$
56.6
7.9
—
15.8
11.6
—
—
(1.3)
1.6
—
—
—
92.2
71.4 % $
31.8 % $
93.5
47.3
0.9
28.8
93.6
—
—
14.5
20.9
2.1
(5.2)
—
296.4
61.0
11.1
—
7.1
5.1
—
7.3
(1.4)
4.0
0.1
(1.2)
—
93.1
65.2 % $
31.4 % $
42.5
33.2
1.2
20.6
47.0
—
—
7.3
—
4.5
—
126.7
283.0
70.0
7.9
(3.9)
6.7
13.8
2.1
—
—
—
0.1
—
0.1
96.8
Effective tax
rate
164.7 %
34.2 %
Amounts may not add due to rounding.
From continuing operations.
(a)
See “Other Items Not Allocated To Segments” on pages 30–32 for details. We do not consider these items to be reflective of our operating performance as they result from events and circumstances that are not a part
(b)
of our core business.
(c) Our U.S. retirement plans are frozen and costs related to these plans are excluded from non-GAAP results. Certain non-U.S. operations also have retirement plans. Settlement charges related to these non-U.S. plans
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
are also excluded from non-GAAP results.
Represents the estimated impact of tax legislation enacted into law in the fourth quarter of 2017. This primarily relates to the U.S. tax reform expense from the remeasurement of our net deferred tax assets. The 2018
amount represents a benefit associated with reversing a portion of the 2017 estimated impact as a result of guidance issued by U.S. authorities.
The non-GAAP tax rate excludes the 2019 foreign tax benefits that resulted from the transaction that accelerated U.S. tax in 2015.
Gain on termination of a mining lease obligation related to former coal operations. We have no remaining mining leases.
Effective June 30, 2018, we deconsolidated our investment in Venezuelan subsidiaries and recognized a pretax charge of $126.7 million.
Because we reported a loss from continuing operations on a GAAP basis in 2018, GAAP EPS was calculated using basic shares. However, as we reported income from continuing operations on a non-GAAP basis in
2018, non-GAAP EPS was calculated using diluted shares.
Amounts in 2020 and 2019 primarily relate to interest incurred on a cross currency swap hedging foreign currency risk on the intercompany financing of the Rodoban acquisition. The 2018 amount represents interest
accretion on the installment payments to the sellers of our Maco Transportadora and Maco Litoral acquisitions.
In addition to the items discussed in “Other Items Not Allocated To Segments” on pages 30–32, includes a $4.5 million gain on the sale of a French security services business in 2020, a cumulative $10.8 million
pretax gain on the sale of our French airport security business in 2018, acquisition-related pretax currency transaction losses of $3.6 million in 2020 and $15.5 million in 2018, and acquisition-related pretax losses on
foreign currency forward contracts of $7.0 million in 2020.
Post-deconsolidation funding of ongoing costs related to our Venezuelan operations was $0.9 million in 2019 ($0.6 million in the second half of 2018) and was expensed as incurred and reported in interest and other
nonoperating income (expense). We do not expect any future funding of the Venezuela business, as long as current U.S. sanctions remain in effect.
37
Non-GAAP reconciled to GAAP
(In millions)
Revenues:
GAAP
(b)
Venezuela operations
Acquisitions and dispositions
Internal loss
(b)
(b)
Non-GAAP
Operating profit:
GAAP
(b)
(b)
Venezuela operations
Reorganization and Restructuring
Acquisitions and dispositions
Argentina highly inflationary impact
Internal loss
Reporting compliance
(b)
(b)
(b)
(b)
Non-GAAP
Interest expense:
GAAP
(b)
Venezuela operations
Acquisitions and dispositions
Argentina highly inflationary impact
(b)(i)
(b)
Non-GAAP
Loss on deconsolidation of Venezuela operations:
GAAP
Loss on deconsolidation of Venezuela operations
Non-GAAP
(g)
Interest and other nonoperating income (expense):
GAAP
(c)
(b)(k)
Retirement plans
Venezuela operations
Reorganization and Restructuring
(b)(j)
Acquisitions and dispositions
Argentina highly inflationary impact
Gain on lease termination
(b)
(f)
(b)
Non-GAAP
Non-GAAP margin
Amounts may not add due to rounding.
See page 37 for footnote explanations.
38
Years Ended December 31,
2019
2020
2018
$
$
$
$
$
$
$
$
$
$
3,690.9
—
—
—
3,690.9
3,683.2
—
0.5
(4.0)
3,679.7
213.5
—
66.6
83.1
10.7
6.9
0.5
381.3
(96.5)
—
1.9
—
(94.6)
—
—
—
(37.7)
33.8
—
0.5
6.5
(0.1)
—
3.0
236.8
—
28.8
88.5
14.5
20.9
2.1
391.6
(90.6)
—
5.8
—
(84.8)
—
—
—
(52.7)
47.3
0.9
—
(0.7)
—
(5.2)
(10.4)
3,488.9
(51.4)
—
—
3,437.5
274.7
(2.3)
20.6
41.4
8.0
—
4.5
346.9
(66.7)
0.1
1.2
(0.2)
(65.6)
(126.7)
126.7
—
(38.8)
33.2
3.4
—
4.4
(0.5)
—
1.7
10.3 %
10.6 %
10.1 %
Non-GAAP reconciled to GAAP
(In millions)
Provision for income taxes:
GAAP
(c)
(b)
(b)
(d)
Retirement plans
Venezuela operations
Reorganization and Restructuring
(b)(i)(j)
Acquisitions and dispositions
Tax reform
Tax on accelerated income
Argentina highly inflationary impact
Internal loss
Reporting compliance
Gain on lease termination
Loss on deconsolidation of Venezuela operations
(b)
(b)
(b)
(e)
(f)
(g)
Non-GAAP
Net income (loss) attributable to noncontrolling interests:
GAAP
(b)
Venezuela operations
Reorganization and Restructuring
Acquisitions and dispositions
(b)
(b)
Non-GAAP
Income (loss) from continuing operations attributable to Brink's:
GAAP
(c)
(b)
(b)
(d)
(b)(k)
Retirement plans
Venezuela operations
Reorganization and Restructuring
Acquisitions and dispositions
Tax reform
Tax on accelerated income
Argentina highly inflationary impact
Internal loss
Reporting compliance
Gain on lease termination
Loss on deconsolidation of Venezuela operations
(b)
(b)
(b)
(e)
(f)
Non-GAAP
Amounts may not add due to rounding.
See page 37 for footnote explanations.
(g)
39
Years Ended December 31,
2019
2020
2018
$
$
$
$
$
$
56.6
7.9
—
15.8
11.6
—
—
(1.3)
1.6
—
—
—
92.2
5.9
—
0.3
0.5
6.7
16.8
25.9
—
51.0
79.4
—
—
11.9
5.3
0.5
—
—
190.8
61.0
11.1
—
7.1
5.1
—
7.3
(1.4)
4.0
0.1
(1.2)
—
93.1
4.2
—
—
0.1
4.3
28.3
36.2
0.9
21.7
88.4
—
(7.3)
15.9
16.9
2.0
(4.0)
—
199.0
70.0
7.9
(3.9)
6.7
13.8
2.1
—
—
—
0.1
—
0.1
96.8
5.8
1.0
—
—
6.8
(33.3)
25.3
4.1
13.9
33.2
(2.1)
—
7.3
—
4.4
—
126.6
179.4
Non-GAAP reconciled to GAAP
(In millions, except for per share amounts)
Diluted EPS
GAAP
(c)
(b)
(b)
(d)
(b)(k)
Retirement plans
Venezuela operations
Reorganization and Restructuring
Acquisitions and dispositions
Tax reform
Tax on accelerated income
Argentina highly inflationary impact
Internal loss
Reporting compliance
Gain on lease termination
Loss on deconsolidation of Venezuela operations
Share adjustment
(b)
(h)
(b)
(b)
(e)
(f)
Non-GAAP
Amounts may not add due to rounding.
See page 37 for footnote explanations.
Years Ended December 31,
2019
2020
2018
$
$
0.33
0.51
—
1.00
1.56
—
—
0.23
0.10
0.01
—
—
—
3.76
0.55
0.71
0.02
0.43
1.73
—
(0.14)
0.31
0.33
0.04
(0.08)
—
—
3.89
(0.65)
0.49
0.08
0.27
0.64
(0.04)
—
0.14
—
0.09
—
2.44
0.01
3.46
(g)
40
Foreign Operations
We currently serve customers in more than 100 countries, including 52 countries where we operate subsidiaries.
We are subject to risks customarily associated with doing business in foreign countries, including labor and economic conditions, the imposition of international sanctions,
including by the U.S. government, 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. In April 2019, the U.S. government sanctioned the Venezuela central bank and, as a
result, we have ceased support of our Venezuela business.
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. Recent strengthening of the U.S. dollar relative to certain currencies has reduced our reported dollar
revenues and operating profit, which may continue in 2021. See Application of Critical Accounting Policies—Foreign Currency Translation on pages 60–61 for a
description of our accounting methods and assumptions used to include our Argentina operations in our consolidated financial statements, and a description of the
accounting for subsidiaries operating in highly inflationary economies.
At December 31, 2020, Argentina's economy remains highly inflationary for accounting purposes. At December 31, 2020, we had net monetary assets denominated in
Argentine pesos of $31.3 million (including cash of $24.4 million) and nonmonetary net assets of $146.2 million (including $99.8 million of goodwill). At December 31,
2020, we had minimal equity securities denominated in Argentine pesos.
During September 2019, the Argentine government announced currency controls on both companies and individuals. Under the exchange procedures implemented by the
central bank, approval is required for many transactions, including dividend repatriation abroad.
During the third quarter of 2020 and during the fourth quarter of 2019, we elected to use other market mechanisms to convert Argentine pesos into U.S. dollars. Conversions
under these other market mechanisms generally settle at rates that are less favorable than the rates at which we remeasure the financial statements of Brink’s Argentina. As a
result, we recognized $10.4 million in 2020 and $4.7 million in 2019 of such conversion losses when we converted Argentine pesos into U.S. dollars at rates that were
approximately 100% and 25% less favorable than the rates at which we remeasured the financial statements of Brink’s Argentina. These conversion losses are classified in
the consolidated statements of operations as other operating income (expense).
Although the Argentine government has implemented currency controls, Brink’s management continues to provide guidance and strategic oversight, including budgeting
and forecasting for Brink’s Argentina. We continue to control our Argentina business for purposes of consolidation of our financial statements and continue to monitor the
situation in Argentina.
Changes in exchange rates may also affect transactions which are denominated in currencies other than the functional currency of a given foreign entity. From time to time,
we use short term foreign currency forward and swap contracts to hedge transactional risks associated with foreign currencies, as discussed in Item 7A on page 62. At
December 31, 2020, the notional value of our short term outstanding foreign currency forward and swap contracts was $427 million with average contract maturities of
approximately one month. These short term foreign currency forward and swap contracts primarily offset exposures in the euro, the British pound and the Mexican peso.
Additionally, these short term contracts are not designated as hedges for accounting purposes, and accordingly, changes in their fair value are recorded immediately in
earnings. At December 31, 2020, the fair value of our short term foreign currency contracts was a net asset of approximately $2.4 million, of which $3.5 million was
included in prepaid expenses and other and $1.1 million was included in accrued liabilities on the consolidated balance sheet. At December 31, 2019, the fair value of these
foreign currency contracts was a net asset of approximately $0.6 million, of which $0.8 million was included in prepaid expenses and other and $0.2 million was included in
accrued liabilities on the consolidated balance sheet.
Amounts under these contracts were recognized in other operating income (expense) and in interest and other nonoperating income and expense as follows:
(In millions)
Derivative instrument gains (losses) included in other operating income (expense)
Derivative instrument losses included in other nonoperating income (expense)
(a)
(a)
Represents losses on foreign currency forward contracts related to 2020 acquisition of business operations from G4S.
Twelve Months Ended December 31,
2018
2019
2020
$
(3.0)
(7.0)
6.9
—
7.7
—
We also have a long term cross currency swap to hedge exposure in Brazilian real, which is designated as a cash flow hedge for accounting purposes. At December 31, 2020,
the notional value of this long term contract was $97 million with a weighted-average maturity of 1.9 years. At December 31, 2020, the fair value of the long term cross
currency swap contract was a $23.6 million net asset, of which a $3.2 million asset is included in prepaid and other assets and $20.4 million is included in other assets on the
consolidated balance sheet. At
41
December 31, 2019, the fair value of the long term cross currency swap contract was a $2.1 million net asset, of which a $4.9 million asset is included in other assets and a
$2.8 million liability is included in accrued liabilities on the consolidated balance sheet.
Amounts under this contract were recognized in other operating income (expense) to offset transaction gains or losses and in interest expense as follows:
(In millions)
Twelve Months Ended
December 31,
2020
2019
Derivative instrument gains included in other operating income (expense)
$
22.1
Offsetting transaction losses
Derivative instrument losses included in interest expense
Net derivative instrument gains
(22.1)
(1.9)
20.2
5.8
(5.8)
(5.1)
0.7
See Note 1 to the consolidated financial statements for a description of the deconsolidation of our Venezuelan subsidiaries effective June 30, 2018, under the heading,
"Venezuela". See Note 1 to the consolidated financial statements for a description of how we account for currency remeasurement for our Argentine subsidiaries, beginning
July 1, 2018 under the heading, "Argentina".
42
LIQUIDITY AND CAPITAL RESOURCES
Overview
The discussion of liquidity and capital resources comparing 2019 versus 2018 can be found in Item 7. Management's Discussion and Analysis of Financial Conditions and
Results of Operations of our 2019 Annual Report on Form 10-K, starting on page 38.
Over the last three years, we used cash generated from our operations and borrowings to
•
•
•
•
acquire new business operations ($1.2 billion),
invest in the infrastructure of our business (new facilities, cash sorting and other equipment for our cash management services operations, armored
trucks, CompuSafe units, and information technology) ($438 million),
repurchase shares of Brink's common stock ($144 million), and
pay dividends to Brink’s shareholders ($90 million).
®
Cash flows from operating activities decreased by $50.9 million in 2020 as compared to the prior year primarily due to the decrease in operating profit, higher amounts paid
for taxes (we had $76.8 million in cash payments for income taxes in 2020 as compared to $23.9 million in 2019), and $111.1 million in payments made to G4S for
intercompany receivables from the acquired subsidiaries, offset by increases in restricted cash held for customers. Cash used for investing activities increased by $232.4
million in 2020 due to higher amounts paid for business acquisitions. Cash also increased $37.9 million in 2020 as a result of the weakening of the U.S. dollar in 2020,
primarily against the euro. We financed our liquidity needs in 2020 with debt and cash flows from operations.
Operating Activities
(In millions)
Cash flows from operating activities
Operating activities - GAAP
Venezuela operations
(Increase) decrease in restricted cash held for customers
(Increase) decrease in certain customer obligations
G4S intercompany payments
Operating activities - non-GAAP
(a)
Years Ended December 31,
2019
2020
2018
$ change
2020
2019
$
$
317.7
—
(116.3)
6.5
111.1
319.0
368.6
—
(23.7)
(11.4)
—
333.5
364.1 $
(0.4)
(44.4)
1.7
—
321.0 $
(50.9)
—
(92.6)
17.9
111.1
(14.5)
4.5
0.4
20.7
(13.1)
—
12.5
(a)
To adjust for the change in the balance of customer obligations related to cash received and processed in certain of our secure cash management services operations. The title to this cash transfers to us for a short
period of time. The cash is generally credited to customers’ accounts the following day and we do not consider it as available for general corporate purposes in the management of our liquidity and capital resources.
Non-GAAP cash flows from operating activities is a supplemental financial measure that is not required by, or presented in accordance with, GAAP. The purpose of this
non-GAAP measure is to report financial information excluding cash flows from Venezuela operations, restricted cash held for customers, the impact of cash received and
processed in certain of our secure cash management services operations and the impact of payments made to G4S for net intercompany receivables from the acquired
subsidiaries. We believe this measure is helpful in assessing cash flows from operations, enables period-to-period comparability and is useful in predicting future operating
cash flows. This non-GAAP measure 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.
43
2020 versus 2019
GAAP
Operating cash flows decreased by $50.9 million in 2020 compared to 2019. The decrease was primarily due to the decrease in operating profit, higher amounts paid for
taxes (we had $76.8 million in cash payments for income taxes in 2020 as compared to $23.9 million in 2019), $111.1 million in payments made to G4S for intercompany
receivables from the acquired subsidiaries, and changes in customer obligations related to certain of our secure cash management services operations (certain customer
obligations decreased by $6.5 million in 2020 compared to an increase of $11.4 million in 2019), partially offset by a $92.6 million increase in restricted cash held for
customers and other changes in working capital.
Non-GAAP
Non-GAAP cash flows from operating activities decreased by $14.5 million in 2020 as compared to 2019. The decrease was primarily due to the decrease in operating
profit, higher amounts paid for taxes (we had $76.8 million in cash payments for income taxes in 2020 as compared to $23.9 million in 2019), partially offset by other
changes in working capital.
Investing Activities
(In millions)
Cash flows from investing activities
Capital expenditures
Acquisitions, net of cash acquired
Dispositions, net of cash disposed
Marketable securities:
Purchases
Sales
Proceeds from sale of property, equipment and investments
Redemption of cash-surrender value of life insurance policies
Other
Investing activities
Years Ended December 31,
2019
2018
2020
$ change
2020
2019
$
$
(118.5)
(439.7)
(2.6)
(2.9)
2.0
5.3
—
(9.0)
(565.4)
(164.8)
(183.9)
11.2
(11.8)
1.3
10.3
7.8
(3.1)
(333.0)
(155.1) $
(520.9)
8.4
(62.4)
54.2
4.0
—
(0.9)
(672.7) $
46.3
(255.8)
(13.8)
8.9
0.7
(5.0)
(7.8)
(5.9)
(232.4)
(9.7)
337.0
2.8
50.6
(52.9)
6.3
7.8
(2.2)
339.7
Cash used by investing activities increased by $232.4 million in 2020 as compared to 2019. The increase was primarily due to the G4S acquisition in 2020 offset by
decreased capital expenditures in 2020.
44
Capital expenditures and depreciation and amortization were as follows:
(In millions)
Property and Equipment Acquired during the year
(a)
Capital expenditures :
North America
Latin America
Europe
Rest of World
Corporate items
Capital expenditures - GAAP and non-GAAP
Financing leases
(b):
North America
Latin America
Europe
Rest of World
Financing leases - GAAP and non-GAAP
Total:
North America
Latin America
Europe
Rest of World
Corporate items
Total property and equipment acquired
Depreciation and amortization
(a)
North America
Latin America
Europe
Rest of World
Corporate items
Depreciation and amortization - non-GAAP
Venezuela
Argentina highly inflationary impact
Reorganization and Restructuring
Acquisitions and dispositions
Amortization of intangible assets
Depreciation and amortization - GAAP
Years Ended December 31,
2019
2020
2018
$ change
2020
2019
$
$
$
$
$
$
$
27.4
35.1
33.4
16.6
6.0
118.5
24.1
3.9
3.3
0.1
31.4
51.5
39.0
36.7
16.7
6.0
149.9
62.3
44.0
32.2
20.0
9.1
167.6
—
1.8
1.3
1.0
35.1
206.8
40.7
80.3
16.2
17.3
10.3
164.8
51.8
3.7
4.2
—
59.7
92.5
84.0
20.4
17.3
10.3
224.5
64.2
44.8
21.3
11.0
10.8
152.1
—
1.8
0.2
3.1
27.8
185.0
34.6 $
67.8
22.2
15.7
14.8
155.1
42.3 $
9.6
—
—
51.9 $
76.9 $
77.4
22.2
15.7
14.8
207.0 $
58.2 $
40.2
20.2
11.1
11.9
141.6
1.1
—
1.9
—
17.7
162.3 $
(13.3)
(45.2)
17.2
(0.7)
(4.3)
(46.3)
(27.7)
0.2
(0.9)
0.1
(28.3)
(41.0)
(45.0)
16.3
(0.6)
(4.3)
(74.6)
(1.9)
(0.8)
10.9
9.0
(1.7)
15.5
—
—
1.1
(2.1)
7.3
21.8
6.1
12.5
(6.0)
1.6
(4.5)
9.7
9.5
(5.9)
4.2
—
7.8
15.6
6.6
(1.8)
1.6
(4.5)
17.5
6.0
4.6
1.1
(0.1)
(1.1)
10.5
(1.1)
1.8
(1.7)
3.1
10.1
22.7
(a)
(b)
Capital expenditures as well as depreciation and amortization related to Venezuela have been excluded from Latin America. In addition, incremental depreciation related to highly inflationary accounting in Argentina,
accelerated depreciation related to restructuring activities and amortization of acquisition-related intangible assets have also been excluded from non-GAAP amounts.
Represents the amount of property and equipment acquired using financing leases. Because the assets are acquired without using cash, the acquisitions are not reflected in the consolidated cash flow
statement. Amounts are provided here to assist in the comparison of assets acquired in the current year versus prior years.
Non-GAAP capital expenditures and non-GAAP depreciation and amortization are supplemental financial measures that are not required by, or presented in accordance with
GAAP. The purpose of these non-GAAP measures is to report financial information excluding capital expenditures and depreciation and amortization from our Venezuela
operations, incremental depreciation resulting from highly inflationary accounting in Argentina, accelerated depreciation from restructuring activities and amortization of
acquisition-related intangible assets. We believe these measures are helpful in assessing capital expenditures and depreciation and amortization, enable period-to-period
comparability and are useful in predicting future investing cash flows. These non-GAAP measures should not be considered as alternatives to capital expenditures and
depreciation and amortization determined in accordance with GAAP and should be read in conjunction with our consolidated statements of cash flows.
Our reinvestment ratio, which we define as the annual amount of property and equipment acquired during the year divided by the annual amount of depreciation, was 0.9 in
2020, 1.5 in 2019, and 1.5 in 2018.
Capital expenditures in 2020 for our operating units were primarily for machinery and equipment, armored vehicles, buildings and information technology. Capital
expenditures in 2020 were $46.3 million lower compared to 2019. Total property and equipment acquired in 2020 was $74.6 million lower than the prior year.
45
Corporate capital expenditures in the last three years were primarily for investing in information technology.
Financing Activities
(In millions)
Cash flows from financing activities
Borrowings and repayments:
Short-term borrowings
Cash supply chain customer debt
Long-term revolving credit facilities, net
Other long-term debt, net
Borrowings (repayments)
Debt financing costs
Acquisitions of noncontrolling interests
Payment of acquisition-related obligation
Settlement of acquisition-related contingencies
Repurchase shares of Brink's common stock
Dividends to:
Shareholders of Brink’s
Noncontrolling interests in subsidiaries
Acquisition-related financing activities:
Proceeds from exercise of stock options
Tax withholdings associated with share-based compensation
Cross currency swap contract
Financing activities
Years Ended December 31,
2019
2020
2018
$ change
2020
2019
$
$
(3.9)
(10.5)
(111.1)
924.1
798.6
(13.2)
—
(7.3)
9.7
(50.0)
(30.1)
(16.8)
—
(10.3)
3.1
683.7
(14.8)
—
(225.1)
271.2
31.3
(4.0)
—
(20.3)
—
—
(29.9)
(2.3)
—
(8.9)
(3.9)
(38.0)
1.3 $
(15.6)
340.0
(54.5)
271.2
—
(21.0)
(17.6)
—
(93.5)
(30.4)
(5.2)
0.8
(11.5)
0.6
93.4 $
10.9
(10.5)
114.0
652.9
767.3
(9.2)
—
13.0
9.7
(50.0)
(0.2)
(14.5)
—
(1.4)
7.0
721.7
(16.1)
15.6
(565.1)
325.7
(239.9)
(4.0)
21.0
(2.7)
—
93.5
0.5
2.9
(0.8)
2.6
(4.5)
(131.4)
2020 versus 2019
Cash flows from financing activities increased by $721.7 million in 2020 compared to 2019 as net borrowings increased compared to the prior year period, partially offset
by cash used to repurchase shares of our common stock.
Dividends
We paid dividends to Brink’s shareholders of $0.15 per share in each of the last twelve 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.
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Changes in currency exchange rates increased the amount of cash and cash equivalents by $37.9 million during 2020, compared to a reduction of $8.1 million in 2019 and
$32.2 million in 2018. The increase in 2020 was due to the weakening of the U.S. dollar in 2020, primarily against the euro.
46
Capitalization
We use a combination of debt, leases and equity to capitalize our operations.
As of December 31, 2020, debt as a percentage of capitalization (defined as total debt and equity) was 92%, which is consistent with 89% at December 31, 2019. Our debt in
2020 increased primarily from the borrowings under the senior secured term loan A and additional issuance of five-year senior unsecured notes partially offset by repayment
of the senior secured revolving credit facility. Our equity decreased in 2020 primarily due to share repurchases and dividend payments to Brink's shareholders, which was
offset by acquired noncontrolling interest related to the G4S acquisition, stock-based compensation and reported net income.
Summary of Debt, Equity and Other Liquidity Information
(In millions)
Debt:
Short-term borrowings
Restricted cash borrowings
Other
(b)
Total Short-term borrowings
Long-term debt
Senior Secured - Revolving Facility
Senior Secured - Term Loan A
Senior Unsecured Notes
Letter of Credit Facilities
Other
Financing leases
Total Long-term debt
Total Debt
Total equity
Amount available under
credit facilities
December 31,
2020
Outstanding balance
December 31,
2020
2019
$ change
(a)
$
$
$
$
$
— $
—
— $
1,000.0 $
—
—
53.0
—
—
1,053.0 $
1,053.0 $
$
—
14.2
14.2
—
1,292.4
987.5
—
40.2
151.4
2,471.5
2,485.7
202.5
10.3
4.0
14.3
115.0
767.0
592.9
—
4.9
149.5
1,629.3 $
1,643.6 $
207.6 $
(10.3)
10.2
(0.1)
(115.0)
525.4
394.6
—
35.3
1.9
842.2
842.1
(5.1)
(a)
(b)
In addition to cash borrowings and repayments, the change in the debt balance also includes changes in currency exchange rates.
The 2019 amount is for short-term borrowings related to cash borrowed under lending arrangements used in the process of managing customer cash supply chains, which is currently classified as restricted cash and
not available for general corporate purposes. Due to the change of contractual arrangements with banks in the third quarter of 2020, these funds no longer fall under the definition of restricted cash borrowings. See
Note 20 for more details.
47
Reconciliation of Net Debt to U.S. GAAP Measures
(In millions)
Debt:
Short-term borrowings
Long-term debt
Total Debt
Restricted cash borrowings
Total Debt without restricted cash borrowings
(a)
Less:
Cash and cash equivalents
Amounts held by cash management services operations
(b)
Cash and cash equivalents available for general corporate purposes
December 31,
2020
2019
$ change
$
14.2
2,471.5
2,485.7
—
2,485.7
620.9
(19.1)
601.8
14.3 $
1,629.3
1,643.6
(10.3)
1,633.3
311.0
(26.3)
284.7
(0.1)
842.2
842.1
10.3
852.4
309.9
7.2
317.1
Net Debt
(c)
$
1,883.9
1,348.6 $
535.3
(a)
(b)
(c)
Restricted cash borrowings are related to cash borrowed under lending arrangements used in the process of managing customer cash supply chains, which is currently classified as restricted cash and not available for
general corporate purposes. Due to the change of contractual arrangements with banks in the third quarter of 2020, these funds no longer fall under the definition of restricted cash borrowings.
Title to cash received and processed in certain of our secure Cash Management Services operations transfers to us for a short period of time. The cash is generally credited to customers’ accounts the following day
and we do not consider it as available for general corporate purposes in the management of our liquidity and capital resources and in our computation of Net Debt.
Included within Net Debt is net cash from our Argentina operations of $25 million at December 31, 2020 and $17 million at December 31, 2019 (see Note 1 to the consolidated financial statements for a discussion of
currency controls in Argentina).
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, 2020, and
December 31, 2019.
Net Debt at the end of 2020 increased by $535 million when compared to Net Debt at the end of 2019 primarily due to the funding of business acquisitions and other
working capital needs.
Liquidity Needs
Our operating liquidity needs are typically financed by cash from operations, short-term borrowings and the available borrowing capacity under our revolving credit facility
(our debt facilities are described in more detail in Note 15 to the consolidated financial statements, including certain limitations and considerations related to the cash and
borrowing capacity). As of December 31, 2020, $1,000 million was available under the revolving credit facility. 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 or costly to repatriate
additional 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.
Cash and Cash Equivalents
At December 31, 2020, we had $620.9 million in cash and cash equivalents, compared to $311.0 million at December 31, 2019. We plan to use the current cash and cash
equivalents for working capital needs, capital expenditures, acquisitions and other general corporate purposes.
48
Equity
Common Stock
At December 31, 2020, we had 100 million shares of common stock authorized and 49.5 million shares issued and outstanding.
Preferred Stock
At December 31, 2020, we had the authority to issue up to 2 million shares of preferred stock, par value $10 per share.
Share Repurchase Program
On February 6, 2020, our board of directors authorized a $250 million share repurchase program that expires on December 31, 2021. The authorization replaces our
previous $200 million share repurchase program, authorized by the board of directors in May 2017, which expired December 31, 2019.
Under the $200 million share repurchase program, we repurchased 1.3 million shares for approximately $94 million, or average cost of $69.35 per share. There were
approximately $106 million remaining available under the $200 million program when it expired.
In August 2020, we entered into an accelerated share repurchase arrangement ("ASR") with a financial institution. In exchange for a $50 million up-front payment at the
beginning of the purchase period, the financial institution delivered to us 849,978 shares of our common stock for an average repurchase price of $58.83 per share. The
shares received were retired in the period they were delivered to us, and the up-front payment was accounted for as a reduction to shareholders' equity in the condensed
consolidated balance sheet. For purposes of calculating earnings per share, we reported the ASR as a repurchase of our common stock in August 2020 and as a forward
contract indexed to our common stock. The ASR met all of the applicable criteria for equity classification, and, as a result, was not accounted for as a derivative instrument.
In September 2020, the ASR purchase period was subsequently terminated early and we received and retired an additional 246,676 shares under the ASR, resulting in an
overall average repurchase price of $45.59 per share.
At December 31, 2020, $200 million remains available under the $250 million repurchase program.
Off Balance Sheet Arrangements
We have certain operating leases that are considered short term and are not capitalized to the balance sheet. We use operating leases both on and off balance sheet to lower
our cost of financings. We believe that operating leases are an important component of our capital structure.
49
Contractual Obligations
The contractual obligations presented in the table below represent our estimates of future payments under contractual obligations and
other contingent liabilities and commitments. Changes in our business needs, cancellation provisions and changes in interest rates, as well as actions by third parties and
other factors, may cause these estimates to change. As a result, our actual payments in future periods may vary from those presented in the table. The following table
summarizes our contractual obligations as of December 31, 2020.
(In millions)
Contractual obligations:
Long-term debt obligations
Financing lease obligations
Interest payments on debt and financing leases
Operating lease obligations
Purchase obligations
Other long-term liabilities reflected on the
Company’s balance sheet under GAAP:
(a)
Primary U.S. pension plan
Other retirement obligations:
UMWA plans
Black lung and other plans
Workers compensation and other claims
Other
Total
$
$
2021
2022
Estimated Payments Due by Period
2025
2024
2023
Later Years
Total
99.8
37.5
94.0
96.0
18.9
70.8
36.2
90.7
74.8
2.1
71.0
28.8
78.3
59.4
1.6
1,090.5
22.3
52.6
46.7
1.3
404.6
14.4
41.0
33.0
1.2
601.3
12.2
53.9
133.4
—
2,338.0
151.4
410.5
443.3
25.1
—
0.3
13.8
12.2
7.1
1.7
35.1
—
10.8
31.6
0.2
388.8
—
10.2
10.7
0.2
296.0
—
9.6
10.7
0.2
273.4
—
9.0
10.8
0.2
1,245.6
—
8.4
11.1
0.2
521.0
351.3
97.5
31.7
1.1
1,284.1
351.3
145.5
106.6
2.1
4,008.9
(a)
Estimated future interest payments on our long term debt are based on the outstanding borrowings as of December 31, 2020, the respective maturity dates of the debt agreements and the interest rates in effect at
December 31, 2020. We use interest rate swaps to modify the characteristics of certain of our debt obligations, effectively converting the floating interest rates to fixed interest rates.
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)
•
•
•
• Mortality rates
Change in laws
•
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.
50
Funded Status of U.S. Retirement Plans
(In millions)
Primary U.S. pension plan
Beginning funded status
Net periodic pension credit
Payment from Brink’s
Benefit plan actuarial loss
Ending funded status
(a)
UMWA plans
Beginning funded status
Net periodic postretirement cost
Benefit plan actuarial loss
Other
Ending funded status
(a)
Black lung plans
Beginning funded status
Net periodic postretirement cost
Payment from Brink’s
Benefit plan actuarial loss
Ending funded status
(a)
Actual
2020
2021
2022
Projected
2023
2024
2025
$
$
$
$
$
$
(118.3)
19.8
—
(52.6)
(151.1)
(246.7)
0.3
(27.4)
1.7
(272.1)
(99.2)
(3.1)
7.3
(10.0)
(105.0)
(151.1)
26.4
—
(1.5)
(126.2)
(272.1)
2.4
—
—
(269.7)
(105.0)
(2.1)
10.0
—
(97.1)
(126.2)
27.8
0.3
(5.3)
(103.4)
(269.7)
1.6
—
—
(268.1)
(97.1)
(2.1)
9.4
—
(89.8)
(103.4)
28.9
13.8
(5.4)
(66.1)
(268.1)
0.5
—
—
(267.6)
(89.8)
(1.8)
8.7
—
(82.9)
(66.1)
31.7
12.2
(4.7)
(26.9)
(267.6)
(0.5)
—
—
(268.1)
(82.9)
(1.7)
8.1
—
(76.5)
(26.9)
33.6
7.1
(2.4)
11.4
(268.1)
(1.7)
—
—
(269.8)
(76.5)
(1.6)
7.5
—
(70.6)
(a)
Excludes amounts reclassified from accumulated other comprehensive income (loss).
Primary U.S. Pension Plan
Pension benefits provided to eligible U.S. employees were frozen on December 31, 2005, and benefits are not provided to employees hired after 2005 or to those covered by
a collective bargaining agreement. We did not make cash contributions to the primary U.S. pension plan in 2020. There are approximately 11,000 beneficiaries in the plan.
Based on our current assumptions, we do not expect to make contributions until 2022.
UMWA Plan
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 2,900 beneficiaries in the UMWA plans. The company does not expect to make contributions to these plans until 2029,
based on our actuarial assumptions.
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 700 black lung beneficiaries.
Non-U.S. defined-benefit pension plans. We have various defined-benefit pension plans covering eligible current and former employees of some of our international
operations. See Note 4 to the consolidated financial statements for information about these non-U.S. plans' benefit obligation and estimated future benefit payments over the
next 10 years.
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. These expenses are not allocated to segment results.
(In millions)
Primary U.S. pension plan
UMWA plans
Black lung plans
Total
Actual
2020
2021
2022
Projected
2023
2024
2025
7.4
12.3
10.2
29.9
1.2
12.1
9.6
22.9
(2.6)
12.1
9.0
18.5
(10.3)
12.1
8.3
10.1
(14.8)
12.3
7.7
5.2
$
$
8.7
11.5
11.1
31.3
51
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
Primary U.S. pension plan
UMWA plans
Black lung plans
Total
Actual
2020
2021
2022
Projected
2023
2024
2025
$
$
43.3
25.7
7.3
76.3
47.1
29.7
10.0
86.8
47.2
29.1
9.4
85.7
47.2
28.8
8.7
84.7
47.2
28.1
8.1
83.4
47.1
27.5
7.5
82.1
Summary of Projected Payments from Brink’s to U.S. Plans
This table summarizes estimated payments from Brink’s to U.S. retirement plans.
(In millions)
Projected payments
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035 and thereafter
Total projected payments
Projected Payments to Plans from Brink's
Primary U.S.
Pension Plan
UMWA Plans
Black Lung Plans
Total
$
$
—
0.3
13.8
12.2
7.1
1.7
—
—
—
—
—
—
—
—
—
35.1
—
—
—
—
—
—
—
—
22.8
23.7
22.8
21.9
20.8
19.9
219.4
351.3
10.0
9.4
8.7
8.1
7.5
7.0
6.4
5.9
5.4
5.0
4.7
4.4
4.1
3.8
40.3
130.7
10.0
9.7
22.5
20.3
14.6
8.7
6.4
5.9
28.2
28.7
27.5
26.3
24.9
23.7
259.7
517.1
The amounts in the tables above are based on a variety of estimates, including actuarial assumptions as of December 31, 2020. 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.
Contingent Matters
In August 2020, the Company received a subpoena issued in connection with an investigation being conducted by the U.S. Department of Justice (the “DOJ”). The
Company is fully cooperating with the investigation and responding to requests from the DOJ for documents and other information, primarily related to cross-border
shipments of cash and things of value and anti-money laundering compliance. Given that the investigation is still ongoing and that no civil or criminal claims have been
brought to date, the Company cannot predict the outcome of the investigation, the timing of the ultimate resolution of the matter, or reasonably estimate the possible range of
loss, if any, that may result from this matter. Accordingly, no accruals have been made with respect to this matter.
During the fourth quarter of 2018, we became aware of an investigation initiated by the Chilean Fiscalía Nacional Económica (the Chilean antitrust agency) related to
potential anti-competitive practices among competitors in the cash logistics industry in Chile. Because no legal proceedings have been initiated against Brink’s Chile, we
cannot estimate the probability of loss or any range of possible loss at this time. It is possible, however, that Brink’s Chile could become the subject of legal or
administrative claims or proceedings that could result in a loss in a future period.
In addition, we are involved in various other lawsuits and claims in the ordinary course of business. We are not able to estimate the loss or range of losses for some of these
matters. We have recorded accruals for losses that are considered probable and reasonably estimable. Except as otherwise noted, we do not believe that it is reasonably
possible the ultimate disposition of any of the lawsuits currently pending against the Company could have a material adverse effect on our liquidity, financial position or
results of operations.
52
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 advisers 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, tax credit carryforwards, 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 Policy
We establish valuation allowances, in accordance with the Financial Accounting Standards Board ("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 positive and negative evidence
including 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
(In millions)
U.S.
Non-U.S.
Total
Application of Accounting Policy
December 31,
2020
2019
$
$
94.9
33.2
128.1
90.7
27.6
118.3
U.S. Deferred Tax Assets
We had $272 million of net deferred tax assets at December 31, 2020, of which $234 million related to U.S. jurisdictions.
In 2020, we concluded that we were not more-likely-than-not to realize assets related to certain attributes with a limited statutory carryforward and we recorded a $4 million
valuation allowance through income from continuing operations.
In 2019, we concluded that we were not more-likely-than-not to realize assets related to certain attributes with a limited statutory carryforward and we recorded a $7 million
valuation allowance through income from continuing operations.
We used various estimates and assumptions to evaluate the need for the valuation allowance in the U.S. These included
•
•
•
•
•
•
projected revenues and operating income for our U.S. entities,
projected royalties and management fees paid to U.S. entities from subsidiaries outside the U.S.,
projected GILTI inclusion in our U.S. taxable income
estimated required contributions to our U.S. retirement plans,
the estimated impact of U.S. tax reform, and
interest rates on projected U.S. borrowings.
Our projections assumed continued growth of our revenues and operating profit both in the U.S. and outside the U.S. Had we used different assumptions, we might have
made different conclusions about the need for valuation allowances. For example, if we did not have growth in either the U.S. or non-U.S. jurisdictions with respect to the
GILTI inclusions or using different assumptions, we might have concluded that we require a full valuation allowance offsetting our U.S. deferred tax assets.
Non-U.S. Deferred Tax Assets
In 2020, we recognized a tax benefit of $2 million through income from continuing operations from a change in judgment about the need for valuation allowances for
deferred tax assets in certain non-U.S. jurisdictions. In 2019, we recognized a tax expense of $5 million through income from continuing operations from a change in
judgment about the need for valuation allowances for deferred tax assets in certain non-U.S. jurisdictions.
53
Business Acquisitions
Accounting Policy
In the three years ended December 31, 2020, we have completed multiple business acquisitions. When we acquire a controlling interest in an entity that is determined to
meet the definition of a business, we apply the acquisition method described in FASB ASC Topic 805, Business Combinations. Using the acquisition method, we allocate
the total purchase price to the assets acquired and the liabilities assumed based on their estimated fair values at the acquisition date. Any excess purchase price over the fair
value of the assets acquired and the liabilities assumed is recognized as goodwill.
Application of Accounting Policy
The purchase price allocation process requires us to make significant estimates and assumptions, primarily related to intangible assets. The allocation of the purchase
consideration transferred may be subject to revision based on the final determination of fair values during the measurement period. We use all available information to make
these fair value determinations and, for material business acquisitions, we engage an outside valuation specialist to assist in the fair value determination of the acquired
intangible assets.
We typically use an income method to estimate the fair value of intangible assets, which is based primarily on future cash flow projections. The forecasted cash flows also
reflect significant assumptions related to expected customer attrition rates, revenue growth rates, market participant synergies and discount rates applied to the cash flows.
Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions. The estimated fair values assigned to assets acquired and
liabilities assumed in a purchase price allocation can have a significant effect on future results of operations. For example, a higher fair value assigned to intangible assets
results in higher amortization expense, which results in lower net income.
54
Goodwill, Other Intangible Assets and Property and Equipment Valuations
Accounting Policy
At December 31, 2020, we had property and equipment of $838.2 million, goodwill of $1,219.2 million and other intangible assets of $426.1 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 Policy
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.
Under U.S. GAAP, the annual impairment test may be either a quantitative test or a qualitative assessment. The qualitative assessment can be performed in order to
determine whether facts and circumstances support a determination that reporting unit fair values are greater than their carrying values.
Given the COVID-19 pandemic, we reviewed impairment indicators during the quarter ended June 30, 2020 and we concluded that, due to decreases in our forecasted
results, an interim impairment evaluation for all reporting units was necessary. We performed the interim impairment test as of April 30, 2020 and elected to forego the
optional qualitative assessment and performed a quantitative goodwill impairment test instead. We estimated the fair value of each reporting unit using a weighting of three
valuation methodologies: the Income Approach, the Public Company Market Multiple Method, and the Similar Transactions Method with greatest weight placed on the
Income Approach. The resulting reporting unit fair values were compared to each reporting unit's carrying value. As a result of the evaluation, we concluded that goodwill
was not impaired, and the fair value of each reporting unit exceeded its carrying value for all reporting units. Fair value exceeded carrying value by 8% for France, and by a
range of 21% to 199% for all other reporting units.
We performed a goodwill impairment test on our reporting units as of our regular, annual testing date of October 1, 2020 and elected to forego the optional qualitative
assessment and performed a quantitative goodwill impairment assessment instead. We estimated the fair value of our reporting units consistent with the methodology
described above. The resulting reporting unit fair values were compared to each reporting unit's carrying value. As a result of the evaluation, we concluded that goodwill
was not impaired, and the fair value of each reporting unit exceeded its carrying value for all reporting units. Fair value exceeded carrying value by 10% for France, and by a
range of 20% to 197% for all other reporting units. The France reporting unit had $94.2 million of goodwill at December 31, 2020.
Finite-lived Intangible Assets and Property and Equipment
We review finite-lived intangible assets and property and equipment 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.
Estimates of Future Cash Flows
We made significant assumptions when preparing financial projections of cash flow used in our impairment analyses, including assumptions of future results of operations
including revenue growth rate and operating income over the forecast period, capital requirements, income taxes, long-term growth rates for determining terminal value, and
discount rates. Our projections assumed continued growth of our revenues and operating profit both in the U.S. and outside the U.S. Our conclusions regarding asset
impairment may have been different if we had used different assumptions.
55
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 Accounting Standards Update (“ASU”) 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.
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.
U.S. Plans
For our largest retirement plans, including the primary U.S. pension and UMWA plans and black lung obligations, we derive the discount rates used to measure the present
value of 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 a 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.
We used Mercer’s Above-Mean Curve to determine the discount rates for retirement cost and the year-end benefit obligation. To derive the Above-Mean Curve, Mercer uses
only those bonds with a yield higher than the mean yield of the same portfolio of high quality bonds. The Above-Mean Curve reflects the way an active investment manager
would select high-quality bonds to match the cash flows of the plan.
Non-U.S. Plans
We use the same cash flow matching method to derive the discount rates for our major non-U.S. retirement plans. Where the cash flow matching method is not possible,
rates of local high-quality long-term government bonds are used to estimate the discount rate.
The discount rates for the primary U.S. pension plan, UMWA retiree medical plans and black lung obligations were:
Primary U.S. Plan
2019
2020
2018
2020
UMWA Plans
2019
2018
2020
Black Lung
2019
2018
Discount rate:
Retirement cost
Benefit obligation at year end
3.3 %
2.4 %
4.4 %
3.3 %
3.7 %
4.4 %
3.2 %
2.3 %
4.3 %
3.2 %
3.6 %
4.3 %
3.1 %
2.2 %
4.2 %
3.1 %
3.5 %
4.2 %
Sensitivity Analysis
The discount rate we select at year end materially affects the valuations of plan obligations at year end and the 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, 2020, actual expenses for 2020 and projected expenses for
2021 assuming we had used discount rates that were one percentage point lower or higher.
Plan Obligations at December 31, 2020
(In millions)
Primary U.S. pension plan
UMWA plans
Hypothetical
1% lower
$
1,023.1
491.3
Actual
898.2
440.1
Hypothetical
1% higher
796.8
397.5
56
Actual 2020 and Projected 2021 Expense (Income)
(In millions, except for percentages)
Hypothetical sensitivity analysis
for discount rate assumption
Actual
2020
1% lower
2020
1% higher
2020
Projected
2021
Hypothetical sensitivity analysis
for discount rate assumption
1% lower
2021
1% higher
2021
Years Ending December 31,
Primary U.S. pension plan
Discount rate assumption
Retirement cost
UMWA plans
Discount rate assumption
Retirement cost
$
$
3.3 %
8.7
3.2 %
11.5
2.3 %
16.5
2.2 %
12.7
4.3 %
2.1
$
4.2 %
10.5
$
2.4 %
7.4
2.3 %
12.3
1.4 %
14.2
1.3 %
13.5
3.4 %
1.5
3.3 %
11.1
Expected-Return-on-Assets Assumption
Our expected-return-on-assets assumption, which materially 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 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 7.00% as the
expected-return-on-assets assumption for our primary U.S. pension plan and 8.00% for our UMWA retiree medical plans for actual 2020 expense. We selected 7.00% as the
expected-return-on-assets assumption for our primary U.S. pension plan and 8.00% for our UMWA retiree medical plans for projected 2021 expense.
The twenty to thirty year compound annual return of our primary U.S. pension plan has averaged from 6.7% to 9.1%.
Sensitivity Analysis
Effect of using different expected-rate-of-return assumptions. Our 2020 and projected 2021 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 actual 2020 and projected 2021 expense would be as follows:
(In millions, except for percentages)
Years Ending December 31,
Expected-return-on-asset assumption
Primary U.S. pension plan
UMWA plans
Primary U.S. pension plan
UMWA plans
$
Hypothetical sensitivity analysis
for expected-return-on asset
assumption
Actual
2020
1% lower
2020
1% higher
2020
Projected
2021
Hypothetical sensitivity analysis
for expected-return-on asset
assumption
1% lower
2021
1% higher
2021
8.00 %
9.00 %
$
2.1
9.9
7.00 %
8.00 %
7.4
12.3
6.00 %
7.00 %
14.2
13.8
8.00 %
9.00 %
0.6
10.8
7.00 %
8.00 %
8.7
11.5
6.00 %
7.00 %
15.3
13.1
57
Effect of improving or deteriorating actual future market returns. Our funded status at December 31, 2021, and our 2022 expense will be different from currently projected
amounts if our projected 2021 returns are better or worse than the returns we have assumed for each plan.
(In millions, except for percentages)
Years Ending December 31,
Return on investments in 2021
Primary U.S. pension plan
UMWA plans
Projected Funded Status at December 31, 2021
Primary U.S. pension plan
UMWA plans
(a)
2022 Expense
Primary U.S. pension plan
UMWA plans
Hypothetical sensitivity analysis of 2021 asset
return
better or worse than expected
Projected
Better return
Worse return
7.00 %
8.00 %
14.00 %
16.00 %
$
$
(126)
(270)
1
12
(76)
(257)
(1)
10
— %
— %
(177)
(282)
3
14
(a) Actual future returns on investments will not affect our earnings until 2022 since the earnings in 2021 will be based on the "expected return on assets" assumption.
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,
Based on market-related value of assets
Projected
2021
Projected
2022
Actual
2020
Hypothetical
(a)
2020
2021
2022
Primary U.S. pension plan expense
$
8.7
7.4
1.2 $
5.7
(1.1)
(3.8)
(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 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 healthcare 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 retiree medical plans, we have assumed a medical inflation rate of 5.9% for 2021, and we project this rate to decline to 5% in 2030 and
hold at 5% thereafter. Our overall medical inflation rate assumption, including the assumption that medical inflation rates will gradually decline over the next seven years
and hold at 5%, is based on macroeconomic assumptions of gross domestic growth rates, the excess of national health expenditures over other goods and services, and
population growth. Our assumption of a medical inflation rate of 5.9% for 2021 is based on our recent actual experience. The average annual medical inflation rate of the
Company over the last five to eleven years ranged from 2.6% to 5.1%.
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, 2020, would have
been approximately $51.3 million higher and the expense for 2020 would have been $1.3 million higher. If we had assumed that the medical inflation rates were one
percentage point lower, the plan obligation at December 31, 2020, would have been approximately $43.7 million lower and the related 2020 expenses would have been $1.2
million lower.
58
Excise Tax on High-Cost Health Plans
The Patient Protection and Affordable Care Act included a 40% excise tax on third-party benefit plan administrators for high-cost health plans (“Cadillac plans”), the effects
of which were delayed to 2022 by the Tax Cuts and Jobs Act of 2017 ("Tax Reform Act"). In December 2019, the excise tax provision was repealed by the Setting Every
Community Up for Retirement Enhancement Act (the "SECURE Act"). The repeal of the excise tax provision reduced our plan obligations by $29 million as of December
31, 2019.
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
Mortality tables. We use the Society of Actuaries base mortality tables for private sector plans, Pri-2012, and the Mercer modified MP-2019 projection scale, with a Blue
Collar adjustment factor for the majority of our U.S. retirement plans and a White Collar adjustment factor for our nonqualified U.S. pension plan.
2019 Annuity Contract Buy-out
On October 8, 2019, we purchased a single premium group annuity contract from an insurance company to provide for the payment of pension benefits to approximately
2,600 primary U.S. pension plan participants. We purchased the contract with $53 million of plan assets. The insurance company took over the payments of these benefits
starting January 1, 2020. This transaction settled $54 million of our primary U.S. pension plan obligation. As a result, we recognized a settlement charge of $19.3 million in
the fourth quarter of 2019.
Number of participants. The number of participants by major plan in the past five years is as follows:
Plan
UMWA plans
Black Lung
U.S. pension
2020
2019
Number of participants
2018
2017
2016
2,900
700
11,000
3,000
800
11,200
3,200
800
14,000
3,300
760
14,200
3,600
750
14,800
Because 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. Because the U.S. pension plan has been frozen, the number of its participants will also decline over time.
59
Foreign Currency Translation
The majority of our subsidiaries outside the U.S. conduct business in their local currencies. Our financial results are reported 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. Economies with a three-year cumulative inflation rate of more than 100% are considered highly inflationary. Subsequent reductions in cumulative
inflation rates below 100% do not change the method of translation unless the reduction is deemed to be other than temporary.
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.
Other than nonmonetary equity securities, nonmonetary assets and liabilities do not fluctuate with changes in local currency exchange rates to the dollar. For nonmonetary
equity securities traded in highly inflationary economies, the fair market value of the equity securities are remeasured at the current exchange rates to determine gain or loss
to be recorded in net income.
Application of Accounting Policy
Argentina
We operate in Argentina through wholly owned subsidiaries and a smaller controlled subsidiary (together "Brink's Argentina"). Revenues from Brink's Argentina
represented approximately 5% of our consolidated revenues for the year ended December 31, 2020 and 6% and 7% of our consolidated revenues for the years ended
December 31, 2019 and 2018, respectively.
The operating environment in Argentina continues to present business challenges, including ongoing devaluation of the Argentine peso and significant inflation. For the year
ended December 31, 2018, the Argentine peso declined by approximately 50% (from 18.6 to 37.6 pesos to the U.S. dollar). For the year ended December 31, 2019, the
Argentine peso declined by approximately 37% (from 37.6 to 59.9 pesos to the U.S. dollar). For the year ended December 31, 2020, the Argentine peso declined
approximately 29% (from 59.9 to 84.0 pesos to the U.S. dollar).
Beginning July 1, 2018, we designated Argentina's economy as highly inflationary for accounting purposes. As a result, we consolidated Brink's Argentina using our
accounting policy for subsidiaries operating in highly inflationary economies beginning with the third quarter of 2018. Argentine peso-denominated monetary assets and
liabilities are now remeasured at each balance sheet date using the currency exchange rate then in effect, with currency remeasurement gains and losses recognized in
earnings. In 2020 and in 2019, we recognized $7.7 million and $11.3 million pretax remeasurement losses, respectively. In the second half of 2018, we recognized a $6.2
million pretax remeasurement loss.
At December 31, 2020, Argentina's economy remained highly inflationary for accounting purposes. At December 31, 2020, we had net monetary assets denominated in
Argentine pesos of $31.3 million, including cash of $24.4 million. At December 31, 2020, we had net nonmonetary assets of $146.2 million, including $99.8 million of
goodwill. At December 31, 2020, we had minimal equity securities denominated in Argentine pesos.
At December 31, 2019, we had net monetary assets denominated in Argentine pesos of $16.3 million (including cash of $16.2 million) and net nonmonetary assets of $150.5
million (including $99.8 million of goodwill). At December 31, 2019, we had minimal equity securities denominated in Argentine pesos.
During September 2019, the Argentine government announced currency controls on both companies and individuals. Under the exchange procedures implemented by the
central bank, approval is required for many transactions, including dividend repatriation abroad.
During the third quarter of 2020 and during the fourth quarter of 2019, we elected to use other market mechanisms to convert Argentine pesos into U.S. dollars. Conversions
under these other market mechanisms generally settle at rates that are less favorable than the rates at which we remeasure the financial statements of Brink’s Argentina. As a
result, we recognized $10.4 million in 2020 and $4.7 million in 2019 of such conversion losses when we converted Argentine pesos into U.S. dollars at rates that were
approximately 100% and 25% less favorable than the rates at which we remeasured the financial statements of Brink’s Argentina. These conversion losses are classified in
the consolidated statements of operations as other operating income (expense).
60
Although the Argentine government has implemented currency controls, Brink’s management continues to provide guidance and strategic oversight, including budgeting
and forecasting for Brink’s Argentina. We continue to control our Argentina business for purposes of consolidation of our financial statements and continue to monitor the
situation in Argentina.
Venezuela
Highly Inflationary Accounting. The economy in Venezuela has had significant inflation in the last several years. Prior to deconsolidation as of June 30, 2018, we reported
our Venezuelan results using our accounting policy for subsidiaries operating in highly inflationary economies. Results from our Venezuelan operations prior to the June 30,
2018 deconsolidation are included in items not allocated to segments and are excluded from the operating segments.
Remeasurement rates during 2018. Prior to deconsolidation as of June 30, 2018, in the first six months of 2018, the DICOM rate declined approximately 97%. We received
only minimal U.S. dollars through this exchange mechanism. Prior to deconsolidation as of June 30, 2018, we recognized a $2.2 million pretax remeasurement gain. The
after-tax effect of this gain attributable to noncontrolling interest was $2.0 million.
61
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We currently serve customers in more than 100 countries, including 52 countries where we operate subsidiaries. These operations expose us to a variety of market risks,
including the effects of changes in interest rates and foreign currency exchange rates. These financial exposures are monitored and managed by us as an integral part of our
overall risk management program.
We may periodically use various derivative and non-derivative financial instruments, as discussed below, to hedge our interest rate 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 exposures.
The sensitivity analyses discussed below for the market risk exposures were based on the facts and circumstances in effect at December 31, 2020. 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 both the term loan facility and the revolving credit facility
under our senior secured credit facility, expose us to fluctuations in cash flows due to changes in the general level of interest rates. Fixed rate obligations, including our
senior unsecured notes, are subject to fluctuations in fair values as a result of changes in interest rates.
Our floating rate debt typically is based on an underlying floating rate component as well as a fixed rate margin component. Based on the contractual interest rates on our
floating rate debt at December 31, 2020, a hypothetical 10% increase in rates would increase cash outflows by approximately $0.2 million over a twelve-month period. In
other words, the weighted-average interest rate on our floating rate instruments (including any fixed rate margin component) was 2.1% per annum at December 31, 2020. If
the underlying floating rate component were to increase by 10%, our average rate on this debt would increase by 0.1 percentage points to 2.2%. The effect on the fair values
of our $600 million and $400 million unsecured senior notes of a hypothetical 10% decrease in the yield curve from year-end 2020 levels would result in a $21.3 million
increase in the fair value of our unsecured senior notes.
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.
We are also exposed periodically to the foreign currency rate fluctuations that affect transactions not denominated in the functional currency of our domestic and foreign
operations. To mitigate these exposures, we enter into foreign currency forward and swap contracts from time to time. At December 31, 2020, the notional value of our
shorter outstanding foreign currency forward and swap contracts was $427.0 million with average contract maturities of approximately one month. These contracts
primarily offset exposures in the euro, the British pound and the Mexican peso. Additionally, these contracts are not designated as hedges for accounting purposes, and
accordingly, changes in their fair value are recorded immediately in earnings.
In the first quarter of 2019, we entered into a long term cross currency swap contract to hedge exposure in Brazilian real, which is designated as a cash flow hedge for
accounting purposes. At December 31, 2020, the notional value of this long term contract was $97 million with a weighted-average maturity of 1.9 years.
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 the 2020 levels against all other currencies of countries in which we have continuing
operations are as follows:
(In millions)
Effect on Earnings:
Translation of 2020 earnings into U.S. dollars
Transaction gains (losses)
(b)
(a)
Effect on Other Comprehensive Income (Loss):
Translation of net assets of foreign subsidiaries
(a) Excludes our Venezuela operations which we deconsolidated effective June 30, 2018. See Note 1 to the consolidated financial statements.
(b) Net of outstanding foreign currency swap and forward contracts.
62
Hypothetical Effects
Increase/ (decrease)
$
(19.7)
(0.2)
(155.2)
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.
63
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
THE BRINK’S COMPANY
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020 AND 2019
AND FOR EACH OF THE YEARS IN THE THREE-YEAR PERIOD ENDED DECEMBER 31, 2020
TABLE OF CONTENTS
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Statements of Equity
Consolidated Statements of Cash Flows
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Summary of Significant Accounting Policies
Note 2 – Revenue from Contracts with Customers
Note 3 – Segment Information
Note 4 – Retirement Benefits
Note 5 – Income Taxes
Note 6 – Property and Equipment
Note 7 – Acquisitions and Dispositions
Note 8 – Goodwill and Other Intangible Assets
Note 9 – Prepaid Expenses and Other
Note 10 – Other Assets
Note 11 – Accumulated Other Comprehensive Income (Loss)
Note 12 – Fair Value of Financial Instruments
Note 13 – Accrued Liabilities
Note 14 – Other Liabilities
Note 15 – Debt
Note 16 – Accounts Receivable and Credit Losses
Note 17 – Leases
Note 18 – Share-Based Compensation Plans
Note 19 – Capital Stock
Note 20 – Supplemental Cash Flow Information
Note 21 – Other Operating Income (Expense)
Note 22 – Interest and Other Nonoperating Income (Expense)
Note 23 – Other Commitments and Contingencies
Note 24 – Reorganization and Restructuring
Note 25 – Selected Quarterly Financial Data (unaudited)
Note 26 – Subsequent Events
64
Page
65
70
71
72
73
74
75
81
84
88
98
100
102
107
108
108
109
112
114
114
115
118
119
121
127
128
129
129
130
131
132
133
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) and 15d-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, 2020. 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 (2013).”
Management excluded from its assessment the internal control over financial reporting of the operations acquired from G4S plc (“G4S”) in multiple phases starting in March
2020 and whose financial statements constitute 23% of total assets and 12% of revenue of the consolidated financial statement amounts as of and for the year ended
December 31, 2020.
Based on this assessment, our management believes that, as of December 31, 2020, 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 on our internal control
over financial reporting. KPMG’s attestation report appears on page 66.
65
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
The Brink's Company:
Opinion on Internal Control Over Financial Reporting
We have audited The Brink's Company and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2020, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated
Framework (2013) 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) (PCAOB), the consolidated balance sheet of the
Company as of December 31, 2020, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for the year then ended, and the
related notes (collectively, the consolidated financial statements), and our report dated March 1, 2021 expressed an unqualified opinion on those consolidated financial
statements.
The Company acquired certain operations from G4S plc (G4S) during 2020, and management excluded from its assessment of the effectiveness of the Company’s internal
control over financial reporting as of December 31, 2020, G4S’s internal control over financial reporting associated with total assets of 23 percent and total revenues of 12
percent included in the consolidated financial statements of the Company as of and for the year ended December 31, 2020. Our audit of internal control over financial
reporting of the Company also excluded an evaluation of the internal control over financial reporting of G4S.
Basis for Opinion
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 are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. 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 of internal control over financial reporting 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.
Definition and Limitations of Internal Control Over Financial Reporting
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.
/s/ KPMG LLP
Richmond, Virginia
March 1, 2021
66
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
The Brink's Company:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of The Brink's Company and subsidiaries (the Company) as of December 31, 2020, the related consolidated
statements of operations, comprehensive income (loss), equity, and cash flows for the year then ended, and the related notes (collectively, the consolidated financial
statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and
the results of its operations and its cash flows for the year then ended, 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) (PCAOB), the Company’s internal control over
financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission, and our report dated March 1, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control
over financial reporting.
Change in Accounting Principle
As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for leases as of January 1, 2019 due to the adoption of FASB
Accounting Standards Update 2016-02, Leases, using the modified retrospective approach.
Basis for Opinion
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 audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks
of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe
that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required
to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts
or disclosures to which they relate.
Valuation of goodwill for the France reporting unit
As discussed in Note 8 to the consolidated financial statements, the goodwill balance as of December 31, 2020 was $1,219.2 million, a portion of which related to the France
reporting unit. The Company performs goodwill impairment testing on an annual basis and whenever events or changes in circumstances indicate that it is more likely than
not that an impairment may have occurred. The impairment test is performed by comparing the estimated fair value of a reporting unit to the carrying value of the reporting
unit. The Company estimates the fair value using a weighting of three valuation methodologies, with greatest weight placed on the Income Approach.
We identified the evaluation of the Company’s assessment of goodwill for impairment for the France reporting unit as a critical audit matter. The estimated fair value of the
France reporting unit exceeded its carrying value by ten percent, indicating a higher risk that the goodwill may be impaired and, therefore, involved a high degree of
challenging auditor judgment. Specifically, the revenue growth rates, operating margin and the discount rate used to estimate the fair value of the France reporting unit in the
Income Approach required management to make significant estimates and judgments related to the future results of operations. In addition, individuals with specialized
skills and knowledge were required to assess the fair value model and discount rate used to estimate the fair value of the France reporting unit in the Income Approach.
The following are the primary procedures we performed to address the critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal
controls related to the Company’s assessment of goodwill for impairment, including controls related to the:
67
•
•
•
assessment of the fair value model used in the Income Approach
determination of the revenue growth rate and operating margin forecasts
selection of the discount rate.
We performed sensitivity analyses over the revenue growth rate and operating margin forecasts to assess their impact on the Company’s determination that the fair value of
the France reporting unit exceeded its carrying value. We evaluated the forecasted revenue growth rates and operating margin used to value the France reporting unit by
comparing them to budgets, supporting documentation, and to historical growth rates. We compared the Company’s historical revenue and operating margin forecasts to
actual results to assess the Company’s ability to accurately forecast. In addition, we involved a valuation professional with specialized skills and knowledge, who assisted in:
•
•
evaluating the discount rate used in the fair value model in the Income Approach by comparing it against a discount rate that was independently developed using
publicly available market data for comparable entities
developing an estimate of the France reporting unit’s fair value using the Company’s cash flow forecast and an independently developed discount rate, and
comparing the results of our estimate to the Company’s estimate.
Evaluation of the fair value of customer relationship intangible assets acquired in the G4S business combination
As discussed in Note 7 to the consolidated financial statements, on February 26, 2020, the Company agreed to acquire the G4S cash solutions business, with various closing
dates throughout the year. As a result of the transaction, the Company acquired customer relationship intangible assets representing the generation of future income from
G4S’s existing customers. The acquisition-date preliminary fair value for the customer relationship intangible assets was $176 million.
We identified the evaluation of the fair value of customer relationship intangible assets acquired in the G4S transaction as a critical audit matter due to the high degree of
subjectivity in evaluating certain inputs in the discounted cash flow model used to determine the fair value of such assets. The key assumptions used within the valuation
model included expected future revenue growth, customer attrition rate, and discount rate applied. Changes in these assumptions could have a significant impact on the fair
value of the customer relationship intangible assets.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal
controls related to the Company’s acquisition-date valuation process, including controls over the development of the expected future revenue growth, customer attrition rate,
and discount rate used to value the customer relationship intangible assets. We evaluated the expected future revenue growth used by the Company by comparing the
assumptions used to the historical performance of acquired entities, and to the revenue growth rates of peer companies. We involved valuation professionals with specialized
skills and knowledge who assisted in:
•
•
•
evaluating the estimated annual attrition rate by comparing the selected attrition rate against historical customer attrition and attrition rates used in prior company
specific acquisitions
evaluating the Company’s discount rate by comparing the rate against a discount rate range that was independently developed
developing a fair value estimate of the customer relationship intangible assets using the Company’s cash flow projections and independently developed range of
discount rates and comparing it to the Company’s estimate.
/s/ KPMG LLP
We have served as the Company’s auditor since 2020.
Richmond, Virginia
March 1, 2021
68
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of The Brink’s Company
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of The Brink’s Company and subsidiaries (the "Company") as of December 31, 2019, the related
consolidated statements of operations, comprehensive income (loss), equity, and cash flows, for the years ended December 31, 2019 and 2018, and the related notes
(collectively referred to as the "financial statements"). In our opinion, the 2019 and 2018 financial statements present fairly, in all material respects, the financial position of
the Company as of December 31, 2019, and the results of its operations and its cash flows for each of the years ended December 31, 2019 and 2018, in conformity with
accounting principles generally accepted in the United States of America.
Change in Accounting Principle
As discussed in Note 1 to the financial statements, effective January 1, 2019, adopted FASB Accounting Standards Update 2016-02, Leases, using the modified retrospective
approach.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on
our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our
opinion.
/s/ DELOITTE & TOUCHE LLP
Richmond, Virginia
February 28, 2020 (March 1, 2021 as to Note 2, 3, and 8)
We began serving as the Company’s auditor in 2017. In 2020 we became the predecessor auditor.
69
THE BRINK’S COMPANY
and subsidiaries
Consolidated Balance Sheets
December 31,
2020
2019
(In millions, except for per share amounts)
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash
Accounts receivable (net of allowance: 2020 - $30.7; 2019 - $30.2)
Prepaid expenses and other
LIABILITIES AND EQUITY
Total current assets
Right-of-use assets, net
Property and equipment, net
Goodwill
Other intangibles
Deferred income taxes
Other
Total assets
Current liabilities:
Short-term borrowings
Current maturities of long-term debt
Accounts payable
Accrued liabilities
Restricted cash held for customers
Total current liabilities
Long-term debt
Accrued pension costs
Retirement benefits other than pensions
Lease liabilities
Deferred income taxes
Other
Total liabilities
Commitments and contingent liabilities (notes 4, 5, 15, 17, 23 and 24)
Equity:
The Brink’s Company (“Brink’s”) shareholders:
Common stock, par value $1 per share:
Shares authorized: 100.0
Shares issued and outstanding: 2020 - 49.5; 2019 - 50.1
Capital in excess of par value
Retained earnings
Accumulated other comprehensive income (loss):
Benefit plan adjustments
Foreign currency translation
Losses on cash flow hedges
Accumulated other comprehensive loss
Brink’s shareholders
Noncontrolling interests
Total equity
Total liabilities and equity
See accompanying notes to consolidated financial statements.
$
$
$
620.9
322.0
679.1
192.8
1,814.8
322.0
838.2
1,219.2
426.1
314.9
200.4
5,135.6
14.2
137.3
206.0
779.2
199.5
1,336.2
2,334.2
322.1
379.7
267.2
42.7
251.0
4,933.1
49.5
671.8
407.5
(614.8)
(363.2)
(22.0)
(1,000.0)
128.8
73.7
202.5
$
5,135.6
70
311.0
158.0
635.6
128.0
1,232.6
270.3
763.3
784.6
272.5
273.5
167.0
3,763.8
14.3
74.5
184.5
628.4
100.3
1,002.0
1,554.8
228.9
347.8
218.4
21.2
183.1
3,556.2
50.1
663.3
457.4
(583.0)
(382.8)
(13.2)
(979.0)
191.8
15.8
207.6
3,763.8
THE BRINK’S COMPANY
and subsidiaries
Consolidated Statements of Operations
2020
Years Ended December 31,
2019
2018
$
3,690.9
3,683.2
3,488.9
2,877.3
584.5
3,461.8
(15.6)
213.5
(96.5)
—
(37.7)
79.3
56.6
22.7
(0.8)
21.9
5.9
16.0
16.8
(0.8)
16.0
0.33
(0.02)
0.32
0.33
(0.02)
0.31
50.4
50.8
$
$
$
$
$
2,832.1
604.9
3,437.0
(9.4)
236.8
(90.6)
—
(52.7)
93.5
61.0
32.5
0.7
33.2
4.2
29.0
28.3
0.7
29.0
0.56
0.01
0.58
0.55
0.01
0.57
50.2
51.1
2,703.3
509.2
3,212.5
(1.7)
274.7
(66.7)
(126.7)
(38.8)
42.5
70.0
(27.5)
—
(27.5)
5.8
(33.3)
(33.3)
—
(33.3)
(0.65)
—
(0.65)
(0.65)
—
(0.65)
50.9
50.9
(In millions, except for 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
Loss on deconsolidation of Venezuela operations
Interest and other nonoperating income (expense)
Income from continuing operations before tax
Provision for income taxes
Income (loss) from continuing operations
Income (loss) from discontinued operations, net of tax
Net income (loss)
Less net income attributable to noncontrolling interests
Net income (loss) attributable to Brink’s
Amounts attributable to Brink’s:
Continuing operations
Discontinued operations
Net income (loss) attributable to Brink’s
(a)
Earnings (loss) per share attributable to Brink’s common shareholders :
Basic:
Continuing operations
Discontinued operations
Net income (loss)
Diluted:
Continuing operations
Discontinued operations
Net income (loss)
Weighted-average shares
Basic
Diluted
(a) Amounts may not add due to rounding.
See accompanying notes to consolidated financial statements.
71
THE BRINK’S COMPANY
and subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
2020
Years Ended December 31,
2019
2018
$
21.9
(In millions)
Net income (loss)
Benefit plan adjustments:
Benefit plan actuarial gains (losses)
Benefit plan prior service costs
Deferred profit sharing
Total benefit plan adjustments
Foreign currency translation adjustments
Gains (losses) on cash flow hedges
Other comprehensive income (loss) before tax
Provision (benefit) for income taxes
Other comprehensive income (loss)
Comprehensive income (loss)
Less comprehensive income attributable to noncontrolling interests
Comprehensive income (loss) attributable to Brink’s
$
See accompanying notes to consolidated financial statements.
72
33.2
27.1
(4.1)
0.4
23.4
(0.1)
(19.0)
4.3
0.4
3.9
37.1
5.0
32.1
(27.5)
35.4
(1.6)
(0.2)
33.6
(45.2)
0.1
(11.5)
5.0
(16.5)
(44.0)
5.0
(49.0)
(37.0)
(5.3)
0.7
(41.6)
24.2
(11.2)
(28.6)
(12.4)
(16.2)
5.7
10.7
(5.0)
THE BRINK’S COMPANY
and subsidiaries
Consolidated Statements of Equity
Years Ended December 31, 2020, 2019 and 2018
Shares
Common
Stock
Capital in Excess of Par
Value
Retained
Earnings
AOCI*
Noncontrolling
Interests
Total
50.5 $
—
—
—
(1.3)
—
—
—
—
0.5
—
—
—
49.7
—
—
—
—
—
—
—
0.4
—
50.1
—
—
—
(1.1)
—
—
—
0.5
—
49.5 $
50.5
—
—
—
(1.3)
—
—
—
—
0.5
—
—
—
49.7
—
—
—
—
—
—
—
0.4
—
50.1
—
—
—
(1.1)
—
—
—
0.5
—
49.5
628.6
—
—
—
(16.9)
—
—
28.2
0.8
(9.8)
—
(2.7)
—
628.2
—
—
—
(0.5)
—
—
42.7
(7.1)
—
663.3
—
—
—
(14.9)
—
—
31.3
(7.9)
—
671.8
564.9
3.3
(33.3)
—
(75.3)
(30.4)
—
—
—
(0.1)
—
—
—
429.1
28.8
29.0
—
0.5
(29.9)
—
—
(0.1)
—
457.4
(1.7)
16.0
—
(34.0)
(30.1)
—
—
(0.1)
—
407.5
(926.6)
(1.1)
—
(15.7)
—
—
—
—
—
—
—
(9.9)
—
(953.3)
(28.8)
—
3.1
—
—
—
—
—
—
(979.0)
—
—
(21.0)
—
—
—
—
—
—
(1,000.0)
20.8
—
5.8
(0.8)
—
—
(5.2)
—
—
—
(0.4)
(8.4)
1.1
12.9
—
4.2
0.8
—
—
(2.3)
—
—
0.2
15.8
—
5.9
4.8
—
—
(16.8)
—
—
64.0
73.7
338.2
2.2
(27.5)
(16.5)
(93.5)
(30.4)
(5.2)
28.2
0.8
(9.4)
(0.4)
(21.0)
1.1
166.6
—
33.2
3.9
—
(29.9)
(2.3)
42.7
(6.8)
0.2
207.6
(1.7)
21.9
(16.2)
(50.0)
(30.1)
(16.8)
31.3
(7.5)
64.0
202.5
(In millions)
Balance as of December 31, 2017
Cumulative effect of change in accounting principle
Net income (loss)
Other comprehensive loss
Shares repurchased
Dividends to:
(a)
Brink’s common shareholders ($0.60 per share)
Noncontrolling interests
Share-based compensation:
Stock options and awards:
Compensation expense
Consideration from exercise of stock options
Other share-based benefit transactions
Dispositions of noncontrolling interests
Acquisitions of noncontrolling interests
Acquisitions with noncontrolling interests
Balance as of December 31, 2018
Cumulative effect of change in accounting principle
Net income
Other comprehensive income
Shares repurchased
Dividends to:
(b)
Brink’s common shareholders ($0.60 per share)
Noncontrolling interests
Share-based compensation:
Stock options and awards:
Compensation expense
Other share-based benefit transactions
Capital contributions from noncontrolling interest
Balance as of December 31, 2019
Cumulative effect of change in accounting principle
Net income
Other comprehensive income (loss)
Shares repurchased
Dividends to:
(c)
Brink’s common shareholders ($0.60 per share)
Noncontrolling interests
Share-based compensation:
Stock options and awards:
Compensation expense
Other share-based benefit transactions
Acquisitions with noncontrolling interests
Balance as of December 31, 2020
(a)
(b)
(c)
Effective January 1, 2018, we adopted the provisions of ASU 2014-09, Revenue From Contracts with Customers, ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, and ASU
2016-16, Intra-Entity Transfers of Assets Other Than Inventory. We recognized a cumulative effect adjustment to January 1, 2018 retained earnings as a result of adopting each of these standards. See Note 1 for
further details of the impact of each standard.
Effective January 1, 2019, we adopted the provisions of ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. We recognized a cumulative effect adjustment to
January 1, 2019 retained earnings as a result of adopting this standard. See Note 1 for further details.
Effective January 1, 2020, we adopted the provisions of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. We recognized a cumulative effect
adjustment to January 1, 2020 retained earnings as a result of adopting this standard. See Note 1 for further details.
* Accumulated other comprehensive income (loss)
See accompanying notes to consolidated financial statements.
73
THE BRINK’S COMPANY
and subsidiaries
Consolidated Statements of Cash Flows
(In millions)
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
(Income) loss from discontinued operations, net of tax
Depreciation and amortization
Share-based compensation expense
Deferred income taxes
(Gains) on sale of property, equipment and marketable securities
Gain on business dispositions
Loss on deconsolidation of Venezuela operations
Impairment losses
Retirement benefit funding (more) less than expense:
Pension
Other than pension
Remeasurement losses due to Argentina and Venezuela currency devaluations
Other operating
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable and income taxes receivable
Accounts payable, income taxes payable and accrued liabilities
Restricted cash held for customers
Customer obligations
Prepaid and other current assets
Other
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Acquisitions, net of cash acquired
Dispositions, net of cash disposed
Marketable securities:
Purchases
Sales
Cash proceeds from sale of property, equipment and investments
Redemption of cash-surrender value of life insurance policies
Other
Net cash used by investing activities
Cash flows from financing activities:
Borrowings (repayments) of debt:
Short-term borrowings
Cash supply chain customer debt
Long-term revolving credit facilities:
Borrowings
Repayments
Other long-term debt:
Borrowings
Repayments
Debt financing costs
Acquisitions of noncontrolling interests
Payment of acquisition-related obligation
Settlement of acquisition-related contingencies
Repurchase shares of Brink's common stock
Dividends to:
Shareholders of Brink’s
Noncontrolling interests in subsidiaries
Proceeds from exercise of stock options
Tax withholdings associated with share-based compensation
Cross currency swap contract
Net cash provided (used) by financing activities
Effect of exchange rate changes on cash and cash equivalents
Cash, cash equivalents and restricted cash:
Increase (decrease)
Balance at beginning of period
Balance at end of period
See accompanying notes to consolidated financial statements.
74
Years Ended December 31,
2020
2019
2018
$
$
21.9
0.8
206.8
31.3
(28.2)
(11.6)
(4.1)
—
11.6
9.5
14.3
7.7
15.6
45.1
(114.5)
116.3
(6.5)
(24.5)
26.2
317.7
(118.5)
(439.7)
(2.6)
(2.9)
2.0
5.3
—
(9.0)
(565.4)
(3.9)
(10.5)
897.8
(1,008.9)
1,022.6
(98.5)
(13.2)
—
(7.3)
9.7
(50.0)
(30.1)
(16.8)
—
(10.3)
3.1
683.7
37.9
473.9
469.0
942.9
33.2
(0.7)
185.0
42.7
(33.3)
(2.9)
—
—
7.7
24.1
16.0
11.3
18.1
15.8
35.0
23.7
11.4
(11.3)
(7.2)
368.6
(164.8)
(183.9)
11.2
(11.8)
1.3
10.3
7.8
(3.1)
(333.0)
(14.8)
—
892.7
(1,117.8)
335.0
(63.8)
(4.0)
—
(20.3)
—
—
(29.9)
(2.3)
—
(8.9)
(3.9)
(38.0)
(8.1)
(10.5)
479.5
469.0
(27.5)
—
162.3
28.2
(20.5)
(7.2)
(11.2)
126.7
6.5
6.6
19.5
4.0
8.2
(49.7)
69.0
44.4
(1.7)
0.3
6.2
364.1
(155.1)
(520.9)
8.4
(62.4)
54.2
4.0
—
(0.9)
(672.7)
1.3
(15.6)
982.8
(642.8)
2.2
(56.7)
—
(21.0)
(17.6)
—
(93.5)
(30.4)
(5.2)
0.8
(11.5)
0.6
93.4
(32.2)
(247.4)
726.9
479.5
Note 1 - Summary of Significant Accounting Policies
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE BRINK’S COMPANY
and subsidiaries
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 management services 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 management services company in the U.S., and a market leader in many other
countries.
Consolidation
The consolidated financial statements include our controlled subsidiaries. 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. See "Venezuela" section below for further information. For controlled subsidiaries that are not wholly-
owned, the noncontrolling interests are included in net income and in total equity.
Investments in businesses that we do not control, but for which we have the ability to exercise significant influence over operating and financial policies, are accounted for
under the equity method and our proportionate share of income or loss is recorded in other operating income (expense). Investments in businesses for which we do not have
the ability to exercise significant influence over operating and financial policies are accounted for at fair value, if readily determinable, with changes in fair value recognized
in net income. For equity investments that do not have a readily determinable fair value, we measure these investments at cost minus impairment, if any, plus or minus
changes from observable price changes. See "New Accounting Standards" section below for further information. All intercompany accounts and transactions have been
eliminated in consolidation.
Revenue Recognition
Revenue is recognized when services related to armored vehicle transportation, ATM services, cash management services, payment services, guarding and the secure
international transportation of valuables are performed. We assess our customers' ability to meet contractual terms, including payment terms, before entering into
contracts. Taxes collected from customers and remitted to governmental authorities are not included in revenues in the consolidated statements of operations.
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 include
amounts held by certain of our secure cash management services operations for customers for 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 13).
Restricted Cash
Cash that is held for a specific purpose and is not available for immediate or general business use due to external restrictions is classified in our consolidated balance sheets
as restricted cash. In Malaysia, we offer ATM replenishment services to certain of our financial institution customers. Providing this service requires our Malaysia subsidiary
to take temporary title to the cash received in advance of ATM replenishment. The cash for which we have temporary title is restricted and cannot be used for any other
purpose other than to service our customers who participate in this service offering. In France, we offer services to certain of our customers where we manage some or all of
their cash supply chains. In connection with this offering, we take temporary title to certain customers' cash, which is included as restricted cash in our financial statements
due to customer agreement or regulation (see Note 20).
Trade Accounts Receivable
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. We assess the collectability of our receivables on a pool basis, which we aggregate
by country. We determine historical loss rates for each pool and these historical loss rates represent the primary assumption used in estimating the allowance for doubtful
accounts. We monitor the aging of accounts receivables by country along with any significant economic events to identify any current or expected trends and risks within a
pool that could impact the collectability of receivables that were not contemplated or relevant during a previous period. Account balances are charged off against the
allowance after all means of collection have been exhausted and the potential for recovery is considered remote. See "Internal Loss" and "New Accounting Standards"
sections below as well as Note 16 for further information.
Right-of-Use Assets
For operating leases, right-of-use assets (and related lease liabilities) are recognized at the lease commencement date based on the present value of the future minimum lease
payments over the lease term. See "New Accounting Standards" sections below as well as Note 17 for further information.
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.
75
Leased property and equipment meeting financing 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. See "New Accounting Standards" section below as well as
Note 17 for further information.
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 the 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,
2020, finite-lived intangible assets have remaining useful lives ranging from 1 to 14 years and are amortized based on the pattern in which the economic benefits are used or
on a straight-line basis.
Impairment of Goodwill and Long-Lived Assets
Goodwill is not amortized but is tested for impairment at least annually, as of October 1, and whenever events or circumstances in interim periods indicate that it is more
likely than not that an impairment may have occurred. We perform the test of goodwill impairment at the reporting unit level, which is one level below an operating
segment. Goodwill is assigned to one or more reporting units at the date of acquisition.
Given the COVID-19 pandemic, impairment indicators were reviewed during the quarter ended June 30, 2020 and we concluded that, due to decreases in our forecasted
results, an interim impairment evaluation for all reporting units was necessary. We performed the interim impairment test as of April 30, 2020 and elected to forego the
optional qualitative assessment and performed a quantitative goodwill impairment test instead. We estimated the fair value of each reporting unit using a weighting of three
valuation methodologies: the Income Approach, the Public Company Market Multiple Method, and the Similar Transactions Method with greatest weight placed on the
Income Approach. The resulting reporting unit fair values were compared to each reporting unit's carrying value. As a result of the evaluation, we concluded that goodwill
was not impaired, and the fair value of each reporting unit exceeded its carrying value for all reporting units. Fair value exceeded carrying value by 8% for France, and by a
range of 21% to 199% for all other reporting units.
During the fourth quarter of 2020, we implemented changes to our organization and management structure which resulted in a change from eight reporting units to nine
reporting units:
U.S.
•
• Mexico
Canada
•
France
•
Brazil
•
Global Markets - South America
•
Global Markets - Europe
•
Global Markets - Middle East, Africa and Global Services
•
Global Markets - Asia
•
Markets – Europe and Global Markets – Middle East, Africa and Global Services were previously one reporting unit.We performed a goodwill impairment test on these new
reporting units as of October 1, 2020 and elected to forego the optional qualitative assessment and performed a quantitative goodwill impairment assessment instead. We
estimated the fair value of these new reporting units consistent with the methodology described above. The resulting reporting unit fair values were compared to each
reporting unit's carrying value. As a result of the evaluation, we concluded that goodwill was not impaired, and the fair value of each reporting unit exceeded its carrying
value for all reporting units. Fair value exceeded carrying value by 10% for France, and by a range of 20% to 197% for all other reporting units. The France reporting unit
had $94.2 million of goodwill at December 31, 2020.
We completed these goodwill impairment tests, as well as the tests in the previous two years, with no impairment charges required.
76
Indefinite-lived intangibles are also tested for impairment at least annually by comparing their carrying values to their estimated fair values. 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. See Note 8 for further information.
Retirement Benefit Plans
We account for retirement benefit obligations under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 715, Compensation
– Retirement Benefits. For U.S. and certain non-U.S. retirement plans, we derive the discount rates used to measure the present value of 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 a 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. We used Mercer’s Above-Mean Curve to determine the discount rates for the year-end benefit obligations and
retirement cost of our U.S. retirement plans. We use a local or regional version of the Mercer yield curve in the majority of our non-U.S. locations. In non-U.S. locations
where the cash flow matching method is not possible, rates of local high-quality long-term government bonds are used to select the discount rate.
We select the expected long-term rate of return assumption for our U.S. pension plan and retiree medical plans using advice from our investment advisor. The selected rate
considers plan asset allocation targets, expected overall investment manager performance and long-term historical average compounded rates of return.
Benefit plan actuarial gains and losses are recognized in other comprehensive income (loss). Accumulated net benefit plan actuarial 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 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. See Note
5 for further information.
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“Tax Reform Act”) was enacted into law. The Tax Reform Act included the creation of a new U.S. minimum tax
on foreign earnings called the Global Intangible Low-Taxed Income (“GILTI”). We adopted an accounting policy related to the provision of deferred taxes related to GILTI
and determined that we would not record deferred taxes with respect to GILTI, but would instead treat GILTI as a current period cost.
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. Other than nonmonetary equity securities, nonmonetary assets and liabilities do not fluctuate with changes in local currency exchange rates to the dollar. For
nonmonetary equity securities traded in highly inflationary economies, the fair market value of the equity securities are remeasured at the current exchange rates to
determine gain or loss to be recorded in net income. Revenues and expenses are translated at rates of exchange in effect during the year. See "Venezuela" and "Argentina"
sections below for further information.
77
Argentina
We operate in Argentina through wholly owned subsidiaries and a smaller controlled subsidiary (together "Brink's Argentina"). Revenues from Brink's Argentina
represented approximately 5% of our consolidated revenues for the year ended December 31, 2020 and 6% and 7% of our consolidated revenues for the years ended
December 31, 2019 and 2018, respectively.
The operating environment in Argentina continues to present business challenges, including ongoing devaluation of the Argentine peso and significant inflation. For the year
ended December 31, 2018, the Argentine peso declined by approximately 50% (from 18.6 to 37.6 pesos to the U.S. dollar). For the year ended December 31, 2019, the
Argentine peso declined by approximately 37% (from 37.6 to 59.9 pesos to the U.S. dollar). For the year ended December 31, 2020, the Argentine peso declined
approximately 29% (from 59.9 to 84.0 pesos to the U.S. dollar).
Beginning July 1, 2018, we designated Argentina's economy as highly inflationary for accounting purposes. As a result, we consolidated Brink's Argentina using our
accounting policy for subsidiaries operating in highly inflationary economies beginning with the third quarter of 2018. Argentine peso-denominated monetary assets and
liabilities are now remeasured at each balance sheet date using the currency exchange rate then in effect, with currency remeasurement gains and losses recognized in
earnings. In 2020 and in 2019, we recognized $7.7 million and $11.3 million pretax remeasurement losses, respectively. In the second half of 2018, we recognized a $6.2
million pretax remeasurement loss.
At December 31, 2020, Argentina's economy remains highly inflationary for accounting purposes. At December 31, 2020, we had net monetary assets denominated in
Argentine pesos of $31.3 million (including cash of $24.4 million) and net nonmonetary assets of $146.2 million (including $99.8 million of goodwill). At December 31,
2020, we had minimal equity securities denominated in Argentine pesos.
At December 31, 2019, we had net monetary assets denominated in Argentine pesos of $16.3 million (including cash of $16.2 million) and net nonmonetary assets of $150.5
million (including $99.8 million of goodwill). At December 31, 2019, we had minimal equity securities denominated in Argentine pesos.
During September 2019, the Argentine government announced currency controls on both companies and individuals. The Argentine central bank issued details as to how the
exchange control procedures would operate in practice. Under these procedures, central bank approval is required for many transactions, including dividend repatriation
abroad.
During the third quarter of 2020 and during the fourth quarter of 2019, we elected to use other market mechanisms to convert Argentine pesos into U.S. dollars. Conversions
under these other market mechanisms generally settle at rates that are less favorable than the rates at which we remeasure the financial statements of Brink’s Argentina. As a
result, we recognized $10.4 million in 2020 and $4.7 million in 2019 of such conversion losses when we converted Argentine pesos into U.S. dollars at rates that were
approximately 100% and 25% less favorable than the rates at which we remeasured the financial statements of Brink’s Argentina. These conversion losses are classified in
the consolidated statements of operations as other operating income (expense).
Although the Argentine government has implemented currency controls, Brink’s management continues to provide guidance and strategic oversight, including budgeting
and forecasting for Brink’s Argentina. We continue to control our Argentina business for purposes of consolidation of our financial statements and continue to monitor the
situation in Argentina.
Venezuela
Deconsolidation. Our Venezuelan operations offer transportation and route-based logistics management services for cash and valuables throughout Venezuela. Currency
exchange regulations, combined with other government regulations, such as price controls and strict labor laws, significantly limit our ability to make and execute
operational decisions at our Venezuelan subsidiaries. With the May 2018 re-election of the President in Venezuela for an additional six-year term, we expect these conditions
to continue for the foreseeable future.
As a result of the conditions described above, we concluded that, effective June 30, 2018, we did not meet the accounting criteria for control over our Venezuelan operations
and, as a result, we began reporting the results of our investment in our Venezuelan subsidiaries using the cost method of accounting. This change resulted in a pretax charge
of $127 million in the second quarter of 2018. The pretax charge included $106 million of foreign currency translation losses and benefit plan adjustments previously
included in accumulated other comprehensive loss. It also included the derecognition of the carrying amounts of our Venezuelan operations’ assets and liabilities, including
$32 million of assets and $11 million of liabilities, that were no longer reported in our consolidated balance sheet as of June 30, 2018. We determined the fair value of our
investment in, and receivables from, our Venezuelan subsidiaries to be insignificant based on our expectations of dividend payments and settlements of such receivables in
future periods. For reporting periods beginning after June 30, 2018, we have not included the operating results of our Venezuela operations. We may incur losses resulting
from our Venezuelan business to the extent that we provide U.S. dollars or make future investments in our Venezuelan subsidiaries, including any additional investments
made directly in our Venezuelan subsidiaries or additional costs incurred by us to address compliance with recent sanctions and other regulatory requirements imposed by
the U.S. government that restrict our ability to conduct business in Venezuela. Prior to the imposition of the U.S. government sanctions, we provided immaterial amounts of
financial support to our Venezuela operations in 2019 and 2018.
We continue to monitor the situation in Venezuela, including the imposition of sanctions by the U.S. government targeting Venezuela.
Highly Inflationary Accounting. The economy in Venezuela has had significant inflation in the last several years. Prior to deconsolidation as of June 30, 2018, we reported
our Venezuelan results using our accounting policy for subsidiaries operating in highly inflationary economies.
78
Results from our Venezuelan operations prior to the June 30, 2018 deconsolidation are included in items not allocated to segments and are excluded from the operating
segments.
Remeasurement rates during 2018. Prior to deconsolidation as of June 30, 2018, in the first six months of 2018, the DICOM rate declined approximately 97%. We received
only minimal U.S. dollars through this exchange mechanism. Prior to deconsolidation as of June 30, 2018, we recognized a $2.2 million pretax remeasurement gain. The
after-tax effect of this gain attributable to noncontrolling interest was $2.0 million.
Internal loss
A former non-management employee in our U.S. global services operations embezzled funds from Brink's in prior years. Except for a small deductible amount, the amount
of the internal loss related to the embezzlement was covered by our insurance. In an effort to cover up the embezzlement, the former employee intentionally misstated the
underlying accounts receivable subledger data. In 2019, we incurred $4.5 million in costs (primarily third party expenses) to reconstruct the accounts receivables subledger.
In 2020, we incurred an additional $0.3 million in costs related to this activity. In the third quarter of 2019, we were able to identify $4.0 million of revenues billed and
collected in prior periods which had never been recorded in the general ledger. We also identified and recorded $0.3 million in bank fees, which had been incurred in prior
periods. The rebuild of the subledger was completed during the third quarter of 2019. Based on the reconstructed subledger, we were able to analyze and quantify the
uncollected receivables from prior periods. Although we plan to attempt to collect these receivables, we estimated an increase to bad debt expense of $13.7 million in the
third quarter of 2019.
The estimate of the allowance for doubtful accounts was adjusted in the fourth quarter of 2019 for an additional $6.4 million and again in 2020 for an additional $6.6
million. This estimate will be adjusted in future periods, if needed, as assumptions related to the collectability of these accounts receivable change. At December 31, 2020,
we have recorded a $13.1 million allowance on $14.2 million of accounts receivable, or 92%. We have defined accounts receivable impacted by the embezzlement as
accounts receivable recorded as of and prior to the third quarter of 2019. Due to the unusual nature of this internal loss and the related errors in the subledger data, along
with the fact that management has excluded these amounts when evaluating internal performance, we have excluded these net charges from segment results.
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, allowance for doubtful accounts, deferred tax assets and purchase price allocations.
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 for identical assets or liabilities in active markets.
Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or
inputs other than quoted prices that are directly or indirectly observable, or inputs that are derived principally from, or corroborated by, observable market data by
correlation or other means.
Level 3: Unobservable inputs that reflect estimates and assumptions.
New Accounting Standards
In May 2014, the FASB issued ASU 2014-09, Revenue From Contracts with Customers. Under this standard, an entity recognizes an amount of revenue to which it expects
to be entitled when the transfer of goods or services to customers occurs. The standard requires expanded disclosures regarding the nature, amount, timing and uncertainty of
revenue and cash flows arising from contracts with customers. We adopted this standard effective January 1, 2018 using the modified retrospective method and recognized a
cumulative-effect adjustment increasing retained earnings by $1.5 million. The most significant effects of the standard for us are associated with variable consideration and
capitalization of costs to obtain contracts, such as sales commissions. Previously, we recognized the impact of pricing changes in the period they became fixed and
determinable, and we expensed sales commissions and other costs to obtain contracts as they were incurred. The adoption of this standard has not had a material impact on
our consolidated statements of operations or consolidated balance sheets. See Note 2 for further information.
The FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, in January 2016. This standard changes the accounting related
to the classification and measurement of certain equity investments. Equity investments with readily determinable fair values must be measured at fair value. All changes in
fair value will be recognized in net income as opposed to other comprehensive income. We adopted ASU 2016-01 effective January 1, 2018 and recognized a cumulative-
effect adjustment increasing retained earnings by $1.1 million.
79
In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, which changes the timing of when certain intercompany
transactions are recognized within the provision for income taxes. We adopted ASU 2016-16 effective January 1, 2018 using the modified retrospective method and we
recognized a cumulative-effect adjustment increasing retained earnings by $0.7 million.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires the recognition of right-of-use assets and lease liabilities by lessees for certain leases
classified as operating leases and also requires expanded disclosures regarding leasing activities. The accounting for financing leases (previously "capital leases") remains
substantially unchanged. We have adopted the standard effective January 1, 2019 and will continue to report comparative periods under ASC 840.
We have elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carry forward
the historical lease classification. We also made an accounting policy election to exclude leases with an initial term of 12 months or less from the consolidated balance sheet.
We will recognize those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. As part of this adoption, we have
implemented internal controls and key system functionality to enable the preparation of financial information.
The adoption of the standard resulted in recording right-of-use assets of $310.1 million and lease liabilities of $320.3 million as of January 1, 2019. The right-of-use assets
are lower than the lease liabilities as existing deferred rent and lease incentive liabilities were recorded as a reduction of the right-of-use assets at adoption in accordance
with the standard. The standard did not affect our consolidated statements of operations or our consolidated statements of cash flows and did not result in a cumulative-effect
adjustment to the opening balance of retained earnings. The standard had no impact on our debt-covenant compliance under our current agreements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes
the way entities recognize impairment of many financial assets. This new guidance requires immediate recognition of estimated credit losses expected to occur over the life
of the asset and incorporates estimated, forward-looking data when measuring lifetime Expected Credit Losses (ECL). The standard was designed to provide greater
transparency and understanding of credit risk by requiring enhanced financial statement disclosures which fall into three general categories: ECL estimate methodology and
assumptions, quantitative information and metrics, and policy and process explanations. We adopted the standard using the modified retrospective transition method. Results
for the reporting period beginning January 1, 2020 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously
applicable GAAP. We recognized a cumulative-effect adjustment decreasing retained earnings by $1.7 million on January 1, 2020. The adoption of the standard also resulted
in expanded disclosures related to credit losses (see Note 16).
In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment, which eliminates the requirement that an
entity perform a hypothetical purchase price allocation to measure goodwill impairment. Instead, impairment will be measured using the difference between the carrying
amount and the fair value of the reporting unit. We early adopted this ASU effective January 1, 2019. The early adoption did not have any impact on our consolidated
financial statements.
In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities, which amends and simplifies the
application of hedge accounting guidance to better portray the economic results of risk management activities in the financial statements. The guidance expands the ability
to hedge nonfinancial and financial risk components, reduces complexity in fair value hedges of interest rate risk, eliminates the requirement to separately measure and
report hedge ineffectiveness, and eases certain hedge effectiveness assessment requirements. We adopted the standard effective January 1, 2019 with no significant impact
on our consolidated financial statements.
In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification
from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Reform Act. We adopted ASU 2018-02 effective January
1, 2019 and elected to recognize a cumulative-effect adjustment increasing retained earnings by $28.8 million related to the change in the U.S. federal corporate tax rate.
In August 2018, the FASB issued ASU 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which changes the fair
value measurement disclosure requirements. The amendments in this ASU eliminate some disclosures that are no longer considered cost beneficial, modify/clarify the
specific requirements of certain disclosures and add disclosure requirements for Level 3 fair value measurements. We adopted ASU 2018-13 effective January 1, 2020 and
the standard did not have a significant impact
on our financial statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions for
recognizing deferred taxes for investments, performing intraperiod tax allocations and calculating income taxes in interim periods. The ASU also adds guidance to reduce
complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. ASU 2019-12 will be effective
for us on January 1, 2021. We do not anticipate a significant impact to our financial statements as a result of the adoption of ASU 2019-12.
80
Note 2 - Revenue from Contracts with Customers
Performance Obligations
We provide various services to meet the needs of our customers and we group these service offerings into three broad categories: Core Services, High-Value Services and
Other Security Services.
Core Services
CIT and ATM services are core services we provide to customers throughout the world. We charge customers per service performed or based on the value of goods
transported. CIT services generally involve the secure transportation of cash, securities and other valuables between businesses, financial institutions and central banks.
ATM services are generally composed of management services, including cash replenishment and forecasting, remote monitoring, transaction processing, installation and
maintenance.
High-Value Services
Our high-value services leverage our brand, global infrastructure and core services and include cash management services, global services and payment services. We offer a
variety of cash management services such as currency and coin counting and sorting, deposit preparation and reconciliation, and safe device installation and servicing
(including our CompuSafe service). Our global services business provides secure ground, sea and air transportation and storage of highly-valued commodities including
diamonds, jewelry, precious metals and other valuables. We also provide payment services which include bill payment and collection services on behalf of utility companies
and other billers plus general purpose reloadable prepaid cards and corporate debit cards.
®
Other Security Services
Our other security services feature the protection of airports, offices, warehouses, stores and public venues in Europe and Brazil.
For performance obligations related to the services described above, we generally satisfy our obligations as each action to provide the service to the customer occurs.
Because the customers simultaneously receive and consume the benefits from our services, these performance obligations are deemed to be satisfied over time. We use an
output method, units of service provided, to recognize revenue because that is the best method to represent the transfer of our services to the customer at the agreed upon
rate for each action.
Although not as significant as our service offerings, we also sell goods to customers from time to time, such as safe devices. In those transactions, we satisfy our
performance obligation at a point in time. We recognize revenue when the goods are delivered to the customer as that is the point in time that best represents when control
has transferred to the customer.
Our contracts with customers describe the services we can provide along with the fees for each action to provide the service. We typically send invoices to customers for all
of the services we have provided within a monthly period and payments are generally due within 30 to 60 days of the invoice date.
Although our customer contracts specify the fees for each action to provide service, the majority of the services stated in our contracts do not have a defined quantity over
the contract term. Accordingly, the transaction price is considered variable as there is an unknown volume of services that will be rendered over the course of the contract.
We recognize revenue for these services in the period in which they are provided to the customer based on the contractual rate at which we have the right to invoice the
customer for each action.
Some of our contracts with customers contain clauses that define the level of service that the customer will receive. The service level agreements (“SLA”) within those
contracts contain specific calculations to determine whether the appropriate level of service has been met within a specific period, which is typically a month. We estimate
SLA penalties and recognize the amounts as a reduction to revenue.
Taxes collected from customers and remitted to governmental authorities are not included in revenues in the consolidated statements of operations.
81
Revenue Disaggregated by Reportable Segment and Type of Service
(In millions)
Twelve months ended December 31, 2020
Reportable Segments:
North America
Latin America
Europe
Rest of World
Total reportable segments
Twelve months ended December 31, 2019
Reportable Segments:
North America
Latin America
Europe
Rest of World
Total reportable segments
Not Allocated to Segments:
Acquisitions and dispositions
Internal loss
(a)
Total
Twelve months ended December 31, 2018
Reportable Segments:
North America
Latin America
Europe
Rest of World
Total reportable segments
Not Allocated to Segments:
(b)
Venezuela
Total
Core Services
High-Value Services
Other Security
Services
Total
$
$
$
$
$
702.8
650.5
382.0
173.8
1,909.1
794.6
806.9
232.1
119.7
1,953.3
—
—
1,953.3
602.6
742.4
247.2
110.0
1,702.2
18.4
1,720.6
558.6
404.6
239.0
411.5
1,613.7
575.8
501.6
185.5
318.0
1,580.9
(0.5)
4.0
1,584.4
498.4
527.3
192.4
330.2
1,548.3
33.0
1,581.3
—
16.8
132.8
18.5
168.1
—
11.3
132.0
2.2
145.5
—
—
145.5
—
11.9
173.0
2.1
187.0
—
187.0
1,261.4
1,071.9
753.8
603.8
3,690.9
1,370.4
1,319.8
549.6
439.9
3,679.7
(0.5)
4.0
3,683.2
1,101.0
1,281.6
612.6
442.3
3,437.5
51.4
3,488.9
(a)
(b)
See details regarding the Internal loss and the impact on revenues in Note 1.
Represents revenues from our Venezuela operations prior to June 30, 2018 deconsolidation. See Note 1 for details.
The majority of our revenues from contracts with customers are earned by providing services and these performance obligations are satisfied over time. Smaller amounts of
revenues are earned from selling goods, such as safes, to customers where the performance obligations are satisfied at a point in time.
Certain of our high-value services involve the leasing of assets, such as safes, to our customers along with the regular servicing of those safe devices. Revenues related to the
leasing of these assets are recognized in accordance with applicable lease guidance (ASC 842 beginning in 2019 and ASC 840 prior to 2019), but are included in the above
table as the amounts are a small percentage of overall revenues.
Contract Balances
Contract Asset
Although payment terms and conditions can vary, for the majority of our customer contracts, we invoice for all of the services provided to the customer within a monthly
period. For certain customer contracts, the timing of our performance may precede our right to invoice the customer for the total transaction price. For example, Brink's
affiliates in certain countries, primarily in South America, negotiate annual price adjustments with certain customers and, once the price increases are finalized, the pricing
changes are made retroactive to services provided in earlier periods. These retroactive pricing adjustments are estimated and recognized as revenue with a corresponding
contract asset in the same period in which the related services are performed. As the estimate of the ultimate transaction price changes, we recognize a cumulative catch-up
adjustment for the change in estimate.
82
Contract Liability
For other customer contracts, we may obtain the right to payment or receive customer payments prior to performing the related services under the contract. When the right to
customer payments or receipt of payments precedes our performance, we recognize a contract liability.
The opening and closing balances of receivables, contract assets and contract liabilities related to contracts with customers are as follows:
(In millions)
Opening (January 1, 2020)
Closing (December 31, 2020)
Increase (decrease)
Receivables
Contract Asset
Contract Liability
$
$
635.6
679.1
43.5
1.9
0.4
(1.5)
12.8
15.1
2.3
The amount of revenue recognized in 2020 that was included in the January 1, 2020 contract liability balance was $12.8 million. This revenue consists of services provided
to customers who had prepaid for those services prior to the current year.
We also recognized revenue of $1.5 million in 2020 from performance obligations satisfied in the prior year. This amount is a result of changes in the transaction price of our
contracts with customers.
Contract Costs
Sales commissions directly related to obtaining new contracts with customers are capitalized when incurred and are then amortized to expense ratably over the term of the
contracts. At December 31, 2020, the net capitalized costs to obtain contracts was included in other assets on the consolidated balance sheet. The capitalized amounts at
December 31, 2020 and December 31, 2019 as well as amortization expense in 2020 and 2019 were not significant.
Practical Expedients
For the majority of our contracts with customers, we invoice a fixed amount for each unit of service we have provided. These contracts provide us with the right to invoice
for an amount or rate that corresponds to the value we have delivered to our customers. The volume of services that will be provided to customers over the term is not
known at inception of these contracts. Therefore, while the rate per unit of service is known, the transaction price itself is variable. For this reason, we recognize revenue
from these contracts equal to the amount for which we have the contractual right to invoice the customers. Because we are not required to estimate variable consideration
related to the transaction price in order to recognize revenue, we are also not required to estimate the variable consideration to provide certain disclosures. As a result, we
have elected to use the optional exemption related to the disclosure of transaction prices, amounts allocated to remaining performance obligations and the future periods in
which revenue will be recognized, sometimes referred to as backlog.
We have also elected to use the practical expedient for financing components related to our contract liabilities. We do not recognize interest expense on contracts for which
the period between our receipt of customer payments and our service to the customer is one year or less.
83
Note 3 - Segment Information
We identify our operating segments based on how our chief operating decision maker (“CODM”) allocates resources, assesses performance and makes decisions. Our
CODM is our President and Chief Executive Officer. Our CODM evaluates performance and allocates resources to each operating segment based on a profit or loss
measure which, at the reportable segment level, excludes the following:
•
•
Corporate expenses - includes corporate headquarters costs, regional management costs, currency transaction gains and losses, adjustments to reconcile segment
accounting policies to U.S. GAAP, and costs related to global initiatives
Other items not allocated to segments - certain significant items such as reorganization and restructuring actions that are evaluated on an individual basis by
management and are not considered part of the ongoing activities of the business are excluded from segment results. Prior to deconsolidation (see Note 1), results
from Venezuela operations were also excluded from our segment results due to the Venezuelan government's restrictions that have prevented us from repatriating
funds. We also exclude certain costs, gains and losses related to acquisitions and dispositions of assets and of businesses. Beginning in the third quarter of 2018,
we began to consolidate Brink's Argentina using our accounting policy for subsidiaries operating in highly inflationary economies. We have excluded from our
segment results the impact of highly inflationary accounting in Argentina, including currency remeasurement losses. Incremental costs (primarily third party
expenses) incurred related to the mitigation of material weaknesses and the implementation and adoption of ASU 2016-02, the new lease accounting standard
effective for us as of January 1, 2019, are excluded from segment results. We have also excluded from our segment results net charges related to an internal loss in
our U.S. global services operations. The net impact includes costs incurred to reconstruct an accounts receivable subledger as well as estimated bad debt expense
for uncollectible receivables, partially offset by revenue billed and collected, but not previously recorded as a result of the former non-management employee's
embezzlement activities.
We currently serve customers in more than 100 countries, including 52 countries where we operate subsidiaries.
During the fourth quarter of 2020, we implemented changes to our organizational and management structure that resulted in changes to our operating segments. Previously,
our business was managed and reported in three operating segments: North America, South America and Rest of World. We now manage our business in four segments, and
segment results are reported by these four segments. The four segments are as follows:
•
•
•
•
North America – operations in the U.S. and Canada, including the Brink’s Global Services ("BGS") line of business,
Latin America – operations in Latin American countries where we have an ownership interest, including the BGS line of business. This segment includes
operations in Mexico, which was previously reported in the North America segment,
Europe – operations in European countries which primarily provide services outside of the BGS line of business. This segment includes the BGS line of business
within these country operations, and
Rest of World – operations in European countries which primarily provide BGS services. This segment includes other lines of business within these country
operations. This segment also includes operations in the Middle East, Africa and Asia as well as BGS activity in Latin American countries where we do not have
an ownership interest.
Previously disclosed information for all periods presented has been revised to reflect our current segment structure.
84
(In millions)
Reportable Segments:
North America
Latin America
Europe
Rest of World
Total reportable segments
Reconciling Items:
Corporate items:
General, administrative and other expenses
Foreign currency transaction losses
Reconciliation of segment policies to GAAP
Other items not allocated to segments:
Venezuela operations
Reorganization and Restructuring
Acquisitions and dispositions
Argentina highly inflationary impact
Internal loss
Reporting compliance
(g)
(b)
(d)
(c)
(e)
(f)
(a)
Total
Revenues
Years Ended December 31,
2019
2020
2018
2020
Operating Profit
Years Ended December 31,
2019
2018
$
$
1,261.4
1,071.9
753.8
603.8
3,690.9
—
—
—
—
—
—
—
—
—
3,690.9
1,370.4
1,319.8
549.6
439.9
3,679.7
—
—
—
—
—
(0.5)
—
4.0
—
3,683.2
1,101.0 $
1,281.6
612.6
442.3
3,437.5
—
—
—
51.4
—
—
—
—
—
3,488.9 $
91.7
233.6
51.2
117.1
493.6
(116.3)
(6.5)
10.5
—
(66.6)
(83.1)
(10.7)
(6.9)
(0.5)
213.5
104.1
296.9
42.6
75.7
519.3
(123.2)
(4.8)
0.3
—
(28.8)
(88.5)
(14.5)
(20.9)
(2.1)
236.8
70.9
254.9
43.0
74.1
442.9
(99.4)
(2.2)
5.6
2.3
(20.6)
(41.4)
(8.0)
—
(4.5)
274.7
Represents adjustments to bad debt expense reported within the segments to bad debt expense required on a consolidated basis under U.S. GAAP.
(a)
(b) Amounts in 2018 represent revenues and operating profit from our Venezuela operations prior to the June 30, 2018 deconsolidation. See Note 1 for details.
(c) Management periodically implements restructuring actions in targeted sections of our business. Due to the unique circumstances around the charges related to these actions, they have not been allocated to segment
(d)
(e)
results.
Certain acquisition and disposition items that are not considered part of the ongoing activities of the business and are special in nature are consistently excluded from segment results. These items include amortization
expense for acquisition-related intangible assets and integration, transaction and restructuring costs related to business acquisitions.
Beginning in the third quarter of 2018, we designated Argentina's economy as highly inflationary for accounting purposes. Currency remeasurement gains and losses related to peso-denominated monetary assets and
liabilities as well as incremental expense related to nonmonetary assets are excluded from segment results.
See details regarding the impact of the Internal loss at Note 1.
(f)
(g) Accounting standard implementation and material weakness remediation. Additional information provided at page 32.
(In millions)
Capital Expenditures by Reportable Segment
North America
Latin America
Europe
Rest of World
Total reportable segments
Corporate items
Total
Depreciation and Amortization by Reportable Segment
Depreciation and amortization of property and equipment:
North America
Latin America
Europe
Rest of World
Total reportable segments
Corporate items
Venezuela
Argentina highly inflationary impact
Acquisitions and dispositions
Reorganization and Restructuring
Depreciation and amortization of property and equipment
Amortization of intangible assets
(a)
Total
85
Years Ended December 31,
2019
2020
2018
$
$
$
$
27.4
35.1
33.4
16.6
112.5
6.0
118.5
62.3
44.0
32.2
20.0
158.5
9.1
—
1.8
1.0
1.3
171.7
35.1
206.8
40.7
80.3
16.2
17.3
154.5
10.3
164.8
64.2
44.8
21.3
11.0
141.3
10.8
—
1.8
3.1
0.2
157.2
27.8
185.0
34.6
67.8
22.2
15.7
140.3
14.8
155.1
58.2
40.2
20.2
11.1
129.7
11.9
1.1
—
—
1.9
144.6
17.7
162.3
(a) Amortization of acquisition-related intangible assets has been excluded from reportable segment amounts.
(In millions)
Assets held by Reportable Segment
North America
Latin America
Europe
Rest of World
Total reportable segments
Corporate items
Total
(In millions)
(a)
Long-Lived Assets by Geographic Area
Non-U.S.:
Mexico
France
Brazil
Canada
Other
Subtotal
U.S.
Total
(a)
Long-lived assets include only property and equipment, net.
(In millions)
Revenues by Geographic Area
Outside the U.S.:
(a)
Brazil
France
Mexico
Argentina
Canada
Other
Subtotal
U.S.
Total
(a)
Revenues are recorded in the country where service is initiated or performed. No single customer represents more than 10% of total revenue.
86
December 31,
2020
2019
1,327.8
1,029.3
1,432.4
911.1
4,700.6
435.0
5,135.6
1,355.8
1,133.3
636.2
372.2
3,497.5
266.3
3,763.8
December 31,
2020
2019
118.9
74.9
57.9
46.2
269.0
566.9
271.3
838.2
129.4
74.1
72.2
54.1
150.0
479.8
283.5
763.3
$
$
$
$
Years Ended December 31,
2019
2020
2018
$
$
315.0
336.7
366.3
171.2
129.8
1,240.3
2,559.3
1,131.6
3,690.9
440.4
373.2
412.4
214.4
149.8
868.4
2,458.6
1,224.6
3,683.2
405.4
428.5
365.3
247.2
151.7
941.5
2,539.6
949.3
3,488.9
(In millions)
Net assets outside the U.S.
France
Netherlands
Mexico
Argentina
Brazil
Hong Kong
Other non-U.S. markets
Total
(In millions)
Information about Unconsolidated Equity Method Affiliates:
Carrying value of investments and advances at December 31
Undistributed earnings at December 31
Share of equity earnings (loss)
December 31,
2020
2019
$
$
155.2
156.0
154.0
178.9
224.1
116.3
991.5
1,976.0
155.4
—
181.3
166.1
274.1
32.5
450.7
1,260.1
2020
2019
2018
$
4.9
3.1
0.8
5.0
3.2
0.9
4.9
3.5
1.9
Investments in businesses that we do not control, but for which we have the ability to exercise significant influence over operating and financial policies, are accounted for
under the equity method and our proportionate share of income or loss is recorded in other operating income (expense).
In 2020, the Rest of World segment reported equity earnings of $0.7 million related to an equity method investment with a carrying value of $4.5 million as of December 31,
2020 and undistributed earnings of $2.7 million as of December 31, 2020. In 2020, the Latin America segment reported equity earnings of $0.1 million related to an equity
method investment with a carrying value of $0.4 million as of December 31, 2020 and undistributed earnings of $0.4 million as of December 31, 2020.
In 2019, the Rest of World segment reported equity earnings of $0.6 million related to an equity method investment with a carrying value of $4.4 million as of December 31,
2019 and undistributed earnings of $2.6 million as of December 31, 2019. In 2019, the Latin America segment reported equity earnings of $0.3 million related to an equity
method investment with a carrying value of $0.6 million as of December 31, 2019 and undistributed earnings of $0.6 million as of December 31, 2019.
In 2018, the Rest of World segment reported equity earnings of $0.9 million related to an equity method investment with a carrying value of $4.2 million and undistributed
earnings of $2.8 million as of December 31, 2018. In 2018, the Latin America segment reported equity earnings of $1.0 million related to an equity method investment with
a carrying value of $0.7 million and undistributed earnings of $0.7 million as of December 31, 2018.
87
Note 4 - 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. Pension benefits provided to eligible U.S. employees were frozen on
December 31, 2005.
Components of Net Periodic Pension Cost
(In millions)
Years Ended December 31,
2020
U.S. Plans
2019
2018
2020
Non-U.S. Plans
2019
2018
2020
Total
2019
2018
Service cost
Interest cost on projected benefit
obligation
Return on assets – expected
Amortization of losses
Amortization of prior service cost
Curtailment gain
(a)
Settlement loss
Net periodic pension cost
$
—
26.7
(46.2)
28.6
—
—
—
9.1
$
—
34.1
(50.7)
19.6
—
—
19.3
22.3
— $
9.7
9.9
10.5 $
9.7
31.9
(53.6)
27.7
—
—
—
6.0 $
11.6
(12.1)
5.1
—
(1.5)
2.4
15.2
10.4
(10.3)
4.2
0.1
—
2.1
16.4
11.8
(11.1)
4.6
0.5
—
1.7
18.0 $
38.3
(58.3)
33.7
—
(1.5)
2.4
24.3
9.9
44.5
(61.0)
23.8
0.1
—
21.4
38.7
10.5
43.7
(64.7)
32.3
0.5
—
1.7
24.0
(a)
Settlement losses recognized in the U.S. in 2019 are related to an annuity contract buy-out of approximately 2,600 participants. See "2019 Annuity Contract Buy-out" below. Settlement losses outside the U.S. relate
primarily to terminated employees that participate in a Mexican severance indemnity program that is accounted for as a defined benefit plan.
The components of net periodic pension cost other than the service cost component are included in interest and other nonoperating income (expense) in the consolidated
statements of operations.
88
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
Participant contributions
Plan amendments
Plan combinations
Acquisitions
Curtailments
Settlements
Benefits paid
Actuarial losses
Foreign currency exchange effects
Benefit obligation at end of year
Fair value of plan assets at beginning of year
Return on assets – actual
Participant contributions
Plan combinations
Employer contributions
Acquisitions
Settlements
Benefits paid
Foreign currency exchange effects
Fair value of plan assets at end of year
Funded status
Included in:
Current liability, included in accrued liabilities
Noncurrent liability
Net pension liability
U.S. Plans
Non-U.S. Plans
Total
2020
2019
2020
2019
2020
2019
$
$
$
$
$
$
$
826.8
—
26.7
—
—
—
—
—
—
(44.0)
98.5
—
908.0
699.3
91.2
—
—
0.6
—
—
(44.0)
—
747.1
801.9
—
34.1
—
—
—
—
—
(53.6)
(49.1)
93.5
—
826.8
686.6
114.1
—
—
0.7
—
(53.0)
(49.1)
—
699.3
318.4
9.7
11.6
0.7
0.3
1.0
132.5
(1.5)
(0.7)
(21.6)
42.9
26.5
519.8
215.1
49.1
0.7
1.0
14.2
80.3
(0.7)
(21.6)
17.7
355.8
264.2
9.9
10.4
0.1
(0.6)
1.4
—
(0.8)
(0.9)
(18.2)
43.2
9.7
318.4
180.6
29.2
0.1
1.4
13.9
—
(0.9)
(18.2)
9.0
215.1
1,145.2
9.7
38.3
0.7
0.3
1.0
132.5
(1.5)
(0.7)
(65.6)
141.4
26.5
1,427.8
914.4
140.3
0.7
1.0
14.8
80.3
(0.7)
(65.6)
17.7
1,102.9
1,066.1
9.9
44.5
0.1
(0.6)
1.4
—
(0.8)
(54.5)
(67.3)
136.7
9.7
1,145.2
867.2
143.3
0.1
1.4
14.6
—
(53.9)
(67.3)
9.0
914.4
(160.9)
(127.5)
(164.0)
(103.3)
(324.9)
(230.8)
0.6
160.3
160.9
0.6
126.9
127.5
2.2
161.8
164.0
1.3
102.0
103.3
2.8
322.1
324.9
1.9
228.9
230.8
89
Other Changes in Plan Assets and Benefit Recognized in Other Comprehensive Income (Loss)
(In millions)
Years Ended December 31,
U.S. Plans
Non-U.S. Plans
Total
2020
2019
2020
2019
2020
2019
Benefit plan net actuarial losses recognized in accumulated
other comprehensive income (loss):
Beginning of year
Net actuarial gains (losses) arising during the year
Reclassification adjustment for amortization of prior
actuarial losses included in net income (loss)
Foreign currency exchange effects
End of year
Benefit plan prior service cost recognized in accumulated other
comprehensive income (loss):
Beginning of year
Prior service credit (cost) from plan amendments during the
year
Reclassification adjustment for amortization of prior service
cost included in net income (loss)
Foreign currency exchange effects
End of year
$
$
$
$
(296.6)
(53.5)
28.6
—
(321.5)
—
—
—
—
—
(306.0)
(29.5)
38.9
—
(296.6)
—
—
—
—
—
(81.5)
(5.9)
7.5
(2.5)
(82.4)
(0.5)
(0.3)
—
0.2
(0.6)
(62.0)
(23.5)
6.3
(2.3)
(81.5)
(1.2)
0.6
0.1
—
(0.5)
(378.1)
(59.4)
36.1
(2.5)
(403.9)
(0.5)
(0.3)
—
0.2
(0.6)
(368.0)
(53.0)
45.2
(2.3)
(378.1)
(1.2)
0.6
0.1
—
(0.5)
U.S. Plans
The net actuarial losses of $53.5 million in 2020 and $29.5 million in 2019 were mainly driven by changes in the primary U.S. pension plan. The 2020 net actuarial losses
arose from a lower discount rate at the end of the year ($93 million) and a loss from updates to the census data ($5 million), partially offset by higher actual return on assets
than expected ($45 million). The 2019 net actuarial losses arose from a lower discount rate at the end of the year ($96 million), largely offset by higher actual return on
assets than expected ($63 million) and a gain from updating the mortality projection table ($5 million).
Non-U.S. Plans
The net actuarial losses of $5.9 million in 2020 were primarily due to lower discount rates at the end of the year ($45 million), largely offset by actual return on assets being
higher than expected ($37 million). The net actuarial losses of $23.5 million in 2019 were primarily due to lower discount rates at the end of the year ($37 million), partially
offset by actual return on assets being higher than expected ($19 million).
Information Comparing Plan Assets to Plan Obligations
Information comparing plan assets to plan obligations as of December 31, 2020 and 2019 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. The total ABO for our U.S. pension plans was $908.0 million in 2020 and $826.8 million in 2019. The total ABO for our Non-U.S. pension plans was $318.6
million in 2020 and $280.9 million in 2019.
(In millions)
December 31,
U.S. Plans
Non-U.S. Plans
Total
2020
2019
2020
2019
2020
2019
Information for pension plans with an ABO in excess of plan
assets:
Fair value of plan assets
Accumulated benefit obligation
Projected benefit obligation
$
747.1
908.0
908.0
699.3
826.8
826.8
62.3
149.6
175.3
50.8
124.2
142.1
809.4
1,057.6
1,083.3
750.1
951.0
968.9
2019 Annuity Contract Buy-out
On October 8, 2019, we purchased a single premium group annuity contract from an insurance company to provide for the payment of pension benefits to approximately
2,600 primary U.S. pension plan participants. We purchased the contract with $53 million of plan assets. The insurance company took over the payments of these benefits
starting January 1, 2020. This transaction settled $54 million of our primary U.S. pension plan obligation. As a result, we recognized a settlement charge of $19.3 million in
the fourth quarter of 2019.
90
Assumptions
The weighted-average assumptions used to determine the net pension cost and benefit obligations for our pension plans were as follows:
2020
U.S. Plans
2019
2018
2020
Non-U.S. Plans
2019
2018
Discount rate:
Pension cost
Benefit obligation at year end
3.3 %
2.4 %
4.4 %
3.3 %
3.7 %
4.4 %
3.2 %
2.3 %
4.0 %
3.2 %
3.5 %
4.0 %
Expected return on assets – pension cost
7.00 %
7.00 %
7.25 %
3.28 %
5.64 %
5.62 %
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
2.6 %
1.9 %
2.6 %
2.6 %
2.6 %
2.6 %
(a)
Salary scale assumptions are determined through historical experience and vary by age and industry. The U.S. plan benefits are frozen and will not increase due to future salary increases.
Mortality Tables for our U.S. Retirement Benefits
We use the Society of Actuaries base mortality tables for private sector plans, Pri-2012, and the Mercer modified MP-2019 projection scale, with a Blue Collar adjustment
factor for the majority of our U.S. retirement plans and a White Collar adjustment factor for our nonqualified U.S. pension plan.
Estimated Future Cash Flows
Estimated Future Contributions from the Company into Plan Assets
Our policy is to fund at least the minimum actuarially determined amounts required by applicable regulations. We do not expect to make contributions to our primary U.S.
pension plan in 2021. We expect to contribute $9.2 million to our non-U.S. pension plans and $0.6 million to our nonqualified U.S. pension plan in 2021.
Estimated Future Benefit Payments from Plan Assets to Beneficiaries
Projected benefit payments of the plans in the next 10 years using assumptions in effect at December 31, 2020, are as follows:
(In millions)
2021
2022
2023
2024
2025
2026 through 2029
U.S. Plans
Non-U.S. Plans
Total
$
47.7
47.8
47.9
47.8
47.7
234.6
13.7
13.8
14.5
16.0
17.6
107.7
61.4
61.6
62.4
63.8
65.3
342.3
91
Retirement Benefits Other than Pensions
Summary
We provide retirement healthcare benefits for eligible current and former U.S., Canadian, and Brazilian employees. Retirement benefits related to our former U.S. 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)
Years Ended December 31,
UMWA Plans
2019
2018
2020
Black Lung and Other Plans
2019
2018
2020
2020
Total
2019
2018
Service cost
Interest cost on APBO
Return on assets – expected
Amortization of losses
Amortization of prior service cost (credit)
Curtailment gain
Net periodic postretirement cost
$
$
—
12.7
(13.0)
16.5
(4.7)
—
11.5
—
17.3
(13.3)
16.6
(4.7)
—
15.9
— $
17.1
(16.7)
20.3
(4.6)
—
16.1 $
0.1
3.8
—
8.3
(0.3)
—
11.9
0.2
3.8
—
4.6
(0.3)
(0.1)
8.2
0.2 $
3.2
—
5.8
1.1
—
10.3 $
0.1
16.5
(13.0)
24.8
(5.0)
—
23.4
0.2
21.1
(13.3)
21.2
(5.0)
(0.1)
24.1
0.2
20.3
(16.7)
26.1
(3.5)
—
26.4
The components of net periodic postretirement cost other than the service cost component are included in interest and other nonoperating income (expense) in the
consolidated statements of operations.
Obligations and Funded Status
Changes in the accumulated postretirement benefit obligation (“APBO’) and plan assets related to retirement healthcare benefits are as follows:
(In millions)
Years Ended December 31,
APBO at beginning of year
Service cost
Interest cost
Plan amendments
Acquisitions
Curtailment
Benefits paid
Actuarial (gains) losses, net
Foreign currency exchange effects
APBO at end of year
Fair value of plan assets at beginning of year
Return on assets – actual
Employer contributions
Net transfers to (from) plan assets
Benefits paid
Fair value of plan assets at end of year
Funded status
Included in:
Current, included in accrued liabilities
Noncurrent
Retirement benefits other than pension liability
UMWA Plans
Black Lung and Other Plans
Total
2020
2019
2020
2019
2020
2019
424.6
—
12.7
—
—
—
(25.7)
28.5
—
440.1
177.9
14.1
—
1.7
(25.7)
168.0
479.1
—
17.3
—
—
—
(29.3)
(42.5)
—
424.6
181.7
25.9
—
(0.4)
(29.3)
177.9
112.1
0.1
3.8
—
—
—
(7.4)
11.8
(2.5)
117.9
—
—
7.4
—
(7.4)
—
76.5
0.2
3.8
(0.3)
0.9
(0.2)
(8.5)
39.9
(0.2)
112.1
—
—
8.5
—
(8.5)
—
536.7
0.1
16.5
—
—
—
(33.1)
40.3
(2.5)
558.0
177.9
14.1
7.4
1.7
(33.1)
168.0
555.6
0.2
21.1
(0.3)
0.9
(0.2)
(37.8)
(2.6)
(0.2)
536.7
181.7
25.9
8.5
(0.4)
(37.8)
177.9
(272.1)
(246.7)
(117.9)
(112.1)
(390.0)
(358.8)
—
272.1
272.1
—
246.7
246.7
10.3
107.6
117.9
11.0
101.1
112.1
10.3
379.7
390.0
11.0
347.8
358.8
$
$
$
$
$
$
$
92
Other Changes in Plan Assets and Benefit Recognized in Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) of our retirement benefit plans other than pensions are as follows:
(In millions)
Years Ended December 31,
UMWA Plans
Black Lung and Other Plans
Total
2020
2019
2020
2019
2020
2019
Benefit plan net actuarial gain (loss) recognized in
accumulated other comprehensive income (loss):
Beginning of year
Net actuarial gains (losses) arising during the year
Reclassification adjustment for amortization of prior
actuarial losses included in net income (loss)
Foreign currency exchange effects
End of year
Benefit plan prior service (cost) credit recognized in
accumulated other comprehensive income (loss):
Beginning of year
Prior service credit from plan amendments during the year
Reclassification adjustment for amortization or curtailment
of prior service cost included in net income (loss)
Foreign currency exchange effects
End of year
$
$
$
$
(219.2)
(27.4)
16.5
—
(230.1)
28.0
—
(4.7)
—
23.3
(290.9)
55.1
16.6
—
(219.2)
32.7
—
(4.7)
—
28.0
(78.1)
(11.8)
8.3
1.3
(80.3)
1.4
—
(0.3)
(0.2)
0.9
(42.9)
(39.9)
4.6
0.1
(78.1)
1.5
0.3
(0.4)
—
1.4
(297.3)
(39.2)
24.8
1.3
(310.4)
29.4
—
(5.0)
(0.2)
24.2
(333.8)
15.2
21.2
0.1
(297.3)
34.2
0.3
(5.1)
—
29.4
UMWA Plans
The net actuarial losses of $27.4 million in 2020 arose primarily due to a lower discount rate at the end of the year ($37 million). This was partially offset by favorable
medical claims experience ($10 million). The net actuarial gains of $55.1 million in 2019 arose primarily as a result of favorable medical claims experience ($53 million),
the removal of the excise tax liability due as noted in "Excise Tax on High-Cost Health Plans" below ($29 million), the return on assets being higher than expected ($13
million) and mortality and trend tables update ($6 million) and updates to the UMWA census data ($4 million). These were largely offset by a lower discount rate at the end
of the year ($50 million).
Black Lung and Other Plans
We recognized net actuarial losses of $11.8 million in 2020. This was primarily due to a lower discount rate compared to the prior period ($8 million) and updates to the
black lung census data ($5 million), partially offset by less than expected claims ($3 million). We recognized net actuarial losses of $39.9 million in 2019. This was
primarily due to assumption changes for the claims approval ratings and legal and administrative expenses ($27 million), updates to the black lung census data ($8 million)
and a lower discount rate compared to the prior period ($5 million), partial offset by mortality table updates ($3 million).
Assumptions
See Mortality Tables for our U.S. Retirement Benefits on page 91 for a description of the mortality assumptions.
The APBO for each of the plans was determined using the unit credit method and assumed rates 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
2020
2019
2018
3.2 %
3.1 %
3.3 %
2.3 %
2.2 %
2.4 %
8.00 %
4.3 %
4.2 %
4.4 %
3.2 %
3.1 %
3.3 %
8.00 %
3.6 %
3.5 %
3.7 %
4.3 %
4.2 %
4.4 %
8.00 %
93
Healthcare Cost Trend Rates
For UMWA plans, the assumed healthcare cost trend rate used to compute the 2020 APBO is 5.9% for 2021, declining to 5.0% in 2030 and thereafter (in 2019: 6.5% for
2020 declining to 5.0% in 2027 and thereafter). For the black lung obligation, the assumed healthcare cost trend rate used to compute the 2020 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.
For the Canadian plan, the assumed healthcare cost trend rate used to compute the 2020 APBO is 5.9% for 2021, declining to 5.0% in 2030. For the Brazilian plan, the
assumed healthcare cost trend rate used to compute the 2020 APBO is 3.8%.
We provide healthcare benefits to our UMWA retirees who are eligible for the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Medicare
Act”) subsidy reimbursement under an employer group waiver plan (“EGWP”). Under this arrangement, a government approved health insurance provider receives the
Medicare Act subsidy reimbursement on our behalf and passes these savings to us. Additionally, by providing healthcare benefits under an EGWP, we are able to benefit
from the mandatory 50% discount that pharmaceutical companies must provide for Medicare Act-eligible prescription drugs.
Excise Tax on High-Cost Health Plans
The Patient Protection and Affordable Care Act included a 40% excise tax on third-party benefit plan administrators for high-cost health plans (“Cadillac plans”), the effects
of which were delayed to 2022 by the Tax Reform Act. In December 2019, the excise tax provision was repealed by the Setting Every Community Up for Retirement
Enhancement Act (the "SECURE Act"). The repeal of the excise tax provision reduced our plan obligations by $29 million as of December 31, 2019.
Cash Flows
Estimated Contributions from the Company to Plan Assets
Based on the funded status and assumptions at December 31, 2020, we expect the Company to contribute $10.3 million in cash to the plans to pay 2021 beneficiary
payments for black lung and other plans. We do not expect to contribute cash to our UMWA plans in 2021 since we believe these plans have sufficient amounts held in trust
to pay for beneficiary payments until 2029 based on actuarial assumptions. 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
Projected benefit payments of the plans in the next 10 years using assumptions in effect at December 31, 2020, are as follows:
(In millions)
2021
2022
2023
2024
2025
2026 through 2029
UMWA Plans
Black Lung and
Other Plans
Total
$
29.7
29.1
28.8
28.1
27.5
126.7
10.3
9.6
9.0
8.4
7.8
31.7
40.0
38.7
37.8
36.5
35.3
158.4
94
Retirement Plan Assets
U.S. Plans
(In millions, except for percentages)
Fair Value
Level
Total Fair
Value
December 31, 2020
% Actual
Allocation
% Target
Allocation
Total Fair
Value
December 31, 2019
% Actual
Allocation
% Target
Allocation
U.S. Pension Plans
Cash, cash equivalents and receivables
Equity securities:
U.S. large-cap
U.S. small/mid-cap
International
Emerging markets
Dynamic asset allocation
(b)
(a)
(a)
(a)
(c)
Fixed-income securities:
(d)
Long duration - mutual fund
Long duration - Treasury strips
High yield
Emerging markets
(e)
(f)
(d)
Other types of investments:
(g) (l)
Core property
Structured credit
(h) (l)
Total
UMWA Plans
Cash, cash equivalents and receivables
Equity securities:
U.S. large-cap
U.S. small/mid-cap
International
Emerging markets
Dynamic asset allocation
(b)
(a)
(a)
(c)
(a)
Fixed-income securities:
(e)
High yield
Emerging markets
Multi asset real return
Other types of investments:
(f)
(i)
(g) (l)
Core property
Structured credit
Global private equity
Energy debt
(h) (l)
(k) (l)
(j) (l)
Total
1
1
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
$
3.7
117.3
46.7
117.8
15.6
31.4
292.8
49.6
—
—
37.0
35.2
747.1
0.5
32.2
13.3
40.2
7.0
10.9
3.4
6.8
8.3
14.1
10.2
13.9
7.2
168.0
$
$
$
—
16
6
16
2
4
46
—
—
5
5
100
—
19
8
24
4
7
2
4
5
9
6
8
4
100
—
15
6
15
2
4
48
—
—
5
5
100
—
19
8
24
4
7
2
4
5
10
5
7
5
100
3.8
83.6
34.7
106.2
14.0
28.3
277.3
53.9
13.9
14.0
36.3
33.3
699.3
0.8
32.8
13.8
40.4
6.9
12.1
3.5
6.9
8.6
20.3
9.6
14.8
7.4
177.9
—
12
5
15
2
4
48
2
2
5
5
100
—
19
8
23
4
7
2
4
5
11
5
8
4
100
—
12
5
15
2
4
48
2
2
5
5
100
—
19
8
24
4
7
2
4
5
10
5
7
5
100
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
These categories include a passively managed U.S. large-cap equity mutual fund, an actively managed U.S. small/mid-cap equity and a Non-U.S. equity mutual fund 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 invests primarily in equity securities of emerging market issuers. Emerging market countries are those countries that are characterized as developing or emerging
by any of the World Bank, the United Nations, the International Finance Corporation, or the European Bank for Reconstruction and Development or included in an emerging markets index by a recognized index provider.
This category represents an actively managed mutual fund that seeks to generate, over time, a total return in excess of the broad U.S. equity market by selecting investments from among a broad range of asset classes based
upon the manager's expectations of risk and return. The fund’s allocations among asset classes may be adjusted over short periods and can vary from multiple to a single asset class.
This category represents actively managed mutual funds that seek to duplicate the risk and return characteristics of an intermediate to a long-term fixed-income security portfolio with an approximate duration of 10 to15 years
and longer. This is achieved by using an intermediate duration credit bond fund and a long duration credit bond mutual fund. This category also includes Treasury future contracts and zero-coupon securities created by the U.S.
Treasury.
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 real estate fund of funds that seeks both current income and long-term capital appreciation through investing in underlying funds that acquire, manage, and dispose of commercial
real estate properties. These properties are high-quality, low-leveraged, income-generating office, industrial, retail, and multi-family properties, generally fully-leased to creditworthy companies and governmental entities.
This category invests primarily in a diversified portfolio comprised primarily of collateralized loan obligations and other structured credit investments backed primarily by bank loans.
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.
This category will offer exposure to a diversified pool of global private assets fund investments. Further, the category will seek to shorten the duration of the typical private assets fund of funds through a dedicated focus on
secondary strategies (i.e. funds whose investment strategy is to purchase interests in other private market investments/funds as a way to provide the original investors liquidity prior to the end of those investments’/funds’
contracted end date), income-producing investment strategies (e.g. debt, real estate, and to a lesser extent, real assets), and underlying funds whose stated life is five to seven years, as opposed to the more typical 10-year life of
private assets funds.
This category invests in credit securities of commodity oriented companies affected by the dislocation in the commodity markets with the investment objective of producing an equity like return with less downside risk than
equity or commodity investments.
In accordance with ASC Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair
value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.
95
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 above. 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 quarterly 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.
In 2018, the UMWA plans re-locked their energy debt investment for another three years, which will expire in 2022.
The global private equity investment cannot be redeemed due to the nature of the underlying investments. As the global private equity investment matures and becomes fully
invested, liquidating distributions will be provided back to investors. We expect to receive liquidating distributions over the stated life of the underlying investments. We
have $5 million in unfunded commitments related to the global private equity investment.
Most of the investments of our U.S. retirement plans can be redeemed daily. The structured credit investments can be redeemed quarterly with 65 days’ notice. The core
property fund investment can be redeemed quarterly with 95 days’ notice. The energy debt investment can be redeemed semi-annually with 95 days' notice after the three
year lock up expires.
We believe all plans have sufficient liquidity to meet the needs of the plans' beneficiaries in all market scenarios.
Non-U.S. Plans
(In millions, except for percentages)
Non-U.S. Pension Plans
Cash and cash equivalents
Equity securities:
(a)
(a)
U.S. equity funds
Canadian equity funds
European equity funds
Emerging markets
Other global equity funds
Total equity securities
(a)
(a)
(a)
Fixed-income securities:
(b)
Canadian fixed-income securities
European fixed-income funds
High-yield
Emerging markets
Long-duration
(d)
(e)
(c)
(f)
Total fixed-income securities
Other types of investments:
Guaranteed contract value
Property funds
Global infrastructure fund
Other
(h)
(g)
(i)
Total Fair
Value
December 31, 2020
% Actual
Allocation
% Target
Allocation
Total Fair
Value
December 31, 2019
% Actual
Allocation
% Target
Allocation
$
0.5
—
—
32.6
44.1
3.7
5.6
31.4
117.4
6.2
12.4
1.8
2.1
77.3
99.8
120.2
8.0
7.9
2.0
138.1
355.8
33
32
28
34
5
27
35
6
100
100
0.5
30.2
41.4
3.6
5.0
25.0
105.2
—
9.1
1.6
1.8
79.5
92.0
—
8.1
7.5
1.8
17.4
215.1
—
—
49
50
43
41
8
100
9
100
Total other types of investments
Total
$
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
These categories are comprised of equity index actively and passively managed funds that track various indices such as S&P 500 Composite Total Return Index, Russell 2500 Index, MSCI World Index, S&P/TSX
Total Return Index and others. Some of these funds use a dynamic asset allocation investment strategy seeking to generate total return over time by selecting investments from among a broad range of asset classes,
investing primarily through the use of derivatives.
This category represents actively managed mutual funds that seek to duplicate the risk and return characteristics of an intermediate to a long-term fixed-income security portfolio with an approximate duration of 10
to15 years and longer. This is achieved by using an intermediate duration credit bond fund and a long duration credit bond mutual fund. This category also includes Canadian-dollar denominated zero-coupon
securities issued by the Canadian Federal and Provincial governments, and agencies thereof.
This category is primarily 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 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 represents the guaranteed contract value of insurance contracts in the Netherlands pension plan.
This category offers exposure to limited partnerships invested in diversified real estate, participating mortgages, and property for development and resale.
This category is a limited partnership invested in fund of funds designed to acquire and maintain a diversified portfolio of global infrastructure investments (within targeted sub-sectors with varied maturities) that
realizes a minimum of 10% annual return over a three-year rolling period.
96
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.
Non-U.S. Plans - Fair Value Measurements
(In millions)
Quoted prices in active markets for identical assets (Level 1)
Significant other observable inputs (Level 2)
Guaranteed contract value (Level 3)
Net asset value per share practical expedient
Total fair value
(b)
(a)
December 31, 2020
December 31, 2019
$
$
186.0
10.3
120.2
39.3
355.8
177.9
—
—
37.2
215.1
(a)
(b)
In 2020, we acquired operations in the Netherlands as part of the U.K.-based G4S plc ("G4S") acquisition. As a result, we acquired insurance contract assets related to the Netherlands pension plan. These investments
are valued at the highest value available at year end, either the reported cash surrender value of the contract or the vested benefit obligation ("VBO"). The VBO for a defined benefit pension plan is the actuarial
present value of the vested benefits to which the employee is currently entitled but based on the employee's expected date of separation or retirement. Both the cash surrender value and the VBO are determined based
on unobservable inputs, which are contractually or actuarially determined, regarding returns, fees, the present value of the future cash flows of the contract and benefit obligations. The contract is classified as a Level
3 investment.
In accordance with ASC Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value
hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.
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. Prior to April 1, 2020, we matched the first 2% of employees’ eligible contributions to our U.S. 401(k) plan. In April 2020,
we temporarily suspended matching contributions. Our matching contribution expense is as follows:
(In millions)
Years Ended December 31,
U.S. 401(K)
Other plans
Total
2020
2019
2018
$
$
2.0
9.9
11.9
6.5
4.9
11.4
5.0
4.9
9.9
97
Note 5 - Income Taxes
(In millions)
Income (loss) from continuing operations before income taxes
U.S.
Foreign
Income from continuing operations before income taxes
Provision (benefit) for income taxes from continuing operations
Current tax expense (benefit)
U.S. federal
State
Foreign
Current tax expense
Deferred tax expense (benefit)
U.S. federal
State
Foreign
Deferred tax expense (benefit)
Provision for income taxes of continuing operations
(In millions)
Comprehensive provision (benefit) for income taxes allocable to
Continuing operations
Discontinued operations
Other comprehensive income (loss)
Equity
Comprehensive provision for income taxes
Years Ended December 31,
2019
2020
2018
(72.9)
152.2
79.3
(0.8)
(0.6)
86.2
84.8
(7.9)
(1.6)
(18.7)
(28.2)
56.6
(90.2)
183.7
93.5
(0.8)
4.3
90.8
94.3
(30.4)
(4.8)
1.9
(33.3)
61.0
(32.9)
75.4
42.5
(2.3)
0.7
92.1
90.5
(7.5)
(2.9)
(10.1)
(20.5)
70.0
Years Ended December 31,
2019
2020
2018
56.6
(0.2)
(12.4)
(0.6)
43.4
61.0
0.2
0.4
—
61.6
70.0
—
5.0
—
75.0
$
$
$
$
$
$
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 21% for 2020, 2019 and
2018.
(In percentages)
U.S. federal tax rate
Increases (reductions) in taxes due to:
(a)
Venezuela deconsolidation and devaluations
Foreign rate differential
Taxes on cross border income, net of credits
Tax on accelerated U.S. income
Adjustments to valuation allowances
Foreign income taxes
Tax reform
French business tax
State income taxes, net
Share-based compensation
Acquisition costs
Other
Actual income tax rate on continuing operations
Years Ended December 31,
2019
2020
2018
21.0 %
—
12.9
11.0
—
6.6
10.6
—
3.7
(1.6)
(3.1)
6.0
4.3
71.4 %
21.0 %
—
17.3
9.3
(7.9)
16.0
13.7
—
3.0
(2.2)
(4.8)
—
(0.2)
65.2 %
21.0 %
62.4
39.3
22.6
—
13.1
18.9
(4.9)
8.0
(1.3)
(14.4)
—
—
164.7 %
(a)
In 2019, we recognized a benefit of $7.3 million related to a previously recognized $23.5 million current tax expense that accelerated U.S. taxable income in 2015.
98
Components of Deferred Tax Assets and Liabilities
(In millions)
Deferred tax assets
Pension liabilities
Retirement benefits other than pensions
Lease liabilities
Workers’ compensation and other claims
Property and equipment, net
Other assets and liabilities
Net operating loss carryforwards
Foreign tax and other tax credits
Subtotal
Valuation allowances
Total deferred tax assets
(a)
Deferred tax liabilities
Right-of-use assets, net
Goodwill and other intangibles
Other assets and miscellaneous
Deferred tax liabilities
Net deferred tax asset
Included in:
Noncurrent assets
Noncurrent liabilities
Net deferred tax asset
December 31,
2020
2019
$
$
$
85.3
67.5
72.3
35.6
39.2
108.7
74.8
81.6
565.0
(128.1)
436.9
68.3
60.0
36.4
164.7
272.2
314.9
(42.7)
272.2
62.1
61.2
62.8
37.0
31.0
93.6
51.7
76.8
476.2
(118.3)
357.9
59.3
17.4
28.9
105.6
252.3
273.5
(21.2)
252.3
(a) U.S. foreign tax credits of $77.4 million have a 10 year carryforward period and the remaining credits of $4.2 million have various carryforward periods. The U.S. foreign tax credits and other U.S. tax credits have a
valuation allowance.
Valuation Allowances
Valuation allowances relate to deferred tax assets for certain federal credit carryforwards, certain state and non-U.S. jurisdictions. Based on our analysis of positive and
negative evidence including 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, 2020.
(In millions)
Valuation allowances:
Beginning of year
Expiring tax credits
Acquisitions and dispositions
Changes in judgment about deferred tax assets
Other changes in deferred tax assets, charged to:
Income from continuing operations
Other comprehensive income (loss)
Foreign currency exchange effects
End of year
(a)
Years Ended December 31,
2019
2020
2018
$
$
118.3
(0.4)
4.9
(2.4)
8.1
(0.3)
(0.1)
128.1
100.7
(0.3)
3.1
5.3
10.0
—
(0.5)
118.3
98.9
(0.6)
(0.7)
—
6.1
(0.3)
(2.7)
100.7
(a)
Changes in judgment about valuation allowances are based on a recognition threshold of “more-likely-than-not” of realizing beginning-of-year balances of deferred tax assets. Amounts are recognized in income from
continuing operations.
99
Net Operating Losses
The gross amount of the net operating loss carryforwards as of December 31, 2020, was $526.8 million. The tax benefit of net operating loss carryforwards, before
valuation allowances, as of December 31, 2020, was $74.8 million, and expires as follows:
(In millions)
Years of expiration
2021-2025
2026-2030
2031 and thereafter
Unlimited
Uncertain Tax Positions
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(In millions)
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
Increases related to acquisitions
Decreases related to acquisitions
Settlements
Effect of the expiration of statutes of limitation
Foreign currency exchange effects
End of year
Federal
State
Foreign
Total
$
$
—
—
—
—
—
—
0.8
14.1
0.7
15.6
10.6
2.5
2.7
43.4
59.2
Years Ended December 31,
2019
2020
2018
$
$
12.0
—
(0.2)
2.3
4.1
—
(2.1)
(1.4)
(0.7)
14.0
9.5
0.2
(0.8)
1.4
3.1
—
(0.1)
(1.3)
—
12.0
10.6
3.3
16.8
44.1
74.8
10.4
0.3
—
1.3
—
(0.2)
(0.4)
(1.1)
(0.8)
9.5
Included in the balance of unrecognized tax benefits at December 31, 2020, are potential benefits of approximately $13.5 million that, if recognized, will reduce the effective
tax rate on income from continuing operations.
We recognize accrued interest and penalties related to unrecognized tax benefits in provision (benefit) for income taxes. We reverse interest and penalty accruals when a
statute of limitation lapses or when we otherwise conclude the amounts should not be accrued. The impact of interest and penalties on the 2020, 2019 and 2018 tax
provisions was not significant. We had accrued interest and penalties of $5.7 million at December 31, 2020, and $5.4 million at December 31, 2019.
We file income tax returns in the U.S. federal and various state and foreign jurisdictions. With a few exceptions, as of December 31, 2020, 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 2017. Additionally, due to statute of limitations expirations and audit
settlements, it is reasonably possible that approximately $2.7 million of currently remaining unrecognized tax positions may be recognized by the end of 2021.
100
Note 6 - Property and Equipment
The following table presents our property and equipment that is classified as held and used:
(In millions)
Land
Buildings
Leasehold improvements
Vehicles
Capitalized software
Other machinery and equipment
(a)
Accumulated depreciation and amortization
Property and equipment, net
(a) Amortization of capitalized software costs included in continuing operations was $14.7 million in 2020, $15.7 million in 2019 and $16.5 million in 2018.
101
December 31,
2020
2019
$
$
53.1
229.1
269.2
686.6
233.4
742.4
2,213.8
(1,375.6)
838.2
51.9
211.0
236.0
646.3
213.4
667.3
2,025.9
(1,262.6)
763.3
Note 7 - Acquisitions and Dispositions
In 2020, we acquired multiple business operations from G4S plc ("G4S") at different times during the year. In 2019, we acquired four business operations. In 2018, we
acquired one business operation and additionally acquired a controlling interest in a second business operation. We accounted for these 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 operations include the results of operations for each acquired entity from the date of acquisition.
G4S Acquisitions
On February 26, 2020, we announced that we agreed to acquire the majority of the cash management operations of U.K.-based G4S, with closings planned in multiple
phases in 2020. In March 2020, we acquired 100% of the capital stock of G4S International Logistics Group Limited, a company which directly or indirectly owns
controlling interests in multiple businesses providing secure international transportation of valuables. In the second quarter of 2020, we acquired cash management
operations from G4S located in the Netherlands, Belgium, Ireland, Hong Kong, Cyprus, Romania, the Czech Republic, Malaysia, the Dominican Republic and the
Philippines. In the third quarter of 2020, we acquired operations in Indonesia, Estonia, Latvia and Lithuania. For the majority of the acquisitions in the second and third
quarters of 2020, we acquired 100% of the ownership interests. In Malaysia, the Dominican Republic, the Philippines and Indonesia, we acquired ownership interests of less
than 100%. We believe that we meet the accounting criteria for consolidating these subsidiaries. In the aggregate, the purchase consideration for the G4S acquisitions in
2020 is $709.7 million. We also paid G4S approximately $111 million for net intercompany receivables from the acquired subsidiaries (included in accounts payable,
income taxes payable and accrued liabilities in the consolidated statement of cash flows). The operations we have acquired through December 31, 2020, which represent
approximately 90% of the total estimated purchase price, generated approximately $740 million in revenues in 2019. See Note 26 – Subsequent Events for further
discussion.
The contingent consideration noted in the following table below is related to the acquisition of the Malaysia operations. The consideration will be paid when minimum
dividend distributions are received by Brink's relating to cash on the balance sheets of the Malaysia subsidiaries as of the acquisition date. We used a probability-weighted
approach to estimate the fair value of the contingent consideration. The fair value of the contingent consideration reflected in the table below is the full $22 million that
remains potentially payable as of December 31, 2020 as we believe it is unlikely that the contingent consideration payments will be reduced.
We have provisionally estimated fair values for the assets purchased, liabilities assumed and purchase consideration as of the date of the acquisition in the following table.
The determination of estimated fair value required management to make significant estimates and assumptions. The amounts reported are considered provisional as we are
completing the valuations that are required to allocate the purchase price in areas such as property and equipment, intangible assets, lease-related assets and liabilities,
deferred taxes and goodwill. As a result, the allocation of the provisional purchase price may change in the future.
(In millions)
Fair value of purchase consideration
Cash paid through December 31, 2020
Contingent consideration
Liabilities assumed from seller
Receivable from seller
Fair value of purchase consideration
Fair value of net assets acquired
(a)
Cash
Restricted cash
Accounts receivable
Other current assets
Property and equipment, net
Right-of-use assets, net
Intangible assets
Goodwill
Other noncurrent assets
Current liabilities
Lease liabilities
Other noncurrent liabilities
Fair value of net assets acquired
Less: Fair value of noncontrolling interest
Fair value of purchase consideration
(b)
Estimated Fair Value at
Acquisition Date
$
$
$
$
$
686.5
22.0
1.6
(0.4)
709.7
218.2
30.1
135.2
24.9
119.7
66.5
175.9
422.5
18.2
(281.0)
(61.3)
(95.0)
773.9
(64.2)
709.7
(a)
(b)
Intangible assets are composed of customer relationships ($176 million fair value and 15 year amortization period).
Consists of intangible assets that do not qualify for separate recognition, combined with synergies expected from integrating G4S operations with our existing operations. Goodwill has been provisionally assigned to the Global
Markets-Europe reporting unit ($190 million), the Global Markets-Asia reporting unit ($160 million), the Global Markets-MEA & GS reporting unit ($70 million) and the Global Markets-South America reporting unit ($3 million).
We do not currently expect goodwill in these reporting units to be deductible for tax purposes.
102
Rodoban Transportes Aereos e Terrestres Ltda., Rodoban Servicos e Sistemas de Seguranca Ltda., and Rodoban Seguranca e Transporte de Valores Ltda ("Rodoban")
Brazilian cash management business
On January 4, 2019, we acquired 100% of the capital stock of Rodoban in Brazil for $134 million. The Rodoban business is expected to expand our operations in
southeastern Brazil and will be integrated with our existing Brink's Brazil operations. Rodoban has approximately 2,900 employees, 13 branches and about 190 armored
vehicles across its operations.
We estimated fair values for the assets purchased, liabilities assumed and purchase consideration as of the date of the acquisition in the following table. The determination of
estimated fair value required management to make significant estimates and assumptions. We finalized our purchase price accounting in the fourth quarter of 2019. There
have been no significant changes to our fair value estimates of the net assets acquired of Rodoban.
(In millions)
Fair value of purchase consideration
Cash paid through December 31, 2020
Indemnification asset
Fair value of purchase consideration
Fair value of net assets acquired
Cash
Accounts receivable
Other current assets
Property and equipment, net
Intangible assets
Goodwill
Other noncurrent assets
Current liabilities
Noncurrent liabilities
(b)
(a)
Fair value of net assets acquired
Estimated Fair Value at
Acquisition Date
$
$
$
$
135.7
(1.9)
133.8
1.4
8.9
0.5
2.4
49.0
85.1
5.8
(11.4)
(7.9)
133.8
(a)
(b)
Intangible assets are composed of customer relationships ($47 million fair value and 11 year amortization period), trade name ($1 million fair value and 1 year amortization period), and non-compete agreement ($1
million fair value and 5 year amortization period).
Consists of intangible assets that do not qualify for separate recognition, combined with synergies expected from integrating Rodoban’s operations with our existing Brink’s Brazil operations. All of the goodwill has
been assigned to the Brazil reporting unit and is expected to be deductible for tax purposes.
103
Dunbar Armored, Inc. ("Dunbar")
U.S. cash management business
On August 13, 2018, we acquired 100% of the shares of Dunbar for approximately $541 million. We paid cash of approximately $541 million, which is net of approximately
$6 million received from the seller in the fourth quarter of 2020 related to a working capital adjustment. The Dunbar business is being integrated with our existing Brink's
U.S. operations. This acquisition has expanded our customer base in the U.S. as a result of Dunbar's focus on small-to-medium sized retailers and financial institutions.
Dunbar has approximately 5,400 employees, 78 branches and over 1,600 armored vehicles across its operations.
We estimated fair values for the assets purchased, liabilities assumed and purchase consideration as of the date of the acquisition in the following table. The determination of
estimated fair value required management to make significant estimates and assumptions. We finalized our purchase price accounting in the third quarter of 2019. As
compared to our initial estimates in the period of acquisition, our fair value estimates of acquisition date intangible assets decreased approximately $20 million, acquisition
date goodwill increased approximately $21 million, acquisition date other noncurrent assets increased approximately $11 million and acquisition date noncurrent liabilities
increased approximately $16 million and total purchase consideration decreased approximately $6 million. There have been no other significant changes to our fair value
estimates of the net assets acquired for the Dunbar acquisition.
(In millions)
Fair value of purchase consideration
Cash paid through December 31, 2020
Fair value of purchase consideration
Fair value of net assets acquired
Cash
Accounts receivable
Other current assets
Property and equipment, net
Intangible assets
Goodwill
Other noncurrent assets
Current liabilities
Noncurrent liabilities
(b)
(a)
Fair value of net assets acquired
Estimated Fair Value at
Acquisition Date
$
$
$
$
540.5
540.5
25.8
31.9
11.7
56.6
162.0
304.1
21.1
(29.5)
(43.2)
540.5
(a)
(b)
Intangible assets are composed of customer relationships ($148 million fair value and 15 year amortization period) and rights related to the trade name ($14 million fair value and 8 year amortization period).
Consists of intangible assets that do not qualify for separate recognition, combined with synergies expected from integrating Dunbar’s operations with our existing Brink’s U.S. operations. All of the goodwill has been
assigned to the U.S. reporting unit and is expected to be deductible for tax purposes.
104
Other 2019 acquisitions
On June 12, 2019, we acquired 100% of the capital stock of Balance Innovations, LLC and its wholly owned subsidiary, Balance Innovations Services, Inc. (together "BI").
BI develops and licenses software that provides real-time data to optimize operations for general retail and convenience store industries throughout the United States and
Canada. This acquisition enhances our ability to deliver technology-enabled, end-to-end retail cash management services.
On June 14, 2019, we acquired 100% of the capital stock of Comercio Eletronico Facil Ltda. ("COMEF"), a Brazil-based company. COMEF offers bank correspondent
services and bill payment processing and is expected to supplement our existing Brazilian payment services businesses.
On September 30, 2019, we acquired 100% of the capital stock of Transportadora de Valores del Sur Limitada and its wholly owned subsidiary, TVS Pagos, Recaudos y
Procesos S.A.S. (together "TVS"). TVS provides CIT and money processing services in Colombia. This acquisition is expected to provide opportunities for branch
consolidation and route efficiencies and position our existing Colombian business as well as TVS to more effectively service our customers.
The aggregate purchase price of these three business acquisitions (BI, COMEF, and TVS) was approximately $50 million. These three acquired operations employ
approximately 1,300 people in the aggregate.
For these three business acquisitions (BI, COMEF and TVS), we estimated fair values for the assets purchased and liabilities assumed as of the date of the acquisitions.
These estimated amounts are aggregated in the following table. The determination of estimated fair value required management to make significant estimates and
assumptions. We finalized our purchase price accounting for these business acquisitions in 2020.
(In millions)
Fair value of purchase consideration
Cash paid through December 31, 2020
Contingent consideration
Indemnification asset
Fair value of purchase consideration
Fair value of net assets acquired
Cash
Accounts receivable
Property and equipment, net
Intangible assets
Goodwill
Other current and noncurrent assets
Current liabilities
Noncurrent liabilities
(b)
(a)
Fair value of net assets acquired
Estimated Fair Value at
Acquisition Date
$
$
$
$
60.6
1.6
(13.3)
48.9
6.5
4.5
7.1
24.3
34.3
2.0
(15.2)
(14.6)
48.9
(a)
(b)
Intangible assets are composed of developed technology, customer relationships and trade names.
Consists of intangible assets that do not qualify for separate recognition, combined with synergies expected from integrating these acquired operations into our existing operations. The goodwill from these
acquisitions has been assigned to the following reporting units: BI (U.S.), COMEF (Brazil) and TVS (Global Markets - South America). We do not expect goodwill related to COMEF or TVS to be deductible for tax
purposes. We expect goodwill related to BI to be deductible for tax purposes.
Other 2018 acquisition
On December 4, 2018, we acquired 60% of the shares of Worldbridge Secure Logistics Co., Ltd. ("Worldbridge"), a Cambodian company that provides CIT and money
processing services. The total purchase consideration for Worldbridge was less than $2 million.
105
Actual and Pro Forma (unaudited) disclosures
The pro forma consolidated results of Brink’s presented below are unaudited and reflect a hypothetical ownership on January 1, 2019 of the businesses we acquired during
2020 and a hypothetical ownership on January 1, 2018 for the businesses we acquired in 2019.
(In millions)
Revenue
Net income attributable to
Brink's
Actual results included in Brink's consolidated 2020 and 2019 results for businesses acquired in 2020 and 2019
from the date of acquisition
Twelve months ended December 31, 2020
G4S
Total
Twelve months ended December 31, 2019
Rodoban
Other acquisitions
(a)
Total
(a)
Includes the actual results of Balance Innovations, COMEF and TVS.
(In millions)
Pro forma results of Brink's for the twelve months ended December 31,
2020
Brink's as reported
G4S
(a)
Total
2019
Brink's as reported
(a)
G4S
Rodoban
Other acquisitions
(a)
(a)
Total
(a)
Represents amounts prior to acquisition by Brink's.
Acquisition costs
$
$
$
$
$
$
$
$
442.7
442.7
66.0
16.1
82.1
10.5
10.5
4.6
0.2
4.8
Revenue
Net income attributable to
Brink's
3,690.9
192.0
3,882.9
3,683.2
740.0
0.6
26.8
4,450.6
16.0
(4.2)
11.8
29.0
10.7
—
1.6
41.3
We have incurred $19.3 million in transaction costs related to business acquisitions in 2020 ($7.9 million in 2019 and $6.7 million in 2018). These costs are classified in the
consolidated statement of operations as selling, general and administrative expenses.
Acquisition of noncontrolling interest
In November 2018, we completed the acquisition of the 42% noncontrolling interest in our consolidated subsidiary, Brink's de Colombia, S.A. We now own 100% of the
shares of this subsidiary and we accounted for this increase in ownership interest as an equity transaction.
Dispositions
On January 1, 2020, we sold 100% of our ownership interest in a French security services company for a net sales price of approximately
$11 million. We recognized a $4.5 million gain on the sale of this business, which is reported in interest and other nonoperating income (expense) in the consolidated
statements of operations. The French security services company was part of the Europe reportable segment and reported revenues of $3 million in 2019.
On June 1, 2018, we sold 100% of our ownership interest in a French airport security services company for a net sales price of approximately $19 million. On a cumulative
basis, we have recognized a $10.8 million gain on the sale of this business, which is reported in interest and other nonoperating income (expense) in the consolidated
statements of operations. The French airport security services company was part of the Europe reportable segment and reported revenues of $79 million in 2017.
106
Note 8 - Goodwill and Other Intangible Assets
Goodwill
The changes in the carrying amount of goodwill by operating segment for the years ended December 31, 2020 and 2019 are as follows:
(In millions)
Goodwill:
North America
Latin America
Europe
Rest of World
Total Goodwill
(a)
Includes adjustments related to prior year acquisitions ($0.9 million in Latin America).
(In millions)
Goodwill:
North America
Latin America
Europe
Rest of World
Total Goodwill
Beginning Balance
Acquisitions/
(a)
Dispositions
Currency
Ending Balance
December 31, 2020
$
$
347.8
248.5
106.5
81.8
784.6
—
1.8
187.7
229.5
419.0
0.1
(28.0)
30.7
12.8
15.6
347.9
222.3
324.9
324.1
1,219.2
Beginning Balance
Acquisitions/
(a)
Dispositions
Currency
Ending Balance
December 31, 2019
$
$
329.8
157.3
108.7
82.8
678.6
17.6
99.6
—
0.2
117.4
0.4
(8.4)
(2.2)
(1.2)
(11.4)
347.8
248.5
106.5
81.8
784.6
(a)
Includes adjustments related to prior year acquisitions ($3.1 million decrease in North America and $0.2 million increase in Rest of World).
Intangible Assets
The following table summarizes our other intangible assets by category:
December 31, 2020
December 31, 2019
(In millions)
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Customer relationships
Indefinite-lived trade names
Finite-lived trade names
Developed technology
Other
Total
$
$
509.0
7.8
20.1
8.6
4.6
550.1
(109.2)
—
(9.1)
(1.5)
(4.2)
(124.0)
399.8 $
7.8
11.0
7.1
0.4
426.1 $
322.3
8.2
20.7
8.7
6.1
366.0
(80.3)
—
(7.1)
(0.8)
(5.3)
(93.5)
242.0
8.2
13.6
7.9
0.8
272.5
Weighted-average
amortization
period
12.2
—
5.4
9.5
2.6
Total amortization expense for our finite-lived intangible assets was $35.1 million in 2020 and $27.8 million in 2019. Our estimated aggregate amortization expense for
finite-lived intangibles recorded at December 31, 2020, for the next five years is as follows:
(In millions)
Amortization expense
2021
2022
2023
2024
2025
$
36.4
35.3
34.9
34.5
33.9
107
Note 9 - Prepaid Expenses and Other
(In millions)
Prepaid expenses
Income tax receivable
Other
Prepaid expenses and other
Note 10 - Other Assets
(In millions)
Deposits
Deferred profit sharing asset
Income tax receivable
Derivative instruments
Equity method investment in unconsolidated entities
Stop loss insurance receivable
Cash surrender value of life insurance policies
Indemnification asset
Debt issue costs
Marketable securities
Other
Other assets
108
December 31,
2020
2019
126.4
23.5
42.9
192.8
81.6
25.7
20.7
128.0
December 31,
2020
2019
30.7
10.7
7.3
20.4
4.9
14.5
0.9
17.5
6.0
24.8
62.7
200.4
23.6
10.9
17.1
5.0
5.0
17.0
0.9
20.6
5.5
12.0
49.4
167.0
$
$
$
$
Note 11 - Accumulated Other Comprehensive Income (Loss)
The following tables provide the components of other comprehensive income (loss), including the amounts reclassified from accumulated other comprehensive income
(loss) into earnings:
(In millions)
2020
Amounts attributable to Brink's:
Benefit plan adjustments
Foreign currency translation adjustments
Gains (losses) on cash flow hedges
(b)
Amounts attributable to noncontrolling interests:
Benefit plan adjustments
Foreign currency translation adjustments
Total
Benefit plan adjustments
Foreign currency translation adjustments
Gains (losses) on cash flow hedges
(c)
(a)
(b)
2019
Amounts attributable to Brink's:
Benefit plan adjustments
Foreign currency translation adjustments
Gains (losses) on cash flow hedges
Amounts attributable to noncontrolling interests:
Foreign currency translation adjustments
Total
Benefit plan adjustments
Foreign currency translation adjustments
Gains (losses) on cash flow hedges
(c)
(a)
(b)
See page 110 for footnote explanations.
Amounts Arising During the
Current Period
Amounts Reclassified to Net
Income (Loss)
Pretax
Income Tax
Pretax
Income Tax
Total Other
Comprehensive
Income (Loss)
22.7
—
(2.5)
20.2
—
—
—
22.7
—
(2.5)
20.2
4.4
—
4.8
9.2
—
—
4.4
—
4.8
9.2
56.7
—
(12.3)
44.4
—
—
—
56.7
—
(12.3)
44.4
61.4
—
(0.2)
61.2
—
—
61.4
—
(0.2)
61.2
(12.7)
—
4.9
(7.8)
—
—
—
(12.7)
—
4.9
(7.8)
(9.9)
0.1
0.2
(9.6)
—
—
(9.9)
0.1
0.2
(9.6)
(31.8)
19.6
(8.8)
(21.0)
0.2
4.6
4.8
(31.6)
24.2
(8.8)
(16.2)
17.9
(0.8)
(14.0)
3.1
0.8
0.8
17.9
—
(14.0)
3.9
$
$
$
$
(98.5)
19.6
1.1
(77.8)
0.2
4.6
4.8
(98.3)
24.2
1.1
(73.0)
(38.0)
(0.9)
(18.8)
(57.7)
0.8
0.8
(38.0)
(0.1)
(18.8)
(56.9)
109
(In millions)
2018
Amounts attributable to Brink's:
Benefit plan adjustments
Foreign currency translation adjustments
Gains (losses) on cash flow hedges
Amounts attributable to noncontrolling interests:
Foreign currency translation adjustments
Total
Benefit plan adjustments
Foreign currency translation adjustments
Gains (losses) on cash flow hedges
(c)
(a)
(b)
Amounts Arising During the
Current Period
Amounts Reclassified to Net
Income (Loss)
Pretax
Income Tax
Pretax
Income Tax
Total Other
Comprehensive
Income (Loss)
$
$
(31.4)
(151.6)
0.3
(182.7)
(0.8)
(0.8)
(31.4)
(152.4)
0.3
(183.5)
8.6
—
—
8.6
—
—
8.6
—
—
8.6
65.0
107.2
(0.2)
172.0
—
—
65.0
107.2
(0.2)
172.0
(13.3)
(0.3)
—
(13.6)
—
—
(13.3)
(0.3)
—
(13.6)
28.9
(44.7)
0.1
(15.7)
(0.8)
(0.8)
28.9
(45.5)
0.1
(16.5)
(a)
The amortization of actuarial losses and prior service cost is part of total net periodic retirement benefit cost when reclassified to net income (loss). Net periodic retirement benefit cost also includes service cost,
interest cost, expected returns on assets, and settlement costs. Total service cost is allocated between cost of revenues and selling, general and administrative expenses on a plan-by-plan basis and the remaining net
periodic retirement benefit cost items are allocated to interest and other nonoperating income (expense):
(In millions)
Total net periodic retirement benefit cost included in:
Cost of revenues
Selling, general and administrative expenses
Interest and other nonoperating income (expense)
2020
December 31,
2019
2018
$
7.7
2.1
37.9
7.8
2.3
52.7
8.4
2.3
39.7
(b)
(c)
2020 foreign currency translation adjustment amounts arising during the current period reflect primarily the strengthening of the euro and various currencies related to the G4S acquisition, partially offset by
devaluation of the Mexican peso and Brazilian real. 2018 foreign currency translation adjustment amounts reclassified to net income are due to the deconsolidation of Venezuela (see Note 1). 2018 foreign currency
translation adjustment amounts arising during the current period reflect primarily the devaluation of the Argentine peso (prior to the July 1, 2018 highly inflationary designation) and Brazilian real.
Pretax gains and losses on cash flow hedges are classified in the consolidated statements of operations as
•
•
•
other operating income (expense) ($22.1 million gain in 2020, $5.8 million gain in 2019 and no gains or losses in 2018.)
interest expense ($9.8 million of expense in 2020 and $5.7 million of expense in 2019.)
interest and other nonoperating income (expense) (no gains or losses in 2020, no gains or losses in 2019 and no gains or losses in 2018.)
110
The changes in accumulated other comprehensive loss attributable to Brink’s are as follows:
(In millions)
Balance as of December 31, 2017
Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive loss to
net income (loss)
Other comprehensive income (loss) attributable to Brink's
Cumulative effect of change in accounting principle
Acquisitions of noncontrolling interests
Balance as of December 31, 2018
(a)
Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive loss to
net income (loss)
Other comprehensive income (loss) attributable to Brink's
Cumulative effect of change in accounting principle
Balance as of December 31, 2019
(b)
Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive loss to
net income (loss)
Other comprehensive income (loss) attributable to Brink's
Balance as of December 31, 2020
$
$
Benefit Plan
Adjustments
Foreign Currency
Translation
Adjustments
Unrealized Gains
(Losses) on
Available-for-Sale
Securities
Gains (Losses)
on Cash Flow
Hedges
(601.0)
(22.8)
51.7
28.9
—
—
(572.1)
(33.6)
51.5
17.9
(28.8)
(583.0)
(75.8)
44.0
(31.8)
(614.8)
(327.4)
(151.6)
106.9
(44.7)
—
(9.9)
(382.0)
(0.9)
0.1
(0.8)
—
(382.8)
19.6
—
19.6
(363.2)
1.1
—
—
—
(1.1)
—
—
—
—
—
—
—
—
—
—
—
0.7
0.3
(0.2)
0.1
—
—
0.8
(14.0)
—
(14.0)
—
(13.2)
(1.4)
(7.4)
(8.8)
(22.0)
Total
(926.6)
(174.1)
158.4
(15.7)
(1.1)
(9.9)
(953.3)
(48.5)
51.6
3.1
(28.8)
(979.0)
(57.6)
36.6
(21.0)
(1,000.0)
(a) We adopted ASU 2016-01 (see Note 1) effective January 1, 2018 and recognized a cumulative-effect adjustment to retained earnings.
(b) We adopted ASU 2018-02 (see Note 1) effective January 1, 2019 and recognized a cumulative-effect adjustment to retained earnings.
111
Note 12 - Fair Value of Financial Instruments
Investments in Marketable Securities
We have investments in mutual funds and equity securities that are carried at fair value in the financial statements and are included in other assets on the consolidated
balance sheet. For these investments, fair value was based on quoted market prices, which we have categorized as a Level 1 valuation.
Fixed-Rate Debt
The fair value and carrying value of our fixed-rate debt, excluding any unamortized debt issuance costs, are as follows:
(In millions)
$600 million Senior unsecured notes
Carrying value
Fair value
$400 million Senior unsecured notes
Carrying value
Fair value
December 31,
2020
2019
$
$
600.0
640.9
400.0
426.8
600.0
624.7
—
—
The fair value estimate of our senior unsecured notes was based on the present value of future cash flows, discounted at rates for similar instruments at the measurement
date, which we have categorized as a Level 3 valuation.
Forward and Swap Contracts
We have outstanding foreign currency forward and swap contracts to hedge transactional risks associated with foreign currencies. At December 31, 2020, the notional value
of our outstanding foreign currency forward and swap contracts was $427 million, with average maturities of approximately one month. These foreign currency forward and
swap contracts primarily offset exposures in the euro, the British pound and the Mexican peso and are not designated as hedges for accounting purposes. Accordingly,
changes in their fair value are recorded immediately in earnings. At December 31, 2020, the fair value of our short term foreign currency contracts was a net asset of
approximately $2.4 million, of which $3.5 million was included in prepaid expenses and other and $1.1 million was included in accrued liabilities on the consolidated
balance sheet. At December 31, 2019, the fair value of these foreign currency contracts was a net asset of approximately $0.6 million, of which $0.8 million was included in
prepaid expenses and other and $0.2 million was included in accrued liabilities on the consolidated balance sheet.
Amounts under these contracts were recognized in other operating income (expense) and in interest and other nonoperating income and expense as follows:
(In millions)
Derivative instrument gains (losses) included in other operating income (expense)
Derivative instrument losses included in other nonoperating income (expense)
(a)
Twelve Months Ended December 31,
2018
2019
2020
$
(3.0)
(7.0)
6.9
—
7.7
—
(a)
Represents net losses on foreign currency forward contracts related to 2020 and anticipated 2021 acquisition of business operations from G4S.
In the first quarter of 2019, we entered into a long term cross currency swap contract to hedge exposure in Brazilian real, which is designated as a cash flow hedge for
accounting purposes. At December 31, 2020, the notional value of this long term contract was $97 million with a weighted-average maturity of 1.9 years. At December 31,
2020, the fair value of the long term cross currency swap contract was a $23.6 million net asset, of which a $3.2 million asset is included in prepaid expense and other and a
$20.4 million asset is included in other assets on the consolidated balance sheet. At December 31, 2019, the fair value of the long term cross currency swap contract was a
$2.1 million net asset, of which a $4.9 million asset is included in other assets and a $2.8 million liability is included in accrued liabilities on the consolidated balance sheet.
112
Amounts under this contract were recognized in other operating income (expense) to offset transaction gains or losses and in interest expense as follows:
(In millions)
Twelve Months Ended
December 31,
2020
2019
Derivative instrument gains included in other operating income (expense)
$
22.1
Offsetting transaction losses
Derivative instrument losses included in interest expense
Net derivative instrument gains
(22.1)
(1.9)
20.2
5.8
(5.8)
(5.1)
0.7
In the first quarter of 2016, we entered into two interest rate swaps to hedge cash flow risk associated with changes in variable interest rates and are designated as cash flow
hedges for accounting purposes. At December 31, 2020, the notional value of these contracts was $40 million with a weighted-average maturity of 0.2 years. At
December 31, 2020, the fair value of these interest rate swaps was a liability of $0.1 million and was included in accrued liabilities on the consolidated balance sheet. At
December 31, 2019, the fair value of these interest rate swaps was an asset of $0.2 million and was included in prepaid expenses and other on the consolidated balance sheet.
The effect of these swaps is included in interest expense and was not significant in 2020, 2019 or 2018.
In the first quarter of 2019, we entered into ten interest rate swaps that hedge cash flow risk associated with changes in variable interest rates and that are designated as cash
flow hedges for accounting purposes. At December 31, 2020, the notional value of these contracts was $400 million with a remaining weighted-average maturity of 1.6
years. At December 31, 2020, the fair value of these interest rate swaps was a net liability of $29.0 million, of which $9.7 million was included in accrued liabilities and
$19.3 million was included in other liabilities on the consolidated balance sheet. At December 31, 2019, the fair value of these interest rate swaps was a net liability of $15.0
million, of which $3.6 million was included in accrued liabilities and $11.4 million was included in other liabilities on the consolidated balance sheet.
The effect of these swaps is included in interest expense.
(In millions)
Derivative instrument losses included in interest expense
Twelve Months Ended
December 31,
2020
2019
$
7.7
1.0
The fair values of these forward and swap contracts are based on the present value of net future cash payments and receipts, which we have categorized as a Level 2
valuation.
Contingent Consideration
In the fourth quarter of 2019, we paid the remaining contingent consideration payable for our acquisition of Maco Transportadora. This remaining contingent consideration
paid was a scheduled second installment, with the amount to be paid in the fourth quarter of 2019 based partially on the retention of customer revenue versus a target
revenue amount. If there was a shortfall in revenues, a multiple of 2.5 would have been applied to the revenue shortfall and the contingent consideration to be paid to the
former owners would have been reduced. Because there was no shortfall in revenues, no reduction occurred. We paid an additional $15.1 million and settled the outstanding
contingent consideration.
Other Financial Instruments
Other financial instruments include cash and cash equivalents, accounts receivable, floating rate debt, accounts payable and accrued liabilities. The financial statement
carrying amounts of these items approximate the fair value.
There were no transfers in or out of any of the levels of the valuation hierarchy in 2020.
113
Note 13 - Accrued Liabilities
(In millions)
Payroll and other employee liabilities
Taxes, except income taxes
Income taxes payable
Acquisition-related obligations
Workers’ compensation and other claims
Cash held by cash management services operations
Cash supply chain deposit liability
Retirement benefits (see Note 4)
Operating lease liabilities
Accrued interest
Contract liability
Derivative instruments
Other
Accrued liabilities
(a)
December 31,
2020
2019
$
$
159.1
112.2
21.6
—
31.6
19.1
113.7
13.1
77.2
17.5
15.1
10.9
188.1
779.2
140.8
98.1
26.7
7.8
26.1
26.3
47.4
12.9
65.9
6.0
12.8
6.7
150.9
628.4
(a)
Title to cash received and processed in certain of our secure cash management services operations transfers to us for a short period of time. The cash is generally credited to customers’ accounts the following day and
we record a liability while the cash is in our possession.
Note 14 - Other Liabilities
(In millions)
Workers’ compensation and other claims
Post-employment benefits
Asset retirement and remediation obligations
Acquisition-related obligations
Derivative instruments
Noncurrent tax liabilities
Deferred compensation
Other
Other liabilities
December 31,
2020
2019
$
$
75.0
7.2
26.8
25.7
19.3
16.1
10.6
70.3
251.0
81.3
7.2
18.6
1.5
11.3
15.3
10.9
37.0
183.1
114
Note 15 - Debt
(In millions)
Debt:
Short-term borrowings
Restricted cash borrowings (year-end weighted-average interest rate of 0.0% in 2020 and 0.0% in 2019
Other (year-end weighted-average interest rate of 5.4% in 2020 and 8.8% in 2019)
Total short-term borrowings
(a)
Long-term debt
Bank credit facilities:
Term loan A (year-end effective interest rate of 2.1% in 2020 and 3.5% in 2019)
less unamortized issuance cost of $5.4 million in 2020 and $3.0 million in 2019
Senior unsecured notes (year-end effective interest rate of 4.6% and 5.5% respectively for "2017 Senior Notes" and "2020 Senior
Notes" in 2020 and 4.6% in 2019)
less unamortized issuance cost of $12.5 million in 2020 and $7.1 million in 2019
Revolving Credit Facility (year-end weighted average interest rate of 3.5% in 2019)
Other primarily non-U.S. dollar-denominated facilities (year-end weighted-
average interest rate of 1.9% in 2020 and 7.0% in 2019)
Financing leases (year-end weighted-average interest rate of 4.0% in 2020 and 4.9% in 2019)
Total long-term debt
Total Debt
Included in:
Current liabilities
Noncurrent liabilities
Total debt
December 31,
2020
2019
$
$
—
14.2
14.2
10.3
4.0
14.3
$
1,292.4
767.0
987.5
—
40.2
151.4
2,471.5
592.9
115.0
4.9
149.5
1,629.3
2,485.7
1,643.6
151.5
2,334.2
2,485.7
88.8
1,554.8
1,643.6
$
$
$
$
(a)
The 2019 amount is for a short-term borrowing related to cash borrowed under lending arrangements used in the process of managing customer cash supply chains, which has been classified as restricted cash and not
available for general corporate purposes. In the third quarter of 2020, due to the change of contractual agreements, these funds no longer fall under the definition of restricted cash borrowings. See Note 20 for more
details.
Long-Term Debt
Senior Secured Credit Facility
In April 2020, we amended our senior secured credit facility (the “Senior Secured Credit Facility”) with Bank of America, N.A. as administrative agent to increase the term
loan borrowing by $590 million. After the amendment, the Senior Secured Credit Facility consisted of a $1 billion revolving credit facility (the "Revolving Credit Facility")
and $1.39 billion of term loans (the "Term Loans"). The proceeds from the incremental term loan borrowings were used to repay outstanding principal under the Revolving
Credit Facility as well as certain fees, costs and expenses related to the closing of the G4S acquisition.
In June 2020, we amended our Revolving Credit Facility to, among other things, change the methodology for calculating the Company’s leverage ratio by using a net first
lien leverage ratio (net secured debt leverage ratio) instead of a total net debt leverage ratio. Under the amended agreement, the maximum net first lien leverage ratio for the
remainder of 2020 is 4.25x.
All loans under the Revolving Credit Facility and the Term Loans mature five years after the date of the first amendment to the Senior Secured Credit Facility (February 8,
2024). Principal payments for the Term Loans are due quarterly in an amount equal to 1.25% of the initial loan amount with a final lump sum payment due on February 8,
2024. Interest rates for the Senior Secured Credit Facility are based on LIBOR plus a margin or an alternate base rate plus a margin. The Revolving Credit Facility allows us
to borrow money or issue letters of credit (or otherwise satisfy credit needs) on a revolving basis over the term of the facility. As of December 31, 2020, $1 billion was
available under the Revolving Credit Facility. The obligations under the Senior Secured Credit Facility are secured by a first-priority lien on all or substantially all of the
assets of the Company and certain of its domestic subsidiaries, including a first-priority lien on equity interests of certain of the Company’s direct and indirect subsidiaries.
The Company and certain of its domestic subsidiaries also guarantee the obligations under the Senior Secured Credit Facility.
The margin on both LIBOR and alternate base rate borrowings under the Senior Secured Credit Facility is based on the Company’s total net debt leverage ratio. The margin
on LIBOR borrowings, which can range from 1.25% to 2.50%, was 2% at December 31, 2020. The margin on alternate base rate borrowings, which can range from 0.25%
to 1.50%, was 1% as of December 31, 2020. We also pay an annual commitment fee on unused portion the Revolving Credit Facility based on the Company’s total net
leverage ratio. The commitment fee, which can range from 0.15% to 0.35%, was 0.3% as of December 31, 2020.
115
Senior Unsecured Notes
In June 2020, we issued at par five-year senior unsecured notes (the "2020 Senior Notes") in the aggregate principal amount of $400 million. The 2020 Senior Notes will
mature on July 15, 2025 and bear an annual interest rate of 5.5%. The 2020 Senior Notes are general unsecured obligations guaranteed by certain of the Company’s existing
and future U.S. subsidiaries, which are also guarantors under the Senior Secured Credit Facility.
In October 2017, we issued at par ten-year senior unsecured notes (the "2017 Senior Notes" and together with the 2020 Senior Notes, the "Senior Notes") in the aggregate
principal amount of $600 million. The 2017 Senior Notes will mature on October 15, 2027, bearing an annual interest rate of 4.625%. The 2017 Senior Notes are general
unsecured obligations guaranteed by certain of the Company’s existing and future U.S. subsidiaries, which are also guarantors under the Senior Secured Credit Facility.
The Senior Notes have not been and will not be registered under the Securities Act of 1933 (the “Securities Act”) or the securities laws of any other jurisdiction and may not
be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Senior Notes were offered in the United States only
to persons reasonably believed to be qualified institutional buyers in reliance on the exception from registration set forth in Rule 144A under the Securities Act and outside
the United States to non-U.S. persons pursuant to Regulation S under the Securities Act.
The aggregate proceeds from the Senior Secured Credit Facility and the 2017 Senior Notes were used in part to repay certain prior indebtedness and certain fees and
expenses related to the closing of the transactions. Borrowings were used for working capital needs, capital expenditures, acquisitions and other general corporate purposes.
The aggregate proceeds from the 2020 Senior Notes were used in part to repay certain existing indebtedness incurred in connection with the G4S acquisition, finance the
remaining G4S acquisition transactions and pay certain fees and expenses related to the transactions. Remaining net proceeds from the 2020 Senior Notes were used for
working capital needs, capital expenditures, acquisitions and other general corporate purposes.
Letter of Credit and Bank Guarantee Facilities
We have four committed letters of credit facilities totaling $68 million, of which approximately $21 million was available at December 31, 2020. At December 31, 2020, we
had undrawn letters of credit and guarantees of $47 million issued under these facilities. We have two $10 million facilities. The first $10 million facility expires in April
2022 while the second $10 million facility has no expiration date. The $32 million facility expires in December 2022 and the $16 million facility expires in January 2024.
We have two uncommitted letter of credit facilities totaling $55 million, of which approximately $32 million was available at December 31, 2020. At December 31, 2020,
we had undrawn letters of credit of $23 million issued under these facilities. The $40 million facility expires in December 2021 and the $15 million facility has no expiration
date.
The Senior Secured Credit Facility is also available for issuance of letters of credit and bank guarantees.
Minimum repayments of long-term debt are as follows:
(In millions)
2021
2022
2023
2024
2025
Later years
Total
Financing leases
Other long-term debt
Total
$
$
37.5
36.2
28.8
22.3
14.4
12.2
151.4
99.8
70.8
71.0
1,090.5
404.6
601.3
2,338.0
137.3
107.0
99.8
1,112.8
419.0
613.5
2,489.4
The Senior Secured Credit Facility, Senior Unsecured Notes, the letter of credit facilities and bank guarantee facilities contain various financial and other covenants. The
financial covenants, among other things, limit our ability to provide liens, restrict fundamental changes, limit transactions with affiliates and unrestricted subsidiaries, restrict
changes to our fiscal year and to organizational documents, limit asset dispositions, limit the use of proceeds from asset sales, limit sale and leaseback transactions, limit
investments, limit the ability to incur debt, restrict certain payments to shareholders, limit negative pledges, limit the ability to change the nature of our business, provide for
a maximum consolidated net leverage ratio and provide for minimum coverage of interest costs. If we were not to comply with the terms of our various financing
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 financing agreements. We were in compliance with all covenants at December 31, 2020.
116
Financing Leases
Property and equipment acquired under financing leases are included in property and equipment as follows:
(In millions)
Asset class:
Buildings
Vehicles
Machinery and equipment
Less: accumulated amortization
Total
December 31,
2020
2019
$
$
4.1
276.9
17.4
298.4
(128.9)
169.5
4.1
267.5
5.1
276.7
(114.2)
162.5
117
Note 16 - Accounts Receivable and Credit Losses
Accounts receivable
(In millions)
Trade
Other
Total accounts receivable
Allowance for doubtful accounts
Accounts receivable, net
Credit losses
December 31,
2020
2019
$
$
629.1
80.7
709.8
(30.7)
679.1
595.4
70.4
665.8
(30.2)
635.6
We are exposed to credit losses primarily through sales of our Core and High-Value services to customers with operations in the U.S. as well as customers in more than 100
countries outside the U.S. We typically invoice our customers on a monthly basis and payment terms are generally between 30 and 60 days.
We assess currently expected credit losses in our financial assets on a pool basis by aggregating financial assets with similar risk characteristics. We have pooled the
financial assets by geographical location, specifically by country, because of the similarities within each country such as customers, payment terms, and services offered.
Loss experience is monitored for each pool and we determine historical loss rates for each pool. These historical loss rates are the main assumption used in estimating
expected credit losses over the life of the financial assets.
We monitor the aging of accounts receivables by country and write off any accounts that are deemed uncollectible. We also monitor any significant economic events to
identify any current or expected trends and risks within a pool that could impact the collectability of outstanding accounts receivables balances that were not contemplated
or relevant during a previous period.
The following table is a rollforward of the allowance for doubtful accounts:
(In millions)
Allowance for doubtful accounts:
Beginning of year
Cumulative effect of change in accounting principle
Provision for uncollectible accounts receivable
Write offs and recoveries
Foreign currency exchange effects
End of year
(a)
Years Ended December 31,
2019
2020
2018
$
$
30.2
2.3
14.6
(17.0)
0.6
30.7
10.1
—
22.8
(2.2)
(0.5)
30.2
11.2
—
1.4
(0.9)
(1.6)
10.1
(a)
The provision includes a $13.1 million allowance in 2020 and a $19.2 million allowance in 2019 related to the internal loss in our U.S. global services operations. See Note 1 for details.
118
Note 17 - Leases
We lease facilities, vehicles, CompuSafe units, computers and other equipment under long-term operating and financing leases with varying terms. Most of the operating
leases contain renewal and/or purchase options at our sole discretion. The renewal periods differ by asset class and by country and are included in our determination of lease
term if we determine we are reasonably certain to exercise the option.
®
We have taken the component election for all material asset categories, except CompuSafe units. This election allows us to account for lease components (e.g., fixed
payments or variable payments that depend on a rate that can be determined at commencement, including rent for the right to use the asset) together with nonlease
components (e.g., other fixed payments that deliver a good or service including common-area maintenance costs) in the calculation of the right-of-use asset and
corresponding liability. Variable costs, such as inflation adjusted payments for facilities, or nonlease components that vary periodically (included as part of the component
election), are expensed as incurred.
Our leases do not contain any material residual value guarantees or material restrictive covenants.
The components of lease assets and liabilities were as follows:
Balance sheet classification
December 31,
2020
2019
Right-of-use assets, net
Property and equipment, net
Accrued liabilities
Current maturities of long-term debt
Lease liabilities
Long-term debt
(In millions)
Assets:
Operating lease assets
Finance lease assets
Total leased assets
Liabilities:
Current:
Operating
Financing
Noncurrent:
Operating
Financing
Total lease liabilities
The components of lease expense were as follows:
(In millions)
(a)
Operating lease cost
Short-term lease cost
Finance lease cost:
Amortization of related assets
Interest on related liabilities
Total lease cost
(a)
Includes variable lease costs, which are immaterial.
$
$
$
$
$
$
322.0 $
169.5
491.5 $
77.2 $
37.5
267.2
113.9
495.8 $
Years Ended December 31,
2019
2020
131.4 $
18.9
28.2
7.1
185.6 $
270.3
162.5
432.8
65.9
32.5
218.4
117.0
433.8
97.2
27.2
27.4
7.4
159.2
Net rent expense and amortization expense and interest on finance leases included in continuing operations was $151.3 million for the twelve months ended December 31,
2018.
119
Other information related to leases was as follows:
(In millions, except for lease term and discount rate)
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
Right-of-use assets obtained in exchange for lease obligations:
Operating leases
Finance leases
Weighted Average Remaining Lease Term
Operating leases
Finance leases
Weighted Average Discount Rate
Operating leases
Finance leases
Years Ended December 31,
2020
2019
$
$
100.4
7.1
34.8
123.6
37.9
96.0
7.4
29.4
56.3
59.7
7.2 years
4.5 years
7.2 years
5.2 years
6.6 %
4.9 %
6.9 %
4.9 %
As of December 31, 2020, future minimum lease payments under noncancellable operating leases with initial or remaining lease terms in excess of one year were as follows:
Facilities
Vehicles
Other
Total
(In millions)
2021
2022
2023
2024
2025
Later years
Total Lease Payments
Less: Interest
Present value of lease liabilities
$
$
$
68.1
56.2
47.5
39.9
31.0
132.6
375.3
93.8
281.5 $
9.2
5.7
3.3
1.4
0.7
0.8
21.1
1.8
19.3
As of December 31, 2020, minimum repayments of long-term debt under financing leases were as follows:
(In millions)
2021
2022
2023
2024
2025
Later years
Total
120
18.7
12.9
8.6
5.4
1.3
—
46.9
3.3
43.6
$
$
96.0
74.8
59.4
46.7
33.0
133.4
443.3
98.9
344.4
37.5
36.2
28.8
22.3
14.4
12.2
151.4
Note 18 - Share-Based Compensation Plans
We have share-based compensation plans to attract and retain employees and nonemployee directors and to more closely align their interests with those of our shareholders.
We have outstanding share-based awards granted to employees under the 2013 Equity Incentive Plan (the "2013 Plan") and the 2017 Equity Incentive Plan (the "2017
Plan"). These plans permit grants of restricted stock, restricted stock units, performance stock, performance units, stock appreciation rights, stock options, as well as other
share-based awards to eligible employees. The 2013 Plan and the 2017 Plan also permit cash awards to eligible employees. The 2017 Plan became effective May 2017. No
further grants of awards will be made under the 2013 Plan, although awards previously granted remain outstanding.
We also have outstanding deferred stock units granted to directors under the 2017 Plan. Share-based awards were previously granted to directors and remain outstanding
under the Non-Employee Director's Equity Plan and the Directors’ Stock Accumulation Plan, which has expired.
There are 4.6 million shares underlying the 2017 Plan that are authorized, but not yet granted. Outstanding awards at December 31, 2020, include performance share units,
restricted stock units, deferred stock units, performance-based stock options, time-based stock options and certain awards that will be settled in cash.
Compensation Expense
Compensation expense is measured using the fair-value-based method. Prior to 2020, for employee and director awards considered equity grants, compensation expense was
recognized from the award or grant date to the earlier of the retirement-eligible date or the vesting date. In 2020, the retirement eligibility provisions for many employee
awards were changed on a go-forward basis to require a six month notification period prior to actual retirement. For these awards, we recognize expense from the grant date
to six months after the participant's retirement eligible date. For awards considered liability awards, compensation cost is based on the change in the fair value of the
instrument for each reporting period and the percentage of the requisite service that has been rendered. Compensation cost associated with liability awards was not
significant in 2019 or 2018.
Compensation expenses are classified as selling, general and administrative expenses in the consolidated statements of operations.
Compensation expenses for the last three years and the amount of unrecognized expense for awards outstanding at December 31, 2020, were as follows:
(in millions except years)
Performance Share Units
Market Share Units
Restricted Stock Units
Deferred Stock Units and fees paid in stock
Performance-based Options
Time-based Options
Cash based awards
Share-based payment expense
Income tax benefit
Share-based payment expense, net of tax
Compensation Expense
Years Ended December 31,
2019
2020
2018
Unrecognized
Expense for
Nonvested Awards at
Dec 31, 2020
Weighted-average No.
of Years Unrecognized
Expense to be
Recognized
25.8
—
6.6
1.2
8.1
1.0
—
42.7
(9.2)
33.5
15.8 $
0.1
6.6
1.2
4.5
—
—
28.2
(6.5)
21.7
17.7
—
9.4
0.3
0.3
1.8
1.3
1.5
0.0
1.7
0.3
0.1
1.6
1.9
$
$
20.2
—
6.0
1.2
2.3
1.6
1.4
32.7
(7.4)
25.3
121
Value of Distributed or Exercised Awards
The value of shares distributed or options exercised in the last three years is as follows:
(in millions)
Performance Share Units
Market Share Units
Restricted Stock Units
Deferred Stock Units and fees paid in stock
Performance-based Options
Time-based vesting Options
(a)
(a)
Total
Income tax benefit realized
(a)
Intrinsic value for options.
Value of Shares Distributed or Exercised
Years Ended December 31,
2019
2020
2018
(a)
$
$
$
33.3
—
6.9
0.6
0.5
—
41.3
9.0
28.7
—
11.8
0.9
5.4
—
46.8
10.2
25.3
8.2
8.0
0.7
—
2.2
44.4
9.9
Restricted Stock Units (“RSUs”)
We granted RSUs to select senior executives and employees in the last three years that contain only a service condition. RSUs are paid out in shares of Brink’s stock when
the awards vest. For RSUs granted during the last three years, the units generally vest ratably in three equal annual installments. In 2020, we additionally granted RSUs that
will vest after a stated two year service condition has been met.
We measure the fair value of RSUs based on the price of Brink’s stock at the grant date, adjusted for a discount for dividends not received or accrued during the vesting
period. The weighted-average fair value per share at grant date was $70.85 in 2020, $78.28 in 2019 and $72.31 in 2018. The weighted-average discount was approximately
2% in each of 2020, 2019 and 2018.
The following table summarizes RSU activity during 2020:
Nonvested balance as of December 31, 2019
Activity from January 1 to December 31, 2020:
Granted
Forfeited
Conversion to cash settled awards
Vested
(a)
Nonvested balance as of December 31, 2020
Shares
(in thousands)
Weighted-Average
Grant Date Fair
Value Per Share
172.7 $
178.6
(12.5)
(1.3)
(85.7)
251.8 $
71.87
70.85
78.86
72.80
67.44
72.30
(a)
Certain RSUs were modified in the first quarter of 2020 to change the awards' classification from share-settled to cash-settled. The weighted-average grant date fair value per share shown above is the removal of the
original fair value.
Performance Share Units (“PSUs”)
We granted Internal Metric PSUs ("IM PSUs") and Total Shareholder Return PSUs ("TSR PSUs") to certain senior executives and employees in the last three years.
IM PSUs contain a performance condition as well as a service condition. We measure the fair value of these PSUs based on the price of Brink’s stock at the grant date,
adjusted for a discount for dividends not received or accrued during the vesting period. IM PSUs granted in 2020, 2019 and 2018 have a three year performance period.
IM PSUs will be paid out in shares of Brink’s stock when the awards vest. For the IM PSUs granted in 2020, 2019 and 2018, the number of shares paid out ranges from 0%
to 200% of an employee’s award, depending on the achievement of pre-established financial goals over the performance period. Shares are not paid out if the financial
results do not meet a pre-established threshold level of performance.
122
TSR PSUs contain a market condition as well as a service condition. We measure the fair value of TSR PSUs at the grant date using a Monte Carlo simulation model. TSR
PSUs granted have a three year performance period and typically vest at the end of three years. TSR PSUs are paid out in shares of Brink’s stock when the awards vest. The
number of shares paid out ranges from 0% to 200% of an employee's award for the 2020, 2019 and 2018 TSR PSU grants, depending on Brink's relative TSR rank among a
selected peer group.
The following table summarizes all PSU activity during 2020:
Nonvested balance as of December 31, 2019
Activity from January 1 to December 31, 2020:
Granted
Forfeited
Conversion to cash settled awards
Vested
(b)
(a)
Nonvested balance as of December 31, 2020
Shares
(in thousands)
Weighted-Average
Grant Date Fair
Value Per Share
564.2 $
248.4
(27.0)
(4.6)
(204.3)
576.7 $
70.10
83.68
76.32
65.42
56.72
80.43
(a)
(b)
Certain IM PSUs were modified in the first quarter of 2020 to change the awards' classification from share-settled to cash-settled. The weighted-average grant date fair value per share shown above is the removal
of the original fair value.
The vested PSUs presented are based on the target amount of the award. In accordance with the terms of the underlying award agreements, the actual shares earned and distributed for the performance period ended
December 31, 2019 were 394.0 thousand, compared to target shares of 204.3 thousand,
The following table provides the terms and weighted-average assumptions used in the Monte Carlo simulation model for the TSR PSUs granted in 2020, 2019 and 2018:
Terms and Assumptions Used to Estimate Grant Date Fair Value
2020 TSR PSUs
2019 TSR PSUs
2018 TSR PSUs
Terms of awards:
Performance period
Weighted-average assumptions used to estimate fair value:
Jan. 1, 2020 to
Dec. 31, 2022
Jan. 1, 2019 to
Dec. 31, 2021
Jan. 1, 2018 to
Dec. 31, 2020
(a)
Expected dividend yield
Expected stock price volatility
Risk-free interest rate
Contractual term in years
(c)
(b)
0.7 %
29.6 %
1.4 %
2.9
0.8 %
30.8 %
2.5 %
2.8
Weighted-average fair value estimates at grant date:
In millions
Fair value per share
$
$
3.6
94.53
$
$
3.0
105.16
0.8 %
29.9 %
2.4 %
2.9
3.2
79.05
(a)
(b)
(c)
TSR is determined assuming that dividends are reinvested. The stock price projection in the Monte Carlo simulation model assumed a 0% dividend yield, which is mathematically equivalent to reinvesting dividends
over the performance period. For the valuation of the TSR PSU, because the holders of the awards have no rights to any dividend paid during the vesting period, we applied a dividend yield in the Monte Carlo
simulation model to reduce the projected stock price as of the grant date.
The expected stock price volatility was calculated on the grant date for the most recent term equivalent to the contractual term in years.
The risk-free interest rate on each date of grant is the rate for a zero-coupon U.S. Treasury bill that was commensurate with the grant date contractual term.
Market Share Units (“MSUs”)
We previously granted MSUs. At December 31, 2020 and December 31, 2019, there were no remaining outstanding MSUs.
123
Options
Prior to 2019, we granted primarily performance-based stock options to select senior executives. These performance-based awards have a service condition as well as a
market condition. We measure the fair value of these awards at the grant date using a Monte Carlo simulation model. No performance-based options were granted after
2018.
In 2020, 2019 and 2017, we granted time-based vesting stock options to certain senior executives. We measure the fair value of these awards at the grant date using the
Black-Scholes-Merton option pricing model.
When vested, options entitle the holder to purchase a specified number of shares of Brink’s stock at a price set at the date the options were granted. The option price for
Brink’s options was equal to the market price of Brink’s stock on the award date. Options granted to employees have a maximum term of six years.
Performance-Based Option Activity
The table below summarizes the activity associated with grants of performance-based options:
Shares
(in thousands)
Weighted- Average
Exercise Price Per
Share
Weighted-Average
Grant Date Fair
Value Per Share
Weighted- Average
Remaining
Contractual
Term (in years)
Aggregate Intrinsic
Value
(in millions)
(a)
Outstanding at December 31, 2019
Granted
Forfeited or expired
(b)
Exercised
Outstanding at December 31, 2020
(b)
(b)(c)
Of the above, as of December 31, 2020:
Exercisable
Expected to vest in future periods
(d)
1,191.1 $
—
—
(26.1)
1,165.0 $
50.51 $
—
—
52.75
50.46 $
11.52
—
—
27.14
11.17
757.8 $
407.2 $
38.11
73.45
2.2 $
1.7 $
3.0 $
25.7
25.7
—
(a)
(b)
(c)
(d)
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, 2020 was $72.00.
Certain performance-based stock options were modified in the second quarter of 2019. The weighted-average grant date fair value per share for the outstanding options at December 31, 2019, the options exercised in
2020 and for the outstanding options at December 31, 2020 reflects the inclusion of the modified fair value per share.
There were 485.0 thousand exercisable performance-based options with a weighted average exercise price of $29.87 at December 31, 2019 and no exercisable performance-based options at December 31, 2018.
The number of options expected to vest takes into account an estimate of expected forfeitures. We currently have applied a 0% expected forfeiture rate to the performance-based options.
124
The following table provides the term of the performance period and the weighted-average assumptions used in the Monte Carlo simulation model for the performance-
based options granted in 2018:
Terms and Assumptions Used to Estimate Grant Date Fair Value of Performance-Based Options Granted
2018
Terms of awards:
Performance period for achieving stock price hurdles
Assumptions used to estimate fair value:
(a)
Expected dividend yield
Expected stock price volatility
Risk-free interest rate
Expected term in years
(d)
(c)
(b)
Weighted-average fair value estimates at grant date:
In millions
Fair value per share
Three years from
grant date
0.8 %
29.3 %
2.6 %
4.5
$
$
7.0
16.73
(a)
(b)
(c)
(d)
Since the holders of the awards have no rights to any dividend paid during the vesting period, we applied a dividend yield in the Monte Carlo simulation model. At each grant date, the dividend yield was calculated
based on the most recent annualized dividend payment and Brink's stock price at the date of grant.
The expected stock price volatility was calculated on each grant date for the most recent 4.5 year term.
The risk-free interest rate on each grant date is the rate for a zero-coupon U.S. Treasury bill that was commensurate with the expected life of 4.5 years.
Because we did not have historical exercise behavior for instruments with premiums, we assumed that the exercise of vested options occurred at the mid-point between the three-year vesting date and the six-year
contractual term. In the Monte Carlo simulation, at each iteration of forecasted Brink's stock prices, the option was assumed to be exercised at the mid-point of 4.5 years if the stock price hurdle had been achieved.
When the hurdle is achieved, the exercise price was then subtracted from the projected stock price, and discounted back to the grant date. In situations where the projected price had not met the hurdle, no value was
attributed.
Time-based Vesting Option Activity
The table below summarizes the activity associated with grants of time-based vesting options:
Shares
(in thousands)
Weighted- Average
Exercise Price Per
Share
Weighted-Average
Grant Date Fair
Value Per Share
Weighted- Average
Remaining
Contractual
Term (in years)
Aggregate Intrinsic
Value
(in millions)
(a)
Outstanding at December 31, 2019
Granted
Forfeited or expired
Outstanding at December 31, 2020
(b)
Of the above, as of December 31, 2020:
Exercisable
Expected to vest in future periods
(c)
127.0 $
80.8
—
207.8 $
2.7 $
205.1 $
79.32 $
84.42
—
81.30 $
84.65
81.26
21.56
21.10
—
21.38
4.5 $
2.8 $
4.5 $
—
—
—
(a)
(b)
(c)
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, 2020 was $72.00.
There were no exercisable options at December 31, 2019 and at December 31, 2018.
The number of options expected to vest takes into account an estimate of expected forfeitures. We currently have applied a 0% expected forfeiture rate to the time-based vesting options.
125
The following table provides the weighted-average assumptions used in the Black-Scholes-Merton option pricing model for the time-based vesting options granted in 2020
and 2019:
Assumptions Used to Estimate Grant Date Fair Value of Time-Based Options
2020
2019
Assumptions used to estimate fair value:
(a)
Expected dividend yield
Expected stock price volatility
Risk-free interest rate
Expected term in years
(d)
(c)
(b)
Weighted-average fair value estimates at grant date:
In millions
Fair value per share
0.7 %
29.7 %
1.3 %
4.5
0.8 %
30.3 %
2.5 %
4.5
$
$
1.7
21.10
$
$
3.0
21.58
(a)
(b)
(c)
(d)
The expected dividend yield is the calculated annual yield on Brink's stock at the time of the grant.
The expected stock price volatility was calculated at time of the grant after reviewing the historic volatility of our stock using daily close prices.
The risk-free interest rate at each grant date was the rate for a zero-coupon U.S. Treasury bill that was commensurate with the expected life of 4.5 years.
The expected term of the options was based on historical exercise, expiration and post-cancellation behavior.
Deferred Stock Units (“DSUs”)
We granted DSUs to our nonemployee directors in 2020 and in prior years. We measure the fair value of DSUs at the grant date, based on the price of Brink's stock, and, if
applicable, adjusted for a discount for dividends not received or accrued during the vesting period.
DSUs granted after 2014 will be paid out in shares of Brink's stock on the first anniversary of the grant date, provided that the director has not elected to defer the
distribution of shares until a later date. DSUs granted prior to 2015, in general, will be paid out in shares of stock following separation from service.
The following table summarizes all DSU activity during 2020:
Nonvested balance as of December 31, 2019
Activity from January 1 to December 31, 2020:
Granted
Vested
Nonvested balance as of December 31, 2020
Shares
(in thousands)
Weighted-Average
Grant-Date Fair
Value
12.1 $
21.6
(12.1)
21.6 $
79.69
40.46
79.69
40.46
The weighted-average grant-date fair value estimate per share for DSUs granted was $40.46 in 2020, $79.69 in 2019 and $74.43 in 2018.
Other Share-Based Compensation
We have a deferred compensation plan that allows participants to defer a portion of their compensation into stock units. Units will be redeemed by employees for an equal
number of shares of Brink’s stock. Employee deferred compensation accounts held 157,489 units at December 31, 2020, and 198,198 units at December 31, 2019.
We have a stock accumulation plan for our non-employee directors that, prior to 2014, provided for awards of stock units. Additionally, some fees paid to our directors are in
the form of stock and may be deferred for distribution to a later date. Directors’ deferred compensation accounts held 21,432 units at December 31, 2020, and 19,951 units at
December 31, 2019.
126
Note 19 - Capital Stock
Common Stock
At December 31, 2020, we had 100 million shares of common stock authorized and 49.5 million shares issued and outstanding.
Dividends
We paid regular quarterly dividends on our common stock during the last three years. On January 21, 2021, the Board declared a regular quarterly dividend of 15 cents per
share payable on March 1, 2021. The payment of future dividends is at the discretion of the Board and is dependent on our future earnings, financial condition, shareholder
equity levels, cash flow, business requirements and other factors.
Preferred Stock
At December 31, 2020, we had the authority to issue up to 2.0 million shares of preferred stock with a par value of $10 per share.
Share Repurchase Program
On February 6, 2020, our Board authorized a $250 million share repurchase program that expires on December 31, 2021. The authorization replaces our previous $200
million share repurchase program, authorized by the Board in May 2017, which expired December 31, 2019.
Under the $200 million share repurchase program, we repurchased 1.3 million shares for approximately $94 million, or an average cost of $69.35 per share. There was
approximately $106 million remaining available under the $200 million program when it expired.
Under the $250 million share repurchase program, we are not obligated to repurchase any specific dollar amount or number of shares. The timing and volume of share
repurchases may be executed at the discretion of management on an opportunistic basis, or pursuant to trading plans or other arrangements. Share repurchases under this
program may be made in the open market, in privately negotiated transactions, or otherwise.
In August 2020, we entered into an accelerated share repurchase arrangement ("ASR") with a financial institution. In exchange for a $50 million up-front payment at the
beginning of the purchase period, the financial institution delivered to us 849,978 shares of our common stock for an average repurchase price of $58.83 per share. The
shares received were retired in the period they were delivered to us, and the up-front payment was accounted for as a reduction to shareholders' equity in the consolidated
balance sheet. For purposes of calculating earnings per share, we reported the ASR as a repurchase of our common stock in August 2020 and as a forward contract indexed
to our common stock. The ASR met all of the applicable criteria for equity classification, and, as a result, was not accounted for as a derivative instrument. In September
2020, the ASR purchase period was subsequently terminated early and we received and retired an additional 246,676 shares under the ASR, resulting in an overall average
repurchase price of $45.59 per share.
At December 31, 2020, $200 million remains available under the $250 million share repurchase program.
Shares Used to Calculate Earnings per Share
(In millions)
Weighted-average shares
(a)
Basic
Effect of dilutive stock awards
Diluted
(a)
Antidilutive stock awards excluded from denominator
Years Ended December 31,
2019
2020
2018
50.4
0.4
50.8
0.6
50.2
0.9
51.1
0.1
50.9
—
50.9
1.6
(a) We have deferred compensation plans for directors and certain of our employees. Some 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 common stock units credited to employees and directors under the deferred compensation plans. Additionally, nonvested
units containing only a service requirement 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 0.3 million in 2020, 0.3 million in 2019 and 0.3 million in 2018.
127
Note 20 - Supplemental Cash Flow Information
(In millions)
Cash paid for:
Interest
Income taxes, net
Years Ended December 31,
2019
2020
2018
$
80.4
76.8
84.2
23.9
63.7
90.6
Argentina Currency Conversions
We have elected to repatriate cash from Brink's Argentina using different means to convert Argentine pesos into U.S. dollars. In 2020, cash outflows from the purchases of
these financial instruments totaled $20.5 million and cash inflows from the sale of these financial instruments totaled $10.1 million, resulting in $10.4 million in conversion
losses at rates that were approximately 100% less favorable than rates at which we remeasured the financial statements of Brink's Argentina. In 2019, cash outflows from the
purchase of these financial instruments totaled $23.6 million and cash inflows from the sale of these financial instruments totaled $18.9 million. In 2018 cash flows related
to these transactions were not significant. The net cash flows from these transactions are treated as operating cash flows as the financial instruments are purchased
specifically for resale and are generally sold within a short period of time from the date of purchase.
Non-cash Investing and Financing Activities
We acquired armored vehicles, CompuSafe units and other equipment under financing lease arrangements in the last three years including $31.4 million in 2020, $59.7
million in 2019 and $51.9 million in 2018.
®
Cash Paid for Acquisitions Included in Financing Activities
In 2020, we paid $7.3 million related to the TVS acquisition completed in 2019. In 2019, we paid $15.6 million in scheduled installments on the Maco Transportadora
acquisition that was completed in the third quarter of 2017. In 2019, we also paid $2.6 million in scheduled installments on the Rodoban acquisition that was completed in
first quarter of 2019. We paid $16.3 million during 2018 in scheduled installments related to the Maco Transportadora acquisition. These payments are reported as cash
outflows from financing activities as the payments were made more than three months after the acquisition date.
Restricted Cash (Cash Supply Chain Services)
In France, we offer services to certain of our customers where we manage some or all of their cash supply chains. Providing this service requires our French subsidiary to
take temporary title to the cash received from the management of our customers' cash supply chains until the cash is returned to the customers. The cash for which we have
temporary title is restricted and cannot be used for any other purpose other than to service our customers who participate in this service offering. Prior to the third quarter of
2020, as part of this service offering, we entered into lending arrangements with some of our customers. Cash borrowed under these lending arrangements was used in the
process of managing these customers' cash supply chains, was restricted and could not be used for any other purpose other than to service these customers.
In Malaysia, we offer ATM replenishment services to certain of our financial institution customers. Providing this service requires our Malaysia subsidiary to take temporary
title to the cash received in advance of ATM replenishment. The cash for which we have temporary title is restricted and cannot be used for any other purpose other than to
service our customers who participate in this service offering.
In accordance with a revolving credit facility, we are required to maintain a restricted cash reserve of $5.0 million and, due to this contractual restriction, we have classified
this amount as restricted cash.
At December 31, 2020, we held $322.0 million of restricted cash ($199.5 million represented restricted cash held for customers and $113.7 million represented accrued
liabilities). At December 31, 2019, we held $158.0 million of restricted cash ($10.3 million represented short-term borrowings, $100.3 million represented restricted cash
held for customers and $47.4 million represented accrued liabilities).
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same
such amounts shown in the consolidated statements of cash flows.
(In millions)
Cash and cash equivalents
Restricted cash
Total, cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows
December 31,
2020
2019
$
$
620.9
322.0
942.9
311.0
158.0
469.0
128
Note 21 - Other Operating Income (Expense)
(In millions)
Foreign currency items:
(a)
Transaction losses
Derivative instrument gains (losses)
Gains on sale of property and other assets
Impairment losses
Share in earnings of equity method affiliates
Royalty income
Other
(b)
Other operating income (expense)
Years Ended December 31,
2019
2020
2018
$
$
(11.2)
(3.0)
0.9
(11.6)
0.8
4.8
3.7
(15.6)
(22.9)
6.9
5.8
(7.7)
0.9
5.1
2.5
(9.4)
(13.9)
7.7
4.0
(6.5)
1.9
4.5
0.6
(1.7)
(a)
(b)
Includes remeasurement losses in Argentina of $7.7 million in 2020, $11.3 million in 2019 and $6.2 million in 2018 related to highly inflationary accounting. Prior to the June 30, 2018 deconsolidation, Venezuela
reported remeasurement gains of $2.2 million in 2018 under highly inflationary accounting.
Includes a $3.0 million gain in 2018 related to the sale of real estate in Mexico.
Note 22 - Interest and Other Nonoperating Income (Expense)
(In millions)
(c)
(a)
(b)
Interest income
Gain (loss) on equity securities
Foreign currency transaction losses
Derivative instrument losses
Retirement benefit cost other than service cost
Interest on Colombia tax claim
Non-income taxes on intercompany billings
(f)
Venezuela operations
Gain on lease termination
Gain on a disposition of a subsidiary
Other
(g)
(d)
(h)
(e)
Interest and other nonoperating income (expense)
Years Ended December 31,
2019
2020
2018
$
$
5.6
10.6
(3.6)
(7.0)
(37.9)
—
(4.6)
—
—
4.1
(4.9)
(37.7)
5.6
(2.9)
—
—
(52.7)
(1.1)
(4.2)
(0.9)
5.2
—
(1.7)
(52.7)
6.9
3.2
(15.5)
—
(39.7)
—
(2.6)
(0.6)
—
11.2
(1.7)
(38.8)
The gain in 2020 is primarily related to the market value increase of our investment in MoneyGram International, Inc.
(a)
(b) Amounts in 2020 represent currency transaction losses on contingent consideration payable related to G4S business acquisitions. Prior to the July 1, 2018 highly inflationary designation for accounting purposes,
(c)
(d)
(e)
(f)
currency transaction losses incurred by Brink's Argentina related to its U.S. dollar-denominated payables to the sellers of Maco Transporatadora and Maco Litoral.
Represents loss on foreign currency forward contracts related to acquisition of business operations from G4S.
Related to an unfavorable court ruling in 2019 on a non-income tax claim in Colombia. The court ruled that Brink's must pay interest accruing from 2009 to the current date. The principal amount of the claim was less
than $1 million and was recognized in selling, general and administrative expenses in 2019.
Certain of our Latin American subsidiaries incur non-income taxes related to the billing of intercompany charges. These intercompany charges do not impact segment results and are eliminated in our consolidation.
Charges incurred for providing financial support to Brink's Venezuelan subsidiaries after the June 30, 2018 deconsolidation. We do not expect any future funding of the Venezuela business, as long as current U.S.
sanctions remain in effect.
(g) Gain on termination of a mining lease obligation related to former coal operations. We have no remaining mining leases.
(h) Gains on the sale of our former French airport security services subsidiary in the second quarter of 2018 (adjusted downward by $0.4 million in the fourth quarter of 2020) and on our former French security services
subsidiary in the first quarter of 2020 (adjusted downward by $0.2 million in the fourth quarter of 2020).
129
Note 23 - Other Commitments and Contingencies
In August 2020, the Company received a subpoena issued in connection with an investigation being conducted by the U.S. Department of Justice (the “DOJ”). The
Company is fully cooperating with the investigation and responding to requests from the DOJ for documents and other information, primarily related to cross-border
shipments of cash and things of value and anti-money laundering compliance. Given that the investigation is still ongoing and that no civil or criminal claims have been
brought to date, the Company cannot predict the outcome of the investigation, the timing of the ultimate resolution of the matter, or reasonably estimate the possible range of
loss, if any, that may result from this matter. Accordingly, no accruals have been made with respect to this matter.
During the fourth quarter of 2018, we became aware of an investigation initiated by the Chilean Fiscalía Nacional Económica (the Chilean antitrust agency) related to
potential anti-competitive practices among competitors in the cash logistics industry in Chile. Because no legal proceedings have been initiated against Brink’s Chile, we
cannot estimate the probability of loss or any range of possible loss at this time. It is possible, however, that Brink’s Chile could become the subject of legal or
administrative claims or proceedings that could result in a loss in a future period.
In addition, we are involved in various other lawsuits and claims in the ordinary course of business. We are not able to estimate the loss or range of losses for some of these
matters. We have recorded accruals for losses that are considered probable and reasonably estimable. Except as otherwise noted, we do not believe that it is reasonably
possible the ultimate disposition of any of the lawsuits currently pending against the Company could have a material adverse effect on our liquidity, financial position or
results of operations.
At December 31, 2020, we had noncancellable commitments for $25.1 million in equipment purchases, and information technology and other services.
130
Note 24 - Reorganization and Restructuring
2016 Reorganization and Restructuring
In the fourth quarter of 2016, management implemented restructuring actions across our global business operations and our corporate functions. As a result of these actions,
we recognized $18.1 million in related 2016 costs and an additional $17.3 million in 2017 under this restructuring related to severance, asset-related adjustments, a benefit
program termination and lease terminations. We recognized an additional $13.0 million in 2018 under this restructuring for severance costs and asset-related adjustments.
The actions under this program were substantially completed in 2018, with cumulative pretax charges of approximately $48 million. Severance actions reduced our global
workforce by approximately 800 positions.
Other Restructurings
Management periodically implements restructuring actions in targeted sections of our business. As a result of these actions, we recognized net costs of $7.6 million in 2018
and $28.8 million in 2019, primarily severance costs and charges related to the modification of share-based compensations awards in 2019. We recognized $66.6 million net
costs in operating profit and $0.6 million costs in interest and other nonoperating income (expense) in 2020, primarily severance costs. For the restructuring actions that have
not yet been completed, we expect to incur additional costs between $4 million and $6 million in future periods.
The following table summarizes the costs incurred, payments and utilization, and foreign currency exchange effects of other restructurings:
(In millions)
Balance as of December 31, 2018
Expense (benefit)
Payments and utilization
Accrual adjustment
Foreign currency exchange effects
Balance as of December 31, 2019
Expense (benefit)
Payments and utilization
Accrual adjustment
Foreign currency exchange effects
Balance as of December 31, 2020
Severance Costs
Modification of
Shared-based
Awards
Other
Total
3.3
19.7
(15.6)
(0.4)
—
7.0
66.5
(57.7)
(6.1)
(0.4)
9.3
—
7.7
(7.7)
—
—
—
—
—
—
—
—
—
1.8
(1.8)
—
—
—
6.8
(6.8)
—
—
—
3.3
29.2
(25.1)
(0.4)
—
7.0
73.3
(64.5)
(6.1)
(0.4)
9.3
$
$
$
131
Note 25 - Selected Quarterly Financial Data (unaudited)
2020 Quarters
2019 Quarters
(In millions, except for per share
amounts)
Revenues
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
st
1
872.8
26.2
1.8
—
1.8
45.0
30.2
$
$
$
$
nd
2
826.0
(1.0)
13.7
(0.8)
12.9
52.1
23.7
Earnings (loss) per share attributable to Brink’s common shareholders:
Basic
Continuing operations
Discontinued operations
Net income (loss)
Diluted
Continuing operations
Discontinued operations
Net income (loss)
$
$
$
$
0.04
—
0.03
0.03
—
0.03
0.27
(0.02)
0.25
0.27
(0.01)
0.25
rd
3
970.5
76.4
(23.8)
(0.1)
(23.9)
55.1
25.2
(0.47)
—
(0.48)
(0.47)
—
(0.48)
th
4
1,021.6 $
111.9
st
1
905.0
58.4
25.1 $
0.1
25.2 $
54.6 $
39.4
0.51 $
—
0.51 $
0.50 $
—
0.50 $
13.7
—
13.7
47.9
35.2
0.27
—
0.27
0.27
—
0.27
nd
2
914.0
52.6
12.6
(0.1)
12.5
48.7
37.9
0.25
—
0.25
0.25
—
0.25
rd
3
928.4
52.5
5.8
(0.4)
5.4
42.9
42.9
0.11
(0.01)
0.11
0.11
(0.01)
0.10
th
4
935.8
73.3
(3.8)
1.2
(2.6)
45.5
48.8
(0.08)
0.02
(0.05)
(0.08)
0.02
(0.05)
Earnings per share. 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.
Significant pretax items in a quarter.
2020
First quarter of 2020 We recognized $7.7 million of pretax losses on foreign currency forward contracts related to acquisition of business operations from G4S. We also
recognized a $4.7 million pretax gain on the sale of a French security services business (adjusted down by $0.2 million in the fourth quarter).
Second quarter of 2020 We recognized $39.0 million in pretax charges related to restructuring actions, primarily severance costs. We also recognized a $5.8 million pretax
gain related to the market value increase of our investment in MoneyGram International, Inc.
Third quarter of 2020 We recognized a $10.4 million pretax loss when we elected to use other market mechanisms to convert Argentine pesos into U.S. dollars at rates that
were less favorable than the rates at which we remeasured the financial statements of Brink’s Argentina.
Fourth quarter of 2020 We recognized $16.9 million in pretax charges related to restructuring actions, primarily severance costs. We also recognized a $8.1 million pretax
gain related to the market value increase of our investment in MoneyGram International, Inc.
2019
Second quarter of 2019 We recognized a $6.9 million pretax charge related to the modification of share-based awards granted to a former senior executive. We also
recognized a $5.2 million pretax gain on the termination of a mining lease obligation.
Third quarter of 2019 We completed the rebuild of an accounts receivable subledger in our U.S. global services business in the third quarter of 2019. As a result, we
identified $4.0 million of revenues billed and collected in prior periods, which had never been recorded in the general ledger. We also identified and recorded $0.3 million in
bank fees, which had been incurred in prior periods. Finally, based on the reconstructed subledger, we estimated an increase to bad debt expense of $13.7 million. The net
impact of these adjustments was a $10.0 million cumulative pretax accounting correction.
Fourth quarter of 2019 We recognized a pretax settlement charge of $19.3 million related to the October 2019 purchase of a single premium group annuity contract from an
insurance company to provide for the payment of pension benefits to certain primary U.S. pension plan participants. We also recognized a pretax $8.2 million credit related
to lower social taxes in Brazil, primarily from the recovery of overpayments.
132
Note 26 - Subsequent Events
Acquisition of G4S Operations
On February 8, 2021, we acquired cash management operations in Macau as part of the G4S acquisition. On February 15, 2021 we acquired additional operations in
Luxembourg and Kuwait, which completes the remaining, planned G4S transactions. The G4S businesses acquired, which are located primarily in Europe and Asia,
generated approximately $800 million in revenues in 2019.
133
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 Executive 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 Executive 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 Executive Vice President and
Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
(b) Internal Controls over Financial Reporting
See pages 65 and 66 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, 2020, that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Not applicable.
134
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
We have adopted a 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 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 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.
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, 2020.
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, 2020.
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, 2020.
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, 2020.
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, 2020.
135
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
1.
2.
3.
All financial statements – see pages 64–133.
Financial statement schedules – not applicable.
Exhibits – see exhibit index.
ITEM 16. FORM 10-K SUMMARY
None.
136
Exhibit Index
Each exhibit listed as a previously filed document is hereby incorporated by reference to such document.
Exhibit
Number
Description
2.1†
2.2†
2.3†
3.1
3.2
4.1
4.2
4.3
10.1*
10.2*
10.3*
10.4*
10.5*
10.6*
10.7*
10.8*
10.9*
Stock Purchase Agreement, dated as of February 26, 2020 between the Company and G4S . Exhibit 2.1 to Registrant's Current Report on Form 8-K filed
on July 10, 2020.
Stock Purchase Agreement, dated as of February 26, 2020 between the Company and G4S . Exhibit 2.2 to Registrant's Current Report on Form 8-K filed
on July 10, 2020.
First Amendment dated as of March 30, 2020 to the Stock Purchase Agreements dated as of February 26, 2020, between the Company and G4S. Exhibit
2.3 to the Registrant's Current Report on Form 8-K filed on July 10, 2020.
Second Amended and Restated Articles of Incorporation of the Registrant. Exhibit 3(i) to the Registrant's Quarterly Report on Form 10-Q filed July 31,
2015.
Bylaws of the Registrant. Exhibit 3(ii) to the Registrant’s Current Report on Form 8-K filed August 12, 2019.
Description of Registrant's Securities Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended. Exhibit 4.1 to the Registrant's form 10-K
for the year ended December 31, 2019.
Senior Notes Indenture dated as of October 20, 2017 among The Brink's Company, the Subsidiary Guarantors named therein, and U.S. Bank National
Association, as trustee, relating to the Senior Notes due 2027. Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed October 20, 2017.
Senior Notes Indenture dated as of June 22, 2020 among The Brink's Company, the Subsidiary Guarantors named therein, and the U.S. Bank National
Association, as trustee, relating to the Senior Notes due 2025.
Brink's Incentive Plan, effective as of February 17, 2017. Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31,
2017.
Key Employees’ Deferred Compensation Program, as amended and restated as of September 24, 2020. Exhibit 10.1 to the Registrant’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2020.
Pension Equalization Plan, as amended and restated as of July 23, 2012. Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter
ended June 30, 2012 (the “Second Quarter 2012 Form 10-Q”).
Amended and Restated Executive Salary Continuation Plan, effective as of December 31, 2020.
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”).
2013 Equity Incentive Plan, effective as of February 22, 2013 and amended and restated effective May 2, 2019. Exhibit 10.1 to the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2019.
2017 Equity Incentive Plan, effective as of May 5, 2017 and amended and restated effective May 2, 2019. Exhibit 10.2 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 2019
Form of Inducement Stock Option Award Agreement, effective July 14, 2016. Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2016.
Form of Promotion Stock Option Award Agreement, effective July 28, 2016. Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2016.
137
10.10*
10.11*
10.12*
10.13*
10.14*
10.15*
10.16*
Form of Restricted Stock Units Award Agreement, effective November 13, 2014. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed
February 25, 2015.
Form of Stock Option Award Agreement, effective February 17, 2017. Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2017.
Form of 2017 Award Agreement for deferred stock units granted under the 2017 Equity Incentive Plan. Exhibit 10.3 to the Registrant's Second Quarter
2017 Form 10-Q.
Form of Restricted Stock Units Award Agreement, effective February 22, 2018. Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed
February 26, 2018.
Form of Internal Metric Performance Share Units Award Agreement, effective February 22, 2018. Exhibit 10.4 to the Registrant’s Current Report on Form
8-K filed February 26, 2018.
Form of Relative Total Shareholder Return Performance Share Units Award Agreement, effective February 22, 2018. Exhibit 10.5 to the Registrant’s
Current Report on Form 8-K filed February 26, 2018.
Form of Stock Option Award Agreement, effective February 22, 2018. Exhibit 10.6 to the Registrant's Current Report on Form 8-K filed February 26,
2018.
10.17*
Form of Restricted Stock Unit (RSU) Award Agreement, effective October 4, 2018.
10.18*
Form of Performance Share Units Award Agreement (Internal Metric), effective October 4, 2018.
10.19*
Form of Change in Control Agreement. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed March 9, 2020.
10.20*
Form of Indemnification Agreement entered into by the Registrant with its directors and officers. Exhibit 10(l) to the 1991 Form 10-K.
10.21*
10.22*
10.23*
10.24*
Offer Letter, dated June 9, 2016, between The Brink’s Company and Douglas A. Pertz. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed
June 10, 2016.
Change in Control Agreement between The Brink’s Company and Douglas A. Pertz. Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed
March 9, 2020.
Inducement Stock Option Award Agreement with Douglas A. Pertz, effective June 9, 2016. Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-
Q for the quarter ended June 30, 2016.
Offer Letter, dated July 14, 2016, between The Brink’s Company and Ronald J. Domanico. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K
filed July 15, 2016.
10.25*
Non-Employee Directors’ Equity Plan, as amended and restated as of July 12, 2012. Exhibit 10.9 to the Registrant’s Second Quarter 2012 Form 10-Q.
10.26*
10.27*
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.
Form of Award Agreement for deferred stock units granted in 2009, 2010, 2011, 2012, 2013 and 2014 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.
138
10.28*
10.29*
10.30
10.31
10.32
10.33
10.34
10.36*
10.37*
21
23.1
23.2
24
31.1
31.2
32.1
32.2
Form of Award Agreement for deferred stock units granted in 2014 and 2015 to be distributed upon vesting under the Non-Employee Directors’ Equity
Plan. Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (the “Second Quarter 2014 Form 10-Q”).
Plan for Deferral of Directors’ Fees, as amended and restated as of November 11, 2016. Exhibit 10(v) to the Registrant’s Form 10-K for the year ended
December 31, 2016 (the “2016 Form 10-K”).
Amendment and Restatement of The Brink’s Company Employee Welfare Benefit Trust. Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2013.
$1,500,000,000 Senior Secured Credit Facility, dated as of October 17, 2017, among The Brink’s Company, 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 and Swingline Lender, and various other Lenders named therein. Exhibit 10.1 to the Registrant's
Current Report on Form 8-K filed on October 20, 2017.
First Amendment to Loan Documents, dated as of February 8, 2019, with Wells Fargo Bank, National Association, as existing administrative agent, Bank
of America, N.A., as successor administrative agent, and the lenders party thereto. Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on
February 14, 2019.
Incremental Amendment to Credit Agreement, dated as of April 1, 2020, by and among the Company, the subsidiaries of the Company
party thereto, Bank of America, National Association, as administrative agent, and the lenders party thereto. Exhibit 10.1 to the Registrant's
Current Report on Form 8-K filed on April 2, 2020.
Third Amendment to Credit Agreement, dated as of June 9, 2020, by and among the Company, the subsidiaries of the Company party
thereto, with Bank of America, N.A. as administrative agent and the lenders party there. Exhibit 10.1 to the Registrant's Current Report on
Form 8-K filed on June 12, 2020.
Severance Pay Plan of The Brink's Company effective November 13, 2015, as amended October 2018. Exhibit 10.49 to the Registrant's Form 10-K for the
year ended December 31, 2018.
Consulting Agreement dated May 8, 2019, by and between The Brink's Company and Amit Zukerman. Exhibit 10.1 to the Registrant's Current Report on
Form 8-K filed on May 8, 2019.
Subsidiaries of the Registrant.
Consent of Independent Registered Public Accounting Firm.
Consent of Independent Registered Public Accounting Firm.
Powers of Attorney.
Certification of Chief Executive Officer of the Brink's Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
Certification of Chief Financial Officer of the Brink's Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
Certification of Chief Executive Officer of the Brink's Company pursuant to Rule 13a-14(a) or Rule 15d-14(b) and 18 U.S.C. 1350.
Certification of Chief Financial Officer of the Brink's Company pursuant to Rule 13a-14(a) or Rule 15d-14(b) and 18 U.S.C. 1350.
99.1*
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
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008.
139
99.2*
99.3*
101
Subscription Agreement, dated June 9, 2016, between The Brink’s Company and Douglas A. Pertz. Exhibit 99.2 to the Registrant’s Current Report on
Form 8-K filed June 10, 2016.
Subscription Agreement, dated July 14, 2016, between The Brink’s Company and Ronald J. Domanico. Exhibit 99.2 to the Registrant’s Current Report on
Form 8-K filed July 15, 2016.
Interactive Data File (Annual Report on Form 10-K, for the year ended December 31, 2019, 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, 2020, and
December 31, 2019, (ii) the Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018, (iii) the Consolidated
Statements of Comprehensive Income (Loss) for the years ended December 31, 2020, 2019 and 2018, (iv) the Consolidated Statements of Equity for the
years ended December 31, 2020, 2019 and 2018, (v) the Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018,
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.
104
Cover Page Interactive Data File (included in Exhibit 101)
*Management contract or compensatory plan or arrangement.
†Certain schedules attached to the Stock Purchase Agreements and Stock Purchase Agreement Amendment have been omitted pursuant to Item 601(b)(2) of Regulation S-
K. The Company will furnish the omitted schedules to the Securities and Exchange Commission upon request by the Commission.
140
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 March 1, 2021.
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 March 1, 2021.
By
The Brink’s Company
(Registrant)
/s/ Douglas A. Pertz
Douglas A. Pertz
(President and
Chief Executive Officer)
Signature
/s/ Douglas A. Pertz
Douglas A. Pertz
/s/ Ronald J. Domanico
Ronald J. Domanico
/s/ Michael Sweeney
Michael Sweeney
*
Kathie J. Andrade
*
Paul G. Boynton
*
Ian D. Clough
*
Susan E. Docherty
*
Reginald D. Hedgebeth
*
Michael J. Herling
*
George I. Stoeckert
Title
Director, President
and Chief Executive Officer
(Principal Executive Officer)
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
Controller
(Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
* By:
/s/ Douglas A. Pertz
Douglas A. Pertz, Attorney-in-Fact
141
Exhibit 10.4
The Brink’s Company
Richmond, Virginia
Executive Salary Continuation Plan
Amended and Restated, effective as of December 31, 2020
Eligibility and Participation
The Brink’s Company (the “Company”) has designated certain executives as eligible to participate in The Brink’s
Company Executive Salary Continuation Plan (the “Plan”), which has been amended and restated, effective as of
December 31, 2020 to clarify the definition of Participant to include the Executive Officers of the Company.
Salary Continuation Benefits
Subject to certain limitations stated below, in the event a Participant dies while in the employment of the Company
(including while totally disabled), and prior to termination of employment, the Company shall pay a salary continuation
death benefit to the Designated Beneficiary equal to three (3) times the Participant’s Annual Salary in effect at the
time of death.
If a Participant dies while totally disabled, as defined by the long term disability plan if effect at the time of death, and
prior to termination of employment, his/her salary continuation benefit will be based upon his/her Annual Salary on
the date the participant became disabled.
Salary continuation death benefits shall be payable in ten equal annual installments, without interest, beginning as
soon as practicable after the date of death.
Beneficiaries
Benefits under this Plan are payable to the beneficiary or beneficiaries designated by the Participant by completing
the proper form when the Participant enrolled in the Plan.
A Participant may change his/her Designated Beneficiary at any time by completing a new designation form provided
by the Company. The new form will supersede any previous beneficiary designation on the date the new form is
acknowledged by the countersignature of the Chief Executive Officer or General Counsel of the Company.
Other Information
When Participation and Benefits Terminate
Participation in this Plan will terminate on the earliest of these events:
• The date and time the Participant’s employment with the Company terminates if termination is for reason
other than death or total disability;
• The date the Participant’s total disability ends (but no later than your termination of employment);
The Brink’s Company Executive Salary Continuation Plan Page 1
• The date the Plan is terminated.
Obligations of the Company
In the performance and administration of this Plan, the Company shall be under no obligation to purchase any
insurance policies or to invest any amounts in order to fund the salary continuation death benefits payable under this
Plan.
The interest of a Participant is limited to the right to designate the beneficiary to whom payments may be made
pursuant to the section of this Plan entitled Salary Continuation Benefits, and the interest of any Designated
Beneficiary is limited to the right to receive payments from the Company as provided herein.
The obligation of the Company to pay the benefits provided under the Plan to a Participant’s Designated Beneficiary
or estate is based on the condition that such Participant does not directly or indirectly engage in competition with the
Company during the course of his/her employment with the Company.
Payments Not Transferable
No Participant or Designated Beneficiary shall have any right to commute, sell, assign, transfer or otherwise convey
or encumber the rights to receive any payments under the Plan, which payments and all the rights thereto are
expressly declared to be non-assignable and non-transferable.
Employment Rights
This Plan shall not be deemed to constitute a contract between the Company and any person, or to be consideration
or inducement for the employment of any person by the Company. Nothing contained in the Plan shall be deemed (a)
to give any person the right to be retained in the service of the Company, or (b) to interfere with the right of the
Company to discharge any person at any time without regard to the effect which such discharge will have upon
his/her rights or potential rights, if any, under the Plan.
Modification or Termination of the Plan
The Company may modify or terminate the Plan at any time, and shall thereafter give written notice of such effect to
each Participant.
The Brink’s Company Executive Salary Continuation Plan Page 2
How to File a Claim
Any Designated Beneficiary of a Participant in the Plan (the “Claimant”), or their duly authorized representative, or the
participant’s estate (the “Claimant”) if no Designated Beneficiary survives the Participant, may file a written claim for a
Plan benefit with the Plan Administrator.
In the event that a claim is denied, in whole or in part, a Claimant shall be furnished with notice of the decision of
such denial by the Plan Administrator within 90 days after the claim has been received by the Plan Administrator.
Such notice of the decision shall be in writing and shall state the specific provision(s) of the Plan on which the denial
was based, any additional material or information necessary for the Claimant to perfect the claim, as well as an
explanation of why such material or information is necessary, and an explanation of the claim review procedure set
forth in the following paragraphs. In the event that notice of denial of a claim is not furnished within such 90 day
period, the claim shall be deemed to have been denied for purposes of permitting the Claimant to appeal the
decision.
Every Claimant shall have a reasonable opportunity to appeal a denial of a claim to the Plan Administrator. Such
appeal shall be made in writing by the Claimant or his/her duly authorized representative. The Claimant or his/her
representative may review pertinent documents and submit issues and comments in writing. A Claimant must make a
request for such review within 60 days after receipt by the Claimant of written notice of the denial of his/her claim.
A decision shall be rendered by the Plan Administrator within 60 days after the receipt of the request for review
provided that, where special circumstances make a longer period for decision necessary or appropriate, a decision
may be postponed on written notice to the Claimant for an additional 60 days; however, in no event shall such a
decision be rendered more than 120 days after the receipt of such request for review. Any decision by the Plan
Administrator shall be in writing and shall set forth the specific reason(s) for the decision and the specific plan
provision(s) on which the decision is based.
If it ever becomes necessary for a Participant or a Claimant to sue the Company over the terms of the Plan, legal
process may be served on the Administrative Committee, The Brink’s Company, 1801 Bayberry Court, P. O. Box
18100, Richmond, VA 23226-8100.
Definitions
The following words and phrases shall have the following meanings when used in this Plan:
Annual Salary - The annual rate of salary of an employee in effect at any time, excluding all fringe benefits including,
but not limited to, life insurance premiums or imputed benefits, pension, profit sharing, bonuses, supplementary
benefits ordinarily available to executives of the Company, and any awards made pursuant to any incentive plans of
the Company. Amounts
The Brink’s Company Executive Salary Continuation Plan Page 3
contributed by the Company to any plan of deferred compensation, including the Key Employees’ Deferred
Compensation Plan (and any successor plan), are not included.
Company - The Brink’s Company, a Virginia corporation, and each of its U.S. subsidiaries.
Designated Beneficiary - The person designated by the Participant on a form provided by the Company to receive
any benefits payable by the Company on account of Participant’s death. If no Designated Beneficiary survives the
Participant, benefits will be payable to the Participant’s estate.
Participant – Only those executives designated for participation by the Plan Administrator. Effective December 31,
2020, each Executive Officer of the Company is a Participant, and each future Executive Officer of the Company shall
become a Participant effective as of the date the Board of Directors of the Company designates the individual an
Executive Officer of the Company.
Plan - The Brink’s Company Executive Salary Continuation Plan.
Plan Administrator - The Brink’s Company is the “Plan Administrator” as that term is defined by ERISA. The
Company has appointed the Administrative Committee to oversee the administration of the Plan. It is the
responsibility of the Administrative Committee to administer the Plan pursuant to the terms of the Plan and any plan
documents or insurance contracts through which certain of these benefits may be provided.
The Plan Administrator has the absolute and exclusive authority and discretion to: interpret the terms of the Plan,
including the Plan’s eligibility provisions and its provisions relating to qualification for and accrual of benefits; adopt,
amend and rescind rules and regulations pertaining to its duties under the Plan; and make all other determinations
necessary or advisable for the discharge of its duties under the Plan. The Plan Administrator’s decisions are final and
binding on all persons seeking Plan benefits.
The Plan Administrator may be reached by contacting the Administrative Committee at the Company’s Corporate
Office:
The Brink’s Company
1801 Bayberry Court
P. O. Box 18100
Richmond, VA 23226-8100
Tel. No.: 804-289-9600
Attn: Executive Salary Continuation Plan Administrator
The Brink’s Company Executive Salary Continuation Plan Page 4
Exhibit 21
SUBSIDIARIES OF THE BRINK’S COMPANY
AS OF December 31, 2020
(The subsidiaries listed below are owned 100%, directly or indirectly, by The Brink’s Company unless otherwise noted.)
Company
The Pittston Company
Glen Allen Development, Inc.
Liberty National Development Company, LLC (32.5%)
New Liberty Residential Urban Renewal Company, LLC (17.5%)
Pittston Services Group Inc.
Brink’s Holding Company
Brink’s, Incorporated (“BI”)
Brink’s Delaware, LLC
Brink’s Express Company
Brink’s Global Payments, LLC
Brink’s Finance Holding Company, LLC
Brink’s Capital Holding Company, LLC
Brink’s Capital, LLC
Brink’s Complete Holding Company, LLC
Brink's Capital Mexico, S.A. de C.V., S.D.F.O.M., E.N.R. (98%)
Brink’s St. Lucia Ltd. (26%)
Security Services (Brink’s Jordan) Company Ltd (95%)
Servicio Pan Americano de Proteccio n S.A. de C.V. (“Serpaprosa”) (by Trust, BI is Settlor of Trust)
(99.75%)
Inmobiliaria, A.J., S.A. de C.V. (99.75%)
Operadora Especializada de Transportes, S.A. de C.V. (99.75%)
Procesos Integrales en Distribucion y Logistica, S.A. de C.V. (99.75%)
Brink’s Security International, Inc. (“BSI”)
Brink’s Si International Logistics Group Limited
Brink’s Si International Logistics (Holding) Limited
Brink’s Si Logistics Minorities Limited
Brink’s Si International Logistics (Germany) GmbH
Brink's Si International Logistics (Switzerland) AG
Brink’s Si International Logistics Middle East LLC (40%)
Brink’s Si International Logistics (Middle East) FZE
G4S International Logistics (Middle East) DMCC
Brink's Si International Logistics (Hong Kong) Limited (99.9%)
Brink’s Si International Logistics (Shanghai) Co Limited
Brink’s Si International Logistics (Singapore) Pte. Limited
G4S International Logistics Holdings (Thailand) Limited (48.99%)
G4S International Logistics (Thailand) Limited (51%)
Jurisdiction of Incorporation
Delaware
Delaware
Delaware
New Jersey
Virginia
Delaware
Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
Mexico
St. Lucia
Jordan
Mexico
Mexico
Mexico
Mexico
Delaware
U.K.
U.K.
U.K.
Germany
Switzerland
Dubai (UAE)
Dubai (UAE)
Dubai (UAE)
Hong Kong
China
Singapore
Thailand
Thailand
Company
Brink’s Si International Logistics (Australia) Pty Limited
Brink’s Brokerage Company, Incorporated
Brink’s C.l.S., Inc.
Brink’s Cambodia, Inc.
Brink’s Global Services International, Inc
Brink’s Global Services KL, Inc.
Brink’s Global Services USA, Inc.
Brink’s International Management Group, Inc.
Brink’s Network, Incorporated
Brink’s Myanmar, Limited
Brink’s Vietnam, Incorporated
Brink’s Asia Pacific Limited
Brink’s Australia Pty Ltd.
Brink’s Belgium S.A.
Cavalier Insurance Company Ltd.
Brink’s Global Services FZE
Brink’s Diamond Title DMCC
Brink’s Gulf LLC (49%)
Brink’s Beteiligungsgesellschaft mbH
Brink’s Global Services Deutschland GmbH
Brink’s Far East Limited
Brink’s Holding (Hong Kong) Limited
Brink’s Cash Solutions (Hong Kong) Limited
Brink’s Macau Investment (Hong Kong) Limited
Brink’s Technology (Hong Kong) Limited
Brink’s Ireland Limited
Brink’s ATM Services Limited
Brink’s Holdings Limited
Brink’s (Israel) Limited (70%)
Brink’s Blue Ltd (70%)
Brink’s Global Services S.r.L.
Brink’s Japan Limited
Brink’s Luxembourg S.A.
Brink’s Security Luxembourg S.A.
BK Services S.a.r.l.
Brink’s Alarm & Security Technologies
Brink’s Holding (Estonia) AS
Brink’s Estonia OÜ
UAB Brink’s Lithuania
2
Jurisdiction of Incorporation
Australia
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Hong Kong
Australia
Belgium
Bermuda
Dubai (UAE)
Dubai (UAE)
Dubai (UAE)
Germany
Germany
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Ireland
Ireland
Israel
Israel
Israel
Italy
Japan
Luxembourg
Luxembourg
Luxembourg
Luxembourg
Estonia
Estonia
Lithuania
Company
AS Brink’s Latvia
Brink’s Global Services
Brink’s International, C.V. (“BICV”, BSI is General Partner)
Inversiones Brink’s Chile Limitada (BICV is beneficial owner)
Brink’s Global Payments Chile, SpA
Logistica Segura SpA
Servicios Ejecutivos y de Consultoria SpA
Servicios Integrales Valor Agregado SpA (“SIVA SPA”)
Brink’s Chile, S.A. (BICV is beneficial owner)
Centro De Capacitaciόn Aprendizaje Y Desarrollo SpA
Brink’s de Colombia S.A. (BICV is beneficial owner)
Domesa de Colombia S.A.
Procesos & Canje S.A.
Sistema Integrado Multiple de Pago Electronicos S.A. (“SIMPLE S.A.”)(25%)
Proteccion de Valores, S.A.
Transportadora de Valores del Sur Limitada
TVS Pago, Recaudos y Procesos S.A.S.
Brink’s Canada Holdings, B.V. (BICV is beneficial owner)
Brink’s Canada Limited
Brink’s Security Services B.V.
Brink’s Dutch Holdings, B.V. (BICV is beneficial owner)
Brink’s Solutions Holdings B.V.
Brink’s Cash Management (NL) B.V.
Brink’s Solutions Nederland B.V.
SecurCash B.V.
Brink’s Hellenic Holdings, B.V. (“BHH”)
Athena Marathon Holdings, B.V. (“AMH”)
Apollo Acropolis Holdings, B.V. (“AAH”)
Brink’s Bolivia S.A.
Hermes Delphi Holdings, B.V, (“HDH”)
Zeus Oedipus Holdings, B.V. (“ZOH”)
Jurisdiction of Incorporation
Latvia
Mexico
Netherlands
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Colombia
Colombia
Colombia
Colombia
Colombia
Panama
Colombia
Netherlands
Canada
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Bolivia
Netherlands
Netherlands
Brink’s Hellas Commercial S.A. – Information Technology Services (“Brink’s Hellas SA”) (14.3%
each BHH, AMH, AAH, HDH, ZOH, Brink’s Dutch Holdings, B.V., Brink’s Canada Holdings, B.V.) Greece
Greece
Greece
Greece
Brink’s Cash & Valuable Services S.A. (“Brink’s Cash & Valuable Services SA”)
Brink’s Security Services SA (“Brink’s Security Services SA”)
Brink’s Aviation Security Services S.A. (“Brink’s Aviation Security Services S.A.”) (70%)
Hellenic Central Station SA - Reception & Processing Centre of Electronic Signals
(“Hellenic Central Station”) (10%)
Greece
3
Company
BHM Human Resources Mexico Holding, S.A. de C.V.
Brink’s Servicios Administrativo
BM Control y Administracion de Personal, S.A. de C.V.
Brink’s Argentina S.A.
Brink’s Seguridad Corporativa S.A. (99.6%)
Maco Litoral S.A.
Maco Transportadora de Caudales S.A.
Brink’s India Private Limited
Brink’s Asia Holding (NL) B.V
PT BRINKS SOLUTIONS INDONESIA (83.85%)
PT Indonesia Cash Systems
Brinks Mongolia LLC (51%)
Brink’s RUS Holding B.V.
Limited Liability Company Brink’s Management
Limited Liability Company Brink’s
Servicio Pan Americano de Proteccion C.A. (61%, BICV is beneficial owner)
Aeropanamericano, C.A. (61%)
Aero Sky Panama, S.A. (61%)
Artes Graficas Avanzadas 98, C.A. (61%)
Blindados de Zulia Occidente, C.A. (61%)
Blindados de Oriente, S.A. (61%)
Blindados Panamericanos, S.A. (61%)
Blindados Centro Occidente, S.A. (61%)
Documentos Mercantiles, S.A. (61%)
Instituto Panamericano, C.A. (61%)
Intergraficas Panama, S.A. (61%)
Panamericana de Vigilancia, S.A. (61%)
Transportes Expresos, C.A. (61%)
Tepuy Inmobiliaria VII, C.A.
Brink’s Panama S.A.
Business Process Intelligence Inc.
Brink’s Global Services Poland Sp.zo.o.
Brink’s International Holdings AG
Bolivar Business S.A.
Domesa Courier Corporation
Panamerican Protective Service Sint Maarten, N.V.
Radio Llamadas Panama, S.A.
Servicio Panamericano de Proteccion (Curacao), N.V.
Domesa Curacao, N.V.
4
Jurisdiction of Incorporation
Mexico
Mexico
Mexico
Argentina
Argentina
Argentina
Argentina
India
Netherlands
Indonesia
Indonesia
Mongolia
Netherlands
Russian Federation
Russian Federation
Venezuela
Venezuela
Panama
Venezuela
Venezuela
Venezuela
Venezuela
Venezuela
Venezuela
Venezuela
Panama
Venezuela
Venezuela
Venezuela
Panama
Panama
Poland
Switzerland
Panama
Florida
Sint Maarten
Panama
Curacao
Curacao
Company
Domesa, N.V.
Servicio Panamericano de Vigilancia (Curacao), N.V.
Brink’s France SAS
Brink’s (Mauritius) Ltd
Brink’s Antilles SAS
Brink’s Controle Securite Reunion S.A.R.L.
Brink’s Evolution SAS
Les Goelands S.A.S.
Temis Conseil & Formation (“TEMIS Formation S.A.R.L.")
Brink’s Formation S.A.R.L.
Brink’s France Finance SAS
Brink’s Madagascar S.A. (60%)
Brink’s Maroc S.A.S.
Brink’s Process Outsourcing, SAS
Brink’s Reunion S.A.R.L.
Cyrasa Servicios de Control SA
Maartenval NV
Security & Risk Management Training Centre Ltd
Brink’s Solutions Belgium
Brink’s Cash Services (Ireland) Limited
Brink’s Cash Solutions Holding (NL) B.V.
Brink’s Cash Solutions (CZ) a.s.
Brink’s Cash Solutions Services (CZ) s.r.o.
Brink’s Cash Solutions (RO) SRL
Brink’s Secure Solutions (RO) SRL
Brink’s Services (RO) SRL
Brink’s Cyprus (Private Security Services) Limited
T.I.S. Total Integrated Services Limited (50%)
G4S Aviation (Cyprus) Limited
Brink’s Global Holdings B.V.
A.G.S. Groep B.V.
AGS Freight Watch B.V.
Brink’s Regional Services B.V.
Brink’s Trading Ltd.
DDX Trading NV (25.25%)
Brink’s Global Services Antwerp
Brink’s Global Services Pte. Ltd.
Brink’s Kenya Limited
Brink’s Switzerland Ltd.
5
Jurisdiction of Incorporation
Aruba
Curacao
France
Mauritius
Guadeloupe (FR)
La Réunion (FR)
France
France
France
France
France
Madagascar
Morocco
France
La Réunion (FR)
Spain
Sint Maarten
Mauritius
Belgium
Ireland
Netherlands
Czech Republic
Czech Republic
Romania
Romania
Romania
Cyprus
Cyprus
Cyprus
Netherlands
Netherlands
Netherlands
Netherlands
Israel
Belgium
Belgium
Singapore
Kenya
Switzerland
Company
Brink’s Diamond & Jewelry Services BVBA
Transpar – Brink’s ATM Ltda.
BGS – Agenciamento de Carga e Despacho Aduaneiro Ltda.
BSL – Brink’s Solucoes Logisticas Ltda.
Brink’s-Seguranca e Transporte de Valores Ltda.
Brink’s Servicios e Sistemas de Seguranca Ltda
BVA-Brink’s Valores Agregados Ltda.
Trustion Tecnologia Ltda. (51%)
Brink’s Hong Kong Limited
Brink’s (Shanghai) Finance Equipment Technology Services Co. Ltd. (75%)
Brink’s Diamond (Shanghai) Company Limited
Brink’s Jewellery Trading (Shanghai) Company Limited
Brink’s Security Transportation (Shanghai) Company Limited
Brink’s Global Services Korea Limited – Yunan Hoesa Brink’s Global (80%)
Brink’s Singapore Pte Ltd
BVC Brink’s Diamond & Jewellery Services LLP (51%)
Brink’s Worldbridge Secure Logistics Co., Ltd. (60%)
Brinks (Southern Africa) (Proprietary) Limited
Brinks Armoured Security Services (Proprietary) Limited
Brinks Security (Pty) Ltd
Brinks Si Valuable Logistics (SA) (Pty) Limited
Brink’s e-Pago Tecnologia Ltda.
Comercio Eletronico Facil Ltda
Muitofacil Arrecadacao e Recebimento Ltda
Redetrel – Rede Transacoes Eletronicas Ltda
ePago International Inc.
e-Pago de Colombia S.A. (75%)
Brink’s ePago S.A. de C.V.
Brink’s Global Services (BGS) Botswana (Proprietary) Limited
Brink’s Macau Limited
Brink’s Trading (Taiwan) Co., Ltd.
Brink’s Vietnam Company Limited
Brink’s Philippines, Inc. (51%)
Brink’s Taiwan Security Limited
Brink’s Security (Thailand) Limited (40%)
Brink’s Global Technology Limited
Brink’s Guvenlik Hizmetleri Anonim Sirketi
Brink’s (UK) Limited
6
Jurisdiction of Incorporation
Belgium
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Hong Kong
China
China
China
China
Korea
Singapore
India
Cambodia
South Africa
South Africa
South Africa
South Africa
Brazil
Brazil
Brazil
Brazil
Panama
Colombia
Mexico
Botswana
Macau
Taiwan
Vietnam
Philippines
Taiwan
Thailand
Thailand
Turkey
U.K.
Company
Brink’s Limited
Brink’s Limited (Bahrain) EC
Brink’s Security Limited
Quarrycast Commercial Limited
Brink’s Global Services, Ltd.
Brink’s Cash Solutions Holding (UK) Limited
Brink’s Cash Corporate Services (UK) Limited
Brink’s RO Minorities Holding (UK) Limited
Brink’s DOM & MY Holding (UK) Limited
Brink’s Cash Solutions (Dominican) S.A.
Brink’s Secure Solutions (Dominican) S.A.
Brink’s Support Services (MY) Sdn. Bhd.
Brink’s (BVI) Holding Limited
Safeguards G4S Sdn Bhd
Securicor (Malaysia) Sdn Bhd
Safeguards G4S (Sabah) Sdn Bhd
Safeguards G4S (Sarawak) Sdn Bhd
Safeguards G4S Security Systems Sdn Bhd
Almo Systems Sdn Bhd
Group 4 Falck CMS Sdn Bhd
Gwenkens Security Services Sdn Bhd (90%)
Safeguards G4S Academy Sdn Bhd
Gwenkens Central Monitoring Sdn Bhd
BAX Holding Company
Brink’s Administrative Services Inc.
Pittston Minerals Group Inc.
Pittston Coal Company
Heartland Coal Company
Maxxim Rebuild Company, Inc.
Pittston Forest Products, Inc.
Addington, Inc.
Appalachian Mining, Inc.
Molloy Mining, Inc.
Vandalia Resources, Inc.
Pittston Coal Management Company
Pittston Coal Terminal Corporation
Pyxis Resources Company
HICA Corporation
Holston Mining, Inc.
7
Jurisdiction of Incorporation
U.K.
Bahrain
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
Dominican Republic
Dominican Republic
Malaysia
British Virgin Islands
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Virginia
Delaware
Virginia
Delaware
Delaware
Delaware
Virginia
Kentucky
West Virginia
West Virginia
West Virginia
Virginia
Virginia
Virginia
Kentucky
West Virginia
Company
Motivation Coal Company
Paramont Coal Corporation
Sheridan-Wyoming Coal Company, Incorporated
Thames Development Ltd.
Buffalo Mining Company
Clinchfield Coal Company
Dante Coal Company
Eastern Coal Corporation
Elkay Mining Company
Jewell Ridge Coal Corporation
Kentland-Elkhorn Coal Corporation
Meadow River Coal Company
Pittston Coal Group, Inc.
Ranger Fuel Corporation
Sea “B” Mining Company
Pittston Mineral Ventures Company
PMV Gold Company
Pittston Mineral Ventures International Ltd.
Mineral Ventures of Australia Pty Ltd.
Jurisdiction of Incorporation
Virginia
Delaware
Delaware
Virginia
West Virginia
Virginia
Virginia
West Virginia
West Virginia
Virginia
Kentucky
Kentucky
Virginia
West Virginia
Virginia
Delaware
Delaware
Delaware
Australia
NOTE: Subsidiaries that are not majority owned do not constitute “Subsidiaries” for the purposes of this Schedule. They have been left on the Schedule so
as to make the ownership structure clear.
8
EXHIBIT 23.1
Consent of Independent Registered Public Accounting Firm
The Board of Directors
The Brink’s Company:
We consent to the incorporation by reference in registration statements (Nos. 33-21393, 33-53565, 333-78631, 333-78633, 333-70758, 333-70772, 333-
146673, 333-152552, 333-133073, 333-158285, 333-165567, 333-188342, 333-217723 and 333-225111) on Forms S-8 of The Brink’s Company of our
reports dated March 1, 2021, with respect to the consolidated balance sheet of The Brink’s Company as of December 31, 2020, and the related statements
of operations, comprehensive income (loss), equity, and cash flows for the year then ended and the related notes (collectively, the consolidated financial
statements), and the effectiveness of internal control over financial reporting as of December 31, 2020, which reports appear in the December 31, 2020
annual report on Form 10-K of The Brink’s Company.
Our report on the consolidated financial statements contains an explanatory paragraph that refers to a change in the method of accounting for leases. Our
report dated March 1, 2021, on the effectiveness of internal control over financial reporting as of December 31, 2020, contains an explanatory paragraph
that states management excluded certain operations from G4S plc’s internal control over financial reporting from its assessment of the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2020.
/s/ KPMG LLP
Richmond, Virginia
March 1, 2021
EXHIBIT 23.2
Consent of Independent Registered Public Accounting Firm
The Board of Directors
The Brink’s Company:
We consent to the incorporation by reference in Registration Statement No. 33-21393, 33-53565, 333-78631, 333-78633, 333-70758, 333-70772, 333-146673, 333-152552,
333-133073, 333-158285, 333-165567, 333-188342, 333-217723 and 333-225111 on Forms S-8 of our report dated February 28, 2020 (March 1, 2021 as to Notes 2, 3, and
8), relating to the financial statements of The Brink’s Company appearing in this Annual Report on Form 10-K for the year ended December 31, 2020.
/s/ DELOITTE & TOUCHE LLP
Richmond, Virginia
March 1, 2021
POWER OF ATTORNEY
EXHIBIT 24
KNOW ALL BY THESE PRESENTS, that the undersigned does hereby constitute and appoint Douglas A. Pertz and Ronald J. Domanico, and
each of them (with full power of substitution), her true and lawful attorney-in-fact and agent to do any and all acts and things and to execute any and all
instruments which, with the advice of counsel, any of said attorneys and agents may deem necessary or advisable to enable The Brink’s Company, a
Virginia corporation (the “Company”), to comply with the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and
any rules, regulations and requirements of the Securities and Exchange Commission in respect thereof, in connection with the preparation and filing of the
Company’s annual report on Form 10-K for the fiscal year ended December 31, 2020 (the “Form 10-K”), including specifically, but without limitation,
power and authority to sign her name as an officer and/or director of the Company, as the case may be, to the Form 10-K or any amendments thereto; and
the undersigned does hereby ratify and confirm all that said attorneys shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 24 day of February, 2021.
th
/s/ Kathie J. Andrade
Kathie J. Andrade
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned does hereby constitute and appoint Douglas A. Pertz and Ronald J. Domanico, and
each of them (with full power of substitution), his true and lawful attorney-in-fact and agent to do any and all acts and things and to execute any and all
instruments which, with the advice of counsel, any of said attorneys and agents may deem necessary or advisable to enable The Brink’s Company, a
Virginia corporation (the “Company”), to comply with the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and
any rules, regulations and requirements of the Securities and Exchange Commission in respect thereof, in connection with the preparation and filing of the
Company’s annual report on Form 10-K for the fiscal year ended December 31, 2020 (the “Form 10-K”), including specifically, but without limitation,
power and authority to sign his name as an officer and/or director of the Company, as the case may be, to the Form 10-K or any amendments thereto; and
the undersigned does hereby ratify and confirm all that said attorneys shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 22 day of February, 2021.
nd
/s/ Paul G. Boynton
Paul G. Boynton
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned does hereby constitute and appoint Douglas A. Pertz and Ronald J. Domanico, and
each of them (with full power of substitution), his true and lawful attorney-in-fact and agent to do any and all acts and things and to execute any and all
instruments which, with the advice of counsel, any of said attorneys and agents may deem necessary or advisable to enable The Brink’s Company, a
Virginia corporation (the “Company”), to comply with the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and
any rules, regulations and requirements of the Securities and Exchange Commission in respect thereof, in connection with the preparation and filing of the
Company’s annual report on Form 10-K for the fiscal year ended December 31, 2020 (the “Form 10-K”), including specifically, but without limitation,
power and authority to sign his name as an officer and/or director of the Company, as the case may be, to the Form 10-K or any amendments thereto; and
the undersigned does hereby ratify and confirm all that said attorneys shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 23 day of February, 2021.
rd
/s/ Ian D. Clough
Ian D. Clough
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned does hereby constitute and appoint Douglas A. Pertz and Ronald J. Domanico, and
each of them (with full power of substitution), her true and lawful attorney-in-fact and agent to do any and all acts and things and to execute any and all
instruments which, with the advice of counsel, any of said attorneys and agents may deem necessary or advisable to enable The Brink’s Company, a
Virginia corporation (the “Company”), to comply with the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and
any rules, regulations and requirements of the Securities and Exchange Commission in respect thereof, in connection with the preparation and filing of the
Company’s annual report on Form 10-K for the fiscal year ended December 31, 2020 (the “Form 10-K”), including specifically, but without limitation,
power and authority to sign her name as an officer and/or director of the Company, as the case may be, to the Form 10-K or any amendments thereto; and
the undersigned does hereby ratify and confirm all that said attorneys shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 23 day of February, 2021.
rd
/s/ Susan E. Docherty
Susan E. Docherty
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned does hereby constitute and appoint Douglas A. Pertz and Ronald J. Domanico, and
each of them (with full power of substitution), his true and lawful attorney-in-fact and agent to do any and all acts and things and to execute any and all
instruments which, with the advice of counsel, any of said attorneys and agents may deem necessary or advisable to enable The Brink’s Company, a
Virginia corporation (the “Company”), to comply with the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and
any rules, regulations and requirements of the Securities and Exchange Commission in respect thereof, in connection with the preparation and filing of the
Company’s annual report on Form 10-K for the fiscal year ended December 31, 2020 (the “Form 10-K”), including specifically, but without limitation,
power and authority to sign his name as an officer and/or director of the Company, as the case may be, to the Form 10-K or any amendments thereto; and
the undersigned does hereby ratify and confirm all that said attorneys shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 22 day of February, 2021.
nd
/s/ Reginald D. Hedgebeth
Reginald D. Hedgebeth
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned does hereby constitute and appoint Douglas A. Pertz and Ronald J. Domanico, and
each of them (with full power of substitution), his true and lawful attorney-in-fact and agent to do any and all acts and things and to execute any and all
instruments which, with the advice of counsel, any of said attorneys and agents may deem necessary or advisable to enable The Brink’s Company, a
Virginia corporation (the “Company”), to comply with the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and
any rules, regulations and requirements of the Securities and Exchange Commission in respect thereof, in connection with the preparation and filing of the
Company’s annual report on Form 10-K for the fiscal year ended December 31, 2020 (the “Form 10-K”), including specifically, but without limitation,
power and authority to sign his name as an officer and/or director of the Company, as the case may be, to the Form 10-K or any amendments thereto; and
the undersigned does hereby ratify and confirm all that said attorneys shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 22 day of February, 2021.
nd
/s/ Michael J. Herling
Michael J. Herling
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned does hereby constitute and appoint Douglas A. Pertz and Ronald J. Domanico, and
each of them (with full power of substitution), his true and lawful attorney-in-fact and agent to do any and all acts and things and to execute any and all
instruments which, with the advice of counsel, any of said attorneys and agents may deem necessary or advisable to enable The Brink’s Company, a
Virginia corporation (the “Company”), to comply with the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and
any rules, regulations and requirements of the Securities and Exchange Commission in respect thereof, in connection with the preparation and filing of the
Company’s annual report on Form 10-K for the fiscal year ended December 31, 2020 (the “Form 10-K”), including specifically, but without limitation,
power and authority to sign his name as an officer and/or director of the Company, as the case may be, to the Form 10-K or any amendments thereto; and
the undersigned does hereby ratify and confirm all that said attorneys shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 23 day of February, 2021.
rd
/s/ George I. Stoeckert
George I. Stoeckert
EXHIBIT 31.1
I, Douglas A. Pertz, President and Chief Executive Officer (Principal Executive Officer) of The Brink’s Company, certify that:
1.
I have reviewed this Annual Report on Form 10-K of The Brink’s Company;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
2.
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
3.
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
4.
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, 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;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
5.
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal
control over financial reporting.
Date: March 1, 2021
/s/ Douglas A. Pertz
Douglas A. Pertz
President and
Chief Executive Officer
(Principal Executive Officer)
I, Ronald J. Domanico, Executive Vice President and Chief Financial Officer (Principal Financial Officer) of The Brink’s Company, certify that:
EXHIBIT 31.2
1.
I have reviewed this Annual Report on Form 10-K of The Brink’s Company;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
2.
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
3.
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, 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;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
5.
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal
control over financial reporting.
Date: March 1, 2021
/s/ Ronald J. Domanico
Ronald J. Domanico
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
In connection with the Annual Report on Form 10-K of The Brink’s Company (the “Company”) for the period ending December 31, 2020 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas A. Pertz, President and Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Douglas A. Pertz
Douglas A. Pertz
President and Chief Executive Officer
(Principal Executive Officer)
March 1, 2021
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature
that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.2
In connection with the Annual Report on Form 10-K of The Brink’s Company (the “Company”) for the period ending December 31, 2020 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I, Ronald J. Domanico, Executive Vice President and Chief Financial Officer
(Principal Financial Officer) of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Ronald J. Domanico
Ronald J. Domanico
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
March 1, 2021
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature
that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.