form_10-k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
x ANNUAL REPORT PURSUANT TO SECTION 13
OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF
1934
For the fiscal year ended
December 31, 2009
OR
o 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)
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Virginia
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54-1317776
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(State
or other jurisdiction of
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(I.R.S.
Employer
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incorporation
or organization)
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Identification
No.)
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P.O.
Box 18100,
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1801
Bayberry Court
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Richmond,
Virginia
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23226-8100
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code
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(804)
289-9600
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Securities
registered pursuant to Section 12(b) of the Act:
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Name
of each exchange on
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Title of each class
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which registered
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The
Brink’s Company Common Stock, Par Value $1
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New
York Stock Exchange
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Securities
registered pursuant to Section 12(g) of the
Act: None
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes x No o
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 o No x
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 x No o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files). Yes o No o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company. See definition of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
Large accelerated
filer x Accelerated
filer o Non-accelerated
filer o Smaller reporting
company o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes o No x
As of
February 22, 2010, there were issued and outstanding 47,872,426 shares of common
stock. The aggregate market value of shares of common stock held by
non-affiliates as of June 30, 2009, was $1,319,269,250.
Documents
incorporated by reference: Part III incorporates information by
reference from portions of the Registrant’s definitive 2010 Proxy Statement to
be filed pursuant to Regulation 14A.
THE
BRINK’S COMPANY
FORM
10-K
FOR
THE YEAR ENDED DECEMBER 31, 2009
TABLE
OF CONTENTS
PART
I
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Page
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Item
1.
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Business
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2
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Item
1A.
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Risk
Factors
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10
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Item
1B.
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Unresolved
Staff Comments
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15
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Item
2.
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Properties
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15
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Item
3.
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Legal
Proceedings
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15
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Item
4.
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Submission
of Matters to a Vote of Security Holders
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15
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Executive
Officers of the Registrant
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16
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PART
II
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Item
5.
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Market
for Registrant’s Common Equity, Related Stockholder Matters and
Issuer
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Purchases
of Equity Securities
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17
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Item
6.
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Selected
Financial Data
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19
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Item
7.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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20
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Item
7A.
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Quantitative
and Qualitative Disclosures About Market Risk
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63
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Item
8.
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Financial
Statements and Supplementary Data
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65
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Item
9.
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
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109
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Item
9A.
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Controls
and Procedures
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109
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Item
9B.
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Other
Information
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109
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PART
III
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Item
10.
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Directors,
Executive Officers and Corporate Governance
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110
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Item
11.
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Executive
Compensation
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110
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Item
12.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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110
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Item
13.
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Certain
Relationships and Related Transactions, and Director
Independence
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110
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Item
14.
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Principal
Accountant Fees and Services
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110
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PART
IV
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Item
15.
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Exhibits
and Financial Statement Schedules
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111
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The
Brink’s Company (along with its subsidiaries, “we,” “our,” “Brink’s” or the
“Company”), based in Richmond, Virginia, is a leading provider of secure
transportation, cash logistics and other security-related services to banks and
financial institutions, retailers, government agencies, mints, jewelers and
other commercial operations around the world. Brink’s is the oldest
and largest secure transportation and cash logistics company in the U.S., and a
market leader in many other countries. Our international network
serves customers in more than 50 countries and employs approximately 59,400
people. Our operations include approximately 875 facilities and
10,500 vehicles. Our globally recognized brand, global
infrastructure, expertise in security and logistics and history and heritage are
important competitive advantages. Seventy-one percent (71%) of our $3
billion in revenues are from outside North America. Over the past
several years, we have changed from a conglomerate (with operations in the U.S.
monitored home security, heavy-weight freight transportation, coal and other
natural resource industries) into a company focused solely on the security
industry.
Financial
information related to The Brink’s Company, our two reporting segments
(International and North America) and amounts not allocated to segments is
included in the consolidated financial statements on pages
65-108. Management evaluates performance and allocates resources to
its segments based on operating profit or loss, excluding corporate
allocations.
A
significant portion of our business is conducted outside of the United
States. Financial results are reported in U.S. dollars and are
affected by fluctuations in the relative value of foreign
currencies. Our business is also subject to other risks customarily
associated with operating in foreign countries including changing labor and
economic conditions, political instability, restrictions on repatriation of
earnings and capital, as well as nationalization, expropriation and other forms
of restrictive government actions. The future effects of these risks
cannot be predicted. Additional information about risks associated
with our foreign operations is provided on pages 10, 41 and 64.
We have
significant liabilities associated with our retirement plans, a portion of which
has been funded. These liabilities increased $465 million in 2008
primarily as a result of a significant decline in the value of the investments
of these plans. The liabilities were $242 million lower at the end of
2009, primarily as a result of a voluntary $150 million contribution we made to
our primary U.S. retirement plan in 2009. See pages 48-50 and 54-58 for more
information on these liabilities. Additional risk factors are
described on pages 10-14.
Available
Information and Corporate Governance Documents
The
following items are available free of charge on our website (www.brinkscompany.com)
as soon as reasonably possible after filing or furnishing them with the
Securities and Exchange Commission:
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Annual
reports on Form 10-K
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·
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Quarterly
reports on Form 10-Q
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Current
reports on Form 8-K, and amendments to those
reports
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In
addition, the following documents are also available free of charge on our
website:
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Corporate
governance policies
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Business
Code of Ethics
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The
charters of the following Board Committees: Audit and Ethics,
Compensation and Benefits, and Corporate Governance and
Nominating.
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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.
General
Our 2009
segment operating profit was $213 million on revenues of $3.1 billion, resulting
in a segment operating profit margin of 6.8%.
Our
operations are located around the world and most of our revenues (71%) and
segment operating profit (73%) are earned outside of North America.
International
operations has three regions: Europe, Middle East, and Africa (“EMEA”);
Latin America and Asia Pacific. On a combined basis, international
operations generated 2009 revenues of $2.2 billion (71% of total) and segment
operating profit of $157 million (73% of total).
Brink’s
EMEA, which generated $1.3 billion or 40% of total 2009 revenues,
operates 258 branches in 22 countries. Its largest operations are in
France, the Netherlands and Germany. In 2009, France accounted for
$615 million or 49% of EMEA revenues (20% of total).
Brink’s Latin
America, which generated $905 million or 29% of total 2009 revenues,
operates 217 branches in nine countries. Its largest operations are
in Venezuela, Brazil and Colombia. In 2009, Venezuela accounted for
$376 million or 42% of Latin American revenues (12% of total). Brazil accounted
for $258 million or 28% of Latin American revenues (8% of total) in
2009.
Brink’s
Asia-Pacific operates 97 branches in nine countries, and accounted for
$79 million or 2% of total 2009 revenues.
North American
operations include 181 branches in the U.S. and 52 branches in
Canada. North American operations generated 2009 revenues of $894
million (29% of total) and segment operating profit of $56 million (27% of
total).
Brink’s
also serves customers in countries in which we do not operate
branches. Through our investments in unconsolidated equity affiliates
as well as our Global Services network, Brink’s operates in over 50
countries.
The
largest eight Brink’s operations (U.S., France, Venezuela, Brazil, the
Netherlands, Colombia, Canada and Germany) accounted for $2.5 billion or 79% of
total 2009 revenues.
(In
millions)
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2009
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%
total
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%
change
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2008
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%
total
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%
change
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2007
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%
total
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%
change
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Revenues
by region:
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EMEA:
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France
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$ |
615 |
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20 |
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(12 |
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$ |
698 |
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22 |
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11 |
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$ |
629 |
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23 |
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15 |
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Other
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642 |
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20 |
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(3 |
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661 |
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21 |
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18 |
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563 |
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21 |
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23 |
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Total
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1,257 |
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40 |
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(7 |
) |
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1,359 |
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43 |
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14 |
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1,192 |
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|
44 |
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19 |
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Latin America:
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|
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Venezuela (a)
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376 |
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12 |
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7 |
|
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351 |
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|
11 |
|
|
|
56 |
|
|
|
225 |
|
|
|
8 |
|
|
|
31 |
|
Brazil
|
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|
258 |
|
|
|
8 |
|
|
|
33 |
|
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|
194 |
|
|
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6 |
|
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|
20 |
|
|
|
161 |
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|
6 |
|
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|
36 |
|
Other
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|
271 |
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|
9 |
|
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|
6 |
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|
256 |
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|
8 |
|
|
|
23 |
|
|
|
208 |
|
|
|
8 |
|
|
|
27 |
|
Total
|
|
|
905 |
|
|
|
29 |
|
|
|
13 |
|
|
|
801 |
|
|
|
25 |
|
|
|
35 |
|
|
|
594 |
|
|
|
22 |
|
|
|
31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia Pacific
|
|
|
79 |
|
|
|
2 |
|
|
|
10 |
|
|
|
72 |
|
|
|
2 |
|
|
|
15 |
|
|
|
63 |
|
|
|
2 |
|
|
|
(7 |
) |
Total
International
|
|
|
2,241 |
|
|
|
71 |
|
|
|
- |
|
|
|
2,232 |
|
|
|
70 |
|
|
|
21 |
|
|
|
1,849 |
|
|
|
68 |
|
|
|
21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
894 |
|
|
|
29 |
|
|
|
(4 |
) |
|
|
932 |
|
|
|
30 |
|
|
|
5 |
|
|
|
886 |
|
|
|
32 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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Total
Revenues
|
|
$ |
3,135 |
|
|
|
100 |
|
|
|
(1 |
) |
|
$ |
3,164 |
|
|
|
100 |
|
|
|
16 |
|
|
$ |
2,735 |
|
|
|
100 |
|
|
|
16 |
|
|
Amounts
may not add due to rounding.
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(a)
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2009
Venezuela revenues were $138 million on an adjusted basis, or 5%, of
Brink’s $2.9 billion consolidated adjusted revenues in
2009. Adjusted revenues are not reported under U.S. GAAP, and
present Venezuela revenues at the less-favorable parallel market currency
exchange rate. The adjustments are described in detail and are
reconciled to our GAAP results on pages
39-40.
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Geographic
financial information related to revenues and long-lived
assets is included in the consolidated financial statements on page
82.
Brink’s
ownership interests in subsidiaries and affiliated companies ranged from 36% to
100% at December 31, 2009. In some instances, local laws limit the
extent of Brink’s ownership interest.
Services
Our
primary services include:
·
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Cash-in-transit
(“CIT”) armored car transportation
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·
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Automated
teller machine (“ATM”) replenishment and
servicing
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·
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Global
Services – arranging secure long-distance transportation of
valuables
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·
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Cash
Logistics – supply chain management of
cash
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·
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Guarding
services, including airport
security
|
Brink’s
typically provides customized services under separate contracts designed to meet
the distinct needs of customers. Contracts usually cover an initial
term of at least one year and range up to five years, depending on the
service. The contracts generally remain in effect after the initial
term until canceled by either party.
Core
Services (55% of total revenue in 2009)
CIT and
ATM Services are core services we provide to customers throughout the
world. Core
services generated approximately $1.7 billion of revenues in 2009.
CIT We
have been serving customers since 1859. Our success in CIT is driven
by a combination of rigorous security practices, high quality customer service,
risk management expertise and logistics expertise. CIT services
generally include the secure transportation of:
·
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cash
between businesses and banks
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·
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cash,
securities and other valuables between commercial banks, central banks,
and investment banking and brokerage
firms
|
·
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new
currency, coins and precious metals for central
banks
|
ATM
Services We manage nearly 77,000 ATM units worldwide for banks
and other cash dispensing operators. We provide cash replenishment,
monitoring and forecasting capabilities, deposit pick-up and processing
services. Advanced online tools deliver consolidated electronic
reports for simplified reconciliation.
Value-Added
Services (33% of total revenue in 2009)
Our core
services, combined with our brand and global infrastructure, provide a
substantial platform from which we offer additional value-added services. Value-added
services generated approximately $1.0 billion of revenues in 2009.
Global
Services With operations spanning more than 50 countries,
Brink’s is a leading global provider of secure long-distance logistics for
valuables including diamonds, jewelry, precious metals, securities, currency,
high-tech devices, electronics and pharmaceuticals. We typically
employ a combination of armored car and secure air transportation to leverage
our extensive global network. Our specialized diamond and jewelry
operation has offices in the major diamond and jewelry centers of the
world.
Cash
Logistics
Brink’s offers a fully integrated approach to managing the supply chain of cash,
from point-of-sale through transport, vaulting, bank deposit and related
credit. Cash Logistics services include:
·
|
money
processing and cash management
services
|
·
|
deploying
and servicing “intelligent” safes and safe control devices, including our
patented CompuSafe®
service
|
·
|
integrated
check and cash processing services (“Virtual
Vault”)
|
Money
processing services generally include counting, sorting and wrapping
currency. Other currency management services include cashier
balancing, counterfeit detection, account consolidation and electronic
reporting. Retail and bank customers use Brink’s to count and
reconcile coins and currency, prepare bank deposit information, and replenish
coins and currency in specific denominations.
Brink’s
offers a variety of advanced technology applications including online cash
tracking, cash inventory management, check imaging for real-time deposit
processing, and a variety of other web-based information tools that enable banks
and other customers to reduce costs while improving service to their
customers.
Brink’s
CompuSafe® service
offers customers an integrated, closed-loop system for preventing theft and
managing cash. We market CompuSafe® services to a
variety of cash-intensive customers such as convenience stores, gas stations,
restaurants, retail chains and entertainment venues. Our service
includes the installation of a specialized safe in the customer’s
facility. The customer’s employees deposit currency into the safe’s
cassettes, which can only be removed by Brink’s personnel. Upon
removal, the cassettes are transported to a secure location where contents are
verified and transferred for deposit. Our CompuSafe service system
features currency recognition counterfeit detection technology, multi-language
touch screens and electronic interface between point-of-sale, back-office
systems and external banks. Our electronic reporting interface with
external banks enables our CompuSafe service customers to receive same-day
credit on their cash balances, even if the cash remains on the customer’s
premises.
Virtual
Vault services combine CIT, Cash Logistics, vaulting and electronic reporting
technologies to help banks expand into new markets while minimizing investment
in vaults and branch facilities. In addition to secure storage, we
process deposits, provide check imaging and reconciliation services, and
electronically transmit debits and credits.
We
believe the quality and scope of our cash processing and information systems
differentiate our Cash Logistics services from competitive
offerings.
Payment
Services We provide bill payment acceptance and
processing services to utility companies and other billers. Consumers can pay
their bills at our payment locations or payment locations that we operate on
behalf of billers and bank customers.
Other
Security Services (12% of total revenue in 2009)
Security and
Guarding We protect airports, offices, warehouses,
stores, and public venues with electronic surveillance, access control, fire
prevention and highly trained patrolling personnel. Other security
services generated approximately $0.4 billion of revenues in 2009.
Our
guarding services are generally offered in European markets including France,
Germany, Luxembourg and Greece. A significant portion of this
business involves long-term contracts related primarily to guarding services at
airports. Generally, other guarding contracts are for a one-year period, the
majority of which are extended. Our security officers are typically
stationed at customer sites, and responsibilities include detecting and
deterring specific security threats.
Growth
Strategy
We are
pursuing various growth strategies, which we categorize as follows:
·
|
Organic
Growth Strategy
|
1.
|
Continue
to develop and expand our portfolio of high-margin services (for example,
Cash Logistics and Global Services)
|
2.
|
Penetrate
new geographies with strong growth potential for our existing service
offerings
|
·
|
Adjacency
Growth Strategy – enter new security-related markets where we can create
value for customers with our brand, capabilities and other competitive
advantages
|
·
|
Acquisitions
to supplement organic growth – acquire businesses that meet internal
metrics for projected growth, profitability and return on
investment
|
Industry
and Competition
Brink’s
competes with large multinational, regional and smaller companies throughout the
world. Our largest multinational competitors are Group 4 Securicor
plc (headquartered in the U.K.), Loomis AB, formerly a division of Securitas AB
(Sweden), Prosegur, Compania de Seguridad, S.A. (Spain) and Garda World Security
Corporation (Canada).
We
believe the primary factors in attracting and retaining customers are security
expertise, service quality and price. Our competitive advantages
include:
·
|
reputation
for a high level of service and
security
|
·
|
risk
management and logistics expertise
|
·
|
global
infrastructure and customer base
|
·
|
proprietary
cash processing and information
systems
|
·
|
proven
operational excellence
|
·
|
high-quality
insurance coverage and general financial
strength
|
Our cost
structure is generally competitive, although certain competitors may have lower
costs due to a variety of factors including lower wages, less costly employee
benefits, or less stringent security and service standards.
Although
Brink’s faces competitive pricing pressure in many markets, we resist competing
on price alone. We believe our high levels of service and security
differentiate us from competitors.
The
availability of high-quality and reliable insurance coverage is an important
factor in our ability to attract and retain customers and manage the risks
inherent in our business. Brink’s is self-insured for much of the
liability related to potential losses of cash or valuables while such items are
in our possession. However, we purchase insurance coverage for losses
in excess of what we consider to be prudent levels of
self-insurance. Our insurance policies cover losses from most causes,
with the exception of war, nuclear risk and certain other exclusions typical in
such policies.
Insurance
for security is provided by different groups of underwriters at negotiated rates
and terms. Premiums fluctuate depending on market
conditions. The security loss experience of Brink’s and, to a limited
extent, other armored carriers affects our premium rates.
Revenues
are generated from charges per service performed or based on the value of goods
transported. As a result, revenues are affected by the level of
economic activity in various markets as well as the volume of business for
specific customers. CIT contracts usually cover an initial term of at
least one year and in many cases one to three years, and generally remain in
effect thereafter until canceled by either party. Contracts for Cash
Logistics are typically longer. Costs are incurred when preparing to
serve a new customer or to transition away from an existing
customer. Operating profit is generally stronger in the second half
of the year, particularly in the fourth quarter, as economic activity is
typically stronger during this period.
As part
of the spin-off of our former monitored home security business, Brink’s Home
Security Holdings, Inc. (“BHS”), we agreed not to compete with BHS in the United
States, Canada and Puerto Rico with respect to certain activities related to
BHS’s security system monitoring and surveillance business until October 31,
2013.
Service
Mark and Patents
BRINKS is
a registered service mark in the U.S. and certain foreign
countries. The BRINKS mark, name and related marks are of material
significance to our business. We own patents expiring in 2011 and
2012 for certain coin sorting and counting machines. We also own
patents for safes, including our integrated CompuSafe® services
which expire between 2015 and 2022. These patents provide important
advantages to Brink’s. However, Brink’s operations are not dependent
on the existence of these patents.
We have
agreed to license the Brink’s name. An example is a license to a
distributor of security products (padlocks, door hardware, etc.) offered for
sale to consumers through major retail chains.
We
entered into a Brand Licensing Agreement in connection with the spin-off of
BHS. Under the
agreement, BHS licenses the rights to use certain trademarks, including
trademarks that contain the word “Brink’s” in the United States, Canada and
Puerto Rico. In exchange for these rights, BHS has agreed to pay a
licensing fee equal to 1.25% of its net revenues during the period after the
spin-off until the expiration date of the agreement. The license is
terminable by BHS upon 30 days notice and will expire on October 31,
2011. Based on public statements by Tyco International, Ltd.
("Tyco"), we expect that this license will be terminated prior to September 2010
in connection with the pending acquisition of BHS by Tyco.
Government
Regulation
Our U.S.
operations are subject to regulation by the U.S. Department of Transportation
with respect to safety of operations, equipment and financial
responsibility. Intrastate operations in the U.S. are subject to
state regulation. Our International operations are regulated to
varying degrees by the countries in which we operate.
Employee
Relations
At
December 31, 2009, our company had approximately 59,400 employees, including
approximately 12,000 employees in North America (of whom approximately 1,800
were classified as part-time employees) and approximately 47,400 employees
outside North America. At December 31, 2009, Brink’s was a party to 5
collective bargaining agreements in North America with various local unions
covering approximately 1,000 employees, almost all of whom are employees in
Canada and members of unions affiliated with the Canadian Auto Workers
(Ontario). The agreements have various expiration dates in
2010. Outside of North America, approximately 62% of branch employees
are members of labor or employee organizations. We believe our
employee relations are satisfactory.
ACQUISITIONS
Sebival
Brazilian
CIT and payment processing business
On
January 8, 2009, we acquired 100% of the capital stock and voting interests in
Sebival-Seguranca Bancaria
Industrial e de Valores Ltda. and Setal Servicos Especializados,
Tecnicos e Auxiliares Ltda. (“Sebival”) for approximately $47.6 million
in cash. Both of the businesses which comprise Sebival were controlled by the
same owner and the acquisition expands our operations into the midwestern region
of Brazil.
Brink’s
Arya
Indian
CIT and Global Services business
On
September 1, 2009, we acquired additional shares of Brink’s Arya (“Arya”),
increasing our ownership in Arya from 40% to 78%. The consideration paid for the
additional 38% interest was $22.2 million.
In
connection with the acquisition of 38% of Arya’s shares, we also agreed to
purchase the remaining 22% of the shares we do not currently hold for
approximately $12.8 million. This purchase is subject to the satisfaction of
certain conditions which are expected to be met by September 1,
2011. We consider Arya as 100% owned for accounting purposes and
included the fixed purchase price in non-current liabilities.
Arya is a
cash handling and secure logistics company based in Mumbai, India, and this
acquisition expands our presence in one of the largest cash services markets in
Asia.
Other
acquisitions
In the
first quarter of 2009, we acquired a controlling interest in a Panama armored
transportation operation, which was previously 49% owned.
In the
first quarter of 2009, we also acquired 80% ownership of a secure logistics
company based in Moscow, Russia. The relatively small acquisition increases our
presence in a region that has long-term growth potential.
In the
third quarter of 2009, we acquired a majority stake in ICD Limited (“ICD”), a
premium provider of commercial security services in the Asia-Pacific
region. ICD designs, installs, maintains and manages high-quality
commercial security systems. With principal operations in China, ICD
also has offices in Hong Kong, India, Singapore and Australia. ICD
employs approximately 200 people and had 2008 revenue of $12
million.
See note
6 to the consolidated financial statements for more information.
DISCONTINUED
OPERATIONS
Brink’s
Home Security Holdings, Inc.
On
October 31, 2008, we completed the 100% spin-off of BHS. BHS offered
monitored security services in North America primarily for owner-occupied,
single-family residences. To a lesser extent, BHS offered security
services for commercial and multi-family properties. BHS typically
installed and owned the on-site security systems and charged fees to monitor and
service the systems.
In
connection with the spin-off, we entered into certain agreements with BHS to
define responsibility for obligations arising before and after the spin-off,
including obligations relating to liabilities of the businesses, employees,
taxes and intellectual property. We entered into a Brand Licensing
Agreement with BHS. Under the agreement, BHS licenses the rights to
use certain trademarks, including trademarks that contain the word “Brink’s” in
the United States, Canada and Puerto Rico. In exchange for these
rights, BHS has agreed to pay a licensing fee equal to 1.25% of its net revenues
during the period after the spin-off until the expiration date of the
agreement. The license is terminable by BHS upon 30 days notice and
will expire on October 31, 2011. Based on public statements by Tyco
International, Ltd. ("Tyco"), we expect that this license will be terminated
prior to September 2010 in connection with the pending acquisition of BHS by
Tyco.
We also
entered into a Non-Compete Agreement with BHS, which will expire on October 31,
2013, pursuant to which we agreed not to compete with BHS in the United States,
Canada and Puerto Rico with respect to certain restricted activities specified
in the Non-Compete Agreement in which BHS currently is, or is currently planning
to be, engaged.
We
contributed $50 million in cash to BHS at the time of the spin-off and forgave
all the existing intercompany debt owed by BHS to us and our subsidiaries as of
the distribution date.
Former
Coal Business
We have
significant liabilities related to retirement medical plans of our former coal
operations, a portion of which have been funded. Some of the
obligations have not been funded. We expect to have ongoing expense
and future cash outflow for these liabilities. See notes 3, 17 and 21
to the consolidated financial statements for more
information.
We are
exposed to risk in the operation of our businesses. Some of these
risks are common to all companies doing business in the industries in which we
operate and some are unique to our business. In addition, there are
risks associated with investing in our common stock. These risk
factors should be considered carefully when evaluating the company and its
businesses.
The
weak economy is expected to have a negative impact on demand for our
services.
Global
economic conditions have deteriorated significantly, and demand for our services
has been negatively impacted in regions where we provide our
services. For example, demand for our services is significantly
affected by the amount of discretionary consumer and business spending, which
historically has displayed significant cyclicality. Further
deterioration in general global economic conditions would have a negative impact
on our financial condition, results of operations and cash flows, although it is
difficult to predict the extent and the length of time the economic downturn
will affect our business.
The
inability to access capital or significant increases in the cost of capital
could adversely affect our business.
Our
ability to obtain adequate and cost effective financing depends on our credit
ratings as well as the liquidity of financial markets. A negative change in our
ratings outlook or any downgrade in our current investment-grade credit ratings
by our rating agencies could adversely affect our cost and/or access to sources
of liquidity and capital. Additionally, such a downgrade could increase the
costs of borrowing under available credit lines. Disruptions in the capital and
credit markets could adversely affect our ability to access short-term and
long-term capital. Our access to funds under short-term credit facilities is
dependent on the ability of the participating banks to meet their funding
commitments. Those banks may not be able to meet their funding commitments if
they experience shortages of capital and liquidity. Longer disruptions in the
capital and credit markets as a result of uncertainty, changing or increased
regulation, reduced alternatives or failures of significant financial
institutions could adversely affect our access to capital needed for our
business.
We have significant retirement
obligations. Poor
investment performance of retirement plan holdings could unfavorably affect our
liquidity and results of operations.
We have
substantial pension and retiree medical obligations, a portion of which have
been funded. The amount of these obligations is significantly
affected by factors that are not in our control, including interest rates used
to determine the present value of future payment streams, investment returns,
medical inflation rates, participation rates and changes in laws and
regulations. Our liabilities for these plans increased significantly
in 2008 primarily as a result of a decline in value of plan
investments. To improve the funded status of The Brink’s Company
Pension-Retirement Plan, we made a voluntary $150 million cash and stock
contribution in 2009. The funded status of the plan was approximately
83% as of December 31, 2009. We expect that we will be required to
make significant contributions to The Brink’s Company Pension-Retirement Plan in
the next several years. This could adversely affect our liquidity and
our ability to use our resources to make acquisitions and to otherwise grow our
business. The net periodic costs of our retirement plans in 2009
were adversely affected by the investment losses sustained in 2008
and we anticipate that costs in future years will continue to be affected as the
unrecognized losses are recognized into earnings. If these
investments have additional losses, our future cash requirements and costs for
these plans will be further adversely affected.
We
have significant operations outside the United States.
We
currently operate in more than 50 countries. Approximately
three-quarters of our revenue in 2009 came from operations outside the
U.S. We expect revenue outside the U.S. to continue to represent a
significant portion of total revenue. Business operations outside the
U.S. are subject to political, economic and other risks inherent in operating in
foreign countries, such as:
·
|
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;
|
·
|
varying
permitting and licensing requirements in different
jurisdictions;
|
·
|
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;
|
·
|
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 influence
currency exchange rates; and
|
·
|
inflation
levels exceeding that of the U.S.
|
We are
exposed to certain risks when we operate in countries that have high levels of
inflation, including the risk that:
·
|
the
rate of price increases for services will not keep pace with cost
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. GAAP
purposes.
|
We try to
manage these risks by monitoring current and anticipated political and economic
developments 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
highly competitive industries.
We
compete in industries that are subject to significant competition and pricing
pressures. We face significant pricing pressures from competitors in
most markets. Because we believe we have competitive advantages such
as brand name recognition and a reputation for a high level of service and
security, we resist competing on price alone. However, continued
pricing pressure could impact our customer base or pricing structure and have an
adverse effect on our business, financial condition, results of operations and
cash flows.
Our earnings and cash flow could be
materially affected by increased losses of customer
valuables.
We
purchase insurance coverage for losses of customer valuables for amounts in
excess of what we consider prudent deductibles and/or
retentions. Insurance is provided by different groups of underwriters
at negotiated rates and terms. Coverage is available to us in major
insurance markets, although premiums charged are subject to fluctuations
depending on market conditions. Our loss experience and that of other
armored carriers affects premium rates charged to us. We are
self-insured for losses below our coverage limits and recognize expense up to
these limits for actual losses. Our insurance policies cover losses
from most causes, with the exception of war, nuclear risk and various other
exclusions typical for such policies. The availability of
high-quality and reliable insurance coverage is an important factor in order for
us to obtain and retain customers and to manage the risks of our
business. If our losses increase, or if we are unable to obtain
adequate insurance coverage at reasonable rates, our financial condition,
results of operations and cash flows could be materially and adversely
affected.
Restructuring
charges may be required in the future.
There is
a possibility we will take restructuring actions in one or more of our markets
in the future to reduce expenses if a major customer is lost or if recurring
operating losses continue. These actions could result in significant
restructuring charges at these subsidiaries, including recognizing impairment
charges to write down assets, and recording accruals for employee severance and
operating leases. These charges, if required, could significantly
affect results of operations and cash flows.
We depend heavily on the availability
of fuel and the ability to pass higher fuel costs to
customers.
Fuel
prices have fluctuated significantly in recent years. In some
periods, our operating profit has been adversely affected because we are not
able to immediately offset the full impact of higher fuel prices through
increased prices or fuel surcharges. We do not have any long-term
fuel purchase contracts, and have not entered into any other hedging
arrangements that protect against fuel price increases. A significant
increase in fuel costs and an inability to pass increases on to customers or a
shortage of fuel could adversely affect our results of operations and cash
flows.
We operate in regulated
industries.
Our U.S.
operations are subject to regulation by the U.S. Department of Transportation
with respect to safety of operations and equipment and financial
responsibility. Intrastate operations in the U.S. are subject to
regulation by state regulatory authorities and interprovincial operations in
Canada are subject to regulation by Canadian and provincial regulatory
authorities. Our international operations are regulated to varying
degrees by the countries in which we operate.
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 have retained obligations from the
sale of BAX Global.
In
January 2006 we sold BAX Global. We retained some of the obligations
related to these operations, primarily for taxes owed prior to the date of sale
and for any amounts paid related to one pending litigation matter for which we
have accrued a loss reserve of $13 million. In addition, we provided
indemnification customary for these sorts of transactions. Future
unfavorable developments related to these matters could require us to record
additional expenses or make cash payments in excess of recorded
liabilities. The occurrence of these events could have a material
adverse affect on our financial condition, results of operations and cash
flows.
We are subject to covenants for
credit facilities.
We have
credit facilities with financial covenants, including a limit on the ratio of
debt to earnings before interest, taxes, depreciation, and amortization, limits
on the ability to pledge assets, limits on the use of proceeds of asset sales
and minimum coverage of interest costs. Although we believe none of
these covenants are presently restrictive to operations, the ability to meet the
financial covenants can be affected by changes in our results of operations or
financial condition. We cannot provide assurance that we will meet
these covenants. A breach of any of these covenants could result in a
default under existing credit facilities. Upon the occurrence of an
event of default under any of our credit facilities, the lenders could cause
amounts outstanding to be immediately payable and terminate all commitments to
extend further credit. The occurrence of these events would have a
significant impact on our liquidity and cash flows.
Our
growth strategy may not be successful.
One
element of our growth strategy is to strengthen our brand portfolio and expand
our geographic reach through selective acquisitions. Acquisitions
present risks of failing to achieve efficient and effective integration,
strategic objectives and anticipated revenue improvements and cost savings.
There can be no assurance
·
|
that
we will be able to acquire attractive businesses on favorable
terms,
|
·
|
that
all future acquisitions will be accretive to
earnings,
|
·
|
or
that future acquisitions will be rapidly and efficiently integrated into
existing operations.
|
Our effective income
tax rate could change.
We
operate in more than 50 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
have certain environmental and other exposures related to our former coal
operations.
We may
incur future environmental and other liabilities that are presently unknown in
connection with our former coal operations.
Our performance
could be negatively impacted by the spin-off of BHS, which was completed in
2008.
In
connection with the BHS spin-off, we received both a private letter ruling from
the Internal Revenue Service (the “IRS”) and a favorable opinion from Cravath,
Swaine & Moore LLP that the spin-off qualifies for tax-free treatment
under Section 355 of the Internal Revenue Code of 1986, as
amended. However, the IRS could subsequently determine that the
spin-off should be treated as a taxable transaction. If the spin-off
fails to qualify for tax-free treatment, it could have a material adverse tax
impact on us as well as on our shareholders. We also entered into
certain agreements with BHS that could potentially affect our ability to conduct
our operations in the manner most advantageous to us until the expiration of
such agreements. We have agreed to license certain trademarks that
contain the word “Brink’s” to BHS until October 31, 2011, subject to earlier
termination. We also have agreed not to compete with BHS in the
United States, Canada and Puerto Rico with respect to certain activities related
to BHS’s security system monitoring and surveillance business until October 31,
2013.
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 (CO2)) 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
impacts of climate change and related regulation on our customers are highly
uncertain and may adversely affect our operations.
Forward-Looking
Statements
This
document contains both historical and forward-looking
information. Words such as “anticipates,” “estimates,” “expects,”
“projects,” “intends,” “plans,” “believes,” “may,” “should” and similar
expressions may identify forward-looking information. Forward-looking
information in this document includes, but is not limited to, statements
regarding expected revenue growth and earnings for The Brink’s Company,
including organic revenue growth and segment operating profit margin in 2010,
the anticipated termination of the BHS license, the pursuit of growth through
acquisitions in our core market and in other markets, the growth of our Cash
Logistics services, our cost structure, the seasonality of our operating profit,
employee relations, significant liabilities and ongoing expenses and future cash
outflows related to retirement medical plans of former coal operations, customer
demand for our services, expected non-segment income and expenses, potential
changes in foreign currency exchange rates, the anticipated effective tax rate
for 2010 and our future tax position, expenses related to former operations,
expected trademark royalties from BHS, the impact of exchange rates, the
anticipated effect of translating our Venezuelan operations at the parallel
market rate rather than the official rate and designating Venezuela as “highly
inflationary” for accounting purposes, projected contributions, expense and
payouts for the U.S. retirement plans and the non-U.S. pension plans and the
expected long-term rate of return and funded status of the primary U.S. pension
plan, expected future contributions to the UMWA plans, capital expenditures in
2010 and future trends for capital expenditures, future depreciation and
amortization, future payment of bonds issued by the Peninsula Ports Authority of
Virginia, the ability to meet liquidity needs, estimated contractual obligations
for the next five years and beyond, contractual indemnities associated with the
sale of BAX Global and the spin-off of BHS, the outcome of pending litigation
and the anticipated financial impact of the disposition of these matters, future
realization of deferred tax assets, the impairment of goodwill, future
amortizations into net periodic pension cost, estimated discount rates, the
assumed inflation rate for a number of the Company’s benefit plans, the impact
of accounting rule changes, the likelihood of losses due to non-performance by
parties to hedging instruments, the use of earnings from foreign subsidiaries
and equity affiliates, future recognition of unrecognized tax benefits and
uncertain tax positions, minimum repayments of long-term debt and minimum future
lease payments, and expected future cash payments and expense levels for black
lung obligations. Forward-looking information in this document is
subject to known and unknown risks, uncertainties, and contingencies, which
could cause actual results, performance or achievements to differ materially
from those that are anticipated.
These
risks, uncertainties and contingencies, many of which are beyond our control,
include, but are not limited to the impact of the global economic slowdown on
our business opportunities, access to the capital and credit markets, the recent
market volatility and its impact on the demand for our services, the
implementation of investments in technology and value-added services and cost
reduction efforts and their impact on revenue and profit growth, the ability to
identify and execute further cost and operational improvements and efficiencies
in our core business, the willingness of our customers to absorb fuel surcharges
and other future price increases, the actions of competitors, our ability to
identify strategic opportunities and integrate them successfully, acquisitions
and dispositions made in the future, our ability to integrate recent
acquisitions, regulatory and labor issues and higher security threats, the
impact of turnaround actions responding to current conditions in Europe, the
return to profitability of operations in jurisdictions where we have recorded
valuation adjustments, the stability of the Venezuelan economy and changes in
Venezuelan policy regarding exchange rates, fluctuations in value of the
Venezuelan bolivar fuerte, the effect of translating our Venezuelan operations
at the parallel market rate rather than the official rate and designating
Venezuela as “highly inflationary” for accounting purposes, variations in costs
or expenses and performance delays of any public or private sector supplier,
service provider or customer, our ability to obtain appropriate insurance
coverage, positions taken by insurers with respect to claims made and the
financial condition of insurers, safety and security performance, our loss
experience, changes in insurance costs, risks customarily associated with
operating in foreign countries including changing labor and economic conditions,
currency devaluations, safety and security issues, political instability,
restrictions on repatriation of earnings and capital, nationalization,
expropriation and other forms of restrictive government actions, costs
associated with the purchase and implementation of cash processing and security
equipment, the timing of the termination of the BHS license, changes in the
scope or method of remediation or monitoring of our former coal operations, the
timing of the pass-through of certain costs to third parties and the timing of
approvals by governmental authorities relating to the disposal of the coal
assets, changes to estimated liabilities and assets in actuarial assumptions due
to payments made, investment returns, annual actuarial revaluations, and
periodic revaluations of reclamation liabilities, the funding requirements,
accounting treatment, investment performance and costs and expenses of our
retirement plans and other employee benefits, whether Company assets or
retirement plan assets are used to pay benefits, projections regarding the
number of participants in and beneficiaries of our employee and retiree benefit
plans, mandatory or voluntary retirement plan contributions,
black
lung claims incidence, the number of dependents of mine workers for whom
benefits are provided, actual retirement experience of the former coal
operation’s employees, actual medical and legal expenses relating to benefits,
changes in inflation rates (including medical inflation) and interest rates,
changes in mortality and morbidity assumptions, discovery of new facts relating
to civil suits, the addition of claims or changes in relief sought by adverse
parties, our cash, debt and tax position and growth needs, our demand for
capital and the availability and cost of such capital, the nature of our hedging
relationships, changes in employee obligations, overall domestic and
international economic, political, social and business conditions, capital
markets performance, the strength of the U.S. dollar relative to foreign
currencies, foreign currency exchange rates, changes in estimates and
assumptions underlying our critical accounting policies, as more fully described
in the section “Application of Critical Accounting Policies” but including the
likelihood that net deferred tax assets will be realized, discount rates,
expectations of future performance, the timing of deductibility of expenses,
inflation, the promulgation and adoption of new accounting standards and
interpretations, including SFAS 166, now part of FASB ASC Topic 860, Transfers and Servicing, SFAS 167, now part of
FASB ASC Topic 810, Consolidation, ASU
2009-13, and ASU 2009-14, anticipated return on assets, inflation, seasonality,
pricing and other competitive industry factors, labor relations, new government
regulations and interpretations of existing regulations, legislative
initiatives, judicial decisions, issuances of permits, variations in costs or
expenses and the ability of counterparties to perform. The
information included in this document is representative only as of the date of
this document, and The Brink’s Company undertakes no obligation to update any
information contained in this document.
ITEM
1B. UNRESOLVED STAFF COMMENTS
Not
applicable.
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, 2009.
|
|
Facilities
|
|
|
Vehicles
|
|
Region
|
|
Leased
|
|
|
Owned
|
|
|
Total
|
|
|
Leased
|
|
|
Owned
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.
S.
|
|
|
174 |
|
|
|
25 |
|
|
|
199 |
|
|
|
2,118 |
|
|
|
293 |
|
|
|
2,411 |
|
Canada
|
|
|
40 |
|
|
|
13 |
|
|
|
53 |
|
|
|
442 |
|
|
|
86 |
|
|
|
528 |
|
North
America
|
|
|
214 |
|
|
|
38 |
|
|
|
252 |
|
|
|
2,560 |
|
|
|
379 |
|
|
|
2,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
|
229 |
|
|
|
48 |
|
|
|
277 |
|
|
|
863 |
|
|
|
2,877 |
|
|
|
3,740 |
|
Latin
America
|
|
|
193 |
|
|
|
50 |
|
|
|
243 |
|
|
|
450 |
|
|
|
2,868 |
|
|
|
3,318 |
|
Asia
Pacific
|
|
|
103 |
|
|
|
- |
|
|
|
103 |
|
|
|
2 |
|
|
|
512 |
|
|
|
514 |
|
International
|
|
|
525 |
|
|
|
98 |
|
|
|
623 |
|
|
|
1,315 |
|
|
|
6,257 |
|
|
|
7,572 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
739 |
|
|
|
136 |
|
|
|
875 |
|
|
|
3,875 |
|
|
|
6,636 |
|
|
|
10,511 |
|
During
2009, we installed approximately 2,800 units, net of dispositions, for our
CompuSafe® service. This is a 37% increase in the installed base
since the end of 2008. Our installed base now stands at approximately
10,300 units. In 2009, revenues from our CompuSafe® service
represented approximately 7% of North America’s revenues.
ITEM
3. LEGAL PROCEEDINGS
We are
involved in various lawsuits and claims in the ordinary course of
business. We are not able to estimate the range of losses for some of
these matters. We have recorded accruals for losses that are
considered probable and reasonably estimable. We do not believe that
the ultimate disposition of any of these matters will have a material adverse
effect on our liquidity, financial position or results of
operations.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
Not
applicable.
Executive
Officers of the Registrant
The
following is a list as of February 15, 2010, of the names and ages of the
executive and other officers of The Brink’s Company indicating the principal
positions and offices held by each. There are no family relationships
among any of the officers named.
Name
|
Age
|
|
Positions
and Offices Held
|
Held
Since
|
Executive
Officers:
|
|
|
|
|
Michael
T. Dan
|
59
|
|
President,
Chief Executive Officer and Chairman of the Board
|
1998
|
Joseph
W. Dziedzic
|
41
|
|
Vice
President and Chief Financial Officer
|
2009
|
Frank
T. Lennon
|
68
|
|
Vice
President and Chief Administrative Officer
|
2005
|
McAlister
C. Marshall, II
|
40
|
|
Vice
President and General Counsel
|
2008
|
Matthew
A. P. Schumacher
|
51
|
|
Controller
|
2001
|
|
|
|
|
|
Other
Officers:
|
|
|
|
|
Jonathan
A. Leon
|
43
|
|
Treasurer
|
2008
|
Lisa
M. Landry
|
44
|
|
Vice
President - Tax
|
2009
|
Michael
J. McCullough
|
39
|
|
Secretary
|
2009
|
Arthur
E. Wheatley
|
67
|
|
Vice
President – Risk
Management and Insurance
|
1988
|
Executive
and other officers of The Brink’s Company are elected annually and serve at the
pleasure of its board of directors.
Mr. Dan
was elected President, Chief Executive Officer and Director of The Brink’s
Company in February 1998 and was elected Chairman of the Board effective January
1, 1999. He also serves as Chief Executive Officer of Brink’s,
Incorporated, a position he has held since July 1993. From August
1992 to July 1993 he served as President of North American operations of
Brink’s, Incorporated and as Executive Vice President of Brink’s, Incorporated
from 1985 to 1992.
Mr.
Dziedzic is the Vice President and Chief Financial Officer of The Brink’s
Company. Mr. Dziedzic was hired on May 25, 2009 and appointed to this
position on August 1, 2009. Before joining The Brink’s Company, Mr.
Dziedzic was Chief Financial Officer for GE Aviation Services, a producer,
seller and servicer of jet engines, turboprop and turbo shaft engines and
related replacement parts, from March 2006 to May 2009. Prior to this
position, Mr. Dziedzic was Manager-Global Financial Planning & Analysis for
GE Energy, a provider of products and services related to energy production,
distribution and management, from January 2003 to February 2006.
Mr.
Lennon was appointed Vice President and Chief Administrative Officer in
2005. Prior to this position, he was the Vice President, Human
Resources and Administration of The Brink’s Company from 1990 through
2005.
Mr.
Marshall was appointed Vice President and General Counsel of The Brink’s Company
in September 2008 and also held the office of Secretary from September 2008 to
July 2009. Prior to joining The Brink’s Company, Mr. Marshall
was the Vice President, General Counsel and Secretary at Tredegar Corporation, a
manufacturer of plastic films and aluminum extrusions, from October 2006 to
September 2008. Prior to this position, Mr. Marshall was the
Assistant General Counsel and Secretary for The Brink’s Company from July 2006
to September 2006. Prior to this position, Mr. Marshall was the
Assistant General Counsel and Director-Corporate Governance and Compliance for
The Brink’s Company from July 2004 to July 2006. Prior to this
position, Mr. Marshall was the Assistant General Counsel for The Brink’s Company
from July 2000 to July 2004.
Messrs.
Schumacher and Wheatley have served in their present positions for more than the
past five years.
Ms.
Landry was appointed Vice President-Tax of The Brink’s Company on July 10,
2009. Prior to this position, Ms. Landry was Director of Taxes and
Chief Tax Counsel of The Brink’s Company from December 2006 to July
2009. Prior to this position, Ms. Landry was Senior Tax Counsel of
The Brink’s Company from March 2004 to December 2006.
Mr. Leon
is the Treasurer of The Brink’s Company. Mr. Leon was hired in June
2008 and appointed to this position in July 2008. Before joining The
Brink’s Company, Mr. Leon was the Assistant Treasurer for Universal Corporation,
a leaf tobacco merchant and processor, from January 2007 to June
2008. Prior to this position, Mr. Leon was the Assistant Treasurer
for The Brink’s Company from July 2005 to January 2007. Prior to this
position, Mr. Leon had held various financial management positions with The
Brink’s Company from February 1998 to July 2005.
Mr.
McCullough was appointed Secretary of The Brink’s Company on July 10,
2009. Prior to this position, Mr. McCullough was Assistant General
Counsel and Director of Corporate Governance and Compliance of The Brink’s
Company from October 2006 to July 2009, and served as Assistant Secretary from
July 2007 to July 2009. Prior to this position, Mr. McCullough had
held various internal counsel positions with The Brink’s Company from July 2003
to October 2006.
ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Our
common stock trades on the New York Stock Exchange under the symbol
“BCO.” As of February 17, 2010, there were approximately 2,000
shareholders of record of common stock.
The
dividends declared and the high and low prices of our common stock for each full
quarterly period within the last two years are as follows:
|
|
2009
Quarters
|
|
|
2008
Quarters
|
|
|
|
1st
|
|
|
2nd
|
|
|
3rd
|
|
|
4th
|
|
|
1st
|
|
|
2nd
|
|
|
3rd
|
|
|
4th
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
declared per common share
|
|
$ |
0.1000 |
|
|
|
0.1000 |
|
|
|
0.1000 |
|
|
|
0.1000 |
|
|
$ |
0.1000 |
|
|
|
0.1000 |
|
|
|
0.1000 |
|
|
|
0.1000 |
|
Stock
prices:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High
|
|
$ |
32.36 |
|
|
|
31.28 |
|
|
|
30.66 |
|
|
|
26.89 |
|
|
$ |
70.11 |
|
|
|
74.61 |
|
|
|
71.48 |
|
|
|
61.32 |
|
Low
|
|
|
20.73 |
|
|
|
25.79 |
|
|
|
25.00 |
|
|
|
22.23 |
|
|
|
49.04 |
|
|
|
65.23 |
|
|
|
57.68 |
|
|
|
18.19 |
|
We
completed the spin-off of BHS on October 31, 2008. See note 16 to the
consolidated financial statements for a description of limitations of our
ability to pay dividends in the future.
The
following graph compares the cumulative 5-year total return provided to
shareholders on The Brink’s Company’s common stock relative to the cumulative
total returns of the S&P Midcap 400 index and the S&P Midcap 400
Commercial Services & Supplies Index. The graph tracks the performance of a
$100 investment in our common stock and in each index (with the reinvestment of
all dividends) from December 31, 2004, through December 31, 2009.
Source –
Research Data Group, Inc.
Comparison
of Five-Year Cumulative Total Return Among
Brink’s
Common Stock, the S&P MidCap 400 Index and
the
S&P Midcap 400 Commercial Services & Supplies Index
(1)
|
|
Years
Ended December 31,
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Brink's Company
|
|
$ |
100.00 |
|
|
|
121.56 |
|
|
|
162.82 |
|
|
|
153.03 |
|
|
|
215.76 |
|
|
|
198.27 |
|
S&P
Midcap 400 Index
|
|
|
100.00 |
|
|
|
112.55 |
|
|
|
124.17 |
|
|
|
134.08 |
|
|
|
85.50 |
|
|
|
117.46 |
|
S&P
Midcap 400 Commercial Services & Supplies Index
|
|
$ |
100.00 |
|
|
|
103.86 |
|
|
|
122.68 |
|
|
|
140.56 |
|
|
|
95.71 |
|
|
|
114.63 |
|
Copyright
© 2010, Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. All rights reserved.
|
|
|
(1)
|
For
the line designated as “The Brink’s Company” the graph depicts the
cumulative return on $100 invested in The Brink’s Company’s common
stock. For the S&P Midcap 400 Index and the S&P Midcap
400 Commercial Services & Supplies Index, cumulative returns are
measured on an annual basis for the periods from December 31, 2004,
through December 31, 2009, with the value of each index set to $100 on
December 31, 2004. Total return assumes reinvestment of dividends and the
reinvestment of proceeds from the sale of the shares received related to
the spin-off of our former monitored security business on October 31,
2008. We chose the S&P Midcap 400 Index and the S&P Midcap 400
Commercial Services & Supplies Index because we are included in these
indices, which broadly measure the performance of mid-size companies in
the United States market.
|
ITEM
6. SELECTED FINANCIAL DATA
Five
Years in Review
(In
millions, except per share amounts)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
and Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
3,135.0 |
|
|
|
3,163.5 |
|
|
|
2,734.6 |
|
|
|
2,354.3 |
|
|
|
2,113.3 |
|
Segment
operating profit
|
|
|
213.4 |
|
|
|
271.9 |
|
|
|
223.3 |
|
|
|
184.1 |
|
|
|
119.5 |
|
Non-segment
(a)
|
|
|
(46.6 |
) |
|
|
(43.4 |
) |
|
|
(62.3 |
) |
|
|
(73.4 |
) |
|
|
(82.0 |
) |
Operating
profit
|
|
|
166.8 |
|
|
|
228.5 |
|
|
|
161.0 |
|
|
|
110.7 |
|
|
|
37.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
attributable to Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations
|
|
|
195.7 |
|
|
|
131.8 |
|
|
|
78.4 |
|
|
|
53.1 |
|
|
|
(3.3 |
) |
Income
from discontinued operations (b)
|
|
|
4.5 |
|
|
|
51.5 |
|
|
|
58.9 |
|
|
|
534.1 |
|
|
|
151.1 |
|
Cumulative
effect of change in accounting principle (c)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(5.4 |
) |
Net income attributable to
Brink’s
|
|
$ |
200.2 |
|
|
|
183.3 |
|
|
|
137.3 |
|
|
|
587.2 |
|
|
|
142.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
$ |
549.5 |
|
|
|
534.0 |
|
|
|
1,118.4 |
|
|
|
981.9 |
|
|
|
867.4 |
|
Total
assets
|
|
|
1,879.8 |
|
|
|
1,815.8 |
|
|
|
2,394.3 |
|
|
|
2,188.0 |
|
|
|
3,036.9 |
|
Long-term
debt, less current maturities
|
|
|
172.3 |
|
|
|
173.0 |
|
|
|
89.2 |
|
|
|
126.3 |
|
|
|
251.9 |
|
Brink’s
shareholders’ equity
|
|
|
534.9 |
|
|
|
214.0 |
|
|
|
1,046.3 |
|
|
|
753.8 |
|
|
|
837.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
$ |
135.1 |
|
|
|
122.3 |
|
|
|
110.0 |
|
|
|
93.0 |
|
|
|
88.0 |
|
Capital
expenditures
|
|
|
170.6 |
|
|
|
165.3 |
|
|
|
141.8 |
|
|
|
113.8 |
|
|
|
107.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
(loss) per share attributable to Brink’s common
shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
4.14 |
|
|
|
2.85 |
|
|
|
1.68 |
|
|
|
1.06 |
|
|
|
(0.06 |
) |
Discontinued operations
(b)
|
|
|
0.10 |
|
|
|
1.11 |
|
|
|
1.27 |
|
|
|
10.69 |
|
|
|
2.69 |
|
Cumulative effect of change in
accounting principle (c)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(0.10 |
) |
Net income
|
|
$ |
4.23 |
|
|
|
3.96 |
|
|
|
2.95 |
|
|
|
11.75 |
|
|
|
2.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
4.11 |
|
|
|
2.82 |
|
|
|
1.67 |
|
|
|
1.05 |
|
|
|
(0.06 |
) |
Discontinued operations
(b)
|
|
|
0.10 |
|
|
|
1.10 |
|
|
|
1.25 |
|
|
|
10.58 |
|
|
|
2.69 |
|
Cumulative effect of change in
accounting principle (c)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(0.10 |
) |
Net income
|
|
$ |
4.21 |
|
|
|
3.93 |
|
|
|
2.92 |
|
|
|
11.64 |
|
|
|
2.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends
|
|
$ |
0.4000 |
|
|
|
0.4000 |
|
|
|
0.3625 |
|
|
|
0.2125 |
|
|
|
0.1000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
47.2 |
|
|
|
46.3 |
|
|
|
46.5 |
|
|
|
50.0 |
|
|
|
56.3 |
|
Diluted
|
|
|
47.5 |
|
|
|
46.7 |
|
|
|
47.0 |
|
|
|
50.5 |
|
|
|
56.3 |
|
(a)
|
Includes
amounts not allocated to segment
results.
|
(b)
|
Income
from discontinued operations reflects the operations and gains and losses,
if any, on disposal of our former home security, and air freight
businesses, as well as the domestic cash handling operations in the United
Kingdom. Expenses related to postretirement obligations are
recorded as a component of continuing operations after the respective
disposal dates. Adjustments to contingent liabilities are recorded
within discontinued operations.
|
(c)
|
Our
2005 results of operations include a noncash after-tax charge of $5.4
million or $0.10 per diluted share to reflect the cumulative effect of a
change in accounting principle pursuant to the adoption of FIN 47, Accounting for Conditional
Asset Retirement Obligations, which is
now part of FASB ASC Topic 410, Asset
Retirement and Environmental
Obligations.
|
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
THE
BRINK’S COMPANY
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR
THE YEAR ENDED DECEMBER 31, 2009
|
TABLE OF CONTENTS
|
|
|
|
|
|
|
Page
|
OPERATIONS
|
21
|
|
|
|
RESULTS
OF OPERATIONS
|
|
|
Consolidated
Review
|
23
|
|
Segment
Operating Results
|
26
|
|
Non-segment
Income (Expense)
|
32
|
|
Other
Operating Income (Expense)
|
33
|
|
Nonoperating
Income and Expense
|
34
|
|
Income
Taxes
|
35
|
|
Noncontrolling
Interests
|
36
|
|
Income
from Discontinued Operations
|
37
|
|
Summary
of Selected Results and Outlook
|
38
|
|
Adjusted
Results – Reconciled to Amounts Reported under GAAP
|
39
|
|
Foreign
Operations
|
41
|
|
|
|
LIQUIDITY
AND CAPITAL RESOURCES
|
|
|
Overview
|
42
|
|
Summary
Cash Flow Information
|
42
|
|
Operating
Activities
|
43
|
|
Investing
Activities
|
43
|
|
Financing
Activities
|
44
|
|
Capitalization
|
45
|
|
Off
Balance Sheet Arrangements
|
47
|
|
Contractual
Obligations
|
48
|
|
Contingent
Matters
|
51
|
|
|
|
APPLICATION
OF CRITICAL ACCOUNTING POLICIES
|
|
|
Deferred
Tax Asset Valuation Allowance
|
52
|
|
Goodwill,
Other Intangible Assets and Property and Equipment
Valuations
|
53
|
|
Retirement
and Postemployment Benefit Obligations
|
54
|
|
Foreign
Currency Translation
|
59
|
|
|
|
RECENT
ACCOUNTING PRONOUNCEMENTS
|
60
|
The
Brink’s Company offers transportation and logistics management services for cash
and valuables throughout the world. These services include armored
car transportation, automated teller machine (“ATM”) replenishment and
servicing, currency deposit processing and cash management
services. Cash management services include cash logistics services
(“Cash Logistics”), deploying and servicing safes and safe control devices (e.g.
our patented CompuSafe® service), coin sorting and wrapping, integrated check
and cash processing services (“Virtual Vault Services”), arranging secure
transportation of valuables over long distances and around the world (“Global
Services”), providing bill payment acceptance and processing services
to utility companies and other billers (“Payment Services”), and guarding
services (including airport security).
Overview
of Results
2009
versus 2008
Our
revenues and operating profit declined in 2009. Our segment margin
declined in an environment that was extremely difficult for customers in the
banking, retail, and diamond and jewelry sectors. The operating
profit decline was primarily due to a highly profitable monetary conversion
project in Venezuela in 2008, a $23 million repatriation charge and higher
retirement expenses, partially offset by a $14 million gain on an acquisition in
India. The $23 million repatriation charge was the result of
our decision to repatriate 76 million bolivar fuertes from our Venezuelan
operations at the parallel market rate. In addition, newly acquired
businesses helped revenues and operating profit in 2009.
2008
versus 2007
Brink’s
delivered strong full-year results, despite an extremely challenging business
environment that worsened as the year progressed, especially in the diamond and
jewelry segment of our Global Services business. The
biggest contributor to the revenue increase in 2008 was $51 million related to
the completed currency conversion project in Venezuela. Operating
profit improved due primarily to the currency conversion project in Venezuela
and a gain from a sale of coal assets.
Outlook
for 2010
We expect
2010 organic revenue growth in the low-to-mid single-digit percentage range from
our 2009 revenue (Adjusted), and a segment operating profit margin between 7.0%
and 7.5%. We define organic revenue growth as revenue growth
excluding changes in revenue for newly acquired or disposed businesses, and
changes in revenue due to changes in currency exchange rates. See
page 38 for a summary of our 2010 Outlook.
General
Overview
Management
allocates resources to and makes operating decisions on a geographic basis. Our
reportable segments include International and North America
operations. Our International segment includes three distinct
regions: EMEA, Latin America and Asia Pacific. Our North America segment
includes operations in the U.S. and Canada.
We
believe that Brink’s has significant competitive advantages
including:
·
|
reputation
for a high level of service and
security
|
·
|
risk
management and logistics expertise
|
·
|
global
infrastructure and customer base
|
·
|
proprietary
cash processing and information
systems
|
·
|
proven
operational excellence
|
·
|
high-quality
insurance coverage and general financial
strength
|
We focus
our time and resources on service quality, protecting and strengthening our
brand, and addressing our risks. We are a premium provider of
services in most of the markets we serve. Our marketing and sales
efforts are enhanced by the “Brink’s” brand, so we seek to protect and build its
value. Since our services focus on handling, transporting,
protecting, and managing valuables, we strive to understand and manage
risk. Overlaying our approach is an understanding that we must be
disciplined and patient enough to charge prices that reflect the value provided,
the risk assumed and the need for an adequate return for our
investors.
Business
environments around the world change constantly. We must adapt to
changes in competitive landscapes, regional economies and each customer’s level
of business. We balance underlying business risk and the effects of
changing demand on the utilization of our resources. As a result, we
operate largely on a decentralized basis so local management can react quickly
to changes in the business environment.
We
measure financial performance on a long-term basis. The key financial
measures are:
·
|
Revenue
and earnings growth
|
These and
similar measures are critical components of our incentive compensation plans and
performance evaluations.
Because
of our emphasis on managing risks while providing a high level of service, we
focus our marketing and selling efforts on customers who appreciate the value
and breadth of our services, information and risk management capabilities, and
financial strength.
In order
to earn an adequate return on capital, we focus on the effective and efficient
use of resources as well as appropriate pricing levels. We attempt to
maximize the amount of business that flows through our branches, vehicles and
systems in order to obtain the lowest costs possible without compromising
safety, security or service. Due to our higher investment in people
and processes, we generally charge higher prices than competitors that do not
provide the same level of service and risk management.
The
industries we serve have been consolidating. As a result, the demands
and expectations of customers in these industries have
grown. Customers are increasingly seeking suppliers, such as Brink’s,
with broad geographic solutions, sophisticated outsourcing capabilities and
financial strength.
Operating
results may vary from period to period. Since revenues are generated
from charges per service performed or based on the value of goods transported,
they can be affected by both the level of economic activity and the volume of
business for specific customers. As contracts generally run for one
or more years, costs are incurred to prepare to serve, or to transition away,
from a customer. We also periodically incur costs to reduce
operations when volumes decline, including costs to reduce the number of
employees and close or consolidate branch and administrative
facilities. In addition, safety and security costs can vary depending
on performance, cost of insurance coverage, and changes in crime rates (i.e.,
attacks and robberies).
Cash
Logistics is a fully integrated solution that proactively manages the supply
chain of cash from point-of-sale through bank deposit. The process
includes cashier balancing and reporting, deposit processing and consolidation,
and electronic information exchange (including “same-day” credit
capabilities). Retail customers use Brink’s Cash Logistics services
to count and reconcile coins and currency in a secure environment, to prepare
bank deposit information, and to replenish customer coins and currency in proper
denominations.
Because
Cash Logistics involves a higher level of service and more complex activities,
customers are charged higher prices, which result in higher
margins. The ability to offer Cash Logistics to customers
differentiates Brink’s from many of its competitors. Management is
focused on continuing to grow Cash Logistics revenue.
Brink’s
revenues and related operating profit are generally higher in the second half of
the year, particularly in the fourth quarter, because of generally increased
economic activity associated with the holiday season.
Former
Operations
On
October 31, 2008, we completed the tax-free spin-off of Brink’s Home Security
Holdings, Inc. (“BHS”), a former monitored security business in North
America. On August 5, 2007, we sold our domestic cash handling
operations in the United Kingdom. See “Discontinued Operations” for a
description of the transactions and see “Liquidity and Capital Resources” for a
description of the effect of these dispositions on our cash flow and financial
position. We have reported the earnings and cash flows of these operations
within discontinued operations for all periods presented.
We have
significant liabilities associated with our former operations, primarily related
to retirement plans, which are partially funded by plan trusts. These
trusts sustained significant market losses during the second half of
2008.
Information
about our liabilities related to former operations is contained in the following
sections of this report:
·
|
Non-segment
Income (Expense) on page 32
|
·
|
Liquidity
and Capital Resources – Contractual Obligations – on page
48
|
·
|
Application
of Critical Accounting Policies – on page
52
|
·
|
Notes
3, 17 and 21 to the consolidated financial statements, which begin on page
83
|
|
|
GAAP
|
|
|
%
Change
|
|
|
Adjusted
(a)
|
|
|
%
Change
|
|
Years
Ended December 31,
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
(In
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
3,135 |
|
|
|
3,164 |
|
|
|
2,735 |
|
|
|
(1 |
) |
|
|
16 |
|
|
$ |
2,897 |
|
|
|
2,990 |
|
|
|
2,616 |
|
|
|
(3 |
) |
|
|
14 |
|
Segment
operating profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
157 |
|
|
|
215 |
|
|
|
153 |
|
|
|
(27 |
) |
|
|
41 |
|
|
|
118 |
|
|
|
166 |
|
|
|
126 |
|
|
|
(29 |
) |
|
|
32 |
|
North America
|
|
|
57 |
|
|
|
57 |
|
|
|
70 |
|
|
|
(1 |
) |
|
|
(19 |
) |
|
|
57 |
|
|
|
57 |
|
|
|
70 |
|
|
|
(1 |
) |
|
|
(19 |
) |
Total segment operating profit
(b)
|
|
|
213 |
|
|
|
272 |
|
|
|
223 |
|
|
|
(22 |
) |
|
|
22 |
|
|
|
175 |
|
|
|
223 |
|
|
|
196 |
|
|
|
(22 |
) |
|
|
14 |
|
Non-segment
operating profit (c)
|
|
|
(47 |
) |
|
|
(43 |
) |
|
|
(62 |
) |
|
|
7 |
|
|
|
(30 |
) |
|
|
(38 |
) |
|
|
(43 |
) |
|
|
(62 |
) |
|
|
(12 |
) |
|
|
(30 |
) |
Total operating
profit
|
|
|
167 |
|
|
|
229 |
|
|
|
161 |
|
|
|
(27 |
) |
|
|
42 |
|
|
|
137 |
|
|
|
180 |
|
|
|
134 |
|
|
|
(24 |
) |
|
|
34 |
|
Income
from continuing operations (d)
|
|
|
196 |
|
|
|
132 |
|
|
|
78 |
|
|
|
48 |
|
|
|
68 |
|
|
|
66 |
|
|
|
107 |
|
|
|
66 |
|
|
|
(38 |
) |
|
|
62 |
|
Net
income (d)
|
|
|
200 |
|
|
|
183 |
|
|
|
137 |
|
|
|
9 |
|
|
|
34 |
|
|
|
71 |
|
|
|
158 |
|
|
|
125 |
|
|
|
(55 |
) |
|
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
4.11 |
|
|
|
2.82 |
|
|
|
1.67 |
|
|
|
46 |
|
|
|
69 |
|
|
$ |
1.39 |
|
|
|
2.29 |
|
|
|
1.40 |
|
|
|
(39 |
) |
|
|
64 |
|
Net income
|
|
|
4.21 |
|
|
|
3.93 |
|
|
|
2.92 |
|
|
|
7 |
|
|
|
35 |
|
|
|
1.48 |
|
|
|
3.39 |
|
|
|
2.66 |
|
|
|
(56 |
) |
|
|
27 |
|
Amounts
may not add due to rounding.
(a)
|
Adjusted
financial information is contained on pages 39 - 40, including
reconciliation to amounts reported under generally accepted accounting
principles in the United States (“GAAP”). Adjustments relate to
the exchange rate used to translate operating results in Venezuela and
transaction losses on repatriated cash, an exclusion of an
acquisition-related gain, and exclusion of a release of a U.S. tax
valuation allowance.
|
(b)
|
Total
Segment operating profit is a non-GAAP measure. This table
reconciles the measure to operating profit, a GAAP measure. We
believe that our disclosure of total Segment operating profit allows
investors a way to assess the total operating performance of Brink’s
excluding Non-segment income (expenses). We provide our outlook of
total Segment operating profit and Non-segment income (expense) for 2010
on page 38.
|
(c)
|
Non-segment
includes expenses related to corporate and former operations and other
amounts not allocated to segment operating
profit.
|
(d)
|
Amounts
reported in this table are attributable to Brink’s and exclude earnings
related to noncontrolling ownership interests in consolidated
subsidiaries.
|
Overview
Our
revenues and operating profit were down in 2009 compared to 2008. A
weak economy and the results from a highly profitable monetary conversion
project in Venezuela included in 2008 made the comparison
difficult. Our income from continuing operations attributable to
Brink’s and our earnings per share in 2009 were higher than 2008 primarily as a
result of a release of a deferred tax valuation allowance.
Revenues
and operating profit in 2008 improved from 2007 primarily due to organic growth
in Latin America, including a large currency conversion project in Venezuela.
Our income from continuing operations attributable to Brink’s and our earnings
per share in 2008 were higher than 2007 primarily for the same reason, as well
as a gain on the sale of certain assets of our former coal operations and lower
retirement plans expense.
“Adjusted
Results” are Non-GAAP Financial Measures
We
provide an analysis of our results of operations below on both a GAAP and
Adjusted basis. The Adjusted analysis excludes certain income and
expenses recorded under GAAP. The supplemental disclosures are
intended to assist readers in understanding our performance without the
adjustments. The adjustments are described in detail and are
reconciled to our GAAP results on pages 39-40. The adjustments relate
to:
·
|
translating
our Venezuelan results at a different rate of
exchange,
|
·
|
currency
exchange transaction losses on the repatriation of Venezuelan
dividends,
|
·
|
a
gain recognized upon acquiring a controlling interest in an operation in
India, and
|
·
|
a
release of a U.S. deferred tax asset valuation
allowance.
|
Revenues
GAAP
2009
versus 2008
Revenues in 2009 were lower than
2008.
Revenues
in 2009 decreased 1% primarily due to unfavorable changes in currency exchange
rates ($146 million), mostly offset by the net positive effect of businesses
acquired in 2009, net of dispositions ($97 million) and organic growth (see page
21 for our definition of “organic”).
Revenues
increased 1% on an organic basis due mainly to higher average selling prices
(including the effects of inflation in several Latin American countries), mostly
offset by lower volumes in Global Services operations and the loss of guarding
contracts in France.
2008
versus 2007
Revenues
in 2008 were higher than 2007.
·
|
Our
revenues increased 16% in 2008 compared to 2007 mainly due to higher
volumes, including $51 million in incremental revenues from the conversion
project in Venezuela.
|
·
|
Favorable
changes in currency exchange rates increased revenues by 4% ($98 million)
in 2008 over 2007.
|
Adjusted
2009
versus 2008
Revenues
in 2009 were lower than 2008.
Revenues
in 2009 decreased 3% primarily due to unfavorable changes in currency exchange
rates ($194 million), partially offset by the net positive effect of businesses
acquired and disposed in 2009 ($97 million).
Revenues
remained flat on an organic basis compared to 2008. Higher average
selling prices (including the effects of inflation in several Latin American
countries), were mostly offset by lower volumes in Global Services operations
and the loss of guarding contracts in France.
2008
versus 2007
Revenues
in 2008 were higher than 2007.
·
|
Our
revenues increased 14% in 2008 compared to 2007 mainly due to higher
volumes, including $25 million in incremental revenues from the conversion
project in Venezuela.
|
·
|
Favorable
changes in currency exchange rates increased our revenues by 4% ($107
million) in 2008 over 2007.
|
Operating
Profit
GAAP
2009
versus 2008
Operating
profit decreased 27% due mainly to
·
|
the
inclusion in 2008 results of profits from the monetary conversion project
in Venezuela that was completed in
2008,
|
·
|
a
$12 million increase in restructuring and severance costs, primarily in
Europe,
|
·
|
$6
million in accounting corrections in Belgium,
and
|
·
|
higher
non-segment expenses.
|
2008
versus 2007
Operating
profit increased 42% due mainly to significant operating profit from the
conversion project in 2008 and lower non-segment expenses, partially offset by
lower results from our North America segment.
Adjusted
2009
versus 2008
Operating
profit decreased 24% mainly due to
·
|
the
inclusion in 2008 results of profits from the monetary conversion project
in Venezuela that was completed in
2008,
|
·
|
a
$12 million increase in restructuring and severance costs, primarily in
Europe, and
|
·
|
$6
million in accounting corrections in
Belgium,
|
partially
offset by lower non-segment expenses.
2008
versus 2007
Operating
profit increased 34% due mainly to lower non-segment expenses and significant
operating profit from the conversion project in 2008, partially offset by lower
results from our North America segment.
Income
from continuing operations and Net income, and related per share
amounts
(attributable
to Brink’s)
GAAP
2009
versus 2008
Income
from continuing operations and net income (and related per share amounts) was
higher in 2009 compared to 2008 primarily as a result of a release of a deferred
tax valuation allowance, as more fully described on page 52, partially offset by
lower operating profits.
2008
versus 2007
Income
from continuing operations and net income (and related per share amounts) was
higher in 2008 compared to 2007 primarily as a result of a higher operating
profits and a lower effective income tax rate.
Adjusted
2009
versus 2008
Income
from continuing operations and net income (and related per share amounts) was
lower in 2009 compared to 2008 primarily as a result of lower operating
profits.
2008
versus 2007
Income
from continuing operations and net income (and related per share amounts) was
higher in 2008 compared to 2007 primarily as a result of a higher operating
profits and a lower effective income tax rate.
Segment
Operating Results
Segment
Review
2009
versus 2008
GAAP
|
|
Years
Ended
|
|
|
|
|
|
Percentage
|
|
|
|
December
31,
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
Organic
|
|
|
Acquisitions
/
|
|
|
Currency
|
|
|
|
|
|
|
|
|
|
|
(In
millions)
|
|
2008
|
|
|
Change
|
|
|
Dispositions
|
|
|
Change
(a)
|
|
|
2009
|
|
|
Total
|
|
|
Organic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
$ |
1,358.9 |
|
|
|
(21.8 |
) |
|
|
3.3 |
|
|
|
(82.9 |
) |
|
|
1,257.5 |
|
|
|
(7 |
) |
|
|
(2 |
) |
Latin America
|
|
|
800.6 |
|
|
|
74.7 |
|
|
|
80.4 |
|
|
|
(51.0 |
) |
|
|
904.7 |
|
|
|
13 |
|
|
|
9 |
|
Asia Pacific
|
|
|
71.8 |
|
|
|
(3.5 |
) |
|
|
11.6 |
|
|
|
(1.2 |
) |
|
|
78.7 |
|
|
|
10 |
|
|
|
(5 |
) |
International
|
|
|
2,231.3 |
|
|
|
49.4 |
|
|
|
95.3 |
|
|
|
(135.1 |
) |
|
|
2,240.9 |
|
|
|
- |
|
|
|
2 |
|
North America
|
|
|
932.2 |
|
|
|
(28.3 |
) |
|
|
1.5 |
|
|
|
(11.3 |
) |
|
|
894.1 |
|
|
|
(4 |
) |
|
|
(3 |
) |
Revenues
|
|
$ |
3,163.5 |
|
|
|
21.1 |
|
|
|
96.8 |
|
|
|
(146.4 |
) |
|
|
3,135.0 |
|
|
|
(1 |
) |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
$ |
215.0 |
|
|
|
(59.5 |
) |
|
|
8.8 |
|
|
|
(7.5 |
) |
|
|
156.8 |
|
|
|
(27 |
) |
|
|
(28 |
) |
North America
|
|
|
56.9 |
|
|
|
- |
|
|
|
0.1 |
|
|
|
(0.4 |
) |
|
|
56.6 |
|
|
|
(1 |
) |
|
|
- |
|
Segment operating
profit
|
|
$ |
271.9 |
|
|
|
(59.5 |
) |
|
|
8.9 |
|
|
|
(7.9 |
) |
|
|
213.4 |
|
|
|
(22 |
) |
|
|
(22 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
operating margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
9.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.0 |
% |
|
|
|
|
|
|
|
|
North America
|
|
|
6.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.3 |
% |
|
|
|
|
|
|
|
|
Segment operating
margin
|
|
|
8.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.8 |
% |
|
|
|
|
|
|
|
|
Adjusted
(b)
|
|
Years
Ended
|
|
|
|
|
|
Percentage
|
|
|
|
December
31,
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
Organic
|
|
|
Acquisitions
/
|
|
|
Currency
|
|
|
|
|
|
|
|
|
|
|
(In
millions)
|
|
2008
|
|
|
Change
|
|
|
Dispositions
|
|
|
Change
(a)
|
|
|
2009
|
|
|
Total
|
|
|
Organic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
$ |
1,358.9 |
|
|
|
(21.8 |
) |
|
|
3.3 |
|
|
|
(82.9 |
) |
|
|
1,257.5 |
|
|
|
(7 |
) |
|
|
(2 |
) |
Latin America
|
|
|
627.2 |
|
|
|
57.7 |
|
|
|
80.4 |
|
|
|
(98.5 |
) |
|
|
666.8 |
|
|
|
6 |
|
|
|
9 |
|
Asia Pacific
|
|
|
71.8 |
|
|
|
(3.5 |
) |
|
|
11.6 |
|
|
|
(1.2 |
) |
|
|
78.7 |
|
|
|
10 |
|
|
|
(5 |
) |
International
|
|
|
2,057.9 |
|
|
|
32.4 |
|
|
|
95.3 |
|
|
|
(182.6 |
) |
|
|
2,003.0 |
|
|
|
(3 |
) |
|
|
2 |
|
North America
|
|
|
932.2 |
|
|
|
(28.3 |
) |
|
|
1.5 |
|
|
|
(11.3 |
) |
|
|
894.1 |
|
|
|
(4 |
) |
|
|
(3 |
) |
Revenues
|
|
$ |
2,990.1 |
|
|
|
4.1 |
|
|
|
96.8 |
|
|
|
(193.9 |
) |
|
|
2,897.1 |
|
|
|
(3 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
$ |
166.2 |
|
|
|
(45.5 |
) |
|
|
8.8 |
|
|
|
(11.2 |
) |
|
|
118.3 |
|
|
|
(29 |
) |
|
|
(27 |
) |
North America
|
|
|
56.9 |
|
|
|
- |
|
|
|
0.1 |
|
|
|
(0.4 |
) |
|
|
56.6 |
|
|
|
(1 |
) |
|
|
- |
|
Segment operating
profit
|
|
$ |
223.1 |
|
|
|
(45.5 |
) |
|
|
8.9 |
|
|
|
(11.6 |
) |
|
|
174.9 |
|
|
|
(22 |
) |
|
|
(20 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
operating margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
8.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.9 |
% |
|
|
|
|
|
|
|
|
North America
|
|
|
6.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.3 |
% |
|
|
|
|
|
|
|
|
Segment operating
margin
|
|
|
7.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.0 |
% |
|
|
|
|
|
|
|
|
|
(a)
|
The
“Currency Change” amount in the table is the summation of the monthly
currency changes. The monthly currency change is equal to the
Revenue or Operating Profit for the month in local currency, on a
country-by-country basis, multiplied by the difference in rates used to
translate the current period amounts to U.S. dollars versus the
translation rates used in the year-ago
month.
|
|
(b)
|
Adjusted
financial information is contained on pages 39 - 40, including
reconciliation to amounts reported under generally accepted accounting
principles in the United States (“GAAP”). Adjustments relate to
the exchange rate used to translate operating results in Venezuela and
transaction losses on repatriated cash, an exclusion of an
acquisition-related gain, and exclusion of a release of a U.S. tax
valuation allowance.
|
Segment
Review
2009
versus 2008
Total
Segment Operating Profit
GAAP
Segment
operating profit decreased 22% in total and on an organic basis due mainly
to
·
|
the
inclusion in 2008 results of profits from the monetary conversion project
in Venezuela that was completed in
2008,
|
·
|
a
$12 million increase in restructuring and severance costs, primarily in
Europe, and
|
·
|
$6
million in accounting corrections in
Belgium.
|
Adjusted
Segment
operating profit decreased 22%, and 20% on an organic basis, mainly due
to
·
|
the
inclusion in 2008 results of profits from the monetary conversion project
in Venezuela that was completed in
2008,
|
·
|
a
$12 million increase in restructuring and severance costs, primarily in
Europe, and
|
·
|
$6
million in accounting corrections in
Belgium.
|
International
Segment
Total
International
GAAP
Revenues
in 2009 for our international segment were even with 2008 as
·
|
revenues
in EMEA were 7% lower,
|
·
|
revenues
in Latin America were 13% higher,
and
|
·
|
revenues
in Asia Pacific were 10% higher.
|
Operating
profit in our international segment was 27% lower than 2008 as we earned lower
profits in EMEA and Latin America.
Adjusted
Revenues
in 2009 for our international segment were 3% lower than 2008 as
·
|
revenues
in EMEA were 7% lower,
|
·
|
revenues
in Latin America were 6% higher,
and
|
·
|
revenues
in Asia Pacific were 10% higher.
|
Operating
profit in our international segment was 29% lower than 2008 as we earned lower
profits in EMEA and Latin America.
EMEA
GAAP
EMEA
revenues were down 7% due mainly to
·
|
unfavorable
currency impact ($83 million),
|
·
|
a
loss of guarding contracts in France ($34 million),
and
|
·
|
a
sale of certain guarding operations in
France
|
($5
million).
EMEA
revenues were down 2% on an organic basis due to
·
|
the
loss of guarding contracts in France ($34 million),
and
|
·
|
continued
pricing and volume pressure throughout
region.
|
EMEA
operating profit was down 65% due primarily to
·
|
higher
severance costs (up $10 million) related to contract losses and turnaround
efforts,
|
·
|
accounting
corrections in Belgium ($6 million),
and
|
·
|
Global
Services being down across the region on weak diamond and jewelry
demand.
|
Adjusted
The
analysis of Adjusted results is the same as the analysis of our GAAP
results.
Latin
America
GAAP
Revenue
in Latin America increased 13% on
·
|
inflation-based
price increases, and
|
·
|
an
acquisition in Brazil ($74
million).
|
Revenue
increased 9% on an organic basis on higher CIT volume throughout the region
including inflation-based price increases.
Operating
profit decreased 13% as 2008 included results from highly profitable monetary
conversion project in Venezuela, and higher foreign currency transaction losses
in Venezuela ($8 million) were partially offset by profit increased as a result
of the Brazil acquisition ($10 million).
Adjusted
Revenue
in Latin America increased 6% on
·
|
inflation-based
price increases, and
|
·
|
an
acquisition in Brazil ($74
million).
|
Revenue
increased 9% on an organic basis on higher CIT volume throughout the region
including inflation-based price increases.
Operating
profit decreased 9% as 2008 included results from highly profitable monetary
conversion project in Venezuela, partially offset by profit increased as a
result of the Brazil acquisition ($10 million).
Asia-Pacific
GAAP
Revenue
in Asia Pacific increased 10% due mainly to third-quarter acquisitions in India
($8 million) and China ($4 million).
Revenues
on an organic basis and our operating profit were down due to lower diamond and
jewelry demand.
Adjusted
The
analysis of Adjusted results is the same as the analysis of our GAAP
results.
North
American Segment
GAAP
Revenues
in North America were down 4% on lower volume in CIT and Global Services,
partially offset by higher selling prices. Operating profit in North
America was flat with 2009 with revenue declines offset by cost
reductions.
Adjusted
The
analysis of Adjusted results is the same as the analysis of our GAAP
results.
Outlook for 2010
We expect
2010 organic revenue growth to be in the low-to-mid single-digit percentage
range from our $2.9 billion of 2009 Adjusted revenue, and a segment operating
profit margin to be between 7.0% and 7.5%. See page 38 for a summary
of our 2010 Outlook.
Segment
Review
2008
versus 2007
GAAP
|
|
Years
Ended
|
|
|
Percentage
|
|
|
|
December
31,
|
|
|
Change
|
|
(In
millions)
|
|
2007
|
|
|
Organic
Change
|
|
|
Acquisitions
/ Dispositions
|
|
|
Currency
Change (a)
|
|
|
2008
|
|
|
As
Reported
|
|
|
Organic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
$ |
1,191.5 |
|
|
|
78.4 |
|
|
|
11.7 |
|
|
|
77.3 |
|
|
|
1,358.9 |
|
|
|
14 |
|
|
|
7 |
|
Latin America
|
|
|
594.2 |
|
|
|
186.4 |
|
|
|
1.0 |
|
|
|
19.0 |
|
|
|
800.6 |
|
|
|
35 |
|
|
|
31 |
|
Asia Pacific
|
|
|
62.6 |
|
|
|
8.0 |
|
|
|
- |
|
|
|
1.2 |
|
|
|
71.8 |
|
|
|
15 |
|
|
|
13 |
|
International
|
|
|
1,848.3 |
|
|
|
272.8 |
|
|
|
12.7 |
|
|
|
97.5 |
|
|
|
2,231.3 |
|
|
|
21 |
|
|
|
15 |
|
North America
|
|
|
886.3 |
|
|
|
40.5 |
|
|
|
4.6 |
|
|
|
0.8 |
|
|
|
932.2 |
|
|
|
5 |
|
|
|
5 |
|
Revenues
|
|
$ |
2,734.6 |
|
|
|
313.3 |
|
|
|
17.3 |
|
|
|
98.3 |
|
|
|
3,163.5 |
|
|
|
16 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
$ |
152.9 |
|
|
|
57.2 |
|
|
|
0.8 |
|
|
|
4.1 |
|
|
|
215.0 |
|
|
|
41 |
|
|
|
37 |
|
North America
|
|
|
70.4 |
|
|
|
(13.9 |
) |
|
|
0.3 |
|
|
|
0.1 |
|
|
|
56.9 |
|
|
|
(19 |
) |
|
|
(20 |
) |
Segment operating
profit
|
|
$ |
223.3 |
|
|
|
43.3 |
|
|
|
1.1 |
|
|
|
4.2 |
|
|
|
271.9 |
|
|
|
22 |
|
|
|
19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
operating margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
8.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.6 |
% |
|
|
|
|
|
|
|
|
North America
|
|
|
7.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.1 |
% |
|
|
|
|
|
|
|
|
Segment operating
margin
|
|
|
8.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.6 |
% |
|
|
|
|
|
|
|
|
Adjusted
(b)
|
|
Years
Ended
|
|
|
|
|
|
Percentage
|
|
|
|
December
31,
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
Organic
|
|
|
Acquisitions
/
|
|
|
Currency
|
|
|
|
|
|
|
|
|
|
|
(In
millions)
|
|
2007
|
|
|
Change
|
|
|
Dispositions
|
|
|
Change
(a)
|
|
|
2008
|
|
|
Total
|
|
|
Organic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
$ |
1,191.5 |
|
|
|
78.4 |
|
|
|
11.7 |
|
|
|
77.3 |
|
|
|
1,358.9 |
|
|
|
14 |
|
|
|
7 |
|
Latin America
|
|
|
475.1 |
|
|
|
123.0 |
|
|
|
1.0 |
|
|
|
28.1 |
|
|
|
627.2 |
|
|
|
32 |
|
|
|
26 |
|
Asia Pacific
|
|
|
62.6 |
|
|
|
8.0 |
|
|
|
- |
|
|
|
1.2 |
|
|
|
71.8 |
|
|
|
15 |
|
|
|
13 |
|
International
|
|
|
1,729.2 |
|
|
|
209.4 |
|
|
|
12.7 |
|
|
|
106.6 |
|
|
|
2,057.9 |
|
|
|
19 |
|
|
|
12 |
|
North America
|
|
|
886.3 |
|
|
|
40.5 |
|
|
|
4.6 |
|
|
|
0.8 |
|
|
|
932.2 |
|
|
|
5 |
|
|
|
5 |
|
Revenues
|
|
$ |
2,615.5 |
|
|
|
249.9 |
|
|
|
17.3 |
|
|
|
107.4 |
|
|
|
2,990.1 |
|
|
|
14 |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
$ |
125.7 |
|
|
|
35.7 |
|
|
|
0.8 |
|
|
|
4.0 |
|
|
|
166.2 |
|
|
|
32 |
|
|
|
28 |
|
North America
|
|
|
70.4 |
|
|
|
(13.9 |
) |
|
|
0.3 |
|
|
|
0.1 |
|
|
|
56.9 |
|
|
|
(19 |
) |
|
|
(20 |
) |
Segment operating
profit
|
|
$ |
196.1 |
|
|
|
21.8 |
|
|
|
1.1 |
|
|
|
4.1 |
|
|
|
223.1 |
|
|
|
14 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
operating margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
7.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.1 |
% |
|
|
|
|
|
|
|
|
North America
|
|
|
7.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.1 |
% |
|
|
|
|
|
|
|
|
Segment operating
margin
|
|
|
7.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.5 |
% |
|
|
|
|
|
|
|
|
|
(a)
|
The
“Currency Change” amount in the table is the summation of the monthly
currency changes. The monthly currency change is equal to the
Revenue or Operating Profit for the month in local currency, on a
country-by-country basis, multiplied by the difference in rates used to
translate the current period amounts to U.S. dollars versus the
translation rates used in the year-ago
month.
|
|
(b)
|
Adjusted
financial information is contained on pages 39 - 40, including
reconciliation to amounts reported under generally accepted accounting
principles in the United States (“GAAP”). Adjustments relate to
the exchange rate used to translate operating results in Venezuela and
transaction losses on repatriated cash, an exclusion of an
acquisition-related gain, and exclusion of a release of a U.S. tax
valuation allowance.
|
Segment
Review
2008
versus 2007
Total
Segment Operating Profit
GAAP
Segment
operating profit increased 19% on an organic basis due mainly to significant
operating profit from the conversion project in Venezuela in the first half of
2008, partially offset by lower results from our North America
segment.
Adjusted
Segment
operating profit increased 11% on an organic basis due mainly to significant
operating profit from the conversion project in Venezuela in the first half of
2008, partially offset by lower results from our North America
segment.
International
Segment
Total
International
GAAP
Revenues
in 2008 for our international segment increased 21% from 2007 as
·
|
revenues
in EMEA were 14% higher,
|
·
|
revenues
in Latin America were 35% higher,
and
|
·
|
revenues
in Asia Pacific were 15% higher.
|
Operating
profit in our international segment was 41% higher than in 2007 as we earned
higher profits in EMEA and Latin America.
Adjusted
Revenues
in 2008 for our international segment increased 19% from 2007 as
·
|
revenues
in EMEA were 14% higher,
|
·
|
revenues
in Latin America were 32% higher,
and
|
·
|
revenues
in Asia Pacific were 15% higher.
|
Operating
profit in our international segment was 32% higher than in 2007 as we earned
higher profits in EMEA and Latin America.
EMEA
GAAP
EMEA
revenues were up 14% due mainly to
·
|
favorable
currency impact ($77 million), and
|
·
|
organic
revenue growth of 7%.
|
EMEA
operating profit increased 6% due primarily to
·
|
favorable
changes in currency exchange rates,
|
·
|
improved
operating results in some countries despite higher labor costs and the
overall economic slowdown caused by the global financial
crisis,
|
·
|
strong
performance of Global Services, and
|
partially
offset by
·
|
recessionary
and competitive pricing pressures.
|
Adjusted
The
analysis of Adjusted results is the same as the analysis of our GAAP
results.
Latin
America
GAAP
Revenue
in Latin America increased 35% on
·
|
higher
volumes across the region (including significant volumes from the
conversion project),
|
·
|
normal
inflationary price increases, and
|
·
|
favorable
changes in currency exchange rates.
|
Revenue
increased 31% on an organic basis on higher CIT volume throughout region
including the conversion project and inflation-based price
increases.
Operating
profit increased 64% primarily due to the highly profitable monetary conversion
project in Venezuela, and solid improvement in Brazil and
Argentina.
Adjusted
Revenue
in Latin America increased 32% on
·
|
higher
volumes across the region (including significant volumes from the
conversion project),
|
·
|
normal
inflationary price increases, and
|
·
|
favorable
changes in currency exchange rates.
|
Revenue
increased 26% on an organic basis on higher CIT volume throughout region
including the conversion project and inflation-based price
increases.
Operating
profit increased 57% primarily due to the highly profitable monetary conversion
project in Venezuela, and solid improvement in Brazil and
Argentina.
Asia-Pacific
GAAP
Revenues
in Asia Pacific increased 15% and operating profit improved 8% due to higher
diamond and jewelry demand.
Adjusted
The
analysis of Adjusted results is the same as the analysis of our GAAP
results.
North
American Segment
GAAP
Revenues
in North America increased 5% on higher CIT service
volumes. Operating profit in North America decreased 19% due
to
·
|
higher
spending on labor, fuel, selling, general and administrative expenses and
employment-related legal settlement
expenses,
|
partially
offset by
·
|
lower
expense related to U.S. retirement plans
and
|
·
|
a
gain related to reductions in retirement benefit obligations in
Canada.
|
Adjusted
The
analysis of Adjusted results is the same as the analysis of our GAAP
results.
Non-segment
Income (Expense) (a)
|
|
2009
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
(In
millions)
|
|
GAAP
|
|
|
|
Adjusted
|
|
|
GAAP
and Adjusted
|
|
|
GAAP
and Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
and former operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
$ |
(38.1 |
) |
|
|
|
(38.1 |
) |
|
|
(48.8 |
) |
|
|
(49.7 |
) |
Strategic
reviews and proxy matters
|
|
|
- |
|
|
|
|
- |
|
|
|
(4.8 |
) |
|
|
(3.6 |
) |
Retirement
costs (primarily former operations)
|
|
|
(19.3 |
) |
|
|
|
(19.3 |
) |
|
|
2.7 |
|
|
|
(11.2 |
) |
Subtotal
|
|
|
(57.4 |
) |
|
|
|
(57.4 |
) |
|
|
(50.9 |
) |
|
|
(64.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
amounts not allocated to segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency
exchange transaction gains (losses)
|
|
|
(22.3 |
) |
(b)
|
|
|
0.2 |
|
|
|
(8.4 |
) |
|
|
0.5 |
|
Gains
on acquiring control of equity method affiliates
|
|
|
14.9 |
|
(c)
|
|
|
1.0 |
|
|
|
- |
|
|
|
- |
|
Gains
on sale of property and other assets
|
|
|
9.6 |
|
|
|
|
9.6 |
|
|
|
13.1 |
|
|
|
0.4 |
|
Royalty
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brand licensing fees from BHS
|
|
|
6.8 |
|
|
|
|
6.8 |
|
|
|
1.1 |
|
|
|
- |
|
Other
|
|
|
1.8 |
|
|
|
|
1.8 |
|
|
|
1.7 |
|
|
|
1.3 |
|
Subtotal
|
|
|
10.8 |
|
|
|
|
19.4 |
|
|
|
7.5 |
|
|
|
2.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-segment
income (expense)
|
|
$ |
(46.6 |
) |
|
|
|
(38.0 |
) |
|
|
(43.4 |
) |
|
|
(62.3 |
) |
(a)
|
Includes
corporate, former operations and other amounts not allocated to segment
results.
|
(b)
|
Includes
$22.5 million in the fourth quarter of 2009 related to Venezuela
repatriation of dividends at the parallel
rate.
|
(c)
|
Relates
primarily to acquisition of controlling interest of a CIT operation in
India in the third quarter of 2009.
|
2009
versus 2008
GAAP
Non-segment
expenses were $3 million higher, mainly due to
·
|
higher
retirement expenses ($22 million);
|
·
|
higher
foreign exchange losses ($14 million), including a $23 million
repatriation charge;
|
·
|
lower
gains on asset sales ($4 million);
|
mostly
offset by
·
|
lower
general and administrative expense ($11 million), including lower bonus
accruals ($6 million);
|
·
|
a
gain on an acquisition in India ($14
million);
|
·
|
higher
royalty income ($6 million); and
|
·
|
lower
costs for strategic reviews and proxy matters ($5
million).
|
Adjusted
Non-segment
expenses were $5 million lower, mainly due to
·
|
lower
general and administrative expense ($11 million), including lower bonus
accruals ($6 million);
|
·
|
lower
foreign exchange losses ($9
million);
|
·
|
higher
royalty income ($6 million); and
|
·
|
lower
costs for strategic reviews and proxy matters ($5
million)
|
partially
offset by
·
|
higher
retirement expenses ($22 million);
and
|
·
|
lower
gains on asset sales ($4 million).
|
Outlook
for 2010
We
believe that non-segment expenses will be approximately $56 million in 2010, or
$9 million higher than 2009 primarily as a result of lower royalty income ($4
million) and higher general and administrative expenses ($3
million). See page 38 for a summary of our 2010 Outlook.
2008
versus 2007
GAAP
Non-segment
expenses decreased 30% in 2008 from 2007 mainly due to
·
|
lower
retirement plan costs of $14 million
and
|
·
|
higher
gains on the sale of certain assets of our former coal operations (up $13
million),
|
partially
offset by
·
|
higher
foreign currency transaction losses ($9
million).
|
The
foreign currency losses primarily related to the remeasurement of foreign
currency-denominated intercompany dividends.
Adjusted
The
analysis of Adjusted non-segment expenses is the same as the analysis of our
GAAP non-segment expenses.
Other
Operating Income (Expense)
Other
operating income (expense) includes segment and non-segment other operating
income and expense.
|
|
Years
Ended December 31,
|
|
|
%
change
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency transaction losses
|
|
$ |
(41.4 |
) |
|
|
(18.1 |
) |
|
|
(9.5 |
) |
|
|
129 |
|
|
|
91 |
|
Gain
on acquiring control of an equity method affiliate
|
|
|
14.9 |
|
|
|
- |
|
|
|
- |
|
|
NM
|
|
|
|
- |
|
Gains
on sales of property and other assets
|
|
|
9.4 |
|
|
|
13.1 |
|
|
|
4.6 |
|
|
|
(28 |
) |
|
|
185 |
|
Royalty
income
|
|
|
8.6 |
|
|
|
2.8 |
|
|
|
1.3 |
|
|
|
200 |
+ |
|
|
115 |
|
Share
in earnings of equity affiliates
|
|
|
4.5 |
|
|
|
5.0 |
|
|
|
3.3 |
|
|
|
(10 |
) |
|
|
52 |
|
Impairment
losses
|
|
|
(2.7 |
) |
|
|
(1.9 |
) |
|
|
(2.5 |
) |
|
|
42 |
|
|
|
(24 |
) |
Other
|
|
|
3.2 |
|
|
|
3.7 |
|
|
|
3.9 |
|
|
|
(14 |
) |
|
|
(5 |
) |
Other
operating income (expense)
|
|
$ |
(3.5 |
) |
|
|
4.6 |
|
|
|
1.1 |
|
|
NM
|
|
|
|
200 |
+ |
2009
versus 2008
Other
operating income (expense) was worse in 2009 primarily as a result
of
·
|
higher
foreign currency transaction losses, including the $23 million loss from
repatriating 76 million bolivar fuertes held in Venezuela at the parallel
exchange rate;
|
·
|
lower
gains on asset sales of $4 million;
|
partially
offset by
·
|
gains
that total $15 million primarily related to the acquisition of a
controlling interest in India; and
|
·
|
royalty
income from the licensing agreement with BHS was $6 million
higher.
|
2008
versus 2007
Other
operating income was better in 2008 compared to 2007 primarily as a result
of
·
|
gains
on sales of property and other assets, including a sale of coal assets to
Massey Energy Company in 2008, that were in total $9 million
higher;
|
·
|
royalty
income mainly attributable to royalties from BHS was $2 million
higher;
|
·
|
equity
earnings were $2 million higher;
|
·
|
higher
foreign currency transaction losses of $9 million in 2008, primarily
related to the remeasurement of foreign currency-denominated intercompany
dividends.
|
Nonoperating
Income and Expense
Interest
Expense
|
|
Years
Ended December 31,
|
|
|
%
change
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
$ |
11.3 |
|
|
|
12.0 |
|
|
|
10.8 |
|
|
|
(6 |
) |
|
|
11 |
|
Interest
expense in 2009 decreased mainly due to lower average interest rates. Interest
expense in 2008 was higher than in 2007 due to higher average debt
levels.
Interest
and Other Income
|
|
Years
Ended December 31,
|
|
|
%
change
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$ |
10.8 |
|
|
|
15.0 |
|
|
|
8.7 |
|
|
|
(28 |
) |
|
|
72 |
|
Other-than-temporary
impairment of marketable securities
|
|
|
- |
|
|
|
(7.1 |
) |
|
|
- |
|
|
|
(100 |
) |
|
NM
|
|
Other,
net
|
|
|
- |
|
|
|
0.2 |
|
|
|
1.8 |
|
|
|
(100 |
) |
|
|
(89 |
) |
Total
|
|
$ |
10.8 |
|
|
|
8.1 |
|
|
|
10.5 |
|
|
|
33 |
|
|
|
(23 |
) |
In 2009,
interest income decreased due to lower interest rates and lower average levels
of cash and cash equivalents in certain countries. Our results in
2008 included a $7.1 million other-than-temporary impairment loss on marketable
securities.
Interest
income was higher in 2008 than in 2007 primarily due to higher average levels of
cash and cash equivalents.
Summary
Rate Reconciliation – GAAP
|
|
Years
Ended December 31,
|
|
(In
percentages)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
federal tax rate
|
|
|
35.0 |
% |
|
|
35.0 |
% |
|
|
35.0 |
% |
Increases
(reductions) in taxes due to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to valuation
allowances
|
|
|
(68.2 |
) |
|
|
(6.1 |
) |
|
|
4.0 |
|
Nondeductible repatriation
charge
|
|
|
4.7 |
|
|
|
- |
|
|
|
- |
|
Nontaxable
gain on India acquisition
|
|
|
(2.9 |
) |
|
|
- |
|
|
|
- |
|
Other
|
|
|
(5.3 |
) |
|
|
(5.3 |
) |
|
|
(2.0 |
) |
Income
tax rate on continuing operations
|
|
|
(36.7 |
%) |
|
|
23.6 |
% |
|
|
37.0 |
% |
Summary
Rate Reconciliation – Adjusted (a)
|
|
Years
Ended December 31,
|
|
(In
percentages)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
federal tax rate
|
|
|
35.0 |
% |
|
|
35.0 |
% |
|
|
35.0 |
% |
Increases
(reductions) in taxes due to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to valuation
allowances
|
|
|
3.4 |
|
|
|
(7.8 |
) |
|
|
4.9 |
|
Other
|
|
|
(1.7 |
) |
|
|
(2.4 |
) |
|
|
0.1 |
|
Income
tax rate on Adjusted continuing operations
|
|
|
36.7 |
% |
|
|
24.8 |
% |
|
|
40.0 |
% |
(a)
|
See
pages 39-40 for a reconciliation of Adjusted results to
GAAP.
|
Overview
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
|
·
|
the
nondeductible Venezuela repatriation
charge
|
·
|
the
nontaxable acquisition gains
|
·
|
timing
of benefit recognition for uncertain tax
positions
|
We
establish or reverse valuation allowances for deferred tax assets depending on
all available information including historical and expected future operating
performance of our subsidiaries. Changes in judgment about the future
realization of deferred tax assets can result in significant adjustments to the
valuation allowances. Based on our historical and future expected
taxable earnings, we believe it is more likely than not that we will realize the
benefit of the deferred tax assets, net of valuation allowances.
Outlook
The
effective income tax rate for 2010 is expected to be between 36% and 39%. This
higher forecasted range reflects the designation of Venezuela as highly
inflationary for accounting purposes, effective January 1, 2010. This
designation precludes the recognition of deferred tax benefits that result from
inflationary indexing of assets and liabilities. The higher
forecasted 2010 rate is also due to the characterization of a French business
tax as an income tax based upon legislative changes, also effective January 1,
2010. Our effective tax rate may fluctuate materially from these
estimates due to changes in forecasted permanent book-tax differences, the
expected geographical mix of earnings, changes in valuation allowances or
accruals for contingencies and other factors.
Continuing
Operations
2009
Compared to U.S. Statutory Rate
The
effective income tax rate on continuing operations in 2009 was lower than the
35% U.S. statutory tax rate due to $117.8 million in lower tax expense primarily
resulting from the reversal of a U.S. valuation allowance, $4.9 million in lower
taxes due to the nontaxable India gain, partially offset by $7.9 million in
higher taxes due to the nondeductible Venezuela repatriation
charge. (See Application of Critical Accounting Policies—Deferred Tax
Asset Valuation Allowance on page 52 for an explanation of a description of our
accounting policy, assumptions used and a sensitivity analysis).
2008
Compared to U.S. Statutory Rate
The
effective income tax rate on continuing operations in 2008 was lower than the
35% U.S. statutory tax rate due to a net $13.6 million decrease in our valuation
allowance position in U.S. and non-U.S. jurisdictions as a result of our
assessment of historical and future taxable income in these
jurisdictions. In addition, there was a $13.0 million decrease in the
non-U.S. tax provision, primarily due to the geographical mix of earnings in the
foreign jurisdictions.
2007
Compared to U.S. Statutory Rate
The
effective income tax rate on continuing operations in 2007 was higher than the
35% U.S. statutory tax rate primarily due to a $6.5 million increase related to
a net increase in the valuation allowance for non-U.S. deferred tax assets
partly offset by a $2.3 million decrease in the foreign tax provision primarily
due to the geographical mix of earnings in the foreign
jurisdictions.
Other
As of
December 31, 2009, we have not recorded U.S. federal deferred income taxes on
approximately $403 million of undistributed earnings of foreign subsidiaries and
equity affiliates in accordance with Accounting Principles Board Opinion 23,
Accounting for Income Taxes –
Special Areas, as amended, which is now part of FASB ASC Topic 740, Income Taxes. We expect that these
earnings will be permanently reinvested in operations outside the
U.S. It is not practical to compute the estimated deferred tax
liability on these earnings.
|
|
Years
Ended December 31,
|
|
|
%
change
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income attributable to noncontrolling interests
|
|
$ |
31.7 |
|
|
|
39.8 |
|
|
|
22.8 |
|
|
|
(20 |
) |
|
|
75 |
|
The
decrease in net income attributable to noncontrolling interests in 2009 was
primarily due to a decrease in the earnings of our Venezuelan operations driven
mainly by the absence of the 2008 profitable currency conversion
project.
Income
from Discontinued Operations
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
BHS:
|
|
|
|
|
|
|
|
|
|
Income from operations before tax
(a)
|
|
$ |
- |
|
|
|
105.4 |
|
|
|
112.9 |
|
Expense associated with the
spin-off
|
|
|
- |
|
|
|
(13.0 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom domestic cash handling operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale
|
|
|
- |
|
|
|
- |
|
|
|
1.5 |
|
Loss from operations before tax
(b)
|
|
|
- |
|
|
|
- |
|
|
|
(13.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
to contingencies of former operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain from FBLET refunds (see note
21)
|
|
|
19.7 |
|
|
|
- |
|
|
|
- |
|
BAX Global indemnification (see
note 21)
|
|
|
(13.2 |
) |
|
|
- |
|
|
|
- |
|
Other
|
|
|
0.3 |
|
|
|
4.9 |
|
|
|
(0.1 |
) |
Income
from discontinued operations before income taxes
|
|
|
6.8 |
|
|
|
97.3 |
|
|
|
100.4 |
|
Provision
for income taxes
|
|
|
2.3 |
|
|
|
45.8 |
|
|
|
41.5 |
|
Income
from discontinued operations
|
|
$ |
4.5 |
|
|
|
51.5 |
|
|
|
58.9 |
|
(a)
|
Revenues
of BHS were $442.4 million in 2008 (partial year) and $484.4 million in
2007.
|
(b)
|
Revenues
of the United Kingdom domestic cash handling operations were $28.9 million
in 2007 (partial year).
|
BHS
Spin-off
On
October 31, 2008, we completed the 100% spin-off of BHS, our former monitored
security business in North America. The spin-off of BHS was in the
form of a tax-free stock distribution to our shareholders of record as of the
close of business on October 21, 2008. We distributed one share of
BHS common stock for every share of our common stock outstanding. We contributed
$50 million in cash to BHS at the time of the spin-off. We also
forgave all the existing intercompany debt owed by BHS to us as of the
distribution date. After the spin-off, we reclassified BHS’ results
of operations, including previously reported results and non-segment expenses
directly related to the spin-off, within discontinued operations.
United
Kingdom Domestic Cash Handling Operations
During
2007, we sold Brink’s United Kingdom domestic cash handling operations for $2.2
million in cash and recognized a $1.5 million gain on the sale. These
operations recorded a $7.5 million impairment charge in 2007, primarily related
to writing down leasehold improvements and vehicles to estimated fair value due
to the loss of customers. These operations have been reported as discontinued
operations for all periods presented.
Interest
Expense
Interest
expense included in discontinued operations was $0.3 million in 2008 and $0.6
million in 2007. Interest expense recorded in discontinued operations
includes only interest on third-party borrowings made directly by BHS and
Brink’s United Kingdom domestic cash handling operations.
Adjustments
to Contingent Assets and Liabilities of Former Operations
Adjustments
to contingent assets and liabilities related to former operations, including
those related to reclamation matters, worker’s compensation claims, and
remaining legal contingencies are reported within discontinued
operations.
Summary
of Selected Results and Outlook
Below is
a schedule to assist readers in locating the various estimates we have made
about our future results. For each estimate, there is a reference to
another page in this document that contains a more detailed description of our
expectation for the future.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
(In
millions)
|
|
Actual
|
|
|
Actual
|
|
|
Actual
|
|
|
Outlook
|
|
Reference
|
Revenues
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
$ |
2,735 |
|
|
|
3,164 |
|
|
|
3,135 |
|
|
|
* |
|
|
Adjusted
|
|
|
2,616 |
|
|
|
2,990 |
|
|
|
2,897 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic
Revenue Growth:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
* |
|
|
|
11 |
% |
|
|
1 |
% |
|
|
* |
|
|
Adjusted
|
|
|
* |
|
|
|
10 |
% |
|
|
- |
|
|
Low-to-mid
single-digit %
|
|
Page
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Operating Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
$ |
223 |
|
|
|
272 |
|
|
|
213 |
|
|
|
* |
|
|
Adjusted
|
|
|
196 |
|
|
|
223 |
|
|
|
175 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Operating Margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
8.2 |
% |
|
|
8.6 |
% |
|
|
6.8 |
% |
|
|
7%
- 7.5 |
% |
Page
28
|
Adjusted
|
|
|
7.5 |
% |
|
|
7.5 |
% |
|
|
6.0 |
% |
|
|
7%
- 7.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Segment
– GAAP:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
$ |
50 |
|
|
|
49 |
|
|
|
38 |
|
|
|
41 |
|
|
Retirement plans
|
|
|
11 |
|
|
|
(3 |
) |
|
|
19 |
|
|
|
20 |
|
|
Royalty income
|
|
|
(1 |
) |
|
|
(3 |
) |
|
|
(9 |
) |
|
|
(5 |
) |
|
Other
|
|
|
2 |
|
|
|
- |
|
|
|
(1 |
) |
|
|
- |
|
|
Non-Segment –
GAAP
|
|
$ |
62 |
|
|
|
43 |
|
|
|
47 |
|
|
|
56 |
|
Page
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective
income tax rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
37 |
% |
|
|
24 |
% |
|
|
(37 |
%) |
|
|
36%
- 39 |
%** |
|
Adjusted
|
|
|
40 |
% |
|
|
25 |
% |
|
|
37 |
% |
|
|
36%
- 39 |
%** |
Page
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noncontrolling
interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
$ |
23 |
|
|
|
40 |
|
|
|
32 |
|
|
|
* |
|
|
Adjusted
|
|
|
15 |
|
|
|
24 |
|
|
|
19 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
$ |
142 |
|
|
|
165 |
|
|
|
171 |
|
|
|
180
- 200 |
|
Page
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
$ |
110 |
|
|
|
122 |
|
|
|
135 |
|
|
|
145
- 155 |
|
Page
43
|
* Information
not provided.
** The
tax rate is expected to be higher in 2010 partially due to accounting for
Venezuelan subsidiaries as operating in a highly inflationary economy and due to
the characterization of a French business tax as an income tax based upon
legislative changes, both effective January 1, 2010. Also, the
projected tax rates assume no change in judgment about deferred tax valuation
allowances.
Adjusted
Results – Reconciled to Amounts Reported under GAAP
Purpose
of Adjusted Information
Adjusted
results described in this filing are financial measures that are not required
by, or presented in accordance with, U.S. generally accepted accounting
principles (“GAAP”). These adjusted results
a)
|
reflect
the impact of reporting results from Venezuela at the less favorable
parallel market exchange rate,
|
b)
|
exclude
transaction losses on repatriated cash from
Venezuela,
|
c)
|
exclude
an acquisition gain in India, and
|
d)
|
exclude
the tax valuation allowance
release.
|
The
purpose of the adjusted information is to provide users of financial information
of The Brink’s Company an understanding of the effects of each of the items
described above. The adjusted information provides information to
assist comparability and estimates of future
performance. Brink’s believes these measures are helpful in
assessing operations and estimating future results, provide transparency to
investors, and enable period-to-period comparability of financial
performance. Adjusted 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.
Explanation
of Reconciling Items
The
adjustments:
a.
|
Change
from official rate to parallel rate translation in
Venezuela
|
i.
|
Reduce
segment operating income - International to reflect the operating results
had they been translated using the parallel rate in effect at the
time. Results from Venezuela in 2007, 2008 and most of 2009
were translated at the official
rate.
|
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
(237.9 |
) |
|
|
(173.4 |
) |
|
|
(119.1 |
) |
Operating
profit
|
|
|
(43.0 |
) |
|
|
(48.8 |
) |
|
|
(27.2 |
) |
ii.
|
Increase
segment operating income – International by $4.5 million in
2009. The adjustment reverses certain currency exchange losses
related to increases in cash held in U.S. dollars by the Venezuelan
subsidiaries.
|
b.
|
Venezuela currency
loss. Decrease non-segment expense by $22.5 million for
the loss that was recognized in 2009 related to the repatriation of cash
from Venezuela.
|
c.
|
Acquisition
gain. Decrease other operating income – non-segment by
$13.9 million for the gain recorded in 2009 related to an acquisition of a
controlling interest in an Indian
subsidiary.
|
d.
|
Tax
benefit. Decrease income tax benefit by $117.8 million
in 2009 for the release of a valuation allowance related to deferred tax
assets in the U.S.
|
Adjusted
Results – Reconciled to Amounts Reported Under GAAP (Continued)
|
|
2009
|
|
|
|
Reported
|
|
|
Change
to
|
|
|
Venezuela
|
|
|
India
|
|
|
|
|
|
|
|
(In
millions) (except for per share amounts)
|
|
GAAP
Basis
|
|
|
Parallel
Rate (a)
|
|
|
Currency
Loss (b)
|
|
|
Acquisition
Gain (c)
|
|
|
Tax
Benefit (d)
|
|
|
Adjusted
Basis
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
$ |
1,257.5 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,257.5 |
|
Latin America
|
|
|
904.7 |
|
|
|
(237.9 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
666.8 |
|
Asia Pacific
|
|
|
78.7 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
78.7 |
|
International
|
|
|
2,240.9 |
|
|
|
(237.9 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,003.0 |
|
North America
|
|
|
894.1 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
894.1 |
|
Revenues
|
|
$ |
3,135.0 |
|
|
|
(237.9 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,897.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
$ |
156.8 |
|
|
|
(38.5 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
118.3 |
|
North America
|
|
|
56.6 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
56.6 |
|
Segment operating
profit
|
|
|
213.4 |
|
|
|
(38.5 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
174.9 |
|
Non-segment
|
|
|
(46.6 |
) |
|
|
- |
|
|
|
22.5 |
|
|
|
(13.9 |
) |
|
|
- |
|
|
|
(38.0 |
) |
Operating
profit
|
|
$ |
166.8 |
|
|
|
(38.5 |
) |
|
|
22.5 |
|
|
|
(13.9 |
) |
|
|
- |
|
|
|
136.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations
|
|
$ |
227.4 |
|
|
|
(33.5 |
) |
|
|
22.5 |
|
|
|
(13.9 |
) |
|
|
(117.8 |
) |
|
|
84.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
Brink’s
|
|
$ |
200.2 |
|
|
|
(20.5 |
) |
|
|
22.5 |
|
|
|
(13.9 |
) |
|
|
(117.8 |
) |
|
|
70.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
attributable to Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
$ |
195.7 |
|
|
|
(20.5 |
) |
|
|
22.5 |
|
|
|
(13.9 |
) |
|
|
(117.8 |
) |
|
|
66.0 |
|
Diluted
earnings per share – continuing operations
|
|
|
4.11 |
|
|
|
(0.42 |
) |
|
|
0.47 |
|
|
|
(0.29 |
) |
|
|
(2.48 |
) |
|
|
1.39 |
|
|
|
2008
|
|
|
2007
|
|
(In
millions) (except for per share amounts)
|
|
Reported
|
|
|
Change
to
|
|
|
|
|
|
Reported
|
|
|
Change
to
|
|
|
|
|
|
GAAP
Basis
|
|
|
Parallel
Rate (a)
|
|
|
Adjusted
Basis
|
|
|
GAAP
Basis
|
|
|
Parallel
Rate (a)
|
|
|
Adjusted
Basis
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
$ |
1,358.9 |
|
|
|
- |
|
|
|
1,358.9 |
|
|
|
1,191.5 |
|
|
|
- |
|
|
|
1,191.5 |
|
Latin America
|
|
|
800.6 |
|
|
|
(173.4 |
) |
|
|
627.2 |
|
|
|
594.2 |
|
|
|
(119.1 |
) |
|
|
475.1 |
|
Asia Pacific
|
|
|
71.8 |
|
|
|
- |
|
|
|
71.8 |
|
|
|
62.6 |
|
|
|
- |
|
|
|
62.6 |
|
International
|
|
|
2,231.3 |
|
|
|
(173.4 |
) |
|
|
2,057.9 |
|
|
|
1,848.3 |
|
|
|
(119.1 |
) |
|
|
1,729.2 |
|
North America
|
|
|
932.2 |
|
|
|
- |
|
|
|
932.2 |
|
|
|
886.3 |
|
|
|
- |
|
|
|
886.3 |
|
Revenues
|
|
$ |
3,163.5 |
|
|
|
(173.4 |
) |
|
|
2,990.1 |
|
|
|
2,734.6 |
|
|
|
(119.1 |
) |
|
|
2,615.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
$ |
215.0 |
|
|
|
(48.8 |
) |
|
|
166.2 |
|
|
|
152.9 |
|
|
|
(27.2 |
) |
|
|
125.7 |
|
North America
|
|
|
56.9 |
|
|
|
- |
|
|
|
56.9 |
|
|
|
70.4 |
|
|
|
- |
|
|
|
70.4 |
|
Segment operating
profit
|
|
|
271.9 |
|
|
|
(48.8 |
) |
|
|
223.1 |
|
|
|
223.3 |
|
|
|
(27.2 |
) |
|
|
196.1 |
|
Non-segment
|
|
|
(43.4 |
) |
|
|
- |
|
|
|
(43.4 |
) |
|
|
(62.3 |
) |
|
|
- |
|
|
|
(62.3 |
) |
Operating
profit
|
|
$ |
228.5 |
|
|
|
(48.8 |
) |
|
|
179.7 |
|
|
|
161.0 |
|
|
|
(27.2 |
) |
|
|
133.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations
|
|
$ |
171.6 |
|
|
|
(41.1 |
) |
|
|
130.5 |
|
|
|
101.2 |
|
|
|
(20.4 |
) |
|
|
80.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
Brink’s
|
|
$ |
183.3 |
|
|
|
(25.1 |
) |
|
|
158.2 |
|
|
|
137.3 |
|
|
|
(12.4 |
) |
|
|
124.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
attributable to Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
$ |
131.8 |
|
|
|
(25.1 |
) |
|
|
106.7 |
|
|
|
78.4 |
|
|
|
(12.4 |
) |
|
|
66.0 |
|
Diluted
earnings per share – continuing operations
|
|
|
2.82 |
|
|
|
(0.53 |
) |
|
|
2.29 |
|
|
|
1.67 |
|
|
|
(0.27 |
) |
|
|
1.40 |
|
See page
39 for explanation of footnotes.
We
operate in more than 50 countries outside the U.S.
We are
subject to risks customarily associated with doing business in foreign
countries, including labor and economic conditions, political instability,
controls on repatriation of earnings and capital, nationalization, expropriation
and other forms of restrictive action by local governments. Changes
in the political or economic environments in the countries in which we operate
could have a material adverse effect on our business, financial condition and
results of operations. The future effects, if any, of these risks
cannot be predicted.
Our
international operations conduct a majority of their business in local
currencies. Because our financial results are reported in U.S. dollars, they are
affected by changes in the value of various local currencies in relation to the
U.S. dollar. Brink’s Venezuela is subject to local laws and regulatory
interpretations that determine the exchange rate at which repatriating dividends
may be converted. See Application of Critical Accounting
Policies—Foreign Currency Translation on page 59 for a description of our
accounting methods and assumptions used to include our Venezuelan operation in
our consolidated financial statements, and a description of the accounting for
subsidiaries operating in highly inflationary economies.
Changes
in exchange rates may also affect transactions which are denominated in
currencies other than the functional currency. From time to time, we
use foreign currency forward and swap contracts to hedge transactional risks
associated with foreign currencies, as discussed in Item 7A on page
63. At December 31, 2009, no material foreign currency forward
contracts were outstanding.
LIQUIDITY
AND CAPITAL RESOURCES
Over the
last three years, we have used cash generated from our continuing operations
to
·
|
invest
in the infrastructure of our business (new facilities, cash sorting and
other equipment for our cash logistics operations, armored
trucks, CompuSafe® units, and customer-facing and back-office
information technology) ($478
million),
|
·
|
make
voluntarily contributions to our primary U.S. pension plan ($105 million,
including $92 million in 2009),
|
·
|
acquire
businesses ($100 million including $75 million in BRIC (Brazil, Russia,
India and China) countries in
2009),
|
·
|
repurchase
shares of our stock ($66 million),
and
|
·
|
pay
dividends ($53 million).
|
In
addition, we contributed $50 million to our home security business prior to the
spin off of the business to our shareholders in 2008. During the last
three years, our net debt only increased $20 million primarily as a result of
$794 million of cash provided by operations before contributions to our U.S.
pension plans.
Outlook
·
|
We
continue to consider acquisition opportunities in the secure
transportation and cash logistics industry (our Organic Growth Strategy)
and in other security markets (our Adjacent Growth
Strategy). We may use our cash from operations and borrowings
to fund the purchase of these
acquisitions.
|
·
|
We
may be required to contribute cash to our U.S. pension plans in the
future, and the amount of contributions may exceed the amount of cash
provided by our U.S. subsidiaries. We may choose to borrow cash
in the U.S. rather than pay incremental taxes to use cash held by certain
of our international operations to fund these
obligations.
|
·
|
We
began translating cash flows from our Venezuelan operations at the
parallel rate rather than the official rate. As a result, our
cash flow amounts reported for these operations will be lower than the
past, and our consolidated statements of cash flows in the future will
include smaller amounts related to these operations, which will affect the
comparability of these statements in the
future.
|
Summary
Cash Flow Information
|
|
Years
Ended December 31,
|
|
|
$
change
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before contributions to U.S.
pension plan
|
|
$ |
264.1 |
|
|
|
254.4 |
|
|
|
275.0 |
|
|
$ |
9.7 |
|
|
|
(20.6 |
) |
Contributions to primary U.S.
pension plan
|
|
|
(92.4 |
) |
|
|
- |
|
|
|
(13.0 |
) |
|
|
(92.4 |
) |
|
|
13.0 |
|
Subtotal
|
|
|
171.7 |
|
|
|
254.4 |
|
|
|
262.0 |
|
|
|
(82.7 |
) |
|
|
(7.6 |
) |
Discontinued
operations
|
|
|
23.5 |
|
|
|
172.7 |
|
|
|
191.7 |
|
|
|
(149.2 |
) |
|
|
(19.0 |
) |
Operating
activities
|
|
|
195.2 |
|
|
|
427.1 |
|
|
|
453.7 |
|
|
|
(231.9 |
) |
|
|
(26.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(170.6 |
) |
|
|
(165.3 |
) |
|
|
(141.8 |
) |
|
|
(5.3 |
) |
|
|
(23.5 |
) |
Acquisitions
|
|
|
(74.6 |
) |
|
|
(11.7 |
) |
|
|
(13.4 |
) |
|
|
(62.9 |
) |
|
|
1.7 |
|
Cash held by BHS at the spin-off
date
|
|
|
- |
|
|
|
(50.0 |
) |
|
|
- |
|
|
|
50.0 |
|
|
|
(50.0 |
) |
Other
|
|
|
4.1 |
|
|
|
17.9 |
|
|
|
13.2 |
|
|
|
(13.8 |
) |
|
|
4.7 |
|
Discontinued
operations
|
|
|
- |
|
|
|
(150.8 |
) |
|
|
(175.5 |
) |
|
|
150.8 |
|
|
|
24.7 |
|
Investing
activities
|
|
|
(241.1 |
) |
|
|
(359.9 |
) |
|
|
(317.5 |
) |
|
|
118.8 |
|
|
|
(42.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows before financing activities
|
|
$ |
(45.9 |
) |
|
|
67.2 |
|
|
|
136.2 |
|
|
$ |
(113.1 |
) |
|
|
(69.0 |
) |
Operating
cash flows decreased by $231.9 million in 2009 as cash flows from both our
continuing and discontinued operations were lower compared to
2008. The decrease in operating cash flows from continuing operations
was mainly due to the third-quarter 2009 contribution to our primary U.S.
pension plan, of which $92.4 million was made in cash. While not affecting our
cash flow, we also contributed $57.6 million in Brink’s stock to our pension,
for a total contribution of $150 million to the plan. The pension
contribution cash outflow was partially offset by $43 million in income tax
refunds, much of which were primarily the result of tax deductions associated
with the cash and stock contribution to the pension plan. Lower
operating profit in 2009 also had a negative effect on cash flows from
operations although we used less cash for working capital needs.
The
decrease in operating cash flows related to discontinued operations was
primarily due to BHS’ cash flows in 2008 exceeding FBLET cash refunds, the
primary source of operating cash flows from discontinued operations in
2009.
Our
operating cash flows decreased by $26.6 million in 2008 compared to 2007,
primarily as a result of $22.8 million less cash provided by our discontinued
BHS operation, which only had ten months of operations in 2008, as well as
expenses for professional and legal fees to spin off the
operation. In addition, our continuing operations (before voluntary
contributions to our U.S. pension plan) provided $20.6 million less cash from
operations than the prior year. The decrease was primarily due to
higher professional, legal and advisory fees for shareholder initiatives, and
higher cash usage for working capital needs, partially offset by higher segment
operating profit. We voluntarily contributed $13 million to our
primary U.S. pension plan in 2007.
Cash
flows from investing activities used $118.8 million less cash in 2009 versus
2008 primarily due to the spin-off of BHS in 2008. BHS used $150.8
million in 2008 primarily for the installation of home security equipment for
customers, and we contributed $50 million to BHS at the date of the
spin-off. Our continuing operations used more cash for investing
activities in 2009 compared to 2008 for business acquisitions and higher capital
expenditures, partially offset by proceeds from the sale of assets.
As
discussed in note 6 to the consolidated financial statements, we acquired
operations in Brazil ($47.6 million) and India ($22.2 million) during
2009.
Proceeds
from the disposition of assets in 2008 included the sale of certain coal assets
for $10 million, and the total proceeds in 2008 were approximately the same as
2007. Cash flows for acquisitions in 2008 were also approximately the
same as 2007.
Capital
expenditures and depreciation and amortization are as follows:
|
|
Outlook
|
|
|
Years
Ended December 31,
|
|
|
$
change
|
|
(In
millions)
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
$ |
* |
|
|
|
103.1 |
|
|
|
112.7 |
|
|
|
94.8 |
|
|
$ |
(9.6 |
) |
|
|
17.9 |
|
North America
|
|
|
* |
|
|
|
67.5 |
|
|
|
52.6 |
|
|
|
47.0 |
|
|
|
14.9 |
|
|
|
5.6 |
|
Capital
expenditures
|
|
$ |
180-200 |
|
|
|
170.6 |
|
|
|
165.3 |
|
|
|
141.8 |
|
|
$ |
5.3 |
|
|
|
23.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
$ |
* |
|
|
|
97.5 |
|
|
|
90.5 |
|
|
|
79.7 |
|
|
$ |
7.0 |
|
|
|
10.8 |
|
North America
|
|
|
* |
|
|
|
37.6 |
|
|
|
31.8 |
|
|
|
30.3 |
|
|
|
5.8 |
|
|
|
1.5 |
|
Depreciation
and amortization
|
|
$ |
145-155 |
|
|
|
135.1 |
|
|
|
122.3 |
|
|
|
110.0 |
|
|
$ |
12.8 |
|
|
|
12.3 |
|
Capital
expenditures in 2009 were slightly higher than the same period of
2008.
·
|
Capital
expenditures in 2009 were primarily for new cash processing and security
equipment, armored vehicles, and information
technology.
|
·
|
Higher
capital expenditures in our North America segment were partially offset by
a decrease in our International
segment.
|
·
|
The
increase in our North America segment was mainly due to higher
expenditures for armored vehicles, as we elected to buy rather than lease
these vehicles, as well as increased spending on CompuSafe®
units.
|
·
|
The
decrease in Brink’s International capital expenditures from the prior-year
period was due to lower spending overall, as well as the impact of changes
in currency exchange rates.
|
We had
$23.5 million higher capital expenditures in 2008 versus 2007 primarily for new
facilities, cash processing and security equipment, armored vehicles, and
information technology.
Capital
expenditures have exceeded depreciation and amortization in the last several
years and this trend is expected to continue in the next several years as a
result of growth in the infrastructure of our operations, including new branch
facilities and leasehold improvements, growth in CompuSafe® assets, technology
investments, and investment in the safety and security of our
operations.
Summary
of Financing Activities
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Cash
provided (used) by financing activities
|
|
|
|
|
|
|
|
|
|
Borrowings
and repayments:
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
$ |
(0.9 |
) |
|
|
(4.4 |
) |
|
|
(23.2 |
) |
Long-term revolving credit
facilities
|
|
|
(10.1 |
) |
|
|
93.5 |
|
|
|
(33.5 |
) |
Other long-term
debt
|
|
|
(11.3 |
) |
|
|
(12.6 |
) |
|
|
(5.2 |
) |
Cash
proceeds from sale-leaseback transactions
|
|
|
13.6 |
|
|
|
- |
|
|
|
- |
|
Repurchase
shares of common stock of Brink’s
|
|
|
(6.9 |
) |
|
|
(56.6 |
) |
|
|
(2.7 |
) |
Dividends
attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of
Brink’s
|
|
|
(18.4 |
) |
|
|
(18.2 |
) |
|
|
(16.5 |
) |
Noncontrolling interests in
subsidiaries
|
|
|
(13.7 |
) |
|
|
(12.4 |
) |
|
|
(7.2 |
) |
Proceeds
and tax benefits related to stock compensation and other
|
|
|
1.1 |
|
|
|
11.1 |
|
|
|
18.0 |
|
Discontinued
operations, net
|
|
|
- |
|
|
|
- |
|
|
|
(14.8 |
) |
Cash flows from financing
activities
|
|
$ |
(46.6 |
) |
|
|
0.4 |
|
|
|
(85.1 |
) |
During
the first three months of 2009, we used $6.1 million to purchase 234,456 shares
of our common stock at an average cost of $26.20 per share. We also used $0.8
million in the first three months of 2009 to settle share purchases initiated in
December 2008. We have made no subsequent purchases in
2009. During 2008, we purchased 983,800 shares of our common stock at
an average cost of $57.41 per share. The 2008 purchases were settled
in 2008 ($55.7 million) and in January 2009 ($0.8 million). During 2007, we
purchased 60,500 shares of common stock at an average cost of $60.30 per
share. The 2007 purchases were settled in 2007 ($2.7 million) and in
January 2008 ($0.9 million).
Our
operating liquidity needs are typically financed by short-term debt and the
Revolving Facility, described below. In 2009, we reduced the overall balance of
our bank credit facilities through debt repayments.
Dividends
Our
regular quarterly dividend was increased to an annual rate of 40 cents per share
from 25 cents per share beginning with the dividend paid in the second quarter
of 2007. On January 21, 2010, the board declared a regular quarterly
dividend of 10 cents per share payable on March 1, 2010. Future
dividends are dependent on our earnings, financial condition, shareholder equity
levels, cash flow and business requirements, as determined by the board of
directors.
We use a
combination of debt, leases and equity to capitalize our
operations. As described on page 48, we made a voluntary contribution
of $150 million to our primary U.S. pension plan in the third quarter of 2009,
which included 2,260,738 shares of Brink’s
common stock, which was valued at $57.6 million at the date of the
contribution.
As of
December 31, 2009, debt as a percentage of capitalization (defined as total debt
and shareholders’ equity) was 25% compared to 38% at December 31,
2008. The decrease resulted from a higher level of shareholders’
equity which more than offset the increase in debt of $7
million. Equity increased in 2009 primarily as a result of other
comprehensive income associated with the increased value of assets held by
retirement plans, the contribution of Brink’s common stock to the U.S. pension
plan as well as the generation of $196 million in income from continuing
operations.
Summary
of Debt, Equity and Other Liquidity Information
|
|
Amount
available
|
|
|
|
|
|
|
|
|
|
under
credit facilities
|
|
|
Outstanding
Balance
|
|
|
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
|
(In
millions)
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
$
change (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-currency revolving
facilities
|
|
$ |
28 |
|
|
$ |
6.5 |
|
|
|
5.3 |
|
|
$ |
1.2 |
|
Revolving
Facility
|
|
|
302 |
|
|
|
98.0 |
|
|
|
106.8 |
|
|
|
(8.8 |
) |
Letter of Credit
Facility
|
|
|
9 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Dominion Terminal Associates
bonds
|
|
|
- |
|
|
|
43.2 |
|
|
|
43.2 |
|
|
|
- |
|
Capital leases
|
|
|
- |
|
|
|
32.8 |
|
|
|
18.1 |
|
|
|
14.7 |
|
Other
|
|
|
- |
|
|
|
15.1 |
|
|
|
15.2 |
|
|
|
(0.1 |
) |
Debt
|
|
$ |
339 |
|
|
$ |
195.6 |
|
|
|
188.6 |
|
|
$ |
7.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
equity
|
|
|
|
|
|
$ |
595.8 |
|
|
|
305.3 |
|
|
$ |
290.5 |
|
(a)
|
In
addition to cash borrowings and repayments, the change in the debt balance
also includes changes in currency exchange rates and new capital lease
agreements.
|
Net
Debt (Cash) and Reconciliation to GAAP Measures
|
|
December
31,
|
|
|
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
$ change
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
debt
|
|
$ |
7.2 |
|
|
|
7.2 |
|
|
|
- |
|
Long-term
debt
|
|
|
188.4 |
|
|
|
181.4 |
|
|
|
7.0 |
|
Debt
|
|
|
195.6 |
|
|
|
188.6 |
|
|
|
7.0 |
|
Less
cash and cash equivalents
|
|
|
(143.0 |
) |
|
|
(250.9 |
) |
|
|
107.9 |
|
Net
Debt (Cash) (a)
|
|
$ |
52.6 |
|
|
|
(62.3 |
) |
|
|
114.9 |
|
(a)
|
Net
Debt (Cash) is a non-GAAP measure. Net Debt (Cash) is equal to
short-term debt plus the current and noncurrent portion of long-term debt
(“Debt” in the tables), less cash and cash
equivalents.
|
Net Debt
(Cash) is a supplemental financial measure that is not required by, or presented
in accordance with GAAP. We use Net Debt (Cash) as a measure of our
financial leverage. We believe that investors also may find Net Debt
(Cash) to be helpful in evaluating our financial leverage. Net Debt (Cash)
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 (Cash), 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, 2009, and December 31, 2008.
Net Debt
(Cash) position changed primarily due to the decrease in the cash and cash
equivalents balance. Items that affected cash
and cash
equivalents during 2009 were:
·
|
After-tax
U.S. pension plan contribution ($62
million)
|
·
|
Acquisitions
net of cash acquired ($75 million)
|
·
|
Venezuela
repatriation and translation at less favorable parallel market rate ($45
million)
|
·
|
Other
net inflows, including FBLET refund, additional U.S. tax refunds and cash
from operations, less foreign tax
|
payments
Debt
We have
an unsecured $400 million revolving bank credit facility (the “Revolving
Facility”) with a syndicate of banks. The Revolving Facility’s
interest rate is based on LIBOR plus a margin, prime rate, or competitive
bid. The Revolving Facility allows us to borrow (or otherwise satisfy
credit needs) on a revolving basis over a five-year term ending in August
2011. As of December 31, 2009, $302.0 million was available under the
Revolving Facility. Amounts outstanding under the Revolving Facility
as of December 31, 2009, were denominated primarily in U.S. dollars and to a
lesser extent in Canadian dollars.
The
margin on LIBOR borrowings under the Revolving Facility which can range from
0.140% to 0.575%, depending on our credit rating, was 0.350% at December 31,
2009. When borrowings and letters of credit under the Revolving
Facility are in excess of $200 million, the applicable interest rate is
increased by 0.100% or 0.125%. We also pay an annual facility fee on
the Revolving Facility based on our credit rating. The facility fee,
which can range from 0.060% to 0.175%, was 0.100% at the end of
2009.
We have
an unsecured $135 million letter of credit facility with a bank (the “Letter of
Credit Facility”). The Letter of Credit Facility expires in July
2011. As of December 31, 2009, $8.9 million was available under the
Letter of Credit Facility. The Revolving Facility and the
multi-currency revolving credit facilities (described below) are also used for
the issuance of letters of credit and bank guarantees.
We have
two unsecured multi-currency revolving bank credit facilities with a total of
$50.0 million in available credit, of which approximately $27.9 million was
available at December 31, 2009. Interest on these facilities is based
on LIBOR plus a margin. The margin ranges from 0.14% to
2.5%. The two facilities expire in December 2011. We also have the ability
to borrow from other banks under short-term uncommitted
agreements. Various foreign subsidiaries maintain other lines of
credit and overdraft facilities with a number of banks.
The
Revolving Facility, the Letter of Credit Facility and the two unsecured
multi-currency revolving bank credit facilities contain subsidiary guarantees
and various financial and other covenants. The financial covenants,
among other things, limit our total indebtedness, limit asset sales, limit the
use of proceeds from asset sales and provide for minimum coverage of interest
costs. The credit agreements do not provide for the acceleration of
payments should our credit rating be reduced. If we were not to
comply with the terms of our various loan agreements, the repayment terms could
be accelerated and the commitments could be withdrawn. An
acceleration of the repayment terms under one agreement could trigger the
acceleration of the repayment terms under the other loan
agreements. We were in compliance with all of these financial
covenants at December 31, 2009.
We have
$43.2 million of bonds issued by the Peninsula Ports Authority of Virginia
recorded as debt on our balance sheet. Although we are not the
primary obligor of the debt, we have guaranteed the debt and we believe that we
will ultimately pay this obligation. The guarantee originated as part
of a former interest in Dominion Terminal Associates, a deep water coal
terminal. We continue to pay interest on the debt. The
bonds bear a fixed interest rate of 6.0% and mature in 2033. The
bonds may mature prior to 2033 upon the occurrence of specified events such as
the determination that the bonds are taxable or if we fail to abide by the terms
of the guarantee.
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 12 months.
Equity
At
December 31, 2009, we had 100 million shares of common stock authorized and 47.9
million shares issued and outstanding.
Share
Purchases
On
September 14, 2007, our board of directors authorized the purchase of up to $100
million of our outstanding common shares. The repurchase
authorization does not have an expiration date. Under the program, we
used $56.3 million to purchase 883,800 shares of common stock between December
5, 2007, and May 2, 2008, at an average price of $63.67 per share. We
used an additional $3.9 million to purchase 160,500 shares of common stock in
the fourth quarter of 2008, at an average price of $24.03 per
share. In the first quarter of 2009, we used an additional $6.1
million to purchase 234,456 shares of common stock at an average price of $26.20
per share. No shares were purchased in the second, third or fourth
quarters of 2009. As of December 31, 2009, we had $33.7 million under
this program available to purchase shares.
Dividends
We paid
regular quarterly dividends on our Common Stock during the last three
years. On January 21, 2010, the board declared a regular quarterly
dividend of 10 cents per share payable on March 1, 2010. Future
dividends are dependent on the earnings, financial condition, shareholder equity
levels, cash flow and business requirements of the Company, as determined by the
board of directors.
Employee
Benefits Trust
In
September 2008, we terminated The Brink’s Company Employee Benefits Trust (the
“Employee Benefits Trust”). Immediately prior to termination, the
shares held by the trust were distributed to us and the shares were
retired. The
purpose of the Employee Benefits Trust (prior to termination) was to hold shares
of our common stock to fund obligations under compensation and employee benefit
programs that provided for the issuance of stock. After the
termination of the trust, newly issued shares are used to satisfy these
programs.
Through
2007, shares of common stock were voted by the trustee in the same proportion as
the shares of common stock voted by our employees participating in our 401(k)
plan. Our 401(k) plan divested all shares of our common stock in
January 2008. After the 401(k) plan divested all shares of Company
common stock, shares of the trust were not voted in matters voted on by
shareholders.
Preferred
Stock
At
December 31, 2009, we have the authority to issue up to 2.0 million shares of
preferred stock, par value $10 per share.
Off
Balance Sheet Arrangements
We have
operating leases that are described in the notes to the consolidated financial
statements. See note 14 for operating leases that have residual value
guarantees or other terms that cause the agreement to be considered a variable
interest. We use operating leases to lower our cost of
financings. We believe that operating leases are an important
component of our capital structure.
The
following table reflects our contractual obligations as of December 31,
2009.
|
|
Estimated
Payments Due by Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Later
|
|
|
|
|
(In
millions)
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
Years
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual
obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
obligations
|
|
$ |
2.3 |
|
|
|
106.3 |
|
|
|
1.5 |
|
|
|
1.2 |
|
|
|
1.0 |
|
|
|
43.3 |
|
|
|
155.6 |
|
Capital lease
obligations
|
|
|
13.8 |
|
|
|
6.0 |
|
|
|
3.5 |
|
|
|
2.5 |
|
|
|
1.9 |
|
|
|
5.1 |
|
|
|
32.8 |
|
Operating lease
obligations
|
|
|
79.2 |
|
|
|
62.7 |
|
|
|
48.7 |
|
|
|
31.4 |
|
|
|
24.9 |
|
|
|
46.2 |
|
|
|
293.1 |
|
Purchase
obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service contracts
|
|
|
9.6 |
|
|
|
5.4 |
|
|
|
0.3 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
15.3 |
|
Other
|
|
|
1.8 |
|
|
|
0.4 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.5 |
|
|
|
3.3 |
|
Other long-term liabilities
reflected on the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company’s balance sheet under
GAAP:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary U.S. pension
plan
|
|
|
- |
|
|
|
- |
|
|
|
27.7 |
|
|
|
38.4 |
|
|
|
30.6 |
|
|
|
41.6 |
|
|
|
138.3 |
|
Other retirement
obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UMWA plans
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
419.0 |
|
|
|
419.0 |
|
Black lung and other
plans
|
|
|
6.3 |
|
|
|
6.0 |
|
|
|
5.6 |
|
|
|
5.3 |
|
|
|
4.9 |
|
|
|
50.6 |
|
|
|
78.7 |
|
Workers
compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and other
claims
|
|
|
25.4 |
|
|
|
12.6 |
|
|
|
6.9 |
|
|
|
4.7 |
|
|
|
3.5 |
|
|
|
18.6 |
|
|
|
71.7 |
|
Uncertain tax
positions
|
|
|
8.0 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8.0 |
|
Other
|
|
|
1.9 |
|
|
|
13.7 |
|
|
|
0.8 |
|
|
|
0.8 |
|
|
|
0.7 |
|
|
|
10.7 |
|
|
|
28.6 |
|
Total
|
|
$ |
148.3 |
|
|
|
213.1 |
|
|
|
95.2 |
|
|
|
84.5 |
|
|
|
67.7 |
|
|
|
635.6 |
|
|
|
1,244.4 |
|
U.S.
Retirement Plans
Pension
Plans
Pension
benefits provided to eligible U.S. employees were frozen on December 31, 2005,
and are not provided to employees hired after 2005 or to those covered by a
collective bargaining agreement. On January 1, 2009, there were
approximately 21,100 beneficiaries in the plans. In 2009, we
contributed $150 million to the primary U.S. pension plan, which helped reduce
the underfunded status of U.S. plans to $152 million. We are not
required to make additional contributions until 2012. The Contractual
Obligations table above includes the required contributions to comply with the
minimum funding requirements of the Pension Protection Act of 2006 based on
actuarial assumptions at the end of 2009. We have elected the
asset-smoothing basis of computing asset values for funding purposes to reduce
the volatility of future required contributions to the plans. The
amount of these required contributions may vary as they are subject to potential
changes in asset values, discount rates on future obligations, assumed rates of
return, and potential legislative action. We may elect to make
voluntary contributions to achieve certain threshold funding
levels. Based on current assumptions, the underfunded status is
expected to decline from 2010 through 2013 and become fully funded under GAAP in
2014.
UMWA
Plans
Retirement
benefits related to former coal operations include medical benefits provided by
the Pittston Coal Group Companies Employee Benefit Plan for UMWA Represented
Employees. On January 1, 2009, there were approximately 4,700
beneficiaries in the UMWA plans. In 2007, we began using the assets
of the plans to fund the majority of the benefit payments required under our
UMWA retirement medical plans. Based on our funding assumptions as of
December 31, 2009, we do not expect to make additional contributions to these
plans until 2026.
We and
certain current and former subsidiaries are jointly and severally liable for
approximately $234 million of retirement obligations. We have funded
a significant portion of these obligations in the past. We have
recognized the obligations, net of funded amounts in our financial
statements. We have indemnified BHS and the purchasers of BAX Global
and natural resources assets for their contingent obligation.
Black
Lung and other plans
Under the
Federal Black Lung Benefits Act of 1972, Brink’s is also responsible for paying
lifetime black lung benefits to miners and their dependents for claims filed
after June 30, 1973. The unfunded balance and cash payments related
to black lung are expected to decline over time due to mortality. On
December 31, 2009, there were approximately 700 black lung beneficiaries in the
plan.
We also
have a plan that provides retirement health care benefits to certain eligible
salaried employees. Benefits under this plan are not indexed for
inflation.
The
Contractual Obligations table above includes payments projected to be paid with
our corporate funds and does not include payments made with retirement plan
assets.
Underfunded
(Overfunded) Status of U.S. Retirement Plans – Actual and Projected
|
|
Actual
|
|
|
Projected
|
|
(in
millions)
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
pension plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
|
$ |
329.2 |
|
|
|
152.3 |
|
|
|
141.4 |
|
|
|
129.4 |
|
|
|
87.4 |
|
|
|
29.4 |
|
Net
periodic pension credit (a)
|
|
|
(13.5 |
) |
|
|
(20.3 |
) |
|
|
(17.7 |
) |
|
|
(15.7 |
) |
|
|
(16.1 |
) |
|
|
(21.8 |
) |
Payment
from Brink’s
|
|
|
(150.0 |
) |
|
|
- |
|
|
|
- |
|
|
|
(27.7 |
) |
|
|
(38.4 |
) |
|
|
(30.6 |
) |
Benefit
plan experience (gain) loss
|
|
|
(9.2 |
) |
|
|
11.0 |
|
|
|
7.4 |
|
|
|
3.0 |
|
|
|
(1.1 |
) |
|
|
- |
|
Other
|
|
|
(4.2 |
) |
|
|
(1.6 |
) |
|
|
(1.7 |
) |
|
|
(1.6 |
) |
|
|
(2.4 |
) |
|
|
(1.3 |
) |
Ending
underfunded (overfunded) balance
|
|
$ |
152.3 |
|
|
|
141.4 |
|
|
|
129.4 |
|
|
|
87.4 |
|
|
|
29.4 |
|
|
|
(24.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UMWA
plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
|
$ |
207.5 |
|
|
|
157.5 |
|
|
|
158.5 |
|
|
|
159.9 |
|
|
|
161.8 |
|
|
|
164.2 |
|
Net
periodic postretirement cost (a)
|
|
|
3.2 |
|
|
|
1.0 |
|
|
|
1.4 |
|
|
|
1.9 |
|
|
|
2.4 |
|
|
|
3.0 |
|
Payment
from Brink’s
|
|
|
(0.5 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Benefit
plan experience gain
|
|
|
(52.7 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Ending
underfunded balance
|
|
$ |
157.5 |
|
|
|
158.5 |
|
|
|
159.9 |
|
|
|
161.8 |
|
|
|
164.2 |
|
|
|
167.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Black
lung and other plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
|
$ |
48.6 |
|
|
|
47.1 |
|
|
|
43.2 |
|
|
|
39.4 |
|
|
|
35.9 |
|
|
|
32.5 |
|
Net
periodic postretirement cost (a)
|
|
|
1.4 |
|
|
|
2.4 |
|
|
|
2.2 |
|
|
|
2.1 |
|
|
|
1.9 |
|
|
|
1.8 |
|
Payment
from Brink’s
|
|
|
(7.6 |
) |
|
|
(6.3 |
) |
|
|
(6.0 |
) |
|
|
(5.6 |
) |
|
|
(5.3 |
) |
|
|
(4.9 |
) |
Benefit
plan experience loss
|
|
|
4.5 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Other
|
|
|
0.2 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Ending
unfunded balance
|
|
$ |
47.1 |
|
|
|
43.2 |
|
|
|
39.4 |
|
|
|
35.9 |
|
|
|
32.5 |
|
|
|
29.4 |
|
(a)
|
Excludes
amounts reclassified from accumulated other comprehensive
income.
|
Summary
of Total Expenses Related to U.S. Retirement Liabilities
This
table summarizes actual and projected expense (income) related to U.S.
retirement liabilities. Most expenses are allocated to non-segment
results, with the balance allocated to North American operations. The market
value of the investments used to pay benefits for our retirement plans
significantly declined in 2008. Expenses related to our U.S pension
plans are expected to increase over the next few years as market losses are
amortized into earnings from other comprehensive income. See
Application of Critical Accounting Policies—Retirement Benefit Obligations on
pages 54-58 for a description of our accounting policies, assumptions used, and
various sensitivity analyses.
|
|
Actual
|
|
|
Projected
|
|
(in
millions)
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
pension plans
|
|
$ |
(4.1 |
) |
|
|
(0.7 |
) |
|
|
5.9 |
|
|
|
11.7 |
|
|
|
14.0 |
|
|
|
3.1 |
|
UMWA
plans
|
|
|
19.9 |
|
|
|
16.5 |
|
|
|
16.2 |
|
|
|
16.1 |
|
|
|
16.0 |
|
|
|
16.0 |
|
Black
lung and other plans
|
|
|
2.9 |
|
|
|
2.9 |
|
|
|
2.9 |
|
|
|
2.8 |
|
|
|
2.6 |
|
|
|
2.5 |
|
Total
|
|
$ |
18.7 |
|
|
|
18.7 |
|
|
|
25.0 |
|
|
|
30.6 |
|
|
|
32.6 |
|
|
|
21.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
allocated to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North American
segment
|
|
$ |
(2.0 |
) |
|
|
(0.8 |
) |
|
|
1.7 |
|
|
|
4.0 |
|
|
|
4.9 |
|
|
|
0.7 |
|
Non-segment
|
|
|
20.7 |
|
|
|
19.5 |
|
|
|
23.3 |
|
|
|
26.6 |
|
|
|
27.7 |
|
|
|
20.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
18.7 |
|
|
|
18.7 |
|
|
|
25.0 |
|
|
|
30.6 |
|
|
|
32.6 |
|
|
|
21.6 |
|
Summary
of Total Payments from Brink’s to U.S. Plans and Payments from U.S. Plans to
Participants
This
table summarizes actual and estimated payments
·
|
from
Brink’s to U.S. retirement plans,
and
|
·
|
from
the plans to participants.
|
|
|
Actual
|
|
|
Projected
|
|
(in
millions)
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments
from Brink’s to U.S. Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
pension plans
|
|
$ |
150.0 |
|
|
|
- |
|
|
|
- |
|
|
|
27.7 |
|
|
|
38.4 |
|
|
|
30.6 |
|
UMWA
plans
|
|
|
0.5 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Black
lung and other plans (a)
|
|
|
7.6 |
|
|
|
6.3 |
|
|
|
6.0 |
|
|
|
5.6 |
|
|
|
5.3 |
|
|
|
4.9 |
|
Total
|
|
$ |
158.1 |
|
|
|
6.3 |
|
|
|
6.0 |
|
|
|
33.3 |
|
|
|
43.7 |
|
|
|
35.5 |
|
(a)These
plans are not funded.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments
from U.S. Plans to participants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
pension plans
|
|
$ |
36.1 |
|
|
|
40.3 |
|
|
|
42.0 |
|
|
|
43.6 |
|
|
|
46.2 |
|
|
|
47.0 |
|
UMWA
plans
|
|
|
36.4 |
|
|
|
36.4 |
|
|
|
37.2 |
|
|
|
37.6 |
|
|
|
38.0 |
|
|
|
37.6 |
|
Black
lung and other plans
|
|
|
7.6 |
|
|
|
6.3 |
|
|
|
6.0 |
|
|
|
5.6 |
|
|
|
5.3 |
|
|
|
4.9 |
|
Total
|
|
$ |
80.1 |
|
|
|
83.0 |
|
|
|
85.2 |
|
|
|
86.8 |
|
|
|
89.5 |
|
|
|
89.5 |
|
The
amounts in the tables above are based on a variety of estimates, including
actuarial assumptions as of December 31, 2009. 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.
Income
Tax
We are
subject to tax examinations in various U.S. and foreign
jurisdictions. We have approximately $19.0 million of unrecognized
tax benefits at December 31, 2009. The amount of the unrecognized tax
benefits has been measured in accordance with FASB ASC Topic 740, Income Taxes. The amount of tax
benefits ultimately recognized for open tax periods at December 31, 2009, will
depend on the final outcome of the various issues that may arise during an
examination, and the tax benefit recognized may be materially different from
that amount as measured under FASB ASC Topic 740.
Federal
Black Lung Excise Tax (“FBLET”) refunds
In late
2008, Congress passed the Energy Improvement and Extension Act of 2008 which
enabled taxpayers to file claims for FBLET refunds for periods prior to those
open under the statute of limitations previously applicable to us. In the second
quarter of 2009, we received FBLET refunds and recognized the majority of these
refunds as a pretax gain of $19.7 million. The gain related to these
refunds was recorded in discontinued operations.
Former
operations
BAX
Global, a former business unit, is defending a claim related to the apparent
diversion by a third party of goods being transported for a
customer. During 2009, BAX Global advised us that it is probable that
it will be deemed liable for this claim. We have contractually
indemnified the purchaser of BAX Global for this contingency. Although it
is possible that this claim ultimately may be decided in favor of BAX Global, we
have accrued €9 million ($13 million at December 31, 2009) related to this
matter. We recognized the expense in discontinued
operations. We believe we have insurance coverage applicable to this
matter and that it will be resolved without a material adverse effect on our
liquidity, financial position or results of operations.
Other
We are
involved in various lawsuits and claims in the ordinary course of
business. We are not able to estimate the range of losses for some of
these matters. We have recorded accruals for losses that are
considered probable and reasonably estimable. We do not believe that
the ultimate disposition of any of these matters will have a material adverse
effect on our liquidity, financial position or results of
operations.
APPLICATION
OF CRITICAL ACCOUNTING POLICIES
The
application of accounting principles requires the use of assumptions, estimates
and judgments. We make assumptions, estimates and judgments based on,
among other things, knowledge of operations, markets, historical trends and
likely future changes, similarly situated businesses and, when appropriate, the
opinions of advisors with relevant knowledge and experience. Reported
results could have been materially different had management used a different set
of assumptions, estimates and judgments.
Deferred
Tax Asset Valuation Allowance
Deferred
tax assets result primarily from net operating losses and the net tax effects of
temporary differences between the carrying amount of assets and liabilities for
financial statement and income tax purposes, as determined under enacted tax
laws and rates.
Accounting
Policies
We
establish valuation allowances in accordance with FASB ASC Topic 740, Income Taxes, when we
estimate it is not more likely than not that a deferred tax asset will be
realized. We decide to record valuation allowances primarily based on
an assessment of historical earnings and future taxable income that incorporates
prudent, feasible tax-planning strategies. We assess deferred tax
assets on an individual jurisdiction basis. Changes in tax statutes,
the timing of deductibility of expenses or expectations for future performance
could result in material adjustments to our valuation allowances, which would
increase or decrease tax expense. Our valuation allowances are as
follows:
Valuation
Allowances
|
|
December
31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
U.S.
|
|
$ |
9.8 |
|
|
|
151.0 |
|
Non-U.S.
|
|
|
35.6 |
|
|
|
32.6 |
|
Total
|
|
$ |
45.4 |
|
|
|
183.6 |
|
Application of Accounting
Policies
U.S.
Deferred Tax Assets
Our
deferred tax assets before valuation allowances increased significantly in 2008
primarily as a result of higher U.S. retirement obligations. At the
end of 2008, we expected that future taxable income of our U.S. operations would
not have been sufficient to realize the entire benefit from the future tax
deductions associated with these obligations. We therefore concluded
that approximately $145.5 million of U.S. federal and state net deferred tax
assets would not have been realized and provided a valuation allowance for these
assets in other comprehensive income (loss). Our deferred tax assets,
before valuation allowances, decreased in 2009 as a result of an increase in
retirement asset values from the equity market improvement and our contribution
to the primary U.S. pension plan. The likelihood of realizing additional amounts
of the remaining deferred tax assets improved due to improving market
conditions, including credit markets. As a result, we revised our
estimate of the amount of U.S. valuation allowances needed and reversed $117.8
million in 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,
|
·
|
estimated
required contributions to our U.S. retirement plans,
and
|
·
|
interest
rates on projected U.S. borrowings.
|
Had we
used different assumptions, we might have made different conclusions about the
need for valuation allowances. For example, in 2009 we might have
concluded that we should not reverse any of the valuation allowance offsetting
our U.S. deferred tax asset, or we might have concluded that we should have
reversed less than we did. Further, using different assumptions in
2008 we might have concluded that we did not require a valuation allowance
offsetting our U.S. deferred tax assets at the end of 2008. In either
of these cases, our tax provision on income from continuing operations could
have been up to $117.8 million higher in 2009.
Non-U.S.
Deferred Tax Assets
We
changed our judgment about the need for valuation allowances for deferred tax
assets in certain non-U.S. jurisdictions as a result of improvements in
operating results and an improved outlook about the future operating
performance. As a result, we reversed $2.0 million of valuation allowances
in 2009 and $16.6 million of valuation allowances in 2008 through continuing
operations.
Goodwill,
Other Intangible Assets and Property and Equipment Valuations
Accounting
Policies
At
December 31, 2009, we had property and equipment of $549.5 million, goodwill of
$213.7 million and other intangible assets of $69.4 million, net of accumulated
depreciation and amortization. We review these assets for possible
impairment using the guidance in FASB ASC Topic 350, Intangibles - Goodwill and
Other, for goodwill and other intangible assets and FASB ASC Topic 360,
Property, Plant and
Equipment, for property and equipment. Our review for
impairment requires the use of significant judgments about the future
performance of our operating subsidiaries. Due to the many variables inherent in
the estimates of the fair value of these assets, differences in assumptions
could have a material effect on the impairment analyses.
Application
of Accounting Policies
Goodwill
We review
goodwill for impairment annually and whenever events or circumstances make it
more likely than not that impairment may have occurred. Application
of the goodwill impairment test requires judgment, including the identification
of reporting units, assignment of assets and liabilities to reporting units,
assignment of goodwill to reporting units, and determination of the fair value
of each reporting unit. We estimate the fair value of each reporting unit using
a discounted cash flow methodology. The fair value of each reporting
unit is compared to its carrying value to determine if impairment is
indicated. Due to a history of profitability and cash flow generation
along with expectations for future cash flows, no impairment of goodwill has
been identified.
Other
Intangible Assets and Property and Equipment
We review
long-lived assets besides goodwill 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.
We
recognized a $7.5 million impairment charge in 2007 prior to selling a portion
of our United Kingdom operation. We have had no other significant
impairments of property and equipment in the last three years.
Retirement
and Postemployment Benefit Obligations
We
provide benefits through defined benefit pension plans and retiree medical
benefit plans and under statutory requirements (e.g., black lung and workers’
compensation obligations).
Accounting
Policy
We
account for retirement and postemployment benefit obligations under FASB ASC
Topic 715, Compensation –
Retirement Benefits and FASB ASC Topic 712, Compensation – Nonretirement
Postemployment Benefits.
The
primary benefits are accounted for as follows:
·
|
Pension
obligations – FASB ASC Topic 715
|
·
|
Other
retiree obligations – FASB ASC Topic
715
|
·
|
Workers’
compensation obligations – FASB ASC Topic
712
|
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
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.
The
discount rate used to measure the present value of our benefit obligations was
derived using the cash flow matching method. Under this method, we
compare the plans’ projected payment obligations by year with the corresponding
yields on a hypothetical portfolio of high-quality bonds with similar expected
payment streams. 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.
We
changed our method of estimating our discount rate for our U.S. plans in
2007. In 2007, an average of the discount rates calculated using
Mercer Yield Curve and the Citigroup Pension Discount Curve was selected and was
rounded to the nearest tenth of a percentage point. In 2008, we
simplified our method to use only the Mercer Yield Curve, rounded to the nearest
tenth of a percentage point. The discount rate in 2008 determined
using our new method would not have changed if we had used our prior
method.
The
discount rates for the U.S. pension plans, UMWA retiree medical plans and Black
Lung obligations were:
|
|
Primary
U.S. Plan
|
|
|
UMWA
Plans
|
|
|
Black
Lung
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount
rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement cost
|
|
|
6.7 |
% |
|
|
6.4 |
% |
|
|
5.8 |
% |
|
|
6.2 |
% |
|
|
6.4 |
% |
|
|
5.8 |
% |
|
|
6.3 |
% |
|
|
6.1 |
% |
|
|
5.8 |
% |
Benefit obligation at year
end
|
|
|
5.9 |
% |
|
|
6.2 |
% |
|
|
6.4 |
% |
|
|
5.9 |
% |
|
|
6.2 |
% |
|
|
6.4 |
% |
|
|
5.4 |
% |
|
|
6.3 |
% |
|
|
6.1 |
% |
Sensitivity
Analysis
The
discount rate we select at year end affects the valuations of plan obligations
at year end and calculations of net periodic expenses for the following
year.
The
tables below compare hypothetical plan obligation valuations for our largest
plans as of December 31, 2009, actual expenses for 2009 and projected expenses
for 2010 assuming we had used discount rates that were one percentage point
lower or higher.
Plan
Obligations at December 31, 2009
|
|
Hypothetical
|
|
|
Actual
|
|
|
Hypothetical
|
|
(In
millions)
|
|
|
4.9 |
% |
|
|
5.9 |
% |
|
|
6.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary
U.S. pension plan
|
|
$ |
895.9 |
|
|
|
790.7 |
|
|
|
697.8 |
|
UMWA
plans
|
|
|
514.2 |
|
|
|
465.5 |
|
|
|
424.7 |
|
Actual
2009 and Projected 2010 Expense (Income)
(In
millions, except percentages)
|
|
|
|
|
Hypothetical
sensitivity analysis for discount rate assumption
|
|
|
|
|
|
Hypothetical
sensitivity analysis for discount rate assumption
|
|
|
|
Actual
|
|
|
1%
lower
|
|
|
1%
higher
|
|
|
Projected
|
|
|
1%
lower
|
|
|
1%
higher
|
|
Years
Ending December 31,
|
|
2009
|
|
|
2009
|
|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary
U.S. pension plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount
rate assumption
|
|
|
6.7 |
% |
|
|
5.7 |
% |
|
|
7.7 |
% |
|
|
5.9 |
% |
|
|
4.9 |
% |
|
|
6.9 |
% |
Retirement
cost (credit)
|
|
$ |
(5.7 |
) |
|
|
2.9 |
|
|
|
(14.0 |
) |
|
$ |
(2.2 |
) |
|
|
6.8 |
|
|
|
(12.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UMWA
plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount
rate assumption
|
|
|
6.2 |
% |
|
|
5.2 |
% |
|
|
7.2 |
% |
|
|
5.9 |
% |
|
|
4.9 |
% |
|
|
6.9 |
% |
Retirement
cost
|
|
|
19.9 |
|
|
|
21.1 |
|
|
|
18.9 |
|
|
|
16.5 |
|
|
|
17.7 |
|
|
|
15.4 |
|
Expected-Return-on-Assets
Assumption for Plans Accounted
under FASB ASC Topic 715
Our
expected-return-on-assets assumption, which affects our net periodic benefit
cost, reflects the long-term average rate of return we expect the plan assets to
earn. We select the expected-return-on-assets assumption using advice
from our investment advisor and actuary considering each plan’s asset allocation
targets and expected overall investment manager performance and a review of the
most recent long-term historical average compounded rates of return, as
applicable. We selected 8.75% as the expected-return-on-assets
assumption as of December 31, 2009 and 2008.
Over the
last ten years, the annual returns of our primary U.S. pension plan have
averaged, on a compounded basis, 3.4%, net of fees, while the 20-year compounded
annual return averaged 9.0% and the 25-year compounded annual return averaged
9.1%.
Sensitivity
Analysis
Effect of using different
expected-rate-of-return assumptions. Our 2009 and projected
2010 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 2009 and 2010 expense would be as
follows:
(In
millions, except percentages)
|
|
|
|
|
Hypothetical
sensitivity analysis for expected-return-on asset
assumption
|
|
|
|
|
|
Hypothetical
sensitivity analysis for expected-return-on asset
assumption
|
|
|
|
Actual
|
|
|
1%
lower
|
|
|
1%
higher
|
|
|
Projected
|
|
|
1%
lower
|
|
|
1%
higher
|
|
Years
Ending December 31,
|
|
2009
|
|
|
2009
|
|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected-return-on-asset
assumption
|
|
|
8.8 |
% |
|
|
7.8 |
% |
|
|
9.8 |
% |
|
|
8.8 |
% |
|
|
7.8 |
% |
|
|
9.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary
U.S. pension plan (a)
|
|
$ |
(5.7 |
) |
|
|
1.3 |
|
|
|
(12.7 |
) |
|
$ |
(2.2 |
) |
|
|
5.4 |
|
|
|
(9.8 |
) |
UMWA
plans
|
|
|
19.9 |
|
|
|
22.5 |
|
|
|
17.3 |
|
|
|
16.5 |
|
|
|
19.4 |
|
|
|
13.6 |
|
(a)
Expense includes continuing and discontinued operations.
Effect of improving or deteriorating
actual future market returns. Our funded status at December
31, 2010, and our 2011 expense will be different from currently projected
amounts if our projected 2010 returns are better or worse than the 8.75% return
we have assumed.
(In
millions, except percentages)
|
|
|
|
|
Hypothetical
sensitivity analysis of 2010 asset return better or worse than
expected
|
|
|
|
|
|
|
Better
|
|
|
Worse
|
|
Years
Ending December 31,
|
|
Projected
|
|
|
return
|
|
|
return
|
|
|
|
|
|
|
|
|
|
|
|
Return
on investments in 2010
|
|
|
8.8 |
% |
|
|
17.5 |
% |
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded
Status at December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary
U.S. pension plan
|
|
$ |
(122 |
) |
|
|
(66 |
) |
|
|
(178 |
) |
UMWA
plans
|
|
|
(159 |
) |
|
|
(133 |
) |
|
|
(184 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary
U.S. pension plan (a)
|
|
$ |
4 |
|
|
|
2 |
|
|
|
7 |
|
UMWA
plans
|
|
|
16 |
|
|
|
12 |
|
|
|
20 |
|
(a)
Expense includes continuing and discontinued operations.
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)
|
|
Based
on market-related value of assets
|
|
Hypothetical
(a)
|
|
|
Actual
|
Projected
|
Projected
|
|
|
|
|
Years
Ending December 31,
|
|
2009
|
2010
|
2011
|
|
2009
|
2010
|
2011
|
|
|
|
|
|
|
|
|
|
Expense
(Income)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary
U.S. pension plan
|
$
|
(5.7)
|
(2.2)
|
4.5
|
$
|
39.0
|
18.7
|
14.0
|
(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 relatedto 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 credit to earnings
from the expected return on assets to fluctuate more than the similar credit
using the accounting methodology of our defined-benefit pension
plans.
Medical
Inflation Assumption
We
estimate the trend in health care cost inflation to predict future cash flows
related to our retiree medical plans. Our assumption is based on recent plan
experience and industry trends.
For the
UMWA plans, our major postretirement plans, we have assumed a medical inflation
rate of 7.5% for 2010, and we project this rate to decline to 5% by
2016. The average annual increase for medical inflation in the plan
for the last five years has been below 6%. If we assumed that medical
inflation rates were one percentage point higher in each future year, the plan
obligation for the UMWA retiree medical benefit plan would have been
approximately $45.9 million higher at December 31, 2009, and the expense for
2009 would have been $2.4 million higher. If we had assumed that the
medical inflation rate would be one percentage point lower, the plan obligation
would have been approximately $39.3 million lower at December 31, 2009, and the
related 2009 expenses would have been $2.0 million lower.
If we had
projected medical inflation rates to ratably decline from 7.5% to 4.9% by 2025,
instead of ratably declining to 5.0% by 2016 as we estimated, the plan
obligation for the UMWA retiree medical benefit plan would have been $43.3
million higher for 2009 and our expense would be $5.2 million higher for
2010.
In
addition, health care reform currently under consideration in the U.S. Congress
could substantially change the health care and insurance industries in the
United States, which could increase our costs.
Workers’
Compensation
Besides
the effects of changes in medical costs, worker’s compensation costs are
affected by the severity and types of injuries, changes in state and federal
regulations and their application and the quality of programs which assist an
employee’s return to work. Our liability for future payments for
workers’ compensation claims is evaluated annually with the assistance of an
actuary.
Numbers
of Participants
The
valuations of all of these benefit plans are affected by the life expectancy of
the participants. Accordingly, we rely on actuarial information to predict the
number and life expectancy of participants. We use the following
mortality table for our major plans.
Plan
|
Mortality
table
|
|
UMWA
plans
|
RP-2000
Employee, Annuitant Healthy Blue Collar
|
|
Black
Lung
|
RP-2000
Blue Collar
|
|
Primary
U.S. pension
|
RP-2000
Combined Healthy Blue Collar
|
|
The
number of participants by major plan in the past five years is as
follows:
|
|
Number
of participants
|
|
Plan
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
UMWA
plans
|
|
|
4,700 |
|
|
|
4,900 |
|
|
|
5,000 |
|
|
|
5,200 |
|
|
|
5,400 |
|
Black
Lung
|
|
|
700 |
|
|
|
700 |
|
|
|
800 |
|
|
|
800 |
|
|
|
800 |
|
U.S.
pension
|
|
|
21,100 |
|
|
|
21,500 |
|
|
|
22,500 |
|
|
|
24,800 |
|
|
|
23,800 |
|
Since we
are no longer operating in the coal industry, we anticipate that the number of
participants in the UMWA retirement medical plan and the number of participants
receiving benefits under black lung regulations will decline over time due to
mortality. Since the U.S. pension plan has been frozen, the number of
its participants should also decline over time.
Foreign
Currency Translation
The
majority of our subsidiaries outside the U.S. conduct business in their local
currencies. Our financials report results in U.S. dollars, which include
the results of these subsidiaries.
Accounting
Policy
Our
accounting policy for foreign currency translation is different depending on
whether the economy in which our foreign subsidiary operates has been designated
as highly inflationary or not. Economies with a three-year cumulative
inflation rate of more than 100% are considered as highly
inflationary. At the end of 2009, we did not have any subsidiaries
operating in highly inflationary economies.
Non-Highly
Inflationary Economies
Assets
and liabilities of foreign subsidiaries in non-highly inflationary economies are
translated into U.S. dollars using rates of exchange at the balance sheet
date. Translation adjustments are recorded in other comprehensive income
(loss). Revenues and expenses are translated at rates of exchange in
effect during the year. Transaction gains and losses are recorded in net
income.
Highly
Inflationary Economies
Foreign
subsidiaries that operate in highly inflationary countries must use the
reporting currency (the U.S. dollar) as the functional currency.
Local-currency monetary assets and liabilities are remeasured into dollars each
balance sheet date, with remeasurement adjustments and other transaction gains
and losses recognized in earnings. Non-monetary assets and liabilities do
not fluctuate with changes in local currency exchange rates to the
dollar.
Application
of Accounting Policy
Use
of Parallel Market Exchange Rate to Convert Venezuelan Operations
Our
Venezuelan operations, which are 61% owned by Brink’s, constitute a material
portion of our overall consolidated operations. There are two
currency exchange rates which may be used to convert Venezuelan bolivar
fuertes into other currencies: an official rate and a market
rate. The use of the official rate to convert cash held in bolivar
fuertes into other currencies requires the approval of the Venezuelan
government’s currency control organization. The parallel market rate may
be used to obtain U.S. dollars without the approval of the currency control
organization.
In
December 2009, we repatriated dividends generated by our Venezuelan operations
that had been unpaid over the last several years using the parallel market
exchange rate. We decided to repatriate our dividends using the parallel
rate due to significant delays in receiving the needed government approval to
repatriate dividends at the official rate. We began translating our
financial statements for our Venezuelan operations using the parallel rate,
effective December 21, 2009, the date of our decision, since we expect to pay
future dividends using the parallel rate. This is consistent with the
guidance issued by the International Practices Task Force of the Center for
Audit Quality (the “IPTF”) and U.S. GAAP. This guidance provides
that, in the absence of unusual circumstances, the rate used for dividend
remittances should be used to translate foreign financial
statements.
We
recognized foreign currency translation losses because we changed to the
parallel rate for purposes of translating our Venezuelan financial
position. We recognized losses in our consolidated statement of
comprehensive income (loss) in 2009 of
·
|
$85
million attributable to Brink’s
|
·
|
$54
million attributable to noncontrolling interests,
and
|
We have
provided a non-GAAP Adjusted earnings measure within our Management’s Discussion
and Analysis that provides supplemental analysis to assist readers understand
the hypothetical effect on our financial results had we used the parallel rate
to report our results in the past.
Venezuela
Designated as Highly Inflationary Economy in 2010
Venezuela
has had significant inflation in the last several years and, in December 2009,
the three-year cumulative inflation rate exceeded 100%. As a result,
beginning in 2010, we are designating Venezuela’s economy as highly
inflationary, and we intend to consolidate our Venezuelan results in 2010 using
our accounting policy for subsidiaries operating in highly inflationary
economies.
RECENT
ACCOUNTING PRONOUNCEMENTS
Recently Adopted Accounting
Standards
We
adopted Statement of Financial Accounting Standard (“SFAS”) 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles – a
replacement of FASB Statement No. 162, effective for our quarter
ended September
30, 2009. SFAS 168 established the FASB Accounting Standards
Codification (“Codification”) as the sole source of authoritative
non-governmental accounting principles to be applied in the preparation of
financial statements in conformity with U.S. GAAP. Although SFAS 168 does not
change U.S. GAAP, the adoption of SFAS 168 impacted our financial statements
since all future references to authoritative accounting literature are now in
accordance with SFAS 168, except for the following standards, which will remain
authoritative until they are integrated into the Codification: SFAS 164, Not-for-Profit
Entities: Mergers and Acquisitions, SFAS 166,Accounting for Transfers of
Financial Assets, SFAS 167, Amendments to FASB Interpretation
No. 46R and SFAS 168.
The
Company adopted the accounting principles established by FASB
Interpretation (“FIN”) 48, Accounting for Uncertainty in Income
Taxes – an interpretation of SFAS 109,
which is now part of FASB Accounting Standards Codification (“ASC”) Topic
740, Income Taxes,
effective January 1, 2007. This interpretation clarifies the
accounting for uncertainty in income taxes recognized in an entity’s financial
statements in accordance with SFAS 109, Accounting for Income
Taxes. It prescribes a recognition threshold and measurement
attribute for financial statement disclosure of tax positions taken or expected
to be taken on a tax return. The adoption of this interpretation
increased retained earnings at January 1, 2007, by $7.0 million.
We
adopted the accounting principles established by FSP FAS
132(R)-1, Employers’
Disclosures about Postretirement Benefit Plan Assets, which is now part
of FASB ASC Topic 715, Compensation – Retirement
Benefits, effective for us on December 31, 2009. This guidance requires
enhanced disclosures about plan assets in an employer’s defined benefit pension
or other postretirement plans in order to provide users of financial statements
with an understanding of how investment allocation decisions are made, the major
categories of plan assets, the inputs and valuation techniques used to measure
the fair value of plan assets, and significant concentrations of risk within
plan assets.
We
adopted the accounting principles established by SFAS 141(R), Business Combinations, which
is now part of FASB ASC Topic 805, Business Combinations,
effective January 1, 2009. FASB ASC Topic 805 establishes
requirements for an acquirer to record the assets acquired, liabilities assumed,
and any related noncontrolling interests related to the acquisition of a
controlled subsidiary, measured at fair value, as of the acquisition
date. In 2008, we expensed all acquisition costs for transactions
that were expected to close in 2009. In 2009, we recognized gains
related to the acquisition of controlling interests in equity affiliates – see
note 6 to our consolidated financial statements. The adoption of this
new guidance did not otherwise have an effect on our historical financial
statements, but does affect the way we account for acquisitions after the
effective date.
We
adopted the accounting principles established by SFAS 160, Noncontrolling Interests in
Consolidated Financial Statements an Amendment of ARB No. 51, which is
now part of FASB ASC Topic 810, Consolidation, effective
January 1, 2009. FASB ASC Topic 810 establishes new accounting and
reporting standards for the noncontrolling interest, previously known as
minority interest, in a subsidiary and for the deconsolidation of a
subsidiary. This statement clarifies that a noncontrolling interest
in a subsidiary is an ownership interest in the consolidated entity that should
be reported as a separate component within equity in the consolidated financial
statements. Additionally, consolidated net income is to be reported
with separate disclosure of the amounts attributable to the parent and to the
noncontrolling interests. We retroactively restated our consolidated
balance sheets, consolidated statements of income, consolidated statement of
shareholders’ equity, consolidated statements of cash flows and consolidated
statements of comprehensive income as required by FASB ASC Topic
810. The adoption of this new guidance resulted in a $91.3 million
reclassification of noncontrolling interests from other long-term liabilities to
shareholders’ equity on the December 31, 2008, consolidated balance sheet.
Prior to the adoption of this new guidance, noncontrolling interests were
deductions from income in arriving at net income. Under FASB ASC
Topic 810, noncontrolling interests are a deduction from net income used to
arrive at net income attributable to Brink’s.
We
adopted the accounting principles established by SFAS 161, Disclosures about Derivative
Instruments and Hedging Activities an Amendment of SFAS 133, which is now
part of FASB ASC Topic 815, Derivatives and Hedging,
effective January 1, 2009. FASB ASC Topic 815 requires enhanced
disclosures about an entity's derivative and hedging activities. The
adoption of this new guidance had no impact on our financial
statements.
We
adopted the accounting principles established by SFAS 165, Subsequent Events, which is
now part of FASB ASC Topic 855, Subsequent Events, effective
for our quarter ended June 30, 2009. FASB ASC Topic 855 establishes
general standards of accounting and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued. This standard requires the disclosure of the date through which an
entity has evaluated subsequent events and the basis for selecting that
date. The adoption of this new guidance did not have a material
effect on our financial statements.
We
adopted the accounting principles established by FASB Staff
Position ("FSP") EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities,
which is now part of FASB ASC Topic 260, Earnings per Share, effective January 1,
2009. FASB ASC Topic 260 affects entities that accrue cash dividends
(whether paid or unpaid) on share-based payment awards during the award’s
service period for dividends that are nonforfeitable. The adoption of this new
guidance did not have a material effect on our financial
statements.
We
adopted the accounting principles established by FSP 157-2, Partial Deferral of the Effective
Date of SFAS 157, which is now part of FASB ASC Topic 820, Fair Value Measurements and
Disclosures, effective January 1, 2009. This guidance delayed
the effective date of FASB ASC Topic 820 for all nonrecurring fair value
measurements of nonfinancial assets and nonfinancial liabilities. The adoption
of this guidance did not have a material effect on our results of operations or
financial position.
We
adopted the accounting principles established by FSP FAS 157-4, Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly, which is now
part of FASB ASC Topic 820, Fair Value Measurements and
Disclosures, effective for our quarter ended June 30,
2009. FASB ASC Topic 820 provides guidance for estimating fair value
when the volume and level of activity for the asset or liability have
significantly decreased. FASB ASC Topic 820 also provides guidance for
identifying circumstances that indicate a transaction is not orderly and affirms
that the objective of fair value measurement in a market for an asset that is
not active is the price that would be received in an orderly (i.e., not
distressed) transaction on the measurement date under current market conditions.
If the market is determined to be not active, the entity must consider all
available evidence in determining whether an observable transaction is
orderly. The adoption of this new guidance did not have a material
effect on our results of operations or financial position.
We
adopted the accounting principles established by FSP
FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments, which is now part of FASB ASC Topic
320, Investments – Debt and
Equity Securities, effective for our
quarter ended June 30, 2009. FASB ASC Topic 320 provides guidance on
the recognition of other-than-temporary impairments of investments in debt
securities and provides new presentation and disclosure requirements for
other-than-temporary impairments of investments in debt and equity
securities. The adoption of this new guidance did not have a material
effect on our financial statements.
We
adopted the accounting principles established by FSP
FAS 107-1 and APB 28-1,
Interim Disclosures about Fair Value of Financial Instruments, which is
now part of FASB ASC Topic 825, Financial Instruments,
effective for our quarter ended June 30, 2009. FASB ASC Topic 825
requires disclosures about the fair value of financial instruments in interim
reporting periods whereas, previously, the disclosures were required only in
annual financial statements. The adoption of this new guidance
resulted in the disclosure of the fair value of our significant fixed-rate
long-term debt and our marketable securities as of our interim reporting
periods. This new guidance did not otherwise have an effect on our
financial statements.
We
adopted the accounting principles established by FSP
FAS 141(R)-1, Accounting for
Assets Acquired and Liabilities Assumed in a Business Combination that Arise
from Contingencies, which is now part of FASB ASC Topic 805, Business Combinations,
effective for our quarter ended June 30, 2009. This guidance is
effective for each of our business combinations which were completed on or after
January 1, 2009. FASB ASC Topic 805 provides that contingent assets
acquired or liabilities assumed in a business combination be recorded at fair
value if the acquisition-date fair value can be determined during the
measurement period. If the acquisition-date fair value cannot be
determined, such items would be recognized at the acquisition date if they meet
the recognition requirements of FASB ASC
Topic 450, Contingencies. In
periods after the acquisition date, items not recognized as part of the
acquisition but recognized subsequently would be reflected in that subsequent
period’s income. The adoption of this new guidance did not have a
material effect on our financial statements.
In August
2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, Measuring Liabilities at Fair
Value, which was effective for us on October 1, 2009. This ASU clarifies
the application of certain valuation techniques in circumstances in which a
quoted price in an active market for the identical liability is not available.
The adoption of this guidance did not have a material effect on our financial
statements.
In
September 2009, the FASB issued ASU 2009-12, Investments in Certain Entities That
Calculate Net Asset Value per Share (or Its Equivalent), which was
effective for our year ending December
31, 2009. ASU 2009-12 allows investors to use net asset value as a
practical expedient to estimate the fair value of certain investments that do
not have readily determinable fair values and sets forth disclosure requirements
for these investments. The adoption of this ASU helped us in applying
the enhanced disclosure requirements established by FSP FAS
132(R)-1. Otherwise, the adoption of this guidance did not have a
material effect on our financial statements.
Standards
Not Yet Adopted
In
June 2009, the FASB issued SFAS 166, Accounting for Transfers of
Financial Assets, now part of FASB ASC Topic 860, Transfers and Servicing, which will be
effective for us on January 1, 2010. SFAS 166 removes the concept of
a qualifying special-purpose entity (QSPE) from SFAS 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities, and removes the
exception from applying FASB Interpretation 46R, Consolidation of Variable Interest
Entities. This statement also clarifies the requirements for isolation
and limitations on portions of financial assets that are eligible for sale
accounting. We do not expect a material effect from the adoption of
this standard on our financial statements.
In
June 2009, the FASB issued SFAS 167, Amendments to FASB Interpretation
No. 46R, now part of FASB ASC Topic 810, Consolidation, which will be effective
for us on January 1, 2010. SFAS 167 requires an analysis to determine whether a
variable interest gives the entity a controlling financial interest in a
variable interest entity. This statement requires an ongoing reassessment and
eliminates the quantitative approach previously required for determining whether
an entity is the primary beneficiary. We do not expect a material effect from
the adoption of this standard on our financial statements.
In
October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue
Arrangements, which will be effective for us on January 1, 2011. ASU
2009-13 establishes a selling price hierarchy for determining the selling price
of a deliverable in a multiple-deliverable arrangement. In addition, the revised
guidance requires additional disclosures about the methods and assumptions used
to evaluate multiple-deliverable arrangements and to identify the significant
deliverables within those arrangements. We are currently evaluating the
potential impact of the amended guidance on our financial
statements.
In
October 2009, the FASB issued ASU 2009-14, Certain Revenue Arrangements that
Include Software Elements, which will be effective for us on January 1,
2011. ASU 2009-14 amends ASC Topic 985 to exclude from its scope
tangible products that contain both software and non-software components that
function together to deliver a product’s essential functionality. We
are currently evaluating the potential impact of the amended guidance on our
financial statements.
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
We
operate in more than 50 countries. These operations expose us to a variety of
market risks, including the effects of changes in interest rates, commodity
prices and foreign currency exchange rates. These financial and
commodity exposures are monitored and managed by us as an integral part of its
overall risk management program.
We
periodically use various derivative and non-derivative financial instruments, as
discussed below, to hedge our interest rate, commodity prices and foreign
currency exposures when appropriate. The risk that counterparties to these
instruments may be unable to perform is minimized by limiting the counterparties
used to major financial institutions with investment grade credit
ratings. We do not expect to incur a loss from the failure of any
counterparty to perform under the agreements. We do not use
derivative financial instruments for purposes other than hedging underlying
financial or commercial exposures.
The
sensitivity analyses discussed below for the market risk exposures were based on
the facts and circumstances in effect at December 31, 2009. Actual
results will be determined by a number of factors that are not under
management’s control and could vary materially from those
disclosed.
We use
both fixed and floating rate debt and leases to finance our operations. Floating
rate obligations, including our Revolving Facility, expose us to fluctuations in
cash flows due to changes in the general level of interest
rates. Fixed rate obligations, including our Dominion Terminal
Associates debt, are subject to fluctuations in fair values as a result of
changes in interest rates.
Based on
the contractual interest rates on the floating rate debt at December 31, 2009, a
hypothetical 10% increase in rates would increase cash outflows by approximately
$0.1 million over a twelve-month period. In other words, our weighted
average interest rate on our floating rate instruments was 1.3% per annum at
December 31, 2009. If that average rate were to increase by 0.1
percentage points to 1.4%, the cash outflows associated with these instruments
would increase by $0.1 million annually. The effect on the fair value
of our Dominion Terminal Associates debt for a hypothetical 10% decrease in the
yield curve from year-end 2009 levels would result in a $3.4 million increase in
the fair value of this debt.
We have
exposure to the effects of foreign currency exchange rate fluctuations on the
results of all of its foreign operations. Our foreign operations
generally use local currencies to conduct business but their results are
reported in U.S. dollars.
We are
exposed periodically to the foreign currency rate fluctuations that affect
transactions not denominated in the functional currency of domestic and foreign
operations. To mitigate these exposures, we, from time to time, enter into
foreign currency forward contracts. At December 31, 2009, no material
foreign currency forward contracts were outstanding. We do not use
derivative financial instruments to hedge investments in foreign subsidiaries
since such investments are long-term in nature.
The
effects of a hypothetical simultaneous 10% appreciation in the U.S. dollar from
year-end 2009 levels against all other currencies of countries in which we have
continuing operations are as follows:
|
|
Hypothetical
Effects
|
|
(In
millions)
|
|
Increase/
(decrease)
|
|
|
|
|
|
Effect
on Earnings:
|
|
|
|
Translation
of 2009 earnings into U.S. dollars
|
|
$ |
(12.8 |
) |
Transaction
gains (losses)
|
|
|
0.1 |
|
Effect
on Other Comprehensive Income (Loss):
|
|
|
|
|
Translation
of net assets of foreign subsidiaries
|
|
|
(65.2 |
) |
The
hypothetical foreign currency effects above detail the consolidated impact of a
simultaneous change in the value of a large number of foreign currencies
relative to the U. S. dollar. The foreign currency exposure impact
related to a change in an individual currency could be significantly
different.
Venezuela
Designated as Highly Inflationary Economy in 2010
Venezuela
has had significant inflation in the last several years and, in December 2009,
the three-year cumulative inflation rate exceeded 100%. As a result,
beginning in 2010, we are designating Venezuela’s economy as highly
inflationary. Local-currency monetary assets and liabilities will be
remeasured into U.S. dollars each balance sheet date, with remeasurement
adjustments and other transaction gains and losses recognized in
earnings. Net Venezuelan bolivar fuerte denominated monetary assets
at December 31, 2009, were $35.7 million, and a hypothetical 10% appreciation of
the U.S. dollar against the Venezuelan bolivar fuerte after we begin accounting
for these assets as highly inflationary as of January 1, 2010, would result in a
$3.6 million transaction loss, which is in addition to the amounts in the above
table.
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
THE
BRINK’S COMPANY
CONSOLIDATED
FINANCIAL STATEMENTS
FOR
THE YEAR ENDED DECEMBER 31, 2009
TABLE
OF CONTENTS
|
|
Page
|
|
|
|
MANAGEMENT’S
ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
|
66
|
|
|
REPORTS
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
67
|
|
|
|
CONSOLIDATED
FINANCIAL STATEMENTS
|
|
|
Consolidated
Balance Sheets
|
69
|
|
Consolidated
Statements of Income
|
70
|
|
Consolidated
Statements of Comprehensive Income (Loss)
|
71
|
|
Consolidated
Statements of Shareholders’ Equity
|
72
|
|
Consolidated
Statements of Cash Flows
|
73
|
|
|
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
Note
1 – Summary of Significant Accounting Policies
|
74
|
|
Note
2 – Segment Information
|
81
|
|
Note
3 – Retirement Benefits
|
83
|
|
Note
4 – Income Taxes
|
91
|
|
Note
5 – Property and Equipment
|
94
|
|
Note
6 – Acquisitions
|
94
|
|
Note
7 – Goodwill and Other Intangible Assets
|
96
|
|
Note
8 – Other Assets
|
97
|
|
Note
9 – Fair Value of Financial Instruments
|
97
|
|
Note
10 – Accrued Liabilities
|
98
|
|
Note
11 – Other Liabilities
|
98
|
|
Note
12 – Long-Term Debt
|
98
|
|
Note
13 – Accounts Receivable
|
100
|
|
Note
14 – Operating Leases
|
100
|
|
Note
15 – Share-Based Compensation Plans
|
101
|
|
Note
16 – Capital Stock
|
104
|
|
Note
17 – Income from Discontinued Operations
|
105
|
|
Note
18 – Supplemental Cash Flow Information
|
106
|
|
Note
19 – Other Operating Income (Expense)
|
106
|
|
Note
20 – Interest and Other Nonoperating Income
|
106
|
|
Note
21 – Other Commitments and Contingencies
|
107
|
|
Note
22 – Selected Quarterly Financial Data (unaudited)
|
108
|
MANAGEMENT’S
ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management
of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rule 13a-15(f) under the
Securities Exchange Act of 1934. Our internal control over financial reporting
is designed to provide reasonable assurance to our management and board of
directors regarding the preparation and fair presentation of published financial
statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial
statement preparation and presentation.
Management
assessed the effectiveness of our internal control over financial reporting as
of December 31, 2009. In making this assessment, management used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in “Internal Control – Integrated Framework.” Based on this
assessment, our management believes that, as of December 31, 2009, our internal
control over financial reporting is effective based on those
criteria.
KPMG LLP,
the independent registered public accounting firm which audits our consolidated
financial statements, has issued an attestation report of our internal control
over financial reporting. KPMG’s attestation report appears on page
67.
Report
of Independent Registered Public Accounting Firm
The Board
of Directors and Shareholders
The
Brink’s Company:
We have
audited The Brink’s Company’s (the Company) internal control over financial
reporting as of December 31, 2009, based on criteria established in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). The Company’s management is responsible for
maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting,
included in the accompanying Management’s Annual Report on
Internal Control over Financial Reporting. Our responsibility is to
express an opinion on the Company’s internal control over financial reporting
based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audit also included performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the
financial statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
In our
opinion, The Brink’s Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2009, based on
criteria established in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of The Brink’s
Company and subsidiaries as of December 31, 2009 and 2008, and the related
consolidated statements of income, comprehensive income (loss), shareholders’
equity, and cash flows for each of the years in the three-year period ended
December 31, 2009, and our report dated February 25, 2010 expressed an
unqualified opinion on those consolidated financial statements.
/s/ KPMG
LLP
Richmond,
Virginia
February
25, 2010
Report
of Independent Registered Public Accounting Firm
The Board
of Directors and Shareholders
The
Brink’s Company:
We have
audited the accompanying consolidated balance sheets of The Brink’s Company
and subsidiaries (the Company) as of December 31, 2009 and 2008, and
the related consolidated statements of income, comprehensive income (loss),
shareholders’ equity, and cash flows for each of the years in the three-year
period ended December 31, 2009. These consolidated financial statements are
the responsibility of the Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our
audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of The Brink’s Company
and subsidiaries as of December 31, 2009 and 2008, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 2009, in conformity with U.S. generally
accepted accounting principles.
As
disclosed in note 1 to the consolidated financial statements, the Company
adopted the provisions of Statement of Financial Accounting Standards No.
141(R), Business
Combinations (included in FASB ASC Topic 805, Business Combinations),
effective January 1, 2009 and Statement of Financial Accounting Standards No.
160, Noncontrolling Interests
in Consolidated Financial Statements an Amendment of ARB No. 51 (included
in FASB ASC Topic 810, Consolidation), effective
January 1, 2009.
We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), The Brink’s Company’s internal control over
financial reporting as of December 31, 2009, based on criteria established
in Internal Control –
Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO), and our report dated February 25, 2010
expressed an unqualified opinion on the effectiveness of the Company’s internal
control over financial reporting.
/s/ KPMG
LLP
Richmond,
Virginia
February
25, 2010
THE
BRINK’S COMPANY
and
subsidiaries
Consolidated
Balance Sheets
|
|
December
31,
|
|
(In
millions, except per share amounts)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$ |
143.0 |
|
|
|
250.9 |
|
Accounts receivable (net of
allowance: 2009 – $7.1; 2008 – $6.8)
|
|
|
427.6 |
|
|
|
450.7 |
|
Prepaid expenses and
other
|
|
|
81.0 |
|
|
|
99.7 |
|
Deferred income
taxes
|
|
|
38.5 |
|
|
|
31.1 |
|
Total current
assets
|
|
|
690.1 |
|
|
|
832.4 |
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
549.5 |
|
|
|
534.0 |
|
Goodwill
|
|
|
213.7 |
|
|
|
139.6 |
|
Deferred
income taxes
|
|
|
254.1 |
|
|
|
202.6 |
|
Other
|
|
|
172.4 |
|
|
|
107.2 |
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
1,879.8 |
|
|
|
1,815.8 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$ |
7.2 |
|
|
|
7.2 |
|
Current maturities of long-term
debt
|
|
|
16.1 |
|
|
|
8.4 |
|
Accounts payable
|
|
|
127.2 |
|
|
|
137.8 |
|
Income taxes
payable
|
|
|
5.5 |
|
|
|
21.2 |
|
Accrued
liabilities
|
|
|
364.3 |
|
|
|
360.5 |
|
Total current
liabilities
|
|
|
520.3 |
|
|
|
535.1 |
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
172.3 |
|
|
|
173.0 |
|
Accrued
pension costs
|
|
|
192.1 |
|
|
|
373.4 |
|
Retirement
benefits other than pensions
|
|
|
198.3 |
|
|
|
249.9 |
|
Deferred
income taxes
|
|
|
30.5 |
|
|
|
21.5 |
|
Other
|
|
|
170.5 |
|
|
|
157.6 |
|
Total liabilities
|
|
|
1,284.0 |
|
|
|
1,510.5 |
|
|
|
|
|
|
|
|
|
|
Commitments
and contingent liabilities (notes 3, 4, 12, 14, 17 and 21)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
The Brink’s Company (“Brink’s”)
shareholders’ equity:
|
|
|
|
|
|
|
|
|
Common
stock, par value $1 per share:
|
|
|
|
|
|
|
|
|
Shares
authorized: 100.0
|
|
|
|
|
|
|
|
|
Shares issued and outstanding:
2009 – 47.9; 2008 – 45.7
|
|
|
47.9 |
|
|
|
45.7 |
|
Capital in excess of par
value
|
|
|
550.2 |
|
|
|
486.3 |
|
Retained
earnings
|
|
|
514.8 |
|
|
|
310.0 |
|
Accumulated other
comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Benefit plan experience
loss
|
|
|
(517.1 |
) |
|
|
(603.7 |
) |
Benefit plan prior service
cost
|
|
|
(3.4 |
) |
|
|
(4.5 |
) |
Foreign currency
translation
|
|
|
(60.7 |
) |
|
|
(20.4 |
) |
Unrealized gains on marketable
securities
|
|
|
3.2 |
|
|
|
0.6 |
|
Accumulated other comprehensive
loss
|
|
|
(578.0 |
) |
|
|
(628.0 |
) |
|
|
|
|
|
|
|
|
|
Total Brink’s shareholders’
equity
|
|
|
534.9 |
|
|
|
214.0 |
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
|
60.9 |
|
|
|
91.3 |
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
595.8 |
|
|
|
305.3 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders’ equity
|
|
$ |
1,879.8 |
|
|
|
1,815.8 |
|
See
accompanying notes to consolidated financial statements.
THE
BRINK’S COMPANY
Consolidated
Statements of Income
|
|
Years
Ended December 31,
|
|
(In
millions, except per share amounts)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
3,135.0 |
|
|
|
3,163.5 |
|
|
|
2,734.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of revenues
|
|
|
2,534.5 |
|
|
|
2,505.1 |
|
|
|
2,194.9 |
|
Selling,
general and administrative expenses
|
|
|
430.2 |
|
|
|
434.5 |
|
|
|
379.8 |
|
Total costs and
expenses
|
|
|
2,964.7 |
|
|
|
2,939.6 |
|
|
|
2,574.7 |
|
Other
operating income (expense)
|
|
|
(3.5 |
) |
|
|
4.6 |
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
166.8 |
|
|
|
228.5 |
|
|
|
161.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(11.3 |
) |
|
|
(12.0 |
) |
|
|
(10.8 |
) |
Interest
and other income
|
|
|
10.8 |
|
|
|
8.1 |
|
|
|
10.5 |
|
Income from continuing operations
before income taxes
|
|
|
166.3 |
|
|
|
224.6 |
|
|
|
160.7 |
|
Provision
for (benefit from) income taxes
|
|
|
(61.1 |
) |
|
|
53.0 |
|
|
|
59.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations
|
|
|
227.4 |
|
|
|
171.6 |
|
|
|
101.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from discontinued operations, net of tax
|
|
|
4.5 |
|
|
|
51.5 |
|
|
|
58.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
231.9 |
|
|
|
223.1 |
|
|
|
160.1 |
|
Less net income attributable
to noncontrolling interests
|
|
|
(31.7 |
) |
|
|
(39.8 |
) |
|
|
(22.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
Brink’s
|
|
$ |
200.2 |
|
|
|
183.3 |
|
|
|
137.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
attributable to Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
$ |
195.7 |
|
|
|
131.8 |
|
|
|
78.4 |
|
Income
from discontinued operations
|
|
|
4.5 |
|
|
|
51.5 |
|
|
|
58.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
Brink’s
|
|
$ |
200.2 |
|
|
|
183.3 |
|
|
|
137.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share attributable to Brink’s common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
4.14 |
|
|
|
2.85 |
|
|
|
1.68 |
|
Discontinued
operations
|
|
|
0.10 |
|
|
|
1.11 |
|
|
|
1.27 |
|
Net income
|
|
|
4.23 |
|
|
|
3.96 |
|
|
|
2.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
4.11 |
|
|
|
2.82 |
|
|
|
1.67 |
|
Discontinued
operations
|
|
|
0.10 |
|
|
|
1.10 |
|
|
|
1.25 |
|
Net income
|
|
|
4.21 |
|
|
|
3.93 |
|
|
|
2.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
47.2 |
|
|
|
46.3 |
|
|
|
46.5 |
|
Diluted
|
|
|
47.5 |
|
|
|
46.7 |
|
|
|
47.0 |
|
See accompanying notes to
consolidated financial statements.
THE
BRINK’S COMPANY
and
subsidiaries
Consolidated
Statements of Comprehensive Income (Loss)
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
231.9 |
|
|
|
223.1 |
|
|
|
160.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit plan
experience:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net experience gains (losses)
arising during the year
|
|
|
68.2 |
|
|
|
(501.2 |
) |
|
|
112.6 |
|
Tax benefit (provision) related
to net experience gains and losses arising during the year
|
|
|
(0.3 |
) |
|
|
32.7 |
|
|
|
(40.8 |
) |
Reclassification adjustment for
amortization of prior net experience loss included in net
income
|
|
|
28.2 |
|
|
|
11.8 |
|
|
|
27.1 |
|
Tax benefit related to
reclassification adjustment
|
|
|
(9.5 |
) |
|
|
(0.7 |
) |
|
|
(8.9 |
) |
Benefit plan experience gain
(loss), net of tax
|
|
|
86.6 |
|
|
|
(457.4 |
) |
|
|
90.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit plan prior service credit
(cost):
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service credit from plan
amendment during the year
|
|
|
- |
|
|
|
3.1 |
|
|
|
0.1 |
|
Tax provision related to prior
service credit from plan amendment during the year
|
|
|
- |
|
|
|
(0.5 |
) |
|
|
- |
|
Reclassification adjustment for
amortization of prior service cost (credit) included in net
income
|
|
|
1.2 |
|
|
|
(0.3 |
) |
|
|
1.3 |
|
Tax provision (benefit) related
to reclassification adjustment
|
|
|
(0.1 |
) |
|
|
0.6 |
|
|
|
- |
|
Benefit plan prior service
credit, net of tax
|
|
|
1.1 |
|
|
|
2.9 |
|
|
|
1.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency:
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation adjustments arising
during the year
|
|
|
(92.4 |
) |
|
|
(47.0 |
) |
|
|
41.6 |
|
Tax benefit (provision) related
to translation adjustments
|
|
|
(0.7 |
) |
|
|
0.8 |
|
|
|
(0.1 |
) |
Reclassification adjustment for
dispositions of businesses
|
|
|
- |
|
|
|
- |
|
|
|
(0.1 |
) |
Foreign currency translation
adjustments, net of tax
|
|
|
(93.1 |
) |
|
|
(46.2 |
) |
|
|
41.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized net gains (losses) on
marketable securities arising during the year
|
|
|
2.1 |
|
|
|
(7.2 |
) |
|
|
1.1 |
|
Tax benefit (provision) related
to unrealized net gains and losses on marketable
securities
|
|
|
- |
|
|
|
2.6 |
|
|
|
(0.4 |
) |
Reclassification adjustment for
net (gains) losses realized in net income
|
|
|
- |
|
|
|
6.2 |
|
|
|
(1.4 |
) |
Tax provision (benefit) related
to reclassification adjustment
|
|
|
- |
|
|
|
(2.2 |
) |
|
|
0.5 |
|
Unrealized net gains (losses) on
marketable securities, net of tax
|
|
|
2.1 |
|
|
|
(0.6 |
) |
|
|
(0.2 |
) |
Other comprehensive income
(loss)
|
|
|
(3.3 |
) |
|
|
(501.3 |
) |
|
|
132.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss)
|
|
$ |
228.6 |
|
|
|
(278.2 |
) |
|
|
292.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
attributable to Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
200.2 |
|
|
|
183.3 |
|
|
|
137.3 |
|
Benefit plan
experience
|
|
|
86.6 |
|
|
|
(457.4 |
) |
|
|
90.0 |
|
Benefit plan prior service
credit
|
|
|
1.1 |
|
|
|
2.9 |
|
|
|
1.4 |
|
Foreign currency
|
|
|
(40.3 |
) |
|
|
(43.9 |
) |
|
|
39.7 |
|
Marketable
securities
|
|
|
2.6 |
|
|
|
(0.6 |
) |
|
|
(0.2 |
) |
Other comprehensive income
(loss)
|
|
|
50.0 |
|
|
|
(499.0 |
) |
|
|
130.9 |
|
Comprehensive income (loss)
attributable to Brink’s
|
|
|
250.2 |
|
|
|
(315.7 |
) |
|
|
268.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
attributable to noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
31.7 |
|
|
|
39.8 |
|
|
|
22.8 |
|
Foreign currency
|
|
|
(52.8 |
) |
|
|
(2.3 |
) |
|
|
1.7 |
|
Marketable
securities
|
|
|
(0.5 |
) |
|
|
- |
|
|
|
- |
|
Other comprehensive income
(loss)
|
|
|
(53.3 |
) |
|
|
(2.3 |
) |
|
|
1.7 |
|
Comprehensive income (loss)
attributable to noncontrolling interests
|
|
|
(21.6 |
) |
|
|
37.5 |
|
|
|
24.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss)
|
|
$ |
228.6 |
|
|
|
(278.2 |
) |
|
|
292.7 |
|
See
accompanying notes to consolidated financial statements.
THE
BRINK’S COMPANY
and
subsidiaries
Consolidated
Statements of Shareholders’ Equity
Years
Ended December 31, 2009, 2008 and 2007
|
|
|
|
Capital
in
Excess
|
|
Accumulated
Other
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Common
|
of
Par
|
Retained
|
Comprehensive
|
Noncontrolling
|
|
(In
millions)
|
(a)
|
|
Stock
|
Value
|
Earnings
|
Loss
|
Interests
|
Total
|
Balance
as of December 31, 2006
|
48.5
|
$
|
48.5
|
414.7
|
552.0
|
(261.4)
|
51.8
|
805.6
|
Net
income
|
-
|
|
-
|
-
|
137.3
|
-
|
22.8
|
160.1
|
Other
comprehensive income
|
-
|
|
-
|
-
|
-
|
130.9
|
1.7
|
132.6
|
Shares
repurchased (see note 16)
|
(0.1)
|
|
(0.1)
|
(0.5)
|
(3.0)
|
-
|
-
|
(3.6)
|
Dividends
to:
|
|
|
|
|
|
|
|
|
Brink’s common
shareholders ($0.3625 per share)
|
-
|
|
-
|
-
|
(16.5)
|
-
|
-
|
(16.5)
|
Noncontrolling
interests
|
-
|
|
-
|
-
|
-
|
-
|
(7.2)
|
(7.2)
|
Share-based
compensation:
|
|
|
|
|
|
|
|
|
Stock options and
awards:
|
|
|
|
|
|
|
|
|
Compensation expense
(b)
|
-
|
|
-
|
11.7
|
-
|
-
|
-
|
11.7
|
Consideration from exercise of
stock options
|
-
|
|
-
|
12.6
|
-
|
-
|
-
|
12.6
|
Excess tax benefit of stock compensation
|
-
|
|
-
|
5.9
|
-
|
-
|
-
|
5.9
|
Other share-based benefit
programs
|
-
|
|
-
|
8.4
|
(0.3)
|
-
|
-
|
8.1
|
Retire
shares of common stock
|
-
|
|
-
|
(0.2)
|
(0.7)
|
-
|
-
|
(0.9)
|
Adoption
of - Financial Accounting Standards Board
|
|
|
|
|
|
|
|
|
Interpretation 48 (see note
1)
|
-
|
|
-
|
-
|
7.0
|
-
|
-
|
7.0
|
Purchases
of subsidiary shares from
|
|
|
|
|
|
|
|
|
noncontrolling
interests
|
-
|
|
-
|
-
|
-
|
-
|
(0.9)
|
(0.9)
|
Balance
as of December 31, 2007
|
48.4
|
|
48.4
|
452.6
|
675.8
|
(130.5)
|
68.2
|
1,114.5
|
Net
income
|
-
|
|
-
|
-
|
183.3
|
-
|
39.8
|
223.1
|
Other
comprehensive loss
|
-
|
|
-
|
-
|
-
|
(499.0)
|
(2.3)
|
(501.3)
|
Shares
repurchased (see note 16)
|
(1.0)
|
|
(1.0)
|
(9.8)
|
(45.7)
|
-
|
-
|
(56.5)
|
Termination
of Employee Benefits Trust
|
(1.7)
|
|
(1.7)
|
1.7
|
-
|
-
|
-
|
-
|
Dividends
to:
|
|
|
|
|
|
|
|
|
Brink’s common
shareholders ($0.40 per share)
|
-
|
|
-
|
-
|
(18.2)
|
-
|
-
|
(18.2)
|
Noncontrolling
interests
|
-
|
|
-
|
-
|
-
|
-
|
(12.4)
|
(12.4)
|
Share-based
compensation:
|
|
|
|
|
|
|
|
|
Stock options and
awards:
|
|
|
|
|
|
|
|
|
Compensation expense
(a)
|
-
|
|
-
|
9.5
|
-
|
-
|
-
|
9.5
|
Consideration from exercise of
stock options
|
0.1
|
|
0.1
|
18.5
|
-
|
-
|
-
|
18.6
|
Excess tax benefit of stock compensation
|
-
|
|
-
|
13.3
|
-
|
-
|
-
|
13.3
|
Other share-based benefit
programs
|
0.1
|
|
0.1
|
4.3
|
(0.3)
|
-
|
-
|
4.1
|
Retire
shares of common stock
|
(0.2)
|
|
(0.2)
|
(3.8)
|
(16.0)
|
-
|
-
|
(20.0)
|
Spin-off
of Brink’s Home Security Holdings, Inc.
|
|
|
|
|
|
|
|
|
(“BHS”) (see note
17)
|
-
|
|
-
|
-
|
(468.9)
|
1.5
|
-
|
(467.4)
|
Purchases
of subsidiary shares from
|
|
|
|
|
|
|
|
|
noncontrolling
interests
|
-
|
|
-
|
-
|
-
|
-
|
(2.0)
|
(2.0)
|
Balance
as of December 31, 2008
|
45.7
|
|
45.7
|
486.3
|
310.0
|
(628.0)
|
91.3
|
305.3
|
Net
income
|
-
|
|
-
|
-
|
200.2
|
-
|
31.7
|
231.9
|
Other
comprehensive loss
|
-
|
|
-
|
-
|
-
|
50.0
|
(53.3)
|
(3.3)
|
Shares
repurchased (see note 16)
|
(0.2)
|
|
(0.2)
|
(2.5)
|
(3.4)
|
-
|
-
|
(6.1)
|
Shares
contributed to pension plan (see note 16)
|
2.3
|
|
2.3
|
55.3
|
-
|
-
|
-
|
57.6
|
Dividends
to:
|
|
|
|
|
|
|
|
|
Brink’s common
shareholders ($0.40 per share)
|
-
|
|
-
|
-
|
(18.4)
|
-
|
-
|
(18.4)
|
Noncontrolling
interests
|
-
|
|
-
|
-
|
-
|
-
|
(13.7)
|
(13.7)
|
Share-based
compensation:
|
|
|
|
|
|
|
|
|
Stock options and
awards:
|
|
|
|
|
|
|
|
|
Compensation
expense
|
-
|
|
-
|
6.6
|
-
|
-
|
-
|
6.6
|
Consideration from exercise of
stock options
|
0.1
|
|
0.1
|
1.2
|
-
|
-
|
-
|
1.3
|
Excess tax benefit of stock compensation
|
-
|
|
-
|
0.1
|
-
|
-
|
-
|
0.1
|
Other share-based benefit
programs
|
-
|
|
-
|
3.2
|
(0.4)
|
-
|
-
|
2.8
|
Adjustment
to spin-off of BHS (see note 17)
|
-
|
|
-
|
-
|
26.8
|
-
|
-
|
26.8
|
Acquisitions
of new subsidiaries (see note 6)
|
-
|
|
-
|
-
|
-
|
-
|
4.9
|
4.9
|
Balance
as of December 31, 2009
|
47.9
|
$
|
47.9
|
550.2
|
514.8
|
(578.0)
|
60.9
|
595.8
|
(a)
|
Includes
1.7 million shares at December 31, 2007, held by The Brink’s Company
Employee Benefits Trust that were not allocated to
participants. The trust was terminated in 2008 (see note
16).
|
(b)
|
Includes
amounts classified as discontinued
operations.
|
See accompanying notes to
consolidated financial statements.
THE
BRINK’S COMPANY
and
subsidiaries
Consolidated
Statements of Cash Flows
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
231.9 |
|
|
|
223.1 |
|
|
|
160.1 |
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued
operations, net of tax
|
|
|
(4.5 |
) |
|
|
(51.5 |
) |
|
|
(58.9 |
) |
Depreciation and
amortization
|
|
|
135.1 |
|
|
|
122.3 |
|
|
|
110.0 |
|
Stock compensation
expense
|
|
|
6.6 |
|
|
|
7.8 |
|
|
|
10.1 |
|
Deferred income
taxes
|
|
|
(91.0 |
) |
|
|
(20.0 |
) |
|
|
9.9 |
|
Gains:
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
of property and other assets
|
|
|
(9.4 |
) |
|
|
(13.1 |
) |
|
|
(4.6 |
) |
Acquisitions
of controlling interest of equity-method investments
|
|
|
(14.9 |
) |
|
|
- |
|
|
|
- |
|
Impairment
charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable
securities
|
|
|
- |
|
|
|
7.1 |
|
|
|
- |
|
Long-lived assets
|
|
|
2.7 |
|
|
|
1.9 |
|
|
|
2.5 |
|
Retirement
benefit funding (more) less than expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
(102.7 |
) |
|
|
(12.2 |
) |
|
|
(7.7 |
) |
Other than
pension
|
|
|
15.3 |
|
|
|
(5.1 |
) |
|
|
1.1 |
|
Other operating,
net
|
|
|
4.3 |
|
|
|
5.0 |
|
|
|
6.2 |
|
Change in operating assets and
liabilities, net of effects of acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
8.9 |
|
|
|
(24.1 |
) |
|
|
0.3 |
|
Accounts payable, income taxes
payable and accrued liabilities
|
|
|
(16.4 |
) |
|
|
40.8 |
|
|
|
28.8 |
|
Prepaid and other current
assets
|
|
|
3.5 |
|
|
|
(21.8 |
) |
|
|
(7.3 |
) |
Other, net
|
|
|
2.3 |
|
|
|
(5.8 |
) |
|
|
11.5 |
|
Discontinued operations,
net
|
|
|
23.5 |
|
|
|
172.7 |
|
|
|
191.7 |
|
Net cash provided by operating
activities
|
|
|
195.2 |
|
|
|
427.1 |
|
|
|
453.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(170.6 |
) |
|
|
(165.3 |
) |
|
|
(141.8 |
) |
Acquisitions
|
|
|
(74.6 |
) |
|
|
(11.7 |
) |
|
|
(13.4 |
) |
Marketable
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases
|
|
|
(11.1 |
) |
|
|
(3.5 |
) |
|
|
(1.8 |
) |
Sales
|
|
|
4.7 |
|
|
|
2.5 |
|
|
|
1.3 |
|
Cash
proceeds from sale of property, equipment and investments
|
|
|
10.5 |
|
|
|
16.9 |
|
|
|
14.0 |
|
Cash
held by home security business at spin-off
|
|
|
- |
|
|
|
(50.0 |
) |
|
|
- |
|
Other,
net
|
|
|
- |
|
|
|
2.0 |
|
|
|
(0.3 |
) |
Discontinued
operations, net
|
|
|
- |
|
|
|
(150.8 |
) |
|
|
(175.5 |
) |
Net cash used by investing
activities
|
|
|
(241.1 |
) |
|
|
(359.9 |
) |
|
|
(317.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
and repayments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
debt
|
|
|
(0.9 |
) |
|
|
(4.4 |
) |
|
|
(23.2 |
) |
Long-term
revolving credit facilities
|
|
|
(10.1 |
) |
|
|
93.5 |
|
|
|
(33.5 |
) |
Other
long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
|
|
0.6 |
|
|
|
- |
|
|
|
6.9 |
|
Repayments
|
|
|
(11.9 |
) |
|
|
(12.6 |
) |
|
|
(12.1 |
) |
Cash
proceeds from sale-leaseback transactions
|
|
|
13.6 |
|
|
|
- |
|
|
|
- |
|
Repurchase
shares of common stock of Brink’s
|
|
|
(6.9 |
) |
|
|
(56.6 |
) |
|
|
(2.7 |
) |
Dividends
to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of
Brink’s
|
|
|
(18.4 |
) |
|
|
(18.2 |
) |
|
|
(16.5 |
) |
Noncontrolling interests in
subsidiaries
|
|
|
(13.7 |
) |
|
|
(12.4 |
) |
|
|
(7.2 |
) |
Proceeds
from exercise of stock options
|
|
|
1.3 |
|
|
|
16.2 |
|
|
|
12.6 |
|
Excess
tax benefits associated with stock compensation
|
|
|
0.3 |
|
|
|
12.5 |
|
|
|
5.8 |
|
Minimum
tax withholdings associated with stock compensation
|
|
|
(0.4 |
) |
|
|
(17.6 |
) |
|
|
(0.8 |
) |
Other,
net
|
|
|
(0.1 |
) |
|
|
- |
|
|
|
0.4 |
|
Discontinued
operations, net
|
|
|
- |
|
|
|
- |
|
|
|
(14.8 |
) |
Net cash provided (used) by
financing activities
|
|
|
(46.6 |
) |
|
|
0.4 |
|
|
|
(85.1 |
) |
Effect
of exchange rate changes on cash
|
|
|
(15.4 |
) |
|
|
(13.1 |
) |
|
|
8.1 |
|
Cash
and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(decrease)
|
|
|
(107.9 |
) |
|
|
54.5 |
|
|
|
59.2 |
|
Balance at beginning of
year
|
|
|
250.9 |
|
|
|
196.4 |
|
|
|
137.2 |
|
Balance at end of
year
|
|
$ |
143.0 |
|
|
|
250.9 |
|
|
|
196.4 |
|
See accompanying notes to
consolidated financial statements.
THE
BRINK’S COMPANY
and
subsidiaries
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
1 – Summary of Significant Accounting Policies
Basis
of Presentation
The
Brink’s Company (along with its subsidiaries, “we,” “our,” “Brink’s” or the
“Company”), based in Richmond, Virginia, is a leading provider of secure
transportation, cash logistics and other security-related services to banks and
financial institutions, retailers, government agencies, mints, jewelers and
other commercial operations around the world. Brink’s is the oldest
and largest secure transportation and cash logistics company in the U.S., and a
market leader in many other countries.
Principles
of Consolidation
The
consolidated financial statements include the accounts of Brink’s and the
subsidiaries it controls. Control is determined based on ownership
rights or, when applicable, based on whether we are considered to be the primary
beneficiary of a variable interest entity. Our interest in 20%- to
50%-owned companies that are not controlled are accounted for using the equity
method (“equity affiliates”), unless we do not sufficiently influence the
management of the investee. Other investments are accounted for as
cost-method investments or as available-for-sale marketable
securities. All significant intercompany accounts and transactions
have been eliminated in consolidation.
Revenue
Recognition
Brink’s. Revenue is
recognized when services related to armored car transportation, ATM servicing,
cash logistics, coin sorting and wrapping and the secure transportation of
valuables are performed. Customer contracts have prices that are fixed and
determinable and we assess the customer’s ability to meet the contractual terms,
including payment terms, before entering into contracts. Customer
contracts generally are automatically extended after the initial contract period
until either party terminates the agreement.
BHS (discontinued
operation). Monitoring revenues were recognized monthly as
services were provided pursuant to the terms of subscriber contracts, which had
contract prices that were fixed and determinable. BHS assessed the
subscriber’s ability to meet the contract terms, including payment terms, before
entering into the contract. Generally, nonrefundable installation
revenues and a portion of the related direct costs of acquiring new subscribers
(primarily sales commissions) were deferred and recognized over an estimated 15
year subscriber relationship period. When an installation was
identified for disconnection, any unamortized deferred revenues and deferred
costs related to that installation were recognized at that time.
Taxes collected from
customers. Taxes collected from customers and remitted to
governmental authorities are not included in revenues in the consolidated
statements of income.
Cash
and Cash Equivalents
Cash and
cash equivalents include cash on hand, demand deposits and investments with
original maturities of three months or less.
Marketable
Securities
We have
marketable securities held as of December 31, 2009 and 2008 designated as
available-for-sale securities for purposes of FASB ASC Topic 320, Investments – Debt and Equity
Securities. Unrealized gains and losses on available-for-sale
securities are generally reported in accumulated other comprehensive income
(loss) until realized. Declines in value judged to be
other-than-temporary are reported in interest and other income,
net.
Trade
Accounts Receivable
Trade
accounts receivable are recorded at the invoiced amount and do not bear
interest. The allowance for doubtful accounts is our best estimate of
the amount of probable credit losses on our existing accounts
receivable. We determine the allowance based on historical write-off
experience. We review our allowance for doubtful accounts
quarterly. Account balances are charged off against the allowance
after all means of collection have been exhausted and the potential for recovery
is considered remote.
Property
and Equipment
Property
and equipment are recorded at cost. Depreciation is calculated
principally on the straight-line method based on the estimated useful lives of
individual assets or classes of assets.
Leased
property and equipment meeting capital lease criteria are capitalized at the
lower of the present value of the related lease payments or the fair value of
the leased asset at the inception of the lease. Amortization is
calculated on the straight-line method based on the lease term.
Leasehold
improvements are recorded at cost. Amortization is calculated
principally on the straight-line method over the lesser of the estimated useful
life of the leasehold improvement or lease term. Renewal periods are
included in the lease term when the renewal is determined to be reasonably
assured.
Part of
the costs related to the development or purchase of internal-use software is
capitalized and amortized over the estimated useful life of the
software. Costs that are capitalized include external direct costs of
materials and services to develop or obtain the software, and internal costs,
including compensation and employee benefits for employees directly associated
with a software development project.
Estimated
Useful Lives
|
Years
|
|
Buildings
|
16
to 25
|
|
Building
leasehold improvements
|
3
to 10
|
|
Vehicles
|
3
to 10
|
|
Capitalized
software
|
3
to 5
|
|
Other
machinery and equipment
|
3
to 10
|
|
Machinery
and equipment leasehold improvements
|
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 amortized over the lesser of the remaining life of the asset or,
if applicable, the lease term.
BHS
(discontinued operation) retained ownership of most security systems installed
at subscriber locations. Costs for those systems were capitalized and
depreciated over the estimated lives of the assets. Costs capitalized as part of
security systems included equipment and materials used in the installation
process, direct labor required to install the equipment at subscriber sites, and
other costs associated with the installation process. These other
costs included the cost of vehicles used for installation purposes and the
portion of telecommunication, facilities and administrative costs incurred
primarily at BHS’ branches that were associated with the installation
process. Direct labor and other costs represented approximately 70%
of the amounts capitalized, while equipment and materials represented
approximately 30% of amounts capitalized. In addition to regular
straight-line depreciation expense each period, BHS charged to expense the
carrying value of security systems estimated to be permanently disconnected
based on each period’s actual disconnects and historical reconnection
experience.
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. Intangible assets that are subject to amortization have,
at December 31, 2009, remaining useful lives ranging from 1 to 16 years and are
amortized based on the pattern in which the economic benefits are used or on a
straight-line basis.
Impairment
of Long-Lived Assets
Goodwill
is tested for impairment at least annually by comparing the carrying value of
each reporting unit to its estimated fair value. We base our
estimates of fair value on projected future cash flows. We completed
goodwill impairment tests during each of the last three years with no impairment
charges required.
Long-lived
assets other than goodwill 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.
Long-lived
assets held for sale are carried at the lower of carrying value or fair value
less cost to sell. Fair values are determined based on quoted market
values, discounted cash flows or internal and external appraisals, as
applicable.
Retirement
Benefit Plans
We
account for retirement benefit obligations under FASB ASC Topic 715, Compensation – Retirement
Benefits. Prior to 2007, we selected discount rates for our
U.S. plan obligations after reviewing published long-term yield information for
a small number of high-quality fixed-income securities (e.g., Moody’s Aa bond
yields) and yields for the broader range of long-term high-quality securities
with maturities in line with expected payments. We changed the method
of estimating U.S. discount rates in 2007. As of December 31, 2007,
we derived the discount rates used to measure the present value of our benefit
obligations using the cash flow matching method. Under this method,
we compared the plan’s projected payment obligations by year with the
corresponding yields on the Citigroup Pension Discount Curve and the Mercer
Yield Curve. Each year’s projected cash flows were then discounted back to their
present value at the measurement date and an overall discount rate was
determined for each curve; the average of the two discount rates was selected
and rounded to the nearest tenth of a percentage point. The effect of
the change in estimate was to increase other comprehensive income in 2007 by
$46.3 million. We revised the method of estimating discount rates for
U.S. plan obligations in 2008 to use only the Mercer Yield Curve. The
discount rates selected in 2008 for U.S. plans would have been the same under
the 2007 method. We use a similar approach to the 2008 method for
U.S. plans to select the discount rates for major non-U.S. plans. For
other non-U.S. plans, discount rates are developed based on a bond index within
the country of domicile.
We select
the expected long-term rate of return assumption for our U.S. pension plan and
retiree medical plans using advice from an investment advisor and an
actuary. The selected rate considers plan asset allocation targets,
expected overall investment manager performance and long-term historical average
compounded rates of return.
Benefit
plan experience gains and losses are recognized in other comprehensive income
(loss). Accumulated net benefit plan experience gains and losses that
exceed 10% of the greater of a plan’s benefit obligation or plan assets at the
beginning of the year are amortized into earnings from other comprehensive
income (loss) on a straight-line basis. The amortization period for
pension plans is the average remaining 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. Management periodically reviews recorded deferred tax assets
to determine if it is more-likely-than-not that they will be
realized. If management determines it is not more-likely-than-not
that a deferred tax asset will be realized, an offsetting valuation allowance is
recorded, reducing comprehensive income (loss) and the deferred tax asset in
that period.
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.
Our
accounting policy for foreign currency translation is different depending on
whether the economy in which our foreign subsidiary operates has been designated
as highly inflationary or not. Economies with a three-year cumulative
inflation rate of more than 100% are considered as highly
inflationary. At the end of 2009, we did not have any subsidiaries
operating in highly inflationary economies.
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 must use the
reporting currency (the U.S. dollar) as the functional currency.
Local-currency monetary assets and liabilities are remeasured into dollars each
balance sheet date, with remeasurement adjustments and other transaction gains
and losses recognized in earnings. Non-monetary assets and liabilities do
not fluctuate with changes in local currency exchange rates to the
dollar.
Venezuela
We have
operating subsidiaries in Venezuela. There are two currency exchange
rates which may be used to convert Venezuelan bolivar fuertes into other
currencies: an official rate and a parallel market rate. The use of
the official rate to convert cash held in bolivar fuertes into other currencies
requires the approval of the Venezuelan government’s currency control
organization. The parallel market rate may be used to obtain U.S.
dollars without the approval of the currency control
organization.
In
December 2009, we repatriated dividends generated by our Venezuelan operations
that had been unpaid over the last several years using the parallel market
exchange rate. We began translating our financial statements for our
Venezuelan operations using the parallel rate, effective December 21, 2009, the
date of our decision, since we expect to pay future dividends using the parallel
rate. This is consistent with the guidance issued by the International
Practices Task Force of the Center for Audit Quality (the “IPTF”) and U.S.
GAAP. This guidance provides that, in the absence of unusual
circumstances, the rate used for dividend remittances should be used to
translate foreign financial statements.
Venezuela
has had significant inflation in the last several years and, in December 2009,
the three-year cumulative inflation rate exceeded 100%. As a result,
beginning in 2010, we are designating Venezuela’s economy as highly
inflationary, and we intend to consolidate our Venezuelan results in 2010 using
our accounting policy for subsidiaries operating in highly inflationary
economies.
In
determining whether Venezuela is a highly inflationary economy, we previously
used the consumer price index ("CPI") which is based on the inflation rates for
the metropolitan area of Caracas, Venezuela. Beginning January 1, 2008, a
national consumer price index ("NCPI") was developed for the entire country of
Venezuela. However, because inflation data is not available to compute a
cumulative three-year inflation rate for Venezuela using only NCPI, we use a
blended NCPI and CPI rate to determine whether the three-year cumulative
inflation rate has exceeded 100%. At December 31, 2009, the blended
three-year cumulative inflation rate was approximately 100.5%.
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”), our
management has 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 used by management are
related to goodwill and other long-lived assets, pension and other retirement
benefit assets and obligations, deferred tax assets and foreign currency
translation.
Fair-value
estimates. We have various financial instruments included in
our financial statements. Financial instruments are carried in our
financial statements at either cost or fair value. We categorize how
we estimate fair value of financial instruments and our retirement plan assets
as follows:
|
Level
1: Quoted prices (unadjusted) in active markets that are
accessible at the measurement date for identical assets and
liabilities. Thefair value hierarchy gives the highest priority
to Level 1 inputs.
|
|
Level
2: Observable prices that are based on inputs not quoted on
active markets, but are corroborated by market
data.
|
|
Level
3: Unobservable inputs are used when little or no market data
is available. The fair value hierarchy gives the lowest
priority to Level 3 inputs.
|
New
Accounting Standards
Recently Adopted Accounting
Standards
We
adopted Statement of Financial Accounting Standard (“SFAS”) 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles – a
replacement of FASB Statement No. 162, effective for our quarter
ended September
30, 2009. SFAS 168 established the FASB Accounting Standards
Codification (“Codification”) as the sole source of authoritative
non-governmental accounting principles to be applied in the preparation of
financial statements in conformity with US GAAP. Although SFAS 168 does not
change US GAAP, the adoption of SFAS 168 impacted our financial statements since
all future references to authoritative accounting literature are now in
accordance with SFAS 168, except for the following standards, which will remain
authoritative until they are integrated into the Codification: SFAS 164, Not-for-Profit
Entities: Mergers and Acquisitions, SFAS 166,Accounting for Transfers of
Financial Assets, SFAS 167, Amendments to FASB Interpretation
No. 46R and SFAS 168.
The
Company adopted the accounting principles established by FASB
Interpretation (“FIN”) 48, Accounting for Uncertainty in Income
Taxes – an interpretation of SFAS 109,
which is now part of FASB Accounting Standards Codification (“ASC”) Topic
740, Income Taxes,
effective January 1, 2007. This interpretation clarifies the
accounting for uncertainty in income taxes recognized in an entity’s financial
statements in accordance with SFAS 109, Accounting for Income
Taxes. It prescribes a recognition threshold and measurement
attribute for financial statement disclosure of tax positions taken or expected
to be taken on a tax return. The adoption of this interpretation
increased retained earnings at January 1, 2007, by $7.0 million.
We
adopted the accounting principles established by FSP FAS
132(R)-1, Employers’
Disclosures about Postretirement Benefit Plan Assets, which is now part
of FASB ASC Topic 715, Compensation – Retirement
Benefits, effective for us on December 31, 2009. This guidance requires
enhanced disclosures about plan assets in an employer’s defined benefit pension
or other postretirement plans in order to provide users of financial statements
with an understanding of how investment allocation decisions are made, the major
categories of plan assets, the inputs and valuation techniques used to measure
the fair value of plan assets, and significant concentrations of risk within
plan assets.
We
adopted the accounting principles established by SFAS 141(R), Business Combinations, which
is now part of FASB ASC Topic 805, Business Combinations,
effective January 1, 2009. FASB ASC Topic 805 establishes
requirements for an acquirer to record the assets acquired, liabilities assumed,
and any related noncontrolling interests related to the acquisition of a
controlled subsidiary, measured at fair value, as of the acquisition
date. In 2008, we expensed all acquisition costs for transactions
that were expected to close in 2009. In 2009, we recognized gains
related to the acquisition of controlling interests in equity affiliates – see
note 6 to our consolidated financial statements. The adoption of this
new guidance did not otherwise have an effect on our historical financial
statements, but does affect the way we account for acquisitions after the
effective date.
We
adopted the accounting principles established by SFAS 160, Noncontrolling Interests in
Consolidated Financial Statements an Amendment of ARB No. 51, which is
now part of FASB ASC Topic 810, Consolidation, effective
January 1, 2009. FASB ASC Topic 810 establishes new accounting and
reporting standards for the noncontrolling interest, previously known as
minority interest, in a subsidiary and for the deconsolidation of a
subsidiary. This statement clarifies that a noncontrolling interest
in a subsidiary is an ownership interest in the consolidated entity that should
be reported as a separate component within equity in the consolidated financial
statements. Additionally, consolidated net income is to be reported
with separate disclosure of the amounts attributable to the parent and to the
noncontrolling interests. We retroactively restated our consolidated
balance sheets, consolidated statements of income, consolidated statement of
shareholders’ equity, consolidated statements of cash flows and consolidated
statements of comprehensive income as required by FASB ASC Topic
810. The adoption of this new guidance resulted in a $91.3 million
reclassification of noncontrolling interests from other long-term liabilities to
shareholders’ equity on the December 31, 2008, consolidated balance sheet.
Prior to the adoption of this new guidance, noncontrolling interests were
deductions from income in arriving at net income. Under FASB ASC
Topic 810, noncontrolling interests are a deduction from net income used to
arrive at net income attributable to Brink’s.
We
adopted the accounting principles established by SFAS 161, Disclosures about Derivative
Instruments and Hedging Activities an Amendment of SFAS 133, which is now
part of FASB ASC Topic 815, Derivatives and Hedging,
effective January 1, 2009. FASB ASC Topic 815 requires enhanced
disclosures about an entity's derivative and hedging activities. The
adoption of this new guidance had no impact on our financial
statements.
We
adopted the accounting principles established by SFAS 165, Subsequent Events, which is
now part of FASB ASC Topic 855, Subsequent Events, effective
for our quarter ended June 30, 2009. FASB ASC Topic 855 establishes
general standards of accounting and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued. This standard requires the disclosure of the date through which an
entity has evaluated subsequent events and the basis for selecting that
date. The adoption of this new guidance did not have a material
effect on our financial statements.
We
adopted the accounting principles established by FASB Staff
Position ("FSP") EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities,
which is now part of FASB ASC Topic 260, Earnings per Share, effective January 1,
2009. FASB ASC Topic 260 affects entities that accrue cash dividends
(whether paid or unpaid) on share-based payment awards during the award’s
service period for dividends that are nonforfeitable. The adoption of this new
guidance did not have a material effect on our financial
statements.
We
adopted the accounting principles established by FSP 157-2, Partial Deferral of the Effective
Date of SFAS 157, which is now part of FASB ASC Topic 820, Fair Value Measurements and
Disclosures, effective January 1, 2009. This guidance delayed
the effective date of FASB ASC Topic 820 for all nonrecurring fair value
measurements of nonfinancial assets and nonfinancial liabilities. The adoption
of this guidance did not have a material effect on our results of operations or
financial position.
We
adopted the accounting principles established by FSP FAS 157-4, Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly, which is now
part of FASB ASC Topic 820, Fair Value Measurements and
Disclosures, effective for our quarter ended June 30,
2009. FASB ASC Topic 820 provides guidance for estimating fair value
when the volume and level of activity for the asset or liability have
significantly decreased. FASB ASC Topic 820 also provides guidance for
identifying circumstances that indicate a transaction is not orderly and affirms
that the objective of fair value measurement in a market for an asset that is
not active is the price that would be received in an orderly (i.e., not
distressed) transaction on the measurement date under current market conditions.
If the market is determined to be not active, the entity must consider all
available evidence in determining whether an observable transaction is
orderly. The adoption of this new guidance did not have a material
effect on our results of operations or financial position.
We
adopted the accounting principles established by FSP
FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments, which is now part of FASB ASC Topic
320, Investments – Debt and
Equity Securities, effective for our
quarter ended June 30, 2009. FASB ASC Topic 320 provides guidance on
the recognition of other-than-temporary impairments of investments in debt
securities and provides new presentation and disclosure requirements for
other-than-temporary impairments of investments in debt and equity
securities. The adoption of this new guidance did not have a material
effect on our financial statements.
We
adopted the accounting principles established by FSP
FAS 107-1 and APB 28-1,
Interim Disclosures about Fair Value of Financial Instruments, which is
now part of FASB ASC Topic 825, Financial Instruments,
effective for our quarter ended June 30, 2009. FASB ASC Topic 825
requires disclosures about the fair value of financial instruments in interim
reporting periods whereas, previously, the disclosures were required only in
annual financial statements. The adoption of this new guidance
resulted in the disclosure of the fair value of our significant fixed-rate
long-term debt and our marketable securities as of our interim reporting
periods. This new guidance did not otherwise have an effect on our
financial statements.
We
adopted the accounting principles established by FSP
FAS 141(R)-1, Accounting for
Assets Acquired and Liabilities Assumed in a Business Combination that Arise
from Contingencies, which is now part of FASB ASC Topic 805, Business Combinations,
effective for our quarter ended June 30, 2009. This guidance is
effective for each of our business combinations which were completed on or after
January 1, 2009. FASB ASC Topic 805 provides that contingent assets
acquired or liabilities assumed in a business combination be recorded at fair
value if the acquisition-date fair value can be determined during the
measurement period. If the acquisition-date fair value cannot be
determined, such items would be recognized at the acquisition date if they meet
the recognition requirements of FASB ASC
Topic 450, Contingencies. In
periods after the acquisition date, items not recognized as part of the
acquisition but recognized subsequently would be reflected in that subsequent
period’s income. The adoption of this new guidance did not have a
material effect on our financial statements.
In August
2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, Measuring Liabilities at Fair
Value, which was effective for us on October 1, 2009. This ASU clarifies
the application of certain valuation techniques in circumstances in which a
quoted price in an active market for the identical liability is not available.
The adoption of this guidance did not have a material effect on our financial
statements.
In
September 2009, the FASB issued ASU 2009-12, Investments in Certain Entities That
Calculate Net Asset Value per Share (or Its Equivalent), which was
effective for our year ending December
31, 2009. ASU 2009-12 allows investors to use net asset value as a
practical expedient to estimate the fair value of certain investments that do
not have readily determinable fair values and sets forth disclosure requirements
for these investments. The adoption of this ASU helped us in applying
the enhanced disclosure requirements established by FSP FAS
132(R)-1. Otherwise, the adoption of this guidance did not have a
material effect on our financial statements.
Standards
Not Yet Adopted
In
June 2009, the FASB issued SFAS 166, Accounting for Transfers of
Financial Assets, now part of FASB ASC Topic 860, Transfers and Servicing, which will be
effective for us on January 1, 2010. SFAS 166 removes the concept of
a qualifying special-purpose entity (QSPE) from SFAS 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities, and removes the
exception from applying FASB Interpretation 46R, Consolidation of Variable Interest
Entities. This statement also clarifies the requirements for isolation
and limitations on portions of financial assets that are eligible for sale
accounting. We do not expect a material effect from the adoption of
this standard on our financial statements.
In
June 2009, the FASB issued SFAS 167, Amendments to FASB Interpretation
No. 46R, now part of FASB ASC Topic 810, Consolidation, which will be effective
for us on January 1, 2010. SFAS 167 requires an analysis to determine whether a
variable interest gives the entity a controlling financial interest in a
variable interest entity. This statement requires an ongoing reassessment and
eliminates the quantitative approach previously required for determining whether
an entity is the primary beneficiary. We do not expect a material effect from
the adoption of this standard on our financial statements.
In
October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue
Arrangements, which will be effective for us on January 1, 2011. ASU
2009-13 establishes a selling price hierarchy for determining the selling price
of a deliverable in a multiple-deliverable arrangement. In addition, the revised
guidance requires additional disclosures about the methods and assumptions used
to evaluate multiple-deliverable arrangements and to identify the significant
deliverables within those arrangements. We are currently evaluating the
potential impact of the amended guidance on our financial
statements.
In
October 2009, the FASB issued ASU 2009-14, Certain Revenue Arrangements that
Include Software Elements, which will be effective for us on January 1,
2011. ASU 2009-14 amends ASC Topic 985 to exclude from its scope
tangible products that contain both software and non-software components that
function together to deliver a product’s essential functionality. We
are currently evaluating the potential impact of the amended guidance on our
financial statements.
Note
2 – Segment Information
We
identify our operating segments based on how resources are allocated and
operating decisions are made. Management evaluates performance and
allocates resources based on operating profit or loss, excluding corporate
allocations. We have four geographic operating segments, and under
the aggregation criteria set forth in FASB ASC 280, Segment Reporting, we have
two reportable segments: International and North
America.
The
primary services of the reportable segments include:
·
|
Cash-in-transit
(“CIT”) armored car transportation
|
·
|
Automated
teller machine (“ATM”) replenishment and
servicing
|
·
|
Global
Services – arranging secure long-distance
transportation of valuables
|
·
|
Cash
Logistics – supply chain management of cash; from point-of-sale through
transport, vaulting and bank
deposit
|
·
|
Payment
Services – consumers pay utility and other bills at payment
locations
|
·
|
Guarding
services, including airport
security
|
Brink’s
operates in more than 50 countries.
|
|
Revenues
|
|
|
Operating
Profit (Loss)
|
|
|
|
Years
Ended December 31,
|
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business
Segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
$ |
2,240.9 |
|
|
|
2,231.3 |
|
|
|
1,848.3 |
|
|
$ |
156.8 |
|
|
|
215.0 |
|
|
|
152.9 |
|
North
America
|
|
|
894.1 |
|
|
|
932.2 |
|
|
|
886.3 |
|
|
|
56.6 |
|
|
|
56.9 |
|
|
|
70.4 |
|
Business segments
|
|
|
3,135.0 |
|
|
|
3,163.5 |
|
|
|
2,734.6 |
|
|
|
213.4 |
|
|
|
271.9 |
|
|
|
223.3 |
|
Non-segment
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(46.6 |
) |
|
|
(43.4 |
) |
|
|
(62.3 |
) |
|
|
$ |
3,135.0 |
|
|
|
3,163.5 |
|
|
|
2,734.6 |
|
|
$ |
166.8 |
|
|
|
228.5 |
|
|
|
161.0 |
|
|
|
Capital
Expenditures
|
|
|
Depreciation
and Amortization
|
|
|
|
Years
Ended December 31,
|
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business
Segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
$ |
103.1 |
|
|
|
112.7 |
|
|
|
94.8 |
|
|
$ |
88.5 |
|
|
|
85.7 |
|
|
|
75.3 |
|
North
America
|
|
|
67.5 |
|
|
|
52.6 |
|
|
|
47.0 |
|
|
|
36.6 |
|
|
|
31.0 |
|
|
|
29.7 |
|
Property and
equipment
|
|
|
170.6 |
|
|
|
165.3 |
|
|
|
141.8 |
|
|
|
125.1 |
|
|
|
116.7 |
|
|
|
105.0 |
|
Amortization
of intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
9.0 |
|
|
|
4.8 |
|
|
|
4.4 |
|
North America
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1.0 |
|
|
|
0.8 |
|
|
|
0.6 |
|
|
|
$ |
170.6 |
|
|
|
165.3 |
|
|
|
141.8 |
|
|
$ |
135.1 |
|
|
|
122.3 |
|
|
|
110.0 |
|
|
|
Assets
|
|
|
|
December
31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Business
Segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
$ |
1,265.5 |
|
|
|
1,289.1 |
|
|
|
1,187.8 |
|
North
America
|
|
|
335.4 |
|
|
|
341.9 |
|
|
|
329.5 |
|
Business Segments
|
|
|
1,600.9 |
|
|
|
1,631.0 |
|
|
|
1,517.3 |
|
Non-segment
|
|
|
278.9 |
|
|
|
184.8 |
|
|
|
160.7 |
|
Discontinued
operations
|
|
|
- |
|
|
|
- |
|
|
|
716.3 |
|
|
|
$ |
1,879.8 |
|
|
|
1,815.8 |
|
|
|
2,394.3 |
|
|
|
Long-Lived
Assets (a)
|
|
|
Revenues
|
|
|
|
December
31,
|
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
(b)
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-U.S.:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
France
|
|
$ |
167.2 |
|
|
|
167.0 |
|
|
|
180.8 |
|
|
$ |
615.2 |
|
|
|
697.7 |
|
|
|
628.8 |
|
Venezuela
|
|
|
33.2 |
|
|
|
75.0 |
|
|
|
61.3 |
|
|
|
376.1 |
|
|
|
350.9 |
|
|
|
224.9 |
|
Brazil
|
|
|
96.5 |
|
|
|
29.0 |
|
|
|
32.7 |
|
|
|
257.6 |
|
|
|
193.5 |
|
|
|
160.8 |
|
Other
|
|
|
372.8 |
|
|
|
280.2 |
|
|
|
296.2 |
|
|
|
1,154.5 |
|
|
|
1,158.8 |
|
|
|
978.4 |
|
Subtotal
|
|
|
669.7 |
|
|
|
551.2 |
|
|
|
571.0 |
|
|
|
2,403.4 |
|
|
|
2,400.9 |
|
|
|
1,992.9 |
|
United
States
|
|
|
162.9 |
|
|
|
143.5 |
|
|
|
797.4 |
|
|
|
731.6 |
|
|
|
762.6 |
|
|
|
741.7 |
|
|
|
$ |
832.6 |
|
|
|
694.7 |
|
|
|
1,368.4 |
|
|
$ |
3,135.0 |
|
|
|
3,163.5 |
|
|
|
2,734.6 |
|
(a)
|
Long-lived
assets include property and equipment, net; goodwill; other intangible
assets, net; and deferred charges.
|
(b)
|
Includes
$689.2 million in 2007 related to BHS, principally in the United
States.
|
Revenues
are recorded in the country where service is initiated or performed. No single
customer represents more than 10% of total revenue.
|
|
December
31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe,
Middle East and Africa
|
|
$ |
300.9 |
|
|
|
365.0 |
|
|
|
349.1 |
|
Latin
America
|
|
|
261.1 |
|
|
|
258.5 |
|
|
|
173.9 |
|
Asia
Pacific
|
|
|
87.8 |
|
|
|
26.6 |
|
|
|
33.6 |
|
Other
|
|
|
34.8 |
|
|
|
30.1 |
|
|
|
48.7 |
|
|
|
$ |
684.6 |
|
|
|
680.2 |
|
|
|
605.3 |
|
|
|
December
31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Investments
in unconsolidated equity affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
$ |
10.2 |
|
|
|
13.1 |
|
|
|
12.6 |
|
Other
|
|
|
- |
|
|
|
- |
|
|
|
4.7 |
|
|
|
$ |
10.2 |
|
|
|
13.1 |
|
|
|
17.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
of earnings of unconsolidated equity affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
$ |
4.5 |
|
|
|
4.7 |
|
|
|
3.0 |
|
Other
|
|
|
- |
|
|
|
0.3 |
|
|
|
0.3 |
|
|
|
$ |
4.5 |
|
|
|
5.0 |
|
|
|
3.3 |
|
Undistributed
earnings of equity affiliates included in consolidated retained earnings
approximated $5.4 million at December 31, 2009, $8.1 million at December 31,
2008, and $8.1 million at December 31, 2007.
Note
3 – Retirement Benefits
Defined-benefit
Pension Plans
Summary
We have
various defined-benefit pension plans covering eligible current and former
employees. Benefits under most plans are based on salary and years of
service. There are limits to the amount of benefits which can be paid
to participants from a U.S. qualified pension plan. We maintain a
nonqualified U.S. plan to pay benefits for those eligible current and former
employees in the U.S. whose benefits exceed the regulatory limits.
|
Components
of Net Periodic Pension Cost
|
(In
millions)
|
|
U.S.
Plans
|
|
|
Non-U.S.
Plans
|
|
|
Total
|
|
Years
Ended December 31,
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$ |
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
6.1 |
|
|
|
9.7 |
|
|
|
9.2 |
|
|
$ |
6.1 |
|
|
|
9.7 |
|
|
|
9.2 |
|
Interest
cost on PBO
|
|
|
47.7 |
|
|
|
45.9 |
|
|
|
44.2 |
|
|
|
12.2 |
|
|
|
12.8 |
|
|
|
10.3 |
|
|
|
59.9 |
|
|
|
58.7 |
|
|
|
54.5 |
|
Return
on assets - expected
|
|
|
(61.2 |
) |
|
|
(58.9 |
) |
|
|
(53.5 |
) |
|
|
(9.0 |
) |
|
|
(11.6 |
) |
|
|
(10.0 |
) |
|
|
(70.2 |
) |
|
|
(70.5 |
) |
|
|
(63.5 |
) |
Amortization
of losses
|
|
|
9.1 |
|
|
|
1.6 |
|
|
|
13.3 |
|
|
|
3.5 |
|
|
|
3.7 |
|
|
|
3.1 |
|
|
|
12.6 |
|
|
|
5.3 |
|
|
|
16.4 |
|
Settlement
loss
|
|
|
0.3 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.3 |
|
|
|
- |
|
|
|
- |
|
Net
pension cost (credit)
|
|
$ |
(4.1 |
) |
|
|
(11.4 |
) |
|
|
4.0 |
|
|
$ |
12.8 |
|
|
|
14.6 |
|
|
|
12.6 |
|
|
$ |
8.7 |
|
|
|
3.2 |
|
|
|
16.6 |
|
|
Obligations
and Funded Status
|
Changes
in the projected benefit obligation (“PBO”) and plan assets for our pension
plans are as follows:
(In
millions)
|
|
U.S.
Plans
|
|
|
Non-U.S.
Plans
|
|
|
Total
|
|
Years
Ended December 31,
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBO
at beginning of year
|
|
$ |
769.3 |
|
|
|
730.7 |
|
|
|
196.3 |
|
|
|
232.9 |
|
|
|
965.6 |
|
|
|
963.6 |
|
Service
cost
|
|
|
- |
|
|
|
- |
|
|
|
6.1 |
|
|
|
9.7 |
|
|
|
6.1 |
|
|
|
9.7 |
|
Interest
cost
|
|
|
47.7 |
|
|
|
45.9 |
|
|
|
12.2 |
|
|
|
12.8 |
|
|
|
59.9 |
|
|
|
58.7 |
|
Plan
participant contributions
|
|
|
- |
|
|
|
- |
|
|
|
2.8 |
|
|
|
2.9 |
|
|
|
2.8 |
|
|
|
2.9 |
|
Plan
settlements
|
|
|
(3.5 |
) |
|
|
- |
|
|
|
- |
|
|
|
(0.6 |
) |
|
|
(3.5 |
) |
|
|
(0.6 |
) |
Benefits
paid
|
|
|
(36.1 |
) |
|
|
(35.0 |
) |
|
|
(8.9 |
) |
|
|
(8.0 |
) |
|
|
(45.0 |
) |
|
|
(43.0 |
) |
Actuarial
(gains) losses
|
|
|
33.1 |
|
|
|
27.7 |
|
|
|
(0.6 |
) |
|
|
(26.6 |
) |
|
|
32.5 |
|
|
|
1.1 |
|
Foreign
currency exchange effects
|
|
|
- |
|
|
|
- |
|
|
|
15.5 |
|
|
|
(26.8 |
) |
|
|
15.5 |
|
|
|
(26.8 |
) |
PBO
at end of year
|
|
$ |
810.5 |
|
|
|
769.3 |
|
|
|
223.4 |
|
|
|
196.3 |
|
|
|
1,033.9 |
|
|
|
965.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value of plan assets at beginning of year
|
|
$ |
440.1 |
|
|
|
708.8 |
|
|
|
147.9 |
|
|
|
195.9 |
|
|
|
588.0 |
|
|
|
904.7 |
|
Return
on assets – actual
|
|
|
103.5 |
|
|
|
(235.6 |
) |
|
|
19.2 |
|
|
|
(33.3 |
) |
|
|
122.7 |
|
|
|
(268.9 |
) |
Plan
participant contributions
|
|
|
- |
|
|
|
- |
|
|
|
2.8 |
|
|
|
2.9 |
|
|
|
2.8 |
|
|
|
2.9 |
|
Employer
contributions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary
U.S. Plan (a)
|
|
|
150.0 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
150.0 |
|
|
|
- |
|
Other
plans
|
|
|
4.2 |
|
|
|
1.9 |
|
|
|
14.8 |
|
|
|
13.8 |
|
|
|
19.0 |
|
|
|
15.7 |
|
Plan
settlements
|
|
|
(3.5 |
) |
|
|
- |
|
|
|
- |
|
|
|
(0.6 |
) |
|
|
(3.5 |
) |
|
|
(0.6 |
) |
Benefits
paid
|
|
|
(36.1 |
) |
|
|
(35.0 |
) |
|
|
(8.9 |
) |
|
|
(8.0 |
) |
|
|
(45.0 |
) |
|
|
(43.0 |
) |
Foreign
currency effects
|
|
|
- |
|
|
|
- |
|
|
|
13.1 |
|
|
|
(22.8 |
) |
|
|
13.1 |
|
|
|
(22.8 |
) |
Fair
value of plan assets at end of year
|
|
$ |
658.2 |
|
|
|
440.1 |
|
|
|
188.9 |
|
|
|
147.9 |
|
|
|
847.1 |
|
|
|
588.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded
status
|
|
$ |
(152.3 |
) |
|
|
(329.2 |
) |
|
|
(34.5 |
) |
|
|
(48.4 |
) |
|
|
(186.8 |
) |
|
|
(377.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included
in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent asset
|
|
$ |
- |
|
|
|
- |
|
|
|
(8.2 |
) |
|
|
- |
|
|
|
(8.2 |
) |
|
|
- |
|
Current liability, included in
accrued liabilities
|
|
|
1.7 |
|
|
|
3.6 |
|
|
|
1.2 |
|
|
|
0.6 |
|
|
|
2.9 |
|
|
|
4.2 |
|
Noncurrent
liability
|
|
|
150.6 |
|
|
|
325.6 |
|
|
|
41.5 |
|
|
|
47.8 |
|
|
|
192.1 |
|
|
|
373.4 |
|
Net
pension liability
|
|
$ |
152.3 |
|
|
|
329.2 |
|
|
|
34.5 |
|
|
|
48.4 |
|
|
|
186.8 |
|
|
|
377.6 |
|
(a)
|
Comprised
of $92.4 million of cash and $57.6 million of shares of Brink’s common
stock.
|
Other
Changes in Plan Assets and Benefit Recognized in Other Comprehensive
Income
(In
millions)
|
|
U.S.
Plans
|
|
|
Non-U.S.
Plans
|
|
|
Total
|
|
Years
Ended December 31,
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
plan experience loss recognized in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accumulated other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of
year
|
|
$ |
(385.7 |
) |
|
|
(65.1 |
) |
|
|
(30.2 |
) |
|
|
(13.9 |
) |
|
|
(415.9 |
) |
|
|
(79.0 |
) |
Net experience gains (losses)
arising during the year
|
|
|
9.2 |
|
|
|
(322.2 |
) |
|
|
10.8 |
|
|
|
(18.3 |
) |
|
|
20.0 |
|
|
|
(340.5 |
) |
Reclassification adjustment
for amortization of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
experience loss included in
net income
|
|
|
9.1 |
|
|
|
1.6 |
|
|
|
2.0 |
|
|
|
2.0 |
|
|
|
11.1 |
|
|
|
3.6 |
|
End of year
|
|
$ |
(367.4 |
) |
|
|
(385.7 |
) |
|
|
(17.4 |
) |
|
|
(30.2 |
) |
|
|
(384.8 |
) |
|
|
(415.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
plan prior service cost recognized in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accumulated other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of
year
|
|
$ |
- |
|
|
|
- |
|
|
|
(10.4 |
) |
|
|
(12.1 |
) |
|
|
(10.4 |
) |
|
|
(12.1 |
) |
Reclassification adjustment
for amortization of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
prior service cost included in
net income
|
|
|
- |
|
|
|
- |
|
|
|
1.5 |
|
|
|
1.7 |
|
|
|
1.5 |
|
|
|
1.7 |
|
End of year
|
|
$ |
- |
|
|
|
- |
|
|
|
(8.9 |
) |
|
|
(10.4 |
) |
|
|
(8.9 |
) |
|
|
(10.4 |
) |
Approximately
$21.7 million of experience loss and $1.6 million of prior service cost are
expected to be amortized from accumulated other comprehensive income (loss) into
net periodic pension cost during 2010.
The net
experience gains in 2009 were primarily due to the actual return on assets being
higher than expected partially offset by the lower discount rate of the U.S.
plans. The net experience losses in 2008 were primarily due to the
return on assets being lower than expected.
|
Information
Comparing Plan Assets to Plan
Obligations
|
Information
comparing plan assets to plan obligations as of December 31, 2009 and 2008 are
aggregated below. The 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.
|
|
ABO
Greater
|
|
|
Plan
Assets
|
|
|
|
|
(In
millions)
|
|
Than
Plan Assets
|
|
|
Greater
Than ABO
|
|
|
Total
|
|
December
31,
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBO
|
|
$ |
867.5 |
|
|
|
962.8 |
|
|
|
166.4 |
|
|
|
2.8 |
|
|
|
1,033.9 |
|
|
|
965.6 |
|
ABO
|
|
|
862.5 |
|
|
|
948.3 |
|
|
|
156.2 |
|
|
|
2.5 |
|
|
|
1,018.7 |
|
|
|
950.8 |
|
Fair
value of plan assets
|
|
|
678.9 |
|
|
|
585.1 |
|
|
|
168.2 |
|
|
|
2.9 |
|
|
|
847.1 |
|
|
|
588.0 |
|
The
weighted-average assumptions used in determining the net pension cost and
benefit obligations for our pension plans were as follows:
|
|
U.S.
Plans
|
|
|
Non-U.S.
Plans
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount
rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension cost
|
|
|
6.6 |
% |
|
|
6.4 |
% |
|
|
5.8 |
% |
|
|
6.2 |
% |
|
|
5.5 |
% |
|
|
4.8 |
% |
Benefit obligation at year
end
|
|
|
5.9 |
% |
|
|
6.2 |
% |
|
|
6.4 |
% |
|
|
6.2 |
% |
|
|
6.2 |
% |
|
|
5.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected
return on assets – Pension cost
|
|
|
8.8 |
% |
|
|
8.8 |
% |
|
|
8.8 |
% |
|
|
5.8 |
% |
|
|
5.9 |
% |
|
|
5.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
rate of increase in salaries (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension cost
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
4.0 |
% |
|
|
3.0 |
% |
|
|
3.0 |
% |
Benefit obligation at year
end
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
3.1 |
% |
|
|
4.0 |
% |
|
|
3.0 |
% |
(a)
|
Salary
scale assumptions are determined through historical experience and vary by
age and industry. The U.S. plan benefits are
frozen. Pension benefits will not increase due to future salary
increases.
|
The
RP-2000 Combined Healthy Blue Collar mortality table and the RP-2000 Combined
Healthy White Collar mortality table were used to estimate the expected lives of
participants in the U.S. pension plans. Expected lives of
participants in non-U.S. pension plans were estimated using mortality tables in
the country of operation.
Cash
Flows
Estimated
Contributions from the Company into Plan Assets
Our
policy is to fund at least the minimum actuarially determined amounts required
by applicable regulations. Based on December 31, 2009, data,
assumptions and funding regulations, we are not required to make a contribution
to the primary U.S. plan for the fiscal year 2010.
On August
20, 2009, we made a voluntary $150 million contribution to our primary U.S.
retirement plan to improve the funded status of the plan. The
contribution was comprised of $92.4 million of cash and 2,260,738 newly
issued shares of our common stock valued for purposes of the contribution at
$25.48 per share, or $57.6 million in the aggregate. Because we
considered the contribution to be a significant event for the plan, we
remeasured our projected benefit obligation and plan assets related to our
primary U.S. pension plan as of July 1, 2009. As part of the
remeasurement we changed the discount rate from 6.2% to 6.8%.
At the
time we made the voluntary $150 million contribution we changed the method of
valuing assets for funding purposes from the fair-market-value basis to the
asset-smoothing basis. We elected the asset-smoothing basis to reduce
the volatility of future required contributions to the plan.
We expect
to contribute approximately $1.6 million to our nonqualified U.S. pension plan
and $14.0 million to our non-U.S. pension plans in 2010.
Estimated
Future Benefit Payments from Plan Assets to Beneficiaries
Our
projected benefit payments at December 31, 2009, for each of the next five years
and the aggregate five years thereafter are as follows:
(In
millions)
|
|
U.S.
Plans
|
|
|
Non-U.S.
Plans
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
$ |
40.3 |
|
|
|
7.5 |
|
|
|
47.8 |
|
2011
|
|
|
42.0 |
|
|
|
8.0 |
|
|
|
50.0 |
|
2012
|
|
|
43.6 |
|
|
|
8.6 |
|
|
|
52.2 |
|
2013
|
|
|
46.2 |
|
|
|
9.6 |
|
|
|
55.8 |
|
2014
|
|
|
47.0 |
|
|
|
9.7 |
|
|
|
56.7 |
|
2015
through 2019
|
|
|
265.4 |
|
|
|
66.6 |
|
|
|
332.0 |
|
Total
|
|
$ |
484.5 |
|
|
|
110.0 |
|
|
|
594.5 |
|
Multi-employer
Pension Plans
We
contribute to multi-employer pension plans in a few of our non-U.S.
subsidiaries. Multi-employer pension expense for continuing
operations was $2.1 million in 2009, $2.1 million in 2008 and $2.0 million in
2007.
Savings
Plans
We
sponsor various defined contribution plans to help eligible employees provide
for retirement. We match 125% of up to 5% of our employees’ eligible
contributions to our U.S. 401(k) plan. Participants were formerly
allowed to invest in Brink’s common stock, but in January 2008, all Brink’s
stock investments were reallocated to other investments. Our matching
contribution expense is as follows:
(In
millions)
|
|
|
|
Years
Ended December 31,
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
401(k)
|
|
$ |
13.4 |
|
|
|
11.7 |
|
|
|
11.8 |
|
Other
Plans
|
|
|
3.4 |
|
|
|
1.8 |
|
|
|
1.1 |
|
Total
|
|
$ |
16.8 |
|
|
|
13.5 |
|
|
|
12.9 |
|
Retirement
Benefits Other than Pensions
Summary
We
provide retirement health care benefits for eligible current and former U.S. and
Canadian employees, including former employees of our former U.S. coal
operation. Retirement benefits related to our former coal operation
include medical benefits provided by the Pittston Coal Group Companies Employee
Benefit Plan for UMWA Represented Employees (the “UMWA plans”) as well as costs
related to Black Lung obligations.
|
Components
of Net Periodic Postretirement Cost
|
The
components of net periodic postretirement cost related to retirement benefits
other than pensions were as follows:
(In
millions)
|
|
UMWA
plans
|
|
|
Black
lung and other plans
|
|
|
Total
|
|
Years
Ended December 31,
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$ |
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
- |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
$ |
- |
|
|
|
0.1 |
|
|
|
0.2 |
|
Interest
cost on APBO
|
|
|
25.8 |
|
|
|
31.3 |
|
|
|
31.2 |
|
|
|
2.8 |
|
|
|
3.0 |
|
|
|
3.6 |
|
|
|
28.6 |
|
|
|
34.3 |
|
|
|
34.8 |
|
Return
on assets – expected
|
|
|
(22.6 |
) |
|
|
(38.6 |
) |
|
|
(38.6 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(22.6 |
) |
|
|
(38.6 |
) |
|
|
(38.6 |
) |
Amortization
of losses
|
|
|
16.7 |
|
|
|
7.9 |
|
|
|
11.4 |
|
|
|
0.1 |
|
|
|
0.3 |
|
|
|
0.6 |
|
|
|
16.8 |
|
|
|
8.2 |
|
|
|
12.0 |
|
Curtailment
gain (a)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2.0 |
) |
|
|
- |
|
|
|
- |
|
|
|
(2.0 |
) |
|
|
- |
|
Net
periodic postretirement cost
|
|
$ |
19.9 |
|
|
|
0.6 |
|
|
|
4.0 |
|
|
$ |
2.9 |
|
|
|
1.4 |
|
|
|
4.4 |
|
|
$ |
22.8 |
|
|
|
2.0 |
|
|
|
8.4 |
|
(a) In
January 2008, Brink’s froze the Canadian retirement benefit plan.
|
Obligations
and Funded Status
|
Changes
in the APBO and plan assets related to retirement health care benefits are as
follows:
(In
millions)
|
|
UMWA
plans
|
|
|
Black
lung and other plans
|
|
|
Total
|
|
Years
Ended December 31,
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APBO
at beginning of year
|
|
$ |
483.6 |
|
|
|
509.3 |
|
|
|
48.6 |
|
|
|
61.3 |
|
|
|
532.2 |
|
|
|
570.6 |
|
Service
cost
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.1 |
|
|
|
- |
|
|
|
0.1 |
|
Interest
cost
|
|
|
25.8 |
|
|
|
31.3 |
|
|
|
2.8 |
|
|
|
3.1 |
|
|
|
28.6 |
|
|
|
34.4 |
|
Plan
amendments
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3.1 |
) |
|
|
- |
|
|
|
(3.1 |
) |
Benefits
paid
|
|
|
(39.6 |
) |
|
|
(37.6 |
) |
|
|
(7.6 |
) |
|
|
(7.1 |
) |
|
|
(47.2 |
) |
|
|
(44.7 |
) |
Medicare
subsidy received
|
|
|
3.2 |
|
|
|
3.2 |
|
|
|
- |
|
|
|
- |
|
|
|
3.2 |
|
|
|
3.2 |
|
Actuarial
(gain) loss, net
|
|
|
(7.5 |
) |
|
|
(22.6 |
) |
|
|
4.5 |
|
|
|
(5.0 |
) |
|
|
(3.0 |
) |
|
|
(27.6 |
) |
Foreign
currency exchange effects and other
|
|
|
- |
|
|
|
- |
|
|
|
(1.2 |
) |
|
|
(0.7 |
) |
|
|
(1.2 |
) |
|
|
(0.7 |
) |
APBO
at end of year
|
|
$ |
465.5 |
|
|
|
483.6 |
|
|
|
47.1 |
|
|
|
48.6 |
|
|
|
512.6 |
|
|
|
532.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value of plan assets at beginning of year
|
|
$ |
276.1 |
|
|
|
460.3 |
|
|
|
- |
|
|
|
- |
|
|
|
276.1 |
|
|
|
460.3 |
|
Employer
contributions
|
|
|
- |
|
|
|
- |
|
|
|
7.6 |
|
|
|
7.1 |
|
|
|
7.6 |
|
|
|
7.1 |
|
Return
on assets – actual
|
|
|
67.8 |
|
|
|
(149.7 |
) |
|
|
- |
|
|
|
- |
|
|
|
67.8 |
|
|
|
(149.7 |
) |
Benefits
paid
|
|
|
(39.1 |
) |
|
|
(37.7 |
) |
|
|
(7.6 |
) |
|
|
(7.1 |
) |
|
|
(46.7 |
) |
|
|
(44.8 |
) |
Medicare
subsidy received
|
|
|
3.2 |
|
|
|
3.2 |
|
|
|
- |
|
|
|
- |
|
|
|
3.2 |
|
|
|
3.2 |
|
Fair
value of plan assets at end of year
|
|
$ |
308.0 |
|
|
|
276.1 |
|
|
|
- |
|
|
|
- |
|
|
|
308.0 |
|
|
|
276.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded
status
|
|
$ |
(157.5 |
) |
|
|
(207.5 |
) |
|
|
(47.1 |
) |
|
|
(48.6 |
) |
|
|
(204.6 |
) |
|
|
(256.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included
in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current, included in accrued
liabilities
|
|
$ |
- |
|
|
|
- |
|
|
|
6.3 |
|
|
|
6.2 |
|
|
|
6.3 |
|
|
|
6.2 |
|
Noncurrent
|
|
|
157.5 |
|
|
|
207.5 |
|
|
|
40.8 |
|
|
|
42.4 |
|
|
|
198.3 |
|
|
|
249.9 |
|
Retirement
benefits other than pension liability
|
|
$ |
157.5 |
|
|
|
207.5 |
|
|
|
47.1 |
|
|
|
48.6 |
|
|
|
204.6 |
|
|
|
256.1 |
|
Other
Changes in Plan Assets and Benefit Recognized in Other Comprehensive
Income
Changes
in accumulated other comprehensive income (loss) of our retirement benefit plans
other than pensions are as follows:
(In
millions)
|
|
UMWA
plans
|
|
|
Black
lung and other plans
|
|
|
Total
|
|
Years
Ended December 31,
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
plan experience gain (loss) recognized in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accumulated other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of
year
|
|
$ |
(321.0 |
) |
|
|
(163.2 |
) |
|
$ |
(5.2 |
) |
|
|
(10.5 |
) |
|
$ |
(326.2 |
) |
|
|
(173.7 |
) |
Net experience gains (losses)
arising during the year
|
|
|
52.7 |
|
|
|
(165.7 |
) |
|
|
(4.5 |
) |
|
|
5.0 |
|
|
|
48.2 |
|
|
|
(160.7 |
) |
Reclassification adjustment
for amortization of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
experience losses included in
net income
|
|
|
16.7 |
|
|
|
7.9 |
|
|
|
0.4 |
|
|
|
0.3 |
|
|
|
17.1 |
|
|
|
8.2 |
|
End of year
|
|
$ |
(251.6 |
) |
|
|
(321.0 |
) |
|
$ |
(9.3 |
) |
|
|
(5.2 |
) |
|
$ |
(260.9 |
) |
|
|
(326.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
plan prior service credit recognized in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accumulated other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of
year
|
|
$ |
- |
|
|
|
- |
|
|
$ |
2.9 |
|
|
|
1.8 |
|
|
$ |
2.9 |
|
|
|
1.8 |
|
Prior service credit from plan
amendments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
during the
year
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3.1 |
|
|
|
- |
|
|
|
3.1 |
|
Reclassification adjustment
for amortization or curtailment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
recognition of prior service
credit included in net income
|
|
|
- |
|
|
|
- |
|
|
|
(0.3 |
) |
|
|
(2.0 |
) |
|
|
(0.3 |
) |
|
|
(2.0 |
) |
End of year
|
|
$ |
- |
|
|
|
- |
|
|
$ |
2.6 |
|
|
|
2.9 |
|
|
$ |
2.6 |
|
|
|
2.9 |
|
We
estimate that $16.3 million of experience loss and $0.3 million of prior service
credit will be amortized from accumulated other comprehensive income (loss) into
net periodic postretirement cost during 2010.
We
recognized net experience gains in 2009 associated with the UMWA obligations
primarily related to the return on assets being higher than expected and
renegotiating a contract at a discount for the prescription drug
coverage. The gains were partially offset by losses primarily related
to extending the time it takes to reach the ultimate health care cost rate of 5%
from four to six years.
We
recognized net experience losses in 2008 associated with the UMWA obligations
primarily related to the return on assets being lower than
expected.
The
accumulated postretirement benefit obligation (“APBO”) for each of the plans was
determined using the unit credit method and an assumed discount rate as
follows:
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
discount rate:
|
|
|
|
|
|
|
|
|
|
Postretirement
cost:
|
|
|
|
|
|
|
|
|
|
UMWA
plans
|
|
|
6.2 |
% |
|
|
6.4 |
% |
|
|
5.8 |
% |
Black
lung
|
|
|
6.3 |
% |
|
|
6.1 |
% |
|
|
5.8 |
% |
Weighted-average
|
|
|
6.2 |
% |
|
|
6.4 |
% |
|
|
5.8 |
% |
Benefit
obligation at year end:
|
|
|
|
|
|
|
|
|
|
|
|
|
UMWA
plans
|
|
|
5.9 |
% |
|
|
6.2 |
% |
|
|
6.4 |
% |
Black
lung
|
|
|
5.4 |
% |
|
|
6.3 |
% |
|
|
6.1 |
% |
Weighted-average
|
|
|
5.9 |
% |
|
|
6.2 |
% |
|
|
6.4 |
% |
Expected
return on assets
|
|
|
8.8 |
% |
|
|
8.8 |
% |
|
|
8.8 |
% |
The
RP-2000 Employee, Annuitant, Blue Collar and Combined Healthy Blue Collar
mortality tables are primarily used to estimate expected lives of
participants.
Health
Care Cost Trend Rates
For UMWA
plans, the assumed health care cost trend rate used to compute the 2009 APBO is
7.5% for 2010, declining ratably to 5% in 2016 and thereafter (in 2008: 7.6% for
2009 declining ratably to 5% in 2013 and thereafter). For the black
lung obligation, the assumed health care cost trend rate used to compute the
2009 and 2008 APBO was 8.0%. Other plans in the U.S. provide for
fixed-dollar value coverage for eligible participants and, accordingly, are not
adjusted for inflation.
The table
below shows the estimated effects of a one percentage-point change in the
assumed health care cost trend rates for each future year.
|
|
Effect
of Change in Assumed Health Care Trend Rates
|
|
(In
millions)
|
|
Increase
1%
|
|
|
Decrease
1%
|
|
|
|
|
|
|
|
|
Higher
(lower):
|
|
|
|
|
|
|
Service and interest cost in
2009
|
|
$ |
2.4 |
|
|
|
(2.1 |
) |
APBO at December 31,
2009
|
|
|
46.8 |
|
|
|
(40.1 |
) |
The Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (the “Medicare Act”) provides
for a prescription drug benefit under Medicare as well as a federal subsidy to
sponsors of retiree health care benefit plans that provide a benefit that is at
least actuarially equivalent to Medicare prescription drug
benefits. Because of the broadness of coverage provided under our
plan, we believe that the plan benefits are at least actuarially equivalent to
the Medicare benefits. The estimated effect of the legislation has
been recorded as a reduction to the APBO, as permitted by FSP 106-2, Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003, included in FASB ASC Topic 715, Compensation – Retirement
Benefits. The estimated value of the projected federal subsidy
assumes no changes in participation rates and assumes that the subsidy is
received in the year after claims are paid. The estimated reduction
in per capita claim costs for participants over 65 years old was
8%.
Our net
periodic postretirement costs were approximately $4.3 million lower in 2009,
$5.5 million lower in 2008 and $5.7 million lower in 2007 due to the Medicare
Act as a result of lower interest cost and amortization of
losses. The estimated net present value of the subsidy, reflected as
a reduction to the APBO, was approximately $47 million at December 31, 2009, and
$54 million at December 31, 2008.
Cash
Flows
Estimated
Contributions from the Company to Plan Assets
Based on
the funded status and assumptions at December 31, 2009, we expect the Company to
contribute cash to the plans to pay 2010 beneficiary payments for black lung and
other plans. We do not expect to contribute cash to our UMWA plans
since these plans have sufficient amounts held in trust to pay for beneficiary
payments for 2010. Our UMWA plans are not covered by ERISA or other
funding laws or regulations that require these plans to meet funding
ratios.
Estimated Future Benefit Payments
from Plan Assets to Beneficiaries
Our
projected benefit payments at December 31, 2009, for each of the next five years
and the aggregate five years thereafter are as follows:
|
|
Before
Medicare Subsidy
|
|
|
|
|
|
Medicare
|
|
|
Net
Projected
|
|
(In
millions)
|
|
UMWA
plans
|
|
|
Black
lung and other plans
|
|
|
Subtotal
|
|
|
Subsidy
|
|
|
Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
$ |
39.2 |
|
|
|
6.3 |
|
|
|
45.5 |
|
|
|
(2.8 |
) |
|
|
42.7 |
|
2011
|
|
|
40.2 |
|
|
|
6.0 |
|
|
|
46.2 |
|
|
|
(3.0 |
) |
|
|
43.2 |
|
2012
|
|
|
40.7 |
|
|
|
5.6 |
|
|
|
46.3 |
|
|
|
(3.1 |
) |
|
|
43.2 |
|
2013
|
|
|
41.2 |
|
|
|
5.3 |
|
|
|
46.5 |
|
|
|
(3.2 |
) |
|
|
43.3 |
|
2014
|
|
|
40.9 |
|
|
|
4.9 |
|
|
|
45.8 |
|
|
|
(3.3 |
) |
|
|
42.5 |
|
2015
through 2019
|
|
|
195.7 |
|
|
|
19.7 |
|
|
|
215.4 |
|
|
|
(17.2 |
) |
|
|
198.2 |
|
Total
|
|
$ |
397.9 |
|
|
|
47.8 |
|
|
|
445.7 |
|
|
|
(32.6 |
) |
|
|
413.1 |
|
Retirement
Plan Assets
U.S.
Plans
Assets of
our U.S. plans are invested with an objective of positioning the plans to be
fully funded by maximizing their total return, taking into consideration the
liabilities of the plan, and minimizing the risks that could create the need for
excessive contributions. Plan assets are invested primarily using
actively managed accounts with asset allocation targets listed in the tables
below. Our policy does not permit the purchase of The Brink’s Company
common stock if immediately after any such purchase the aggregate fair market
value of the plan assets invested in The Brink’s Company common stock exceeds
10% of the aggregate fair market value of the assets of the plan, except as
permitted by an exemption under ERISA. The plans rebalance their
assets on a monthly basis if actual allocations of assets are outside
predetermined ranges. Among other factors, the performance of asset
groups and investment managers will affect the long-term rate of
return.
All of
the investments of our U.S. retirement plans can be redeemed daily, except for
the hedge fund of funds, which can be redeemed quarterly, subject to any
restrictions imposed by the underlying hedge funds.
The fair
values of the investments of our U.S. pension plans have been estimated using
the net asset value per share of the investments.
Below are
the fair value measurements of the investments in our U.S. retirement plans as
of December 31, 2009:
|
|
Quoted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prices
in
|
|
|
Significant
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
|
|
|
Active
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
|
%
|
|
|
%
|
|
|
|
Markets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
Total
Fair
|
|
|
Actual
|
|
|
Target
|
|
(In
millions, except percentages)
|
|
(Level
1)
|
|
|
(Level
2)
|
|
|
(Level
3)
|
|
|
Value
|
|
|
Allocation
|
|
|
Allocation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Pension Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
cash equivalents and receivables
|
|
$ |
6.7 |
|
|
|
- |
|
|
|
- |
|
|
|
6.7 |
|
|
|
1 |
|
|
|
- |
|
Equity
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Brink’s Company common stock (a)
|
|
|
33.2 |
|
|
|
- |
|
|
|
- |
|
|
|
33.2 |
|
|
|
5 |
|
|
|
- |
|
U.S.
large-cap (b)
|
|
|
189.7 |
|
|
|
- |
|
|
|
- |
|
|
|
189.7 |
|
|
|
29 |
|
|
|
30 |
|
U.S.
small/mid-cap (b)
|
|
|
51.6 |
|
|
|
- |
|
|
|
- |
|
|
|
51.6 |
|
|
|
8 |
|
|
|
8 |
|
International
(b)
|
|
|
75.5 |
|
|
|
- |
|
|
|
- |
|
|
|
75.5 |
|
|
|
11 |
|
|
|
12 |
|
Fixed-income
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long
duration (c)
|
|
|
137.8 |
|
|
|
- |
|
|
|
- |
|
|
|
137.8 |
|
|
|
21 |
|
|
|
23 |
|
High
yield (d)
|
|
|
51.5 |
|
|
|
- |
|
|
|
- |
|
|
|
51.5 |
|
|
|
8 |
|
|
|
8 |
|
Emerging
markets (e)
|
|
|
24.9 |
|
|
|
- |
|
|
|
- |
|
|
|
24.9 |
|
|
|
4 |
|
|
|
4 |
|
Other
types of investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge
fund of funds (f)
|
|
|
- |
|
|
|
- |
|
|
|
87.3 |
|
|
|
87.3 |
|
|
|
13 |
|
|
|
15 |
|
Total
|
|
$ |
570.9 |
|
|
|
- |
|
|
|
87.3 |
|
|
|
658.2 |
|
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UMWA
Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
large-cap (b)
|
|
$ |
115.7 |
|
|
|
- |
|
|
|
- |
|
|
|
115.7 |
|
|
|
37 |
|
|
|
37 |
|
U.S.
small/mid-cap (b)
|
|
|
29.9 |
|
|
|
- |
|
|
|
- |
|
|
|
29.9 |
|
|
|
10 |
|
|
|
9 |
|
International (b)
|
|
|
48.6 |
|
|
|
- |
|
|
|
- |
|
|
|
48.6 |
|
|
|
16 |
|
|
|
14 |
|
Fixed-income
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
fixed income (g)
|
|
|
34.7 |
|
|
|
- |
|
|
|
- |
|
|
|
34.7 |
|
|
|
11 |
|
|
|
13 |
|
High
yield (d)
|
|
|
26.7 |
|
|
|
- |
|
|
|
- |
|
|
|
26.7 |
|
|
|
9 |
|
|
|
8 |
|
Emerging
markets (e)
|
|
|
12.4 |
|
|
|
- |
|
|
|
- |
|
|
|
12.4 |
|
|
|
4 |
|
|
|
4 |
|
Other
types of investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge
fund of funds (f)
|
|
|
- |
|
|
|
- |
|
|
|
40.0 |
|
|
|
40.0 |
|
|
|
13 |
|
|
|
15 |
|
Total
|
|
$ |
268.0 |
|
|
|
- |
|
|
|
40.0 |
|
|
|
308.0 |
|
|
|
100 |
|
|
|
100 |
|
|
(a)
|
An
independent fiduciary makes all investment decisions regarding these
shares and, as a result, the investment is excluded from our target asset
allocation.
|
|
(b)
|
These
categories include actively managed mutual funds that track various
indices such as the S&P 500 Index, the Russell 2500 Index and the MSCI
All Country World Ex-U.S. Index.
|
|
(c)
|
This
category represents an actively managed mutual fund that seeks to
duplicate the risk and return characteristics of a long-term fixed-income
securities portfolio with an approximate duration of 10 to 13 years by
using a long duration bond portfolio, including interest-rate swap
agreements and Treasury futures contracts, for the purpose of managing the
overall duration of this fund.
|
|
(d)
|
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.
|
(e)
|
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.
|
|
(f)
|
This
category represents an actively managed mutual fund that invests in
different hedge-fund investments, with various strategies. The
fund holds approximately 40 separate hedge-fund
investments. Strategies included (1) long-short equity, (2)
event-driven and distressed-debt, (3) global macro, (4) credit hedging,
(5) multi-strategy, and (6) fixed-income arbitrage. Its
investment objective is to seek to achieve an attractive risk-adjusted
return with moderate volatility and moderate directional market exposure
over a full market cycle.
|
|
(g)
|
This
category represents an actively managed mutual fund that invests in funds
with investments in mortgage backed securities, corporate bonds and
investment grade securities. The category seeks to provide
returns and a risk profile of the Barclays Capital U.S. Aggregate Bond
Index.
|
Non-U.S.
Plans
The
investments of our non-U.S. plans are managed by us or insurance companies
depending on regulations or market practice of the country where the assets are
invested. Each plan’s investment manager makes investment decisions
within the guidelines set by us or local regulations. For plan assets
that we manage, we evaluate performance by comparing the actual rate of return
to the return on other similar assets. Asset allocation strategies
for our non-U.S. plans utilize a diversified portfolio of 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 our
non-U.S. pension plans are invested primarily using actively managed
accounts. The weighted-average asset allocation targets are listed in
the table below. Most of the
investments
of our non-U.S. retirement plans can be redeemed at least
monthly. The fair values of the investments of our non-U.S. pension
plans have been estimated using the net asset value per share of the
investments.
Below are
the fair value measurements of investments in our non-U.S. retirement plans as
of December 31, 2009:
|
|
Quoted
|
|
|
Significant
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
|
|
|
Prices
in
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
|
%
|
|
|
%
|
|
|
|
Active
Markets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
Total
Fair
|
|
|
Actual
|
|
|
Target
|
|
(In
millions, except percentages)
|
|
(Level
1)
|
|
|
(Level
2)
|
|
|
(Level
3)
|
|
|
Value
|
|
|
Allocation
|
|
|
Allocation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-U.S.
Pension Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
0.5 |
|
|
|
- |
|
|
|
- |
|
|
|
0.5 |
|
|
|
- |
|
|
|
- |
|
Equity
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
equity funds (a)
|
|
|
- |
|
|
|
22.5 |
|
|
|
- |
|
|
|
22.5 |
|
|
|
|
|
|
|
|
|
Canadian
equity funds (a)
|
|
|
- |
|
|
|
22.5 |
|
|
|
- |
|
|
|
22.5 |
|
|
|
|
|
|
|
|
|
European
equity funds (a)
|
|
|
- |
|
|
|
14.9 |
|
|
|
- |
|
|
|
14.9 |
|
|
|
|
|
|
|
|
|
Asia-pacific
equity funds (a)
|
|
|
- |
|
|
|
2.5 |
|
|
|
- |
|
|
|
2.5 |
|
|
|
|
|
|
|
|
|
Emerging
markets(a)
|
|
|
- |
|
|
|
4.5 |
|
|
|
- |
|
|
|
4.5 |
|
|
|
|
|
|
|
|
|
Other
non-U.S. equity funds (a)
|
|
|
- |
|
|
|
9.2 |
|
|
|
- |
|
|
|
9.2 |
|
|
|
|
|
|
|
|
|
Total
equity securities
|
|
|
- |
|
|
|
76.1 |
|
|
|
- |
|
|
|
76.1 |
|
|
|
40 |
|
|
|
47 |
|
Fixed-income
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global
credit (b)
|
|
|
- |
|
|
|
22.7 |
|
|
|
- |
|
|
|
22.7 |
|
|
|
|
|
|
|
|
|
Canadian
fixed-income funds (c)
|
|
|
- |
|
|
|
14.2 |
|
|
|
- |
|
|
|
14.2 |
|
|
|
|
|
|
|
|
|
European
fixed-income funds (d)
|
|
|
- |
|
|
|
3.4 |
|
|
|
- |
|
|
|
3.4 |
|
|
|
|
|
|
|
|
|
High-yield (e)
|
|
|
- |
|
|
|
7.6 |
|
|
|
- |
|
|
|
7.6 |
|
|
|
|
|
|
|
|
|
Emerging
markets (f)
|
|
|
- |
|
|
|
4.2 |
|
|
|
- |
|
|
|
4.2 |
|
|
|
|
|
|
|
|
|
Long-duration
(g)
|
|
|
- |
|
|
|
48.4 |
|
|
|
- |
|
|
|
48.4 |
|
|
|
|
|
|
|
|
|
Total
fixed-income securities
|
|
|
- |
|
|
|
100.5 |
|
|
|
- |
|
|
|
100.5 |
|
|
|
53 |
|
|
|
53 |
|
Other
types of investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
securities (h)
|
|
|
- |
|
|
|
6.3 |
|
|
|
- |
|
|
|
6.3 |
|
|
|
|
|
|
|
|
|
Other
|
|
|
- |
|
|
|
4.0 |
|
|
|
1.5 |
|
|
|
5.5 |
|
|
|
|
|
|
|
|
|
Total
other types of investments
|
|
|
- |
|
|
|
10.3 |
|
|
|
1.5 |
|
|
|
11.8 |
|
|
|
7 |
|
|
|
- |
|
Total
|
|
$ |
0.5 |
|
|
|
186.9 |
|
|
|
1.5 |
|
|
|
188.9 |
|
|
|
100 |
|
|
|
100 |
|
(a)
|
These
categories are comprised of equity index actively managed funds that track
various indices such as S&P 500 Composite Total Return Index, Russell
1000 and 2000 Indices, MSCI Europe Ex-UK Index, S&P/TSX Total Return
Index, MSCI EAFE Index and others.
|
|
(b)
|
This
category represents investment-grade corporate bonds of U.S. and European
issuers from diverse industries.
|
|
(c)
|
This
category seeks to achieve a return that exceeds the Scotia Capital Markets
Universe Bond Index.
|
|
(d)
|
This
category is designed to generate income and exhibit volatility similar to
that of the Sterling denominated bond market. This category
primarily invests in investment grade or better
securities.
|
|
(e)
|
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.
|
|
(f)
|
This
category consists of a diversified portfolio of listed and unlisted debt
securities issued by governments, financial institutions, companies or
other entities domiciled in emerging market
countries.
|
|
(g)
|
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.
|
|
(h)
|
This
category invests in convertible securities of global issuers from diverse
industries.
|
Changes
in the plan assets measured at fair value using significant unobservable inputs
(Level 3) for our retirement plans are as follows:
|
|
Year
Ended
|
|
|
|
December
31, 2009
|
|
(In
millions)
|
|
U.S.
Pension Plans
|
|
|
UMWA
Plans
|
|
|
Non-U.S.
Pension Plans
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
|
$ |
- |
|
|
|
- |
|
|
|
3.3 |
|
Actual
return on plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Relating
to assets still held at the reporting date
|
|
|
3.5 |
|
|
|
1.8 |
|
|
|
(1.8 |
) |
Relating
to assets sold during the period
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Purchases,
sales and settlements
|
|
|
83.8 |
|
|
|
38.2 |
|
|
|
- |
|
Transfers
in and/or out of Level 3
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Ending
balance
|
|
$ |
87.3 |
|
|
|
40.0 |
|
|
|
1.5 |
|
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$ |
37.0 |
|
|
|
25.8 |
|
|
|
25.7 |
|
Foreign
|
|
|
129.3 |
|
|
|
198.8 |
|
|
|
135.0 |
|
|
|
$ |
166.3 |
|
|
|
224.6 |
|
|
|
160.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax expense (benefit) from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
federal
|
|
$ |
(29.1 |
) |
|
|
2.2 |
|
|
|
(4.3 |
) |
State
|
|
|
(0.8 |
) |
|
|
1.6 |
|
|
|
1.4 |
|
Foreign
|
|
|
59.8 |
|
|
|
69.2 |
|
|
|
52.5 |
|
|
|
|
29.9 |
|
|
|
73.0 |
|
|
|
49.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
federal
|
|
|
(72.3 |
) |
|
|
3.9 |
|
|
|
14.4 |
|
State
|
|
|
(8.1 |
) |
|
|
4.6 |
|
|
|
(0.9 |
) |
Foreign
|
|
|
(10.6 |
) |
|
|
(28.5 |
) |
|
|
(3.6 |
) |
|
|
|
(91.0 |
) |
|
|
(20.0 |
) |
|
|
9.9 |
|
|
|
$ |
(61.1 |
) |
|
|
53.0 |
|
|
|
59.5 |
|
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
provision (benefit) for income taxes allocable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
(61.1 |
) |
|
|
53.0 |
|
|
|
59.5 |
|
Discontinued
operations
|
|
|
2.3 |
|
|
|
45.8 |
|
|
|
41.5 |
|
Other
comprehensive income (loss)
|
|
|
10.6 |
|
|
|
(33.3 |
) |
|
|
49.7 |
|
Shareholders’
equity
|
|
|
(0.1 |
) |
|
|
(13.3 |
) |
|
|
(12.9 |
) |
|
|
$ |
(48.3 |
) |
|
|
52.2 |
|
|
|
137.8 |
|
Rate
Reconciliation
The
following table reconciles the difference between the actual tax rate on
continuing operations and the statutory U.S. federal income tax rate of
35%.
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
federal tax rate
|
|
|
35.0 |
% |
|
|
35.0 |
% |
|
|
35.0 |
% |
Increases
(reductions) in taxes due to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
income taxes
|
|
|
(3.5 |
) |
|
|
(5.8 |
) |
|
|
(1.4 |
) |
Taxes on undistributed earnings of
foreign affiliates
|
|
|
(1.1 |
) |
|
|
1.5 |
|
|
|
0.9 |
|
State income taxes,
net
|
|
|
0.2 |
|
|
|
(0.5 |
) |
|
|
0.2 |
|
Medicare subsidy for retirement
plans
|
|
|
(0.9 |
) |
|
|
(0.8 |
) |
|
|
(1.2 |
) |
Adjustments to valuation
allowances
|
|
|
(68.2 |
) |
|
|
(6.1 |
) |
|
|
4.0 |
|
Nondeductible
repatriation charge
|
|
|
4.7 |
|
|
|
- |
|
|
|
- |
|
Nontaxable
India gain
|
|
|
(2.9 |
) |
|
|
- |
|
|
|
- |
|
Other
|
|
|
- |
|
|
|
0.3 |
|
|
|
(0.5 |
) |
Actual
income tax rate on continuing operations
|
|
|
(36.7 |
)% |
|
|
23.6 |
% |
|
|
37.0 |
% |
Components
of Deferred Tax Assets and Liabilities
|
|
December
31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Deferred
tax assets
|
|
|
|
|
|
|
Retirement
benefits other than pensions
|
|
$ |
81.9 |
|
|
|
106.9 |
|
Pension
liabilities
|
|
|
70.2 |
|
|
|
143.4 |
|
Workers’
compensation and other claims
|
|
|
37.0 |
|
|
|
35.9 |
|
Property
and equipment, net
|
|
|
1.4 |
|
|
|
17.7 |
|
Other
assets and liabilities
|
|
|
70.0 |
|
|
|
68.8 |
|
Net
operating loss carryforwards
|
|
|
47.3 |
|
|
|
35.8 |
|
Alternative
minimum and other tax credits
|
|
|
28.5 |
|
|
|
2.2 |
|
Subtotal
|
|
|
336.3 |
|
|
|
410.7 |
|
Valuation
allowances
|
|
|
(45.4 |
) |
|
|
(183.6 |
) |
Total
deferred tax assets
|
|
|
290.9 |
|
|
|
227.1 |
|
|
|
|
|
|
|
|
|
|
Deferred
tax liabilities
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
6.0 |
|
|
|
- |
|
Other
assets and miscellaneous
|
|
|
24.4 |
|
|
|
16.4 |
|
Deferred
tax liabilities
|
|
|
30.4 |
|
|
|
16.4 |
|
Net
deferred tax asset
|
|
$ |
260.5 |
|
|
|
210.7 |
|
|
|
|
|
|
|
|
|
|
Included
in:
|
|
|
|
|
|
|
|
|
Current assets
|
|
$ |
38.5 |
|
|
|
31.1 |
|
Noncurrent assets
|
|
|
254.1 |
|
|
|
202.6 |
|
Current liabilities, included in
accrued liabilities
|
|
|
(1.6 |
) |
|
|
(1.5 |
) |
Noncurrent
liabilities
|
|
|
(30.5 |
) |
|
|
(21.5 |
) |
Net
deferred tax asset
|
|
$ |
260.5 |
|
|
|
210.7 |
|
Valuation
Allowances
Valuation
allowances relate to deferred tax assets in various federal, state and non-U.S.
jurisdictions. Based on our historical and expected future taxable
earnings, and a consideration of available tax-planning strategies, management
believes 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,
2009.
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Valuation
allowances:
|
|
|
|
|
|
|
|
|
|
Beginning of
year
|
|
$ |
183.6 |
|
|
|
56.0 |
|
|
|
54.3 |
|
Expiring tax
credits
|
|
|
(0.7 |
) |
|
|
(0.7 |
) |
|
|
(0.9 |
) |
Acquisitions and
dispositions
|
|
|
0.3 |
|
|
|
(0.1 |
) |
|
|
(0.8 |
) |
Changes in judgment about deferred
tax assets (a)
|
|
|
(119.8 |
) |
|
|
(11.0 |
) |
|
|
2.7 |
|
Other changes in deferred tax
assets, charged to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations
|
|
|
7.1 |
|
|
|
(2.2 |
) |
|
|
(1.1 |
) |
Income from discontinued
operations
|
|
|
1.7 |
|
|
|
- |
|
|
|
- |
|
Other comprehensive income
(loss) (b)
|
|
|
(28.3 |
) |
|
|
148.2 |
|
|
|
(3.7 |
) |
Foreign currency exchange
effects
|
|
|
1.5 |
|
|
|
(6.6 |
) |
|
|
5.5 |
|
End of year
|
|
$ |
45.4 |
|
|
|
183.6 |
|
|
|
56.0 |
|
(a)
|
Changes
in judgment about valuation allowances are based on a recognition
threshold of “more-likely-than-not.”Amounts are based on beginning-of-year
balances of deferred tax assets that could potentially be realized in
future years. Amounts are recognized in income from
continuing operations. In 2009, includes $117.8 million related
to U.S federal and state income
taxes.
|
(b)
|
In
2008, includes $145.5 million related to U.S. retirement plans’ net
experience losses incurred in 2008 that were not deemed to be more likely
than not of being realized. In 2009, includes a $25.4 million
reversal related to net experience gains of U.S. retirement plans
recognized in 2009.
|
Undistributed
Foreign Earnings
As of
December 31, 2009, we have not recorded U.S. federal deferred income taxes on
approximately $403 million of undistributed earnings of foreign subsidiaries and
equity affiliates. It is expected that these earnings will be
permanently reinvested in operations outside the U.S. It is not
practical to compute the estimated deferred tax liability on these
earnings.
Net
Operating Losses
The gross
amount of the net operating loss carryforwards as of December 31, 2009, was
$260.0 million. The tax benefit of net operating loss carryforwards,
before valuation allowances, as of December 31, 2009, was $47.3 million, and
expires as follows:
(In
millions)
|
|
|
Federal
|
|
|
State
|
|
|
Foreign
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
of expiration:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010-2014 |
|
|
$ |
- |
|
|
|
0.7 |
|
|
|
4.4 |
|
|
|
5.1 |
|
|
2015-2019 |
|
|
|
- |
|
|
|
0.5 |
|
|
|
0.7 |
|
|
|
1.2 |
|
2020 and
thereafter
|
|
|
|
- |
|
|
|
7.9 |
|
|
|
- |
|
|
|
7.9 |
|
Unlimited
|
|
|
|
- |
|
|
|
- |
|
|
|
33.1 |
|
|
|
33.1 |
|
|
|
|
|
$ |
- |
|
|
|
9.1 |
|
|
|
38.2 |
|
|
|
47.3 |
|
Uncertain
Tax Positions
A
reconciliation of the beginning and ending amount of unrecognized tax benefits
is as follows:
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Uncertain
tax positions:
|
|
|
|
|
|
|
|
|
|
Beginning of
year
|
|
$ |
19.3 |
|
|
|
25.5 |
|
|
|
17.3 |
|
Increases related to prior-year
tax positions
|
|
|
1.0 |
|
|
|
0.1 |
|
|
|
0.8 |
|
Decreases related to prior-year
tax positions
|
|
|
(1.0 |
) |
|
|
(0.6 |
) |
|
|
(1.6 |
) |
Increases related to
current-year tax positions
|
|
|
1.3 |
|
|
|
2.6 |
|
|
|
10.5 |
|
Settlements
|
|
|
(0.4 |
) |
|
|
(1.3 |
) |
|
|
(0.2 |
) |
Effect of the expiration of
statutes of limitation
|
|
|
(1.2 |
) |
|
|
(2.0 |
) |
|
|
(1.3 |
) |
Effect of BHS spin
off
|
|
|
- |
|
|
|
(5.0 |
) |
|
|
- |
|
End of year
|
|
$ |
19.0 |
|
|
|
19.3 |
|
|
|
25.5 |
|
Included
in the balance of unrecognized tax benefits at December 31, 2009, are potential
benefits of approximately $15.4 million that, if recognized, will reduce the
effective tax rate on income from continuing operations. Also
included in the balance of unrecognized tax benefits at December 31, 2009, are
benefits of approximately $1.4 million that, if recognized, will reduce the
effective tax rate on income from discontinued operations.
We
recognize accrued interest and penalties related to unrecognized tax benefits in
income tax expense. Interest and penalties included in income tax
expense amounted to $0.9 million in both 2009 and 2008 and $1.0 million in
2007. We had accrued penalties and interest of $2.8 million at
December 31, 2009, and $2.2 million at December 31,
2008.
We file
income tax returns in the U.S. federal, and various state and foreign
jurisdictions. With a few exceptions, as of December 31, 2009, 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 2006. However, it is
reasonably possible that unrecognized tax benefits for previously amended tax
returns in the amount of $6.4 million will be recognized by the end of
2010. Additionally, due to statute of limitations expirations and
audit settlements, it is reasonably possible that approximately $1.6 million of
currently remaining unrecognized tax positions, each of which are individually
insignificant, may be recognized by the end of 2010.
Note
5 – Property and Equipment
The
following table presents our property and equipment that is classified as held
and used:
|
|
December
31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Land
|
|
$ |
32.4 |
|
|
|
33.4 |
|
Buildings
|
|
|
178.9 |
|
|
|
193.5 |
|
Leasehold
improvements
|
|
|
181.8 |
|
|
|
168.9 |
|
Vehicles
|
|
|
297.2 |
|
|
|
263.4 |
|
Capitalized
software (a)
|
|
|
109.0 |
|
|
|
105.5 |
|
Other
machinery and equipment
|
|
|
535.0 |
|
|
|
491.2 |
|
|
|
|
1,334.3 |
|
|
|
1,255.9 |
|
Accumulated
depreciation and amortization
|
|
|
(784.8 |
) |
|
|
(721.9 |
) |
Property
and equipment, net
|
|
$ |
549.5 |
|
|
|
534.0 |
|
(a)
Amortization of capitalized software costs included in continuing operations was
$13.6 million in 2009, $14.2 million in 2008 and $14.1 million in
2007.
We
acquired security operations in various countries over the last three
years. We accounted for the acquisitions as business combinations
using the acquisition method. Under the acquisition method of
accounting, assets acquired and liabilities assumed from these operations are
recorded at fair value on the date of acquisition. The consolidated
statements of income include the results of operations for each acquired entity
from the date of acquisition.
Sebival
Brazilian
CIT and payment processing business
On
January 8, 2009, we acquired 100% of the capital stock and voting interests in
Sebival-Seguranca Bancaria
Industrial e de Valores Ltda. and Setal Servicos Especializados,
Tecnicos e Auxiliares Ltda. (“Sebival”) for approximately $47.6 million
in cash. Both of the businesses which comprise Sebival were controlled by the
same owner and the acquisition expands our operations into the midwestern region
of Brazil. Acquisition-related costs were $0.8 million and were
included in selling, general and administrative expenses in our consolidated
statement of income for the year ended December 31, 2008.
The
estimated fair values for the assets purchased and liabilities assumed as of the
date of the acquisition is in the following table. The determination of
estimated fair value required management to make significant estimates and
assumptions.
|
|
Estimated
Fair
|
|
|
|
Value
at
|
|
(In
millions)
|
|
January
8, 2009
|
|
|
|
|
|
Accounts
receivable
|
|
$ |
6.3 |
|
Other
current assets
|
|
|
4.9 |
|
Property
and equipment, net
|
|
|
5.3 |
|
Identifiable
intangible assets
|
|
|
19.2 |
|
Goodwill
(a)
|
|
|
24.4 |
|
Other
noncurrent assets
|
|
|
1.1 |
|
Current
liabilities
|
|
|
(11.1 |
) |
Noncurrent
liabilities
|
|
|
(2.5 |
) |
Total
net assets acquired
|
|
$ |
47.6 |
|
(a)
|
Consists
of intangible assets that do not qualify for separate recognition,
combined with synergies expected from integrating Sebival’s operations
into our existing Brazilian operations. All of the goodwill has
been assigned to the Latin America reporting unit and is expected to be
deductible for tax purposes.
|
Brink’s
Arya
Indian
CIT and Global Services business
On
September 1, 2009, we acquired additional shares of Brink’s Arya (“Arya”)
increasing our ownership in Arya from 40% to 78%. Arya is a cash handling and
secure logistics company based in Mumbai, India, and this acquisition expands
our presence in one of the largest cash services markets in Asia. The
consideration paid for the additional 38% interest was approximately $22.2
million. We recognized a gain of $13.9 million on the conversion from the equity
method of accounting to consolidation. The gain represents the difference
between the fair value and the book value of our previously held 40% investment
as of the acquisition date and was included in other operating income of
non-segment income (expense).
In
connection with the acquisition of 38% of Arya’s shares, we also agreed to
purchase the remaining 22% of the shares we do not currently hold for
approximately $12.8 million. This purchase is subject to the satisfaction of
certain conditions which are expected to be met by September 1,
2011. We accounted for Arya as 100% owned and included the fixed
purchase price in noncurrent liabilities.
We have
provisionally estimated fair values for the assets purchased and liabilities
assumed as of the date of the acquisition. 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 valuation work required to allocate the purchase price, as a
result, the allocation of the purchase price may change in the
future.
|
|
Estimated
Fair
|
|
|
|
Value
at
|
|
(In
millions)
|
|
September
1, 2009
|
|
|
|
|
|
Total
purchase consideration:
|
|
|
|
Cash
paid for 38% of shares
|
|
$ |
22.2 |
|
Fair
value of previously held 40% noncontrolling interest
|
|
|
20.0 |
|
Liability
to purchase remaining 22% of shares
|
|
|
12.8 |
|
Fair
value of purchase consideration
|
|
$ |
55.0 |
|
|
|
|
|
|
Accounts
receivable
|
|
$ |
3.2 |
|
Other
current assets
|
|
|
10.1 |
|
Property
and equipment, net
|
|
|
2.5 |
|
Identifiable
intangible assets
|
|
|
26.6 |
|
Goodwill
(a)
|
|
|
23.9 |
|
Current
liabilities
|
|
|
(2.0 |
) |
Noncurrent
liabilities
|
|
|
(9.3 |
) |
Total
net assets acquired
|
|
$ |
55.0 |
|
(a)
|
Consists
of intangible assets that do not qualify for separate recognition along
with expected benefits from combining Arya into Brink’s
operations. All of the goodwill has been assigned to the
Asia-Pacific reporting unit and is not expected to be deductible for tax
purposes.
|
Actual
results of Sebival and Arya included in our consolidated financial statements
from the dates of acquisition as well as pro forma revenue and earnings are as
follows:
(In
millions)
|
|
Revenue
|
|
|
Net
income attributable to Brink’s
|
|
|
|
|
|
|
|
|
Actual
results for the year ended December 31, 2009 (a)
|
|
|
|
|
|
|
Sebival
|
|
$ |
74.4 |
|
|
|
8.0 |
|
Arya
|
|
|
8.0 |
|
|
|
- |
|
Pro
forma results of The Brink’s Company (b)
|
|
|
|
|
|
|
|
|
Year ended December 31,
2009
|
|
$ |
3,147.3 |
|
|
|
186.8 |
|
Year ended December 31,
2008
|
|
|
3,257.8 |
|
|
|
188.0 |
|
(a)
|
Actual
results of Sebival and Arya included in our 2009 consolidated results of
operations from the dates of
acquisition.
|
(b)
|
Pro
forma results of The Brink’s Company, assuming the Sebival and Arya
acquisitions occurred on January 1, 2008. Pro forma net income
attributable to Brink’s does not include a gain on acquiring a controlling
interest in Arya.
|
Other
acquisitions
In the
first quarter of 2009, we acquired a controlling interest in a Panama armored
transportation operation, which was previously 49% owned. We
recognized a gain of $0.5 million related to the step-up in basis of our
previous ownership in this company and a gain of $0.5 million related to the
bargain purchase of the remaining 51% interest. The total
pretax gain resulting from this transaction of $1.0 million was recognized in
our consolidated statements of income in other operating income (expense) of our
International segment.
In the
first quarter of 2009, we also acquired 80% ownership of a secure logistics
company based in Moscow, Russia. The relatively small acquisition increases our
presence in a region that has long-term growth potential.
On
September 4, 2009, we acquired a majority stake in ICD Limited (“ICD”), a
premium provider of commercial security services in the Asia-Pacific
region. ICD designs, installs, maintains and manages high-quality
commercial security systems. With principal operations in China, ICD
also has offices in Hong Kong, India, Singapore and Australia. ICD
employs approximately 200 people and had 2008 revenue of $12
million.
Note
7 – Goodwill and Other Intangible Assets
Goodwill
Goodwill
resulted from acquiring businesses. The changes in the carrying
amount of goodwill for the years ended December 31, 2009 and 2008 are as
follows:
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Goodwill:
|
|
|
|
|
|
|
Beginning of
year
|
|
$ |
139.6 |
|
|
|
141.3 |
|
Acquisitions (see note
6)
|
|
|
58.2 |
|
|
|
8.1 |
|
Adjustments (a)
|
|
|
(0.2 |
) |
|
|
1.8 |
|
Foreign currency exchange
effects
|
|
|
16.1 |
|
|
|
(11.6 |
) |
End of year
|
|
$ |
213.7 |
|
|
|
139.6 |
|
(a)
|
Includes
purchase accounting adjustment occurring in the year following the
acquisition and adjustments to valuation allowances for deferred tax
assets.
|
Other
Intangible Assets
|
|
December
31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Finite-lived
intangible assets
|
|
$ |
98.6 |
|
|
|
39.2 |
|
Accumulated
amortization
|
|
|
(29.2 |
) |
|
|
(18.1 |
) |
Intangible
assets, net
|
|
$ |
69.4 |
|
|
|
21.1 |
|
As
discussed in note 6, we made several acquisitions in 2009, as a result of which
our intangible assets significantly increased.
Our other
intangible assets are included in other assets on the balance sheet (see note 8)
and consist primarily of customer lists, customer relationships, covenants not
to compete, trademarks and other identifiable intangibles.
Based on
identified intangible assets recorded as of December 31, 2009, and assuming that
the underlying assets will not be impaired in the future, our estimated
aggregate amortization expense for each of the five succeeding years is as
follows:
(In
millions)
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
expense
|
|
$ |
9.9 |
|
|
|
10.1 |
|
|
|
9.0 |
|
|
|
5.3 |
|
|
|
3.8 |
|
|
|
December
31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Intangible
assets, net (see note 7)
|
|
$ |
69.4 |
|
|
|
21.1 |
|
Investment
in unconsolidated entities:
|
|
|
|
|
|
|
|
|
Cost method
|
|
|
23.4 |
|
|
|
23.4 |
|
Equity method
|
|
|
10.2 |
|
|
|
13.1 |
|
Marketable
securities (a)
|
|
|
22.7 |
|
|
|
20.1 |
|
Other
|
|
|
46.7 |
|
|
|
29.5 |
|
Other
assets
|
|
$ |
172.4 |
|
|
|
107.2 |
|
(a)
|
We
recorded an other-than-temporary impairment of $7.1 million on our
marketable securities in 2008, primarily due to the length of time and
severity of the decrease in fair value below
cost.
|
Note
9 – Fair Value of Financial Instruments
Investments
in Available-for-sale Securities
We have
available-for-sale securities that are carried at fair value in the financial
statements. For all of these investments, fair value was estimated
based on quoted prices (Level 1).
|
|
|
|
|
Gross
Unrealized
|
|
|
Gross
Unrealized
|
|
|
|
|
(In
millions)
|
|
Cost
(a)
|
|
|
Gains
|
|
|
Losses
(b)
|
|
|
Fair
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual
funds
|
|
$ |
15.0 |
|
|
|
2.6 |
|
|
|
- |
|
|
|
17.6 |
|
Non-U.S.
debt securities
|
|
|
3.7 |
|
|
|
- |
|
|
|
(0.6 |
) |
|
|
3.1 |
|
Equity
securities
|
|
|
0.2 |
|
|
|
1.8 |
|
|
|
- |
|
|
|
2.0 |
|
Marketable
securities
|
|
$ |
18.9 |
|
|
|
4.4 |
|
|
|
(0.6 |
) |
|
|
22.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual
funds
|
|
$ |
19.2 |
|
|
|
- |
|
|
|
- |
|
|
|
19.2 |
|
Equity
securities
|
|
|
- |
|
|
|
0.9 |
|
|
|
- |
|
|
|
0.9 |
|
Marketable
securities
|
|
$ |
19.2 |
|
|
|
0.9 |
|
|
|
- |
|
|
|
20.1 |
|
(a)
|
Cost
adjusted for impairment on mutual funds in
2008.
|
(b)
|
There
were no marketable securities in an unrealized loss position longer than a
year.
|
Fixed-Rate
Debt
Fair
value of our obligation related to the fixed-rate Dominion Terminal Associates
(“DTA”) bonds at December 31, 2009, is based on quoted prices. At
December 31, 2008, the fair value of these bonds was estimated by discounting
the future cash flows using rates for similar debt at the valuation
date.
The fair
value and carrying value of our DTA bonds are as follows:
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
(In
millions)
|
|
Fair
Value
|
|
|
Carrying
Value
|
|
|
Fair
Value
|
|
|
Carrying
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DTA
bonds
|
|
$ |
42.7 |
|
|
|
43.2 |
|
|
|
44.5 |
|
|
|
43.2 |
|
Other
Financial Instruments
Other
financial instruments not measured at fair value on a recurring basis include
cash and cash equivalents, short-term fixed rate deposits, accounts receivable,
floating rate debt, accounts payable and accrued liabilities. The
financial statement carrying amounts of these items approximate the fair value
due to their short-term nature.
Note
10 – Accrued Liabilities
|
|
December
31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Payroll
and other employee liabilities
|
|
$ |
135.0 |
|
|
|
141.0 |
|
Taxes,
except income taxes
|
|
|
81.7 |
|
|
|
83.7 |
|
Workers’
compensation and other claims
|
|
|
25.4 |
|
|
|
23.2 |
|
Retirement
benefits (see note 3)
|
|
|
9.2 |
|
|
|
10.4 |
|
Other
|
|
|
113.0 |
|
|
|
102.2 |
|
Accrued
liabilities
|
|
$ |
364.3 |
|
|
|
360.5 |
|
Note
11 – Other Liabilities
|
|
December
31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Workers’
compensation and other claims
|
|
$ |
46.3 |
|
|
|
49.0 |
|
Other
|
|
|
124.2 |
|
|
|
108.6 |
|
Other
liabilities
|
|
$ |
170.5 |
|
|
|
157.6 |
|
|
|
December
31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Bank
credit facilities:
|
|
|
|
|
|
|
Revolving Facility (year-end
weighted average interest
|
|
|
|
|
|
|
rate of 0.6% in 2009
and 1.6% in 2008)
|
|
$ |
98.0 |
|
|
|
106.8 |
|
Other non-U.S. dollar-denominated
facilities (year-end weighted
|
|
|
|
|
|
|
|
|
average interest rate of 4.4 % in
2009 and 5.2% in 2008)
|
|
|
14.4 |
|
|
|
13.3 |
|
Dominion
Terminal Associates 6.0% bonds, due 2033
|
|
|
43.2 |
|
|
|
43.2 |
|
Capital
leases (average rates: 5.3% in 2009 and 7.5% in 2008)
|
|
|
32.8 |
|
|
|
18.1 |
|
Total long-term
debt
|
|
$ |
188.4 |
|
|
|
181.4 |
|
|
|
|
|
|
|
|
|
|
Included
in:
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
$ |
16.1 |
|
|
|
8.4 |
|
Noncurrent
liabilities
|
|
|
172.3 |
|
|
|
173.0 |
|
Total long-term
debt
|
|
$ |
188.4 |
|
|
|
181.4 |
|
We have
an unsecured $400 million revolving bank credit facility (the “Revolving
Facility”) with a syndicate of banks. The Revolving Facility’s
interest rate is based on LIBOR plus a margin, prime rate, or competitive
bid. The Revolving Facility allows us to borrow (or otherwise satisfy
credit needs) on a revolving basis over a five-year term ending in August
2011. As of December 31, 2009, $302.0 million was available under the
Revolving Facility. Amounts outstanding under the Revolving Facility
as of December 31, 2009, were denominated primarily in U.S. dollars and to a
lesser extent in Canadian dollars.
The
margin on LIBOR borrowings under the Revolving Facility which can range from
0.140% to 0.575%, depending on our credit rating, was 0.350% at December 31,
2009. When borrowings and letters of credit under the Revolving
Facility are in excess of $200 million, the applicable interest rate is
increased by 0.100% or 0.125%. We also pay an annual facility fee on
the Revolving Facility based on our credit rating. The facility fee,
which can range from 0.060% to 0.175%, was 0.100% at the end of
2009.
We have
an unsecured $135 million letter of credit facility with a bank (the “Letter of
Credit Facility”). The Letter of Credit Facility expires in July
2011. As of December 31, 2009, $8.9 million was available under the
Letter of Credit Facility. The Revolving Facility and the
multi-currency revolving credit facilities (described below) are also used for
the issuance of letters of credit and bank guarantees.
We have
two unsecured multi-currency revolving bank credit facilities with a total of
$50.0 million in available credit, of which approximately $27.9 million was
available at December 31, 2009. Interest on these facilities is based
on LIBOR plus a margin. The margin ranges from 0.14% to
2.5%. The two facilities expire in December 2011. We also have the ability
to borrow from other banks under short-term uncommitted
agreements. Various foreign subsidiaries maintain other lines of
credit and overdraft facilities with a number of banks.
Minimum
repayments of long-term debt are as follows:
(In
millions)
|
|
Capital
leases
|
|
|
Other
long-term debt
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
$ |
13.8 |
|
|
|
2.3 |
|
|
|
16.1 |
|
2011
|
|
|
6.0 |
|
|
|
106.3 |
|
|
|
112.3 |
|
2012
|
|
|
3.5 |
|
|
|
1.5 |
|
|
|
5.0 |
|
2013
|
|
|
2.5 |
|
|
|
1.2 |
|
|
|
3.7 |
|
2014
|
|
|
1.9 |
|
|
|
1.0 |
|
|
|
2.9 |
|
Later
years
|
|
|
5.1 |
|
|
|
43.3 |
|
|
|
48.4 |
|
Total
|
|
$ |
32.8 |
|
|
|
155.6 |
|
|
|
188.4 |
|
The
Revolving Facility, the Letter of Credit Facility and the two unsecured
multi-currency revolving bank credit facilities contain subsidiary guarantees
and various financial and other covenants. The financial covenants,
among other things, limit our total indebtedness, limit asset sales, limit the
use of proceeds from asset sales and provide for minimum coverage of interest
costs. The credit agreements do not provide for the acceleration of
payments should our credit rating be reduced. If we were not to
comply with the terms of our various loan agreements, the repayment terms could
be accelerated and the commitments could be withdrawn. An
acceleration of the repayment terms under one agreement could trigger the
acceleration of the repayment terms under the other loan
agreements. We were in compliance with all of these financial
covenants at December 31, 2009.
We have
$43.2 million of bonds issued by the Peninsula Ports Authority of Virginia
recorded as debt on our balance sheet. Although we are not the
primary obligor of the debt, we have guaranteed the debt and we believe that we
will ultimately pay this obligation. The guarantee originated as part
of a former interest in Dominion Terminal Associates, a deep water coal
terminal. We continue to pay interest on the debt. The
bonds bear a fixed interest rate of 6.0% and mature in 2033. The
bonds may mature prior to 2033 upon the occurrence of specified events such as
the determination that the bonds are taxable or if we fail to abide by the terms
of the guarantee.
At
December 31, 2009, we had undrawn unsecured letters of credit and guarantees
totaling $156.4 million, including $126.1 million issued under the Letter of
Credit Facility, and $15.6 million issued under the multi-currency revolving
bank credit facilities. These letters of credit primarily support our
obligations under various self-insurance programs and credit
facilities.
Capital
Leases
Property
under capital leases is included in property and equipment as
follows:
|
|
December
31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Asset
class:
|
|
|
|
|
|
|
Buildings
|
|
$ |
15.2 |
|
|
|
12.9 |
|
Vehicles
|
|
|
37.4 |
|
|
|
34.1 |
|
Machinery and
equipment
|
|
|
11.4 |
|
|
|
7.2 |
|
|
|
|
64.0 |
|
|
|
54.2 |
|
Less: accumulated
amortization
|
|
|
(23.1 |
) |
|
|
(29.1 |
) |
Total
|
|
$ |
40.9 |
|
|
|
25.1 |
|
Note
13 – Accounts Receivable
|
|
December
31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Trade
|
|
$ |
390.9 |
|
|
|
426.1 |
|
Other
|
|
|
43.8 |
|
|
|
31.4 |
|
|
|
|
434.7 |
|
|
|
457.5 |
|
Allowance
for doubtful accounts
|
|
|
(7.1 |
) |
|
|
(6.8 |
) |
Accounts
receivable, net
|
|
$ |
427.6 |
|
|
|
450.7 |
|
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for doubtful accounts:
|
|
|
|
|
|
|
|
|
|
Beginning of
year
|
|
$ |
6.8 |
|
|
|
10.8 |
|
|
|
11.6 |
|
Provision for uncollectible
accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
|
1.2 |
|
|
|
3.2 |
|
|
|
(0.1 |
) |
Discontinued
operations
|
|
|
- |
|
|
|
8.7 |
|
|
|
11.0 |
|
Write offs less
recoveries
|
|
|
(1.2 |
) |
|
|
(10.4 |
) |
|
|
(12.6 |
) |
Charge to other
accounts
|
|
|
- |
|
|
|
0.4 |
|
|
|
0.4 |
|
Spin-off of BHS (see note
17)
|
|
|
- |
|
|
|
(4.5 |
) |
|
|
- |
|
Foreign currency exchange
effects
|
|
|
0.3 |
|
|
|
(1.4 |
) |
|
|
0.5 |
|
End of year
|
|
$ |
7.1 |
|
|
|
6.8 |
|
|
|
10.8 |
|
Note
14 – Operating Leases
We lease
facilities, vehicles, computers and other equipment under long-term operating
and capital leases with varying terms. Most of the operating leases contain
renewal and/or purchase options. We expect that in the normal course
of business, the majority of operating leases will be renewed or replaced by
other leases.
As of
December 31, 2009, future minimum lease payments under noncancellable operating
leases with initial or remaining lease terms in excess of one year are included
below.
(In
millions)
|
|
Facilities
|
|
|
Vehicles
|
|
|
Other
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
$ |
48.0 |
|
|
|
25.8 |
|
|
|
5.4 |
|
|
|
79.2 |
|
2011
|
|
|
39.5 |
|
|
|
19.1 |
|
|
|
4.1 |
|
|
|
62.7 |
|
2012
|
|
|
32.1 |
|
|
|
13.9 |
|
|
|
2.7 |
|
|
|
48.7 |
|
2013
|
|
|
20.8 |
|
|
|
9.7 |
|
|
|
0.9 |
|
|
|
31.4 |
|
2014
|
|
|
17.6 |
|
|
|
6.8 |
|
|
|
0.5 |
|
|
|
24.9 |
|
Later
years
|
|
|
40.2 |
|
|
|
4.9 |
|
|
|
1.1 |
|
|
|
46.2 |
|
|
|
$ |
198.2 |
|
|
|
80.2 |
|
|
|
14.7 |
|
|
|
293.1 |
|
In North
America, most vehicles that were added to the fleet prior to March 1, 2009, were
obtained pursuant to operating leases that had residual value
guarantees. Our maximum residual value guarantee was $50.1 million at
December 31, 2009. If we continue to renew the leases and pay the lease
payments for the vehicles that have been included in the above table, this
residual value guarantee will reduce to zero at the end of the final renewal
period. Vehicles added to the fleet between March 1, 2009 and
December 31, 2009, were either purchased or were financed under capital
lease.
We also
have a maximum residual value guarantee of $4.9 million on another operating
lease.
Net rent
expense included in continuing operations amounted to $101.4 million in 2009,
$97.2 million in 2008 and $87.3 million in 2007.
Note
15 – Share-Based Compensation Plans
We have
share-based compensation plans to retain employees and nonemployee directors and
to more closely align their interests with those of our
shareholders.
The 2005
Equity Incentive Plan (the “2005 Plan”) permits grants of stock options,
restricted stock, stock appreciation rights, performance stock and other
share-based awards to employees. Only stock options and restricted
stock units have been granted under the plan to date. There are also
outstanding stock options granted to employees under a prior stock incentive
plan, the 1988 Stock Option Plan (the “1988 Plan”).
We
provide share-based awards to directors through the Non-Employee Directors’
Equity Plan (the “Directors’ Plan”). In 2008 and 2009, we granted
deferred stock units under the Directors’ Plan. There are also
outstanding stock options granted to directors under a prior plan, the
Non-Employee Directors’ Stock Option Plan (the “Prior Directors’
Plan”). Options were granted to directors in 2007 under the Prior
Directors’ Plan.
There are
3.0 million shares underlying share-based plans that are authorized, but not yet
granted.
General
Terms
Options
are granted at a price not less than the average quoted market price on the date
of grant. Options granted to employees have a maximum term of six
years. All grants of options and restricted stock units to employees
under the 2005 Plan either vest over three years from the date of grant or at
the end of the third year. Options and restricted stock units granted
under the 2005 Plan continue to vest if an employee
retires. Compensation cost related to options and restricted stock is
recognized from the grant date to the lesser of the retirement eligible date or
the stated vesting date.
Deferred
stock units granted under the Directors’ Plan vest in full one year from the
date of grant or upon termination of service. Under the Prior
Directors’ Plan, options granted had a maximum term of ten years and vested in
full at the end of six months. Compensation cost is recognized in its
entirety at the grant date.
If a
change in control were to occur (as defined in the plan documents), certain
awards will become immediately vested.
Spin-Off
of BHS (see note 17)
Upon
completion of the BHS spin-off on October 31, 2008, 118,500 options that had
been granted in the third quarter of 2008 to employees of BHS were
canceled.
For
employees remaining with Brink’s on October 31, 2008, the number of options and
the exercise prices were adjusted to reflect the effect of the spin-off of
BHS. For options granted in 2008, 420,104 options were adjusted to 771,867
options. Additionally, the exercise prices for these options were adjusted
from $64.15 and $69.11 per share to $34.92 and $37.62 per share,
respectively.
Option
Activity
The table
below summarizes the activity in all plans for options of our common
stock.
|
|
|
|
|
|
|
|
Weighed-Average
|
|
|
Aggregate
|
|
|
|
Shares
|
|
|
Weighted-
Average
|
|
|
Remaining
Contractual
|
|
|
Intrinsic
Value
|
|
|
|
(in
thousands)
|
|
|
Exercise
Price Per Share
|
|
|
Term
(in years)
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at December 31, 2006
|
|
|
2,130 |
|
|
$ |
36.77 |
|
|
|
|
|
|
|
Granted
|
|
|
636 |
|
|
|
63.60 |
|
|
|
|
|
|
|
Exercised
|
|
|
(489 |
) |
|
|
25.78 |
|
|
|
|
|
|
|
Forfeited
or expired
|
|
|
(31 |
) |
|
|
50.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at December 31, 2007
|
|
|
2,246 |
|
|
|
46.57 |
|
|
|
|
|
|
|
Granted
|
|
|
541 |
|
|
|
64.24 |
|
|
|
|
|
|
|
Exercised
|
|
|
(559 |
) |
|
|
33.34 |
|
|
|
|
|
|
|
Forfeited
or expired
|
|
|
(35 |
) |
|
|
53.54 |
|
|
|
|
|
|
|
Cancelled
awards (a)
|
|
|
(389 |
) |
|
|
58.32 |
|
|
|
|
|
|
|
Adjustment
due to spin-off (a)
|
|
|
1,518 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at December 31, 2008
|
|
|
3,322 |
|
|
|
28.95 |
|
|
|
|
|
|
|
Granted
|
|
|
289 |
|
|
|
27.59 |
|
|
|
|
|
|
|
Exercised
|
|
|
(79 |
) |
|
|
16.50 |
|
|
|
|
|
|
|
Forfeited
or expired
|
|
|
(97 |
) |
|
|
34.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at December 31, 2009
|
|
|
3,435 |
|
|
$ |
28.98 |
|
|
|
3.3 |
|
|
$ |
5.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Of
the above, as of December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable
|
|
|
2,428 |
|
|
$ |
27.41 |
|
|
|
2.7 |
|
|
$ |
5.4 |
|
Expected to vest in future periods
(b)
|
|
|
974 |
|
|
$ |
32.80 |
|
|
|
4.6 |
|
|
$ |
- |
|
(a)
|
Related
to BHS employees and directors. See note
17.
|
(b)
|
The
number of options expected to vest takes into account an estimate of
expected forfeitures.
|
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, 2009, was $24.34 per
share. The total intrinsic value of options exercised was $0.9
million ($11.62 per share) in 2009, $19.7 million ($35.24 per share) in 2008,
and $17.8 million ($36.42 per share) in 2007. The total fair value of
options vested was $6.7 million for 2009, $9.9 million for 2008 and $7.9 million
for 2007.
There
were 1.8 million shares of exercisable options with a weighted-average exercise
price of $24.52 per share at December 31, 2008, and 1.1 million shares of
exercisable options with a weighted-average exercise price of $35.50 per share
at December 31, 2007.
Method
and Assumptions Used to Estimate Fair Value of Options
The fair
value of each stock option grant is estimated at the time of grant using the
Black-Scholes option-pricing model. The fair value of options that
vest entirely at the end of a fixed period, generally three years, is estimated
using a single option approach and, the fair value of options that vest ratably
over three years is estimated using a multiple-option approach. If a
different option-pricing model had been used, results may have been
different.
The fair
value of options granted during the three years ended December 31, 2009, was
calculated using the following estimated weighted-average
assumptions.
Options
Granted
|
|
|
|
|
|
Years
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Number
of shares underlying options, in thousands
|
|
|
289 |
|
|
|
541 |
|
|
|
636 |
|
Weighted-average
exercise price per share
|
|
$ |
27.59 |
|
|
|
64.24 |
|
|
|
63.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumptions
used to estimate fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected dividend yield
(a):
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
|
|
|
1.4 |
% |
|
|
0.6 |
% |
|
|
0.6 |
% |
Expected volatility
(b):
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
|
|
|
36 |
% |
|
|
26 |
% |
|
|
27 |
% |
Range
|
|
|
35%-39 |
% |
|
|
26%-27 |
% |
|
|
26%-31 |
% |
Risk-free interest rate
(c):
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
|
|
|
1.8 |
% |
|
|
2.8 |
% |
|
|
4.9 |
% |
Range
|
|
|
0.9%-2.4 |
% |
|
|
2.0%-3.1 |
% |
|
|
4.9%-5.0 |
% |
Expected term in years
(d):
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
|
|
|
3.8 |
|
|
|
3.6 |
|
|
|
3.8 |
|
Range
|
|
|
1.9-5.3 |
|
|
|
2.1-5.4 |
|
|
|
2.1-6.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
fair value estimates at grant date:
|
|
|
|
|
|
|
|
|
|
|
|
|
In millions
|
|
$ |
2.1 |
|
|
|
7.8 |
|
|
|
10.7 |
|
Fair value per
share
|
|
$ |
7.24 |
|
|
|
14.39 |
|
|
|
16.84 |
|
(a)
|
The
expected dividend yield is the calculated yield on Brink’s common stock at
the time of the grant.
|
(b)
|
The
expected volatility was estimated after reviewing the historical
volatility of our stock using daily close
prices.
|
(c) The
risk-free interest rate was based on yields on U.S. Treasury debt at the time of
the grant.
(d)
|
The
expected term of the options was based on historical option exercise data,
option expiration and post-vesting cancellation
behavior.
|
Nonvested
Share Activity
|
|
Number
of shares
|
|
|
Weighted-Average
|
|
|
|
2005
|
|
|
Directors’
|
|
|
|
|
|
Grant-Date
|
|
(in
thousands of shares, except per share amounts)
|
|
Plan
|
|
|
Plan
|
|
|
Total
|
|
|
Fair
Value (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of January 1, 2008
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
- |
|
Granted
|
|
|
30.3 |
|
|
|
13.0 |
|
|
|
43.3 |
|
|
|
66.27 |
|
Cancelled
awards due to BHS spin off
|
|
|
- |
|
|
|
(4.7 |
) |
|
|
(4.7 |
) |
|
|
63.22 |
|
Adjustment
due to spin-off of BHS
|
|
|
25.3 |
|
|
|
7.0 |
|
|
|
32.3 |
|
|
|
- |
|
Balance as of December 31,
2008
|
|
|
55.6 |
|
|
|
15.3 |
|
|
|
70.9 |
|
|
|
36.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
178.4 |
|
|
|
22.7 |
|
|
|
201.1 |
|
|
|
26.90 |
|
Cancelled
awards
|
|
|
(1.3 |
) |
|
|
- |
|
|
|
(1.3 |
) |
|
|
26.80 |
|
Vested
|
|
|
(18.5 |
) |
|
|
(15.3 |
) |
|
|
(33.8 |
) |
|
|
35.71 |
|
Balance as of December 31,
2009
|
|
|
214.2 |
|
|
|
22.7 |
|
|
|
236.9 |
|
|
$ |
28.45 |
|
(a)
|
Fair
value is measured at the date of grant based on the average of the high
and low per share quoted sales price of Brink’s common stock, adjusted for
a discount on units that do not receive or accrue
dividends.
|
As of
December 31, 2009, $4.0 million of total unrecognized compensation cost related
to previously granted stock options and nonvested shares is expected to be
recognized over a weighted-average period of 1.5 years.
Other
Share-Based Compensation
We have a
deferred compensation plan that allows participants to defer a portion of their
compensation into common stock units. Units may be redeemed by
employees as equal number of shares of Brink’s common stock. Employee
accounts held 787,719 units at December 31, 2009, and 679,681 units at December
31, 2008.
We have a
stock accumulation plan for our non-employee directors denominated in Brink’s
common stock units. Directors’ accounts held 59,332 units at December
31, 2009, and 67,993 units at December 31, 2008.
Common
Stock
At
December 31, 2009, we had 100 million shares of common stock authorized and 47.9
million shares issued and outstanding.
Share
Purchases
On
September 14, 2007, our board of directors authorized the purchase of up to $100
million of our outstanding common shares. The repurchase
authorization does not have an expiration date. Under the program, we
used $56.3 million to purchase 883,800 shares of common stock between December
5, 2007, and May 2, 2008, at an average price of $63.67 per share. We
used an additional $3.9 million to purchase 160,500 shares of common stock in
the fourth quarter of 2008, at an average price of $24.03 per
share. In the first quarter of 2009, we used an additional $6.1
million to purchase 234,456 shares of common stock at an average price of $26.20
per share. No shares were purchased in the remainder of
2009. As of December 31, 2009, we had $33.7 million under this
program available to purchase shares.
Shares
Contributed to U.S. Pension Plan
On August
20, 2009, we made a voluntary $150 million contribution to our primary U.S.
retirement plan. The contribution was comprised of $92.4 million of
cash and 2,260,738 newly issued shares of our common stock valued for
purposes of the contribution at $25.48 per share, or $57.6 million in the
aggregate.
Dividends
We paid
regular quarterly dividends on our common stock during the last three
years. On January 21, 2010, the board declared a regular quarterly
dividend of 10 cents per share payable on March 1, 2010. Future
dividends are dependent on the earnings, financial condition, shareholder equity
levels, cash flow and business requirements, as determined by the board of
directors.
Employee
Benefits Trust
In
September 2008, we terminated The Brink’s Company Employee Benefits Trust (the
“Employee Benefits Trust”). Immediately prior to termination, the
shares held by the trust were distributed to us and the shares were
retired. The
purpose of the Employee Benefits Trust (prior to termination) was to hold shares
of our common stock to fund obligations under compensation and employee benefit
programs that provided for the issuance of stock. After the
termination of the trust, newly issued shares are used to satisfy these
programs.
Through
2007, shares of common stock were voted by the trustee in the same proportion as
the shares of common stock voted by our employees participating in our 401(k)
plan. Our 401(k) plan divested all shares of our common stock in
January 2008. After the 401(k) plan divested all shares of our common
stock, shares of the trust were not voted in matters voted on by
shareholders.
Preferred
Stock
At
December 31, 2009, we have the authority to issue up to 2.0 million shares of
preferred stock, par value $10 per share.
Shares
Used to Calculate Earnings per Share
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
(a)
|
|
|
47.2 |
|
|
|
46.3 |
|
|
|
46.5 |
|
Effect
of dilutive stock awards
|
|
|
0.3 |
|
|
|
0.4 |
|
|
|
0.5 |
|
Diluted
|
|
|
47.5 |
|
|
|
46.7 |
|
|
|
47.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Antidilutive
stock awards excluded from denominator
|
|
|
2.5 |
|
|
|
0.7 |
|
|
|
0.4 |
|
(a)
|
We
have deferred compensation plans for directors and certain of our
employees. Amounts owed to participants are denominated in
common stock units. Each unit represents one share of common
stock. The number of shares used to calculate basic earnings
per share includes the weighted-average units credited to employees and
directors under the deferred compensation plans. Accordingly,
included in basic shares are weighted-average units of 0.8 million in
2009, 0.7 million in 2008 and 1.0 million in
2007.
|
Shares of
our common stock held by the Employee Benefits Trust in 2007 that were not
allocated to participants under our various benefit plans were excluded from
earnings per share calculations since they were treated as treasury shares for
the calculation of earnings per share. The Employee Benefits Trust
held 1.7 million unallocated shares at December 31, 2007. As
discussed above, the trust was terminated in September 2008.
Note
17 – Income from Discontinued Operations
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Brink’s
Home Security Holdings, Inc. (“BHS”):
|
|
|
|
|
|
|
|
|
|
Income from operations before tax
(a)
|
|
$ |
- |
|
|
|
105.4 |
|
|
|
112.9 |
|
Expense associated with the
spin-off
|
|
|
- |
|
|
|
(13.0 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
Kingdom domestic cash handling operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale
|
|
|
- |
|
|
|
- |
|
|
|
1.5 |
|
Loss from operations before tax
(b)
|
|
|
- |
|
|
|
- |
|
|
|
(13.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
to contingencies of former operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain from FBLET refunds (see note
21)
|
|
|
19.7 |
|
|
|
- |
|
|
|
- |
|
BAX Global indemnification (see
note 21)
|
|
|
(13.2 |
) |
|
|
- |
|
|
|
- |
|
Other
|
|
|
0.3 |
|
|
|
4.9 |
|
|
|
(0.1 |
) |
Income
from discontinued operations before income taxes
|
|
|
6.8 |
|
|
|
97.3 |
|
|
|
100.4 |
|
Provision
for income taxes
|
|
|
2.3 |
|
|
|
45.8 |
|
|
|
41.5 |
|
Income
from discontinued operations
|
|
$ |
4.5 |
|
|
|
51.5 |
|
|
|
58.9 |
|
(a)
|
Revenues
of BHS were $442.4 million in 2008 (partial year) and $484.4 million in
2007.
|
(b)
|
Revenues
of the United Kingdom domestic cash handling operations were $28.9 million
in 2007.
|
BHS
Spin-off
On
October 31, 2008, we distributed all of our interest in BHS to our shareholders
of record as of the close of business on October 21, 2008, in a tax-free
distribution. We distributed one share of BHS common stock for every
share of our common stock outstanding. We contributed $50 million in
cash to BHS at the time of the spin-off. We also forgave all the
existing intercompany debt owed by BHS to us as of the distribution
date.
BHS
offered monitored security services in North America primarily for
owner-occupied, single-family residences. To a lesser extent, BHS
offered security services for commercial and multi-family
properties. BHS typically installed and owned the on-site security
systems and charged fees to monitor and service the systems.
In
connection with the spin-off, we entered into a Tax Matters Agreement with BHS
which provides a basis for the preparation and filing of tax returns for
pre-spin and post-spin operations of BHS in 2008. As authorized by the Tax
Matters Agreement, we made certain elections related to BHS’ operations for our
U.S. federal and state 2008 consolidated tax returns in 2009. These elections
have the effect of decreasing the net deferred tax assets allocated to BHS at
the time of the spin-off. As a result, we increased the amount of our current
income tax receivable during 2009 by $26.8 million, with an offsetting increase
in retained earnings to adjust the amount of the spin-off
distribution.
After the
spin-off, we reclassified BHS’ results of operations, including previously
reported results and non-segment income (expense) directly related to the
spin-off, within discontinued operations.
United
Kingdom Domestic Cash Handling Operations
During
2007, we sold Brink’s United Kingdom domestic cash handling operations for $2.2
million in cash and recognized a $1.5 million gain on the sale. These
operations recorded a $7.5 million impairment charge in 2007, primarily related
to writing down leasehold improvements and vehicles to estimated fair value due
to the loss of customers. These operations have been reported as discontinued
operations for all periods presented.
Interest
Expense
Interest
expense included in discontinued operations was $0.3 million in 2008 and $0.6
million in 2007. Interest expense recorded in discontinued operations
includes only interest on third-party borrowings made directly by BHS, and
Brink’s United Kingdom domestic cash handling operations.
Note
18 – Supplemental Cash Flow Information
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$ |
10.3 |
|
|
|
12.1 |
|
|
|
10.1 |
|
Income taxes, net
|
|
|
12.6 |
|
|
|
69.2 |
|
|
|
65.5 |
|
On August
20, 2009, we issued 2,260,738 shares of our common stock as part of our
voluntary contribution to our primary U.S. retirement plan. The value
of our stock contribution was at $25.48 per share, or $57.6 million in the
aggregate.
Note
19 – Other Operating Income (Expense)
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency transaction losses
|
|
$ |
(41.4 |
) |
|
|
(18.1 |
) |
|
|
(9.5 |
) |
Gain
on acquiring control of equity method affiliates
|
|
|
14.9 |
|
|
|
- |
|
|
|
- |
|
Gains
on sales of property and other assets
|
|
|
9.4 |
|
|
|
13.1 |
|
|
|
4.6 |
|
Royalty
income
|
|
|
8.6 |
|
|
|
2.8 |
|
|
|
1.3 |
|
Share
in earnings of equity affiliates
|
|
|
4.5 |
|
|
|
5.0 |
|
|
|
3.3 |
|
Impairment
losses
|
|
|
(2.7 |
) |
|
|
(1.9 |
) |
|
|
(2.5 |
) |
Other
|
|
|
3.2 |
|
|
|
3.7 |
|
|
|
3.9 |
|
Other
operating income (expense)
|
|
$ |
(3.5 |
) |
|
|
4.6 |
|
|
|
1.1 |
|
Note
20 – Interest and Other Nonoperating Income
|
|
Years
Ended December 31,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$ |
10.8 |
|
|
|
15.0 |
|
|
|
8.7 |
|
Other-than-temporary
impairment of marketable securities
|
|
|
- |
|
|
|
(7.1 |
) |
|
|
- |
|
Other,
net
|
|
|
- |
|
|
|
0.2 |
|
|
|
1.8 |
|
Total
|
|
$ |
10.8 |
|
|
|
8.1 |
|
|
|
10.5 |
|
In 2008,
we recognized a $7.1 million other-than-temporary impairment loss on marketable
securities. We concluded the impairment of the securities was not
temporary based on the length of time and the degree to which the fair value had
been below the securities’ $26.3 million cost basis.
Note
21 – Other Commitments and Contingencies
Federal
Black Lung Excise Tax (“FBLET”) refunds
In late
2008, Congress passed the Energy Improvement and Extension Act of 2008 which
enabled taxpayers to file claims for FBLET refunds for periods prior to those
open under the statute of limitations previously applicable to us. In the second
quarter of 2009, we received FBLET refunds and recognized the majority of these
refunds as a pretax gain of $19.7 million. The gain related to these
refunds was recorded in discontinued operations.
Former
operations
BAX
Global, a former business unit, is defending a claim related to the apparent
diversion by a third party of goods being transported for a
customer. During 2009, BAX Global advised us that it is probable that
it will be deemed liable for this claim. We have contractually
indemnified the purchaser of BAX Global for this contingency. Although it
is possible that this claim ultimately may be decided in favor of BAX Global, we
have accrued €9 million ($13 million at December 31, 2009) related to this
matter. We recognized the expense in discontinued
operations. We believe we have insurance coverage applicable to this
matter and that it will be resolved without a material adverse effect on our
liquidity, financial position or results of operations.
Other
We are
involved in various lawsuits and claims in the ordinary course of
business. We are not able to estimate the range of losses for some of
these matters. We have recorded accruals for losses that are
considered probable and reasonably estimable. We do not believe that
the ultimate disposition of any of these matters will have a material adverse
effect on our liquidity, financial position or results of
operations.
Purchase
Obligations
At
December 31, 2009, we had noncancellable commitments for $18.6 million in
equipment purchases, and information technology and other services.
Note
22 – Selected Quarterly Financial Data (unaudited)
|
|
2009
Quarters
|
|
|
2008
Quarters
|
|
(In
millions, except per share amounts)
|
|
1st
|
|
|
2nd
|
|
|
3rd
|
|
|
4th
|
|
|
1st
|
|
|
2nd
|
|
|
3rd
|
|
|
4th
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
732.5 |
|
|
|
751.9 |
|
|
|
801.8 |
|
|
|
848.8 |
|
|
$ |
792.8 |
|
|
|
797.8 |
|
|
|
813.4 |
|
|
|
759.5 |
|
Segment
operating profit
|
|
|
52.4 |
|
|
|
28.9 |
|
|
|
61.7 |
|
|
|
70.4 |
|
|
|
82.0 |
|
|
|
52.6 |
|
|
|
68.1 |
|
|
|
69.2 |
|
Operating
profit
|
|
|
41.7 |
|
|
|
26.7 |
|
|
|
60.9 |
|
|
|
37.5 |
|
|
|
66.5 |
|
|
|
42.8 |
|
|
|
49.8 |
|
|
|
69.4 |
|
Amounts
attributable to Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
22.2 |
|
|
|
16.0 |
|
|
|
33.4 |
|
|
|
124.1 |
|
|
$ |
32.9 |
|
|
|
30.7 |
|
|
|
29.5 |
|
|
|
38.7 |
|
Discontinued
operations
|
|
|
0.8 |
|
|
|
4.3 |
|
|
|
1.0 |
|
|
|
(1.6 |
) |
|
|
17.2 |
|
|
|
18.0 |
|
|
|
18.5 |
|
|
|
(2.2 |
) |
Net
income attributable to Brink’s
|
|
$ |
23.0 |
|
|
|
20.3 |
|
|
|
34.4 |
|
|
|
122.5 |
|
|
$ |
50.1 |
|
|
|
48.7 |
|
|
|
48.0 |
|
|
|
36.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
$ |
30.7 |
|
|
|
32.8 |
|
|
|
33.7 |
|
|
|
37.9 |
|
|
$ |
29.8 |
|
|
|
31.3 |
|
|
|
31.5 |
|
|
|
29.7 |
|
Capital
expenditures
|
|
|
29.5 |
|
|
|
45.0 |
|
|
|
38.0 |
|
|
|
58.1 |
|
|
|
31.5 |
|
|
|
38.9 |
|
|
|
49.0 |
|
|
|
45.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
(loss) per share attributable to Brink’s
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common
shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
0.48 |
|
|
|
0.35 |
|
|
|
0.70 |
|
|
|
2.54 |
|
|
$ |
0.71 |
|
|
|
0.66 |
|
|
|
0.64 |
|
|
|
0.83 |
|
Discontinued
operations
|
|
|
0.02 |
|
|
|
0.09 |
|
|
|
0.02 |
|
|
|
(0.03 |
) |
|
|
0.37 |
|
|
|
0.39 |
|
|
|
0.40 |
|
|
|
(0.04 |
) |
Net income
|
|
$ |
0.50 |
|
|
|
0.44 |
|
|
|
0.72 |
|
|
|
2.51 |
|
|
$ |
1.08 |
|
|
|
1.06 |
|
|
|
1.04 |
|
|
|
0.79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
0.48 |
|
|
|
0.34 |
|
|
|
0.70 |
|
|
|
2.53 |
|
|
$ |
0.70 |
|
|
|
0.66 |
|
|
|
0.64 |
|
|
|
0.83 |
|
Discontinued
operations
|
|
|
0.02 |
|
|
|
0.09 |
|
|
|
0.02 |
|
|
|
(0.03 |
) |
|
|
0.37 |
|
|
|
0.39 |
|
|
|
0.39 |
|
|
|
(0.04 |
) |
Net income
|
|
$ |
0.49 |
|
|
|
0.44 |
|
|
|
0.72 |
|
|
|
2.50 |
|
|
$ |
1.07 |
|
|
|
1.05 |
|
|
|
1.03 |
|
|
|
0.78 |
|
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.
In the
second quarter of 2009, we recognized approximately $20 million in pretax gains
from FBLET refunds which were partially offset by a $13 million charge for a
contingent liability related to our former BAX operations. Both amounts were
reported as part of discontinued operations.
Results
in the third quarter of 2009 included a $14 million gain related to the
acquisition of a controlling interest in an equity affiliate.
Fourth-quarter
2009 results included a $118 million tax benefit related to the release of the
U.S. tax valuation allowance and a $23 million pretax loss from the repatriation
of cash from our Venezuelan operations.
In the
fourth quarter of 2008, we completed the spin-off of our former home security
business, BHS. After the spin-off, we reclassified BHS’ results of
operations, including previously reported results and non-segment expenses
directly related to the spin-off, within discontinued operations.
Results
in the fourth quarter of 2008 included a pretax gain of $12 million on the sale
of certain assets of our former coal operations.
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Not
applicable.
ITEM
9A. CONTROLS AND PROCEDURES
Pursuant
to Rule 13a-15(b) under the Securities Exchange Act of 1934, we carried out an
evaluation, with the participation of our management, including our Chief
Executive Officer and Vice President and Chief Financial Officer, of the
effectiveness of our disclosure controls and procedures (as defined under Rule
13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period
covered by this report. Based upon that evaluation, our Chief
Executive Officer and Vice President and Chief Financial Officer concluded that
our disclosure controls and procedures are effective in ensuring that
information required to be disclosed by us in the reports that we file or submit
under the Securities Exchange Act of 1934, is recorded, processed, summarized
and reported, within the time periods specified in the SEC’s rules and forms,
and that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Vice President and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure.
There has
been no change in our internal control over financial reporting during the
quarter ended December 31, 2009, that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.
Reference
is made to pages 66 and 67 for Management’s Annual Report on Internal Control
over Financial Reporting and the Attestation Report of the Registered Public
Accounting Firm.
ITEM
9B. OTHER INFORMATION
Not
applicable.
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
We have
adopted a Business Code of Ethics that applies to all of the directors, officers
and employees (including the Chief Executive Officer, Chief Financial Officer
and Controller) and have posted the Code on our website. We intend to
satisfy the disclosure requirement under Item 5.05 of Form 8-K relating to
amendments to or waivers from any provision of the Business Code of Ethics
applicable to the Chief Executive Officer, Chief Financial Officer or Controller
by posting this information on the website. The internet address is
www.brinkscompany.com.
Our Chief
Executive Officer is required to make, and he has made, an annual certification
to the New York Stock Exchange (“NYSE”) stating that he was not aware of any
violation by us of the corporate governance listing standards of the
NYSE. Our Chief Executive Officer made his annual certification to
that effect to the NYSE as of May 14, 2009. In addition, we are
filing, as exhibits to this Annual Report on Form 10-K, the certification of our
principal executive officer and principal financial officer required under
sections 906 and 302 of the Sarbanes-Oxley Act of 2002 to be filed with the
Securities and Exchange Commission regarding the quality of our public
disclosure.
The
information regarding executive officers is included in this report following
Item 4, under the caption “Executive Officers of the
Registrant.” Other information required by Item 10 is incorporated by
reference to our definitive proxy statement to be filed pursuant to Regulation
14A within 120 days after December 31, 2009.
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, 2009.
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, 2009.
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, 2009.
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, 2009.
ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
|
1.
|
All
financial statements – see pages 69 – 108.
|
|
|
|
|
2.
|
Financial
statement schedules – not applicable.
|
|
|
|
|
3.
|
Exhibits
– see exhibit index.
|
|
|
|
Undertaking
For the
purposes of complying with the amendments to the rules governing Form S-8
(effective July 13, 1990) under the Securities Act of 1933, the undersigned
Registrant hereby undertakes as follows, which undertaking shall be incorporated
by reference into Registrant’s Registration Statements on Form S-8 Nos. 2-64258,
33-2039, 33-21393, 33-23333, 33-69040, 33-53565, 333-02219, 333-78631,
333-78633, 333-70758, 333-70772, 333-70766, 333-70762 and
333-146673. Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Signatures
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on February 25, 2010.
|
|
|
The
Brink’s Company
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
By
|
/s/
M. T. Dan
|
|
|
|
(Michael
T. Dan,
|
|
|
|
Chairman,
President and
|
|
|
|
Chief
Executive Officer)
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities indicated, on February 25, 2010.
Signature
|
|
Title
|
|
|
/s/ M.
T. Dan
|
|
Director,
Chairman of the Board,
President
and Chief Executive Officer
(Principal
Executive Officer)
|
Michael
T. Dan
|
|
|
/s/ J.W.
Dziedzic
|
|
Vice
President
and
Chief Financial Officer
(Principal
Financial Officer)
|
Joseph
W. Dziedzic
|
|
|
/s/ M.
A. P. Schumacher
|
|
Controller
(Principal
Accounting Officer)
|
Matthew
A.P. Schumacher
|
|
|
|
|
*
|
|
Director
|
Roger
G. Ackerman
|
|
|
|
|
*
|
|
Director
|
Betty
C. Alewine
|
|
|
|
|
*
|
|
Director
|
Marc
C. Breslawsky
|
|
|
|
|
*
|
|
Director
|
Paul
G. Boynton
|
|
|
|
|
*
|
|
Director
|
Michael
J. Herling
|
|
|
|
|
*
|
|
Director
|
Thomas
R. Hudson Jr.
|
|
|
|
|
*
|
|
Director
|
Murray
D. Martin
|
|
|
|
|
*
|
|
Director
|
Thomas
C. Schievelbein
|
|
|
|
|
*
|
|
Director
|
Robert
J. Strang
|
|
|
|
|
*
|
|
Director
|
Ronald
L. Turner
|
|
|
|
|
|
*
By:
|
|
/s/ M.
T. Dan
|
|
|
Michael
T. Dan, Attorney-in-Fact
|
Exhibit
Index
Each
exhibit listed as a previously filed document is hereby incorporated by
reference to such document.
Exhibit
Number
|
Description
|
|
|
2(i)
|
Shareholders’
Agreement, dated as of January 10, 1997, between Brink’s Security
International, Inc., and Valores Tamanaco, C.A. Exhibit 10(w)
to the Registrant’s Annual Report on Form 10-K for the year ended December
31, 1998.
|
|
|
3(i)
|
Amended
and Restated Articles of Incorporation of the
Registrant. Exhibit 3(i) to the Registrant’s Current Report on
Form 8-K filed November 20, 2007.
|
|
|
3(ii)
|
Amended
and Restated Bylaws of the Registrant. Exhibit 3(ii) to the
Registrant’s Current Report on Form 8-K filed February 22,
2010.
|
|
|
10(a)*
|
Key
Employees Incentive Plan, as amended and restated as of November 16,
2007. Exhibit 10(a) to the Registrant’s Annual Report on Form
10-K for the year ended December 31, 2007 (the “2007 Form
10-K”)
|
|
|
10(b)*
|
Key
Employees’ Deferred Compensation Program, as amended and restated as of
November 13, 2008. Exhibit 10(b) to the Registrant’s Annual
report on Form 10-K for the year ended December 31, 2008 (the “2008 Form
10-K”)
|
|
|
10(c)*
|
(i)
|
Pension
Equalization Plan as amended and restated, effective as of October 22,
2008. Exhibit 10.2 to the Registrant’s Quarterly Report on Form
10-Q for the quarter ended September 30, 2008 (the “Third Quarter 2008
Form 10-Q”)
|
|
|
|
(ii)
|
Amended
and Restated Trust Agreement, dated December 1, 1997, between the
Registrant and Chase Manhattan Bank, as Trustee (the “Trust
Agreement”). Exhibit 10(e)(ii) to the Registrant’s Annual
Report on Form 10-K for the year ended December 31, 1997 (the “1997
Form 10-K”).
|
|
|
|
(iii)
|
Amendment
No. 1 to Trust Agreement, dated as of August 18, 1999. Exhibit
10(c)(iii) to the Registrant’s Annual Report on Form 10-K for the year
ended December 31, 1999 (the “1999 Form 10-K”).
|
|
|
|
(iv)
|
Amendment
No. 2 to Trust Agreement, dated as of July 26, 2001. Exhibit
10(c)(iv) to the Registrant’s Annual Report on Form 10-K for the year
ended December 31, 2002 (the “2002 Form 10-K”).
|
|
|
|
(v)
|
Amendment
No. 3 to Trust Agreement, dated as of September 18,
2002. Exhibit 10(c)(v) to the 2002 Form
10-K.
|
|
|
|
(vi)
|
Amendment
No. 4 to Trust Agreement, dated as of September 22,
2003. Exhibit 10.1 to the Registrant’s Quarterly Report on Form
10-Q for the quarter ended September 30, 2003 (the “Third Quarter 2003
Form 10-Q”).
|
|
|
|
(vii)
|
Amendment
No. 5 to Trust Agreement, dated as of September 20,
2004. Exhibit 10.1 to the Registrant’s Quarterly Report on Form
10-Q for the quarter ended September 30, 2004.
|
|
|
|
(viii)
|
Amendment
No. 6 to Trust Agreement, dated as of November 22,
2004. Exhibit 99.4 to the Registrant’s Current Report on Form
8-K filed November 22, 2004.
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|
|
10(d)*
|
Executive
Salary Continuation Plan. Exhibit 10(e) to the Registrant’s
Annual Report on Form 10-K for the year ended December 31, 1991 (the “1991
Form 10-K”).
|
|
|
10(e)*
|
1988
Stock Option Plan, as amended and restated as of January 14,
2000. Exhibit 10(f) to the 1999
Form 10-K.
|
|
|
10(f)*
|
2005
Equity Incentive Plan, as amended and restated as of February 19,
2010.
|
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|
10(g)*
|
(i)
|
Form
of Option Agreement for options granted under 2005 Equity Incentive
Plan. Exhibit 99 to the Registrant’s Current Report on Form 8-K
filed July 13, 2005.
|
|
|
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|
(ii)
|
Form
of Restricted Stock Units Award Agreement for restricted stock units
granted under 2005 Equity Incentive Plan. Exhibit 10.1 to the
Registrant’s Current Report on Form 8-K filed July 13,
2009.
|
|
|
10(h)*
|
Management
Performance Improvement Plan, as amended and restated as of February 19,
2010.
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|
10(i)*
|
Change
in Control Agreement dated as of February 25, 2010, between the Registrant
and Frank T. Lennon. Exhibit 10.3 to the Registrant’s Current
Report on Form 8-K filed February 25, 2010.
|
|
|
10(j)*
|
(i)
|
Form
of severance agreement between the Registrant and Frank T.
Lennon. Exhibit 10(o)(ii) to the 1997 Form
10-K.
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|
(ii)
|
Form
of Amendment No. 1 to severance agreement. Exhibit 10(j)(ii) to
the 2008 Form 10-K.
|
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|
10(k)*
|
(i)
|
Employment
Agreement dated as of May 4, 1998, among the Registrant, Brink’s,
Incorporated and Michael T. Dan. Exhibit 10(a) to the Registrant’s
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998
(the “Third Quarter 1998 Form 10-Q”).
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|
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(ii)
|
Amendment
No. 1 to Employment Agreement among the Registrant, Brink’s, Incorporated
and Michael T. Dan. Exhibit 10 to the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended June 30,
2002.
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|
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(iii)
|
Amendment
No. 2 to Employment Agreement among the Registrant, Brink’s, Incorporated
and Michael T. Dan. Exhibit 10 to the Registrant’s Current
Report on Form 8-K filed March 10, 2006.
|
|
|
|
(iv)
|
Amendment
No. 3 to Employment Agreement among the Registrant, Brink’s, Incorporated
and Michael T. Dan. Exhibit 10(k)(iv) to the 2008 Form
10-K.
|
|
|
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|
(v)
|
Amendment
No. 4 to Employment Agreement among the Registrant, Brink’s, Incorporated
and Michael T. Dan. Exhibit 10.1 to the Registrant’s Current
Report on Form 8-K filed May 13, 2009.
|
|
|
10(l)*
|
Change
in Control Agreement dated as of February 25, 2010, between the Registrant
and Michael T. Dan. Exhibit 10.1 to the Registrant’s Current
Report on Form 8-K filed February 25, 2010.
|
|
|
10(m)*
|
(i)
|
Change
in Control Agreement dated as of April 7, 2008, between the Registrant and
Michael J. Cazer. Exhibit 10.3 to the Registrant’s Current
Report on Form 8-K filed May 5, 2008.
|
|
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|
(ii)
|
Amendment
No. 1 to Change in Control Agreement between the Registrant and Michael J.
Cazer. Exhibit 10(m)(ii) to the 2008 Form
10-K.
|
|
|
10(n)*
|
(i)
|
Severance
Agreement dated as of April 7, 2008, between the Registrant and Michael J.
Cazer. Exhibit 10.4 to the Registrant’s Current Report on Form
8-K filed May 5, 2008.
|
|
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(ii)
|
Amendment
No. 1 to Severance Agreement between the Registrant and Michael J.
Cazer. Exhibit 10(n)(ii) to the 2008 Form
10-K.
|
|
|
10(o)*
|
(i)
|
Restricted
Stock Unit Award Agreement, dated as of April 7, 2008, between the
Registrant and Michael J. Cazer. Exhibit 10.1 to the Registrant’s Current
Report on Form 8-K filed May 5, 2008.
|
|
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|
(ii)
|
Restricted
Stock Unit Award Agreement, dated as of April 7, 2008, between the
Registrant and Michael J. Cazer. Exhibit 10.2 to the Registrant’s Current
Report on Form 8-K filed May 5, 2008.
|
|
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|
10(p)*
|
Change
in Control Agreement dated as of February 25, 2010, between the Registrant
and Joseph W. Dziedzic. Exhibit 10.2 to the Registrant’s
Current Report on Form 8-K filed February 25, 2010.
|
|
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10(q)*
|
Change
in Control Agreement dated as of February 25, 2010, between the Registrant
and McAlister C. Marshall, II. Exhibit 10.4 to the Registrant’s
Current Report on Form 8-K filed February 25, 2010.
|
|
|
10(r)*
|
Restricted
Stock Unit Award Agreement, dated as of September 15, 2008, between the
Registrant and McAlister C. Marshall, II. Exhibit 10(q) to the
2008 Form 10-K.
|
|
|
10(s)*
|
Change
in Control Agreement dated as of February 25, 2010, between the Registrant
and Matthew A.P. Schumacher. Exhibit 10.5 to the Registrant’s
Current Report on Form 8-K filed February 25, 2010.
|
|
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10(t)*
|
Form
of Indemnification Agreement entered into by the Registrant with its
directors and officers. Exhibit 10(l) to the 1991 Form
10-K.
|
|
|
10(u)*
|
(i)
|
Retirement
Plan for Non-Employee Directors, as amended. Exhibit 10(g) to
the Registrant’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994 (the “Third Quarter 1994 Form
10-Q”).
|
|
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|
(ii)
|
Form
of letter agreement dated as of September 16, 1994, between the Registrant
and its Non-Employee Directors pursuant to Retirement Plan for
Non-Employee Directors. Exhibit 10(h) to the Third Quarter 1994
Form 10-Q.
|
|
|
10(v)*
|
Non-Employee
Directors’ Stock Option Plan, as amended and restated as of July 8,
2005. Exhibit 10.2 to the Registrant’s Quarterly Report on Form
10-Q for the quarter ended June 30, 2005.
|
|
|
10(w)*
|
Directors’
Stock Accumulation Plan, as amended and restated as of September 12,
2008. Exhibit 10.1 to the Third Quarter 2008 Form
10-Q.
|
|
|
10(x)*
|
Non-Employee
Directors’ Equity Plan. Annex B to the Proxy Statement for the
Registrant’s 2008 Annual Meeting of Shareholders.
|
|
|
10(y)*
|
(i)
|
Form
of Award Agreement for deferred stock units granted in 2008 under the
Non-Employee Directors’ Equity Plan. Exhibit 10.3 to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30,
2008 (the “Second Quarter 2008 Form 10-Q”).
|
|
|
|
|
(ii)
|
Form
of Award Agreement for deferred stock units granted in 2009 under the
Non-Employee Directors Equity Plan. Exhibit 10.5 to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30,
2009 (the “Second Quarter 2009 Form 10-Q”).
|
|
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10(z)*
|
Plan
for Deferral of Directors’ Fees, as amended and restated as of November
14, 2008. Exhibit 10(y) to the 2008 Form
10-K.
|
|
|
10(aa)
|
(i)
|
Trust
Agreement for The Brink’s Company Employee Welfare Benefit
Trust. Exhibit 10(t) to the 1999
Form 10-K.
|
|
|
|
(ii)
|
First
Amendment of The Brink’s Company Employee Welfare Benefit Trust, dated as
of November 1, 2001. Exhibit 10(t)(ii) to the 2007 Form
10-K.
|
|
|
|
(iii)
|
Second
Amendment of The Brink’s Company Employee Welfare Benefit Trust, dated as
of September 30, 2003. Exhibit 10(t)(iii) to the 2007 Form
10-K.
|
|
|
10(bb)
|
(i)
|
$43,160,000
Bond Purchase Agreement, dated September 17, 2003, among the Peninsula
Ports Authority of Virginia, Dominion Terminal Associates, Pittston Coal
Terminal Corporation and the Registrant. Exhibit 10.1 to the
Second Quarter 2009 Form 10-Q.
|
|
|
|
(ii)
|
Loan
Agreement between the Peninsula Ports Authority of Virginia and Dominion
Terminal Associates, dated September 1, 2003. Exhibit 10.2(ii)
to the Third Quarter 2003 Form 10-Q.
|
|
|
|
(iii)
|
Indenture
and Trust between the Peninsula Ports Authority of Virginia and Wachovia
Bank, National Association (“Wachovia”), as trustee, dated September 1,
2003. Exhibit 10.2(iii) to the Third Quarter 2003 Form
10-Q.
|
|
|
|
(iv)
|
Parent
Company Guaranty Agreement, dated September 1, 2003, made by the
Registrant for the benefit of Wachovia. Exhibit 10.2(iv) to the
Third Quarter 2003 Form 10-Q.
|
|
|
|
(v)
|
Continuing
Disclosure Undertaking between the Registrant and Wachovia, dated
September 24, 2003. Exhibit 10.2(v) to the Third Quarter 2003
Form 10-Q.
|
|
|
|
(vi)
|
Coal
Terminal Revenue Refunding Bond (Dominion Terminal Associates Project –
Brink’s Issue) Series 2003. Exhibit 10.2(vi) to the Third
Quarter 2003 Form 10-Q.
|
|
|
10(cc)
|
$135,000,000
Letter of Credit Agreement, dated as of July 23, 2008 with an effective
date of August 13, 2008, among the Registrant, certain of the Registrant’s
subsidiaries and ABN AMRO Bank N.V. Exhibit 10.2 to Second
Quarter 2009 Form 10-Q.
|
|
|
10(dd)
|
(i)
|
Credit
Agreement, dated July 13, 2005, among the Registrant, certain of its
subsidiaries and ABN AMRO Bank N.V. Exhibit 10.3 to Second
Quarter 2009 Form 10-Q.
|
|
|
|
(ii)
|
First
Amendment to Credit Agreement, entered into as of December 22, 2006, by
and among the Registrant, Brink’s, Incorporated and ABN AMRO Bank
N.V. Exhibit 10.2 to the Registrant’s Current Report on Form
8-K filed December 22, 2006.
|
|
|
|
(iii)
|
Second
Amendment to Credit Agreement, entered into as of March 24, 2008, by and
among the Registrant, Brink’s, Incorporated and ABN AMRO Bank
N.V. Exhibit 10(cc)(iii) to the 2008 Form
10-K.
|
|
|
10(ee)
|
$400,000,000
Credit Agreement among the Registrant, as Parent Borrower, the Subsidiary
Borrowers referred to therein, certain of Parent Borrower’s Subsidiaries,
as Guarantors, Various Lenders, Bank of Tokyo-Mitsubishi UFJ Trust
Company, as Documentation Agent, Bank of America, N.A. and JPMorgan Chase
Bank, N.A., as Syndication Agents, and Wachovia Bank, National
Association, as Administrative Agent, an Issuing Lender and Swingline
Lender, dated as of August 11, 2006. Exhibit 10.4 to Second
Quarter 2009 Form 10-Q.
|
|
|
10(ff)
|
Stock
Purchase Agreement, dated as of November 15, 2005, by and among BAX
Holding Company, BAX Global Inc., The Brink’s Company and Deutsche Bahn
AG. Exhibit 2.1 to the Registrant’s Current Report on Form 8-K
filed November 16, 2005.
|
|
|
10(gg)
|
Separation
and Distribution Agreement between the Registrant and Brink’s Home
Security Holdings, Inc. dated as of October 31, 2008. Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed November 5,
2008.
|
|
|
10(hh)
|
Brand
Licensing Agreement between Brink’s Network, Incorporated and Brink’s Home
Security Holdings, Inc. dated as of October 31, 2008. Exhibit
10.2 to the Registrant’s Current Report on Form 8-K filed November 5,
2008.
|
|
|
10(ii)
|
Tax
Matters Agreement between the Registrant and Brink’s Home Security
Holdings, Inc. dated as of October 31, 2008. Exhibit 10.3 to
the Registrant’s Current Report on Form 8-K filed November 5,
2008.
|
|
|
10(jj)
|
Non-Competition
and Non-Solicitation Agreement between the Registrant and Brink’s Home
Security Holdings, Inc. dated as of October 31, 2008. Exhibit
10.4 to the Registrant’s Current Report on Form 8-K filed November 5,
2008.
|
|
|
10(kk)
|
Employee
Matters Agreement between the Registrant and Brink’s Home Security
Holdings, Inc. dated as of October 31, 2008. Exhibit 10.5 to
the Registrant’s Current Report on Form 8-K filed November 5,
2008.
|
|
|
10(ll)
|
Registration
Rights Agreement between the Registrant and Evercore Trust Company, N.A.
dated as of August 20, 2009. Exhibit 10.1 to the Registrant’s
Current Report on Form 8-K filed August 20, 2009.
|
|
|
21
|
Subsidiaries
of the Registrant.
|
|
|
23
|
Consent
of Independent Registered Public Accounting Firm.
|
|
|
24
|
Powers
of Attorney.
|
|
|
31
|
Rule
13a-14(a)/15d-14(a) Certifications.
|
|
|
32
|
Section
1350 Certifications.
|
|
|
99(a)*
|
Excerpt
from Pension-Retirement Plan relating to preservation of assets of the
Pension-Retirement Plan upon a change in control. Exhibit 99(a)
to the 2008 Form 10-K.
|
*Management
contract or compensatory plan or arrangement.