BRINKS CO
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2015
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ____________ to ____________
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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
ý
No
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
¨
No
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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
ý
No
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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
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No
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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.
ý
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
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
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No
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As of
February 22, 2016
, there were issued and outstanding
48,969,350
shares of common stock. The aggregate market value of shares of common stock held by non-affiliates as of June 30,
2015
, was
$1,431,587,475
.
Documents incorporated by reference: Part III incorporates information by reference from portions of the Registrant’s definitive
2016
Proxy Statement to be filed pursuant to Regulation 14A.
THE BRINK’S COMPANY
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31,
2015
TABLE OF CONTENTS
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Overview
The Brink’s Company is a premier provider of secure logistics and security solutions including cash-in-transit, ATM replenishment and maintenance, international transportation of valuables, cash management and payment services. Our customers include financial institutions, retailers, government agencies (including central banks), mints, jewelers and other commercial operations around the world. Our global network serves customers in more than
100
countries. We have ownership interest in companies in
41
countries and agency relationships with companies in additional countries. We employ approximately
59,900
people and our operations include approximately
1,100
facilities and
12,000
vehicles.
Brink’s was founded in 1859 and The Brink’s Company was first incorporated in 1930 under the laws of the State of Delaware (at that time, the Company was named The Pittston Company). It succeeded to the business of a Virginia corporation in 1986 and was renamed The Brink’s Company in 2003. Our headquarters are located in Richmond, Virginia. The Brink’s Company, along with its subsidiaries, is referred to as “we,” “our,”, “us,” “Brink’s,” or “the Company” throughout this Form 10-K.
Brink’s operations are located throughout the world with 76% of our revenues earned outside the U.S. during 2015. Brink’s Largest 5 Markets (U.S., France, Mexico, Brazil and Canada) represent 63% of consolidated revenues. The following table presents a summary of revenues by segment in
2013
,
2014
and
2015
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(In millions)
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2015
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% total
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% change
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2014
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% total
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% change
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2013
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% total
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Revenues by segment:
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Largest 5 Markets:
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U.S.
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$
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730.4
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24
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—
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$
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727.8
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20
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3
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$
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707.5
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19
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France
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431.5
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14
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(17
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)
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517.4
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15
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—
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517.6
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14
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Mexico
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333.0
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11
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(14
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)
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388.2
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11
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(8
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)
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423.9
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11
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Brazil
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270.4
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9
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(26
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)
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364.1
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10
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3
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354.4
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9
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Canada
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153.7
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5
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(14
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)
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179.7
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5
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(6
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191.4
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5
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Largest 5 Markets
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1,919.0
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63
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(12
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2,177.2
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61
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(1
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)
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2,194.8
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58
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Latin America
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369.9
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12
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(3
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380.6
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11
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(7
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407.1
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11
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EMEA
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444.7
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15
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(20
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556.3
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16
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3
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540.6
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14
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Asia
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157.4
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5
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13
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139.8
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4
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4
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134.2
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4
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Global Markets
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972.0
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32
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(10
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1,076.7
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30
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—
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1,081.9
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29
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Payment Services
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85.9
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3
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(11
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)
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96.6
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3
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76
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54.8
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1
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Total reportable segments
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2,976.9
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97
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(11
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)
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3,350.5
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94
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1
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3,331.5
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88
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Other items not allocated to segments:
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Venezuela operations
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84.5
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3
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(60
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211.8
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6
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(53
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447.1
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12
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Total Revenues
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$
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3,061.4
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100
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(14
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$
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3,562.3
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100
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(6
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$
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3,778.6
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100
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Amounts may not add due to rounding.
Geographic financial information related to revenues and long-lived assets is included in the consolidated financial statements on page 78.
1
Mission and Strategy
Our Mission and Goal
Our mission is to be the world’s most respected provider of secure logistics solutions. Our goal is to increase shareholder value by achieving consistent growth in revenues, profits and cash flows.
Our Strategy
Our strategy has three pillars:
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Expand offerings
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Drive efficiency
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Transform our culture
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Expand our offerings -
Transform from a transactional business model to a value-based secure supply chain management company.
We are working to expand our services across our customers’ entire cash and valuable supply chains and business processes. Improving our customers’ supply-chain efficiency reduces total cost, improves our value-added pricing and generates opportunities for customers to outsource more services to Brink’s.
These opportunities include:
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integrated armored transportation and money processing services
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full-service management of entire ATM networks
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CompuSafe
®
service (“intelligent safes”)
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new market opportunities for Global Services
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Drive efficiency -
Implement "Lean" processes, right-size cost structure, and centralize support to deliver the most customer value while consuming fewer resources.
Improving operational efficiency is critical to enhancing our competitive position and pursuing future growth. Our efforts include:
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flattening organizational structures to enhance decision-making and reduce administrative expenses
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centralizing support functions to reduce costs and enable country-level operating management to focus on customers and operations
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improving route logistics with IT-based productivity tools
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introducing new and retrofitted vehicles to accommodate one-person crews
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leveraging global purchasing power to reduce costs for vehicles, equipment, maintenance, travel and other services.
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Transform our culture -
Demonstrate behaviors that reflect our values of Accountability, Customer Focus and Trust (“ACT”). Transform culture to drive strategy.
As part of our ongoing cultural transformation, we continue to promote ACT and endeavor to ensure that our employees demonstrate these values and related behaviors. We are working to place leaders who consistently demonstrate ACT behaviors in our most critical roles.
2
Services
We design customized services to meet the cash and valuables supply chain needs of our customers. We enter into contracts with our customers to establish pricing and other terms. Cash-in-Transit and ATM contracts usually cover an initial term of at least one year and in many cases one to three years, and generally remain in effect thereafter until canceled by either party. Contracts for Cash Management Services are typically longer. Following are descriptions of our service offerings:
Core Services
(53% of total revenues in
2015
)
Cash-in-transit and ATM Services are core services we provide to customers throughout the world. We charge customers per service performed or based on the value of goods transported. Revenues are affected by the level of economic activity in various markets as well as the volume of business for specific customers. Core services generated approximately $1.6 billion of revenues in
2015
.
Cash-in-Transit Services
– Serving customers since 1859, our success in Cash-in-Transit is driven by a combination of rigorous security practices, high-quality customer service, risk management and logistics expertise. Cash-in-Transit Services generally include the secure transportation of:
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cash between businesses and financial institutions, such as banks and credit unions
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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, bullion and precious metals for central banks and other customers
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ATM Services
– We manage
93,000
ATMs worldwide. We provide customers who own and operate ATMs a variety of service options. Basic ATM management services include cash replenishment and first and second line maintenance. We also provide comprehensive services for ATM management through our Brink's Integrated Managed Services (“Brink’s IMS”) offering, which includes cash replenishment, replenishment forecasting, cash optimization, ATM remote monitoring, service call dispatching, transaction processing, installation services, and first and second line maintenance.
High-Value Services
(39% of total revenues in
2015
)
Our Core Services, combined with our brand and global infrastructure, provide a broad platform from which we offer additional High-Value Services, which generated approximately $1.2 billion of revenues in
2015
.
Global Services
- Brink’s Global Services ("BGS") is the leading global provider of secure transport of highly-valued commodities including diamonds, jewelry, precious metals, securities, currency, high-tech devices, electronics and pharmaceuticals. Our specialized diamond and jewelry operations have offices in the world’s major diamond and jewelry centers. Serving customers in more than 100 countries, BGS provides secure transportation services including pick-up, packaging, customs clearance, secure vault storage and inventory management. BGS uses a combination of armored vehicles and secure air and sea transportation.
Cash Management Services
- We offer a variety of Cash Management Services, depending on customers’ unique needs. These include:
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money processing (e.g., counting, sorting, wrapping, checking condition of bills, etc.) and other cash management services
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deploying and servicing “intelligent” safes and safe control devices, including our patented CompuSafe
®
service
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integrated check and cash processing services (“Virtual Vault”)
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check imaging services
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Other cash management services include cashier balancing, counterfeit detection, account consolidation and electronic reporting. Retail and bank customers use Brink’s to count and reconcile coins and currency, prepare bank deposit information and replenish coins and currency in specific denominations.
Customers may have relatively simple requirements or they may need a more fully integrated approach to managing their supply chain of cash. Brink’s offers logistical support from point-of-sale through transport, vaulting, bank deposit and related credit reporting. We also offer 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 tools that enable banks and other customers to reduce costs while improving service to their customers. We believe the quality and scope of our money processing and information systems differentiate our Cash Management Services from competitive offerings.
Brink’s CompuSafe
®
Service
. Brink’s CompuSafe
®
service provides an integrated, closed-loop system for preventing theft and managing cash. We market CompuSafe
®
services to a variety of cash-intensive customers including convenience stores, gas stations, restaurants, retail chains and entertainment venues. Once the specialized safe is installed, the customer’s employees deposit currency into the safe’s cassettes, which can only be removed by Brink’s personnel. Upon removal, the cassettes are securely transported to a vault for processing where contents are verified and transferred for deposit. Our CompuSafe
®
service features currency-recognition and counterfeit-detection technology, multi-language touch screens and an electronic interface between the point-of-sale, back-office systems and external banks. Our electronic reporting interface with external banks enables customers to receive same-day credit on their cash balances, even if the cash remains on the customer’s premises.
Virtual Vault
. Virtual Vault services combine Cash-in-Transit Services, Cash Management Services, vaulting and electronic reporting technologies to help banks expand into new markets while minimizing investment in vaults and branch facilities. In addition to providing secure storage, we process deposits, provide check imaging and reconciliation services,
3
perform currency inventory management, process ATM replenishment orders and electronically transmit banking transactions.
Payment Services
– We provide convenient payment services, including bill payment processing, mobile phone top-up, and Brink’s Money™ prepaid cards.
Latin America
. Bill payment processing services include bill payment acceptance and processing services on behalf of utility companies and other billers. Consumers can pay bills, top-up prepaid mobile phones and manage accounts at retail agent locations that we operate on behalf of utility companies, banks and a small number of leased payment locations. This service is offered at over 33,000 locations in Brazil, Mexico, Colombia and Panama.
United States
. We offer Brink’s Money™ general purpose reloadable prepaid cards and payroll cards to consumers and employers. Our general purpose reloadable cards are sold to consumers through our direct-to-consumer marketing efforts while our payroll cards are sold to employers who use them to pay employees electronically. Brink’s Money™ cards can be used at stores, restaurants, online retailers, and at ATMs worldwide. This product is targeted to the millions of unbanked and under-banked Americans looking for alternative financial products.
Commercial Security Systems
–
We provide commercial security system services in designated markets in Europe. Our security system design and installation services include alarms, motion detectors, closed-circuit televisions, digital video recorders, and access control systems, including card and biometric readers, electronic locks, and turnstiles. Monitoring services may also be provided after systems have been installed.
Other Security Services
(8% of total revenues in
2015
)
Guarding
– We protect airports, offices, warehouses, stores, and public venues with or without electronic surveillance, access control, fire prevention and highly trained patrolling personnel. Other security services generated approximately $0.2 billion of revenues in
2015
.
We offer security and guarding services in France, Luxembourg, Greece, Germany and Brazil. A portion of this business involves long-term contracts related primarily to security services at airports and embassies. Generally, guarding contracts are for a one-year period, and the majority of contracts are extended.
Industry and Competition
Brink’s competes with large multinational, regional and smaller companies throughout the world. Our largest multinational competitors are G4S plc (U.K.); Loomis AB (Sweden); Prosegur, Compania de Seguridad, S.A. (Spain); and Garda World Security Corporation (Canada).
We believe the primary factors in attracting and retaining customers are security expertise, service quality, and price. Our competitive advantages include:
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brand name recognition
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reputation for a high level of service and security
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risk management and logistics expertise
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global infrastructure and customer base
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proven operational excellence, and
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high-quality insurance coverage and financial strength
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Although we face competitive pricing pressure in many markets, we resist competing on price alone. We believe our high levels of service, security expertise and value-added solutions differentiate us from competitors.
Insurance Coverage
The availability of high-quality and reliable insurance coverage is an important factor in our ability to attract and retain customers and manage the risks inherent in our business. We purchase insurance coverage for losses in excess of what we consider to be prudent levels of self-insurance. Our insurance policies cover losses from most causes, with the exception of war, nuclear risk and certain other exclusions typical in such policies.
Insurance for security is provided by different groups of underwriters at negotiated rates and terms. Premiums fluctuate depending on market conditions. The security loss experience of Brink’s and, to a limited extent, other armored carriers affects our premium rates.
4
Service Mark and Patents
BRINKS is a registered service mark in the U.S. and certain foreign countries. The BRINKS mark, name and related marks are of material significance to our business. We own patents for safes and related services, including our integrated CompuSafe
®
service, which expire between
2016
and
2032
. These patents provide us with important advantages; however, we are not dependent on the existence of these patents.
We have licensed the Brink’s name to a limited number of companies, including a distributor of security products (padlocks, door hardware, etc.) offered for sale to consumers through major retail chains.
Government Regulation
Our U.S. operations are subject to regulation by the U.S. Department of Transportation with respect to safety of operations, equipment and financial responsibility. Intrastate operations in the U.S. are subject to state regulation. Operations outside of the United States are regulated to varying degrees by the countries in which we operate.
Employee Relations
At
December 31, 2015
, our company had approximately
59,900
full-time and contract employees, including approximately
7,100
employees in the United States (of whom approximately
480
were classified as part-time employees) and approximately
52,800
employees outside the United States. At
December 31, 2015
, Brink’s was a party to eleven collective bargaining agreements in North America with various local unions covering approximately
1,700
employees. The agreements have various expiration dates from
2016
to
2019
. Outside of North America, approximately
62%
of employees are represented by trade union organizations. We believe our employee relations are satisfactory.
Business Divestitures
Below is a summary of the significant businesses we disposed in the last three years. See note 18 to the consolidated financial statements for more information on these dispositions. The results of the operations below, which met the criteria for classification as discontinued operations as of or prior to December 31, 2014, have been excluded from continuing operations and are reported as discontinued operations for the current and prior periods. The sales of the Russian cash management business and the Irish guarding operations in 2015 did not meet the criteria for classification as discontinued operations. Operating results for these two businesses are included in continuing operations for the current and prior periods. We continue to operate our Global Services business in most of these countries.
Cash-in-transit operations sold or shut down:
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Poland (sold in March 2013)
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Turkey (shut down in June 2013)
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Hungary (sold in September 2013)
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Germany (sold in December 2013)
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Australia (sold in October 2014)
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Puerto Rico (shut down in November 2014)
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Netherlands (sold in December 2014)
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Guarding operations sold:
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France (January 2013)
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Germany (July 2013)
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Other operations sold:
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We sold Threshold Financial Technologies, Inc. in Canada in November 2013. Threshold operated private-label ATM network and payment processing businesses. Brink’s continues to own and operate Brink’s Integrated Managed Services for ATM customers.
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We sold ICD Limited and other affiliated subsidiaries in November 2013. ICD had operations in China and other locations in Asia. ICD designed and installed security systems for commercial customers.
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In February 2015, we sold a small Mexican parcel delivery business which met the criteria for classification as a discontinued operation as of December 31, 2014.
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Other divestitures not classified as discontinued operations:
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We sold an Irish guarding operation in November 2015.
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We sold our 70% ownership interest in a Russian cash management business in November 2015 and recognized a
$5.9 million
loss on the disposition. A significant part of the loss (
$5.0 million
) represented the reclassification of foreign currency translation adjustments from accumulated other comprehensive income (loss) into earnings.
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We sold a noncontrolling interest in a CIT business based in Peru in 2014 for $60 million.
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In February 2016, we decided to wind down the majority of our operations in the Republic of Ireland, which had revenues of approximately
$15 million
in 2015. We expect to recognize losses from operations and the disposition in the range of
$20 million
to
$25 million
in
2016
. During 2016, as these expenses are incurred, we intend to exclude them from the non-GAAP results consistent with other dispositions. We will continue to provide international shipments to and from the Republic of Ireland through our Global Services business.
5
Reorganization and Restructuring
In the fourth quarter of 2014, we announced a reorganization and restructuring of Brink’s global organization (“2014 Reorganization and Restructuring”) to accelerate the execution of our strategy by reducing costs and providing for a more streamlined and centralized organization. As part of this program, we reduced our total workforce by approximately
1,700
positions. Severance costs of
$21.8 million
associated with these actions were recognized in 2014, with an additional
$1.9 million
in restructuring charges recognized in 2015. The restructuring saved annual direct costs of approximately $50 million in 2015 compared to 2014, excluding severance, lease termination and accelerated depreciation.
As part of the 2014 reorganization and restructuring we:
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reorganized the majority of Brink’s country operations under two business units: Largest 5 Markets (including U.S., France, Mexico, Brazil and Canada), and Global Markets (country operations outside the Largest 5 Markets). Country operations typically provide Cash-in-Transit (“CIT”) Services, ATM Services, Cash Management Services and Global Services. These services are described on pages 3–4. Reporting lines within these two business units are supplemented by a matrixed centralized management of the Global Services operations.
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decided to maintain our centralized organization structure for the Payment Services business.
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centralized the reporting structure of our support functions, including IT, HR, finance, legal, procurement, security and project management. Under the new structure, these functional field employees now report to the global functional leaders instead of the country or regional leaders.
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eliminated regional roles and structures in Europe, Middle East and Africa (“EMEA”) and Latin America.
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As a result of the restructuring, we began to report financial results in the following nine operating segments:
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Each of the five countries within Largest 5 Markets (U.S., France, Mexico, Brazil and Canada)
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Each of the three regions within Global Markets (Latin America, EMEA and Asia)
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Payment Services
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Previously, our reportable segments were: Latin America, EMEA, North America and Asia Pacific.
Financial information related to our segments and amounts not allocated to segments is included in the consolidated financial statements on pages 75–79.
We initiated another global restructuring of our business in the third quarter of 2015 (“2015 Reorganization and Restructuring”), which included the recognition in 2015 of
$11.6 million
in costs related to employee severance, contract terminations and property impairment. The 2015 Reorganization and Restructuring is expected to reduce the global workforce by approximately
1,000
to
1,200
positions and is projected to result in
$25
to
$35 million
in 2016 cost savings.
Executive Leadership and Board of Directors Restructuring
In January 2016, Brink’s entered into an agreement (the "Starboard Agreement") with Starboard Value LP and its affiliates ("Starboard") and announced that the Chief Executive Officer, Thomas C. Schievelbein, would step down no later than the 2016 annual meeting of shareholders and that two of the Company’s directors (including the Company’s independent lead director) had retired from the Board. Pursuant to the Starboard Agreement, among other things, the Board appointed three new independent directors and delegated the responsibility to oversee the search for a new Chief Executive Officer to the Board’s Corporate Governance and Nominating Committee.
In the fourth quarter of 2015, we recognized
$1.8 million
in costs related to the Executive Leadership and Board of Directors restructuring. The majority of these charges will be paid in cash in 2016.
We expect to recognize an additional
$5
to
$10 million
in costs in 2016 related to the 2015 Reorganization and Restructuring and the Executive Leadership and Board of Directors Restructuring.
Other Important Events and Transactions in
2015
In addition to the reorganization and restructuring, the following key events and transactions occurred in
2015
.
Impairment of Long-lived Assets in Venezuela
During the second quarter, Brink's elected to evaluate and pursue strategic options for the Venezuelan business. Our consideration of these options, which is ongoing, required us to perform an impairment review of the carrying values of our Venezuelan long-lived assets. As a result, we recognized a
$35.3 million
impairment charge in 2015. The carrying value of the long-lived assets of our Venezuelan operations was
$6.4 million
at December 31,
2015
. We have not reclassified any of the approximately
$113 million
of accumulated other comprehensive losses attributable to Brink’s shareholders related to our operations in Venezuela into earnings.
6
Argentina
We use the official exchange rate to translate the Brink's Argentina balance sheet and income statement. During
2015
, the official exchange rate ranged from
8.5
to
9.8
local pesos to the U.S. dollar until December 17, 2015 when the currency was devalued. At December 31, 2015, the official exchange rate was
12.9
local pesos to the U.S. dollar.
The government in Argentina had periodically imposed limits on the exchange of local pesos into U.S. dollars. As a result, we elected to repatriate cash from Argentina using different means to convert Argentine pesos into U.S. dollars. Conversions prior to the December 17,
2015 devaluation had settled at rates approximately
30%
to
40%
less favorable than the rates at which we translated the financial statements of our subsidiary in Argentina. After the currency was devalued, we completed a conversion transaction at a rate approximately 10% less favorable than the newly devalued rate.
Available Information and Corporate Governance Documents
The following items are available free of charge on our website (
www.brinks.com
) as soon as reasonably possible after filing or furnishing them with the Securities and Exchange Commission (the “SEC”):
|
•
|
Annual reports on Form 10-K
|
|
•
|
Quarterly reports on Form 10-Q
|
|
•
|
Current reports on Form 8-K, and amendments to those reports
|
The following documents are also available free of charge on our website:
|
•
|
Corporate Governance Policies
|
|
•
|
Code of Ethics
|
|
•
|
The charters of the following committees of our Board of Directors (the “Board”): Audit and Ethics, Compensation and Benefits, Corporate Governance and Nominating, and Finance and Strategy
|
Printed versions of these items will be mailed free of charge to shareholders upon request. Such requests can be made by contacting the Corporate Secretary at 1801 Bayberry Court, P. O. Box 18100, Richmond, Virginia 23226-8100.
7
We operate in highly competitive industries.
We compete in industries that are subject to significant competition and pricing pressures in most markets. In addition, our business model requires significant fixed costs associated with offering many of our services including costs to operate a fleet of armored vehicles and a network of secure branches. Because we believe we have competitive advantages such as brand name recognition and a reputation for a high level of service and security, we resist competing on price alone. However, continued pricing pressure from competitors or failure to achieve pricing based on the competitive advantages identified above could result in lost volume of business and have an adverse effect on our business, financial condition, results of operations and cash flows. In addition, given the highly competitive nature of our industries, it is important to develop new solutions and product and service offerings to help retain and expand our customer base. Failure to develop, sell and execute new solutions and offerings in a timely and efficient manner could also negatively affect our ability to retain our existing customer base or pricing structure and have an adverse effect on our business, financial condition, results of operations and cash flows.
Decreased use of cash could have a negative impact on our business.
The proliferation of payment options other than cash, including credit cards, debit cards, stored-value cards, mobile payments and on-line purchase activity, could result in a reduced need for cash in the marketplace and a decline in the need for physical bank branches and retail stores. To mitigate this risk, we are developing new lines of business and investing in adjacent security-related markets, but there is a risk that these initiatives may not offset the risks associated with our traditional cash-based business and that our business, financial condition, results of operations and cash flows could be negatively impacted.
Our growth strategy may not be successful.
One element of our growth strategy is to expand our offerings to customers. We may not be successful in designing or marketing additional products and services to customers. In addition we may fail to achieve our strategic objectives and anticipated operating profit improvements, which would adversely affect our results of operations and cash flows.
We have significant operations outside the United States.
We currently serve customers in more than
100
countries, including
41
countries where we operate subsidiaries. Seventy-six percent (76%) of our revenues in
2015
came from operations outside the U.S. We expect revenues outside the U.S. to continue to represent a significant portion of total revenues. Business operations outside the U.S. are subject to political, economic and other risks inherent in operating in foreign countries, such as:
|
•
|
the difficulty of enforcing agreements, collecting receivables and protecting assets through foreign legal systems;
|
|
•
|
trade protection measures and import or export licensing requirements;
|
|
•
|
difficulty in staffing and managing widespread operations;
|
|
•
|
required compliance with a variety of foreign laws and regulations;
|
|
•
|
enforcement of our global compliance program in foreign countries with a variety of laws, cultures and customs;
|
|
•
|
varying permitting and licensing requirements in different jurisdictions;
|
|
•
|
foreign ownership laws;
|
|
•
|
changes in the general political and economic conditions in the countries where we operate, particularly in emerging markets;
|
|
•
|
threat of nationalization and expropriation;
|
|
•
|
higher costs and risks of doing business in a number of foreign jurisdictions;
|
|
•
|
laws or other requirements and restrictions associated with organized labor;
|
|
•
|
limitations on the repatriation of earnings;
|
|
•
|
fluctuations in equity, revenues and profits due to changes in foreign currency exchange rates, including measures taken by governments to devalue official currency exchange rates;
|
|
•
|
inflation levels exceeding that of the U.S; and
|
|
•
|
inability to collect for services provided to government entities.
|
We are exposed to certain risks when we operate in countries that have high levels of inflation, including the risk that:
|
•
|
the rate of price increases for services will not keep pace with the cost of inflation;
|
|
•
|
adverse economic conditions may discourage business growth which could affect demand for our services;
|
|
•
|
the devaluation of the currency may exceed the rate of inflation and reported U.S. dollar revenues and profits may decline; and
|
|
•
|
these countries may be deemed “highly inflationary” for U.S. generally accepted accounting principles (“GAAP”) purposes.
|
We manage these risks by monitoring current and anticipated political and economic developments, monitoring adherence to our global compliance program and adjusting operations as appropriate. Changes in the political or economic environments of the countries in which we operate could have a material adverse effect on our business, financial condition, results of operations and cash flows.
8
We may be unable to achieve, or may be delayed in achieving, our initiatives to drive efficiency and control costs.
We have launched a number of initiatives, including the 2015 reorganization and restructuring and the 2014 reorganization and restructuring described on page 6, to improve efficiencies and reduce operating costs. Although we have achieved annual cost savings associated with these initiatives, we may be unable to sustain the cost savings that we have achieved. In addition, if we are unable to achieve, or have any unexpected delays in achieving additional cost savings, our results of operations and cash flow may be adversely affected. Even if we meet our goals as a result of these initiatives, we may not receive the expected financial benefits of these initiatives.
We may not be successful in pursuing strategic investments or acquisitions or realize the expected benefits of those transactions because of integration difficulties and other challenges.
While we may identify opportunities for investments to support our growth strategy, as well as acquisition and divestiture opportunities, our due diligence examinations and positions that we may take with respect to appropriate valuations for acquisitions and divestitures and other transaction terms and conditions may hinder our ability to successfully complete business transactions to achieve our strategic goals. Our ability to realize the anticipated benefits from acquisitions will depend, in part, on successfully integrating each business with our company as well as improving operating performance and profitability through our management efforts and capital investments. The risks to a successful integration and improvement of operating performance and profitability include, among others, failure to implement our business plan, unanticipated issues in integrating operations with ours, unanticipated changes in laws and regulations, labor unrest resulting from union operations, regulatory, environmental and permitting issues, the effect on our internal controls and compliance with the regulatory requirements under the Sarbanes-Oxley Act of 2002, and difficulties in fully identifying and evaluating potential liabilities, risks and operating issues. The occurrence of any of these events may adversely affect our expected benefits of any acquisitions and may have a material adverse effect on our financial condition, results of operations or cash flows.
We have significant deferred tax assets in the United States that may not be realized.
Deferred tax assets are future tax deductions that result primarily from the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial statement and income tax purposes. At
December 31, 2015
, we have
$273 million
of U.S. deferred tax assets, net of valuation allowances, primarily related to our retirement plan obligations. These future tax deductions may not be realized if tax rules change or if projected future taxable income is insufficient. Consequently, not realizing our U.S. deferred tax assets may significantly and materially affect our financial condition, results of operations and cash flows.
It is possible that we will incur restructuring charges in the future.
It is possible that we will take restructuring actions in one or more of our markets in the future to reduce expenses. These actions could result in significant restructuring charges at these subsidiaries, including recognizing impairment charges to write down assets, and recording accruals for employee severance and the termination of operating leases. These charges, if required, could significantly and materially affect results of operations and cash flows.
We have significant retirement obligations.
Poor investment performance of retirement plan holdings and / or lower interest rates used to discount the obligations could unfavorably affect our liquidity and results of operations.
We have substantial pension and retiree medical obligations, a portion of which have been funded. The amount of these obligations is significantly affected by factors that are not in our control, including interest rates used to determine the present value of future payment streams, investment returns, medical inflation rates, participation rates and changes in laws and regulations. The funded status of the primary U.S. pension plan was approximately 86% as of
December 31, 2015
. Based on actuarial assumptions at the end of
2015
, we do not expect to make any contributions until 2020. A change in assumptions could result in funding obligations that could adversely affect our liquidity and our ability to use our resources to make acquisitions and to otherwise grow our business.
We have $716 million of actuarial losses recorded in accumulated other comprehensive income (loss) at the end of
2015
. These losses relate to changes in actuarial assumptions that have increased the net liability for benefit plans. These losses have not been recognized in earnings. These losses will be recognized in earnings in future periods to the extent they are not offset by future actuarial gains. Our projections of future cash requirements and expenses for these plans could be adversely affected if our retirement plans have additional actuarial losses.
9
Our earnings and cash flow could be materially affected by increased losses of customer valuables.
We purchase insurance coverage for losses of customer valuables for amounts in excess of what we consider prudent deductibles and/or retentions. Insurance is provided by different groups of underwriters at negotiated rates and terms. Coverage is available to us in major insurance markets, although premiums charged are subject to fluctuations depending on market conditions. Our loss experience and that of other companies in our industry affects premium rates. We are not insured for losses below our coverage limits and recognize expense up to these limits for actual losses. Our insurance policies cover losses from most causes, with the exception of war, nuclear risk and various other exclusions typical for such policies. The availability of high-quality and reliable insurance coverage is an important factor in obtaining and retaining customers and managing the risks of our business. If our losses increase, or if we are unable to obtain adequate insurance coverage at reasonable rates, our financial condition, results of operations and cash flows could be materially and adversely affected.
Currency restrictions in Venezuela limit our ability to use earnings and cash flows outside of Venezuela and may negatively affect ongoing operations in Venezuela.
Because most of our past requests to convert bolivars to dollars have not been approved and certain past processes to obtain dollars are no longer available, we do not expect to be able to repatriate cash from Venezuela for the foreseeable future. Therefore, we do not expect to be able to use cash held in Venezuela for any purpose outside of that country, including reducing our U.S. debt, funding growth or business acquisitions or returning cash to shareholders.
We believe that currency exchange restrictions in Venezuela may disrupt the operation of our business in Venezuela because we may be unable to pay for goods and services that are required to be paid in dollars. This could reduce our ability to provide services to our customers in Venezuela, or could increase the cost of delivering the services, which would negatively affect our earnings and cash flows, and could result in a loss of control, deconsolidation, shutdown or loss of the business in Venezuela.
We have risks associated with confidential information.
In the normal course of business, we collect, process and retain sensitive and confidential information, including information about individuals. Despite the security measures we have in place, our facilities and systems, and those of third-party service providers and business partners, could be vulnerable to security breaches (including cybersecurity breaches), acts of vandalism, computer viruses, misplaced or lost data, programming or human errors or other similar events. Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential information, whether by us or by third-party service providers, could damage our reputation, expose us to the risks of litigation and liability, disrupt our business or otherwise have a material adverse effect on our business, financial condition, results of operations and cash flows.
Negative publicity to our name or brand could lead to a loss of revenues or profitability.
We are in the security business and our success and longevity are based to a large extent on our reputation for trust and integrity. Our reputation or brand, particularly the trust placed in us by our customers, could be negatively impacted in the event of perceived or actual breaches in our ability to conduct our business ethically, securely and responsibly. Any damage to our brand could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Failures of our IT system could have a material adverse effect on our business.
We are heavily dependent on our information technology (IT) infrastructure. Significant problems with our infrastructure, such as telephone or IT system failure, cybersecurity breaches, or failure to develop new technology platforms to support new initiatives and product and service offerings, could halt or delay our ability to service our customers, hinder our ability to conduct and expand our business and require significant remediation costs. In addition, we continue to evaluate and implement upgrades to our IT systems. We are aware of inherent risks associated with replacing these systems, including accurately capturing data and system disruptions, and believe we are taking appropriate action to mitigate these risks through testing, training, and staging implementation. However, there can be no assurances that we will successfully launch these systems as planned or that they will occur without disruptions to our operations. Any of these events could have a material adverse effect on our business, financial condition, results of operations and cash flows.
10
We operate in regulated industries.
Our U.S. operations are subject to regulation by the U.S. Department of Transportation with respect to safety of operations and equipment and financial responsibility. Intrastate operations in the U.S. are subject to regulation by state regulatory authorities and interprovincial operations in Canada are subject to regulation by Canadian and provincial regulatory authorities. Our other international operations are regulated to varying degrees by the countries in which we operate. Many countries have permit requirements for security services and prohibit foreign companies from providing different types of security services.
Changes in laws or regulations could require a change in the way we operate, which could increase costs or otherwise disrupt operations. In addition, failure to comply with any applicable laws or regulations could result in substantial fines or revocation of our operating permits and licenses. If laws and regulations were to change or we failed to comply, our business, financial condition, results of operations and cash flows could be materially and adversely affected.
Our inability to access capital or significant increases in our cost of capital could adversely affect our business
.
Our ability to obtain adequate and cost-effective financing depends on our credit quality as well as the liquidity of financial markets. A negative change in our ratings outlook or any downgrade in our credit ratings by the rating agencies could adversely affect our cost and/or access to sources of liquidity and capital. Additionally, such a downgrade could increase the costs of borrowing under available credit lines. Disruptions in the capital and credit markets could adversely affect our ability to access short-term and long-term capital. Our access to funds under current credit facilities is dependent on the ability of the participating banks to meet their funding commitments. Those banks may not be able to meet their funding commitments if they experience shortages of capital and liquidity. Longer disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives, or failures of significant financial institutions could adversely affect our access to capital needed for our business.
We are subject to covenants for our credit facilities, our unsecured notes and our unsecured term loan.
Our credit facilities as well as our unsecured notes and our unsecured term loan are subject to financial covenants, including a limit on the ratio of debt to earnings before interest, taxes, depreciation, and amortization, limits on the ability to pledge assets, limits on the total amount of indebtedness we can incur, limits on the use of proceeds of asset sales and minimum coverage of interest costs. Although we believe none of these covenants are presently restrictive to operations, the ability to meet the financial covenants can be affected by changes in our results of operations or financial condition. We cannot provide assurance that we will meet these covenants. A breach of any of these covenants could result in a default under existing credit facilities. Upon the occurrence of an event of default under any of our credit facilities, the lenders could cause amounts outstanding to be immediately payable and terminate all commitments to extend further credit. The occurrence of these events would have a significant effect on our liquidity and cash flows.
Our effective income tax rate could change.
We operate subsidiaries in
41
countries, all of which have different income tax laws and associated income tax rates. Our effective income tax rate can be significantly affected by changes in the mix of pretax earnings by country and the related income tax rates in those countries. In addition, our effective income tax rate is significantly affected by the ability to realize deferred tax assets, including those associated with net operating losses. Changes in income tax laws, income apportionment, or estimates of the ability to realize deferred tax assets, could significantly affect our effective income tax rate, financial position and results of operations. We are subject to the regular examination of our income tax returns by various tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from these examinations will not have a material adverse effect on our business.
We have certain environmental and other exposures related to our former coal operations.
We may incur future environmental and other liabilities in connection with our former coal operations, which could materially and adversely affect our financial condition, results of operations and cash flows.
We may be exposed to certain regulatory and financial risks related to climate change.
Growing concerns about climate change may result in the imposition of additional environmental regulations to which we are subject. Some form of federal regulation may be forthcoming with respect to greenhouse gas emissions (including carbon dioxide) and/or "cap and trade" legislation. The outcome of this legislation may result in new regulation, additional charges to fund energy efficiency activities or other regulatory actions. Compliance with these actions could result in the creation of additional costs to us, including, among other things, increased fuel prices or additional taxes or emission allowances. We may not be able to recover the cost of compliance with new or more stringent environmental laws and regulations from our customers, which could adversely affect our business. Furthermore, the potential effects of climate change and related regulation on our customers are highly uncertain and may adversely affect our operations.
11
Forward-Looking Statements
This document contains both historical and forward-looking information. Words such as “anticipates,” “assumes,” “estimates,” “expects,” “projects,” “predicts,” “intends,” “plans,” “potential,” “believes,” “may,” “should” and similar expressions may identify forward-looking information. Forward-looking information in this document includes, but is not limited to, statements regarding future performance of The Brink’s Company and its global operations, including: execution of our business strategy; anticipated savings from reorganization and restructuring activities; expected losses from dispositions; 2016 revenue, organic revenue growth, currency impact on revenue, operating profit margin (including the U.S. and Mexico), income from continuing operations, non-operating income or expense, capital expenditures, capital leases and depreciation and amortization, and earnings per share; the repatriation of cash from our Venezuelan operations; the anticipated financial effect of pending litigation; the realization of deferred tax assets; our anticipated effective tax rate for 2016 and our tax position; the reinvestment of earnings on operations outside the United States; net income (loss) attributable to noncontrolling interests, the ability to meet liquidity needs; expenses and payouts for the U.S. retirement plans and the non-U.S. pension plans and the expected long-term rate of return and funded status of the primary U.S. pension plan; compensation cost related to certain equity awards; expected liability for and future contributions to the UMWA plans, liability for black lung obligations; the projected impact of future excise tax on the UMWA plans, our ability to obtain U.S. dollars to operate our business in Venezuela and the impact of future events or actions on the carrying value of long-lived assets in Venezuela and the reclassification of accumulated other comprehensive losses related to our Venezuela operations into earnings; the performance of counterparties to hedging agreements; the recognition of unrecognized tax positions; and expected future payments under contractual obligations. Forward-looking information in this document is subject to known and unknown risks, uncertainties, and contingencies, which are difficult to quantify and which could cause actual results, performance or achievements to differ materially from those that are anticipated.
These risks, uncertainties and contingencies, many of which are beyond our control, include, but are not limited to:
|
•
|
our ability to improve profitability in our largest five markets;
|
|
•
|
our ability to identify and execute further cost and operational improvements and efficiencies in our core businesses;
|
|
•
|
continuing market volatility and commodity price fluctuations and their impact on the demand for our services;
|
|
•
|
our ability to maintain or improve volumes at favorable pricing levels and increase cost and productivity efficiencies, particularly in the United States and Mexico;
|
|
•
|
investments in information technology and adjacent businesses and their impact on revenues and profit growth;
|
|
•
|
our ability to develop and implement solutions for our customers and gain market acceptance of those solutions;
|
|
•
|
our ability to maintain an effective IT infrastructure and safeguard confidential information;
|
|
•
|
risks customarily associated with operating in foreign countries including changing labor and economic conditions, currency restrictions and devaluations, safety and security issues, political instability, restrictions on repatriation of earnings and capital, nationalization, expropriation and other forms of restrictive government actions;
|
|
•
|
the strength of the U.S. dollar relative to foreign currencies and foreign currency exchange rates;
|
|
•
|
the stability of the Venezuelan economy, changes in Venezuelan policy regarding foreign-owned businesses;
|
|
•
|
regulatory and labor issues in many of our global operations, including negotiations with organized labor and the possibility of work stoppages;
|
|
•
|
our ability to integrate successfully recently acquired companies and improve their operating profit margins;
|
|
•
|
costs related to dispositions and market exits;
|
|
•
|
our ability to identify evaluate and pursue acquisitions and other strategic opportunities;
|
|
•
|
the willingness of our customers to absorb fuel surcharges and other future price increases;
|
|
•
|
our ability to obtain necessary information technology and other services at favorable pricing levels from third party service providers;
|
|
•
|
variations in costs or expenses and performance delays of any public or private sector supplier, service provider or customer;
|
|
•
|
our ability to obtain appropriate insurance coverage, positions taken by insurers with respect to claims made and the financial condition of insurers, safety and security performance, our loss experience, and changes in insurance costs;
|
|
•
|
security threats worldwide and losses of customer valuables;
|
|
•
|
costs associated with the purchase and implementation of cash processing and security equipment;
|
|
•
|
employee and environmental liabilities in connection with our former coal operations, including black lung claims incidence;
|
|
•
|
the impact of the Patient Protection and Affordable Care Act on black lung liability and the Company's ongoing operations;
|
|
•
|
changes to estimated liabilities and assets in actuarial assumptions due to payments made, investment returns, interest rates and annual actuarial revaluations, the funding requirements, accounting treatment, investment performance and costs and expenses of our pension plans, the VEBA and other employee benefits, mandatory or voluntary pension plan contributions;
|
|
•
|
the nature of our hedging relationships;
|
|
•
|
changes in estimates and assumptions underlying our critical accounting policies;
|
|
•
|
our ability to realize deferred tax assets;
|
|
•
|
the outcome of pending and future claims, litigation, and administrative proceedings;
|
|
•
|
public perception of the Company's business and reputation;
|
|
•
|
access to the capital and credit markets;
|
|
•
|
seasonality, pricing and other competitive industry factors; and
|
|
•
|
the promulgation and adoption of new accounting standards and interpretations, new government regulations and interpretation of existing regulations.
|
The information included in this document is representative only as of the date of this document, and The Brink’s Company undertakes no obligation to update any information contained in this document.
12
Not applicable.
13
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, 2015
.
|
Facilities
|
Vehicles
|
||||||||||||||||
|
|
Leased
|
Owned
|
Total
|
Leased
|
Owned
|
Total
|
|||||||||||
|
Largest 5 Markets
|
|
|
|
|
|
|
|||||||||||
|
U.S.
|
118
|
|
26
|
|
144
|
|
2,021
|
|
153
|
|
2,174
|
|
|||||
|
France
|
83
|
|
33
|
|
116
|
|
827
|
|
566
|
|
1,393
|
|
|||||
|
Mexico
|
163
|
|
64
|
|
227
|
|
91
|
|
2,235
|
|
2,326
|
|
|||||
|
Brazil
|
63
|
|
3
|
|
66
|
|
417
|
|
792
|
|
1,209
|
|
|||||
|
Canada
|
37
|
|
15
|
|
52
|
|
478
|
|
11
|
|
489
|
|
|||||
|
Global Markets
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Latin America
|
115
|
|
27
|
|
142
|
|
—
|
|
1,230
|
|
1,230
|
|
|||||
|
EMEA
|
117
|
|
3
|
|
120
|
|
459
|
|
930
|
|
1,389
|
|
|||||
|
Asia
|
143
|
|
—
|
|
143
|
|
5
|
|
672
|
|
677
|
|
|||||
|
Payment Services
|
38
|
|
—
|
|
38
|
|
85
|
|
7
|
|
92
|
|
|||||
|
Corporate Items
|
6
|
|
—
|
|
6
|
|
—
|
|
—
|
|
—
|
|
|||||
|
Venezuela
|
46
|
|
29
|
|
75
|
|
—
|
|
1,053
|
|
1,053
|
|
|||||
|
Total
|
929
|
|
200
|
|
1,129
|
|
4,383
|
|
7,649
|
|
12,032
|
|
|||||
As of
December 31, 2015
, we had approximately
21,300
units for our CompuSafe
®
service installed worldwide, of which approximately
15,900
units were located in the U.S.
For a discussion of legal proceedings, see note 22 to the consolidated financial statements, “Other Commitments and Contingencies,” in Part II, Item 8 of this 10-K.
Not applicable.
14
Executive Officers of the Registrant
The following is a list as of
February 29, 2016
, of the names and ages of the executive officers of The Company indicating the principal positions and offices held by each. There are no family relationships among any of the officers named.
|
Name
|
Age
|
Positions and Offices Held
|
Held Since
|
|||
|
Thomas C. Schievelbein
|
62
|
|
Chairman, President and Chief Executive Officer
|
2012
|
||
|
Joseph W. Dziedzic
|
47
|
|
Executive Vice President and Chief Financial Officer
|
2009
|
||
|
Michael F. Beech
|
54
|
|
Executive Vice President, Strategy and Focus Markets
|
2014
|
||
|
McAlister C. Marshall, II
|
46
|
|
Vice President and General Counsel
|
2008
|
||
|
Holly R. Tyson
|
44
|
|
Vice President and Chief Human Resources Officer
|
2012
|
||
|
Amit Zukerman
|
44
|
|
Executive Vice President, Global Operations
|
2014
|
||
Executive and other officers of the Company are elected annually and serve at the pleasure of the Board.
Mr. Schievelbein is the Chairman, President and Chief Executive Officer of the Company and has held that position since June 2012, prior to which he served as the interim President and Chief Executive Officer of the Company from December 2011 to June 2012 and the interim Executive Chairman of the Company from November 2011 to December 2011. He has also served as a director of the Company since March 2009. He was President of Northrop Grumman Newport News, a subsidiary of the Northrop Grumman Corporation, a global defense company, from November 2001 until November 2004, and was a business consultant from November 2004 to November 2011. Mr. Schievelbein currently serves as a director of Huntington Ingalls Industries, Inc. and New York Life Insurance Company.
Mr. Dziedzic was appointed Executive Vice President of the Company in December 2014 and has served as Chief Financial Officer since 2009. From August 2009 to December 2014, Mr. Dziedzic served as Vice President of the Company. Mr. Dziedzic currently serves as a director of Greatbatch, Inc.
Mr. Beech was appointed Executive Vice President, Strategy and Focus Markets of the Company in December 2014. He served as President, Europe, Middle East and Africa for the Company’s operating subsidiary, Brink’s, Incorporated, from 2011 to December 2014, as President, Asia Pacific from 2011 to 2012 and as Vice President, Global Security from 2009 to 2011.
Mr. Marshall was appointed Vice President and General Counsel of the Company in September 2008. He also previously held the office of Secretary from June 2012 to November 2013.
Ms. Tyson was appointed Vice President and Chief Human Resources Officer of the Company in September 2012. Before joining the Company, Ms. Tyson was with Bristol-Myers Squibb Company, a global biopharmaceutical company, where she was Vice President U.S. Pharmaceuticals Human Resources from 2010 to 2012 and Executive Director World Wide Pharmaceuticals Talent & U.S. Pharmaceutical Sales Learning from 2009 to 2010.
Mr. Zukerman was appointed as the Company’s Executive Vice President, Global Operations and Brink’s Global Services in December 2014. He served as President, Brink’s Global Services and Asia Pacific for the Company’s operating subsidiary, Brink’s, Incorporated, from 2012 to December 2014 and as President, Brink’s Global Services from 2008 to 2012.
15
|
|
Our common stock trades on the New York Stock Exchange under the symbol “BCO.” As of
February 22, 2016
, there were
1,472
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:
|
2015 Quarters
|
2014 Quarters
|
||||||||||||||||||||||||
|
|
1
st
|
2
nd
|
3
rd
|
4
th
|
1
st
|
2
nd
|
3
rd
|
4
th
|
|||||||||||||||||
|
Dividends declared per common share
|
$
|
0.1000
|
|
0.1000
|
|
0.1000
|
|
0.1000
|
|
$
|
0.1000
|
|
0.1000
|
|
0.1000
|
|
0.1000
|
|
|||||||
|
Stock prices:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
High
|
$
|
28.98
|
|
33.62
|
|
31.76
|
|
33.37
|
|
$
|
35.73
|
|
30.56
|
|
28.80
|
|
24.71
|
|
|||||||
|
Low
|
22.24
|
|
25.99
|
|
25.80
|
|
26.87
|
|
27.59
|
|
24.25
|
|
23.85
|
|
19.15
|
|
|||||||||
See note 17 to the consolidated financial statements for a description of limitations of our ability to pay dividends in the future.
16
The following graph compares the cumulative 5-year total return provided to shareholders of The Brink’s Company’s common stock compared to the cumulative total returns of the Russell 2000 Index as well as the S&P SmallCap 600 Index and the S&P 600 Commercial & Professional Services Index. The graph tracks the performance of a $100 investment in our common stock and in each index from December 31, 2010, through December 31, 2015. The performance of The Brink’s Company’s common stock assumes that the shareholder reinvested all dividends received during the period.
*100 invested on 12/31/10 in stock or index, including reinvestment of dividends
Fiscal Year ending December 31.
Source: Zacks Investment Research, Inc.
Comparison of Five-Year Cumulative Total Return
(a)
|
Years Ended December 31,
|
||||||||||||||||||
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
|||||||||||||
|
The Brink's Company
|
$
|
100.00
|
|
101.45
|
|
109.39
|
|
132.72
|
|
96.34
|
|
115.51
|
|
|||||
|
Russell 2000 Index
|
100.00
|
|
95.82
|
|
111.49
|
|
154.78
|
|
162.35
|
|
155.18
|
|
||||||
|
S&P SmallCap 600 Index
|
100.00
|
|
101.02
|
|
117.51
|
|
166.05
|
|
175.61
|
|
172.15
|
|
||||||
|
S&P 600 Commercial & Professional Services Index
|
100.00
|
|
89.37
|
|
112.95
|
|
166.87
|
|
165.32
|
|
167.46
|
|
||||||
|
(a)
|
For the line designated as “The Brink’s Company” the graph depicts the cumulative return on $100 invested in The Brink’s Company’s common stock at December 31, 2010. The cumulative return for each index is measured on an annual basis for the periods from December 31, 2010, through December 31, 2015, with the value of each index set to $100 on December 31, 2010. Total return assumes reinvestment of dividends. In 2015, we changed the indices we provide as comparisons to the stock performance of Brink’s common stock because the Russell 3000 Commercial Services Index was discontinued during 2015. We chose the S&P SmallCap 600 Index and the S&P 600 Commercial & Professional Services Index as appropriate comparisons. We believe that these indices broadly measure the performance of small-cap companies in the United States market and for a smaller subset of small-cap companies in the commercial services industry, respectively.
|
17
Five Years in Review
|
GAAP Basis
|
|||||||||||||||
|
(In millions, except for per share amounts)
|
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||
|
|
|
|
|
|
|||||||||||
|
Revenues
|
$
|
3,061.4
|
|
3,562.3
|
|
3,778.6
|
|
3,577.6
|
|
3,515.4
|
|
||||
|
Operating profit (loss)
|
56.6
|
|
(27.5
|
)
|
163.2
|
|
162.2
|
|
199.7
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Income (loss) attributable to Brink’s
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Continuing operations
|
$
|
(9.1
|
)
|
(54.8
|
)
|
66.0
|
|
102.3
|
|
98.7
|
|
||||
|
Discontinued operations
|
(2.8
|
)
|
(29.1
|
)
|
(9.2
|
)
|
(13.4
|
)
|
(24.2
|
)
|
|||||
|
Net income (loss)
attributable to Brink’s
|
$
|
(11.9
|
)
|
(83.9
|
)
|
56.8
|
|
88.9
|
|
74.5
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Financial Position
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Property and equipment, net
|
$
|
549.0
|
|
669.5
|
|
758.7
|
|
793.8
|
|
749.2
|
|
||||
|
Total assets
|
1,946.7
|
|
2,192.0
|
|
2,497.4
|
|
2,553.1
|
|
2,405.3
|
|
|||||
|
Long-term debt, less current maturities
|
358.1
|
|
373.1
|
|
329.9
|
|
334.8
|
|
334.4
|
|
|||||
|
Brink’s shareholders’ equity
|
317.9
|
|
434.0
|
|
693.9
|
|
501.8
|
|
408.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Supplemental Information
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Depreciation and amortization
|
$
|
139.9
|
|
161.9
|
|
165.8
|
|
148.4
|
|
140.0
|
|
||||
|
Capital expenditures
|
101.1
|
|
136.1
|
|
172.9
|
|
170.9
|
|
176.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Earnings (loss) per share attributable to Brink’s common shareholders
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Continuing operations
|
$
|
(0.19
|
)
|
(1.12
|
)
|
1.36
|
|
2.12
|
|
2.06
|
|
||||
|
Discontinued operations
|
(0.06
|
)
|
(0.59
|
)
|
(0.19
|
)
|
(0.28
|
)
|
(0.51
|
)
|
|||||
|
Net income (loss)
|
(0.24
|
)
|
(1.71
|
)
|
1.17
|
|
1.84
|
|
1.56
|
|
|||||
|
|
|
|
|
|
|||||||||||
|
Diluted:
|
|
|
|
|
|||||||||||
|
Continuing operations
|
$
|
(0.19
|
)
|
(1.12
|
)
|
1.35
|
|
2.11
|
|
2.05
|
|
||||
|
Discontinued operations
|
(0.06
|
)
|
(0.59
|
)
|
(0.19
|
)
|
(0.28
|
)
|
(0.50
|
)
|
|||||
|
Net income (loss)
|
(0.24
|
)
|
(1.71
|
)
|
1.16
|
|
1.83
|
|
1.55
|
|
|||||
|
Cash dividends
|
$
|
0.40
|
|
0.40
|
|
0.40
|
|
0.40
|
|
0.40
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Weighted-average Shares
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Basic
|
49.3
|
|
49.0
|
|
48.7
|
|
48.4
|
|
47.8
|
|
|||||
|
Diluted
|
49.3
|
|
49.0
|
|
49.0
|
|
48.6
|
|
48.1
|
|
|||||
|
Non-GAAP Basis*
|
|||||||||||||||
|
(In millions, except for per share amounts)
|
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||
|
Non-GAAP revenues
|
$
|
2,976.9
|
|
3,350.5
|
|
3,331.5
|
|
3,235.0
|
|
3,246.2
|
|
||||
|
Non-GAAP operating profit
|
156.8
|
|
124.2
|
|
147.0
|
|
166.7
|
|
165.0
|
|
|||||
|
Amounts attributable to Brink’s
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Non-GAAP income from continuing operations
|
$
|
84.2
|
|
49.4
|
|
61.1
|
|
78.1
|
|
81.0
|
|
||||
|
Non-GAAP diluted EPS – continuing operations
|
$
|
1.69
|
|
1.01
|
|
1.25
|
|
1.61
|
|
1.68
|
|
||||
*Reconciliations to GAAP results are found beginning on page 37.
18
THE BRINK’S COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,
2015
TABLE OF CONTENTS
|
|
Page
|
|
|
|
|
|
|
|
||
|
|
Analysis of Results: 2015 versus 2014 (including Outlook)
|
|
|
|
Analysis of Results: 2014 versus 2013
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
19
OPERATIONS
The Brink’s Company offers transportation and logistics management services for cash and valuables throughout the world. These services include:
|
•
|
Cash-in-Transit (“CIT”) Services – armored vehicle transportation of valuables
|
|
•
|
ATM Services – replenishing and maintaining customers’ automated teller machines; providing network infrastructure services
|
|
•
|
Global Services* – secure international transportation of valuables
|
|
•
|
Cash Management Services*
|
|
◦
|
Currency and coin counting and sorting; deposit preparation and reconciliations; other cash management services
|
|
◦
|
Safe and safe control device installation and servicing (including our patented CompuSafe
®
service)
|
|
◦
|
Check and cash processing services for banking customers (“Virtual Vault Services”)
|
|
◦
|
Check imaging services for banking customers
|
|
•
|
Payment Services* – bill payment and processing services on behalf of utility companies and other billers at any of our Brink’s or Brink’s – operated payment locations in Latin America and Brink’s Money™ general purpose reloadable prepaid cards and payroll cards in the U.S.
|
|
•
|
Guarding Services – protection of airports, offices, and certain other locations in Europe and Brazil with or without electronic surveillance, access control, fire prevention and highly trained patrolling personnel
|
* We consider these to be High-Value Services as described in more detail on page 3.
We have nine operating segments:
|
•
|
Each of the five countries within Largest 5 Markets (U.S., France, Mexico, Brazil and Canada)
|
|
•
|
Each of the three regions within Global Markets (Latin America, EMEA and Asia)
|
|
•
|
Payment Services
|
We believe that Brink’s has significant competitive advantages including:
|
•
|
track record of refining our business portfolio to deliver shareholder value
|
|
•
|
medium-term growth drivers from high-value services
|
|
•
|
global footprint in a world with increasing security needs
|
|
•
|
brand name recognition
|
|
•
|
reputation for a high level of service and security
|
|
•
|
risk management and logistics expertise
|
|
•
|
value-based solutions expertise
|
|
•
|
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. Our marketing and sales efforts are enhanced by the “Brink’s” brand, so we seek to protect and build its value. Because our services focus on handling, transporting, protecting and managing valuables, we strive to understand and manage risk.
In order to earn an adequate return on capital, we focus on the effective and efficient use of resources in addition to our pricing discipline. We attempt to maximize the amount of business that flows through our branches, vehicles and systems in order to obtain the lowest costs possible without compromising safety, security or service.
Operating results may vary from period to period. Because revenues are generated from charges per service performed or based on the value of goods transported, they can be affected by both the level of economic activity and the volume of business for specific customers. We also periodically incur costs to change the scale of our operations when volumes increase or decrease. Incremental costs incurred usually relate to increasing or decreasing the number of employees and increasing or decreasing branches or administrative facilities. In addition, security costs can vary depending on performance, the cost of insurance coverage, and changes in crime rates (i.e., attacks and robberies).
Brink’s revenues and related operating profit are generally higher in the second half of the year, particularly in the fourth quarter, due to generally increased economic activity associated with the holiday season.
20
RESULTS OF OPERATIONS
Analysis of Results:
2015
versus
2014
Consolidated Results
Non-GAAP Financial Measures
Non-GAAP results discussed in this filing are financial measures that are not required by or presented in accordance with U.S. generally accepted accounting principles (“GAAP”). We provide an analysis of our operations below on a GAAP and non-GAAP basis. The purpose of the non-GAAP information is to report our operating profit, income from continuing operations and earnings per share without certain income and expense items. The non-GAAP information is used by management to evaluate the performance of our business. Additionally, the non-GAAP financial measures are intended to provide information to assist comparability and estimates of future performance. The non-GAAP adjustments used to reconcile our GAAP results are described in detail on page 37.
Definition of Organic Growth
Organic growth represents the change in revenues or operating profit between the current and prior period, excluding the effect of: acquisitions and dispositions, changes in currency exchange rates (as described on page 24) and the accounting effects of reporting Venezuela under highly inflationary accounting.
|
Years Ended December 31,
|
2015
|
2014
|
% Change
|
||||||
|
(In millions, except for per share amounts)
|
|
|
|
||||||
|
GAAP
|
|
|
|
||||||
|
Revenues
|
$
|
3,061.4
|
|
3,562.3
|
|
(14
|
)
|
||
|
Cost of revenues
|
2,471.6
|
|
2,948.2
|
|
(16
|
)
|
|||
|
Selling, general and administrative expenses
|
463.8
|
|
560.6
|
|
(17
|
)
|
|||
|
Operating profit (loss)
|
56.6
|
|
(27.5
|
)
|
fav
|
|
|||
|
Income (loss) from continuing operations
(a)
|
(9.1
|
)
|
(54.8
|
)
|
(83
|
)
|
|||
|
Diluted EPS from continuing operations
(a)
|
$
|
(0.19
|
)
|
(1.12
|
)
|
(83
|
)
|
||
|
Non-GAAP
(b)
|
|
|
|
|
|
|
|||
|
Non-GAAP revenues
|
$
|
2,976.9
|
|
3,350.5
|
|
(11
|
)
|
||
|
Non-GAAP operating profit
|
156.8
|
|
124.2
|
|
26
|
|
|||
|
Non-GAAP income from continuing operations
(a)
|
84.2
|
|
49.4
|
|
70
|
|
|||
|
Non-GAAP diluted EPS from continuing operations
(a)
|
$
|
1.69
|
|
1.01
|
|
67
|
|
||
|
(a)
|
Amounts reported in this table are attributable to the shareholders of Brink’s and exclude earnings related to noncontrolling interests.
|
|
(b)
|
Non-GAAP results are reconciled to the applicable GAAP results on pages 37–38.
|
Analysis of Consolidated Results:
2015
versus
2014
(GAAP basis)
Consolidated Revenues
Revenues decreased
$500.9 million
or
14
% due to unfavorable changes in currency exchange rates ($
891.3 million
) and an organic decrease in EMEA ($
38.0 million
), partially offset by organic growth in Venezuela ($296.8 million), Latin America ($58.4 million), Payment Services ($
18.9 million
), Asia ($
18.3 million
), Brazil ($
17.7 million
) and Mexico ($
8.5 million
). A significant portion of the reduction in revenues from currency exchange rates relates to a devaluation of the Venezuelan bolivar in February 2015. The U.S. dollar also strengthened against the euro, Brazilian real, Mexican peso and most currencies in Latin America. Revenues increased
11%
on an organic basis due mainly to higher average selling prices in Venezuela and Latin America (including the effects of inflation, which results in pricing adjustments in certain countries).
Consolidated Costs and
Expenses
Cost of revenues decreased
16%
to
$2,471.6 million
as higher labor costs from inflation-based wage increases were more than offset by changes in currency rates, including devaluation in Venezuela, lower U.S. retirement costs ($31.2 million) and cost cutting initiatives. Selling, general and administrative costs decreased
17%
to
$463.8 million
due primarily to changes in currency exchange rates, including devaluation in Venezuela, lower U.S. retirement costs ($15.3 million) and cost cutting initiatives.
Consolidated Operating Profit (Loss)
Operating profit improved from a loss of $27.5 million to a profit of
$56.6 million
due mainly to:
|
•
|
lower remeasurement loss of net monetary assets ($103.5 million) as a result of the devaluation of the Venezuelan currency (a $121.6 million charge in 2014 compared to an $
18.1 million
charge in 2015),
|
|
•
|
lower retirement benefit cost ($46.5 million)
|
|
•
|
organic profit improvement in Latin America ($
38.5 million
), Venezuela ($36.0 million), Mexico ($
19.1 million
), and Asia (
6.0 million
), and
|
|
•
|
lower corporate expenses ($
39.4 million
) on an organic basis due to lower security costs and other cost reductions.
|
The positive impact of these factors was partially offset by:
|
•
|
unfavorable currency impact due to changes in exchange rates ($100.4 million), including devaluation in Venezuela,
|
|
•
|
a $44.3 million gain on sale of our minority interest in a CIT business in Peru in 2014,
|
|
•
|
impairment charges in Venezuela ($35.3 million), and
|
|
•
|
organic profit decreases in EMEA ($
13.6 million
) and the U.S. ($
7.7 million
).
|
21
Consolidated Income (Loss) from Continuing Operations Attributable to Brink’s and Related Per Share Amounts
Loss from continuing operations attributable to Brink’s shareholders in
2015
improved
$45.7 million
to a loss of
$9.1 million
primarily due to the operating profit increase mentioned above and lower interest expense ($4.5 million), partially offset by higher income tax expense ($29.8 million) and a lower loss attributable to noncontrolling interests ($
14.6 million
). Earnings per share from continuing operations was negative
$0.19
, an improvement from negative $1.12 in
2014
.
Analysis of Consolidated Results:
2015
versus
2014
(Non-GAAP basis)
Non-GAAP Consolidated Revenues
Non-GAAP revenues decreased
$373.6 million
or
11
% due to unfavorable changes in currency exchange rates ($
467.2 million
) and an organic decrease in EMEA ($
38.0 million
), partially offset by organic growth in Latin America ($
58.4 million
), Payment Services ($
18.9 million
), Asia ($
18.3 million
), Brazil ($
17.7 million
) and Mexico ($
8.5 million
). The reduction in non-GAAP revenues from currency exchange rates relates to a strengthening of the U.S. dollar against the euro, Brazilian real and Mexican peso and most currencies in Latin America. Non-GAAP revenues increased
3%
on an organic basis due mainly to higher average selling prices in Latin America (including the effects of inflation and related pricing adjustments).
Non-GAAP Consolidated Operating Profit
Non-GAAP operating profit increased
$32.6 million
in
2015
due mainly to:
|
•
|
organic profit improvement in Latin America ($
38.5 million
), Mexico ($
19.1 million
) and Asia (
$6.0 million
), and
|
|
•
|
lower corporate expenses ($
39.4 million
) on an organic basis due to lower security costs and other cost reductions.
|
The positive impact of these factors were partially offset by:
|
•
|
the negative impact of changes in currency exchange rates ($
50.4 million
) and
|
|
•
|
organic profit decreases in EMEA ($
13.6 million
) and the U.S. ($
7.7 million
).
|
Non-GAAP Consolidated Income from Continuing Operations Attributable to Brink’s and Related Per Share Amounts
Non-GAAP income from continuing operations attributable to Brink’s shareholders in
2015
increased $
34.8 million
primarily due to the non-GAAP operating profit increase mentioned above and lower interest expense ($4.4 million), partially offset by the corresponding higher non-GAAP tax expense ($
5.4 million
). Non-GAAP earnings per share from continuing operations was
$1.69
, an improvement from
$1.01
in
2014
.
22
Outlook
Outlook for
2016
Organic revenue growth rate in
2016
, compared to
2015
Non-GAAP results, is expected to be approximately
5%
or
$150 million
. Our estimate of the negative impact of changes in currency exchange rates on revenues is approximately
9%
or
$277 million
. Operating profit margin on a Non-GAAP basis is expected to be in the range of
6.7%
to
7.4%
. Operating profit margin in the U.S. is expected to be 4% - 5%. Operating profit margin in Mexico is expected to be about 10%.
|
2015
GAAP
|
2015
Non-GAAP
(a)
|
2016
Non-GAAP
Outlook
(a)
|
% Change
|
||||||||
|
Revenues
|
$
|
3,061
|
|
2,977
|
|
2,850
|
|
||||
|
Operating profit (loss)
|
57
|
|
157
|
|
190 – 210
|
|
|||||
|
Nonoperating income (expense)
|
(16
|
)
|
(15
|
)
|
(16
|
)
|
|||||
|
Provision for income taxes
|
(67
|
)
|
(52
|
)
|
(68) – (76)
|
|
|||||
|
Loss (income) from noncontrolling interests
|
16
|
|
(5
|
)
|
(5) – (7)
|
|
|||||
|
Income (loss) from continuing operations attributable to Brink's
|
(9
|
)
|
84
|
|
101 – 111
|
|
|||||
|
EPS from continuing operations attributable to Brink's
|
$
|
(0.19
|
)
|
1.69
|
|
2.00 – 2.20
|
|
||||
|
Key Metrics
|
|||||||||||
|
Revenues Change
|
|||||||||||
|
Organic
|
150
|
|
5%
|
||||||||
|
Currency
|
(277
|
)
|
(9%)
|
||||||||
|
Total
|
(127
|
)
|
(4%)
|
||||||||
|
Operating profit margin
|
1.8
|
%
|
5.3
|
%
|
6.7% – 7.4%
|
|
|
||||
|
Effective income tax rate
|
161.8
|
%
|
37.0
|
%
|
39.0
|
%
|
|
||||
|
Fixed assets acquired
|
|
|
|
|
|||||||
|
Capital expenditures
(b)
|
$
|
101
|
|
97
|
|
100 – 110
|
|
|
|||
|
Capital leases
(c)
|
19
|
|
19
|
|
20
|
|
|
||||
|
Total
|
$
|
120
|
|
116
|
|
120 – 130
|
|
|
|||
|
Depreciation and amortization of fixed assets
(b)
|
$
|
136
|
|
132
|
|
120 – 130
|
|
|
|||
Amounts may not add due to rounding.
|
(a)
|
See pages 37 and 38 for information about reconciliations to GAAP.
|
|
(b)
|
2015 non-GAAP amounts exclude Venezuela capital expenditures of
$4.3 million
and Venezuela depreciation and amortization of fixed assets of
$3.9 million
. Depreciation and amortization of fixed assets does not include intangible asset amortization.
|
|
(c)
|
Includes capital leases for newly acquired assets only.
|
23
Revenues and Operating Profit by Segment:
2015
versus
2014
|
|
Organic
|
Acquisitions /
|
|
% Change
|
||||||||||||||||||
|
(In millions)
|
2014
|
Change
|
Dispositions
(a)
|
Currency
(b)
|
2015
|
Total
|
Organic
|
|||||||||||||||
|
Revenues:
|
|
|
|
|
|
|
|
|||||||||||||||
|
U.S.
|
$
|
727.8
|
|
2.6
|
|
—
|
|
—
|
|
730.4
|
|
—
|
|
—
|
|
|||||||
|
France
|
517.4
|
|
(0.3
|
)
|
—
|
|
(85.6
|
)
|
431.5
|
|
(17
|
)
|
—
|
|
||||||||
|
Mexico
|
388.2
|
|
8.5
|
|
—
|
|
(63.7
|
)
|
333.0
|
|
(14
|
)
|
2
|
|
||||||||
|
Brazil
|
364.1
|
|
17.7
|
|
—
|
|
(111.4
|
)
|
270.4
|
|
(26
|
)
|
5
|
|
||||||||
|
Canada
|
179.7
|
|
(1.6
|
)
|
—
|
|
(24.4
|
)
|
153.7
|
|
(14
|
)
|
(1
|
)
|
||||||||
|
Largest 5 Markets
|
2,177.2
|
|
26.9
|
|
—
|
|
(285.1
|
)
|
1,919.0
|
|
(12
|
)
|
1
|
|
||||||||
|
Latin America
|
380.6
|
|
58.4
|
|
—
|
|
(69.1
|
)
|
369.9
|
|
(3
|
)
|
15
|
|
||||||||
|
EMEA
|
556.3
|
|
(38.0
|
)
|
—
|
|
(73.6
|
)
|
444.7
|
|
(20
|
)
|
(7
|
)
|
||||||||
|
Asia
|
139.8
|
|
18.3
|
|
9.1
|
|
(9.8
|
)
|
157.4
|
|
13
|
|
13
|
|
||||||||
|
Global Markets
|
1,076.7
|
|
38.7
|
|
9.1
|
|
(152.5
|
)
|
972.0
|
|
(10
|
)
|
4
|
|
||||||||
|
Payment Services
|
96.6
|
|
18.9
|
|
—
|
|
(29.6
|
)
|
85.9
|
|
(11
|
)
|
20
|
|
||||||||
|
Revenues - non-GAAP
|
3,350.5
|
|
84.5
|
|
9.1
|
|
(467.2
|
)
|
2,976.9
|
|
(11
|
)
|
3
|
|
||||||||
|
Other items not allocated to segments
(d)
|
211.8
|
|
296.8
|
|
—
|
|
(424.1
|
)
|
84.5
|
|
(60
|
)
|
fav
|
|
||||||||
|
Revenues - GAAP
|
$
|
3,562.3
|
|
$
|
381.3
|
|
9.1
|
|
(891.3
|
)
|
3,061.4
|
|
(14
|
)
|
11
|
|
||||||
|
Operating profit:
|
||||||||||||||||||||||
|
U.S.
|
$
|
22.8
|
|
(7.7
|
)
|
—
|
|
—
|
|
15.1
|
|
(34
|
)
|
(34
|
)
|
|||||||
|
France
|
39.4
|
|
1.9
|
|
—
|
|
(6.6
|
)
|
34.7
|
|
(12
|
)
|
5
|
|
||||||||
|
Mexico
|
9.6
|
|
19.1
|
|
—
|
|
(4.5
|
)
|
24.2
|
|
fav
|
|
fav
|
|
||||||||
|
Brazil
|
34.2
|
|
0.1
|
|
—
|
|
(10.5
|
)
|
23.8
|
|
(30
|
)
|
—
|
|
||||||||
|
Canada
|
12.8
|
|
(0.3
|
)
|
—
|
|
(1.8
|
)
|
10.7
|
|
(16
|
)
|
(2
|
)
|
||||||||
|
Largest 5 Markets
|
118.8
|
|
13.1
|
|
—
|
|
(23.4
|
)
|
108.5
|
|
(9
|
)
|
11
|
|
||||||||
|
Latin America
|
50.4
|
|
38.5
|
|
—
|
|
(12.6
|
)
|
76.3
|
|
51
|
|
76
|
|
||||||||
|
EMEA
|
52.5
|
|
(13.6
|
)
|
—
|
|
(3.2
|
)
|
35.7
|
|
(32
|
)
|
(26
|
)
|
||||||||
|
Asia
|
23.1
|
|
6.0
|
|
1.0
|
|
(1.4
|
)
|
28.7
|
|
24
|
|
26
|
|
||||||||
|
Global Markets
|
126.0
|
|
30.9
|
|
1.0
|
|
(17.2
|
)
|
140.7
|
|
12
|
|
25
|
|
||||||||
|
Payment Services
|
(4.9
|
)
|
(1.4
|
)
|
—
|
|
(0.9
|
)
|
(7.2
|
)
|
47
|
|
29
|
|
||||||||
|
Corporate expenses
(c)
|
(115.7
|
)
|
39.4
|
|
—
|
|
(8.9
|
)
|
(85.2
|
)
|
(26
|
)
|
(34
|
)
|
||||||||
|
Operating profit - non-GAAP
|
124.2
|
|
82.0
|
|
1.0
|
|
(50.4
|
)
|
156.8
|
|
26
|
|
66
|
|
||||||||
|
Other items not allocated to segments
(d)
|
(151.7
|
)
|
53.4
|
|
(55.4
|
)
|
53.5
|
|
(100.2
|
)
|
(34
|
)
|
(35
|
)
|
||||||||
|
Operating profit (loss) - GAAP
|
$
|
(27.5
|
)
|
135.4
|
|
(54.4
|
)
|
3.1
|
|
56.6
|
|
fav
|
|
fav
|
|
|||||||
Amounts may not add due to rounding.
|
(a)
|
Includes operating results and gains/losses on acquisitions, sales and exits of businesses. The 2014 divestiture of an equity interest in a business in Peru is included in “Other items not allocated to segments”.
|
|
(b)
|
The amounts in the “Currency” column consist of the amortization of Venezuela non-monetary assets not devalued under highly inflationary accounting rules and the sum of monthly currency changes. Monthly currency changes represent the accumulation throughout the year of the impact on current period results of changes in foreign currency rates from the prior year period.
|
|
(c)
|
Corporate items are not allocated to segment results. Corporate items include salaries and other costs to manage the global business.
|
|
(d)
|
See pages 30–31 for more information.
|
24
Analysis of Segment Results:
2015
versus
2014
Largest 5 Markets
U.S.
Revenues increased (
$2.6 million
) due to organic revenue growth as a result of volume increases. Operating profit decreased
34%
(
$7.7 million
) due to higher labor and security costs associated with challenges managing volume increases while reducing headcount, partially offset by the impact of cost cutting and productivity initiatives and lower health care costs.
France
Revenues decreased
17%
(
$85.9 million
) due to unfavorable currency impact (
$85.6 million
). Revenues were flat organically due to volume and pricing pressure. Operating profit decreased
12%
(
$4.7 million
) due to unfavorable currency (
$6.6 million
), partially offset by the impact of cost cutting initiatives and the inclusion in last year's results of several large unfavorable settlements that did not repeat.
Mexico
Revenues decreased
14%
(
$55.2 million
) due to unfavorable currency impact (
$63.7 million
), partially offset by 2% organic growth ($8.5 million) from higher volumes. Operating profit increased significantly (
$14.6 million
) due to a change in employee benefit structure, lower security losses and the impact of cost cutting and productivity initiatives.
Brazil
Revenues decreased
26%
(
$93.7 million
) primarily due to the negative impact of currency exchange rates (
$111.4 million
), partially offset by
5%
organic growth (
$17.7 million
) from price increases. Operating profit decreased
30%
(
$10.4 million
) driven by unfavorable currency (
$10.5 million
) and flat profits on an organic basis, resulting from low volume growth, slower price growth and higher costs. partially offset by the positive impact of cost cutting initiatives.
Canada
Revenues decreased
14%
(
$26.0 million
) primarily due to the negative impact of currency exchange rates (
$24.4 million
). Operating profit decreased
16%
(
$2.1 million
) driven by unfavorable currency impact (
$1.8 million
) and higher pension costs from a lower discount rate, partially offset by the positive impact of cost cutting initiatives.
Global Markets
Latin America
Revenues decreased
3%
(
$10.7 million
) as the negative impact of currency exchange rates (
$69.1 million
) was offset by organic growth of
15%
(
$58.4 million
) driven by inflation-based revenue increases in Argentina. Operating profit increased
51%
(
$25.9 million
) driven by higher organic results in Argentina and Chile and the positive impact of cost cutting initiatives throughout the region, partially offset by lower organic results in Colombia and unfavorable currency impact (
$12.6 million
). Argentina accounted for over half of Latin America’s profit in
2015
.
EMEA
Revenues decreased
20%
(
$111.6 million
) primarily due to unfavorable currency (
$73.6 million
). Revenue decreased
7%
(
$38.0 million
) on an organic basis as lower revenue in Germany, Greece and Ireland was partially offset by growth in Israel, Turkey, Luxembourg and Switzerland. Operating profit decreased
32%
(
$16.8 million
) due to lower profits in Ireland and Germany, as well as unfavorable currency (
$3.2 million
), partially offset by the positive impact of cost cutting initiatives.
Asia
Revenues increased
13%
(
$17.6 million
) due to organic growth across the region. Operating profit increased
24%
(
$5.6 million
) primarily due to the revenue growth.
Payment Services
Payment Services
Revenues decreased
11%
(
$10.7 million
) as negative currency (
$29.6 million
) was partially offset by
20%
organic growth (
$18.9 million
). Operating profit decreased
$2.3 million
, driven by unfavorable currency (
$0.9 million
) and marketing expenditures to increase cardholders in the U.S. Payments business.
25
Analysis of Results:
2014
versus
2013
Consolidated Results
|
Years Ended December 31,
|
2014
|
2013
|
% Change
|
||||||
|
(In millions, except for per share amounts)
|
|
|
|
||||||
|
GAAP
|
|
|
|
||||||
|
Revenues
|
$
|
3,562.3
|
|
3,778.6
|
|
(6
|
)
|
||
|
Cost of revenues
|
2,948.2
|
|
3,059.2
|
|
(4
|
)
|
|||
|
Selling, general and administrative expenses
|
560.6
|
|
546.8
|
|
3
|
|
|||
|
Operating profit (loss)
|
(27.5
|
)
|
163.2
|
|
unfav
|
|
|||
|
Income (loss) from continuing operations
(a)
|
(54.8
|
)
|
66.0
|
|
unfav
|
|
|||
|
Diluted EPS from continuing operations
(a)
|
$
|
(1.12
|
)
|
1.35
|
|
unfav
|
|
||
|
Non-GAAP
(b)
|
|
|
|
|
|
|
|||
|
Non-GAAP revenues
|
$
|
3,350.5
|
|
3,331.5
|
|
1
|
|
||
|
Non-GAAP operating profit
|
124.2
|
|
147.0
|
|
(16
|
)
|
|||
|
Non-GAAP income from continuing operations
(a)
|
49.4
|
|
61.1
|
|
(19
|
)
|
|||
|
Non-GAAP diluted EPS from continuing operations
(a)
|
$
|
1.01
|
|
1.25
|
|
(19
|
)
|
||
|
(a)
|
Amounts reported in this table are attributable to the shareholders of Brink’s and exclude earnings related to noncontrolling interests.
|
|
(b)
|
Non-GAAP results are reconciled to the applicable GAAP results on pages 37–38.
|
Analysis of Consolidated Results:
2014
versus
2013
(GAAP basis)
Consolidated Revenues
Revenues decreased $216.3 million or
6%
due to unfavorable changes in currency exchange rates (
$740.3 million
), partially offset by organic growth in Venezuela ($346.3 million), Latin America (
$50.5 million
), Payment Services (
$49.4 million
), Brazil (
$43.2 million
), EMEA (
$22.9 million
) and the U.S. (
$20.3 million
). A significant portion of the reduction in revenues from currency exchange rates relates to an 88% devaluation of the Venezuelan bolivar in March 2014. The U.S. dollar also strengthened in the second half of 2014 against the euro and most currencies in Latin America, including the Brazilian real and Mexican peso. Revenues increased
14%
on an organic basis due mainly to higher average selling prices (including the effects of inflation in several Latin American countries). See page 21 for our definition of “organic.”
Consolidated Costs and
Expenses
Cost of revenues decreased 4% to $2,948.2 million as higher labor costs from inflation-based wage increases were more than offset by changes in currency rates, including devaluation in Venezuela. Selling, general and administrative costs increased 3% to $560.6 million due primarily to higher labor costs, partially offset by changes in currency exchange rate, including devaluation in Venezuela.
Consolidated Operating Profit (Loss)
Operating profit decreased $190.7 million to a loss of
$27.5 million
due mainly to:
|
•
|
the negative impact of changes in currency exchange rates ($206.6 million), including a $121.6 million charge related to the remeasurement of net monetary assets as a result of the 88% devaluation of Venezuela currency (compared to a $13.4 million charge for a 16% devaluation in 2013) and lower translated U.S. dollar operating profit in Venezuela due to the 2014 devaluation,
|
|
•
|
costs associated with the 2014 restructuring plan ($21.8 million),
|
|
•
|
higher U.S. pension costs ($20.2 million) and
|
|
•
|
an organic profit decrease in Mexico ($16.6 million)
|
partially offset by the gain on sale of our noncontrolling equity interest in a CIT business in Peru ($44.3 million) and organic profit improvement in Venezuela ($21.3 million), the U.S. ($10.0 million), Latin America (
$7.2 million
) and EMEA (
$6.6 million
).
Consolidated Income (Loss) from Continuing Operations Attributable to Brink’s and Related Per Share Amounts
Income from continuing operations attributable to Brink’s shareholders in 2014 decreased $120.8 million to a loss of $54.8 million primarily due to the operating profit decrease mentioned above, partially offset by the corresponding lower income attributable to noncontrolling interests ($55.2 million) and lower tax expense ($12.6 million). Earnings per share from continuing operations was negative
$1.12
, down from
$1.35
in 2013.
26
Analysis of Consolidated Results:
2014
versus
2013
(Non-GAAP basis)
Non-GAAP Consolidated Revenues
Non-GAAP revenues increased $19.0 million or
1%
as organic growth in Latin America (
$50.5 million
), Payment Services (
$49.4 million
), Brazil (
$43.2 million
), EMEA (
$22.9 million
) and the U.S. (
$20.3 million
) was mostly offset by the negative impact of changes in currency exchange rates (
$158.7 million
). The U.S. dollar strengthened in the second half of 2014 against the euro and most currencies in Latin America, including the Brazilian real and Mexican peso. Revenues increased 5% on an organic basis due mainly to higher average selling prices (including the effects of inflation in several Latin American countries). See page 21 for our definition of “organic.”
Non-GAAP Consolidated Operating Profit
Non-GAAP operating profit decreased $22.8 million in 2014 primarily due to the negative impact of changes in currency exchange rates (
$24.5 million
) and an organic profit decrease in Mexico ($16.6 million), partially offset by organic growth in the U.S. ($10.0 million), and Latin America (
$7.2 million
) and EMEA (
$6.6 million
).
Non-GAAP Consolidated Income from Continuing Operations Attributable to Brink’s and Related Per Share Amounts
Non-GAAP income from continuing operations attributable to Brink’s shareholders in 2014 decreased 19% primarily due to the non-GAAP operating profit decrease mentioned above, partially offset by the corresponding lower tax expense ($7.2 million) and lower income attributable to noncontrolling interests ($2.4 million). Non-GAAP earnings per share from continuing operations was $
1.01
, down from $
1.25
in 2013.
27
Revenues and Operating Profit by Segment:
2014
versus
2013
|
|
Organic
|
Acquisitions /
|
|
% Change
|
||||||||||||||||||
|
(In millions)
|
2013
|
Change
|
Dispositions
(a)
|
Currency
(b)
|
2014
|
Total
|
Organic
|
|||||||||||||||
|
Revenues:
|
|
|
|
|
|
|
|
|||||||||||||||
|
U.S.
|
$
|
707.5
|
|
20.3
|
|
—
|
|
—
|
|
727.8
|
|
3
|
|
3
|
|
|||||||
|
France
|
517.6
|
|
(0.1
|
)
|
—
|
|
(0.1
|
)
|
517.4
|
|
—
|
|
—
|
|
||||||||
|
Mexico
|
423.9
|
|
(19.0
|
)
|
—
|
|
(16.7
|
)
|
388.2
|
|
(8
|
)
|
(4
|
)
|
||||||||
|
Brazil
|
354.4
|
|
43.2
|
|
—
|
|
(33.5
|
)
|
364.1
|
|
3
|
|
12
|
|
||||||||
|
Canada
|
191.4
|
|
1.4
|
|
—
|
|
(13.1
|
)
|
179.7
|
|
(6
|
)
|
1
|
|
||||||||
|
Largest 5 Markets
|
2,194.8
|
|
45.8
|
|
—
|
|
(63.4
|
)
|
2,177.2
|
|
(1
|
)
|
2
|
|
||||||||
|
Latin America
|
407.1
|
|
50.5
|
|
—
|
|
(77.0
|
)
|
380.6
|
|
(7
|
)
|
12
|
|
||||||||
|
EMEA
|
540.6
|
|
22.9
|
|
—
|
|
(7.2
|
)
|
556.3
|
|
3
|
|
4
|
|
||||||||
|
Asia
|
134.2
|
|
9.1
|
|
—
|
|
(3.5
|
)
|
139.8
|
|
4
|
|
7
|
|
||||||||
|
Global Markets
|
1,081.9
|
|
82.5
|
|
—
|
|
(87.7
|
)
|
1,076.7
|
|
—
|
|
8
|
|
||||||||
|
Payment Services
|
54.8
|
|
49.4
|
|
—
|
|
(7.6
|
)
|
96.6
|
|
76
|
|
90
|
|
||||||||
|
Revenues - non-GAAP
|
3,331.5
|
|
177.7
|
|
—
|
|
(158.7
|
)
|
3,350.5
|
|
1
|
|
5
|
|
||||||||
|
Other items not allocated to segments
(d)
|
447.1
|
|
346.3
|
|
—
|
|
(581.6
|
)
|
211.8
|
|
(53
|
)
|
77
|
|
||||||||
|
Revenues - GAAP
|
$
|
3,778.6
|
|
$
|
524.0
|
|
—
|
|
(740.3
|
)
|
3,562.3
|
|
(6
|
)
|
14
|
|
||||||
|
Operating profit:
|
||||||||||||||||||||||
|
U.S.
|
$
|
12.8
|
|
10.0
|
|
—
|
|
—
|
|
22.8
|
|
78
|
|
78
|
|
|||||||
|
France
|
44.5
|
|
(4.6
|
)
|
—
|
|
(0.5
|
)
|
39.4
|
|
(11
|
)
|
(10
|
)
|
||||||||
|
Mexico
|
26.9
|
|
(16.6
|
)
|
—
|
|
(0.7
|
)
|
9.6
|
|
(64
|
)
|
(62
|
)
|
||||||||
|
Brazil
|
41.1
|
|
(3.0
|
)
|
—
|
|
(3.9
|
)
|
34.2
|
|
(17
|
)
|
(7
|
)
|
||||||||
|
Canada
|
10.5
|
|
3.3
|
|
—
|
|
(1.0
|
)
|
12.8
|
|
22
|
|
31
|
|
||||||||
|
Largest 5 Markets
|
135.8
|
|
(10.9
|
)
|
—
|
|
(6.1
|
)
|
118.8
|
|
(13
|
)
|
(8
|
)
|
||||||||
|
Latin America
|
59.6
|
|
7.2
|
|
—
|
|
(16.4
|
)
|
50.4
|
|
(15
|
)
|
12
|
|
||||||||
|
EMEA
|
47.0
|
|
6.6
|
|
—
|
|
(1.1
|
)
|
52.5
|
|
12
|
|
14
|
|
||||||||
|
Asia
|
21.0
|
|
2.4
|
|
—
|
|
(0.3
|
)
|
23.1
|
|
10
|
|
11
|
|
||||||||
|
Global Markets
|
127.6
|
|
16.2
|
|
—
|
|
(17.8
|
)
|
126.0
|
|
(1
|
)
|
13
|
|
||||||||
|
Payment Services
|
1.0
|
|
(5.3
|
)
|
—
|
|
(0.6
|
)
|
(4.9
|
)
|
unfav
|
|
unfav
|
|
||||||||
|
Corporate expenses
(c)
|
(117.4
|
)
|
1.7
|
|
—
|
|
—
|
|
(115.7
|
)
|
(1
|
)
|
(1
|
)
|
||||||||
|
Operating profit - non-GAAP
|
147.0
|
|
1.7
|
|
—
|
|
(24.5
|
)
|
124.2
|
|
(16
|
)
|
1
|
|
||||||||
|
Other items not allocated to segments
(d)
|
16.2
|
|
(29.4
|
)
|
43.6
|
|
(182.1
|
)
|
(151.7
|
)
|
unfav
|
|
unfav
|
|
||||||||
|
Operating profit (loss) - GAAP
|
$
|
163.2
|
|
(27.7
|
)
|
43.6
|
|
(206.6
|
)
|
(27.5
|
)
|
unfav
|
|
(17
|
)
|
|||||||
Amounts may not add due to rounding.
See page 24 for footnotes.
28
Analysis of Segment Results:
2014
versus
2013
Largest 5 Markets
U.S.
Revenues increased
3%
($20.3 million) due to organic revenue growth as a result of volume increases. Operating profit increased
78%
($10.0 million) due to cost efficiency measures and changes to the structure of employee benefits.
France
Revenues were flat overall as well as on an organic basis, driven by low growth in volumes offset by unfavorable pricing. Operating profit decreased
11%
($5.1 million) due to higher costs, including investments to transform the business, several large unfavorable settlements, and the unfavorable pricing mentioned above.
Mexico
Revenues decreased
8%
($35.7 million) due to a
4%
organic decrease (
$19.0 million
) on the loss of a major customer, as well as unfavorable currency impact (
$16.7 million
). Operating profit decreased
64%
($17.3 million) due to the decline in revenues and increased insurance costs, partially offset by cost reduction efforts.
Brazil
Revenues increased
3%
($9.7 million) primarily due to
12%
organic growth (
$43.2 million
) resulting from price increases and growth in CompuSafe, partially offset by the negative impact of currency exchange rates (
$33.5 million
). Operating profit decreased
17%
($6.9 million) driven by unfavorable currency (
$3.9 million
) and lower organic profits resulting from favorable non-income tax settlements in 2013.
Canada
Revenues decreased
6%
($11.7 million) primarily due to the negative impact of currency exchange rates (
$13.1 million
), partially offset by organic growth (
$1.4 million
). Operating profit increased
22%
($2.3 million) driven by lower pension costs, partially offset by negative currency (
$1.0 million
).
Global Markets
Latin America
Revenues decreased
7%
($26.5 million) primarily due to the negative impact of currency exchange rates (
$77.0 million
) partially offset by organic growth of
12%
(
$50.5 million
) driven by inflation-based revenue increases in Argentina. Operating profit decreased
15%
($9.2 million) driven by unfavorable currency impact (
$16.4 million
) and lower organic results in Colombia and Chile, partially offset by improved organic results in Argentina.
EMEA
Revenues increased
3%
($15.7 million) primarily due to organic growth (
$22.9 million
) partially offset by unfavorable changes in exchange rates (
$7.2 million
). Organic growth was driven by better volume and pricing in Germany and increased volumes in Russia. Operating profit increased
12%
($5.5 million) due to higher revenues in Germany and Russia.
Asia
Revenues increased
4%
($5.6 million) due mainly to organic growth across the region partially offset by unfavorable currency impact (
$3.5 million
). Operating profit increased
10%
($2.1 million) primarily due to the revenue growth.
Payment Services
Payment Services
Revenues increased
76%
($41.8 million) primarily due to organic growth in Brazil. Operating profit decreased $5.9 million driven by marketing expenditures to increase cardholders in the U.S. Payments business.
29
Income and Expense Not Allocated to Segments
Corporate Expenses
Corporate expenses include former non-segment and regional management costs, currency transaction gains and losses, and costs related to global initiatives.
|
Years Ended December 31,
|
% change
|
||||||||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
2015
|
2014
|
||||||||||
|
General, administrative and other expenses
|
$
|
(81.0
|
)
|
(110.8
|
)
|
(117.7
|
)
|
(27
|
)
|
(6
|
)
|
||||
|
Foreign currency transaction gains (losses)
|
(8.8
|
)
|
(2.6
|
)
|
(2.4
|
)
|
unfav
|
|
8
|
|
|||||
|
Reconciliation of segment policies to GAAP
|
4.6
|
|
(2.3
|
)
|
2.7
|
|
fav
|
|
unfav
|
|
|||||
|
Corporate items
|
$
|
(85.2
|
)
|
(115.7
|
)
|
(117.4
|
)
|
(26
|
)
|
(1
|
)
|
||||
Corporate expenses in
2015
were
$30.5 million
lower than the prior year period due to cost reductions from reorganization and restructuring and lower security losses.
Corporate items in
2014
were $1.7 million lower than
2013
, mainly due to lower general and administrative costs.
Other Items Not Allocated to Segments
|
Years Ended December 31,
|
% change
|
||||||||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
2015
|
2014
|
||||||||||
|
Revenues:
|
|||||||||||||||
|
Venezuela operations
|
$
|
84.5
|
|
211.8
|
|
447.1
|
|
(60
|
)
|
(53
|
)
|
||||
|
Operating profit:
|
|||||||||||||||
|
Venezuela operations
|
(47.7
|
)
|
(97.9
|
)
|
65.7
|
|
(51
|
)
|
unfav
|
|
|||||
|
Reorganization and Restructuring
|
(15.3
|
)
|
(21.8
|
)
|
—
|
|
(30
|
)
|
unfav
|
|
|||||
|
U.S. and Mexican retirement plans
|
(31.2
|
)
|
(79.0
|
)
|
(55.3
|
)
|
(61
|
)
|
43
|
|
|||||
|
Acquisitions and dispositions
|
(6.0
|
)
|
49.4
|
|
5.8
|
|
unfav
|
|
fav
|
|
|||||
|
Share-based compensation adj.
|
—
|
|
(2.4
|
)
|
—
|
|
fav
|
|
unfav
|
|
|||||
|
Operating profit
|
$
|
(100.2
|
)
|
(151.7
|
)
|
16.2
|
|
(34
|
)
|
unfav
|
|
||||
Venezuela operations
We have excluded from our segment results all of our Venezuela operating results, including expenses related to currency devaluations ($34.3 million in 2015 and $142.7 million in 2014) and charges related to the impairment of property and equipment ($35.3 million, the majority of which was recognized in the second quarter of 2015), due to management’s inability to allocate, generate or redeploy resources in-country or globally. In light of these unique circumstances, the Venezuela business is largely independent of the rest of our global operations. As a result, the CODM, the Company’s Chief Executive Officer, assesses segment performance and makes resource decisions by segment excluding Venezuela operating results. Additionally, management believes excluding Venezuela from segment results makes it possible to more effectively evaluate the company’s performance between periods.
Factors considered by management in excluding Venezuela results include:
|
•
|
Continued inability to repatriate cash to redeploy to other operations or dividend to shareholders
|
|
•
|
Highly inflationary environment
|
|
•
|
Fixed exchange rate policy
|
|
•
|
Continued currency devaluations and
|
|
•
|
Difficulty raising prices and controlling costs
|
Reorganization and Restructuring
Brink’s reorganized and restructured its business in December 2014, eliminating the management roles and structures in its former Latin America and EMEA regions and implementing a plan to reduce the cost structure of various country operations by eliminating approximately
1,700
positions across its global workforce. Severance costs of
$21.8 million
associated with these actions were recognized in 2014. An additional $1.9 million was recognized in 2015 related to the 2014 restructuring. The restructuring saved annual direct costs of approximately
$50 million
in 2015 compared to 2014, excluding charges for severance, lease termination and accelerated depreciation. Brink's initiated an additional restructuring of its business in the third quarter of 2015. We recognized
$11.6 million
in 2015 costs related to employee severance, contract terminations, and property impairment associated with the 2015 restructuring, which is expected to reduce the global workforce by an additional
1,000
to
1,200
positions and is projected to result in
$25
to
$35 million
in 2016 cost savings. In addition, in 2015, we recognized $1.8 million in charges related to Executive Leadership and Board of Directors restructuring actions, which were announced in January 2016. We expect to recognize between $5 and $10 million of additional restructuring costs in 2016. These amounts have not been allocated to segment results.
30
U.S. and Mexican retirement plans
Costs related to our frozen U.S. retirement plans have not been allocated to segment results. Brink’s primary U.S. pension plan settled a portion of its obligation in the fourth quarter of 2014 under a lump sum buy-out offer. Approximately 4,300 terminated participants were paid about $150 million of plan assets under this offer in lieu of receiving their pension benefit. A $56 million settlement loss was recognized as a result of the settlement. Employee termination costs in Mexico are accounted for as retirement benefits under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 715,
Compensation — Retirement Benefits
. Settlement charges ($4.6 million in 2015 and $5.9 million in 2014) related to these termination benefits in Mexico have not been allocated to segment results.
Acquisitions and dispositions
Gains and losses related to acquisitions and dispositions that have not been allocated to segment results are described below:
|
•
|
Brink’s sold an equity investment in a CIT business in Peru and recognized a
$44.3 million
gain in 2014. Other divestiture gains in 2014 were
$0.6 million
.
|
|
•
|
Adjustments to the 2010 business acquisition gain for Mexico (
$0.7 million
favorable adjustment in 2014 and a
$1.1 million
in unfavorable adjustments in 2013).
|
|
•
|
A favorable adjustment to the purchase price of a third quarter 2014 business acquisition in EMEA ($0.3 million in the second quarter of 2015).
|
|
•
|
Adjustments to the purchase price of the January 2013 acquisition of Rede Trel in Brazil (
$1.7 million
of favorable adjustments in 2013).
|
|
•
|
The
$0.9 million
impairment in 2013 of an intangible asset acquired in the 2009 India acquisition.
|
|
•
|
Brink's sold its 70% interest in a cash management business in Russia in 2015 and recognized a $5.9 million loss on the sale.
|
|
•
|
Brink's recognized $0.4 million in pretax charges in 2015 related to a real estate transaction in Mexico. The transaction did not qualify for sale-leaseback accounting under U.S. GAAP rules due to continuing involvement with the property. A financing liability of $14.4 million was recognized for the cash proceeds received in the transaction. When the continuing involvement conditions expire, a gain will be recognized, equal to the difference between the financing liability and the remaining net book value of the property.
|
Share-based compensation adjustment
Accounting adjustment related to share-based compensation of $2.4 million in 2014 has not been allocated to segment results. The accounting adjustments revised the accounting for certain share-based awards from fixed to variable fair value accounting. As of July 11, 2014, all outstanding equity awards had met the conditions for a grant date as defined in ASC Topic 718 and have since been accounted for as fixed share-based compensation expense.
2015
versus
2014
Other items not allocated to segments was a lower expense in
2015
versus the prior year period primarily due to lower devaluation charges in Venezuela, a decrease in U.S. retirement plans expense and lower restructuring charges, partially offset by the $44.3 million gain on the 2014 sale of our former equity method investment in Peru in 2014, the 2015 Venezuela impairment charges of $35.3 million and lower profits from Venezuela operations.
2014
versus
2013
Other items not allocated to segments was an
$151.7 million
expense in
2014
versus the prior year gain of
$16.2 million
primarily due to higher losses from devaluations in Venezuela, lower profits from Venezuela's operations, accruals for severance expenses related to the 2014 Reorganization and Restructuring, and higher expenses related to U.S. retirement plans, partially offset by higher gains from acquisitions and dispositions (principally, the sale of an investment in a CIT business operating in Peru).
2016
Outlook
See page 49 for a 5-year projection of expenses based on current assumptions for our significant U.S. retirement plans. We are not able to estimate the amount of settlement expenses of our Mexican subsidiaries.
31
Other Operating Income and Expense
Amounts below represent consolidated other operating income and expense.
|
Years Ended December 31,
|
% change
|
||||||||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
2015
|
2014
|
||||||||||
|
Foreign currency items:
|
|
|
|
|
|
||||||||||
|
Transaction losses
|
$
|
(26.8
|
)
|
(127.2
|
)
|
(18.1
|
)
|
(79
|
)
|
unfav
|
|
||||
|
Hedge gains (losses)
|
2.9
|
|
1.4
|
|
(0.4
|
)
|
fav
|
|
fav
|
|
|||||
|
Gains on sale of property and equity investment
|
0.9
|
|
44.9
|
|
2.4
|
|
(98
|
)
|
fav
|
|
|||||
|
Argentina conversion losses
|
(7.1
|
)
|
(3.6
|
)
|
(2.1
|
)
|
97
|
|
71
|
|
|||||
|
Impairment losses
|
(37.2
|
)
|
(3.3
|
)
|
(2.9
|
)
|
unfav
|
|
14
|
|
|||||
|
Share in earnings of equity affiliates
|
0.5
|
|
4.3
|
|
6.7
|
|
(88
|
)
|
(36
|
)
|
|||||
|
Royalty income
|
2.1
|
|
1.5
|
|
1.9
|
|
40
|
|
(21
|
)
|
|||||
|
Gains (losses) on business acquisitions and dispositions
|
(6.3
|
)
|
—
|
|
2.8
|
|
unfav
|
|
(100
|
)
|
|||||
|
Other
|
1.6
|
|
1.0
|
|
0.3
|
|
60
|
|
fav
|
|
|||||
|
Other operating income (expense)
|
$
|
(69.4
|
)
|
(81.0
|
)
|
(9.4
|
)
|
(14
|
)
|
unfav
|
|
||||
2015
versus
2014
Other operating expense decreased in
2015
primarily as a result of lower remeasurement losses associated with the currency devaluation in Venezuela ($18.1 million) versus the remeasurement charges related to the currency devaluation in the prior year ($121.6 million). The lower remeasurement charges in 2015 were partially offset by a 2014 gain on the sale of a Peru CIT business ($44.3 million), the 2015 Venezuela property impairment charges ($35.3 million) and a $5.9 million loss on the sale of a Russian cash management business, of which $5.0 million represented foreign currency translation adjustments reclassified from accumulated other comprehensive income (loss) into earnings. See note 1 to the consolidated financial statements for a description of the change in currency exchange processes and rates and the 2015 impairment of long-lived assets in Venezuela.
2014
versus
2013
Other operating expense increased in
2014
primarily as a result of a remeasurement of net monetary assets in Venezuela due to the adoption of the government’s SICAD II currency exchange process partially offset by a $44.3 million gain on the sale of an equity interest in a CIT business in Peru. See note 1 to the consolidated financial statements for a description of the change in currency exchange processes and rates in Venezuela.
32
Nonoperating Income and Expense
Interest Expense
|
Years Ended December 31,
|
% change
|
||||||||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
2015
|
2014
|
||||||||||
|
Interest expense
|
$
|
18.9
|
|
23.4
|
|
25.1
|
|
(19
|
)
|
(7
|
)
|
||||
Interest expense was lower in
2015
due to lower weighted average interest rates, the impact of a stronger U.S. dollar on foreign currency-denominated debt and the redemption of the fixed-rate Dominion Terminal Associates bonds in the third quarter of 2014.
Interest expense was slightly lower in
2014
compared to 2013 due to lower weighted average interest rates, partially offset by higher average borrowings.
Interest and Other Income
|
Years Ended December 31,
|
% change
|
||||||||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
2015
|
2014
|
||||||||||
|
Interest income
|
$
|
3.3
|
|
3.0
|
|
2.7
|
|
10
|
|
11
|
|
||||
|
Gain on available-for-sale securities
|
1.1
|
|
0.4
|
|
0.4
|
|
fav
|
|
—
|
|
|||||
|
Foreign currency hedge losses
|
(0.5
|
)
|
(1.0
|
)
|
(1.0
|
)
|
(50
|
)
|
—
|
|
|||||
|
Other
|
(0.5
|
)
|
(0.5
|
)
|
(0.6
|
)
|
—
|
|
(17
|
)
|
|||||
|
Interest and other income
|
$
|
3.4
|
|
1.9
|
|
1.5
|
|
79
|
|
27
|
|
||||
Interest and other income was higher in
2015
compared to
2014
primarily due to higher gains on available for sale securities and lower foreign currency hedge losses.
Interest and other income was slightly higher in
2014
compared to
2013
primarily due to higher interest income.
Outlook for
2016
(GAAP and Non-GAAP)
We expect nonoperating expense for 2016 to approximate 2015 amounts.
See page 23 for a summary of our
2016
outlook and page 38 for information about reconciliation to GAAP.
33
Income Taxes
Summary Rate Reconciliation – GAAP
|
(In percentages)
|
2015
|
2014
|
2013
|
|||||
|
U.S. federal tax rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
||
|
Increases (reductions) in taxes due to:
|
||||||||
|
Venezuela devaluation
|
61.3
|
|
(86.3
|
)
|
—
|
|
||
|
Tax on accelerated U.S. income
(a)
|
57.3
|
|
—
|
|
—
|
|
||
|
Adjustments to valuation allowances
|
18.9
|
|
(16.9
|
)
|
4.2
|
|
||
|
Foreign income taxes
|
(18.2
|
)
|
(0.7
|
)
|
(6.7
|
)
|
||
|
Medicare subsidy for retirement plans
|
—
|
|
—
|
|
(1.1
|
)
|
||
|
French business tax
|
8.9
|
|
(9.0
|
)
|
3.2
|
|
||
|
Taxes on undistributed earnings of foreign affiliates
|
(1.2
|
)
|
(3.7
|
)
|
(0.1
|
)
|
||
|
State income taxes, net
|
(4.1
|
)
|
5.2
|
|
(0.1
|
)
|
||
|
Other
|
3.9
|
|
1.5
|
|
0.9
|
|
||
|
Income tax rate on continuing operations
|
161.8
|
%
|
(74.9
|
)%
|
35.3
|
%
|
||
|
(a)
|
In the fourth quarter of 2015, we recognized a
$23.5 million
increase to current tax expense related to a transaction that accelerated U.S. taxable income. We expect to recognize the majority of the foreign tax benefit in 2016 and the remainder over future years.
|
Summary Rate Reconciliation – Non-GAAP
(a)
|
(In percentages)
|
2015
|
2014
|
2013
|
|||||
|
U.S. federal tax rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
||
|
Increases (reductions) in taxes due to:
|
|
|
|
|
|
|
||
|
Adjustments to valuation allowances
|
2.0
|
|
6.7
|
|
1.8
|
|
||
|
French business tax
|
2.6
|
|
4.3
|
|
3.5
|
|
||
|
Other
|
(2.6
|
)
|
(0.3
|
)
|
3.3
|
|
||
|
Income tax rate on Non-GAAP continuing operations
|
37.0
|
%
|
45.7
|
%
|
43.6
|
%
|
||
|
(a)
|
See pages 37–38 for a reconciliation of non-GAAP 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
|
|
•
|
nontaxable acquisition gains and losses
|
|
•
|
changes in laws in the U.S., France and Mexico
|
|
•
|
U.S. tax on accelerated taxable income
|
|
•
|
changes in the foreign currency rate used to measure Venezuela’s tax results
|
|
•
|
timing of benefit recognition for uncertain tax positions
|
|
•
|
state income taxes
|
We establish or reverse valuation allowances for deferred tax assets depending on all available information including historical and expected future operating performance of our subsidiaries. Changes in judgment about the future realization of deferred tax assets can result in significant adjustments to the valuation allowances. Based on our historical and future expected taxable earnings, we believe it is more likely than not that we will realize the benefit of the deferred tax assets, net of valuation allowances.
Continuing Operations
2015
Compared to U.S. Statutory Rate
The effective income tax rate on continuing operations in 2015 was higher than the 35% U.S. statutory tax rate primarily due to a significant Venezuela currency remeasurement loss and impairment loss, which were largely non-deductible, and U.S. tax on accelerated taxable income. Excluding these items, the effective income tax rate was higher than the 35% U.S. statutory tax rate due to $3.7 million of tax expense due to the characterization of a French business tax as an income tax.
34
2014
Compared to U.S. Statutory Rate
The effective income tax rate on continuing operations in 2014 was lower than the 35% U.S. statutory tax rate (negative 75%) primarily due to a significant Venezuela currency remeasurement loss, which was largely non-deductible. Excluding the remeasurement loss, the effective income tax rate was higher than the 35% U.S. statutory tax rate due to $9.9 million of tax expense from cross border payments and $4.4 million of tax expense due to the characterization of a French business tax as an income tax, mostly offset by a $4.6 million tax benefit due to the jurisdictional mix of earnings including the favorable Venezuela permanent inflation adjustment.
2013
Compared to U.S. Statutory Rate
The effective income tax rate on continuing operations in 2013 approximated the 35% U.S. statutory tax rate due to $6.1 million of tax expense from cross border payments and $4.4 million of tax expense due to the characterization of a French business tax as an income tax, mostly offset by a $8.4 million tax benefit due to the jurisdictional mix of earnings including the favorable Venezuela permanent inflation adjustment.
Outlook for
2016
On a Non-GAAP basis, the effective income tax rate for
2016
is expected to be
39%
. Our effective tax rate may fluctuate materially from this due to changes in permanent book-tax differences, changes in the expected geographical mix of earnings, changes in current or deferred taxes due to legislative changes, changes in valuation allowances or accruals for contingencies and other factors. See page 23 for a summary of our
2016
outlook and pages 37–38 for information about reconciliations to GAAP.
Undistributed Foreign Earnings
As of
December 31, 2015
, we have not recorded U.S. federal deferred income taxes on approximately
$126 million
of undistributed earnings of foreign subsidiaries and equity affiliates in accordance with 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 determine the income tax liability that might be incurred if all such income was remitted to the U.S. due to the inherent complexities associated with any hypothetical calculation, which would be dependent upon the exact form of repatriation.
Noncontrolling Interests
|
Years Ended December 31,
|
% change
|
|||||||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
2015
|
2014
|
|||||||||
|
Net income (loss) attributable to noncontrolling interests
|
$
|
(16.3
|
)
|
(30.9
|
)
|
24.3
|
|
(47
|
)
|
unfav
|
||||
The net loss attributable to noncontrolling interests in
2015
was primarily due to a
$35.3 million
impairment charge related to property and equipment in Venezuela and a $18.1 million currency remeasurement charge of our Venezuelan subsidiary as a result of the remeasurement of net monetary assets using the SIMADI currency exchange rate in 2015. See note 1 to the consolidated financial statements for more information about the currency remeasurement of our Venezuelan subsidiaries and the Venezuela impairment charge.
We also recognized additional expenses of another $16.2 million in 2015 related to Venezuelan nonmonetary assets . Nonmonetary assets are not remeasured to a lower basis when the currency devalues. Instead, under highly inflationary rules, these assets retained their higher historical basis, with the excess recognized in earnings as the assets were consumed. The after-tax effect of the Venezuela impairment charge, the remeasurement losses and these other nonmonetary expenses attributable to noncontrolling interests was $25.7 million in
2015
.
The net loss attributable to noncontrolling interests in 2014 was primarily due to a
$121.6 million
currency remeasurement charge of our Venezuelan subsidiary as a result of the remeasurement of net monetary assets using the SICAD II currency exchange rate in 2014. We also recognized additional expenses of another $21.1 million related to Venezuelan nonmonetary assets in 2014. The after-tax effect of the remeasurement losses and these other nonmonetary expenses attributable to noncontrolling interests was $47.8 million in 2014.
Outlook for
2016
We expect net income attributable to noncontrolling interests on a non-GAAP basis in
2016
to be between
$5 million
and
$7 million
as compared to non-GAAP net income attributable to noncontrolling interests of
$5 million
in
2015
. See page 23 for a summary of our
2016
outlook and page 38 for information about reconciliations to GAAP.
35
Loss from Discontinued Operations
|
Years Ended December 31,
|
|||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Loss from operations
(a)(b)
|
$
|
(2.4
|
)
|
(13.3
|
)
|
(17.4
|
)
|
||
|
Gain (loss) on sales
|
(0.8
|
)
|
(18.9
|
)
|
16.3
|
|
|||
|
Adjustments to contingencies of former operations
(c)
:
|
|
|
|
|
|
|
|||
|
Workers' compensation
|
(0.7
|
)
|
(4.4
|
)
|
(1.7
|
)
|
|||
|
Insurance recoveries related to BAX Global indemnification
(d)
|
—
|
|
9.5
|
|
—
|
|
|||
|
Other
|
0.1
|
|
(1.6
|
)
|
1.0
|
|
|||
|
Loss from discontinued operations before income taxes
|
(3.8
|
)
|
(28.7
|
)
|
(1.8
|
)
|
|||
|
Provision (benefit) for income taxes
|
(1.0
|
)
|
0.4
|
|
7.4
|
|
|||
|
Loss from discontinued operations, net of tax
|
$
|
(2.8
|
)
|
(29.1
|
)
|
(9.2
|
)
|
||
|
(a)
|
Discontinued operations include gains and losses related to businesses that we recently sold or shut down.
No
interest expense was included in discontinued operations in 2015 and 2014. Interest expense included in discontinued operations was
$0.4 million
in 2013.
|
|
(b)
|
The loss from operations in 2015 included
$1.0 million
in pension settlement charges related to the Mexican parcel delivery business sold in February 2015. The loss from operations in 2014 included
$15.6 million
in non-cash severance and impairment charges related to the Netherlands cash-in-transit operations. The loss from operations in 2013 included
$16.2 million
of severance expenses paid to terminate certain employees of the German cash-in-transit operations. We contributed a portion of the cost to fund the German severance payments to the business prior to the execution of the December 2013 sale transaction.
|
|
(c)
|
Primarily related to former coal businesses and BAX Global, a former freight forwarding and logistics business.
|
|
(d)
|
BAX Global had been defending a claim related to the apparent diversion by a third party of goods being transported for a customer. In 2010, the Dutch Supreme Court denied the final appeal of BAX Global, letting stand the lower court ruling that BAX Global was liable for this claim. We had contractually indemnified the purchaser of BAX Global for this contingency. Through 2010, we had recognized
$11.5 million
of expense related to the payment made in satisfaction of the judgment. In 2014, we recovered
$9.5 million
from insurance companies related to this matter.
|
Cash-in-transit operations sold or shut down:
|
•
|
Poland (sold in March 2013)
|
|
•
|
Turkey (shut down in June 2013)
|
|
•
|
Hungary (sold in September 2013)
|
|
•
|
Germany (sold in December 2013)
|
|
•
|
Australia (sold in October 2014)
|
|
•
|
Puerto Rico (shut down in November 2014)
|
|
•
|
Netherlands (sold in December 2014)
|
Guarding operations sold:
|
•
|
France (January 2013)
|
|
•
|
Germany (July 2013)
|
Other operations sold:
|
•
|
We sold Threshold Financial Technologies, Inc. in Canada in November 2013. Threshold operated private-label ATM network and payment processing businesses. Brink’s continues to own and operate Brink’s Integrated Managed Services for ATM customers.
|
|
•
|
We sold ICD Limited and other affiliated subsidiaries in November 2013. ICD had operations in China and other locations in Asia. ICD designed and installed security systems for commercial customers.
|
|
•
|
In February 2015, we sold a small Mexican parcel delivery business which met the criteria for classification as a discontinued operation as of December 31, 2014.
|
Other divestitures not classified as discontinued operations:
|
•
|
We sold an Irish guarding operation in November 2015.
|
|
•
|
We sold our 70% ownership interest in a Russian cash management business in November 2015 and recognized a
$5.9 million
loss on the disposition. A significant part of the loss (
$5.0 million
) represented the reclassification of foreign currency translation adjustments from accumulated other comprehensive income (loss) into earnings.
|
36
Non-GAAP Results Reconciled to GAAP
Non-GAAP results described in this filing are financial measures that are not required by or presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The purpose of the Non-GAAP results is to report financial information excluding certain income and expenses. Amounts reported for prior periods have been updated in this report to present information consistently for all periods presented.
Our Non-GAAP results now exclude Venezuela operations due to our inability to repatriate cash, the hyper inflationary economy, fixed exchange rate policy, continued currency devaluations, and our difficulty raising prices and controlling costs. Management believes excluding Venezuela operating results enables investors to more effectively evaluate the Company’s performance between periods.
The full-year Non-GAAP tax rate in each year below excludes certain pretax and tax income and expense amounts.
The consolidated Non-GAAP outlook amounts for
2016
are not reconciled to GAAP because we are unable to quantify certain amounts that would be required to be included in the GAAP measures without unreasonable effort.
The Non-GAAP information provides information to assist comparability and estimates of future performance. Brink’s believes these measures are helpful in assessing ongoing operations and estimating future results and enable period-to-period comparability of financial performance. Non-GAAP results should not be considered as an alternative to revenues, income or earnings per share amounts determined in accordance with GAAP and should be read in conjunction with their GAAP counterparts.
Non-GAAP Results Reconciled to GAAP
|
2015
|
2014
|
||||||||||||||||||
|
|
Pre-tax
|
Tax
|
Effective tax rate
|
Pre-tax
|
Tax
|
Effective tax rate
|
|||||||||||||
|
Effective Income Tax Rate
(a)
|
|||||||||||||||||||
|
Non-GAAP
|
$
|
141.3
|
|
52.3
|
|
37.0
|
%
|
$
|
102.7
|
|
46.9
|
|
|
45.7
|
%
|
||||
|
Other items not allocated to segments
(b)
|
(100.2
|
)
|
14.2
|
|
124.8
|
%
|
(151.7
|
)
|
(10.2
|
)
|
|
(120.6
|
)%
|
||||||
|
GAAP
|
$
|
41.1
|
|
66.5
|
|
161.8
|
%
|
$
|
(49.0
|
)
|
36.7
|
|
|
(74.9
|
)%
|
||||
|
|
2013
|
||||||||||||||||||
|
|
Pre-tax
|
Tax
|
Effective tax rate
|
||||||||||||||||
|
Effective Income Tax Rate
(a)
|
|
|
|
||||||||||||||||
|
Non-GAAP
|
$
|
124.0
|
|
54.1
|
|
43.6
|
%
|
||||||||||||
|
Other items not allocated to segments
(b)
|
15.6
|
|
(4.8
|
)
|
(8.3
|
)%
|
|||||||||||||
|
GAAP
|
$
|
139.6
|
|
49.3
|
|
35.3
|
%
|
||||||||||||
|
2015
|
|||
|
EPS:
|
|||
|
Constant currency basis - Non-GAAP
|
$
|
2.33
|
|
|
Effect of changes in currency exchange rates
(c)
|
(0.64
|
)
|
|
|
Non-GAAP
|
1.69
|
|
|
|
Other items not allocated to segments
(b)
|
(1.87
|
)
|
|
|
GAAP
|
$
|
(0.19
|
)
|
Amounts may not add due to rounding.
|
(a)
|
From continuing operations.
|
|
(b)
|
See “Other Items Not Allocated To Segments” on pages 30–31 for pre-tax amounts and details. Other Items Not Allocated To Segments for noncontrolling interests, income from continuing operations attributable to Brink's and EPS are the effects of the same items at their respective line items of the consolidated statements of operations.
|
|
(c)
|
See footnote (b) on page 24 for currency definition and calculation between periods. For Non-GAAP EPS on a constant currency basis, EPS is calculated for the most recent period at the prior period's foreign currency rates to eliminate the currency impact on EPS.
|
37
Non-GAAP reconciled to GAAP
|
Years Ended December 31,
|
|||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Revenues:
|
|
|
|
||||||
|
Non-GAAP
|
$
|
2,976.9
|
|
3,350.5
|
|
3,331.5
|
|
||
|
Other items not allocated to segments
(b)
|
84.5
|
|
211.8
|
|
447.1
|
|
|||
|
GAAP
|
$
|
3,061.4
|
|
3,562.3
|
|
3,778.6
|
|
||
|
Operating profit (loss):
|
|
|
|
|
|
|
|||
|
Non-GAAP
|
$
|
156.8
|
|
124.2
|
|
147.0
|
|
||
|
Other items not allocated to segments
(b)
|
(100.2
|
)
|
(151.7
|
)
|
16.2
|
|
|||
|
GAAP
|
$
|
56.6
|
|
(27.5
|
)
|
163.2
|
|
||
|
Provision for income taxes:
|
|
|
|
|
|
|
|||
|
Non-GAAP
|
$
|
52.3
|
|
46.9
|
|
54.1
|
|
||
|
Other items not allocated to segments
(b)
|
14.2
|
|
(10.2
|
)
|
(4.8
|
)
|
|||
|
GAAP
|
$
|
66.5
|
|
36.7
|
|
49.3
|
|
||
|
Net income (loss) attributable to noncontrolling interests:
|
|
|
|
|
|
|
|||
|
Non-GAAP
|
$
|
4.9
|
|
6.4
|
|
8.8
|
|
||
|
Other items not allocated to segments
(b)
|
(21.2
|
)
|
(37.3
|
)
|
15.5
|
|
|||
|
GAAP
|
$
|
(16.3
|
)
|
(30.9
|
)
|
24.3
|
|
||
|
Income (loss) from continuing operations attributable to Brink's:
|
|
|
|
|
|
|
|||
|
Non-GAAP
|
$
|
84.2
|
|
49.4
|
|
61.1
|
|
||
|
Other items not allocated to segments
(b)
|
(93.3
|
)
|
(104.2
|
)
|
4.9
|
|
|||
|
GAAP
|
$
|
(9.1
|
)
|
(54.8
|
)
|
66.0
|
|
||
|
Diluted EPS
|
|
|
|
|
|
|
|||
|
Non-GAAP
|
$
|
1.69
|
|
1.01
|
|
1.25
|
|
||
|
Other items not allocated to segments
(b)
|
(1.87
|
)
|
(2.12
|
)
|
0.11
|
|
|||
|
GAAP
|
$
|
(0.19
|
)
|
(1.12
|
)
|
1.35
|
|
||
|
Non-GAAP margin
|
5.3
|
%
|
3.7
|
%
|
4.4
|
%
|
|||
Amounts may not add due to rounding.
See page 37 for footnote explanations.
38
Foreign Operations
We currently serve customers in more than
100
countries, including
41
countries where we operate subsidiaries.
We are subject to risks customarily associated with doing business in foreign countries, including labor and economic conditions, political instability, controls on repatriation of earnings and capital, nationalization, expropriation and other forms of restrictive action by local governments. Changes in the political or economic environments in the countries in which we operate could have a material adverse effect on our business, financial condition and results of operations. The future effects, if any, of these risks are unknown.
Our international operations conduct a majority of their business in local currencies. Because our financial results are reported in U.S. dollars, they are affected by changes in the value of various local currencies in relation to the U.S. dollar. Recent strengthening of the U.S. dollar has reduced our reported dollar revenues and operating profit, which may continue in 2016. Our operations in Venezuela are 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 pages 58–59 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 60. At
December 31, 2015
, the notional value of our shorter term outstanding foreign currency forward and swap contracts was $51.8 million with average contract maturities of approximately 1 month. These shorter term foreign currency forward and swap contracts primarily offset exposures in the British pound, the euro and the Mexican peso. Additionally, these shorter term contracts are not designated as hedges for accounting purposes, and accordingly, changes in their fair value are recorded immediately in earnings. We recognized gains of
$2.9 million
on these contracts in
2015
. At
December 31, 2015
, the fair value of these outstanding foreign currency forward and swap contracts was not significant.
We also have a longer term cross currency swap contract to hedge exposure in Brazilian real which is designated as a cash flow hedge for accounting purposes. At
December 31, 2015
, the notional value of this longer term contract was $14.3 million with a weighted average maturity of 1.1 years. We recognized net gains of $3.6 million on this contract, of which gains of $4.1 million were included in other operating income (expense) to offset transaction losses of $4.1 million and expenses of
$0.5 million
were included in interest and other income (expense) in
2015
. At
December 31, 2015
the fair value of the longer term cross currency swap contract was $7.1 million, of which $2.9 million is included in prepaid expenses and other and $4.2 million is included in other assets on the consolidated balance sheet.
See note 1 to the consolidated financial statements for a description of government currency processes and restrictions in Venezuela and Argentina, their effect on our operations, and how we account for currency remeasurement for our Venezuelan subsidiaries.
We have been monitoring the economic instability existing in Greece. Greece continues to remain in the European Union and we currently believe that our net assets in this country are fairly stated. We will continue to closely monitor the economic, operating and political environment in Greece. Our revenues in Greece accounted for 1% of total Brink's revenues in
2015
.
39
LIQUIDITY AND CAPITAL RESOURCES
Overview
Over the last three years, we used cash generated from our operations, proceeds from sales of investments and borrowings to
|
•
|
invest in the infrastructure of our business (new facilities, cash sorting and other equipment for our Cash Management Services operations, armored trucks, CompuSafe
®
units, and information technology) ($410 million),
|
|
•
|
contribute funds to a U.S. pension plan ($100 million),
|
|
•
|
acquire businesses and noncontrolling interests in subsidiaries ($56 million), and
|
|
•
|
pay dividends to Brink’s shareholders ($58 million).
|
Cash flows from operating activities increased by
$67.5 million
in
2015
as compared to the prior year primarily due to contributions made to our primary U.S. pension plan in 2014. Cash used for investing activities increased by
$9.7 million
in
2015
as lower capital expenditures and a decrease in cash outflows from discontinued operations were more than offset by lower cash inflows from asset sales in 2015 as we received $60 million in 2014 from the sale of the Peru CIT business. Cash also decreased $34.0 million in
2015
as a result of the strengthening of the U.S. dollar, primarily against most currencies in Latin America including the Venezuelan bolivar, Argentine peso and Brazilian real. We financed our liquidity needs in
2015
with cash flows from operations supplemented by long-term debt.
Cash flows from operating activities declined in
2014
compared to the prior year. We had lower operating profit and higher pension payments in 2014 compared to 2013. Cash used for investing activities declined in
2014
compared to the prior year as proceeds from the sale of businesses reduced the net investing outflows. We also reduced our capital expenditures significantly in
2014
. Cash decreased $129.9 million in
2014
as a result of a change in the exchange rate we used to translate local currency cash into U.S. dollars, primarily due to an 88% devaluation in Venezuela in March as well as a strengthening of the U.S. dollar late in the year, particularly against currencies in Russia and Latin America.
Outlook
|
•
|
We expect our capital expenditures (excluding assets acquired using capital leases) in
2016
to be between
$100 million
and
$110 million
as we continue to reduce maintenance capital spending through efficiency projects and reallocate more of our spending to growth and productivity initiatives.
|
|
•
|
Based on current assumptions, we do not expect to pay additional amounts to the primary U.S. pension plan until 2020.
|
|
•
|
We expect to pay between $13 and $18 million in 2016 related to restructuring actions (see note 23 to the consolidated financial statements).
|
Operating Activities
|
Years Ended December 31,
|
$ change
|
|||||||||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
2015
|
2014
|
|||||||||||
|
Cash flows from operating activities
|
||||||||||||||||
|
Operating activities - non-GAAP
|
$
|
196.0
|
|
186.9
|
|
157.4
|
|
$
|
9.1
|
|
29.5
|
|
||||
|
Venezuela operations
|
2.3
|
|
20.7
|
|
49.8
|
|
(18.4
|
)
|
(29.1
|
)
|
||||||
|
Contributions to primary U.S. pension plan
|
—
|
|
(87.2
|
)
|
(13.0
|
)
|
87.2
|
|
(74.2
|
)
|
||||||
|
Increase (decrease) in certain customer obligations
(a)
|
12.5
|
|
15.4
|
|
(9.7
|
)
|
(2.9
|
)
|
25.1
|
|
||||||
|
Discontinued operations
(b)
|
(2.0
|
)
|
5.5
|
|
17.0
|
|
(7.5
|
)
|
(11.5
|
)
|
||||||
|
Operating activities - GAAP
|
$
|
208.8
|
|
141.3
|
|
201.5
|
|
$
|
67.5
|
|
(60.2
|
)
|
||||
|
(a)
|
To eliminate the change in the balance of customer obligations related to cash received and processed in certain of our secure Cash Management Services operations. The title to this cash transfers to us for a short period of time. The cash is generally credited to customers’ accounts the following day and we do not consider it as available for general corporate purposes in the management of our liquidity and capital resources.
|
|
(b)
|
To eliminate cash flows related to our discontinued operations.
|
Non-GAAP cash flows from operating activities is a supplemental financial measure that is not required by, or presented in accordance with GAAP. The purpose of this Non-GAAP measure is to report financial information excluding cash flows from Venezuela operations, contributions to the primary U.S. pension plan, the impact of cash received and processed in certain of our Cash Management Services operations and without cash flows from discontinued operations. We believe this measure is helpful in assessing cash flows from operations, enables period-to-period comparability and is useful in predicting future operating cash flows. This Non-GAAP measure should not be considered as an alternative to cash flows from operating activities determined in accordance with GAAP and should be read in conjunction with our consolidated statements of cash flows.
40
2015
versus
2014
GAAP
Operating cash flows increased by $67.5 million in
2015
compared to
2014
. The increase was primarily due to contributions made to our primary U.S. pension plan in 2014, an increase in operating profit, and lower amounts paid for income taxes, offset by an increase in cash used for working capital and discontinued operations as well as a decrease in cash provided by Venezuela operations.
Non-GAAP
Non-GAAP cash flows from operating activities increased by $9.1 million in
2015
as compared to
2014
. The increase was primarily due to an increase in operating profit and lower amounts paid for income taxes, offset by an increase in cash used for working capital.
2014
versus
2013
GAAP
Operating cash flows decreased by $60.2 million in
2014
compared to
2013
. The decrease was primarily due to higher cash contributions to our primary U.S. pension plan ($74.2 million), a decrease in cash provided by Venezuela operations ($29.1 million), and lower operating profit. These decreases in operating cash flows were partially offset by increases in cash provided from changes in working capital, including the timing of security loss payments and insurance recoveries, changes in customer obligations of certain of our secure Cash Management Services operations (cash held for customers increased by
$15.4 million
in
2014
compared to a decrease of
$9.7 million
in
2013
) and lower amounts paid for income taxes.
Non-GAAP
Non-GAAP cash flows from operating activities increased by $29.5 million in
2014
as compared to
2013
. The increase was primarily due to cash provided from changes in working capital, including the timing of security loss payments and insurance recoveries, and lower amounts paid for income taxes, partially offset by lower operating profit.
41
Investing Activities
|
Years Ended December 31,
|
$ change
|
|||||||||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
2015
|
2014
|
|||||||||||
|
Cash flows from investing activities
|
||||||||||||||||
|
Capital expenditures
|
$
|
(101.1
|
)
|
(136.1
|
)
|
(172.9
|
)
|
$
|
35.0
|
|
36.8
|
|
||||
|
Acquisitions
|
—
|
|
(4.6
|
)
|
(18.1
|
)
|
4.6
|
|
13.5
|
|
||||||
|
Dispositions, net of cash disposed
|
(14.6
|
)
|
—
|
|
—
|
|
(14.6
|
)
|
—
|
|
||||||
|
Available-for-sale securities:
|
||||||||||||||||
|
Purchases
|
(27.3
|
)
|
—
|
|
—
|
|
(27.3
|
)
|
—
|
|
||||||
|
Sales
|
33.9
|
|
0.9
|
|
9.9
|
|
33.0
|
|
(9.0
|
)
|
||||||
|
Proceeds from sale of property, equipment and investments
|
1.9
|
|
62.7
|
|
5.9
|
|
(60.8
|
)
|
56.8
|
|
||||||
|
Other
|
1.6
|
|
(3.6
|
)
|
(0.5
|
)
|
5.2
|
|
(3.1
|
)
|
||||||
|
Discontinued operations
|
1.9
|
|
(13.3
|
)
|
52.7
|
|
15.2
|
|
(66.0
|
)
|
||||||
|
Investing activities
|
$
|
(103.7
|
)
|
(94.0
|
)
|
(123.0
|
)
|
$
|
(9.7
|
)
|
29.0
|
|
||||
Cash used by investing activities increased by
$9.7 million
in
2015
versus
2014
. The change was due to the proceeds of $59.6 million received on the 2014 sale of an equity interest in a Peru CIT business and 2015 outflows of cash held for customers related to a business divestiture in Russia. These amounts were partially offset by lower capital expenditures of $35.0 million, less cash used in discontinued operations of $15.2 million and higher net cash inflows from purchases and sales of available-for-sale securities, primarily in Argentina.
Cash used by investing activities decreased by
$29.0 million
in
2014
versus
2013
. The decrease was primarily due to proceeds of $59.6 million received on the sale of an equity interest in a CIT business in Peru and a decrease in capital expenditures of $36.8 million primarily related to information technology and other equipment, partially offset by cash proceeds from the sale of discontinued operations during 2013, including Threshold Financial Technologies Inc. ($43.8 million net proceeds), ICD Limited ($30.2 million net proceeds), less the amount paid to the buyer of our German CIT operations ($13.2 million net cash paid to purchaser).
42
Capital expenditures and depreciation and amortization were as follows:
|
Outlook
|
Years Ended December 31,
|
$ change
|
||||||||||||||||
|
(In millions)
|
2016
|
2015
|
2014
|
2013
|
2015
|
2014
|
||||||||||||
|
Property and Equipment Acquired during the year
|
||||||||||||||||||
|
Capital expenditures
(b)
:
|
||||||||||||||||||
|
Largest 5 Markets
|
$
|
(a)
|
59.3
|
|
83.4
|
|
103.5
|
|
$
|
(24.1
|
)
|
(20.1
|
)
|
|||||
|
Global Markets
|
(a)
|
28.8
|
|
30.0
|
|
29.1
|
|
(1.2
|
)
|
0.9
|
|
|||||||
|
Payment Services
|
(a)
|
1.7
|
|
0.8
|
|
1.5
|
|
0.9
|
|
(0.7
|
)
|
|||||||
|
Corporate items
|
(a)
|
7.0
|
|
16.5
|
|
29.8
|
|
(9.5
|
)
|
(13.3
|
)
|
|||||||
|
Capital expenditures - non-GAAP
|
100 – 110
|
96.8
|
|
130.7
|
|
163.9
|
|
(33.9
|
)
|
(33.2
|
)
|
|||||||
|
Venezuela
|
(a)
|
4.3
|
|
5.4
|
|
9.0
|
|
(1.1
|
)
|
(3.6
|
)
|
|||||||
|
Capital expenditures - GAAP
|
$
|
(a)
|
101.1
|
|
136.1
|
|
172.9
|
|
$
|
(35.0
|
)
|
(36.8
|
)
|
|||||
|
Capital leases
(c):
|
||||||||||||||||||
|
Largest 5 Markets
|
$
|
(a)
|
18.8
|
|
10.6
|
|
5.4
|
|
$
|
8.2
|
|
5.2
|
|
|||||
|
Global Markets
|
(a)
|
—
|
|
0.3
|
|
—
|
|
(0.3
|
)
|
0.3
|
|
|||||||
|
Payment Services
|
(a)
|
0.1
|
|
1.2
|
|
—
|
|
(1.1
|
)
|
1.2
|
|
|||||||
|
Corporate items
|
(a)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||
|
Capital leases - GAAP and non-GAAP
|
$
|
20
|
18.9
|
|
12.1
|
|
5.4
|
|
$
|
6.8
|
|
6.7
|
|
|||||
|
Total:
|
||||||||||||||||||
|
Largest 5 Markets
|
$
|
(a)
|
78.1
|
|
94.0
|
|
108.9
|
|
$
|
(15.9
|
)
|
(14.9
|
)
|
|||||
|
Global Markets
|
(a)
|
28.8
|
|
30.3
|
|
29.1
|
|
(1.5
|
)
|
1.2
|
|
|||||||
|
Payment Services
|
(a)
|
1.8
|
|
2.0
|
|
1.5
|
|
(0.2
|
)
|
0.5
|
|
|||||||
|
Corporate items
|
(a)
|
7.0
|
|
16.5
|
|
29.8
|
|
(9.5
|
)
|
(13.3
|
)
|
|||||||
|
Total - non-GAAP
|
120 – 130
|
115.7
|
|
142.8
|
|
169.3
|
|
(27.1
|
)
|
(26.5
|
)
|
|||||||
|
Venezuela
|
(a)
|
4.3
|
|
5.4
|
|
9.0
|
|
(1.1
|
)
|
(3.6
|
)
|
|||||||
|
Total - GAAP
|
$
|
(a)
|
120.0
|
|
148.2
|
|
178.3
|
|
$
|
(28.2
|
)
|
(30.1
|
)
|
|||||
|
Depreciation and amortization
(b)
|
||||||||||||||||||
|
Largest 5 Markets
|
$
|
(a)
|
94.6
|
|
107.7
|
|
110.0
|
|
$
|
(13.1
|
)
|
(2.3
|
)
|
|||||
|
Global Markets
|
(a)
|
27.2
|
|
31.3
|
|
36.7
|
|
(4.1
|
)
|
(5.4
|
)
|
|||||||
|
Payment Services
|
(a)
|
2.9
|
|
3.7
|
|
3.7
|
|
(0.8
|
)
|
—
|
|
|||||||
|
Corporate items
|
(a)
|
11.3
|
|
9.7
|
|
6.4
|
|
1.6
|
|
3.3
|
|
|||||||
|
Depreciation and amortization - non-GAAP
|
120 – 130
|
136.0
|
|
152.4
|
|
156.8
|
|
(16.4
|
)
|
(4.4
|
)
|
|||||||
|
Venezuela
|
(a)
|
3.9
|
|
9.5
|
|
9.0
|
|
(5.6
|
)
|
0.5
|
|
|||||||
|
Depreciation and amortization - GAAP
|
$
|
(a)
|
139.9
|
|
161.9
|
|
165.8
|
|
$
|
(22.0
|
)
|
(3.9
|
)
|
|||||
|
(a)
|
Not provided.
|
|
(b)
|
Capital expenditures as well as depreciation and amortization related to Venezuela have been excluded from Global Markets.
|
|
(c)
|
Represents the amount of property and equipment acquired using capital leases. Because the assets are acquired without using cash, the acquisitions are not reflected in the consolidated cash flow statement. Amounts are provided here to assist in the comparison of assets acquired in the current year versus prior years. Sale leaseback transactions are excluded from “Capital leases” in this table.
|
Our capital expenditures in the last three years have been focused on information technology to improve business process productivity. During the same period we reduced our capital expenditures for vehicles and facilities while continuing to focus on safety and security.
We continue to focus on maximizing asset utilization and we have reduced our annual spend to a level more in line with depreciation. Our reinvestment ratio, which we define as the annual amount of property and equipment acquired during the year divided by the annual amount of depreciation, was 0.9 in
2015
, 0.9 in
2014
, and 1.1 in
2013
.
Capital expenditures in
2015
for our operating units were primarily for machinery and equipment, armored vehicles, and information technology. Capital expenditures in
2015
were
$35.0 million
lower compared to
2014
. Total property and equipment acquired in
2015
was
$28.2 million
lower than the prior year. Total property and equipment acquired during
2016
is expected to be
$120 million
to
$130 million
.
Capital expenditures in
2014
for our operating units were primarily for investments in information technology, machinery and equipment and armored vehicles. Capital expenditures in
2014
were
$36.8 million
lower compared to
2013
. Total property and equipment acquired in
2014
was
$30.1 million
lower than the prior year.
Corporate capital expenditures in the last three years were primarily for implementing a new finance shared service center and investing in information technology.
43
Financing Activities
Summary of Financing Activities
|
Years Ended December 31,
|
$ change
|
|||||||||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
2015
|
2014
|
|||||||||||
|
Cash provided (used) by financing activities
|
||||||||||||||||
|
Borrowings and repayments:
|
||||||||||||||||
|
Short-term debt
|
$
|
(19.2
|
)
|
(7.8
|
)
|
60.5
|
|
$
|
(11.4
|
)
|
(68.3
|
)
|
||||
|
Long-term revolving credit facilities, net
|
(64.4
|
)
|
115.0
|
|
13.8
|
|
(179.4
|
)
|
101.2
|
|
||||||
|
Other long-term debt, net
|
44.1
|
|
(73.5
|
)
|
(23.5
|
)
|
117.6
|
|
(50.0
|
)
|
||||||
|
Borrowings (repayments)
|
(39.5
|
)
|
33.7
|
|
50.8
|
|
(73.2
|
)
|
(17.1
|
)
|
||||||
|
Nonrecourse financing of real estate transaction
|
14.5
|
|
—
|
|
—
|
|
14.5
|
|
—
|
|
||||||
|
Dividends attributable to:
|
||||||||||||||||
|
Shareholders of Brink’s
|
(19.5
|
)
|
(19.4
|
)
|
(19.2
|
)
|
(0.1
|
)
|
(0.2
|
)
|
||||||
|
Noncontrolling interests in subsidiaries
|
(5.3
|
)
|
(8.6
|
)
|
(6.0
|
)
|
3.3
|
|
(2.6
|
)
|
||||||
|
Acquisition-related financing activities:
|
||||||||||||||||
|
Acquisitions of noncontrolling interests
|
(1.5
|
)
|
—
|
|
(18.5
|
)
|
(1.5
|
)
|
18.5
|
|
||||||
|
Payment of acquisition-related obligation
|
—
|
|
—
|
|
(12.8
|
)
|
—
|
|
12.8
|
|
||||||
|
Other
|
2.1
|
|
(2.4
|
)
|
2.2
|
|
4.5
|
|
(4.6
|
)
|
||||||
|
Discontinued operations
|
0.2
|
|
—
|
|
(2.5
|
)
|
0.2
|
|
2.5
|
|
||||||
|
Cash flows from financing activities
|
$
|
(49.0
|
)
|
3.3
|
|
(6.0
|
)
|
$
|
(52.3
|
)
|
9.3
|
|
||||
2015
versus
2014
Cash flow from financing activities decreased by $52.3 million in 2015 compared to 2014 as net repayments of our revolving credit facilities and short-term debt exceeded net borrowings of other long-term debt. Our ability to repay debt in 2015 resulted primarily from higher operating cash flows as no contributions were made to the primary U.S. pension plan in 2015 along with lower capital expenditures. The higher cash outflows from debt repayments were partially offset by the receipt of $14.5 million in cash in 2015 related to a real estate transaction in Mexico. Due to continuing involvement, the transaction did not qualify for sale-leaseback accounting, therefore the cash proceeds are reported as a nonrecourse financing liability.
2014
versus
2013
Cash flow from financing activities increased by $9.3 million in 2014 compared to 2013. The change is primarily due to cash used for acquisition-related financing activities in
2013
($31.3 million), partially offset by $17.1 million less net borrowings overall in
2014
($33.7 million in
2014
compared to $50.8 million in
2013
). During
2014
, we borrowed
$115.0 million
under our long-term revolving credit facilities to fund cash needs of the business and to repay other long-term debt (
$73.5 million
) including
$43.2 million
of bonds issued by the Peninsula Ports Authority of Virginia.
Dividends
We paid dividends to Brink’s shareholders of
$0.10
per share in each of the last 12 quarters. Future dividends are dependent on our earnings, financial condition, shareholders’ equity levels, our cash flow and business requirements, as determined by the board of directors.
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Changes in currency exchange rates reduced the amount of cash and cash equivalents by
$34.0 million
during
2015
, compared to a reduction of
$129.9 million
in
2014
and
$18.7 million
in
2013
. The decrease in 2015 was caused by the strengthening of the U.S. dollar, primarily against most currencies in Latin America including the Venezuelan bolivar, Argentine peso and Brazilian real. Approximately $93 million of the
2014
reduction was due to a currency devaluation in Venezuela that occurred in the first quarter of that year. See note 1 to the consolidated financial statements for more information. The rest of the change related to the strengthening of the U.S. dollar against many of the currencies in the countries where we operate, particularly in Russia and Latin America.
44
Capitalization
We use a combination of debt, leases and equity to capitalize our operations.
As of
December 31, 2015
, debt as a percentage of capitalization (defined as total debt and equity) was
57%
compared to
50%
at
December 31, 2014
. The ratio increased in
2015
because our equity decreased by a higher amount than the decrease in our debt. Our equity in
2015
was negatively impacted by unfavorable changes in currency rates resulting in other comprehensive losses from foreign currency translation adjustments. Our debt decreased in 2015 as higher operating cash inflows more than offset the increase in investing cash outflows. The increased net cash flows from operating and investing activities were used, along with financing cash inflows from a real estate transaction, to repay debt.
Summary of Debt, Equity and Other Liquidity Information
|
Amount available under credit facilities
|
Outstanding balance
|
|||||||||||||
|
December 31,
|
December 31,
|
|||||||||||||
|
(In millions)
|
2015
|
2015
|
2014
|
$ change
(a)
|
||||||||||
|
Debt:
|
||||||||||||||
|
Revolving Facility
|
$
|
361.7
|
|
$
|
163.3
|
|
233.0
|
|
$
|
(69.7
|
)
|
|||
|
Private Placement Notes
|
—
|
|
92.8
|
|
99.8
|
|
(7.0
|
)
|
||||||
|
Term Loan
|
—
|
|
70.9
|
|
—
|
|
70.9
|
|
||||||
|
Capital leases
|
—
|
|
59.5
|
|
64.9
|
|
(5.4
|
)
|
||||||
|
Multi-currency revolving facilities
|
32.7
|
|
1.1
|
|
5.7
|
|
(4.6
|
)
|
||||||
|
Unsecured committed credit facility
|
20.4
|
|
4.1
|
|
—
|
|
4.1
|
|
||||||
|
Letter of Credit Facilities
|
23.3
|
|
—
|
|
—
|
|
—
|
|
||||||
|
Other
(b)
|
—
|
|
38.8
|
|
63.2
|
|
(24.4
|
)
|
||||||
|
Debt
|
$
|
438.1
|
|
$
|
430.5
|
|
466.6
|
|
$
|
(36.1
|
)
|
|||
|
Total equity
|
$
|
330.6
|
|
473.8
|
|
$
|
(143.2
|
)
|
||||||
|
(a)
|
In addition to cash borrowings and repayments, the change in the debt balance also includes changes in currency exchange rates.
|
|
(b)
|
Includes $29.1 million in short-term borrowings at December 31, 2015 and $59.4 million in short-term borrowings at December 31, 2014.
|
Reconciliation of Net Debt to U.S. GAAP Measures
|
December 31,
|
|
|||||||||
|
(In millions)
|
2015
|
2014
|
$ change
|
|||||||
|
Debt:
|
||||||||||
|
Short-term debt
|
$
|
29.1
|
|
59.4
|
|
$
|
(30.3
|
)
|
||
|
Long-term debt
|
401.4
|
|
407.2
|
|
(5.8
|
)
|
||||
|
Total Debt
|
430.5
|
|
466.6
|
|
(36.1
|
)
|
||||
|
Less:
|
||||||||||
|
Cash and cash equivalents
|
198.3
|
|
176.2
|
|
22.1
|
|
||||
|
Amounts held by Cash Management Services operations
(a)
|
(37.1
|
)
|
(28.0
|
)
|
(9.1
|
)
|
||||
|
Cash and cash equivalents available for general corporate purposes
|
161.2
|
|
148.2
|
|
13.0
|
|
||||
|
Net Debt
|
$
|
269.3
|
|
318.4
|
|
$
|
(49.1
|
)
|
||
|
(a)
|
Title to cash received and processed in certain of our secure Cash Management Services operations transfers to us for a short period of time. The cash is generally credited to customers’ accounts the following day and we do not consider it as available for general corporate purposes in the management of our liquidity and capital resources and in our computation of Net Debt.
|
Net Debt is a supplemental non-GAAP financial measure that is not required by, or presented in accordance with GAAP. We use Net Debt as a measure of our financial leverage. We believe that investors also may find Net Debt to be helpful in evaluating our financial leverage. Net Debt should not be considered as an alternative to Debt determined in accordance with GAAP and should be reviewed in conjunction with our consolidated balance sheets. Set forth above is a reconciliation of Net Debt, a non-GAAP financial measure, to Debt, which is the most directly comparable financial measure calculated and reported in accordance with GAAP, as of
December 31, 2015
, and
December 31, 2014
. Net Debt excluding cash and debt in Venezuelan operations was
$275 million
at
December 31, 2015
, and
$332 million
at
December 31, 2014
.
Net Debt at the end of
2015
decreased by
$49 million
compared to Net Debt at the end of
2014
primarily due to the repayment of revolver debt from operating cash flows and proceeds from a real estate financing transaction in Mexico.
45
Liquidity Needs
Our operating liquidity needs are typically financed by cash from operations, short-term debt and the Revolving Facility (our debt facilities are described below). We have certain limitations and considerations related to the cash and borrowing capacity that are reported in our consolidated financial statements. Based on our current cash on hand, amounts available under our credit facilities and current projections of cash flows from operations, we believe that we will be able to meet our liquidity needs for more than the next twelve months.
Limitations on dividends from foreign subsidiaries
. A significant portion of our operations are outside the U.S. which may make it difficult to repatriate additional cash for use in the U.S. See Item 1A.,
Risk Factors
, for more information on the risks associated with having businesses outside the U.S.
Incremental taxes.
Of the
$198 million
of cash and cash equivalents at
December 31, 2015
, $182 million is held by subsidiaries that we consider to be permanently invested and for which we do not expect to repatriate to the U.S. If we were to decide to repatriate this cash to the U.S., we may have to accrue and pay additional income taxes. Given the number of foreign operations and the complexities of the tax law, it is not practical to estimate the potential tax liability, but the amount of taxes owed could be material depending on how and when the repatriation occurred.
Venezuela
. We have
$6.2 million
of cash and cash equivalents denominated in Venezuelan bolivars (as remeasured at the published SIMADI rate of
199
bolivars to the U.S. dollar) at
December 31, 2015
. We believe that the SIMADI process to convert bolivars (as described in note 1 to the consolidated financial statements) is the only method for which we could receive U.S. dollars that we need to operate our business and to repatriate earnings. The Venezuelan government has restricted conversions of bolivars into U.S. dollars in the past and may do so in the future. We did not repatriate any U.S. dollars from Venezuela in 2015 or 2014.
Debt
In March 2015, we refinanced our previous
$480 million
unsecured revolving bank credit facility with a $525 million unsecured revolving bank credit facility (the “Revolving Facility”) that matures in
March 2020
. The Revolving Facility’s interest rate is based on LIBOR plus a margin or an alternate base rate plus a margin. The Revolving Facility allows us to borrow or issue letters of credit (or otherwise satisfy credit needs) on a revolving basis over the term of the facility. As of
December 31, 2015
,
$362 million
was available under the Revolving Facility. Amounts outstanding under the Revolving Facility as of
December 31, 2015
, were denominated primarily in U.S. dollars and to a lesser extent in euros.
The margin on LIBOR borrowings under the Revolving Facility, which ranges from
1.0%
to
1.70%
depending on our credit rating, was
1.30%
at
December 31, 2015
. The margin on alternate base rate borrowings under the Revolving Facility can range from
0.0%
to
0.70%
. We also pay an annual facility fee on the Revolving Facility based on either our credit rating or our leverage ratio. The facility fee, which ranges from
0.125%
to
0.30%
, was
0.20%
at
December 31, 2015
.
We have principal of
$93 million
in unsecured notes issued through a 2011 private placement debt transaction (the “Notes”). At
December 31, 2015
, the Notes were comprised of
$43 million
in series A notes with a fixed interest rate of
4.57%
and
$50 million
in series B notes with a fixed interest rate of
5.20%
. Annual principal payments under the series A notes began in
January 2015
and continue through maturity. The series B notes are due in
January 2021
.
As of
December 31, 2015
, we had two unsecured multi-currency revolving bank credit facilities totaling
$40 million
, of which
$33 million
was available at
December 31, 2015
. A
$20 million
facility is scheduled to expire at the end of
February 2016
and we plan to renew in the first quarter of 2016. A
$20 million
facility expires in
February 2017
. Interest on these facilities is based on LIBOR plus a margin. The margin ranges from
0.9%
to
2.0%
. We also have the ability to borrow from other banks, at the banks’ discretion, under short-term uncommitted agreements. Various foreign subsidiaries maintain other lines of credit and overdraft facilities with a number of banks.
We have a
$25 million
unsecured committed credit facility that expires in
April 2016
. Interest on this facility is based on LIBOR plus a margin, which ranges from
1.20%
to
1.575%
. As of
December 31, 2015
,
$20 million
was available under the facility.
In March 2015, we entered into a
$75 million
unsecured term loan facility. Interest on this facility is based on LIBOR plus a margin of
1.75%
. The facility is due in
March 2022
. As of
December 31, 2015
, the principal amount outstanding is
$71 million
.
In June 2015, we entered into a
$40 million
uncommitted letter of credit facility with an expiration date of
May 2016
. As of
December 31, 2015
,
$5 million
was utilized.
We have two unsecured letter of credit facilities totaling
$94 million
, of which approximately
$23 million
was available at
December 31, 2015
. A
$54 million
facility expires in
December 2016
, and a
$40 million
facility expires in
December 2018
. The Revolving Facility and the multi-currency revolving credit facilities are also used for issuance of letters of credit and bank guarantees.
The Revolving Facility, the Notes, the unsecured multi-currency revolving bank credit facilities, the unsecured committed credit facility, the letter of credit facilities and the unsecured term loan contain certain subsidiary guarantees and various financial and other covenants. The financial covenants, among other things, limit our total indebtedness, restrict certain payments to shareholders, limit priority debt, limit asset sales, limit the use of proceeds from asset sales, provide for a maximum leverage ratio 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
46
with the terms of our various credit agreements, the repayment terms could be accelerated and the commitments could be withdrawn. An acceleration of the repayment terms under one agreement could trigger the acceleration of the repayment terms under the other loan agreements. We were in compliance with all financial covenants at
December 31, 2015
.
Equity
Common Stock
At
December 31, 2015
, we had
100 million
shares of common stock authorized and
48.9 million
shares issued and outstanding.
Preferred Stock
At
December 31, 2015
, we had the authority to issue up to
2 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. We use operating leases to lower our cost of financings. We believe that operating leases are an important component of our capital structure.
47
Contractual Obligations
The following table reflects our contractual obligations as of
December 31, 2015
.
|
Estimated Payments Due by Period
|
|||||||||||||||||||||
|
(In millions)
|
2016
|
2017
|
2018
|
2019
|
2020
|
Later Years
|
Total
|
||||||||||||||
|
Contractual obligations:
|
|||||||||||||||||||||
|
Long-term debt obligations
|
$
|
23.7
|
|
14.1
|
|
13.1
|
|
12.4
|
|
161.0
|
|
117.6
|
|
341.9
|
|
||||||
|
Capital lease obligations
|
20.2
|
|
12.2
|
|
10.0
|
|
7.1
|
|
4.9
|
|
5.1
|
|
59.5
|
|
|||||||
|
Operating lease obligations
|
57.4
|
|
44.5
|
|
37.3
|
|
25.9
|
|
18.5
|
|
40.3
|
|
223.9
|
|
|||||||
|
Purchase obligations
|
6.0
|
|
2.1
|
|
0.9
|
|
0.7
|
|
0.6
|
|
—
|
|
10.3
|
|
|||||||
|
Other long-term liabilities reflected on the
|
|||||||||||||||||||||
|
Company’s balance sheet under GAAP:
|
|||||||||||||||||||||
|
Primary U.S. pension plan
|
—
|
|
—
|
|
—
|
|
—
|
|
8.8
|
|
43.8
|
|
52.6
|
|
|||||||
|
Other retirement obligations:
|
|||||||||||||||||||||
|
UMWA plans
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
420.1
|
|
420.1
|
|
|||||||
|
Black lung and other plans
|
6.9
|
|
6.8
|
|
6.2
|
|
6.4
|
|
5.5
|
|
74.2
|
|
106.0
|
|
|||||||
|
Workers compensation and other claims
|
24.2
|
|
10.7
|
|
7.4
|
|
5.0
|
|
3.5
|
|
19.7
|
|
70.5
|
|
|||||||
|
Uncertain tax positions
|
0.8
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
0.8
|
|
|||||||
|
Other
|
0.8
|
|
0.8
|
|
0.8
|
|
0.8
|
|
0.8
|
|
8.6
|
|
12.6
|
|
|||||||
|
Total
|
$
|
140.0
|
|
91.2
|
|
75.7
|
|
58.3
|
|
203.6
|
|
729.4
|
|
1,298.2
|
|
||||||
U.S. pension plans.
Pension benefits provided to eligible U.S. employees were frozen on December 31, 2005, and benefits are not provided to employees hired after 2005 or to those covered by a collective bargaining agreement. We did not make cash contributions to the primary U.S. pension plan in 2015. There are approximately
15,000
beneficiaries in the plans.
Based on current assumptions, we do not expect to make additional contributions until 2020.
UMWA plans.
Retirement benefits related to former coal operations include medical benefits provided by the Pittston Coal Group Companies Employee Benefit Plan for UMWA Represented Employees. There are approximately
3,700
beneficiaries in the UMWA plans. The company does not expect to make additional contributions to these plans until 2027, based on actuarial assumptions.
Black Lung.
Under the Federal Black Lung Benefits Act of 1972, Brink’s is responsible for paying lifetime black lung benefits to miners and their dependents for claims filed and approved after June 30, 1973. There are approximately
700
black lung beneficiaries.
Other.
We have a plan that provides retirement healthcare benefits to certain eligible salaried employees. Benefits under this plan are not indexed for inflation.
Assumptions for U.S. Retirement Obligations
We have made various assumptions to estimate the amount of payments to be made in the future. The most significant assumptions include:
|
•
|
Changing discount rates and other assumptions in effect at measurement dates (normally December 31)
|
|
•
|
Investment returns of plan assets
|
|
•
|
Addition of new participants (historically immaterial due to freezing of pension benefits and exit from coal business)
|
|
•
|
Mortality rates
|
|
•
|
Change in laws
|
The Contractual Obligations table above represents payments projected to be paid with our corporate funds and does not represent payments projected to be made to beneficiaries with retirement plan assets.
48
Funded Status of U.S. Retirement Plans
|
Actual
|
Projected
|
||||||||||||
|
(In millions)
|
2015
|
2016
|
2017
|
2018
|
2019
|
2020
|
|||||||
|
U.S. pension plans
|
|
|
|
|
|
|
|||||||
|
Beginning funded status
|
$
|
(117.8
|
)
|
(123.4
|
)
|
(107.4
|
)
|
(90.3
|
)
|
(72.7
|
)
|
(53.4
|
)
|
|
Net periodic pension credit
(a)
|
18.6
|
|
17.7
|
|
18.6
|
|
18.9
|
|
19.0
|
|
19.0
|
|
|
|
Payment from Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary U.S. pension plan
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
8.8
|
|
|
|
Other U.S. pension plan
|
0.3
|
|
0.6
|
|
0.9
|
|
0.6
|
|
1.3
|
|
0.7
|
|
|
|
Benefit plan experience gain (loss)
|
(24.5
|
)
|
(2.3
|
)
|
(2.4
|
)
|
(1.9
|
)
|
(1.0
|
)
|
—
|
|
|
|
Ending funded status
|
$
|
(123.4
|
)
|
(107.4
|
)
|
(90.3
|
)
|
(72.7
|
)
|
(53.4
|
)
|
(24.9
|
)
|
|
UMWA plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning funded status
|
$
|
(197.2
|
)
|
(205.7
|
)
|
(206.6
|
)
|
(208.0
|
)
|
(210.0
|
)
|
(212.7
|
)
|
|
Net periodic postretirement credit
(a)
|
3.5
|
|
(0.9
|
)
|
(1.4
|
)
|
(2.0
|
)
|
(2.7
|
)
|
(3.6
|
)
|
|
|
Benefit plan experience gain (loss)
|
(11.7
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
Other
|
(0.3
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
Ending funded status
|
$
|
(205.7
|
)
|
(206.6
|
)
|
(208.0
|
)
|
(210.0
|
)
|
(212.7
|
)
|
(216.3
|
)
|
|
Black lung and other plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning funded status
|
$
|
(58.3
|
)
|
(56.6
|
)
|
(52.5
|
)
|
(48.6
|
)
|
(44.9
|
)
|
(41.6
|
)
|
|
Net periodic postretirement cost
(a)
|
(2.2
|
)
|
(2.2
|
)
|
(2.0
|
)
|
(1.9
|
)
|
(1.8
|
)
|
(1.6
|
)
|
|
|
Payment from Brink’s
|
6.2
|
|
6.3
|
|
5.9
|
|
5.6
|
|
5.1
|
|
4.8
|
|
|
|
Benefit plan experience gain (loss)
|
(2.3
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
Ending funded status
|
$
|
(56.6
|
)
|
(52.5
|
)
|
(48.6
|
)
|
(44.9
|
)
|
(41.6
|
)
|
(38.4
|
)
|
|
(a)
|
Excludes amounts reclassified from accumulated other comprehensive income (loss).
|
Summary of Total Expenses Related to All U.S. Retirement Liabilities
This table summarizes actual and projected expense (income) related to U.S. retirement liabilities. These expenses are not allocated to segment results.
|
Actual
|
Projected
|
||||||||||||
|
(In millions)
|
2015
|
2016
|
2017
|
2018
|
2019
|
2020
|
|||||||
|
U.S. pension plans
|
$
|
12.6
|
|
6.3
|
|
3.3
|
|
1.9
|
|
1.5
|
|
1.2
|
|
|
UMWA plans
|
7.4
|
|
13.5
|
|
13.3
|
|
13.2
|
|
13.2
|
|
13.3
|
|
|
|
Black lung and other plans
|
6.7
|
|
6.4
|
|
6.1
|
|
5.3
|
|
3.3
|
|
3.0
|
|
|
|
Total
|
$
|
26.7
|
|
26.2
|
|
22.7
|
|
20.4
|
|
18.0
|
|
17.5
|
|
Summary of Total Payments from U.S. Plans to Participants
This table summarizes actual and estimated payments from the plans to participants.
|
Actual
|
Projected
|
||||||||||||
|
(In millions)
|
2015
|
2016
|
2017
|
2018
|
2019
|
2020
|
|||||||
|
Payments from U.S. Plans to participants
|
|||||||||||||
|
U.S. pension plans
|
$
|
51.0
|
|
49.7
|
|
50.5
|
|
50.7
|
|
51.7
|
|
51.5
|
|
|
UMWA plans
|
36.0
|
|
30.9
|
|
31.2
|
|
31.1
|
|
30.8
|
|
31.7
|
|
|
|
Black lung and other plans
|
6.2
|
|
6.3
|
|
5.9
|
|
5.6
|
|
5.1
|
|
4.8
|
|
|
|
Total
|
$
|
93.2
|
|
86.9
|
|
87.6
|
|
87.4
|
|
87.6
|
|
88.0
|
|
49
Summary of Total Payments from Brink’s to U.S. Plans
This table summarizes estimated payments from Brink’s to U.S. retirement plans.
|
Projected Payments to Plans from Brink's
|
|||||||||||||||
|
(In millions)
|
Primary U.S. Pension Plan
|
Other U.S. Pension Plan
|
UMWA Plans
|
Black Lung and Other Plans
|
Total
|
||||||||||
|
Projected payments
|
|||||||||||||||
|
2016
|
$
|
—
|
|
0.6
|
|
—
|
|
6.3
|
|
6.9
|
|
||||
|
2017
|
—
|
|
0.9
|
|
—
|
|
5.9
|
|
6.8
|
|
|||||
|
2018
|
—
|
|
0.6
|
|
—
|
|
5.6
|
|
6.2
|
|
|||||
|
2019
|
—
|
|
1.3
|
|
—
|
|
5.1
|
|
6.4
|
|
|||||
|
2020
|
8.8
|
|
0.7
|
|
—
|
|
4.8
|
|
14.3
|
|
|||||
|
2021
|
21.0
|
|
0.6
|
|
—
|
|
4.4
|
|
26.0
|
|
|||||
|
2022
|
17.4
|
|
0.6
|
|
—
|
|
4.1
|
|
22.1
|
|
|||||
|
2023
|
5.4
|
|
0.6
|
|
—
|
|
3.8
|
|
9.8
|
|
|||||
|
2024
|
—
|
|
0.6
|
|
—
|
|
3.5
|
|
4.1
|
|
|||||
|
2025
|
—
|
|
0.6
|
|
—
|
|
3.2
|
|
3.8
|
|
|||||
|
2026
|
—
|
|
0.6
|
|
—
|
|
3.0
|
|
3.6
|
|
|||||
|
2027
|
—
|
|
0.6
|
|
2.9
|
|
2.8
|
|
6.3
|
|
|||||
|
2028
|
—
|
|
0.5
|
|
23.8
|
|
2.5
|
|
26.8
|
|
|||||
|
2029
|
—
|
|
0.5
|
|
23.1
|
|
2.4
|
|
26.0
|
|
|||||
|
2030
|
—
|
|
0.5
|
|
22.5
|
|
2.2
|
|
25.2
|
|
|||||
|
2031
|
—
|
|
0.5
|
|
21.8
|
|
2.1
|
|
24.4
|
|
|||||
|
2032
|
—
|
|
0.5
|
|
21.2
|
|
1.9
|
|
23.6
|
|
|||||
|
2033
|
—
|
|
0.4
|
|
20.4
|
|
1.8
|
|
22.6
|
|
|||||
|
2034
|
—
|
|
0.4
|
|
19.7
|
|
1.7
|
|
21.8
|
|
|||||
|
2035
|
—
|
|
0.4
|
|
19.1
|
|
1.6
|
|
21.1
|
|
|||||
|
2036
|
—
|
|
0.4
|
|
18.3
|
|
1.5
|
|
20.2
|
|
|||||
|
2037
|
—
|
|
0.4
|
|
17.6
|
|
1.4
|
|
19.4
|
|
|||||
|
2038
|
—
|
|
0.3
|
|
16.9
|
|
1.3
|
|
18.5
|
|
|||||
|
2039
|
—
|
|
0.3
|
|
16.3
|
|
1.3
|
|
17.9
|
|
|||||
|
2040
|
—
|
|
0.3
|
|
15.6
|
|
1.2
|
|
17.1
|
|
|||||
|
2041
|
—
|
|
0.3
|
|
14.8
|
|
1.1
|
|
16.2
|
|
|||||
|
2042
|
—
|
|
0.2
|
|
13.7
|
|
1.0
|
|
14.9
|
|
|||||
|
2043
|
—
|
|
0.2
|
|
12.9
|
|
1.0
|
|
14.1
|
|
|||||
|
2044
|
—
|
|
0.2
|
|
11.8
|
|
0.9
|
|
12.9
|
|
|||||
|
2045
|
—
|
|
0.2
|
|
11.0
|
|
0.9
|
|
12.1
|
|
|||||
|
2046
|
—
|
|
0.2
|
|
10.2
|
|
0.8
|
|
11.2
|
|
|||||
|
2047
|
—
|
|
0.1
|
|
9.4
|
|
0.8
|
|
10.3
|
|
|||||
|
2048
|
—
|
|
0.1
|
|
8.6
|
|
0.7
|
|
9.4
|
|
|||||
|
2049
|
—
|
|
0.1
|
|
7.9
|
|
0.7
|
|
8.7
|
|
|||||
|
2050
|
—
|
|
0.1
|
|
7.1
|
|
0.6
|
|
7.8
|
|
|||||
|
2051
|
—
|
|
0.1
|
|
6.4
|
|
0.6
|
|
7.1
|
|
|||||
|
2052
|
—
|
|
0.1
|
|
5.8
|
|
0.5
|
|
6.4
|
|
|||||
|
2053
|
—
|
|
0.1
|
|
5.2
|
|
0.5
|
|
5.8
|
|
|||||
|
2054
|
—
|
|
0.1
|
|
4.6
|
|
0.5
|
|
5.2
|
|
|||||
|
2055
|
—
|
|
0.1
|
|
4.1
|
|
0.4
|
|
4.6
|
|
|||||
|
2056
|
—
|
|
0.1
|
|
3.6
|
|
0.4
|
|
4.1
|
|
|||||
|
2057
|
—
|
|
0.1
|
|
3.1
|
|
0.4
|
|
3.6
|
|
|||||
|
2058
|
—
|
|
0.1
|
|
2.8
|
|
0.3
|
|
3.2
|
|
|||||
|
2059
|
—
|
|
—
|
|
2.4
|
|
0.3
|
|
2.7
|
|
|||||
|
2060
|
—
|
|
—
|
|
2.1
|
|
0.3
|
|
2.4
|
|
|||||
|
2061
|
—
|
|
—
|
|
1.8
|
|
0.2
|
|
2.0
|
|
|||||
|
2062 and thereafter
|
—
|
|
—
|
|
11.6
|
|
1.5
|
|
13.1
|
|
|||||
|
Total projected payments
|
$
|
52.6
|
|
16.2
|
|
420.1
|
|
89.8
|
|
578.7
|
|
||||
The amounts in the tables above are based on a variety of estimates, including actuarial assumptions as of
December 31, 2015
. 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.
50
Discounted Cash Flows at Plan Discount Rates – Reconciled to Liability Amounts Reported under U.S. GAAP
|
December 31, 2015
|
||||||||||||
|
(In millions)
|
Primary U.S. Pension Plan
(a)
|
UMWA Plans
(b)
|
Other Unfunded U.S. Plans
|
Total
|
||||||||
|
Funded status of U.S. retirement plans – GAAP
|
$
|
113.7
|
|
205.7
|
|
66.3
|
|
385.7
|
|
|||
|
Present value impact of certain projected payments
(c)
|
(73.9
|
)
|
(48.2
|
)
|
—
|
|
(122.1
|
)
|
||||
|
Discounted cash flows at plan discount rates – Non-GAAP
|
$
|
39.8
|
|
157.5
|
|
66.3
|
|
263.6
|
|
|||
|
Plan discount rate
|
4.50
|
%
|
4.40
|
%
|
|
|
|
|
||||
|
Expected return of assets
|
7.50
|
%
|
8.25
|
%
|
|
|
|
|
||||
|
(a)
|
For the primary U.S. pension plan, we are required by ERISA regulations to maintain minimum funding levels. Based on current assumptions, we do not expect to make contributions until 2020.
|
|
(b)
|
There are no minimum funding requirements for the UMWA plans because they are not covered by ERISA funding regulations. Using assumptions at the end of 2015, we project that the plan assets plus expected earnings on those investments will cover the benefit payments for these plans through 2026. We project that Brink’s will be required to contribute cash to the plan beginning in 2027 to pay beneficiaries.
|
|
(c)
|
Reconciling item represents the present value impact of any required contributions to the primary U.S. pension plan as discussed in (a) and the present value impact of projected benefit payments after the UMWA plans assets are depleted as discussed in (b).
|
Discounted cash flows at plan discount rates are supplemental financial measures that are not required by, or presented in accordance with GAAP. The purpose of the discounted cash flows at plan discount rates is to present our retirement obligations after giving effect to the present value impact of certain projected payments. We believe this measure is helpful in assessing the present value of future funding requirements of the company in order to meet plan benefit obligations. Discounted cash flows at plan discount rates should not be considered as an alternative to the funded status of the U.S. retirement plans at
December 31, 2015
, as determined in accordance with GAAP and should be read in conjunction with our consolidated balance sheets.
Contingent Matters
On June 19, 2008, a lawsuit captioned Del Valle Gurria S.C. v. Servicio Pan Americano de Protección, S.A. de C.V. was filed with the Twenty-third Civil Judge in the Federal District in Mexico (the “Court”) against Servicio Pan American de Proteccion, S.A. de C.V. (SERPAPROSA), the Mexico subsidiary that we acquired in November 2010. The plaintiff claims it is owed legal fees and corresponding value-added tax (VAT), interest and expenses related to its legal representation of SERPAPROSA in connection with tax audits covering the 1991, 1992 and 1994 fiscal years. On October 28, 2010, the Court issued a decision in favor of SERPAPROSA in part and the plaintiff in part, ordering SERPAPROSA to pay the plaintiff less than
$1 million
for its previous representation of SERPAPROSA. Between November 2010 and October 2013, the judgment was subject to multiple appeals by both parties to the Fifth Civil Court of Appeal of the Federal District in Mexico (the “Fifth Civil Court of Appeal”) and to the First Civil Collegiate Tribunal of the First Circuit in Mexico (the “First Civil Collegiate Tribunal”), and was remanded twice to the Court for determination of the fees to be paid to the plaintiff. On December 6, 2013, the Fifth Civil Court of Appeal issued a decision in favor of the plaintiff, modifying the lower court’s ruling and ordering SERPAPROSA to pay the plaintiff approximately
$7 million
plus VAT and interest for its previous representation of SERPAPROSA. SERPAPROSA filed a constitutional injunction on January 20, 2014 with the First Civil Collegiate Tribunal. The appeal was granted in favor of SERPAPROSA on September 17, 2014, ordering SERPAPROSA to pay approximately
$2 million
plus VAT and interest. The plaintiff filed an appeal on October 7, 2014, with the Mexico Supreme Court, which was rejected by the court on October 22, 2014. The plaintiff filed two subsequent actions appealing the Supreme Court’s October 22, 2014 decision, one before the First Appellate Court in Civil Matters of the First Circuit (the “Appellate Court”) and one with the Mexico Supreme Court. The action filed before the Appellate Court was rejected on February 16, 2015; the action filed with the Mexico Supreme Court is pending. The Company has accrued
$2 million
, reflecting the Company’s best estimate of exposure, although additional reasonably possible losses could be up to
$10 million
, based on currency exchange rates at
December 31, 2015
. The ultimate resolution of this matter is unknown and the estimated liability may change in the future. The Company denies the allegations asserted by the plaintiff and is vigorously defending itself in this matter.
During the fourth quarter of 2015, we became aware of an investigation initiated by COFECE (the Mexican antitrust agency) related to potential anti-competitive practices among competitors in the cash logistics industry in Mexico (the industry in which Brink’s Mexican subsidiary, SERPAPROSA, is active). Because no legal proceedings have been initiated against SERPAPROSA, we cannot estimate the probability of loss or any range of estimate of possible loss at this time. It is possible that SERPAPROSA could become the subject of legal or administrative claims or proceedings, however, that could result in a loss that could be material to the Company’s results in a future period.
In addition, we are involved in various other lawsuits and claims in the ordinary course of business. We are not able to estimate the loss or range of losses for some of these matters. We have recorded accruals for losses that are considered probable and reasonably estimable. Except as otherwise noted, we do not believe that the ultimate disposition of any of the lawsuits currently pending against the Company should have a material adverse effect on our liquidity, financial position or results of operations.
51
APPLICATION OF CRITICAL ACCOUNTING POLICIES
The application of accounting principles requires the use of assumptions, estimates and judgments. We make assumptions, estimates and judgments based on, among other things, knowledge of operations, markets, historical trends and likely future changes, similarly situated businesses and, when appropriate, the opinions of advisors with relevant knowledge and experience. Reported results could have been materially different had we used a different set of assumptions, estimates and judgments.
Deferred Tax Asset Valuation Allowance
Deferred tax assets result primarily from net operating losses, tax credit carryforwards, and the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial statement and income tax purposes, as determined under enacted tax laws and rates.
Accounting Policy
We establish valuation allowances, in accordance with FASB ASC Topic 740,
Income Taxes
, when we estimate it is not more likely than not that a deferred tax asset will be realized. We decide to record valuation allowances primarily based on an assessment of positive and negative evidence including historical earnings and future taxable income that incorporates prudent, feasible tax-planning strategies. We assess deferred tax assets on an individual jurisdiction basis. Changes in tax statutes, the timing of deductibility of expenses or expectations for future performance could result in material adjustments to our valuation allowances, which would increase or decrease tax expense. Our valuation allowances are as follows.
Valuation Allowances
|
December 31,
|
||||||
|
(In millions)
|
2015
|
2014
|
||||
|
U.S.
|
$
|
20.4
|
|
20.0
|
|
|
|
Non-U.S.
|
25.3
|
|
20.1
|
|
||
|
Total
|
$
|
45.7
|
|
40.1
|
|
|
Application of Accounting Policy
U.S. Deferred Tax Assets
We have $322 million of net deferred tax assets at
December 31, 2015
, of which
$273 million
related to U.S. jurisdictions. There were no significant changes to our U.S. valuation allowances in
2014
or
2015
.
We used various estimates and assumptions to evaluate the need for the valuation allowance in the U.S. These included
|
•
|
projected revenues and operating income for our U.S. entities,
|
|
•
|
projected royalties and management fees paid to U.S. entities from subsidiaries outside the U.S.,
|
|
•
|
estimated required contributions to our U.S. retirement plans, and
|
|
•
|
interest rates on projected U.S. borrowings.
|
Our projections assumed continued growth of our revenues and operating profit both in the U.S. and outside the U.S. Had we used different assumptions, we might have made different conclusions about the need for valuation allowances. For example, using different assumptions we might have concluded that we require a valuation allowance offsetting our U.S. deferred tax assets.
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 changes in operating results and the outlook about the future operating performance in those jurisdictions. As a result, we set up $1.5 million of valuation allowances in
2015
and set up $1.9 million of valuation allowances in
2014
through continuing operations.
52
Goodwill, Other Intangible Assets and Property and Equipment Valuations
Accounting Policy
At
December 31, 2015
, we had property and equipment of
$549.0 million
, goodwill of
$185.3 million
and other intangible assets of
$28.5 million
, net of accumulated depreciation and amortization. We review these assets for possible impairment using the guidance in FASB ASC Topic 350,
Intangibles - Goodwill and Other
, for goodwill and other intangible assets and FASB ASC Topic 360,
Property, Plant and Equipment
, for property and equipment. Our review for impairment requires the use of significant judgments about the future performance of our operating subsidiaries. Due to the many variables inherent in the estimates of the fair value of these assets, differences in assumptions could have a material effect on the impairment analyses.
Application of Accounting Policy
Goodwill
We review goodwill for impairment annually and whenever events or circumstances make it more likely than not that impairment may have occurred. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit.
Under U.S. GAAP, the annual impairment test may be either a quantitative test or a qualitative assessment. The qualitative assessment can be performed in order to determine whether facts and circumstances support a determination that reporting unit fair values are greater than their carrying values.
For
2015
, we elected to bypass the optional qualitative assessment and we performed a quantitative goodwill impairment test instead. We estimated the fair value of each reporting unit using projections of cash flows and compared to its carrying value. We completed the annual goodwill impairment test as of October 1,
2015
. With one exception, our goodwill impairment test indicated that the fair value of each reporting unit substantially exceeded its carrying value ranging from 60% to 198%. For the Latin American Payment Services reporting unit, which has $0.9 million of goodwill at
December 31, 2015
, fair value exceeded carrying value by approximately 6%.
Finite-lived Intangible Assets and Property and Equipment
We review finite-lived intangible assets and property and equipment for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. For purposes of assessing impairment, assets are grouped at the lowest levels for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. To determine whether impairment has occurred, we compare estimates of the future undiscounted net cash flows of groups of assets to their carrying value.
Estimates of Future Cash Flows
We made significant assumptions when preparing financial projections of cash flow used in our impairment analyses, including assumptions of future results of operations, capital requirements, income taxes, long-term growth rates for determining terminal value, and discount rates. Our projections assumed continued growth of our revenues and operating profit both in the U.S. and outside the U.S. Our conclusions regarding asset impairment may have been different if we had used different assumptions.
53
Retirement and Postemployment Benefit Obligations
We provide benefits through defined benefit pension plans and retiree medical benefit plans and under statutory requirements.
Accounting Policy
We account for pension and other retirement benefit obligations under FASB ASC Topic 715,
Compensation – Retirement Benefits.
We account for postemployment benefit obligations, including workers’ compensation obligations, under FASB ASC Topic 712,
Compensation – Nonretirement Postemployment Benefits
.
To account for these benefits, we make assumptions of expected return on assets, discount rates, inflation, demographic factors and changes in the laws and regulations covering the benefit obligations. Because of the inherent volatility of these items and because the obligations are significant, changes in the assumptions could have a material effect on our liabilities and expenses related to these benefits.
Our most significant retirement plans include our primary U.S. pension plan and the retiree medical plans of our former coal business that were collectively bargained with the United Mine Workers of America (the “UMWA”). The critical accounting estimates that determine the carrying values of liabilities and the resulting annual expense are discussed below.
Application of Accounting Policy
Discount Rate Assumptions
For plans accounted under FASB ASC Topic 715, we discount estimated future payments using discount rates based on market conditions at the end of the year. In general, our liability changes in an inverse relationship to interest rates. That is, the lower the discount rate, the higher the associated plan obligation.
U.S. Plans
For our largest retirement plans, including the primary U.S. pension and UMWA plans and black lung obligations, we derive the discount rates used to measure the present value of benefit obligations using the cash flow matching method. Under this method, we compare the plan’s projected payment obligations by year with the corresponding yields on a Mercer yield curve. Each year’s projected cash flows are then discounted back to their present value at the measurement date and an overall discount rate is determined. The overall discount rate is then rounded to the nearest tenth of a percentage point.
We used Mercer’s Above-Mean Curve to determine the discount rates for retirement cost and the year-end benefit obligation.
To derive the Above-Mean Curve, Mercer uses only those bonds with a yield higher than the mean yield of the same portfolio of high quality bonds. The Above-Mean Curve reflects the way an active investment manager would select high-quality bonds to match the cash flows of the plan.
Non-U.S. Plans
We use the same cash flow matching method to derive the discount rates of our major non-U.S. retirement plans. Where the cash flow matching method is not possible, rates of local high-quality long-term government bonds are used to estimate the discount rate.
The discount rates for the primary U.S. pension plan, UMWA retiree medical plans and black lung obligations were:
|
Primary U.S. Plan
|
UMWA Plans
|
Black Lung
|
||||||||||||||||||||||||
|
|
2015
|
2014
|
2013
|
2015
|
2014
|
2013
|
2015
|
2014
|
2013
|
|||||||||||||||||
|
Discount rate:
|
||||||||||||||||||||||||||
|
Retirement cost
|
4.1
|
%
|
5.0
|
%
|
4.2
|
%
|
4.0
|
%
|
4.7
|
%
|
3.9
|
%
|
3.7
|
%
|
4.4
|
%
|
3.5
|
%
|
||||||||
|
Benefit obligation at year end
|
4.5
|
%
|
4.1
|
%
|
5.0
|
%
|
4.4
|
%
|
4.0
|
%
|
4.7
|
%
|
4.2
|
%
|
3.7
|
%
|
4.4
|
%
|
||||||||
Sensitivity Analysis
The discount rate we select at year end materially 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, 2015
, actual expenses for
2015
and projected expenses for
2016
assuming we had used discount rates that were one percentage point lower or higher.
Plan Obligations at
December 31, 2015
|
(In millions)
|
Hypothetical
1% lower
|
Actual
|
Hypothetical
1% higher
|
||
|
Primary U.S. pension plan
|
$
|
944.9
|
|
835.1
|
745.5
|
|
UMWA plans
|
486.6
|
|
433.1
|
388.8
|
|
54
Actual
2015
and Projected
2016
Expense (Income)
|
(In millions, except for 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,
|
2015
|
2015
|
2015
|
2016
|
2016
|
2016
|
||||||||
|
Primary U.S. pension plan
|
||||||||||||||
|
Discount rate assumption
|
4.1
|
%
|
3.1
|
%
|
5.1
|
%
|
4.5
|
%
|
3.5
|
%
|
5.5
|
%
|
||
|
Retirement cost
|
$
|
11.9
|
|
18.9
|
|
5.9
|
|
$
|
5.8
|
|
12.4
|
|
—
|
|
|
UMWA plans
|
||||||||||||||
|
Discount rate assumption
|
4.0
|
%
|
3.0
|
%
|
5.0
|
%
|
4.4
|
%
|
3.4
|
%
|
5.4
|
%
|
||
|
Retirement cost
|
$
|
7.4
|
|
8.6
|
|
6.4
|
|
$
|
13.5
|
|
14.9
|
|
12.2
|
|
Expected-Return-on-Assets
Assumption
Our expected-return-on-assets assumption, which materially affects our net periodic benefit cost, reflects the long-term average rate of return we expect the plan assets to earn. We select the expected-return-on-assets assumption using advice from our investment advisor 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 7.50% as the expected-return-on-assets assumption for our primary U.S. plan and 8.25% for our UMWA retiree medical plans for actual 2015 expense and projected 2016 expense.
Over the last twenty years, the annual returns of our primary U.S. pension plan have averaged, on a compounded basis, 7.5%, while the twenty-five year compounded annual return averaged 8.9% and the 30-year compounded annual return averaged 9.0%.
Sensitivity Analysis
Effect of using different expected-rate-of-return assumptions.
Our
2015
and projected
2016
expense would have been different if we had used different expected-rate-of-return assumptions. For every hypothetical change of one percentage point in the assumed long-term rate of return on plan assets (and holding other assumptions constant), our actual
2015
and projected
2016
expense would be as follows:
|
(In millions, except for 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,
|
2015
|
2015
|
2015
|
2016
|
2016
|
2016
|
||||||||
|
Expected-return-on-asset assumption
|
||||||||||||||
|
Primary U.S. pension plan
|
7.50
|
%
|
6.50
|
%
|
8.50
|
%
|
7.50
|
%
|
6.50
|
%
|
8.50
|
%
|
||
|
UMWA plans
|
8.25
|
%
|
7.25
|
%
|
9.25
|
%
|
8.25
|
%
|
7.25
|
%
|
9.25
|
%
|
||
|
Primary U.S. pension plan
|
$
|
11.9
|
|
19.2
|
|
4.6
|
|
$
|
5.8
|
|
13.1
|
|
(1.5
|
)
|
|
UMWA plans
|
7.4
|
|
9.9
|
|
4.9
|
|
13.5
|
|
15.6
|
|
11.4
|
|
||
55
Effect of improving or deteriorating actual future market returns.
Our funded status at December 31,
2016
, and our
2017
expense will be different from currently projected amounts if our projected
2016
returns are better or worse than the returns we have assumed for each plan.
|
(In millions, except for percentages)
|
Hypothetical sensitivity analysis of 2016 asset return
better or worse than expected
|
||||||
|
Years Ending December 31,
|
Projected
|
Better return
|
Worse return
|
||||
|
Return on investments in 2016
|
|||||||
|
Primary U.S. pension plan
|
7.50
|
%
|
15.00
|
%
|
—
|
%
|
|
|
UMWA plans
|
8.25
|
%
|
16.50
|
%
|
—
|
%
|
|
|
Projected Funded Status at December 31, 2016
|
|||||||
|
Primary U.S. pension plan
|
$
|
(98
|
)
|
(46
|
)
|
(150
|
)
|
|
UMWA plans
|
(207
|
)
|
(189
|
)
|
(224
|
)
|
|
|
2017 Expense
(a)
|
|||||||
|
Primary U.S. pension plan
|
$
|
3
|
|
1
|
|
5
|
|
|
UMWA plans
|
13
|
|
10
|
|
16
|
|
|
|
(a)
|
Actual future returns on investments will not affect our earnings until
2017
since the earnings in
2016
will be based on the "expected return on assets" assumption.
|
Effect of using fair market value of assets to determine expense.
For our defined-benefit pension plans, we calculate expected investment returns by applying the expected long-term rate of return to the market-related value of plan assets. In addition, our plan asset actuarial gains and losses that are subject to amortization are based on the market-related value.
The market-related value of the plan assets is different from the actual or fair market value of the assets. The actual or fair market value is, at a point in time, the value of the assets that is available to make payments to pensioners and to cover any transaction costs. The market-related value recognizes changes in fair value from the expected value on a straight-line basis over five years. This recognition method spreads the effects of year-over-year volatility in the financial markets over several years.
Our expenses related to our primary U.S. pension plan would have been different if our accounting policy were to use the fair market value of plan assets instead of the market-related value to recognize investment gains and losses.
|
(In millions)
|
Based on market-related value of assets
|
Hypothetical
(a)
|
|||||||||||||||||
|
|
Actual
|
Projected
|
Projected
|
|
|
|
|||||||||||||
|
Years Ending December 31,
|
2015
|
2016
|
2017
|
2015
|
2016
|
2017
|
|||||||||||||
|
Primary U.S. pension plan expense
|
$
|
11.9
|
|
5.8
|
|
2.8
|
|
$
|
5.7
|
|
12.2
|
|
8.8
|
|
|||||
|
(a)
|
Assumes that our accounting policy was to use the fair market value of assets instead of the market-related value of assets to determine our expense related to our primary U.S. pension plan.
|
For our UMWA plans, we calculate expected investment returns by applying the expected long-term rate of return to the fair market value of the assets at the beginning of the year. This method is likely to cause the expected return on assets, which is recorded in earnings, to fluctuate more than had we used the accounting methodology of our defined-benefit pension plans.
Medical Inflation Assumption
We estimate the trend in healthcare cost inflation to predict future cash flows related to our retiree medical plans. Our assumption is based on recent plan experience and industry trends.
For the UMWA plans, our largest retiree medical plans, we have assumed a medical inflation rate of 7% for
2016
, and we project this rate to decline to 5% in 2022 and hold at 5% thereafter. Our medical inflation rate assumption (including the assumption that medical inflation rates will gradually decline over the next seven years and hold at 5%) is based on macroeconomic assumptions of gross domestic growth rates, the excess of national health expenditures over other goods and services, and population growth. The average annual medical inflation rate of the company over the last ten years was 5.5%.
If we had assumed that medical inflation rates were one percentage point higher in each future year, the plan obligation for these plans at
December 31, 2015
, would have been approximately $49.8 million higher and the expense for
2015
would have been $2.0 million higher. If we had assumed that the medical inflation rates were one percentage point lower, the plan obligation at
December 31, 2015
, would have been approximately $42.2 million lower and the related
2015
expenses would have been $1.7 million lower.
56
If we had projected medical inflation rates to decline from 7% to 4.5% by 2028, instead of our projected decline to 5% by 2022, the plan obligation for the UMWA retiree medical benefit plan would have been $4.8 million higher for
2015
and our expense would be $0.5 million higher for
2016
.
Excise Tax on Administrators by Patient Protection and Affordable Care Act
A 40% excise tax is expected to be imposed on high-cost health plans (“Cadillac plans”) beginning in 2020. The tax will apply to plan costs that exceed a certain threshold level for individuals and for families, which will be indexed to inflation. Even though the tax is not assessed directly to an employer but rather to the benefits plan administrator, the cost is expected to be passed through to plan sponsors as higher premiums or higher claims administration fees, increasing the plan sponsor’s obligations. We project that we will have to pay the benefits plan administrator this excise tax beginning in 2020, and our plan obligations at
December 31, 2015
, include
$15.1 million
related to this tax. We are currently unable to reduce the benefit levels of our UMWA medical plans to avoid this excise tax because these benefit levels are required by the Coal Industry Retiree Health Benefit Act of 1992.
Workers’ Compensation
Besides the effects of changes in medical costs, worker’s compensation costs are affected by the severity and types of injuries, changes in state and federal regulations and their application and the quality of programs which assist an employee’s return to work. Our liability for future payments for workers’ compensation claims is evaluated annually with the assistance of an actuary.
Numbers of Participants
Mortality tables.
The Society of Actuaries ("SOA") issued new mortality base tables (“RP-2014”) and a longevity improvement scale (“MP-2014”) in 2014, superseding the tables developed in 2000. The new tables reflect that people in the U.S. are living significantly longer than estimated in the 2000 tables.
We adopted the Mercer modified RP-2014 base table and Mercer modified MP-2014 projection scale, with Blue Collar adjustments for the majority of our U.S. retirement plans, and with White Collar adjustments for our nonqualified U.S. pension plan as of December 31, 2014 and going forward.
In October 2015, the SOA issued the MP-2015 mortality projection scale. This did not have any impact on our obligations as the changes in the MP-2015 projection scale were anticipated and already reflected in the Mercer modified MP-2014 projection scale.
Lump sum offer to participants in 2014.
In August 2014, we offered approximately 9,000 terminated participants that had not yet retired the option of receiving the value of their pension benefit in a lump-sum payment, or as a reduced annuity that would begin earlier. The lump-sum elections were accepted by approximately 4,300 terminated participants resulting in payments by the plan of about $150 million. This action helped reduce the premiums paid to the Pension Benefit Guaranty Corporation (“PBGC”) as a portion of the premiums is based on the number of participants in the plan. We recognized a settlement loss in the fourth quarter of 2014 related to the lump-sum payment of $56 million.
Number of participants
. The number of participants by major plan in the past five years is as follows:
|
Number of participants
|
|||||||||
|
Plan
|
2015
|
2014
|
2013
|
2012
|
2011
|
||||
|
UMWA plans
|
3,700
|
3,900
|
4,100
|
4,300
|
4,400
|
||||
|
Black Lung
|
700
|
700
|
710
|
780
|
800
|
||||
|
U.S. pension
|
15,000
|
15,200
|
19,800
|
20,100
|
20,400
|
||||
Because we are no longer operating in the coal industry, we anticipate that the number of participants in the UMWA retirement medical plan will decline over time due to mortality. Because the U.S. pension plan has been frozen, the number of its participants will also decline over time.
57
Foreign Currency Translation
The majority of our subsidiaries outside the U.S. conduct business in their local currencies. Our financial results are reported in U.S. dollars, which include the results of these subsidiaries.
Accounting Policy
Our accounting policy for foreign currency translation is different depending on whether the economy in which our foreign subsidiary operates has been designated as highly inflationary. Economies with a three-year cumulative inflation rate of more than 100% are considered highly inflationary. Subsequent reductions in cumulative inflation rates below 100% do not change the method of translation unless the reduction is deemed to be other than temporary.
Non-Highly Inflationary Economies
Assets and liabilities of foreign subsidiaries in non-highly inflationary economies are translated into U.S. dollars using rates of exchange at the balance sheet date. Translation adjustments are recorded in other comprehensive income (loss). Revenues and expenses are translated at rates of exchange in effect during the year. Transaction gains and losses are recorded in net income (loss).
Highly Inflationary Economies
Foreign subsidiaries that operate in highly inflationary countries must use the reporting currency (the U.S. dollar) as the functional currency. Local-currency monetary assets and liabilities are remeasured into dollars each balance sheet date, with remeasurement adjustments and other transaction gains and losses recognized in earnings. Non-monetary assets and liabilities do not fluctuate with changes in local currency exchange rates to the dollar.
Application of Accounting Policy
Venezuela
The economy in Venezuela has had significant inflation in the last several years. We consolidate our Venezuelan results using our accounting policy for subsidiaries operating in highly inflationary economies.
Since 2003, the Venezuelan government has controlled the exchange of local currency into other currencies, including the U.S. dollar, and has required that currency exchanges be made at official rates established by the government instead of allowing open markets to determine currency rates. Different official rates exist for different industries and purposes and the government does not approve all requests to convert bolivars to other currencies.
As a result of the restrictions on currency exchange, we have in the past been unable to obtain sufficient U.S. dollars to purchase certain imported supplies and fixed assets to fully operate our business in Venezuela. Consequently, we have occasionally purchased more expensive, bolivar-denominated supplies and fixed assets. Furthermore, there is a risk that official currency exchange mechanisms will be discontinued or will not be accessible when needed in the future, which may prevent us from repatriating dividends or obtaining dollars to operate our Venezuelan operations. Since the end of 2013, we have only obtained $1.2 million dollars through official exchange mechanisms and these amounts were used in Venezuela operations.
Remeasurement rates during 2013
. Through January 31, 2013, we used an official rate of
5.3
bolivars to the dollar to remeasure our bolivar-denominated monetary assets and liabilities into U.S. dollars and to translate our revenues and expenses. After the government discontinued the use of the
5.3
rate in February 2013, we began to use the
6.3
official exchange rate to remeasure bolivar-denominated monetary assets and liabilities and to translate our revenues and expenses. We recognized a
$13.4 million
net remeasurement loss in 2013 when we changed from the
5.3
to
6.3
exchange rate. The after-tax effect of these losses attributable to noncontrolling interests was
$4.7 million
in 2013.
Late in 2013, the government added another official exchange process, known as SICAD, for travel and certain other purposes. The published SICAD rate at that time ranged from
10
to
12
bolivars to the dollar. We have only been able to obtain dollars once using the SICAD exchange mechanism and we do not know whether we will be able to access dollars at this rate in the future. We have not used the SICAD rate for translation or for remeasurement purposes.
Remeasurement rates during 2014
. Through March 23, 2014, we used an official rate of
6.3
bolivars to the dollar to remeasure our bolivar-denominated monetary assets and liabilities into U.S. dollars and to translate our revenues and expenses. Effective March 24, 2014, the government initiated another exchange mechanism known as SICAD II and we began to use this exchange rate to remeasure bolivar-denominated monetary assets and liabilities and to translate our revenues and expenses. During 2014, the SICAD II rate averaged approximately
50
bolivars to the dollar and, at December 31, 2014, the rate was approximately
50
bolivars to the dollar.
We recognized a
$121.6 million
net remeasurement loss in 2014 when we changed from the official rate of
6.3
to the SICAD II exchange rate. The after-tax effect of these losses attributable to noncontrolling interests was
$39.7 million
in 2014. While the SICAD II process existed, we received approval to obtain
$1.2 million
(weighted average exchange rate of
51
) through this exchange mechanism.
58
Remeasurement rates during 2015
. Through February 11, 2015, we used the SICAD II rates to remeasure our bolivar-denominated monetary assets and liabilities into U.S. dollars and to translate our revenue and expenses. Effective February 12, 2015, the SICAD II exchange mechanism was disbanded and we began to use the rate under the new exchange mechanism, known as SIMADI, to remeasure bolivar-denominated monetary assets and liabilities and to translate our revenue and expenses. The SIMADI rate has ranged from
170
to
200
bolivars to th dollar since it was first published and, at December 31, 2015, it was
199
bolivars to the dollar. We recognized an
$18.1 million
net remeasurement loss in 2015. The after-tax effect of this loss attributable to noncontrolling interests was
$5.6 million
. To date, we have received minimal U.S. dollars using the SIMADI process.
Remeasuring our Venezuelan results using the SIMADI rate has had the following effects on our reported 2015 results:
|
•
|
Our Venezuelan operations have become a less-significant component of Brink’s consolidated revenues and operating profit.
|
|
•
|
Our Venezuelan operations profit margin percentage declined as the historical U.S. dollar nonmonetary assets were not remeasured to a lower U.S. dollar basis but instead retained a historical higher basis which was used for depreciation and other expense attribution. Our nonmonetary assets were
$13.5 million
at
December 31, 2015
, and
$55.0 million
at
December 31, 2014
.
|
|
•
|
Our investment in our Venezuelan operations on an equity-method basis has declined. Our investment was
$26.0 million
at
December 31, 2015
, which included
$18.7 million
in net payables to other Brink's affiliates and
$59.6 million
at
December 31, 2014
, which included
$17.6 million
in net payables to other Brink's affiliates.
|
|
•
|
Our bolivar-denominated net monetary assets included in our consolidated balance sheets have declined. Our bolivar-denominated net monetary assets were
$9.5 million
(including
$6.2 million
of cash and cash equivalents) at
December 31, 2015
, and
$23.5 million
(including
$12.6 million
of cash and cash equivalents) at
December 31, 2014
.
|
|
•
|
Accumulated other comprehensive losses attributable to Brink’s shareholders related to our Venezuelan operations were approximately
$113 million
at
December 31, 2015
and at
December 31, 2014
.
|
Argentina
We use the official exchange rate to translate the Brink's Argentina balance sheet and income statement. During 2015, the official exchange rate ranged from 8.5 to 9.8 local pesos to the U.S. dollar until December 17, 2015 when the currency was devalued. At
December 31, 2015
, the official exchange rate was
12.9
local pesos to the U.S. dollar.
The government in Argentina had periodically imposed limits on the exchange of local pesos into U.S. dollars. As a result, we elected to repatriate cash from Argentina using different means to convert Argentine pesos into U.S. dollars. Conversions prior to the December 17, 2015 devaluation had settled at rates approximately
30%
to
40%
less favorable than the rates at which we translated the financial statements of our subsidiary in Argentina. After the currency was devalued, we completed a conversion transaction at a rate approximately 10% less favorable than the newly devalued rate. See note 19
Supplemental Cash Flow Information
for more information. We recognized losses from converting local pesos into U.S. dollars of
$7.1 million
in 2015 and
$3.6 million
in 2014. These conversion losses are classified in the consolidated statements of operations as other operating income (expense). At
December 31, 2015
, we had cash and short term investments denominated in pesos of
$10.9 million
.
RECENT ACCOUNTING PRONOUNCEMENTS
In April 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-03,
Simplifying the Presentation of Debt Issuance Costs
. Under ASU 2015-03, certain debt issuance costs reported as assets must be reclassified and shown as direct adjustments to the reported debt liability. We elected to early adopt this ASU as of December 31, 2015 using the retrospective transition method.
In May 2015, the FASB issued ASU 2015-07,
Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or its Equivalent).
This new standard eliminates the requirement to categorize investments in the fair value hierarchy if their fair values are measured at net asset value per share (or its equivalent) using the practical expedient in the FASB’s fair value measurement guidance. This new standard impacted our fair value disclosures related to retirement benefit plan investments. We elected to early adopt this ASU as of December 31, 2015 using the retrospective transition method. As a result, the fair value hierarchy presentation as reported at December 31, 2014 has been updated to reflect this guidance.
In November 2015, the FASB issued ASU 2015-17,
Balance Sheet Classification of Deferred Taxes
. This new standard requires that all deferred tax assets and deferred tax liabilities shall be classified as noncurrent. We elected to early adopt this ASU as of the beginning of the fourth quarter of 2015 using the prospective transition method. In our December 31, 2015 balance sheet, deferred tax assets and deferred tax liabilities are reported as noncurrent as prescribed by the prospective transition method. We have not adjusted the classification of deferred tax assets and deferred tax liabilities in our December 31, 2014 balance sheet.
In May 2014, the FASB issued ASU 2014-09,
Revenue From Contracts with Customers,
a new standard related to revenue recognition which requires an entity to recognize an amount of revenue to which it expects to be entitled for the transfer of promised goods and services to customers. The new standard will replace most of the existing revenue recognition standards in U.S. GAAP. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of this new standard to January 1, 2018. The new standard can be applied retrospectively to each reporting period presented or retrospectively with the cumulative effect of the change recognized at the date of the initial application in retained earnings. We are assessing the potential impact of this new standard on financial reporting and have not yet selected a transition method.
59
We currently serve customers in more than
100
countries, including
41
countries where we operate subsidiaries. These operations expose us to a variety of market risks, including the effects of changes in interest rates, commodity prices and foreign currency exchange rates. These financial and commodity exposures are monitored and managed by us as an integral part of our 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, 2015
. Actual results will be determined by a number of factors that are not under management’s control and could vary materially from those disclosed.
Interest Rate Risk
We use both fixed and floating rate debt and leases to finance our operations. Floating rate obligations, including our Revolving Facility, expose us to fluctuations in cash flows due to changes in the general level of interest rates. Fixed rate obligations, including our unsecured notes, are subject to fluctuations in fair values as a result of changes in interest rates.
Based on the contractual interest rates on the floating rate debt at
December 31, 2015
, a hypothetical 10% increase in rates would increase cash outflows by approximately $0.8 million over a twelve-month period. In other words, our weighted average interest rate on our floating rate instruments was 2.6% per annum at
December 31, 2015
. If that average rate were to increase by 0.3 percentage points to 2.9%, the cash outflows associated with these instruments would increase by $0.8 million annually. The effect on the fair values on our unsecured notes for a hypothetical 10% decrease in the yield curve from year-end
2015
levels would result in a $1.6 million increase for our unsecured notes in the fair values of the debt.
Foreign Currency Risk
We have exposure to the effects of foreign currency exchange rate fluctuations on the results of all of our foreign operations. Our foreign operations generally use local currencies to conduct business but their results are reported in U.S. dollars.
We are also exposed periodically to the foreign currency rate fluctuations that affect transactions not denominated in the functional currency of domestic and foreign operations. To mitigate these exposures, we, from time to time, enter into foreign currency forward and swap contracts. At
December 31, 2015
, the notional value of our shorter term outstanding foreign currency forward and swap contracts was $51.8 million with average contract maturities of approximately one month. These shorter term contracts primarily offset exposures in the British pound, the euro and the Mexican peso. Additionally, these shorter term contracts are not designated as hedges for accounting purposes, and accordingly, changes in their fair value are recorded immediately in earnings. We also have a longer term cross currency swap contract to hedge exposure in the Brazilian real which is designated as a cash flow hedge for accounting purposes. At
December 31, 2015
, the notional value of that longer term contract was $14.3 million with a weighted average maturity of 1.1 years. We do not use derivative financial instruments to hedge investments in foreign subsidiaries since such investments are long-term in nature.
The effects of a hypothetical simultaneous 10% appreciation in the U.S. dollar from the
2015
levels against all other currencies of countries in which we have continuing operations are as follows:
|
(In millions)
|
Hypothetical Effects
Increase/ (decrease)
|
||
|
Effect on Earnings:
|
|
||
|
Translation of 2015 earnings into U.S. dollars
|
$
|
(12.7
|
)
|
|
Transaction gains (losses)
|
(1.6
|
)
|
|
|
Effect on Other Comprehensive Income (Loss):
|
|
|
|
|
Translation of net assets of foreign subsidiaries
|
(63.5
|
)
|
|
The hypothetical foreign currency effects above detail the consolidated effect attributable to Brink’s of a simultaneous change in the value of a large number of foreign currencies relative to the U. S. dollar. The foreign currency exposure effect related to a change in an individual currency could be significantly different.
60
THE BRINK’S COMPANY
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31,
2015
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61
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, 2015
. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control – Integrated Framework (2013).”
Based on this assessment, our management believes that, as of
December 31, 2015
, our internal control over financial reporting is effective based on the COSO criteria.
KPMG LLP, the independent registered public accounting firm which audits our consolidated financial statements, has issued an attestation report of our internal control over financial reporting. KPMG’s attestation report appears on page 63.
62
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
The Brink’s Company:
We have audited The Brink’s Company’s (the Company) internal control over financial reporting as of December 31, 2015, based on criteria established in
Internal Control - Integrated Framework
(2013) 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, 2015
, based on criteria established in
Internal Control - Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
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, 2015
and
2014
, and the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended
December 31, 2015
, and our report dated
February 29, 2016
, expressed an unqualified opinion on those consolidated financial statements.
/s/ KPMG LLP
Richmond, Virginia
February 29, 2016
63
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
The Brink’s Company:
We have audited the accompanying consolidated balance sheets of The Brink’s Company and subsidiaries as of
December 31, 2015
and
2014
, and the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the years in the three‑year period ended
December 31, 2015
. 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, 2015
and
2014
, and the results of their operations and their cash flows for each of the years in the three‑year period ended
December 31, 2015
, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), The Brink’s Company’s internal control over financial reporting as of
December 31, 2015
, based on criteria established in
Internal Control - Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated
February 29, 2016
expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
/s/ KPMG LLP
Richmond, Virginia
February 29, 2016
64
THE BRINK’S COMPANY
and subsidiaries
|
December 31,
|
||||||
|
(In millions, except for per share amounts)
|
2015
|
2014
|
||||
|
ASSETS
|
||||||
|
Current assets:
|
||||||
|
Cash and cash equivalents
|
$
|
198.3
|
|
176.2
|
|
|
|
Accounts receivable (net of allowance: 2015 - $9.1; 2014 - $10.0)
|
478.1
|
|
530.5
|
|
||
|
Prepaid expenses and other
|
101.3
|
|
129.0
|
|
||
|
Deferred income taxes
|
—
|
|
71.9
|
|
||
|
Total current assets
|
777.7
|
|
907.6
|
|
||
|
Property and equipment, net
|
549.0
|
|
669.5
|
|
||
|
Goodwill
|
185.3
|
|
215.7
|
|
||
|
Other intangibles
|
28.5
|
|
39.8
|
|
||
|
Deferred income taxes
|
329.8
|
|
289.5
|
|
||
|
Other
|
76.4
|
|
69.9
|
|
||
|
Total assets
|
$
|
1,946.7
|
|
2,192.0
|
|
|
|
LIABILITIES AND EQUITY
|
||||||
|
Current liabilities:
|
||||||
|
Short-term borrowings
|
$
|
29.1
|
|
59.4
|
|
|
|
Current maturities of long-term debt
|
43.3
|
|
34.1
|
|
||
|
Accounts payable
|
155.3
|
|
168.6
|
|
||
|
Accrued liabilities
|
414.1
|
|
466.3
|
|
||
|
Total current liabilities
|
641.8
|
|
728.4
|
|
||
|
Long-term debt
|
358.1
|
|
373.1
|
|
||
|
Accrued pension costs
|
219.4
|
|
219.0
|
|
||
|
Retirement benefits other than pensions
|
259.2
|
|
257.1
|
|
||
|
Deferred income taxes
|
8.1
|
|
10.8
|
|
||
|
Other
|
129.5
|
|
129.8
|
|
||
|
Total liabilities
|
1,616.1
|
|
1,718.2
|
|
||
|
Commitments and contingent liabilities (notes 3, 4, 13, 15, 18, 22 and 23)
|
|
|
|
|
||
|
Equity:
|
||||||
|
The Brink’s Company (“Brink’s”) shareholders:
|
||||||
|
Common stock, par value $1 per share:
|
||||||
|
Shares authorized: 100.0
|
||||||
|
Shares issued and outstanding: 2015 - 48.9; 2014 - 48.6
|
48.9
|
|
48.6
|
|
||
|
Capital in excess of par value
|
599.6
|
|
584.5
|
|
||
|
Retained earnings
|
561.3
|
|
592.9
|
|
||
|
Accumulated other comprehensive income (loss):
|
||||||
|
Benefit plan adjustments
|
(570.5
|
)
|
(571.7
|
)
|
||
|
Foreign currency translation
|
(322.6
|
)
|
(222.1
|
)
|
||
|
Unrealized gains on available-for-sale securities
|
1.1
|
|
1.4
|
|
||
|
Gains on cash flow hedges
|
0.1
|
|
0.4
|
|
||
|
Accumulated other comprehensive loss
|
(891.9
|
)
|
(792.0
|
)
|
||
|
Brink’s shareholders
|
317.9
|
|
434.0
|
|
||
|
Noncontrolling interests
|
12.7
|
|
39.8
|
|
||
|
Total equity
|
330.6
|
|
473.8
|
|
||
|
Total liabilities and equity
|
$
|
1,946.7
|
|
2,192.0
|
|
|
See accompanying notes to consolidated financial statements.
65
THE BRINK’S COMPANY
and subsidiaries
|
Years Ended December 31,
|
|||||||||
|
(In millions, except for per share amounts)
|
2015
|
2014
|
2013
|
||||||
|
Revenues
|
$
|
3,061.4
|
|
3,562.3
|
|
3,778.6
|
|
||
|
Costs and expenses:
|
|||||||||
|
Cost of revenues
|
2,471.6
|
|
2,948.2
|
|
3,059.2
|
|
|||
|
Selling, general and administrative expenses
|
463.8
|
|
560.6
|
|
546.8
|
|
|||
|
Total costs and expenses
|
2,935.4
|
|
3,508.8
|
|
3,606.0
|
|
|||
|
Other operating expense
|
(69.4
|
)
|
(81.0
|
)
|
(9.4
|
)
|
|||
|
Operating profit (loss)
|
56.6
|
|
(27.5
|
)
|
163.2
|
|
|||
|
Interest expense
|
(18.9
|
)
|
(23.4
|
)
|
(25.1
|
)
|
|||
|
Interest and other income (expense)
|
3.4
|
|
1.9
|
|
1.5
|
|
|||
|
Income (loss) from continuing operations before tax
|
41.1
|
|
(49.0
|
)
|
139.6
|
|
|||
|
Provision for income taxes
|
66.5
|
|
36.7
|
|
49.3
|
|
|||
|
Income (loss) from continuing operations
|
(25.4
|
)
|
(85.7
|
)
|
90.3
|
|
|||
|
Loss from discontinued operations, net of tax
|
(2.8
|
)
|
(29.1
|
)
|
(9.2
|
)
|
|||
|
Net income (loss)
|
(28.2
|
)
|
(114.8
|
)
|
81.1
|
|
|||
|
Less net income (loss) attributable to noncontrolling interests
|
(16.3
|
)
|
(30.9
|
)
|
24.3
|
|
|||
|
Net income (loss) attributable to Brink’s
|
$
|
(11.9
|
)
|
(83.9
|
)
|
56.8
|
|
||
|
Amounts attributable to Brink’s:
|
|||||||||
|
Continuing operations
|
$
|
(9.1
|
)
|
(54.8
|
)
|
66.0
|
|
||
|
Discontinued operations
|
(2.8
|
)
|
(29.1
|
)
|
(9.2
|
)
|
|||
|
Net income (loss) attributable to Brink’s
|
$
|
(11.9
|
)
|
(83.9
|
)
|
56.8
|
|
||
|
Earnings (loss) per share attributable to Brink’s common shareholders
(a)
:
|
|||||||||
|
Basic:
|
|||||||||
|
Continuing operations
|
$
|
(0.19
|
)
|
(1.12
|
)
|
1.36
|
|
||
|
Discontinued operations
|
(0.06
|
)
|
(0.59
|
)
|
(0.19
|
)
|
|||
|
Net income (loss)
|
(0.24
|
)
|
(1.71
|
)
|
1.17
|
|
|||
|
Diluted:
|
|||||||||
|
Continuing operations
|
$
|
(0.19
|
)
|
(1.12
|
)
|
1.35
|
|
||
|
Discontinued operations
|
(0.06
|
)
|
(0.59
|
)
|
(0.19
|
)
|
|||
|
Net income (loss)
|
(0.24
|
)
|
(1.71
|
)
|
1.16
|
|
|||
|
Weighted-average shares
|
|||||||||
|
Basic
|
49.3
|
|
49.0
|
|
48.7
|
|
|||
|
Diluted
|
49.3
|
|
49.0
|
|
49.0
|
|
|||
(a) Amounts may not add due to rounding.
See accompanying notes to consolidated financial statements.
66
THE BRINK’S COMPANY
and subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
|
Years Ended December 31,
|
|||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Net income (loss)
|
$
|
(28.2
|
)
|
(114.8
|
)
|
81.1
|
|
||
|
Benefit plan adjustments:
|
|||||||||
|
Benefit plan experience gains (losses)
|
4.4
|
|
(134.3
|
)
|
265.0
|
|
|||
|
Benefit plan prior service (costs) credits
|
(3.6
|
)
|
(2.9
|
)
|
63.0
|
|
|||
|
Deferred profit sharing
|
—
|
|
0.3
|
|
(0.3
|
)
|
|||
|
Total benefit plan adjustments
|
0.8
|
|
(136.9
|
)
|
327.7
|
|
|||
|
Foreign currency translation adjustments
|
(104.1
|
)
|
(87.0
|
)
|
(32.8
|
)
|
|||
|
Unrealized net gains (losses) on available-for-sale securities
|
(0.5
|
)
|
(0.4
|
)
|
0.1
|
|
|||
|
Gains (loss) on cash flow hedges
|
(0.3
|
)
|
(0.2
|
)
|
0.6
|
|
|||
|
Other comprehensive income (loss) before tax
|
(104.1
|
)
|
(224.5
|
)
|
295.6
|
|
|||
|
Provision (benefit) for income taxes
|
(0.7
|
)
|
(43.0
|
)
|
141.0
|
|
|||
|
Other comprehensive income (loss)
|
(103.4
|
)
|
(181.5
|
)
|
154.6
|
|
|||
|
Comprehensive income (loss)
|
(131.6
|
)
|
(296.3
|
)
|
235.7
|
|
|||
|
Less comprehensive income (loss) attributable to noncontrolling interests
|
(20.1
|
)
|
(37.7
|
)
|
22.5
|
|
|||
|
Comprehensive income (loss) attributable to Brink’s
|
$
|
(111.5
|
)
|
(258.6
|
)
|
213.2
|
|
||
See accompanying notes to consolidated financial statements.
67
THE BRINK’S COMPANY
and subsidiaries
Consolidated Statements of Equity
Years Ended
December 31, 2015
,
2014
and
2013
|
(In millions)
|
Shares
|
Common
Stock
|
Capital in Excess of Par Value
|
Retained
Earnings
|
Accumulated Other Comprehensive Loss
|
Attributable to
Noncontrolling
Interests
|
Total
|
||||||||
|
Balance as of December 31, 2012
|
47.8
|
|
$
|
47.8
|
|
568.3
|
|
659.1
|
|
(773.4
|
)
|
75.0
|
|
576.8
|
|
|
Net income
|
—
|
|
—
|
|
—
|
|
56.8
|
|
—
|
|
24.3
|
|
81.1
|
|
|
|
Other comprehensive income (loss)
|
—
|
|
—
|
|
—
|
|
—
|
|
156.4
|
|
(1.8
|
)
|
154.6
|
|
|
|
Dividends to:
|
|||||||||||||||
|
Brink’s common shareholders ($0.40 per share)
|
—
|
|
—
|
|
—
|
|
(19.2
|
)
|
—
|
|
—
|
|
(19.2
|
)
|
|
|
Noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(6.0
|
)
|
(6.0
|
)
|
|
|
Share-based compensation:
|
|||||||||||||||
|
Stock options and awards:
|
|||||||||||||||
|
Compensation expense
|
—
|
|
—
|
|
9.9
|
|
—
|
|
—
|
|
—
|
|
9.9
|
|
|
|
Consideration from exercise of stock options
|
0.3
|
|
0.3
|
|
6.4
|
|
—
|
|
—
|
|
—
|
|
6.7
|
|
|
|
Reduction in excess tax benefit of stock compensation
|
—
|
|
—
|
|
(2.8
|
)
|
—
|
|
—
|
|
—
|
|
(2.8
|
)
|
|
|
Other share-based benefit programs
|
0.3
|
|
0.3
|
|
(3.6
|
)
|
(0.3
|
)
|
—
|
|
—
|
|
(3.6
|
)
|
|
|
Acquisitions of noncontrolling interests
|
—
|
|
—
|
|
(11.8
|
)
|
—
|
|
(0.3
|
)
|
(6.4
|
)
|
(18.5
|
)
|
|
|
Capital contributions from noncontrolling interest
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
0.5
|
|
0.5
|
|
|
|
Balance as of December 31, 2013
|
48.4
|
|
48.4
|
|
566.4
|
|
696.4
|
|
(617.3
|
)
|
85.6
|
|
779.5
|
|
|
|
Net loss
|
—
|
|
—
|
|
—
|
|
(83.9
|
)
|
—
|
|
(30.9
|
)
|
(114.8
|
)
|
|
|
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(174.7
|
)
|
(6.8
|
)
|
(181.5
|
)
|
|
|
Dividends to:
|
|||||||||||||||
|
Brink’s common shareholders ($0.40 per share)
|
—
|
|
—
|
|
—
|
|
(19.4
|
)
|
—
|
|
—
|
|
(19.4
|
)
|
|
|
Noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(8.6
|
)
|
(8.6
|
)
|
|
|
Share-based compensation:
|
|||||||||||||||
|
Stock options and awards:
|
|||||||||||||||
|
Compensation expense
|
—
|
|
—
|
|
17.3
|
|
—
|
|
—
|
|
—
|
|
17.3
|
|
|
|
Consideration from exercise of stock options
|
—
|
|
—
|
|
0.4
|
|
—
|
|
—
|
|
—
|
|
0.4
|
|
|
|
Reduction in excess tax benefit of stock compensation
|
—
|
|
—
|
|
(0.6
|
)
|
—
|
|
—
|
|
—
|
|
(0.6
|
)
|
|
|
Other share-based benefit programs
|
0.2
|
|
0.2
|
|
1.0
|
|
(0.2
|
)
|
—
|
|
—
|
|
1.0
|
|
|
|
Capital contributions from noncontrolling interest
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
0.5
|
|
0.5
|
|
|
|
Balance as of December 31, 2014
|
48.6
|
|
48.6
|
|
584.5
|
|
592.9
|
|
(792.0
|
)
|
39.8
|
|
473.8
|
|
|
|
Net loss
|
—
|
|
—
|
|
—
|
|
(11.9
|
)
|
—
|
|
(16.3
|
)
|
(28.2
|
)
|
|
|
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(99.6
|
)
|
(3.8
|
)
|
(103.4
|
)
|
|
|
Dividends to:
|
|||||||||||||||
|
Brink’s common shareholders ($0.40 per share)
|
—
|
|
—
|
|
—
|
|
(19.5
|
)
|
—
|
|
—
|
|
(19.5
|
)
|
|
|
Noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(5.3
|
)
|
(5.3
|
)
|
|
|
Share-based compensation:
|
|||||||||||||||
|
Stock options and awards:
|
|||||||||||||||
|
Compensation expense
|
—
|
|
—
|
|
14.1
|
|
—
|
|
—
|
|
—
|
|
14.1
|
|
|
|
Consideration from exercise of stock options
|
0.2
|
|
0.2
|
|
3.6
|
|
—
|
|
—
|
|
—
|
|
3.8
|
|
|
|
Reduction in excess tax benefit of stock compensation
|
—
|
|
—
|
|
(1.8
|
)
|
—
|
|
—
|
|
—
|
|
(1.8
|
)
|
|
|
Other share-based benefit programs
|
0.1
|
|
0.1
|
|
0.6
|
|
(0.2
|
)
|
—
|
|
—
|
|
0.5
|
|
|
|
Business dispositions
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1.9
|
)
|
(1.9
|
)
|
|
|
Acquisitions of noncontrolling interests
|
—
|
|
—
|
|
(1.4
|
)
|
—
|
|
(0.3
|
)
|
0.2
|
|
(1.5
|
)
|
|
|
Balance as of December 31, 2015
|
48.9
|
|
$
|
48.9
|
|
599.6
|
|
561.3
|
|
(891.9
|
)
|
12.7
|
|
330.6
|
|
See accompanying notes to consolidated financial statements.
68
THE BRINK’S COMPANY
and subsidiaries
|
Years Ended December 31,
|
|||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Cash flows from operating activities:
|
|||||||||
|
Net income (loss)
|
$
|
(28.2
|
)
|
(114.8
|
)
|
81.1
|
|
||
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|||||||||
|
Loss from discontinued operations, net of tax
|
2.8
|
|
29.1
|
|
9.2
|
|
|||
|
Depreciation and amortization
|
139.9
|
|
161.9
|
|
165.8
|
|
|||
|
Share-based compensation expense
|
14.1
|
|
17.3
|
|
9.9
|
|
|||
|
Deferred income taxes
|
7.1
|
|
(28.4
|
)
|
(34.6
|
)
|
|||
|
Gains and losses:
|
|||||||||
|
Available-for-sale securities
|
(1.1
|
)
|
(0.4
|
)
|
(0.4
|
)
|
|||
|
Property and other assets
|
(0.9
|
)
|
(44.9
|
)
|
(2.4
|
)
|
|||
|
Business acquisitions and dispositions
|
6.3
|
|
—
|
|
(2.8
|
)
|
|||
|
Venezuela impairment
|
35.3
|
|
—
|
|
—
|
|
|||
|
Other impairment losses
|
1.9
|
|
3.3
|
|
2.9
|
|
|||
|
Retirement benefit funding (more) less than expense:
|
|||||||||
|
Pension
|
10.8
|
|
(23.6
|
)
|
11.3
|
|
|||
|
Other than pension
|
9.2
|
|
1.5
|
|
15.0
|
|
|||
|
Remeasurement losses due to Venezuela currency devaluations
|
18.1
|
|
121.6
|
|
13.4
|
|
|||
|
Other operating
|
2.6
|
|
7.6
|
|
2.3
|
|
|||
|
Changes in operating assets and liabilities, net of effects of acquisitions:
|
|||||||||
|
Accounts receivable and income taxes receivable
|
(44.8
|
)
|
(90.7
|
)
|
(69.7
|
)
|
|||
|
Accounts payable, income taxes payable and accrued liabilities
|
33.0
|
|
105.5
|
|
23.6
|
|
|||
|
Customer obligations
|
12.5
|
|
15.4
|
|
(9.7
|
)
|
|||
|
Prepaid and other current assets
|
(3.4
|
)
|
(9.9
|
)
|
(19.4
|
)
|
|||
|
Other
|
(4.4
|
)
|
(14.7
|
)
|
(11.0
|
)
|
|||
|
Discontinued operations
|
(2.0
|
)
|
5.5
|
|
17.0
|
|
|||
|
Net cash provided by operating activities
|
208.8
|
|
141.3
|
|
201.5
|
|
|||
|
Cash flows from investing activities:
|
|||||||||
|
Capital expenditures
|
(101.1
|
)
|
(136.1
|
)
|
(172.9
|
)
|
|||
|
Acquisitions
|
—
|
|
(4.6
|
)
|
(18.1
|
)
|
|||
|
Dispositions, net of cash disposed
|
(14.6
|
)
|
—
|
|
—
|
|
|||
|
Available-for-sale securities:
|
|||||||||
|
Purchases
|
(27.3
|
)
|
—
|
|
—
|
|
|||
|
Sales
|
33.9
|
|
0.9
|
|
9.9
|
|
|||
|
Cash proceeds from sale of property, equipment and investments
|
1.9
|
|
62.7
|
|
5.9
|
|
|||
|
Other
|
1.6
|
|
(3.6
|
)
|
(0.5
|
)
|
|||
|
Discontinued operations
|
1.9
|
|
(13.3
|
)
|
52.7
|
|
|||
|
Net cash used by investing activities
|
(103.7
|
)
|
(94.0
|
)
|
(123.0
|
)
|
|||
|
Cash flows from financing activities:
|
|||||||||
|
Borrowings (repayments) of debt:
|
|||||||||
|
Short-term debt
|
(19.2
|
)
|
(7.8
|
)
|
60.5
|
|
|||
|
Long-term revolving credit facilities:
|
|||||||||
|
Borrowings
|
569.5
|
|
703.8
|
|
432.6
|
|
|||
|
Repayments
|
(633.9
|
)
|
(588.8
|
)
|
(418.8
|
)
|
|||
|
Other long-term debt:
|
|||||||||
|
Borrowings
|
86.1
|
|
7.5
|
|
3.8
|
|
|||
|
Repayments
|
(42.0
|
)
|
(81.0
|
)
|
(27.3
|
)
|
|||
|
Acquisitions of noncontrolling interests
|
(1.5
|
)
|
—
|
|
(18.5
|
)
|
|||
|
Payment of acquisition-related obligation
|
—
|
|
—
|
|
(12.8
|
)
|
|||
|
Nonrecourse financing of real estate transaction
|
14.5
|
|
—
|
|
—
|
|
|||
|
Dividends to:
|
|||||||||
|
Shareholders of Brink’s
|
(19.5
|
)
|
(19.4
|
)
|
(19.2
|
)
|
|||
|
Noncontrolling interests in subsidiaries
|
(5.3
|
)
|
(8.6
|
)
|
(6.0
|
)
|
|||
|
Proceeds from exercise of stock options
|
3.8
|
|
0.4
|
|
6.7
|
|
|||
|
Minimum tax withholdings associated with share-based compensation
|
(2.0
|
)
|
(1.2
|
)
|
(3.5
|
)
|
|||
|
Other
|
0.3
|
|
(1.6
|
)
|
(1.0
|
)
|
|||
|
Discontinued operations
|
0.2
|
|
—
|
|
(2.5
|
)
|
|||
|
Net cash (used) provided by financing activities
|
(49.0
|
)
|
3.3
|
|
(6.0
|
)
|
|||
|
Effect of exchange rate changes on cash and cash equivalents
|
(34.0
|
)
|
(129.9
|
)
|
(18.7
|
)
|
|||
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|||
|
Increase (decrease)
|
22.1
|
|
(79.3
|
)
|
53.8
|
|
|||
|
Balance at beginning of period
|
176.2
|
|
255.5
|
|
201.7
|
|
|||
|
Balance at end of period
|
$
|
198.3
|
|
176.2
|
|
255.5
|
|
||
See accompanying notes to consolidated financial statements.
69
THE BRINK’S COMPANY
and subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
The Brink’s Company (along with its subsidiaries, “we,” “our,” “Brink’s” or the “Company”), based in Richmond, Virginia, is a leading provider of secure transportation, cash management services and other security-related services to banks and financial institutions, retailers, government agencies, mints, jewelers and other commercial operations around the world. Brink’s is the oldest and largest secure transportation and cash management services company in the U.S., and a market leader in many other countries.
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 investments. All significant intercompany accounts and transactions have been eliminated in consolidation.
Revenue Recognition
Revenue is recognized when services related to armored vehicle transportation, ATM services, cash management services, payment services, guarding and the secure international transportation of valuables are performed. 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. Taxes collected from customers and remitted to governmental authorities are not included in revenues in the consolidated statements of operations.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits and investments with original maturities of three months or less. Cash and cash equivalents include amounts held by certain of our secure cash management services operations for customers for which, under local regulations, the title transfers to us for a short period of time. The cash is generally credited to customers’ accounts the following day and we do not consider it as available for general corporate purposes in the management of our liquidity and capital resources. We record a liability for the amounts owed to customers (see note 11).
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 the lease term. Renewal periods are included in the lease term when the renewal is determined to be reasonably assured.
Part of the costs related to the development or purchase of internal-use software is capitalized and amortized over the estimated useful life of the software. Costs that are capitalized include external direct costs of materials and services to develop or obtain the software, and internal costs, including compensation and employee benefits for employees directly associated with a software development project.
|
Estimated Useful Lives
|
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
|
Expenditures for routine maintenance and repairs on property and equipment are charged to expense. Major renewals, betterments and modifications are capitalized and depreciated over the lesser of the remaining life of the asset or, if applicable, the lease term.
Goodwill and Other Intangible Assets
70
Goodwill is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible net assets of businesses acquired. Intangible assets arising from business acquisitions include customer lists, customer relationships, covenants not to compete, trademarks and other identifiable intangibles. At
December 31, 2015
, finite-lived intangible assets have remaining useful lives ranging from
1
to
12 years
and are amortized based on the pattern in which the economic benefits are used or on a straight-line basis.
Impairment of Goodwill and Long-Lived Assets
Goodwill is not amortized but is tested at least annually for impairment at the reporting unit level, which is at the operating segment level or one level below an operating segment. Goodwill is assigned to one or more reporting units at the date of acquisition. Prior to the restructuring of our global organization in the fourth quarter of 2014, our reporting units were Latin America, EMEA, North America and Asia.
After the 2014 restructuring, we now have
ten
reporting units which are comprised of:
|
•
|
each of the
five
countries within Largest 5 Markets (U.S., France, Mexico, Brazil and Canada),
|
|
•
|
each of the
three
regions within Global Markets (Latin America, EMEA and Asia),
|
|
•
|
the Latin American Payment Services businesses, and
|
|
•
|
the U.S. Payment Services business
|
We performed a goodwill impairment test on the new reporting units that had goodwill as of December 31, 2014.
We performed goodwill impairment tests on the reporting units that had goodwill as of October 1, 2015. We performed a quantitative analysis to determine whether reporting unit fair values exceeded their carrying amounts. We based our estimates of fair value on projected future cash flows and completed these impairment tests, as well as the tests in the previous two years, with no impairment charges required.
Indefinite-lived intangibles are also tested for impairment at least annually by comparing their carrying values to their estimated fair values. We have had no significant impairments of indefinite-lived intangibles in the last three years.
Long-lived assets other than goodwill and other indefinite-lived intangibles are reviewed for impairment when events or changes in circumstances indicate the carrying value of an asset may not be recoverable.
For long-lived assets other than goodwill that are to be held and used in operations, an impairment is indicated when the estimated total undiscounted cash flow associated with the asset or group of assets is less than carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value.
Retirement Benefit Plans
We account for retirement benefit obligations under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 715,
Compensation – Retirement Benefits
. For U.S. and certain non-U.S. retirement plans, we derive the discount rates used to measure the present value of benefit obligations using the cash flow matching method. Under this method, we compare the plan’s projected payment obligations by year with the corresponding yields on a Mercer yield curve. Each year’s projected cash flows are then discounted back to their present value at the measurement date and an overall discount rate is determined. The overall discount rate is then rounded to the nearest tenth of a percentage point. In non-U.S. locations where the cash flow matching method is not possible, rates of local high-quality long-term government bonds are used to select the discount rate.
We used Mercer’s Above-Mean Curve to determine the discount rates for the year-end benefit obligations and retirement cost of our U.S. retirement plans.
We 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. We recognize tax benefits related to uncertain tax positions if we believe it is more likely than not the benefit will be realized. We review our deferred tax assets to determine if it is more-likely-than-not that they will be realized. If we determine it is not more-likely-than-not that a deferred tax asset will be realized, we record a valuation allowance to reverse the previously recognized tax benefit.
71
Foreign Currency Translation
Our consolidated financial statements are reported in U.S. dollars. Our foreign subsidiaries maintain their records primarily in the currency of the country in which they operate.
The method of translating local currency financial information into U.S. dollars depends on whether the economy in which our foreign subsidiary operates has been designated as highly inflationary or not. Economies with a three-year cumulative inflation rate of more than
100%
are considered highly inflationary.
Assets and liabilities of foreign subsidiaries in non-highly inflationary economies are translated into U.S. dollars using rates of exchange at the balance sheet date. Translation adjustments are recorded in other comprehensive income (loss). Revenues and expenses are translated at rates of exchange in effect during the year. Transaction gains and losses are recorded in net income (loss).
Foreign subsidiaries that operate in highly inflationary countries use the U.S. dollar as their functional currency. Local currency monetary assets and liabilities are remeasured into U.S. dollars using rates of exchange as of each balance sheet date, with remeasurement adjustments and other transaction gains and losses recognized in earnings. Non-monetary assets and liabilities do not fluctuate with changes in local currency exchange rates to the dollar.
Venezuela
The economy in Venezuela has had significant inflation in the last several years. We consolidate our Venezuelan results using our accounting policy for subsidiaries operating in highly inflationary economies.
Since 2003,
the Venezuelan government has controlled the exchange of local currency into other currencies, including the U.S. dollar, and has required that currency exchanges be made at official rates established by the government instead of allowing open markets to determine currency rates. Different official rates exist for different industries and purposes and the government does not approve all requests to convert bolivars to other currencies.
As a result of the restrictions on currency exchange, we have in the past been unable to obtain sufficient U.S. dollars to purchase certain imported supplies and fixed assets to fully operate our business in Venezuela. Consequently, we have occasionally purchased more expensive, bolivar-denominated supplies and fixed assets. Furthermore, there is a risk that official currency exchange mechanisms will be discontinued or will not be accessible when needed in the future, which may prevent us from repatriating dividends or obtaining dollars to operate our Venezuelan operations.
Remeasurement rates during 2013
.
Through January 31, 2013, we used an official rate of
5.3
bolivars to the dollar to remeasure our bolivar-denominated monetary assets and liabilities into U.S. dollars and to translate our revenues and expenses. After the government discontinued the use of the
5.3
rate in February 2013, we began to use the
6.3
official exchange rate to remeasure bolivar-denominated monetary assets and liabilities and to translate our revenues and expenses. We recognized a
$13.4 million
net remeasurement loss in 2013 when we changed from the
5.3
to
6.3
exchange rate. The after-tax effect of these losses attributable to noncontrolling interests was
$4.7 million
in 2013.
Late in 2013, the government added another official exchange process, known as SICAD, for travel and certain other purposes. The published SICAD rate at that time ranged from
10
to
12
bolivars to the dollar. We have only been able to obtain dollars once using the SICAD exchange mechanism and we do not know whether we will be able to access dollars at this rate in the future. We have not used the SICAD rate for translation or for remeasurement purposes.
Remeasurement rates during 2014
.
Through March 23, 2014, we used the official rate of
6.3
bolivars to the dollar to remeasure our bolivar-denominated monetary assets and liabilities into U.S. dollars and to translate our revenues and expenses. Effective March 24, 2014, the government initiated another exchange mechanism known as SICAD II and we began to use this exchange rate to remeasure bolivar-denominated monetary assets and liabilities and to translate our revenues and expenses. During 2014, the SICAD II rate averaged approximately
50
bolivars to the dollar and, at December 31, 2014, the rate was approximately
50
bolivars to the dollar.
We recognized a
$121.6 million
net remeasurement loss in 2014 when we changed from the
6.3
rate to the SICAD II exchange rate. The after-tax effect of these losses attributable to noncontrolling interests was
$39.7 million
in 2014.
While the SICAD II process existed, we received approval to obtain
$1.2 million
(weighted average exchange rate of
51
) through this exchange mechanism.
Remeasurement rates during 2015.
Through February 11, 2015, we used the SICAD II rates to remeasure our bolivar-denominated monetary assets and liabilities into U.S. dollars and to translate our revenue and expenses. Effective February 12, 2015, the SICAD II exchange mechanism was disbanded and we began to use the rate under the new exchange mechanism, known as SIMADI, to remeasure bolivar-denominated monetary assets and liabilities and to translate our revenue and expenses. The SIMADI rate has ranged from
170
to
200
bolivars to the dollar since it was first published and, at December 31, 2015, it was
199
bolivars to the dollar. We recognized an
$18.1 million
net remeasurement loss in 2015. The after-tax effect of this loss attributable to noncontrolling interests was
$5.6 million
. To date, we have received minimal U.S. dollars using the SIMADI process.
72
Remeasuring our Venezuelan results using the SIMADI rate has had the following effects on our reported
2015
results:
|
•
|
Our Venezuelan operations have become a less-significant component of Brink’s consolidated revenues and operating profit.
|
|
•
|
Our Venezuelan operations profit margin percentage declined as the historical U.S. dollar nonmonetary assets were not remeasured to a lower U.S. dollar basis but instead retained a historical higher basis which was used for depreciation and other expense attribution. Our nonmonetary assets were
$13.5 million
at
December 31, 2015
, and
$55.0 million
at
December 31, 2014
.
|
|
•
|
Our investment in our Venezuelan operations on an equity-method basis has declined. Our investment was
$26.0 million
at
December 31, 2015
, which included
$18.7 million
in net payables to other Brink's affiliates and
$59.6 million
at
December 31, 2014
, which included
$17.6 million
in net payables to other Brink's affiliates.
|
|
•
|
Our bolivar-denominated net monetary assets included in our consolidated balance sheets have declined. Our bolivar-denominated net monetary assets were
$9.5 million
(including
$6.2 million
of cash and cash equivalents) at
December 31, 2015
, and
$23.5 million
(including
$12.6 million
of cash and cash equivalents) at
December 31, 2014
.
|
|
•
|
Accumulated other comprehensive losses attributable to Brink’s shareholders related to our operations in Venezuela were approximately
$113 million
at
December 31, 2015
and at
December 31, 2014
.
|
On February 17, 2016, the Venezuelan government announced that they would allow the SIMADI rate to float freely. As of February 24, 2016, the SIMADI rate was approximately
205
bolivars to the dollar.
Impairment of Long-lived Assets in Venezuela
During the second quarter of 2015, Brink's elected to evaluate and pursue strategic options for the Venezuelan business. Our consideration of
these strategic options is ongoing and, during the second quarter of 2015, required us to perform an impairment review of the carrying values
of our Venezuelan long-lived assets in accordance with FASB ASC Topic 360,
Property, Plant and Equipment
. Our asset impairment analysis included management's best estimate of associated cash flows relating to the long-lived assets and included fair value assumptions that reflect conditions that exist in a volatile economic environment. Future events or actions relative to our Venezuelan business may result in further adjustments.
As a result of our impairment analysis, we recognized a
$35.3 million
impairment charge in 2015. The carrying value of the long-lived assets of our Venezuelan operations is
$6.4 million
at
December 31, 2015
. We have not reclassified any of the
$113 million
of accumulated other comprehensive losses attributable to Brink’s shareholders related to our operations in Venezuela into earnings.
Argentina
We use the official exchange rate to translate the Brink's Argentina balance sheet and income statement. During 2015, the official exchange rate ranged from
8.5
to
9.8
local pesos to the U.S. dollar until December 17, 2015 when the currency was devalued. At
December 31, 2015
, the official exchange rate was
12.9
local pesos to the U.S. dollar.
The government in Argentina had periodically imposed limits on the exchange of local pesos into U.S. dollars. As a result, we elected to repatriate cash from Argentina using different means to convert Argentine pesos into U.S. dollars. Conversions prior to the December 17, 2015 devaluation had settled at rates approximately
30%
to
40%
less favorable than the rates at which we translated the financial statements of our subsidiary in Argentina. After the currency was devalued, we completed a conversion transaction at a rate approximately
10%
less favorable than the newly devalued rate. See note 19
Supplemental cash flow information
for more information. We recognized losses from converting local pesos into U.S. dollars of
$7.1 million
in 2015 and
$3.6 million
in 2014. These conversion losses are classified in the consolidated statements of operations as other operating income (expense). At
December 31, 2015
, we had cash and short term investments denominated in local pesos of
$10.9 million
.
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.
73
Use of Estimates
In accordance with U.S. generally accepted accounting principles (“GAAP”), we have made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements. Actual results could differ materially from those estimates. The most significant estimates are related to goodwill, intangibles and other long-lived assets, pension and other retirement benefit assets and obligations, legal contingencies, deferred tax assets, purchase price allocations and foreign currency translation.
Fair-value estimates.
We have various financial instruments included in our financial statements. Financial instruments are carried in our financial statements at either cost or fair value. We estimate fair value of assets using the following hierarchy using the highest level possible:
Level 1: Quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities.
Level 2: Observable prices that are based on inputs not quoted on active markets, but are corroborated by market data.
Level 3: Unobservable inputs are used when little or no market data is available.
New Accounting Standards
In April 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-03,
Simplifying the Presentation of Debt Issuance Costs
. Under ASU 2015-03, certain debt issuance costs reported as assets must be reclassified and shown as direct adjustments to the reported debt liability. We elected to early adopt this ASU as of December 31, 2015 using the retrospective transition method.
In May 2015, the FASB issued ASU 2015-07,
Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or its Equivalent).
This new standard eliminates the requirement to categorize investments in the fair value hierarchy if their fair values are measured at net asset value per share (or its equivalent) using the practical expedient in the FASB’s fair value measurement guidance. This new standard impacted our fair value disclosures related to retirement benefit plan investments. We elected to early adopt this ASU as of December 31, 2015 using the retrospective transition method. As a result, the fair value hierarchy presentation as reported at December 31, 2014 has been updated to reflect this guidance.
In November 2015, the FASB issued ASU 2015-17,
Balance Sheet Classification of Deferred Taxes
. This new standard requires that all deferred tax assets and deferred tax liabilities shall be classified as noncurrent. We elected to early adopt this ASU as of the beginning of the fourth quarter of 2015 using the prospective transition method. In our December 31, 2015 balance sheet, deferred tax assets and deferred tax liabilities are reported as noncurrent as prescribed by the prospective transition method. We have not adjusted the classification of deferred tax assets and deferred tax liabilities in our December 31, 2014 balance sheet.
In May 2014, the FASB issued ASU 2014-09,
Revenue From Contracts with Customers
, a new standard related to revenue recognition which requires an entity to recognize an amount of revenue to which it expects to be entitled for the transfer of promised goods and services to customers. The new standard will replace most of the existing revenue recognition standards in U.S. GAAP. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of this new standard to January 1, 2018. The new standard can be applied retrospectively to each reporting period presented or retrospectively with the cumulative effect of the change recognized at the date of the initial application in retained earnings. We are assessing the potential impact of this new standard on financial reporting and have not yet selected a transition method.
74
We identify our operating segments based on how our
chief operating decision maker (“CODM”) allocates resources, assesses performance and makes decisions. Our CODM is our President and Chief Executive Officer. Our CODM evaluates performance and allocates resources to each operating segment based on operating profit or loss, excluding income and expenses not allocated to segments.
Effective December 2014, we reorganized the majority of Brink’s country operations under
two
business units: Largest 5 Markets (including U.S., France, Mexico, Brazil and Canada), and Global Markets (for the country operations outside the Largest 5 Markets). Country operations typically provide Cash-in-Transit (“CIT”) Services, ATM Services, Cash Management Services and Global Services. Reporting lines within these two business units are supplemented by a matrixed, centralized management of the Global Services operations. The Payment Services business has a centralized organizational structure.
As a result of this reorganization, beginning in 2014, we report financial results in the following
nine
operating segments:
|
•
|
Each of the
five
countries within Largest 5 Markets (U.S., France, Mexico, Brazil and Canada)
|
|
•
|
Each of the
three
regions within Global Markets (Latin America, EMEA and Asia)
|
|
•
|
Payment Services
|
When reviewing segment operating results for the first quarter of 2015, the CODM determined that it was no longer useful to include the
operations of Venezuela in the evaluation of the results for the Global Markets - Latin America segment. Accordingly, the Company changed
the composition of its reportable segments effective January 1, 2015 to exclude the Venezuela business. The Venezuela operations are now
reported as part of other items not allocated to segments for all periods presented. This change in the Company’s segment composition and
segment performance measure provides the CODM with information to effectively assess segment performance and to make resource and
allocation decisions. In addition, the removal of Venezuela from the Latin America segment provides our investors with an understanding of
segment results that aligns with management’s view of the business, which is consistent with FASB ASC Topic 280,
Segment Reporting
.
We currently serve customers in more than
100
countries, including
41
countries where we operate subsidiaries.
The primary services of the reportable segments include:
|
•
|
CIT Services – armored vehicle transportation of valuables
|
|
•
|
ATM Services – replenishing and maintaining customers’ automated teller machines; providing network infrastructure services
|
|
•
|
Global Services – secure international transportation of valuables
|
|
•
|
Cash Management Services
|
|
◦
|
Currency and coin counting and sorting; deposit preparation and reconciliations; other cash management services
|
|
◦
|
Safe and safe control device installation and servicing (including our patented CompuSafe
®
service)
|
|
◦
|
Check and cash processing services for banking customers (“Virtual Vault Services”)
|
|
◦
|
Check imaging services for banking customers
|
|
•
|
Payment Services – bill payment and processing services on behalf of utility companies and other billers at any of our Brink’s or Brink’s operated payment locations in Latin America and Brink’s Money™ general purpose reloadable prepaid cards and payroll cards in the U.S.
|
|
•
|
Guarding Services – protection of airports, offices, and certain other locations in Europe with or without electronic surveillance, access control, fire prevention and highly trained patrolling personnel
|
75
|
Revenues
|
Operating Profit (Loss)
|
||||||||||||||||||
|
Years Ended December 31,
|
Years Ended December 31,
|
||||||||||||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
2015
|
2014
|
2013
|
|||||||||||||
|
Reportable Segments:
|
|||||||||||||||||||
|
U.S.
|
$
|
730.4
|
|
727.8
|
|
707.5
|
|
$
|
15.1
|
|
22.8
|
|
12.8
|
|
|||||
|
France
|
431.5
|
|
517.4
|
|
517.6
|
|
34.7
|
|
39.4
|
|
44.5
|
|
|||||||
|
Mexico
|
333.0
|
|
388.2
|
|
423.9
|
|
24.2
|
|
9.6
|
|
26.9
|
|
|||||||
|
Brazil
|
270.4
|
|
364.1
|
|
354.4
|
|
23.8
|
|
34.2
|
|
41.1
|
|
|||||||
|
Canada
|
153.7
|
|
179.7
|
|
191.4
|
|
10.7
|
|
12.8
|
|
10.5
|
|
|||||||
|
Largest 5 Markets
|
1,919.0
|
|
2,177.2
|
|
2,194.8
|
|
108.5
|
|
118.8
|
|
135.8
|
|
|||||||
|
Latin America
|
369.9
|
|
380.6
|
|
407.1
|
|
76.3
|
|
50.4
|
|
59.6
|
|
|||||||
|
EMEA
|
444.7
|
|
556.3
|
|
540.6
|
|
35.7
|
|
52.5
|
|
47.0
|
|
|||||||
|
Asia
|
157.4
|
|
139.8
|
|
134.2
|
|
28.7
|
|
23.1
|
|
21.0
|
|
|||||||
|
Global Markets
|
972.0
|
|
1,076.7
|
|
1,081.9
|
|
140.7
|
|
126.0
|
|
127.6
|
|
|||||||
|
Payment Services
|
85.9
|
|
96.6
|
|
54.8
|
|
(7.2
|
)
|
(4.9
|
)
|
1.0
|
|
|||||||
|
Total reportable segments
|
2,976.9
|
|
3,350.5
|
|
3,331.5
|
|
242.0
|
|
239.9
|
|
264.4
|
|
|||||||
|
Reconciling Items:
|
|||||||||||||||||||
|
Corporate items:
|
|||||||||||||||||||
|
General, administrative and other expenses
|
—
|
|
—
|
|
—
|
|
(81.0
|
)
|
(110.8
|
)
|
(117.7
|
)
|
|||||||
|
Foreign currency transaction losses
|
—
|
|
—
|
|
—
|
|
(8.8
|
)
|
(2.6
|
)
|
(2.4
|
)
|
|||||||
|
Reconciliation of segment policies to GAAP
|
—
|
|
—
|
|
—
|
|
4.6
|
|
(2.3
|
)
|
2.7
|
|
|||||||
|
Other items not allocated to segments:
|
|||||||||||||||||||
|
Venezuela operations
|
84.5
|
|
211.8
|
|
447.1
|
|
(47.7
|
)
|
(97.9
|
)
|
65.7
|
|
|||||||
|
Reorganization and Restructuring
|
—
|
|
—
|
|
—
|
|
(15.3
|
)
|
(21.8
|
)
|
—
|
|
|||||||
|
U.S. and Mexican retirement plans
|
—
|
|
—
|
|
—
|
|
(31.2
|
)
|
(79.0
|
)
|
(55.3
|
)
|
|||||||
|
Acquisitions and dispositions
|
—
|
|
—
|
|
—
|
|
(6.0
|
)
|
49.4
|
|
5.8
|
|
|||||||
|
Share-based compensation adj.
|
—
|
|
—
|
|
—
|
|
—
|
|
(2.4
|
)
|
—
|
|
|||||||
|
Total
|
$
|
3,061.4
|
|
3,562.3
|
|
3,778.6
|
|
$
|
56.6
|
|
(27.5
|
)
|
163.2
|
|
|||||
See "Other Items Not Allocated to Segment" on pages 30–31 to the consolidated financial statements for explanations of each of the other items not allocated to segments.
76
|
Years Ended December 31,
|
|||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Capital Expenditures by Business Segment
|
|||||||||
|
U.S.
|
$
|
21.7
|
|
31.1
|
|
42.4
|
|
||
|
France
|
16.0
|
|
17.9
|
|
13.8
|
|
|||
|
Mexico
|
9.3
|
|
13.3
|
|
24.5
|
|
|||
|
Brazil
|
6.2
|
|
14.7
|
|
13.2
|
|
|||
|
Canada
|
6.1
|
|
6.4
|
|
9.6
|
|
|||
|
Largest 5 Markets
|
59.3
|
|
83.4
|
|
103.5
|
|
|||
|
Latin America
|
13.5
|
|
17.0
|
|
17.8
|
|
|||
|
EMEA
|
11.1
|
|
9.4
|
|
8.9
|
|
|||
|
Asia
|
4.2
|
|
3.6
|
|
2.4
|
|
|||
|
Global Markets
|
28.8
|
|
30.0
|
|
29.1
|
|
|||
|
Payment Services
|
1.7
|
|
0.8
|
|
1.5
|
|
|||
|
Segments
|
89.8
|
|
114.2
|
|
134.1
|
|
|||
|
Corporate items
|
7.0
|
|
16.5
|
|
29.8
|
|
|||
|
Venezuela
|
4.3
|
|
5.4
|
|
9.0
|
|
|||
|
Total
|
$
|
101.1
|
|
136.1
|
|
172.9
|
|
||
|
Depreciation and Amortization by Business Segment
|
|||||||||
|
Depreciation and amortization of property and equipment:
|
|||||||||
|
U.S.
|
$
|
47.6
|
|
49.8
|
|
49.1
|
|
||
|
France
|
15.5
|
|
19.3
|
|
22.1
|
|
|||
|
Mexico
|
14.4
|
|
19.6
|
|
19.2
|
|
|||
|
Brazil
|
7.6
|
|
8.8
|
|
9.0
|
|
|||
|
Canada
|
8.1
|
|
8.5
|
|
8.3
|
|
|||
|
Largest 5 Markets
|
93.2
|
|
106.0
|
|
107.7
|
|
|||
|
Latin America
|
10.0
|
|
12.2
|
|
13.5
|
|
|||
|
EMEA
|
11.5
|
|
13.6
|
|
16.9
|
|
|||
|
Asia
|
3.9
|
|
3.2
|
|
3.7
|
|
|||
|
Global Markets
|
25.4
|
|
29.0
|
|
34.1
|
|
|||
|
Payment Services
|
1.9
|
|
2.2
|
|
2.2
|
|
|||
|
Segments
|
120.5
|
|
137.2
|
|
144.0
|
|
|||
|
Corporate items
|
11.3
|
|
9.7
|
|
6.4
|
|
|||
|
Venezuela
|
3.9
|
|
9.5
|
|
9.0
|
|
|||
|
Depreciation and amortization of property and equipment
|
135.7
|
|
156.4
|
|
159.4
|
|
|||
|
Amortization of intangible assets:
|
|||||||||
|
U.S.
|
—
|
|
—
|
|
0.2
|
|
|||
|
France
|
0.2
|
|
0.3
|
|
0.4
|
|
|||
|
Brazil
|
1.2
|
|
1.4
|
|
1.7
|
|
|||
|
Largest 5 Markets
|
1.4
|
|
1.7
|
|
2.3
|
|
|||
|
Latin America
|
0.3
|
|
0.3
|
|
0.4
|
|
|||
|
EMEA
|
0.6
|
|
1.1
|
|
1.2
|
|
|||
|
Asia
|
0.9
|
|
0.9
|
|
1.0
|
|
|||
|
Global Markets
|
1.8
|
|
2.3
|
|
2.6
|
|
|||
|
Payment Services
|
1.0
|
|
1.5
|
|
1.5
|
|
|||
|
Amortization of intangible assets
|
4.2
|
|
5.5
|
|
6.4
|
|
|||
|
Total
|
$
|
139.9
|
|
161.9
|
|
165.8
|
|
||
77
|
December 31,
|
|||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Assets held by Segment
|
|
|
|
||||||
|
U.S.
|
$
|
325.0
|
|
327.4
|
|
330.0
|
|
||
|
France
|
239.6
|
|
244.7
|
|
246.6
|
|
|||
|
Mexico
|
229.0
|
|
258.9
|
|
285.1
|
|
|||
|
Brazil
|
109.7
|
|
165.0
|
|
165.8
|
|
|||
|
Canada
|
81.3
|
|
92.3
|
|
96.5
|
|
|||
|
Largest 5 Markets
|
984.6
|
|
1,088.3
|
|
1,124.0
|
|
|||
|
Latin America
|
155.3
|
|
189.8
|
|
240.6
|
|
|||
|
EMEA
|
274.6
|
|
308.0
|
|
382.8
|
|
|||
|
Asia
|
99.8
|
|
109.2
|
|
115.1
|
|
|||
|
Global Markets
|
529.7
|
|
607.0
|
|
738.5
|
|
|||
|
Payment Services
|
53.1
|
|
63.7
|
|
72.0
|
|
|||
|
Segments
|
1,567.4
|
|
1,759.0
|
|
1,934.5
|
|
|||
|
Corporate items
|
332.4
|
|
326.8
|
|
282.4
|
|
|||
|
Venezuela
|
46.9
|
|
106.2
|
|
280.5
|
|
|||
|
Total
|
$
|
1,946.7
|
|
2,192.0
|
|
2,497.4
|
|
||
|
Long-Lived Assets by Geographic Area
(a)
|
|||||||||
|
Non-U.S.:
|
|||||||||
|
France
|
$
|
68.1
|
|
75.7
|
|
88.5
|
|
||
|
Mexico
|
93.2
|
|
114.4
|
|
136.8
|
|
|||
|
Brazil
|
34.0
|
|
47.9
|
|
47.6
|
|
|||
|
Canada
|
38.9
|
|
47.9
|
|
50.7
|
|
|||
|
Other
|
122.7
|
|
175.5
|
|
216.3
|
|
|||
|
Subtotal
|
356.9
|
|
461.4
|
|
539.9
|
|
|||
|
U.S.
|
192.1
|
|
208.1
|
|
218.8
|
|
|||
|
Total
|
$
|
549.0
|
|
669.5
|
|
758.7
|
|
||
|
(a)
|
Long-lived assets include only property and equipment.
|
|
Years Ended December 31,
|
|||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Revenues by Geographic Area
(a)
|
|||||||||
|
Outside the U.S.:
|
|||||||||
|
France
|
$
|
431.5
|
|
517.4
|
|
542.5
|
|
||
|
Mexico
|
333.7
|
|
388.5
|
|
424.1
|
|
|||
|
Brazil
|
336.4
|
|
442.3
|
|
392.0
|
|
|||
|
Canada
|
153.7
|
|
179.7
|
|
191.4
|
|
|||
|
Other
|
1,069.6
|
|
1,305.8
|
|
1,521.1
|
|
|||
|
Subtotal
|
2,324.9
|
|
2,833.7
|
|
3,071.1
|
|
|||
|
U.S.
|
736.5
|
|
728.6
|
|
707.5
|
|
|||
|
Total
|
$
|
3,061.4
|
|
3,562.3
|
|
3,778.6
|
|
||
|
(a)
|
Revenues are recorded in the country where service is initiated or performed. No single customer represents more than 10% of total revenue. Geographic disclosures of country revenues include the Payments Services segment in Mexico, Brazil, Colombia and the U.S.
|
78
|
December 31,
|
|||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Net assets outside the U.S.
|
|
|
|
||||||
|
France
|
$
|
87.1
|
|
96.3
|
|
110.8
|
|
||
|
Other EMEA countries
|
147.5
|
|
146.1
|
|
180.6
|
|
|||
|
Mexico
|
86.1
|
|
88.4
|
|
101.2
|
|
|||
|
Brazil
|
87.9
|
|
111.1
|
|
105.2
|
|
|||
|
Other Latin American countries
|
115.2
|
|
182.4
|
|
273.0
|
|
|||
|
Asian countries
|
73.7
|
|
69.2
|
|
72.7
|
|
|||
|
Canada
|
50.3
|
|
53.4
|
|
69.3
|
|
|||
|
Total
|
$
|
647.8
|
|
746.9
|
|
912.8
|
|
||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Information about Unconsolidated Equity Affiliates held by Global Markets:
|
|||||||||
|
Carrying value of investments and advances at December 31
|
$
|
4.9
|
|
2.7
|
|
2.3
|
|
||
|
Undistributed earnings at December 31
|
2.2
|
|
1.1
|
|
0.8
|
|
|||
|
Share of equity earnings
|
0.5
|
|
0.5
|
|
0.7
|
|
|||
Brink’s sold an equity investment in a CIT business in Peru in 2014. This investment is not allocated to segments. The carrying value was
$13.5 million
at December 31, 2013. The equity earnings from this investment were
$3.8 million
in 2014 and
$6.1 million
in 2013.
79
Defined-benefit Pension Plans
Summary
We have various defined-benefit pension plans covering eligible current and former employees. Benefits under most plans are based on salary and years of service. There are limits to the amount of benefits which can be paid to participants from a U.S. qualified pension plan. We maintain a nonqualified U.S. plan to pay benefits for those eligible current and former employees in the U.S. whose benefits exceed the regulatory limits. Pension benefits provided to eligible U.S. employees were frozen on December 31, 2005.
Components of Net Periodic Pension Cost
|
(In millions)
|
U.S. Plans
|
Non-U.S. Plans
|
Total
|
||||||||||||||||||||||||||
|
Years Ended December 31,
|
2015
|
2014
|
2013
|
2015
|
2014
|
2013
|
2015
|
2014
|
2013
|
||||||||||||||||||||
|
Service cost
|
$
|
—
|
|
—
|
|
—
|
|
$
|
10.4
|
|
12.5
|
|
15.0
|
|
$
|
10.4
|
|
12.5
|
|
15.0
|
|
||||||||
|
Interest cost on projected benefit obligation
|
36.0
|
|
45.3
|
|
42.2
|
|
11.2
|
|
18.4
|
|
19.1
|
|
47.2
|
|
63.7
|
|
61.3
|
|
|||||||||||
|
Return on assets – expected
|
(54.6
|
)
|
(63.9
|
)
|
(56.9
|
)
|
(9.5
|
)
|
(14.4
|
)
|
(12.9
|
)
|
(64.1
|
)
|
(78.3
|
)
|
(69.8
|
)
|
|||||||||||
|
Amortization of losses
|
31.2
|
|
28.2
|
|
45.1
|
|
5.0
|
|
2.3
|
|
6.1
|
|
36.2
|
|
30.5
|
|
51.2
|
|
|||||||||||
|
Amortization of prior service cost
|
—
|
|
—
|
|
—
|
|
0.9
|
|
1.0
|
|
0.8
|
|
0.9
|
|
1.0
|
|
0.8
|
|
|||||||||||
|
Settlement loss
(a)
|
—
|
|
56.1
|
|
0.1
|
|
5.7
|
|
6.3
|
|
2.6
|
|
5.7
|
|
62.4
|
|
2.7
|
|
|||||||||||
|
Net periodic pension cost
|
$
|
12.6
|
|
65.7
|
|
30.5
|
|
$
|
23.7
|
|
26.1
|
|
30.7
|
|
$
|
36.3
|
|
91.8
|
|
61.2
|
|
||||||||
|
Included in:
|
|||||||||||||||||||||||||||||
|
Continuing operations
|
$
|
12.6
|
|
65.7
|
|
30.5
|
|
$
|
22.6
|
|
24.4
|
|
28.7
|
|
$
|
35.2
|
|
90.1
|
|
59.2
|
|
||||||||
|
Discontinued operations
|
—
|
|
—
|
|
—
|
|
1.1
|
|
1.7
|
|
2.0
|
|
1.1
|
|
1.7
|
|
2.0
|
|
|||||||||||
|
Net periodic pension cost
|
$
|
12.6
|
|
65.7
|
|
30.5
|
|
$
|
23.7
|
|
26.1
|
|
30.7
|
|
$
|
36.3
|
|
91.8
|
|
61.2
|
|
||||||||
|
(a)
|
Settlement losses recognized in the U.S. in 2014 relate to a lump-sum buy-out of
4,300
participants. See “2014 Lump-sum Buy-out” below. Settlement losses outside the U.S. relate primarily to terminated employees that participate in a Mexican severance indemnity program that is accounted for as a defined benefit plan.
|
80
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,
|
2015
|
2014
|
2015
|
2014
|
2015
|
2014
|
||||||||||||
|
Benefit obligation at beginning of year
|
$
|
904.1
|
|
934.9
|
|
283.1
|
|
390.4
|
|
1,187.2
|
|
1,325.3
|
|
|||||
|
Service cost
|
—
|
|
—
|
|
10.4
|
|
12.5
|
|
10.4
|
|
12.5
|
|
||||||
|
Interest cost
|
36.0
|
|
45.3
|
|
11.2
|
|
18.4
|
|
47.2
|
|
63.7
|
|
||||||
|
Participant contributions
|
—
|
|
—
|
|
0.4
|
|
4.2
|
|
0.4
|
|
4.2
|
|
||||||
|
Plan amendments
|
—
|
|
—
|
|
2.4
|
|
(0.1
|
)
|
2.4
|
|
(0.1
|
)
|
||||||
|
Plan combinations
|
—
|
|
—
|
|
1.2
|
|
—
|
|
1.2
|
|
—
|
|
||||||
|
Curtailments
|
—
|
|
—
|
|
—
|
|
(0.1
|
)
|
—
|
|
(0.1
|
)
|
||||||
|
Settlements
(a)
|
—
|
|
(149.0
|
)
|
—
|
|
—
|
|
—
|
|
(149.0
|
)
|
||||||
|
Benefits paid
|
(51.0
|
)
|
(44.9
|
)
|
(19.5
|
)
|
(24.2
|
)
|
(70.5
|
)
|
(69.1
|
)
|
||||||
|
Sale of Brink’s Netherlands
|
—
|
|
—
|
|
—
|
|
(132.7
|
)
|
—
|
|
(132.7
|
)
|
||||||
|
Actuarial (gains) losses
|
(44.3
|
)
|
117.8
|
|
14.8
|
|
59.7
|
|
(29.5
|
)
|
177.5
|
|
||||||
|
Foreign currency exchange effects
|
—
|
|
—
|
|
(41.2
|
)
|
(45.0
|
)
|
(41.2
|
)
|
(45.0
|
)
|
||||||
|
Benefit obligation at end of year
|
$
|
844.8
|
|
904.1
|
|
262.8
|
|
283.1
|
|
1,107.6
|
|
1,187.2
|
|
|||||
|
Fair value of plan assets at beginning of year
|
$
|
786.3
|
|
811.8
|
|
179.3
|
|
322.0
|
|
965.6
|
|
1,133.8
|
|
|||||
|
Return on assets – actual
|
(14.2
|
)
|
80.6
|
|
4.3
|
|
23.8
|
|
(9.9
|
)
|
104.4
|
|
||||||
|
Participant contributions
|
—
|
|
—
|
|
0.4
|
|
4.2
|
|
0.4
|
|
4.2
|
|
||||||
|
Plan combinations
|
—
|
|
—
|
|
1.2
|
|
—
|
|
1.2
|
|
—
|
|
||||||
|
Employer contributions
|
0.3
|
|
87.8
|
|
24.1
|
|
31.0
|
|
24.4
|
|
118.8
|
|
||||||
|
Settlements
(a)
|
—
|
|
(149.0
|
)
|
—
|
|
—
|
|
—
|
|
(149.0
|
)
|
||||||
|
Benefits paid
|
(51.0
|
)
|
(44.9
|
)
|
(19.5
|
)
|
(24.2
|
)
|
(70.5
|
)
|
(69.1
|
)
|
||||||
|
Sale of Brink’s Netherlands
|
—
|
|
—
|
|
—
|
|
(157.2
|
)
|
—
|
|
(157.2
|
)
|
||||||
|
Foreign currency exchange effects
|
—
|
|
—
|
|
(25.0
|
)
|
(20.3
|
)
|
(25.0
|
)
|
(20.3
|
)
|
||||||
|
Fair value of plan assets at end of year
|
$
|
721.4
|
|
786.3
|
|
164.8
|
|
179.3
|
|
886.2
|
|
965.6
|
|
|||||
|
Funded status
|
$
|
(123.4
|
)
|
(117.8
|
)
|
(98.0
|
)
|
(103.8
|
)
|
(221.4
|
)
|
(221.6
|
)
|
|||||
|
Included in:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Current liability, included in accrued liabilities
|
$
|
0.6
|
|
0.6
|
|
1.4
|
|
2.0
|
|
2.0
|
|
2.6
|
|
|||||
|
Noncurrent liability
|
122.8
|
|
117.2
|
|
96.6
|
|
101.8
|
|
219.4
|
|
219.0
|
|
||||||
|
Net pension liability
|
$
|
123.4
|
|
117.8
|
|
98.0
|
|
103.8
|
|
221.4
|
|
221.6
|
|
|||||
|
(a)
|
The 2014 U.S. settlement reflects the lump-sum elections accepted by approximately
4,300
terminated participants. See “2014 Lump-sum Buy-out” below.
|
81
Other Changes in Plan Assets and Benefit Recognized in Other Comprehensive Income (Loss)
|
(In millions)
|
U.S. Plans
|
Non-U.S. Plans
|
Total
|
|||||||||||||||
|
Years Ended December 31,
|
2015
|
2014
|
2015
|
2014
|
2015
|
2014
|
||||||||||||
|
Benefit plan net experience losses recognized in accumulated other comprehensive income (loss):
|
||||||||||||||||||
|
Beginning of year
|
$
|
(340.4
|
)
|
(323.6
|
)
|
(85.7
|
)
|
(39.2
|
)
|
(426.1
|
)
|
(362.8
|
)
|
|||||
|
Net experience gains (losses) arising during the year
|
(24.5
|
)
|
(101.1
|
)
|
(20.0
|
)
|
(50.3
|
)
|
(44.5
|
)
|
(151.4
|
)
|
||||||
|
Reclassification adjustment for amortization of prior experience losses included in net income (loss)
(a)
|
31.2
|
|
84.3
|
|
10.7
|
|
3.8
|
|
41.9
|
|
88.1
|
|
||||||
|
End of year
|
$
|
(333.7
|
)
|
(340.4
|
)
|
(95.0
|
)
|
(85.7
|
)
|
(428.7
|
)
|
(426.1
|
)
|
|||||
|
Benefit plan prior service cost recognized in accumulated other comprehensive income (loss):
|
||||||||||||||||||
|
Beginning of year
|
$
|
—
|
|
—
|
|
(9.3
|
)
|
(10.2
|
)
|
(9.3
|
)
|
(10.2
|
)
|
|||||
|
Prior service credit (cost) from plan amendments during the year
|
—
|
|
—
|
|
(2.4
|
)
|
0.1
|
|
(2.4
|
)
|
0.1
|
|
||||||
|
Reclassification adjustment for amortization of prior service cost included in net income (loss)
(a)
|
—
|
|
—
|
|
0.9
|
|
0.8
|
|
0.9
|
|
0.8
|
|
||||||
|
End of year
|
$
|
—
|
|
—
|
|
(10.8
|
)
|
(9.3
|
)
|
(10.8
|
)
|
(9.3
|
)
|
|||||
|
(a)
|
Includes
$5.0 million
of reclassification adjustments in net income (loss) in 2014 related to the sale of CIT operations in the Netherlands. These amounts are included in loss from discontinued operations in the consolidated statements of operations and as such are not included in amortization of losses in net periodic postretirement cost.
|
Approximately
$28.9 million
of experience loss and
$0.1 million
of prior service cost are expected to be amortized from accumulated other comprehensive income (loss) into net periodic pension cost during
2016
.
The net experience losses in 2015 were primarily due to actual return on assets being lower than expected, partially offset by a higher U.S. plans discount rate at the end of the year compared to the prior year. The net experience losses in 2014 (the majority attributed to the U.S. plans) were primarily due to the lower discount rates at the end of the year compared to the prior year and the adoption of new mortality tables for U.S. plans, partially offset by a gain from a lump-sum buy-out (see “2014 Lump-sum Buy-out” below) and the actual return on assets being higher than expected.
Information Comparing Plan Assets to Plan Obligations
Information comparing plan assets to plan obligations as of
December 31, 2015
and
2014
are aggregated below. The accumulated benefit obligation (“ABO”) differs from the PBO in that the ABO is based on the benefit earned through the date noted. The PBO includes assumptions about future compensation levels for plans that have not been frozen. The total ABO for our U.S. pension plans was
$844.8 million
in
2015
and
$904.1 million
in
2014
. The total ABO for our Non-U.S. pension plans was
$226.5 million
in
2015
and
$242.9 million
in
2014
.
|
(In millions)
|
U.S. Plans
|
Non-U.S. Plans
|
Total
|
|||||||||||||||
|
December 31,
|
2015
|
2014
|
2015
|
2014
|
2015
|
2014
|
||||||||||||
|
Information for pension plans with an ABO in excess of plan assets:
|
||||||||||||||||||
|
Fair value of plan assets
|
$
|
721.4
|
|
786.3
|
|
47.7
|
|
45.6
|
|
769.1
|
|
831.9
|
|
|||||
|
Accumulated benefit obligation
|
844.8
|
|
904.1
|
|
111.9
|
|
111.9
|
|
956.7
|
|
1,016.0
|
|
||||||
|
Projected benefit obligation
|
844.8
|
|
904.1
|
|
135.2
|
|
137.0
|
|
980.0
|
|
1,041.1
|
|
||||||
2014 Lump-sum Buy-out
The primary U.S. pension plan made an offer to buy out certain plan participants’ pension benefits in 2014 and approximately
4,300
accepted. The pension plan settled the buy-out in the fourth quarter of 2014. After the settlement, there were approximately
15,200
beneficiaries in the plans. We recognized a
$56.1 million
settlement loss as a result of the buy-out in 2014. We also recognized a
$40 million
benefit plan experience gain arising during 2014 in accumulated other comprehensive income (loss) as the obligation released was more than the cash benefit payments from the plan assets.
82
Assumptions
Discount rates
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
|
||||||||||||||||
|
2015
|
2014
|
2013
|
2015
|
2014
|
2013
|
||||||||||||
|
Discount rate:
|
|||||||||||||||||
|
Pension cost
|
4.1
|
%
|
5.0
|
%
|
4.2
|
%
|
5.1
|
%
|
6.3
|
%
|
5.3
|
%
|
|||||
|
Benefit obligation at year end
|
4.5
|
%
|
4.1
|
%
|
5.0
|
%
|
5.1
|
%
|
5.1
|
%
|
6.3
|
%
|
|||||
|
Expected return on assets – pension cost
|
7.50
|
%
|
8.00
|
%
|
8.00
|
%
|
5.58
|
%
|
5.83
|
%
|
4.64
|
%
|
|||||
|
Average rate of increase in salaries
(a):
|
|||||||||||||||||
|
Pension cost
|
N/A
|
|
N/A
|
|
N/A
|
|
3.9
|
%
|
3.9
|
%
|
3.8
|
%
|
|||||
|
Benefit obligation at year end
|
N/A
|
|
N/A
|
|
N/A
|
|
3.8
|
%
|
3.9
|
%
|
3.9
|
%
|
|||||
|
(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.
|
Mortality Tables for our U.S. Retirement Benefits
The Society of Actuaries ("SOA") issued new mortality base tables (“RP-2014”) and a longevity improvement scale (“MP-2014”) in October of 2014, superseding the ones developed in 2000. The new tables reflect that people in the U.S. are living significantly longer than predicted in the 2000 tables.
We adopted the Mercer modified RP-2014 base table and Mercer modified MP-2014 projection scale, with Blue Collar adjustments for the majority of our U.S. retirement plans, and with White Collar adjustments for our nonqualified U.S. pension plan as of December 31, 2014.
In October 2015, the SOA issued the MP-2015 mortality projection scale. This did not have any impact on our obligations as the changes in the MP-2015 projection scale were anticipated and already reflected in the Mercer modified MP-2014 projection scale.
Estimated Future Cash Flows
Estimated Future Contributions from the Company into Plan Assets
Our policy is to fund at least the minimum actuarially determined amounts required by applicable regulations. We do not expect to make contributions to our primary U.S. pension plan in
2016
. We expect to contribute
$11.4 million
to our non-U.S. pension plans and
$0.6 million
to our nonqualified U.S. pension plan in
2016
.
Estimated Future Benefit Payments from Plan Assets to Beneficiaries
Projected benefit payments of the plans in the next 10 years using assumptions in effect at
December 31, 2015
, are as follows:
|
(In millions)
|
U.S. Plans
|
Non-U.S. Plans
|
Total
|
||||||
|
2016
|
$
|
49.7
|
|
10.5
|
|
60.2
|
|
||
|
2017
|
50.5
|
|
10.9
|
|
61.4
|
|
|||
|
2018
|
50.7
|
|
11.9
|
|
62.6
|
|
|||
|
2019
|
51.7
|
|
14.1
|
|
65.8
|
|
|||
|
2020
|
51.5
|
|
15.6
|
|
67.1
|
|
|||
|
2021 through 2025
|
259.6
|
|
146.3
|
|
405.9
|
|
|||
83
Retirement Benefits Other than Pensions
Summary
We provide retirement healthcare benefits for eligible current and former U.S., Canadian, and Brazilian employees. Retirement benefits related to our former U.S. coal operation include medical benefits provided by the Pittston Coal Group Companies Employee Benefit Plan for UMWA Represented Employees (the “UMWA plans”) as well as costs related to black lung obligations.
Components of Net Periodic Postretirement Cost
The components of net periodic postretirement cost related to retirement benefits other than pensions were as follows:
|
(In millions)
|
UMWA Plans
|
Black Lung and Other Plans
(a)
|
Total
|
||||||||||||||||||||||||||
|
Years Ended December 31,
|
2015
|
2014
|
2013
|
2015
|
2014
|
2013
|
2015
|
2014
|
2013
|
||||||||||||||||||||
|
Service cost
|
$
|
—
|
|
—
|
|
—
|
|
$
|
0.2
|
|
0.1
|
|
0.3
|
|
$
|
0.2
|
|
0.1
|
|
0.3
|
|
||||||||
|
Interest cost on APBO
|
17.1
|
|
17.9
|
|
19.7
|
|
2.8
|
|
2.3
|
|
1.9
|
|
19.9
|
|
20.2
|
|
21.6
|
|
|||||||||||
|
Return on assets – expected
|
(20.6
|
)
|
(22.2
|
)
|
(20.8
|
)
|
—
|
|
—
|
|
—
|
|
(20.6
|
)
|
(22.2
|
)
|
(20.8
|
)
|
|||||||||||
|
Amortization of losses
|
15.5
|
|
12.3
|
|
19.6
|
|
3.1
|
|
0.6
|
|
0.7
|
|
18.6
|
|
12.9
|
|
20.3
|
|
|||||||||||
|
Amortization of prior service cost (credit)
|
(4.6
|
)
|
(4.6
|
)
|
—
|
|
1.8
|
|
1.7
|
|
1.7
|
|
(2.8
|
)
|
(2.9
|
)
|
1.7
|
|
|||||||||||
|
Curtailment (gain)
|
—
|
|
—
|
|
—
|
|
(0.1
|
)
|
—
|
|
—
|
|
(0.1
|
)
|
—
|
|
—
|
|
|||||||||||
|
Net periodic postretirement cost
|
$
|
7.4
|
|
3.4
|
|
18.5
|
|
$
|
7.8
|
|
4.7
|
|
4.6
|
|
$
|
15.2
|
|
8.1
|
|
23.1
|
|
||||||||
|
(a)
|
Includes net periodic postretirement cost related to non-U.S. plans of
$1.1 million
in
2015
,
$0.7 million
in
2014
, and
$0.7 million
in
2013
.
|
Obligations and Funded Status
Changes in the accumulated postretirement benefit obligation (“APBO’) and plan assets related to retirement healthcare benefits are as follows:
|
(In millions)
|
UMWA Plans
|
Black Lung and Other Plans
|
Total
|
|||||||||||||||
|
Years Ended December 31,
|
2015
|
2014
|
2015
|
2014
|
2015
|
2014
|
||||||||||||
|
APBO at beginning of year
|
$
|
461.8
|
|
426.5
|
|
66.2
|
|
48.9
|
|
528.0
|
|
475.4
|
|
|||||
|
Service cost
|
—
|
|
—
|
|
0.2
|
|
0.1
|
|
0.2
|
|
0.1
|
|
||||||
|
Interest cost
|
17.1
|
|
17.9
|
|
2.8
|
|
2.3
|
|
19.9
|
|
20.2
|
|
||||||
|
Plan amendments
|
—
|
|
—
|
|
(0.7
|
)
|
—
|
|
(0.7
|
)
|
—
|
|
||||||
|
Curtailment
|
—
|
|
—
|
|
(0.5
|
)
|
—
|
|
(0.5
|
)
|
—
|
|
||||||
|
Benefits paid
|
(36.1
|
)
|
(34.5
|
)
|
(6.3
|
)
|
(7.4
|
)
|
(42.4
|
)
|
(41.9
|
)
|
||||||
|
Medicare subsidy received
|
0.1
|
|
0.6
|
|
—
|
|
—
|
|
0.1
|
|
0.6
|
|
||||||
|
Actuarial (gains) losses, net
|
(9.8
|
)
|
51.3
|
|
0.4
|
|
23.2
|
|
(9.4
|
)
|
74.5
|
|
||||||
|
Foreign currency exchange effects
|
—
|
|
—
|
|
(2.3
|
)
|
(0.9
|
)
|
(2.3
|
)
|
(0.9
|
)
|
||||||
|
APBO at end of year
|
$
|
433.1
|
|
461.8
|
|
59.8
|
|
66.2
|
|
492.9
|
|
528.0
|
|
|||||
|
Fair value of plan assets at beginning of year
|
$
|
264.6
|
|
284.4
|
|
—
|
|
—
|
|
264.6
|
|
284.4
|
|
|||||
|
Return on assets – actual
|
(0.9
|
)
|
14.9
|
|
—
|
|
—
|
|
(0.9
|
)
|
14.9
|
|
||||||
|
Employer contributions
|
(0.3
|
)
|
(0.8
|
)
|
6.3
|
|
7.4
|
|
6.0
|
|
6.6
|
|
||||||
|
Benefits paid
|
(36.1
|
)
|
(34.5
|
)
|
(6.3
|
)
|
(7.4
|
)
|
(42.4
|
)
|
(41.9
|
)
|
||||||
|
Medicare subsidy received
|
0.1
|
|
0.6
|
|
—
|
|
—
|
|
0.1
|
|
0.6
|
|
||||||
|
Fair value of plan assets at end of year
|
$
|
227.4
|
|
264.6
|
|
—
|
|
—
|
|
227.4
|
|
264.6
|
|
|||||
|
Funded status
|
$
|
(205.7
|
)
|
(197.2
|
)
|
(59.8
|
)
|
(66.2
|
)
|
(265.5
|
)
|
(263.4
|
)
|
|||||
|
Included in:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Current, included in accrued liabilities
|
$
|
—
|
|
—
|
|
6.3
|
|
6.3
|
|
6.3
|
|
6.3
|
|
|||||
|
Noncurrent
|
205.7
|
|
197.2
|
|
53.5
|
|
59.9
|
|
259.2
|
|
257.1
|
|
||||||
|
Retirement benefits other than pension liability
|
$
|
205.7
|
|
197.2
|
|
59.8
|
|
66.2
|
|
265.5
|
|
263.4
|
|
|||||
84
Other Changes in Plan Assets and Benefit Recognized in Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) of our retirement benefit plans other than pensions are as follows:
|
(In millions)
|
UMWA Plans
|
Black Lung and Other Plans
|
Total
|
|||||||||||||||
|
Years Ended December 31,
|
2015
|
2014
|
2015
|
2014
|
2015
|
2014
|
||||||||||||
|
Benefit plan net experience gain (loss) recognized in accumulated other comprehensive income (loss):
|
||||||||||||||||||
|
Beginning of year
|
$
|
(265.6
|
)
|
(219.4
|
)
|
(29.0
|
)
|
(6.3
|
)
|
(294.6
|
)
|
(225.7
|
)
|
|||||
|
Net experience gains (losses) arising during the year
|
(11.7
|
)
|
(58.6
|
)
|
0.1
|
|
(23.2
|
)
|
(11.6
|
)
|
(81.8
|
)
|
||||||
|
Reclassification adjustment for amortization of prior experience losses included in net income (loss)
|
15.5
|
|
12.4
|
|
3.1
|
|
0.5
|
|
18.6
|
|
12.9
|
|
||||||
|
End of year
|
$
|
(261.8
|
)
|
(265.6
|
)
|
(25.8
|
)
|
(29.0
|
)
|
(287.6
|
)
|
(294.6
|
)
|
|||||
|
Benefit plan prior service (cost) credit recognized in accumulated other comprehensive income (loss):
|
||||||||||||||||||
|
Beginning of year
|
$
|
51.1
|
|
55.7
|
|
(6.0
|
)
|
(7.7
|
)
|
45.1
|
|
48.0
|
|
|||||
|
Prior service credit from plan amendments during the year
|
—
|
|
—
|
|
0.7
|
|
—
|
|
0.7
|
|
—
|
|
||||||
|
Reclassification adjustment for amortization or curtailment of prior service cost included in net income (loss)
|
(4.6
|
)
|
(4.6
|
)
|
1.8
|
|
1.7
|
|
(2.8
|
)
|
(2.9
|
)
|
||||||
|
End of year
|
$
|
46.5
|
|
51.1
|
|
(3.5
|
)
|
(6.0
|
)
|
43.0
|
|
45.1
|
|
|||||
We estimate that
$19.4 million
of experience loss and
$2.9 million
of prior service credit will be amortized from accumulated other comprehensive income (loss) into net periodic postretirement cost during
2016
.
We recognized net experience losses in
2015
associated with the UMWA obligations primarily due to the return on assets being lower than expected, partially offset by a higher discount rate. We recognized net experience gains in
2015
associated with the black lung and other plans primarily related to a higher discount rate.
We recognized net experience losses in 2014 associated with the UMWA obligations primarily related to the adoption of new mortality tables, a lower discount rate, and the return on assets being lower than expected. We recognized net experience losses in 2014 associated with the black lung and other plans primarily related to an increase in the estimated administrative costs to be incurred by the plans in the future, a lower discount rate and the adoption of new mortality tables.
Assumptions
See
Adoption of New Mortality Tables for our U.S. Retirement Benefits
on page 83 for a description of the mortality assumptions.
Discount rates
The APBO for each of the plans was determined using the unit credit method and an assumed discount rate as follows:
|
2015
|
2014
|
2013
|
||||||
|
Weighted-average discount rate:
|
||||||||
|
Postretirement cost:
|
||||||||
|
UMWA plans
|
4.0
|
%
|
4.7
|
%
|
3.9
|
%
|
||
|
Black lung
|
3.7
|
%
|
4.4
|
%
|
3.5
|
%
|
||
|
Weighted-average
|
4.1
|
%
|
4.7
|
%
|
3.9
|
%
|
||
|
Benefit obligation at year end:
|
||||||||
|
UMWA plans
|
4.4
|
%
|
4.0
|
%
|
4.7
|
%
|
||
|
Black lung
|
4.2
|
%
|
3.7
|
%
|
4.4
|
%
|
||
|
Weighted-average
|
4.4
|
%
|
4.1
|
%
|
4.7
|
%
|
||
|
Expected return on assets
|
8.25
|
%
|
8.25
|
%
|
8.25
|
%
|
||
85
Healthcare Cost Trend Rates
For UMWA plans, the assumed healthcare cost trend rate used to compute the
2015
APBO is
7.0%
for
2016
, declining to
5.0%
in
2022
and thereafter (in
2014
:
7.0%
for
2015
declining to
5.0%
in
2021
and thereafter). For the black lung obligation, the assumed healthcare cost trend rate used to compute the
2015
APBO was
5.0%
. Other plans in the U.S. provide for fixed-dollar value coverage for eligible participants and, accordingly, are not adjusted for inflation.
For the Canadian plan, the assumed healthcare cost trend rate used to compute the
2015
APBO is
7.0%
for
2016
, declining to
5.0%
in
2022
. For the Brazilian plan, the assumed healthcare cost trend rate used to compute the
2015
APBO is
3.0%
.
The table below shows the estimated effects of a one percentage-point change in the assumed healthcare cost trend rates for each future year.
|
Effect of Change in Assumed Healthcare Trend Rates
|
||||||
|
(In millions)
|
Increase 1%
|
Decrease 1%
|
||||
|
Higher (lower):
|
||||||
|
Service and interest cost in 2015
|
$
|
2.2
|
|
(1.9
|
)
|
|
|
APBO at December 31, 2015
|
51.3
|
|
(43.5
|
)
|
||
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 healthcare 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 UMWA plans, we believe that the plans' benefits are at least actuarially equivalent to the Medicare benefits.
For the year ended December 31, 2013, we changed the way we provide healthcare benefits to our UMWA retirees who are eligible for the Medicare Act subsidy reimbursement. We changed from a self-insured welfare benefit plan to an employer group waiver plan (“EGWP”). Under this new arrangement, a government approved health insurance provider receives the Medicare Act subsidy reimbursement on our behalf and passes these savings to us. Additionally, by moving to an EGWP, we were be able to benefit from the mandatory
50%
discount that pharmaceutical companies must provide for Medicare Act-eligible prescription drugs. The combined savings of the subsidy and the
50%
discount were recognized in other comprehensive income (loss) in 2013 as prior service credit, reducing the UMWA APBO.
Excise Tax on Administrators by Patient Protection and Affordable Care Act of 2010
A
40%
excise tax on third-party benefit plan administrators by the
Patient Protection and Affordable Care
Act
will be imposed on high-cost health plans (“Cadillac plans”) beginning in 2020. We are currently unable to reduce the benefit levels of our UMWA medical plans to avoid this excise tax because these benefit levels are required by the Coal Industry Retiree Health Benefit Act of 1992. We have assumed that the cost of the excise tax paid by administrators will be passed through to us in the form of higher premiums or higher claims administration fees, increasing our obligations. We project that we will have to pay the benefits plan administrator this excise tax beginning in 2020, and our plan obligations at
December 31, 2015
, include
$15.1 million
related to this tax (
$24.8 million
at
December 31, 2014
).
Cash Flows
Estimated Contributions from the Company to Plan Assets
Based on the funded status and assumptions at
December 31, 2015
, we expect the Company to contribute
$6.3 million
in cash to the plans to pay
2016
beneficiary payments for black lung and other plans. We do not expect to contribute cash to our UMWA plans in
2016
since we believe these plans have sufficient amounts held in trust to pay for beneficiary payments until 2027 based on actuarial assumptions. Our UMWA plans are not covered by ERISA or other funding laws or regulations that require these plans to meet funding ratios.
Estimated Future Benefit Payments from Plan Assets to Beneficiaries
Projected benefit payments of the plans in the next
10
years using assumptions in effect at
December 31, 2015
, are as follows:
|
(In millions)
|
UMWA Plans
|
Black Lung and Other Plans
|
Total
|
||||||
|
2016
|
$
|
30.9
|
|
6.3
|
|
37.2
|
|
||
|
2017
|
31.2
|
|
5.9
|
|
37.1
|
|
|||
|
2018
|
31.1
|
|
5.6
|
|
36.7
|
|
|||
|
2019
|
30.8
|
|
5.2
|
|
36.0
|
|
|||
|
2020
|
31.7
|
|
4.9
|
|
36.6
|
|
|||
|
2021 through 2025
|
141.8
|
|
19.6
|
|
161.4
|
|
|||
86
Retirement Plan Assets
U.S. Plans
|
|
December 31, 2015
|
December 31, 2014
|
||||||||||||||
|
(In millions, except for percentages)
|
Fair Value Level
|
Total Fair Value
|
% Actual Allocation
|
% Target Allocation
|
Total Fair Value
|
% Actual Allocation
|
% Target Allocation
|
|||||||||
|
U.S. Pension Plans
|
||||||||||||||||
|
Cash, cash equivalents and receivables
|
$
|
4.2
|
|
1
|
—
|
4.1
|
|
1
|
—
|
|||||||
|
Equity securities:
|
||||||||||||||||
|
U.S. large-cap
(a)
|
1
|
80.1
|
|
11
|
12
|
93.1
|
|
12
|
12
|
|||||||
|
U.S. small/mid-cap
(a)
|
1
|
30.0
|
|
4
|
5
|
40.2
|
|
5
|
5
|
|||||||
|
International
(a)
|
1
|
66.1
|
|
9
|
10
|
72.6
|
|
9
|
10
|
|||||||
|
Emerging markets
(b)
|
1
|
8.6
|
|
1
|
2
|
13.8
|
|
2
|
2
|
|||||||
|
Dynamic asset allocation
(c)
|
1
|
23.9
|
|
4
|
4
|
33.7
|
|
4
|
4
|
|||||||
|
U.S. managed volatility equities
(n)
|
1
|
—
|
|
—
|
5
|
—
|
|
—
|
—
|
|||||||
|
Fixed-income securities:
|
||||||||||||||||
|
Long duration - mutual fund
(d)
|
1
|
290.0
|
|
50
|
48
|
277.6
|
|
47
|
48
|
|||||||
|
Long duration - Treasury strips
(d)
|
2
|
71.7
|
|
95.7
|
|
|||||||||||
|
High yield
(e)
|
1
|
9.0
|
|
1
|
2
|
15.3
|
|
2
|
2
|
|||||||
|
Emerging markets
(f)
|
1
|
9.0
|
|
1
|
2
|
14.5
|
|
2
|
2
|
|||||||
|
Other types of investments:
|
||||||||||||||||
|
Hedge fund of funds
(g) (m)
|
|
36.6
|
|
5
|
—
|
37.9
|
|
5
|
5
|
|||||||
|
Core property
(h) (m)
|
|
51.5
|
|
7
|
5
|
45.0
|
|
6
|
5
|
|||||||
|
Structured credit
(i) (m)
|
|
40.7
|
|
6
|
5
|
42.8
|
|
5
|
5
|
|||||||
|
Total
|
$
|
721.4
|
|
100
|
100
|
786.3
|
|
100
|
100
|
|||||||
|
UMWA Plans
|
||||||||||||||||
|
Cash, cash equivalents and receivables
|
$
|
1.6
|
|
|
1
|
—
|
—
|
|
—
|
—
|
||||||
|
Equity securities:
|
||||||||||||||||
|
U.S. large-cap
(a)
|
1
|
47.5
|
|
21
|
22
|
58.5
|
|
21
|
21
|
|||||||
|
U.S. small/mid-cap
(a)
|
1
|
20.2
|
|
9
|
10
|
25.5
|
|
10
|
9
|
|||||||
|
International
(a)
|
1
|
40.5
|
|
18
|
19
|
49.3
|
|
19
|
18
|
|||||||
|
Emerging markets
(b)
|
1
|
9.0
|
|
4
|
4
|
10.7
|
|
4
|
4
|
|||||||
|
Dynamic asset allocation
(c)
|
1
|
15.9
|
|
7
|
7
|
20.0
|
|
8
|
7
|
|||||||
|
Fixed-income securities:
|
||||||||||||||||
|
High yield
(e)
|
1
|
6.9
|
|
3
|
2
|
10.9
|
|
4
|
4
|
|||||||
|
Emerging markets
(f)
|
1
|
9.0
|
|
4
|
4
|
10.4
|
|
4
|
4
|
|||||||
|
Multi asset real return
(j)
|
1
|
14.7
|
|
6
|
5
|
21.6
|
|
8
|
8
|
|||||||
|
Other types of investments:
|
||||||||||||||||
|
Hedge fund of funds
(g) (m)
|
|
6.4
|
|
3
|
—
|
14.6
|
|
6
|
3
|
|||||||
|
Core property
(h) (m)
|
|
32.9
|
|
14
|
10
|
28.8
|
|
11
|
10
|
|||||||
|
Structured credit
(i) (m)
|
|
13.6
|
|
6
|
5
|
14.3
|
|
5
|
5
|
|||||||
|
Global private equity
(k) (m)
|
3.2
|
|
1
|
7
|
—
|
|
—
|
7
|
||||||||
|
Energy debt
(l) (m)
|
6.0
|
|
3
|
5
|
—
|
|
—
|
—
|
||||||||
|
Total
|
$
|
227.4
|
|
100
|
100
|
264.6
|
|
100
|
100
|
|||||||
|
(a)
|
These categories include passively managed U.S. large-cap mutual funds and actively managed U.S. small/mid-cap and international 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.
|
|
(b)
|
This category represents an actively managed mutual fund that invests primarily in equity securities of emerging market issuers. Emerging market countries are those countries that are characterized as developing or emerging by any of the World Bank, the United Nations, the International Finance Corporation, or the European Bank for Reconstruction and Development or included in an emerging markets index by a recognized index provider.
|
|
(c)
|
This category represents an actively managed mutual fund that seeks to generate total return over time by selecting investments from among a broad range of asset classes. The fund’s allocations among asset classes may be adjusted over short periods and can vary from multiple to a single asset class.
|
|
(d)
|
This category represents actively managed mutual funds that seek to duplicate the risk and return characteristics of a long-term fixed-income security portfolio with approximate duration of
10 years
and longer by using a long duration bond portfolio. This category also includes Treasury future contracts and
zero
-coupon securities created by the U.S. Treasury.
|
|
(e)
|
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.
|
|
(f)
|
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.
|
|
(g)
|
This category represents an actively managed hedge fund of funds. The fund holds approximately
30
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.
|
|
(h)
|
This category represents an actively managed real estate fund of funds that seeks both current income and long-term capital appreciation through investing in underlying funds that acquire, manage, and dispose of commercial real estate properties. These properties are high-quality, low-leveraged, income-generating office, industrial, retail, and multi-family properties, generally fully-leased to creditworthy companies and governmental entities.
|
|
(i)
|
This category invests primarily in a diversified portfolio comprised primarily of collateralized loan obligations and other structured credit investments backed primarily by bank loans.
|
|
(j)
|
This category represents an actively managed mutual fund that invests primarily in fixed income and equity securities and commodity linked instruments. The category seeks total returns that exceed the rate of inflation over a full market cycle regardless of market conditions.
|
|
(k)
|
This category will offer exposure to a diversified pool of global private assets fund investments. Further, the category will seek to shorten the duration of the typical private assets fund of funds through a dedicated focus on secondary strategies (i.e. funds whose investment strategy is to purchase interests in other private market investments/funds as a way
|
87
to provide the original investors liquidity prior to the end of those investments’/funds’ contracted end date), income-producing investment strategies (e.g. debt, real estate, and to a lesser extent, real assets), and underlying funds whose stated life is five to seven years, as opposed to the more typical
10
-year life of private assets funds.
|
(l)
|
This category invests in credit securities of commodity oriented companies affected by the dislocation in the commodity markets with the investment objective of producing an equity like return with less downside risk than equity or commodity investments. The fund has a three year lock on each investment and semi-annual redemptions. 50% of the fund balance is redeemable in the first redemption period following the end of the lock up and then 25% of the fund balance in each of the next two redemptions periods.
|
|
(m)
|
In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.
|
|
(n)
|
The U.S. managed volatility fund seeks capital appreciation with lower volatility than the broad U.S. equity market. The Fund will typically invest in equity securities of U.S. companies of all capitalization ranges that exhibit low relative volatility. Over the long term, the Fund is expected to achieve a return similar to that of the Russell 3000 Index with a lower level of volatility.
|
Assets of our U.S. plans are invested with an objective of maximizing the total return, taking into consideration the liabilities of the plan, and minimizing the risks that could create the need for excessive contributions. Plan assets are invested primarily using actively managed accounts with asset allocation targets listed in the tables above. Our policy does not permit the purchase of Brink’s common stock if immediately after any such purchase the aggregate fair market value of the plan assets invested in Brink’s common stock exceeds
10%
of the aggregate fair market value of the assets of the plan, except as permitted by an exemption under ERISA. The plans rebalance their assets on a quarterly basis if actual allocations of assets are outside predetermined ranges. Among other factors, the performance of asset groups and investment managers will affect the long-term rate of return.
The pension plan acquired the structured-credit investment in 2013. The investment is subject to a
two
-year lockup provision, which expired in 2015.
The UMWA plans acquired the structured-credit investment in 2014. The investment is subject to a
two
-year lockup provision, which will expire in 2016. The UMWA plans also acquired the energy debt investment in 2015, which is subject to a
three
-year lockup provision, which will expire in 2018.
Most of the investments of our U.S. retirement plans can be redeemed daily. The core-property and structured-credit investments can be redeemed quarterly with
65
days’ notice. The hedge fund of funds investment can be redeemed quarterly with
95
days’ notice. The energy debt investment can be redeemed semi-annually with
95
days' notice.
The global private equity investment cannot be redeemed due to the nature of the underlying investments. As the global private equity investment matures and becomes fully invested, liquidating distributions will be provided back to investors. We expect to receive liquidating distributions over the stated life of the underlying investments. We have
$18 million
in unfunded commitments related to the global private equity investment. We believe all plans have sufficient liquidity to meet the needs of the plans' beneficiaries in all market scenarios.
Non-U.S. Plans
|
December 31, 2015
|
December 31, 2014
|
|||||||||||||
|
(In millions, except for percentages)
|
Total Fair Value
|
% Actual Allocation
|
% Target Allocation
|
Total Fair Value
|
% Actual Allocation
|
% Target Allocation
|
||||||||
|
Non-U.S. Pension Plans
|
||||||||||||||
|
Cash and cash equivalents
|
$
|
0.8
|
|
—
|
—
|
1.1
|
|
—
|
—
|
|||||
|
Equity securities:
|
||||||||||||||
|
U.S. equity funds
(a)
|
24.5
|
|
31.6
|
|
||||||||||
|
Canadian equity funds
(a)
|
28.6
|
|
39.6
|
|
||||||||||
|
European equity funds
(a)
|
9.5
|
|
8.8
|
|
||||||||||
|
Asia Pacific equity funds
(a)
|
1.8
|
|
1.7
|
|
||||||||||
|
Emerging markets
(a)
|
4.5
|
|
3.5
|
|
||||||||||
|
Other non-U.S. equity funds
(a)
|
17.2
|
|
20.4
|
|
||||||||||
|
Total equity securities
|
86.1
|
|
52
|
60
|
105.6
|
|
59
|
65
|
||||||
|
Fixed-income securities:
|
||||||||||||||
|
Global credit
(b)
|
0.4
|
|
0.3
|
|
||||||||||
|
Canadian fixed-income funds
(c)
|
—
|
|
25.7
|
|
||||||||||
|
European fixed-income funds
(d)
|
13.0
|
|
14.9
|
|
||||||||||
|
High-yield
(e)
|
1.2
|
|
1.0
|
|
||||||||||
|
Emerging markets
(f)
|
1.2
|
|
1.2
|
|
||||||||||
|
Long-duration
(g)
|
60.8
|
|
27.9
|
|
||||||||||
|
Total fixed-income securities
|
76.6
|
|
47
|
38
|
71.0
|
|
40
|
35
|
||||||
|
Other types of investments:
|
||||||||||||||
|
Other
|
1.3
|
|
1.6
|
|
||||||||||
|
Total other types of investments
|
1.3
|
|
1
|
2
|
1.6
|
|
1
|
—
|
||||||
|
Total
|
$
|
164.8
|
|
100
|
100
|
179.3
|
|
100
|
100
|
|||||
|
(a)
|
These categories are comprised of equity index actively and passively managed funds that track various indices such as S&P 500 Composite Total Return Index, Russell 1000 and 2000 Indices, MSCI Europe Ex-UK Index, S&P/TSX Total Return Index, MSCI EAFE Index and others. Some of these funds use a dynamic asset allocation investment strategy seeking to generate total return over time by selecting investments from among a broad range of asset classes, investing primarily through the use of derivatives.
|
|
(b)
|
This category represents investment-grade fixed income debt securities of European issuers from diverse industries.
|
88
|
(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 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.
|
Asset allocation strategies for our non-U.S. plans are designed to accumulate a diversified portfolio among markets and asset classes in order to reduce market risk and increase the likelihood that pension assets are available to pay benefits as they are due. Assets of non-U.S. pension plans are invested primarily using actively managed accounts. The weighted-average asset allocation targets are listed in the table above, and reflect limitations on types of investments held and allocations among assets classes, as required by local regulation or market practice of the country where the assets are invested. Most of the investments of our non-U.S. retirement plans can be redeemed at least monthly, except for a portion of “Other” in the above table, which can be redeemed quarterly.
Non-U.S. Plans - Fair Value Measurements
|
(In millions)
|
December 31, 2015
|
December 31, 2014
|
||||
|
Quoted prices in active markets for identical assets (Level 1)
|
$
|
149.1
|
|
177.9
|
|
|
|
Net asset value per share practical expedient
(a)
|
15.7
|
|
1.4
|
|
||
|
Total fair value
|
$
|
164.8
|
|
179.3
|
|
|
|
(a)
|
In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.
|
Multi-employer Pension Plans
We contribute to multi-employer pension plans in a few of our non-U.S. subsidiaries. We recognized
$0.1 million
of multi-employer pension expense for continuing operations in
2015
,
$0.1 million
in
2014
and
$0.2 million
in
2013
.
Savings Plans
We sponsor various defined contribution plans to help eligible employees provide for retirement. We record expense for amounts that we contribute on behalf of employees, usually in the form of matching contributions. Prior to April 1, 2015, we matched the first
1%
of employees’ eligible contributions to our U.S. 401(k) plan. In April 2015, we increased the matching contribution to the first
1.5%
of employees' eligible contributions. Our matching contribution expense is as follows:
|
(In millions)
|
|||||||||
|
Years Ended December 31,
|
2015
|
2014
|
2013
|
||||||
|
U.S. 401(K)
|
$
|
3.6
|
|
2.2
|
|
2.6
|
|
||
|
Other plans
|
0.3
|
|
2.3
|
|
2.9
|
|
|||
|
Total
|
$
|
3.9
|
|
4.5
|
|
5.5
|
|
||
89
|
|
Years Ended December 31,
|
||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Income (loss) from continuing operations before income taxes
|
|||||||||
|
U.S.
|
$
|
(23.2
|
)
|
(79.4
|
)
|
(58.1
|
)
|
||
|
Foreign
|
64.3
|
|
30.4
|
|
197.7
|
|
|||
|
Income (loss) from continuing operations before income taxes
|
$
|
41.1
|
|
(49.0
|
)
|
139.6
|
|
||
|
Provision (benefit) for income taxes from continuing operations
|
|||||||||
|
Current tax expense (benefit)
|
|||||||||
|
U.S. federal
|
$
|
(1.0
|
)
|
(3.8
|
)
|
0.5
|
|
||
|
State
|
(0.2
|
)
|
(0.8
|
)
|
1.5
|
|
|||
|
Foreign
|
60.6
|
|
69.7
|
|
81.9
|
|
|||
|
Current tax expense
|
59.4
|
|
65.1
|
|
83.9
|
|
|||
|
Deferred tax expense (benefit)
|
|||||||||
|
U.S. federal
|
7.7
|
|
(7.6
|
)
|
(20.6
|
)
|
|||
|
State
|
—
|
|
(1.9
|
)
|
(1.9
|
)
|
|||
|
Foreign
|
(0.6
|
)
|
(18.9
|
)
|
(12.1
|
)
|
|||
|
Deferred tax benefit
|
7.1
|
|
(28.4
|
)
|
(34.6
|
)
|
|||
|
Provision (benefit) for income taxes of continuing operations
|
$
|
66.5
|
|
36.7
|
|
49.3
|
|
||
|
|
Years Ended December 31,
|
||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Comprehensive provision (benefit) for income taxes allocable to
|
|||||||||
|
Continuing operations
|
$
|
66.5
|
|
36.7
|
|
49.3
|
|
||
|
Discontinued operations
|
(1.0
|
)
|
0.4
|
|
7.4
|
|
|||
|
Other comprehensive income (loss)
|
(0.7
|
)
|
(43.0
|
)
|
141.0
|
|
|||
|
Equity
|
1.8
|
|
0.6
|
|
2.8
|
|
|||
|
Comprehensive provision (benefit) for income taxes
|
$
|
66.6
|
|
(5.3
|
)
|
200.5
|
|
||
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 percentages)
|
2015
|
2014
|
2013
|
|||||
|
U.S. federal tax rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
||
|
Increases (reductions) in taxes due to:
|
||||||||
|
Venezuela devaluation
|
61.3
|
|
(86.3
|
)
|
—
|
|
||
|
Tax on accelerated U.S. income
(a)
|
57.3
|
|
—
|
|
—
|
|
||
|
Adjustments to valuation allowances
|
18.9
|
|
(16.9
|
)
|
4.2
|
|
||
|
Foreign income taxes
|
(18.2
|
)
|
(0.7
|
)
|
(6.7
|
)
|
||
|
Medicare subsidy for retirement plans
|
—
|
|
—
|
|
(1.1
|
)
|
||
|
French business tax
|
8.9
|
|
(9.0
|
)
|
3.2
|
|
||
|
Taxes on undistributed earnings of foreign affiliates
|
(1.2
|
)
|
(3.7
|
)
|
(0.1
|
)
|
||
|
State income taxes, net
|
(4.1
|
)
|
5.2
|
|
(0.1
|
)
|
||
|
Other
|
3.9
|
|
1.5
|
|
0.9
|
|
||
|
Actual income tax rate on continuing operations
|
161.8
|
%
|
(74.9
|
)%
|
35.3
|
%
|
||
|
(a)
|
In the fourth quarter of 2015, we recognized a
$23.5 million
increase to current tax expense related to a transaction that accelerated U.S. taxable income.
|
90
Components of Deferred Tax Assets and Liabilities
|
December 31,
|
||||||
|
(In millions)
|
2015
|
2014
|
||||
|
Deferred tax assets
|
||||||
|
Pension liabilities
|
$
|
76.4
|
|
74.2
|
|
|
|
Retirement benefits other than pensions
|
79.4
|
|
77.8
|
|
||
|
Workers’ compensation and other claims
|
41.2
|
|
42.4
|
|
||
|
Property and equipment, net
|
2.5
|
|
4.1
|
|
||
|
Other assets and liabilities
|
120.6
|
|
135.2
|
|
||
|
Net operating loss carryforwards
|
37.1
|
|
47.4
|
|
||
|
Alternative minimum and other tax credits
(a)
|
47.5
|
|
46.7
|
|
||
|
Subtotal
|
404.7
|
|
427.8
|
|
||
|
Valuation allowances
|
(45.7
|
)
|
(40.1
|
)
|
||
|
Total deferred tax assets
|
359.0
|
|
387.7
|
|
||
|
Deferred tax liabilities
|
||||||
|
Retirement benefits other than pensions
|
1.0
|
|
—
|
|
||
|
Other assets and miscellaneous
|
36.3
|
|
38.9
|
|
||
|
Deferred tax liabilities
|
37.3
|
|
38.9
|
|
||
|
Net deferred tax asset
|
$
|
321.7
|
|
348.8
|
|
|
|
Included in:
|
||||||
|
Current assets
|
$
|
—
|
|
71.9
|
|
|
|
Noncurrent assets
|
329.8
|
|
289.5
|
|
||
|
Current liabilities
|
—
|
|
(1.8
|
)
|
||
|
Noncurrent liabilities
|
(8.1
|
)
|
(10.8
|
)
|
||
|
Net deferred tax asset
|
$
|
321.7
|
|
348.8
|
|
|
|
(a)
|
U.S. alternative minimum tax credits of
$32.5 million
have an unlimited carryforward period, U.S. foreign tax credits of
$12.3 million
have a
10
year carryforward period and the remaining credits of
$2.7 million
have various carryforward periods. The U.S. foreign tax credits have a
$10.4 million
valuation allowance.
|
Valuation Allowances
Valuation allowances relate to deferred tax assets for certain federal credit carryforwards, certain state and non-U.S. jurisdictions. Based on our analysis of positive and negative evidence including historical and expected future taxable earnings, and a consideration of available tax-planning strategies, we believe it is more likely than not that we will realize the benefit of the existing deferred tax assets, net of valuation allowances, at
December 31, 2015
.
|
|
Years Ended December 31,
|
||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Valuation allowances:
|
|||||||||
|
Beginning of year
|
$
|
40.1
|
|
32.4
|
|
47.4
|
|
||
|
Expiring tax credits
|
(0.3
|
)
|
(0.5
|
)
|
(1.8
|
)
|
|||
|
Acquisitions and dispositions
|
—
|
|
(1.0
|
)
|
(32.7
|
)
|
|||
|
Changes in judgment about deferred tax assets
(a)
|
1.5
|
|
1.9
|
|
(0.2
|
)
|
|||
|
Other changes in deferred tax assets, charged to:
|
|||||||||
|
Income from continuing operations
|
8.4
|
|
6.3
|
|
6.1
|
|
|||
|
Income from discontinued operations
|
—
|
|
3.3
|
|
12.6
|
|
|||
|
Other comprehensive income (loss)
|
0.3
|
|
0.6
|
|
—
|
|
|||
|
Foreign currency exchange effects
|
(4.3
|
)
|
(2.9
|
)
|
1.0
|
|
|||
|
End of year
|
$
|
45.7
|
|
40.1
|
|
32.4
|
|
||
|
(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.
|
91
Undistributed Foreign Earnings
As of
December 31, 2015
, we have not recorded U.S. federal deferred income taxes on approximately
$126 million
of undistributed earnings of foreign subsidiaries and equity affiliates. We expect that these earnings will be permanently reinvested in operations outside the U.S. It is not practical to determine the income tax liability that might be incurred if all such income was remitted to the U.S. due to the inherent complexities associated with any hypothetical calculation, which would be dependent upon the exact form of repatriation.
Net Operating Losses
The gross amount of the net operating loss carryforwards as of
December 31, 2015
, was
$326.2 million
. The tax benefit of net operating loss carryforwards, before valuation allowances, as of
December 31, 2015
, was
$37.1 million
, and expires as follows:
|
(In millions)
|
Federal
|
State
|
Foreign
|
Total
|
||||||||
|
Years of expiration
|
||||||||||||
|
2016-2020
|
$
|
—
|
|
0.1
|
|
3.0
|
|
3.1
|
|
|||
|
2021-2025
|
—
|
|
0.3
|
|
12.5
|
|
12.8
|
|
||||
|
2026 and thereafter
|
—
|
|
12.3
|
|
0.8
|
|
13.1
|
|
||||
|
No expiration
|
—
|
|
—
|
|
8.1
|
|
8.1
|
|
||||
|
|
$
|
—
|
|
12.7
|
|
24.4
|
|
37.1
|
|
|||
Uncertain Tax Positions
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|
|
Years Ended December 31,
|
||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Uncertain tax positions:
|
|||||||||
|
Beginning of year
|
$
|
7.2
|
|
10.8
|
|
11.8
|
|
||
|
Increases related to prior-year tax positions
|
—
|
|
0.4
|
|
0.1
|
|
|||
|
Decreases related to prior-year tax positions
|
(0.3
|
)
|
—
|
|
—
|
|
|||
|
Increases related to current-year tax positions
|
1.1
|
|
1.1
|
|
2.3
|
|
|||
|
Settlements
|
—
|
|
—
|
|
(0.7
|
)
|
|||
|
Effect of the expiration of statutes of limitation
|
(0.7
|
)
|
(1.3
|
)
|
(3.4
|
)
|
|||
|
Decrease related to dispositions
|
—
|
|
(1.0
|
)
|
—
|
|
|||
|
Foreign currency exchange effects
|
(0.4
|
)
|
(2.8
|
)
|
0.7
|
|
|||
|
End of year
|
$
|
6.9
|
|
7.2
|
|
10.8
|
|
||
Included in the balance of unrecognized tax benefits at
December 31, 2015
, are potential benefits of approximately
$6.1 million
that, if recognized, will reduce the effective tax rate on income from continuing operations.
We recognize accrued interest and penalties related to unrecognized tax benefits in provision (benefit) for income taxes. We reverse interest and penalties accruals when a statute of limitation lapses or when we otherwise conclude the amounts should not be accrued. Net reversals included in provision (benefit) for income taxes were
($0.1) million
in
2015
,
($0.6) million
in
2014
, and
($1.1) million
in
2013
. We had accrued interest and penalties of
$1.0 million
at
December 31, 2015
, and
$1.3 million
at
December 31, 2014
.
We file income tax returns in the U.S. federal and various state and foreign jurisdictions. With a few exceptions, as of
December 31, 2015
, 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
2012
. Additionally, due to statute of limitations expirations and audit settlements, it is reasonably possible that approximately
$0.8 million
of currently remaining unrecognized tax positions may be recognized by the end of 2016.
92
The following table presents our property and equipment that is classified as held and used:
|
December 31,
|
||||||
|
(In millions)
|
2015
|
2014
|
||||
|
Land
|
$
|
56.3
|
|
62.7
|
|
|
|
Buildings
|
192.8
|
|
231.2
|
|
||
|
Leasehold improvements
|
181.3
|
|
199.8
|
|
||
|
Vehicles
|
369.4
|
|
396.5
|
|
||
|
Capitalized software
(a)
|
183.6
|
|
183.0
|
|
||
|
Other machinery and equipment
|
572.1
|
|
673.2
|
|
||
|
1,555.5
|
|
1,746.4
|
|
|||
|
Accumulated depreciation and amortization
|
(1,006.5
|
)
|
(1,076.9
|
)
|
||
|
Property and equipment, net
|
$
|
549.0
|
|
669.5
|
|
|
|
(a)
|
Amortization of capitalized software costs included in continuing operations was
$20.7 million
in
2015
,
$20.3 million
in
2014
and
$17.8 million
in
2013
.
|
Goodwill
After the 2014 Reorganization and Restructuring, we identified
nine
operating segments and
ten
reporting units. We reallocated goodwill from our previous reporting units to our new reporting units in the fourth quarter of 2014. The changes in the carrying amount of goodwill by operating segment for the years ended
December 31, 2015
and
2014
are as follows:
|
December 31, 2015
|
|||||||||||||||
|
(In millions)
|
Beginning Balance
|
Acquisitions/
Dispositions
|
Adjustments
|
Currency
|
Ending Balance
|
||||||||||
|
Goodwill:
|
|
|
|
|
|
||||||||||
|
Largest 5 Markets:
|
|
|
|
|
|
||||||||||
|
U.S.
|
$
|
12.5
|
|
—
|
|
—
|
|
(0.9
|
)
|
11.6
|
|
||||
|
France
|
46.3
|
|
—
|
|
—
|
|
(4.7
|
)
|
41.6
|
|
|||||
|
Mexico
|
11.3
|
|
(0.1
|
)
|
—
|
|
(3.7
|
)
|
7.5
|
|
|||||
|
Brazil
|
15.5
|
|
—
|
|
—
|
|
(5.1
|
)
|
10.4
|
|
|||||
|
Canada
|
3.8
|
|
—
|
|
—
|
|
(0.6
|
)
|
3.2
|
|
|||||
|
Global Markets:
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Latin America
|
16.0
|
|
—
|
|
—
|
|
(4.3
|
)
|
11.7
|
|
|||||
|
EMEA
|
84.4
|
|
(1.8
|
)
|
—
|
|
(7.6
|
)
|
75.0
|
|
|||||
|
Asia
|
24.5
|
|
—
|
|
—
|
|
(1.1
|
)
|
23.4
|
|
|||||
|
Payment Services
|
1.4
|
|
—
|
|
—
|
|
(0.5
|
)
|
0.9
|
|
|||||
|
Total Goodwill
|
$
|
215.7
|
|
(1.9
|
)
|
—
|
|
(28.5
|
)
|
185.3
|
|
||||
|
December 31, 2014
|
|||||||||||||||
|
(In millions)
|
Beginning Balance
|
Acquisitions/
Dispositions
|
Adjustments
|
Currency
|
Ending Balance
|
||||||||||
|
Goodwill:
|
|
|
|
|
|
||||||||||
|
Largest 5 Markets:
|
|
|
|
|
|
||||||||||
|
U.S.
|
$
|
12.5
|
|
—
|
|
—
|
|
—
|
|
12.5
|
|
||||
|
France
|
53.6
|
|
—
|
|
—
|
|
(7.3
|
)
|
46.3
|
|
|||||
|
Mexico
|
12.8
|
|
—
|
|
—
|
|
(1.5
|
)
|
11.3
|
|
|||||
|
Brazil
|
17.5
|
|
—
|
|
—
|
|
(2.0
|
)
|
15.5
|
|
|||||
|
Canada
|
4.7
|
|
—
|
|
—
|
|
(0.9
|
)
|
3.8
|
|
|||||
|
Global Markets:
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Latin America
|
18.1
|
|
—
|
|
—
|
|
(2.1
|
)
|
16.0
|
|
|||||
|
EMEA
|
94.4
|
|
3.5
|
|
(0.2
|
)
|
(13.3
|
)
|
84.4
|
|
|||||
|
Asia
|
25.0
|
|
—
|
|
—
|
|
(0.5
|
)
|
24.5
|
|
|||||
|
Payment Services
|
1.6
|
|
—
|
|
—
|
|
(0.2
|
)
|
1.4
|
|
|||||
|
Total Goodwill
|
$
|
240.2
|
|
3.5
|
|
(0.2
|
)
|
(27.8
|
)
|
215.7
|
|
||||
93
Intangible Assets
The following table summarizes our other intangible assets by category:
|
December 31, 2015
|
December 31, 2014
|
||||||||||||||||||
|
(In millions)
|
Gross Carrying Amount
|
Accumulated Amortization
|
Net Carrying Amount
|
Gross Carrying Amount
|
Accumulated Amortization
|
Net Carrying Amount
|
|||||||||||||
|
Customer relationships
|
54.4
|
|
(40.0
|
)
|
14.4
|
|
64.7
|
|
(43.4
|
)
|
21.3
|
|
|||||||
|
Indefinite-lived trade names
|
9.0
|
|
—
|
|
9.0
|
|
10.4
|
|
—
|
|
10.4
|
|
|||||||
|
Finite-lived trade names
|
1.1
|
|
(0.9
|
)
|
0.2
|
|
1.6
|
|
(1.3
|
)
|
0.3
|
|
|||||||
|
Other contract-related assets
|
5.6
|
|
(1.5
|
)
|
4.1
|
|
8.3
|
|
(1.5
|
)
|
6.8
|
|
|||||||
|
Other
|
3.7
|
|
(2.9
|
)
|
0.8
|
|
4.0
|
|
(3.0
|
)
|
1.0
|
|
|||||||
|
Total
|
$
|
73.8
|
|
(45.3
|
)
|
28.5
|
|
$
|
89.0
|
|
(49.2
|
)
|
39.8
|
|
|||||
Total amortization expense for our finite-lived intangible assets was
$4.2 million
in
2015
. Our estimated aggregate amortization expense for finite-lived intangibles recorded at
December 31, 2015
, for the next
five years
is as follows:
|
(In millions)
|
2016
|
2017
|
2018
|
2019
|
2020
|
||||||||||
|
Amortization expense
|
$
|
3.2
|
|
2.8
|
|
2.5
|
|
2.2
|
|
2.1
|
|
||||
|
December 31,
|
||||||
|
(In millions)
|
2015
|
2014
|
||||
|
Prepaid expenses
|
$
|
53.4
|
|
63.5
|
|
|
|
Mobile airtime inventory
|
13.3
|
|
15.8
|
|
||
|
Income tax receivable
|
19.7
|
|
28.3
|
|
||
|
Other
|
14.9
|
|
21.4
|
|
||
|
Prepaid expenses and other
|
$
|
101.3
|
|
129.0
|
|
|
|
December 31,
|
||||||
|
(In millions)
|
2015
|
2014
|
||||
|
Deposits
|
$
|
12.1
|
|
16.4
|
|
|
|
Deferred profit sharing asset
|
12.4
|
|
10.0
|
|
||
|
Income tax receivable
|
22.9
|
|
15.9
|
|
||
|
Cross currency swap contract
|
4.2
|
|
4.4
|
|
||
|
Equity method investment in unconsolidated entities
|
4.9
|
|
2.7
|
|
||
|
Available-for-sale securities
|
3.5
|
|
3.7
|
|
||
|
Other
|
16.4
|
|
16.8
|
|
||
|
Other assets
|
$
|
76.4
|
|
69.9
|
|
|
94
The following tables provide the components of other comprehensive income (loss), including the amounts reclassified from accumulated other comprehensive income (loss) into earnings:
|
Amounts Arising During the Current Period
|
Amounts Reclassified to Net Income (Loss)
|
||||||||||||||
|
(In millions)
|
Pretax
|
Income Tax
|
Pretax
|
Income Tax
|
Total Other Comprehensive Income (Loss)
|
||||||||||
|
2015
|
|
|
|
|
|
||||||||||
|
Amounts attributable to Brink's:
|
|
|
|
|
|
||||||||||
|
Benefit plan adjustments
|
$
|
(57.1
|
)
|
20.4
|
|
58.1
|
|
(20.2
|
)
|
1.2
|
|
||||
|
Foreign currency translation adjustments
|
(106.2
|
)
|
0.3
|
|
5.7
|
|
—
|
|
(100.2
|
)
|
|||||
|
Unrealized gains (losses) on available-for-sale securities
|
0.6
|
|
(0.2
|
)
|
(1.1
|
)
|
0.4
|
|
(0.3
|
)
|
|||||
|
Gains (losses) on cash flow hedges
|
3.3
|
|
—
|
|
(3.6
|
)
|
—
|
|
(0.3
|
)
|
|||||
|
|
(159.4
|
)
|
20.5
|
|
59.1
|
|
(19.8
|
)
|
(99.6
|
)
|
|||||
|
Amounts attributable to noncontrolling interests:
|
|||||||||||||||
|
Benefit plan adjustments
|
(0.7
|
)
|
—
|
|
0.5
|
|
—
|
|
(0.2
|
)
|
|||||
|
Foreign currency translation adjustments
|
(3.6
|
)
|
—
|
|
—
|
|
—
|
|
(3.6
|
)
|
|||||
|
|
(4.3
|
)
|
—
|
|
0.5
|
|
—
|
|
(3.8
|
)
|
|||||
|
Total
|
|||||||||||||||
|
Benefit plan adjustments
(a)
|
(57.8
|
)
|
20.4
|
|
58.6
|
|
(20.2
|
)
|
1.0
|
|
|||||
|
Foreign currency translation adjustments
(b)
|
(109.8
|
)
|
0.3
|
|
5.7
|
|
—
|
|
(103.8
|
)
|
|||||
|
Unrealized gains (losses) on available-for-sale securities
(c)
|
0.6
|
|
(0.2
|
)
|
(1.1
|
)
|
0.4
|
|
(0.3
|
)
|
|||||
|
Gains (losses) on cash flow hedges
(d)
|
3.3
|
|
—
|
|
(3.6
|
)
|
—
|
|
(0.3
|
)
|
|||||
|
|
$
|
(163.7
|
)
|
20.5
|
|
59.6
|
|
(19.8
|
)
|
(103.4
|
)
|
||||
|
2014
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Amounts attributable to Brink's:
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Benefit plan adjustments
|
$
|
(231.2
|
)
|
78.1
|
|
95.3
|
|
(35.9
|
)
|
(93.7
|
)
|
||||
|
Foreign currency translation adjustments
|
(82.2
|
)
|
—
|
|
1.3
|
|
0.3
|
|
(80.6
|
)
|
|||||
|
Unrealized gains (losses) on available-for-sale securities
|
0.1
|
|
—
|
|
(0.5
|
)
|
0.2
|
|
(0.2
|
)
|
|||||
|
Gains (losses) on cash flow hedges
|
0.7
|
|
—
|
|
(0.9
|
)
|
—
|
|
(0.2
|
)
|
|||||
|
|
(312.6
|
)
|
78.1
|
|
95.2
|
|
(35.4
|
)
|
(174.7
|
)
|
|||||
|
Amounts attributable to noncontrolling interests:
|
|||||||||||||||
|
Benefit plan adjustments
|
(1.4
|
)
|
0.4
|
|
0.4
|
|
(0.1
|
)
|
(0.7
|
)
|
|||||
|
Foreign currency translation adjustments
|
(6.1
|
)
|
—
|
|
—
|
|
—
|
|
(6.1
|
)
|
|||||
|
|
(7.5
|
)
|
0.4
|
|
0.4
|
|
(0.1
|
)
|
(6.8
|
)
|
|||||
|
Total
|
|||||||||||||||
|
Benefit plan adjustments
(a)(b)
|
(232.6
|
)
|
78.5
|
|
95.7
|
|
(36.0
|
)
|
(94.4
|
)
|
|||||
|
Foreign currency translation adjustments
(b)
|
(88.3
|
)
|
—
|
|
1.3
|
|
0.3
|
|
(86.7
|
)
|
|||||
|
Unrealized gains (losses) on available-for-sale securities
(c)
|
0.1
|
|
—
|
|
(0.5
|
)
|
0.2
|
|
(0.2
|
)
|
|||||
|
Gains (losses) on cash flow hedges
(d)
|
0.7
|
|
—
|
|
(0.9
|
)
|
—
|
|
(0.2
|
)
|
|||||
|
|
$
|
(320.1
|
)
|
78.5
|
|
95.6
|
|
(35.5
|
)
|
(181.5
|
)
|
||||
95
|
Amounts Arising During the Current Period
|
Amounts Reclassified to Net Income (Loss)
|
||||||||||||||
|
(In millions)
|
Pretax
|
Income Tax
|
Pretax
|
Income Tax
|
Total Other Comprehensive Income (Loss)
|
||||||||||
|
2013
|
|
|
|
|
|
||||||||||
|
Amounts attributable to Brink's:
|
|
|
|
|
|
||||||||||
|
Benefit plan adjustments
|
$
|
251.9
|
|
(114.1
|
)
|
76.4
|
|
(27.1
|
)
|
187.1
|
|
||||
|
Foreign currency translation adjustments
|
(30.9
|
)
|
—
|
|
(0.5
|
)
|
0.1
|
|
(31.3
|
)
|
|||||
|
Unrealized gains (losses) on available-for-sale securities
|
(0.3
|
)
|
0.1
|
|
0.4
|
|
(0.2
|
)
|
—
|
|
|||||
|
Gains (losses) on cash flow hedges
|
2.9
|
|
—
|
|
(2.3
|
)
|
—
|
|
0.6
|
|
|||||
|
|
223.6
|
|
(114.0
|
)
|
74.0
|
|
(27.2
|
)
|
156.4
|
|
|||||
|
Amounts attributable to noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Benefit plan adjustments
|
(0.9
|
)
|
0.3
|
|
0.3
|
|
(0.1
|
)
|
(0.4
|
)
|
|||||
|
Foreign currency translation adjustments
|
(1.4
|
)
|
—
|
|
—
|
|
—
|
|
(1.4
|
)
|
|||||
|
|
(2.3
|
)
|
0.3
|
|
0.3
|
|
(0.1
|
)
|
(1.8
|
)
|
|||||
|
Total
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Benefit plan adjustments
(a)
|
251.0
|
|
(113.8
|
)
|
76.7
|
|
(27.2
|
)
|
186.7
|
|
|||||
|
Foreign currency translation adjustments
(b)
|
(32.3
|
)
|
—
|
|
(0.5
|
)
|
0.1
|
|
(32.7
|
)
|
|||||
|
Unrealized gains (losses) on available-for-sale securities
(c)
|
(0.3
|
)
|
0.1
|
|
0.4
|
|
(0.2
|
)
|
—
|
|
|||||
|
Gains (losses) on cash flow hedges
(d)
|
2.9
|
|
—
|
|
(2.3
|
)
|
—
|
|
0.6
|
|
|||||
|
|
$
|
221.3
|
|
(113.7
|
)
|
74.3
|
|
(27.3
|
)
|
154.6
|
|
||||
|
(a)
|
The amortization of prior experience losses and prior service cost is part of total net periodic retirement benefit cost when reclassified to net income (loss). Net periodic retirement benefit cost also includes service cost, interest cost, expected returns on assets, and settlement costs. The total pretax expense is allocated between cost of revenues and selling, general and administrative expenses on a plan-by-plan basis:
|
|
|
December 31,
|
||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Total net periodic retirement benefit cost included in:
|
|
|
|
||||||
|
Cost of revenues
|
$
|
36.1
|
|
68.0
|
|
66.8
|
|
||
|
Selling, general and administrative expenses
|
14.3
|
|
29.5
|
|
17.5
|
|
|||
|
(b)
|
Reclassification of foreign currency translation amounts in 2015 relate primarily to the sale of our Russian cash management operations. These amounts are included in other operating income (expense). Pretax benefit plan adjustments of
$8 million
(including related deferred tax component) and foreign currency translation adjustments reclassified to the consolidated statements of operations in 2014 relate to the sale of CIT operations in the Netherlands. Reclassification of foreign currency translation amounts in 2013 relate to the sale of ICD Limited and its affiliates, as well as CIT operations in Hungary and Poland. The 2014 and 2013 amounts are included in loss from discontinued operations in the consolidated statements of operations.
|
|
(c)
|
Gains and losses on sales of available-for-sale securities are reclassified from accumulated other comprehensive loss to the consolidated statements of operations when the gains or losses are realized. Pretax amounts are classified in the consolidated statements of operations as interest and other income (expense).
|
|
(d)
|
Pretax gains and losses on cash flow hedges are classified in the consolidated statements of operations as
|
|
•
|
other operating income (expense) (
$4.1 million
gains in
2015
,
$1.9 million
gains in
2014
and
$3.3 million
gains in
2013
)
|
|
•
|
interest and other income (expense) (
$0.5 million
losses in
2015
and
$1.0 million
losses in
2014
and
2013
.)
|
96
The changes in accumulated other comprehensive loss attributable to Brink’s are as follows:
|
(In millions)
|
Benefit Plan Adjustments
|
Foreign Currency Translation Adjustments
|
Unrealized Gains (Losses) on Available-for-Sale Securities
|
Gains (Losses) on Cash Flow Hedges
|
Total
|
||||||||||
|
Balance as of December 31, 2012
|
$
|
(665.1
|
)
|
(109.9
|
)
|
1.6
|
|
—
|
|
(773.4
|
)
|
||||
|
Other comprehensive income (loss) before reclassifications
|
137.8
|
|
(30.9
|
)
|
(0.2
|
)
|
2.9
|
|
109.6
|
|
|||||
|
Amounts reclassified from accumulated other comprehensive loss
|
49.3
|
|
(0.4
|
)
|
0.2
|
|
(2.3
|
)
|
46.8
|
|
|||||
|
Other comprehensive income (loss) attributable to Brink's
|
187.1
|
|
(31.3
|
)
|
—
|
|
0.6
|
|
156.4
|
|
|||||
|
Acquisitions of noncontrolling interests
|
—
|
|
(0.3
|
)
|
—
|
|
—
|
|
(0.3
|
)
|
|||||
|
Balance as of December 31, 2013
|
(478.0
|
)
|
(141.5
|
)
|
1.6
|
|
0.6
|
|
(617.3
|
)
|
|||||
|
Other comprehensive income (loss) before reclassifications
|
(153.1
|
)
|
(82.2
|
)
|
0.1
|
|
0.7
|
|
(234.5
|
)
|
|||||
|
Amounts reclassified from accumulated other comprehensive loss
|
59.4
|
|
1.6
|
|
(0.3
|
)
|
(0.9
|
)
|
59.8
|
|
|||||
|
Other comprehensive income (loss) attributable to Brink's
|
(93.7
|
)
|
(80.6
|
)
|
(0.2
|
)
|
(0.2
|
)
|
(174.7
|
)
|
|||||
|
Balance as of December 31, 2014
|
(571.7
|
)
|
(222.1
|
)
|
1.4
|
|
0.4
|
|
(792.0
|
)
|
|||||
|
Other comprehensive income (loss) before reclassifications
|
(36.7
|
)
|
(105.9
|
)
|
0.4
|
|
3.3
|
|
(138.9
|
)
|
|||||
|
Amounts reclassified from accumulated other comprehensive loss
|
37.9
|
|
5.7
|
|
(0.7
|
)
|
(3.6
|
)
|
39.3
|
|
|||||
|
Other comprehensive income (loss) attributable to Brink's
|
1.2
|
|
(100.2
|
)
|
(0.3
|
)
|
(0.3
|
)
|
(99.6
|
)
|
|||||
|
Acquisitions of noncontrolling interests
|
—
|
|
(0.3
|
)
|
—
|
|
—
|
|
(0.3
|
)
|
|||||
|
Balance as of December 31, 2015
|
$
|
(570.5
|
)
|
(322.6
|
)
|
1.1
|
|
0.1
|
|
(891.9
|
)
|
||||
97
Investments in Available-for-sale Securities
We have investments in mutual funds designated as available-for-sale securities that are carried at fair value in the financial statements. For these investments, fair value was estimated based on quoted prices categorized as a Level 1 valuation.
Fixed-Rate Debt
The fair value and carrying value of our fixed-rate debt are as follows:
|
December 31,
|
||||||
|
(In millions)
|
2015
|
2014
|
||||
|
Unsecured notes issued in a private placement
|
|
|
||||
|
Carrying value
|
$
|
92.9
|
|
100.0
|
|
|
|
Fair value
|
95.7
|
|
105.6
|
|
||
The fair value estimate of our unsecured private-placement notes is based on the present value of future cash flows, discounted at rates for similar instruments at the respective measurement dates, which we have categorized as a Level 3 valuation.
There were no transfers in or out of any of the levels of the valuation hierarchy in
2015
.
Other Financial Instruments
Other financial instruments include cash and cash equivalents, accounts receivable, floating rate debt, accounts payable and accrued liabilities. The financial statement carrying amounts of these items approximate the fair value.
We have outstanding foreign currency forward and swap contracts to hedge transactional risks associated with foreign currencies. Our short term contracts have a weighted average maturity of approximately
one
month. In 2013, we entered into a cross-currency swap to hedge against the change in value of a long-term intercompany loan denominated in a currency other than the lending subsidiary’s functional currency. The fair values of these foreign currency forward and swap contracts, including the cross-currency swap, are determined using Level 2 valuation techniques and are based on the present value of net future cash payments and receipts. Accordingly, the fair values will fluctuate based on changes in market interest rates and the respective foreign currency to U.S. dollar exchange rate. The fair values of our outstanding short-term contracts at
December 31, 2015
, were not significant. At
December 31, 2015
, the fair value of the cross-currency swap was an asset of
$7.1 million
. There were no transfers in or out of any of the levels of the valuation hierarchy in
2015
.
|
December 31,
|
||||||
|
(In millions)
|
2015
|
2014
|
||||
|
Payroll and other employee liabilities
|
$
|
120.3
|
|
138.8
|
|
|
|
Taxes, except income taxes
|
89.4
|
|
96.3
|
|
||
|
Cash held by Cash Management Services operations
(a)
|
37.1
|
|
28.0
|
|
||
|
Workers’ compensation and other claims
|
24.2
|
|
22.5
|
|
||
|
Retirement benefits (see note 3)
|
8.3
|
|
8.9
|
|
||
|
Income taxes payable
|
16.8
|
|
11.9
|
|
||
|
Other
|
118.0
|
|
159.9
|
|
||
|
Accrued liabilities
|
$
|
414.1
|
|
466.3
|
|
|
|
(a)
|
Title to cash received and processed in certain of our secure Cash Management Services operations transfers to us for a short period of time. The cash is generally credited to customers’ accounts the following day and we record a liability while the cash is in our possession.
|
98
|
December 31,
|
||||||
|
(In millions)
|
2015
|
2014
|
||||
|
Workers’ compensation and other claims
|
$
|
46.3
|
|
47.6
|
|
|
|
Non-recourse financing liability
(a)
|
14.4
|
|
—
|
|
||
|
Post-employment benefits
|
12.0
|
|
16.6
|
|
||
|
Asset retirement and remediation obligations
|
12.9
|
|
12.0
|
|
||
|
Employee-related liabilities
|
4.2
|
|
7.1
|
|
||
|
Noncurrent tax liabilities
|
5.7
|
|
6.4
|
|
||
|
Other
|
34.0
|
|
40.1
|
|
||
|
Other liabilities
|
$
|
129.5
|
|
129.8
|
|
|
(a) Brink's Mexico entered into a transaction in 2015 to sell its headquarters building in Mexico City and lease the property back for
two
years. The transaction did not qualify for sale-leaseback accounting due to continuing involvement with the property. Therefore, proceeds are recorded as a financing liability.
|
December 31,
|
||||||
|
(In millions)
|
2015
|
2014
|
||||
|
Bank credit facilities:
|
|
|
||||
|
Revolving Facility (year-end weighted average interest
|
|
|
||||
|
rate of 1.8% in 2015 and 1.6% in 2014)
|
$
|
163.3
|
|
233.0
|
|
|
|
Private Placement Notes (Series A effective interest rate of 4.6%, Series B effective interest
|
|
|
||||
|
rate of 5.2%), due 2021, less unamortized debt costs of $0.1 in 2015 and $0.2 million in 2014
|
92.8
|
|
99.8
|
|
||
|
Term loan (year-end effective interest rate of 2.2% in 2015)
|
||||||
|
less unamortized debt costs of $0.2 million in 2015
|
70.9
|
|
—
|
|
||
|
Other primarily non-U.S. dollar-denominated facilities (year-end weighted
|
|
|
||||
|
average interest rate of 4.0% in 2015 and 6.9% in 2014)
|
14.9
|
|
9.5
|
|
||
|
Capital leases (year-end weighted average interest rate of 3.6% in 2015 and 3.5% in 2014)
|
59.5
|
|
64.9
|
|
||
|
Total long-term debt
|
$
|
401.4
|
|
407.2
|
|
|
|
Included in:
|
|
|
||||
|
Current liabilities
|
$
|
43.3
|
|
34.1
|
|
|
|
Noncurrent liabilities
|
358.1
|
|
373.1
|
|
||
|
Total long-term debt
|
$
|
401.4
|
|
407.2
|
|
|
Revolving Facility
In March 2015, we refinanced our previous
$480 million
unsecured revolving bank credit facility with a
$525 million
unsecured revolving bank credit facility (the “Revolving Facility”) that matures in
March 2020
. The Revolving Facility’s interest rate is based on LIBOR plus a margin or an alternate base rate plus a margin. The Revolving Facility allows us to borrow or issue letters of credit (or otherwise satisfy credit needs) on a revolving basis over the term of the facility. As of
December 31, 2015
,
$362 million
was available under the Revolving Facility. Amounts outstanding under the Revolving Facility, as of
December 31, 2015
, were denominated primarily in U.S. dollars and to a lesser extent in euros.
The margin on LIBOR borrowings under the Revolving Facility, which can range from
1.0%
to
1.70%
depending on our credit rating, was
1.30%
at
December 31, 2015
. The margin on alternate base rate borrowings under the Revolving Facility can range from
0.0%
to
0.70%
. We also pay an annual facility fee on the Revolving Facility based on our credit rating or our leverage ratio . The facility fee can range from
0.125%
to
0.30%
and was
0.20%
at
December 31, 2015
.
Private Placement Notes
We have principal of
$93 million
in unsecured notes through a private placement debt transaction (the “Notes”). The Notes comprise
$43 million
in series A notes with a fixed interest rate of
4.57%
and
$50 million
in series B notes with a fixed interest rate of
5.20%
. Annual principal payments under the series A notes began in
January 2015
and continue through maturity. The series B notes are due in
January 2021
.
Term Loan
99
In
March 2015
, we entered into a
$75 million
unsecured term loan facility. Interest on this facility is based on LIBOR plus a margin of
1.75%
. Monthly principal payments began April 2015 and continue through to maturity, with the remaining balance of
$33.7 million
due in
March 2022
. As of
December 31, 2015
, the principal amount outstanding is
$71 million
.
Other Facilities
As of
December 31, 2015
, we had
two
unsecured multi-currency revolving bank credit facilities with a total of
$40 million
in available credit, of which approximately
$33 million
was available at
December 31, 2015
. A
$20 million
facility is scheduled to expire at the end of
February 2016
and we plan to renew in the first quarter of 2016. A
$20 million
facility expires in
February 2017
. Interest on these facilities is based on LIBOR plus a margin. The margin ranges from
0.9%
to
2.0%
. We also have the ability to borrow from other banks, at the banks’ discretion, under short-term uncommitted agreements. Various foreign subsidiaries maintain other lines of credit and overdraft facilities with a number of banks.
We have a
$25 million
unsecured committed credit facility that expires in
April 2016
. Interest on this facility is based on LIBOR plus a margin, which ranges from
1.20%
to
1.575%
. As of
December 31, 2015
,
$20 million
was available under the facility.
In
June 2015
, we entered into a
$40 million
uncommitted letter of credit facility with an expiration date of
May 2016
. As of
December 31, 2015
,
$5 million
was utilized.
We have
two
unsecured letter of credit facilities totaling
$94 million
, of which approximately
$23 million
was available at
December 31, 2015
. A
$54 million
facility expires in
December 2016
and a
$40 million
facility expires in
December 2018
. The Revolving Facility and the multi-currency revolving credit facilities are also used for issuance of letters of credit and bank guarantees.
Minimum repayments of long-term debt are as follows:
|
(In millions)
|
Capital leases
|
Other long-term debt
|
Total
|
||||||
|
2016
|
$
|
20.2
|
|
23.7
|
|
43.9
|
|
||
|
2017
|
12.2
|
|
14.1
|
|
26.3
|
|
|||
|
2018
|
10.0
|
|
13.1
|
|
23.1
|
|
|||
|
2019
|
7.1
|
|
12.4
|
|
19.5
|
|
|||
|
2020
|
4.9
|
|
161.0
|
|
165.9
|
|
|||
|
Later years
|
5.1
|
|
117.6
|
|
122.7
|
|
|||
|
Total
|
$
|
59.5
|
|
341.9
|
|
401.4
|
|
||
The Revolving Facility, the Notes, the unsecured multi-currency revolving bank credit facilities, the unsecured committed credit facility, the
letter of credit facilities and the unsecured term loan contain certain subsidiary guarantees and various financial and other covenants. The financial covenants, among other things, limit our total indebtedness, restrict certain payments to shareholders, limit priority debt, limit asset sales,limit the use of proceeds from asset sales, provide for a maximum leverage ratio and provide for minimum coverage of interest costs. The credit agreements do not provide for the acceleration of payments should our credit rating be reduced. If we were not to comply with the
terms of our various credit agreements, the repayment terms could be accelerated and the commitments could be withdrawn. An acceleration
of the repayment terms under one agreement could trigger the acceleration of the repayment terms under the other loan agreements. We were in compliance with all financial covenants at
December 31, 2015
.
At
December 31, 2015
, we had undrawn letters of credit and guarantees of
$70.7 million
issued under the letter of credit facilities and
$7.3 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 and equipment acquired under capital leases are included in property and equipment as follows:
|
December 31,
|
||||||
|
(In millions)
|
2015
|
2014
|
||||
|
Asset class:
|
|
|
||||
|
Buildings
|
$
|
2.0
|
|
2.3
|
|
|
|
Vehicles
|
114.1
|
|
107.5
|
|
||
|
Machinery and equipment
|
13.6
|
|
31.5
|
|
||
|
|
129.7
|
|
141.3
|
|
||
|
Less: accumulated amortization
|
(66.0
|
)
|
(71.2
|
)
|
||
|
Total
|
$
|
63.7
|
|
70.1
|
|
|
100
|
December 31,
|
||||||
|
(In millions)
|
2015
|
2014
|
||||
|
Trade
|
$
|
468.2
|
|
516.3
|
|
|
|
Other
|
19.0
|
|
24.2
|
|
||
|
Total accounts receivable
|
487.2
|
|
540.5
|
|
||
|
Allowance for doubtful accounts
|
(9.1
|
)
|
(10.0
|
)
|
||
|
Accounts receivable, net
|
$
|
478.1
|
|
530.5
|
|
|
|
Years Ended December 31,
|
|||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Allowance for doubtful accounts:
|
|
|
|
||||||
|
Beginning of year
|
$
|
10.0
|
|
8.2
|
|
9.2
|
|
||
|
Provision for uncollectible accounts receivable:
|
|
|
|
|
|
|
|||
|
Continuing operations
|
2.9
|
|
7.5
|
|
4.1
|
|
|||
|
Discontinued operations
|
(0.2
|
)
|
(0.5
|
)
|
0.1
|
|
|||
|
Write offs less recoveries
|
(0.9
|
)
|
(2.6
|
)
|
(3.9
|
)
|
|||
|
Foreign currency exchange effects
|
(2.7
|
)
|
(2.6
|
)
|
(1.3
|
)
|
|||
|
End of year
|
$
|
9.1
|
|
10.0
|
|
8.2
|
|
||
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, 2015
, 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
|
||||||||
|
2016
|
$
|
39.4
|
|
7.7
|
|
10.3
|
|
57.4
|
|
|||
|
2017
|
30.3
|
|
4.1
|
|
10.1
|
|
44.5
|
|
||||
|
2018
|
24.5
|
|
1.8
|
|
11.0
|
|
37.3
|
|
||||
|
2019
|
18.0
|
|
0.3
|
|
7.6
|
|
25.9
|
|
||||
|
2020
|
14.0
|
|
0.1
|
|
4.4
|
|
18.5
|
|
||||
|
Later years
|
39.8
|
|
—
|
|
0.5
|
|
40.3
|
|
||||
|
|
$
|
166.0
|
|
14.0
|
|
43.9
|
|
223.9
|
|
|||
The cost related to operating leases is recognized as rental expense. Net rent expense included in continuing operations amounted to
$92.5 million
in
2015
,
$101.7 million
in
2014
and
$100.4 million
in
2013
.
101
We have share-based compensation plans to retain employees and nonemployee directors and to more closely align their interests with those of our shareholders.
We have granted share-based awards to employees under the 2005 Equity Incentive Plan and the 2013 Equity Incentive Plan. These plans permit grants of restricted stock, restricted stock units, performance stock, performance units, stock appreciation rights, stock options, as well as other share-based awards to eligible employees. The 2013 Plan also permits cash awards to eligible employees. The 2005 Plan was replaced by the 2013 Plan effective in February 2013. No further grants of awards will be made under the 2005 Plan.
We have granted deferred stock units to directors through the Non-Employee Directors’ Equity Plan. There are outstanding share-based awards granted to directors under plans that have expired, the Non-Employee Directors’ Stock Option Plan and the Directors’ Stock Accumulation Plan.
There are
3.3 million
shares underlying share-based plans that are authorized, but not yet granted. Outstanding awards at
December 31, 2015
, include performance share units, market share units, restricted stock units, deferred stock units and stock options.
Compensation Expense
Compensation expense is measured using the fair-value-based method.
For employee and director awards considered equity grants, compensation expense is recognized from the grant date to the earlier of the retirement-eligible date or the vesting date.
The grant date for accounting purposes may be different than the date the award is granted to the employee. To establish a grant date for accounting purposes, the employee and the employer must have a mutual understanding of the important terms and conditions of the award. For awards considered liabilities and for equity awards that have not had a grant date established because a mutual understanding does not exist, compensation cost is based on the change in the fair value of the instrument for each reporting period and the percentage of the requisite service that has been rendered.
Compensation expense related to deferred stock units granted to directors prior to 2014 was recognized in its entirety at the grant date. For deferred stock units granted to directors in 2014, compensation expense is recognized either in its entirety at the grant date or over a
one year
vesting period if the director elects to receive the units in shares after one year. For deferred stock units granted to directors in 2015, compensation expense is recognized over a
one
year vesting period.
Compensation expenses are classified as selling, general and administrative expenses in the consolidated statements of operations. Compensation expenses for the last
three years
and the amount of unrecognized expense for awards outstanding at
December 31, 2015
, were as follows:
|
Compensation Expense
|
Unrecognized Expense for Nonvested Awards at
|
Weighted-average No. of Years Unrecognized Expense to be Recognized
|
|||||||||||||
|
Years Ended December 31,
|
Dec 31, 2015
|
||||||||||||||
|
(in millions except years)
|
2015
|
2014
|
2013
|
||||||||||||
|
Performance Share Units
|
$
|
8.1
|
|
6.8
|
|
4.0
|
|
$
|
7.1
|
|
1.8
|
||||
|
Market Share Units
|
2.3
|
|
1.6
|
|
1.8
|
|
1.4
|
|
2.0
|
||||||
|
Restricted Stock Units
|
3.2
|
|
6.0
|
|
3.1
|
|
2.8
|
|
1.5
|
||||||
|
Deferred Stock Units
|
0.5
|
|
0.6
|
|
0.5
|
|
0.2
|
|
0.4
|
||||||
|
Stock Options
|
—
|
|
2.3
|
|
0.5
|
|
—
|
|
0.0
|
||||||
|
Share-based payment expense
|
14.1
|
|
17.3
|
|
9.9
|
|
|
|
|||||||
|
Income tax benefit
|
(4.6
|
)
|
(5.6
|
)
|
(3.4
|
)
|
|
|
|||||||
|
Share-based payment expense, net of tax
|
$
|
9.5
|
|
11.7
|
|
6.5
|
|
|
|
||||||
102
Fair Value of Vested Awards
The fair value of shares vested in the last
three years
is as follows:
|
Fair Value of Shares Vested
(a)
|
||||||||
|
Years Ended December 31,
|
||||||||
|
(in millions)
|
2015
|
2014
|
2013
|
|||||
|
Restricted Stock Units
|
5.3
|
|
4.1
|
|
4.1
|
|
||
|
Deferred Stock Units
|
0.2
|
|
0.3
|
|
—
|
|
||
|
Stock Options
|
1.1
|
|
0.1
|
|
2.0
|
|
||
|
Total
|
6.6
|
|
4.5
|
|
6.1
|
|
||
|
(a)
|
No Performance Share Units and no Market Share Units had vested as of
December 31, 2015
. Intrinsic value for Stock Options.
|
Recoupment Policy Change in 2014
For certain awards granted since 2010, we concluded in the second quarter of 2014 that the employee and employer did not have a mutual understanding related to the application of a compensation recoupment policy that was established in 2010. As a result, we concluded that the service inception date preceded the grant date for equity awards outstanding at that time. Our recoupment policy was revised in July 2014 and, as a result, we concluded that certain outstanding awards have grant dates that reflect the date of the revision of the policy on July 11, 2014. Approximately
130
employees who received share-based awards were affected by the change in policy. As a result, we recognized
$4.2 million
of expense during the second quarter of 2014 for the cumulative effect of this accounting error.
Restricted Stock Units (“RSUs”)
We granted RSUs to senior executives and select employees in the last
three years
. RSUs are paid out in shares of Brink’s stock when the awards vest. For RSUs granted during the last three years, the units generally vest ratably in three equal annual installments. We measure the fair value of RSU grants based on the price of Brink’s stock, adjusted for a discount for awards that do not receive or accrue dividends. The weighted-average fair value per share at issuance date was
$27.09
in
2015
,
$27.91
in
2014
and
$26.17
in
2013
. The weighted-average discount was approximately
3%
in
2015
,
2014
and
2013
.
The following table summarizes RSU activity during
2015
:
|
Shares
(in thousands)
|
Weighted-Average Grant Date Fair Value
|
|||||
|
Nonvested balance as of December 31, 2014
|
367.1
|
|
$
|
25.87
|
|
|
|
Activity from January 1 to December 31, 2015:
|
|
|
|
|||
|
Granted
|
144.7
|
|
27.09
|
|
||
|
Forfeited
|
(57.2
|
)
|
26.05
|
|
||
|
Vested
|
(181.6
|
)
|
26.37
|
|
||
|
Nonvested balance as of December 31, 2015
|
273.0
|
|
$
|
26.16
|
|
|
Performance Share Units (“PSUs”)
We granted PSUs to senior executives and select employees in
2015
,
2014
and
2013
. PSUs typically vest over
three years
and are paid out in shares of Brink’s stock. The number of shares paid out ranges from
0%
to
200%
of an employee’s award, depending on the achievement of pre-established financial goals over the performance period, generally
three years
. Shares are not paid out if the financial results do not meet a pre-established threshold level of performance.
The number of shares paid out is also affected by Brink’s total shareholder return relative to the total return of a pre-established stock index over the performance period. The number of shares paid out is increased by 25% if Brink’s total shareholder return is at or above the 75
th
percentile of the index’s total return. The number of shares paid out is reduced by 25% if Brink’s performance is at or below the 25
th
percentile. The number of shares is not adjusted if Brink’s performance is between the 25
th
and 75
th
percentile.
Performance Goal Added in 2014 for the 2013 and 2014 PSU Grants.
The performance goals for the 2013 and the 2014 PSU grants are based on consolidated operating profit over the performance period, which are adjusted for various items including corporate items, acquisition and dispositions, unusual or infrequently occurring events and foreign currency. In 2014, the Compensation and Benefits Committee of the Board of Directors approved a second performance goal for the PSU awards granted in 2013 and 2014 to reflect the change in currency exchange rate used to report the results of Venezuela because the rate changed significantly. After the conclusion of the performance period, the payout will be equal to the lower of the calculated payout under the two performance goals. Approximately
100
employees who received PSUs in 2013 and 2014 were affected by the change. No incremental compensation cost associated with the additional performance goal is expected to be recognized as the second goal is expected to be more difficult to achieve and, in accordance with FASB ASC Topic 718,
Compensation - Stock Compensation
, we continue to recognize expense as calculated using the first performance goal.
103
The following table summarizes all PSU activity during
2015
:
|
Shares
(in thousands) |
Weighted-Average Grant Date Fair Value
|
|||||
|
Nonvested balance as of December 31, 2014
|
343.6
|
|
$
|
24.06
|
|
|
|
Activity from January 1 to December 31, 2015:
|
|
|
|
|||
|
Granted
|
199.1
|
|
29.10
|
|
||
|
Forfeited
|
(39.3
|
)
|
25.69
|
|
||
|
Nonvested balance as of December 31, 2015
|
503.4
|
|
$
|
25.93
|
|
|
The majority of PSUs granted contain a market condition in addition to a performance condition. We measure the fair value of these PSUs at the grant date using a Monte Carlo simulation model.
A small portion of PSUs granted contain only performance conditions. We measure the fair value of these PSUs based on the price of Brink's stock at the grant date, as adjusted for a discount for dividends not received during the vesting period.
The following table provides the terms and weighted average assumptions used in the valuation of those PSUs containing a market condition:
|
Terms and Assumptions Used to Estimate Fair Value of PSUs
|
PSUs Granted in 2015
|
PSUs Granted in 2014
|
PSUs Granted in 2013
|
||||||
|
Date of Measurement
|
February 20, 2015
(a)
|
July 11, 2014
(b)
|
July 11, 2014
(b)
|
||||||
|
Terms of awards:
|
|||||||||
|
Performance period
|
Jan. 1, 2015 to
|
Jan. 1, 2014 to
|
April 1, 2013 to
|
||||||
|
|
Dec. 31, 2017
|
Dec. 31, 2016
|
Dec. 31, 2015
|
||||||
|
Beginning average price of Brink’s common stock
|
$
|
23.19
|
|
33.29
|
|
27.59
|
|
||
|
Assumptions used to estimate fair value:
|
|
|
|
|
|
|
|||
|
Expected dividend yield
(c)
|
—
|
%
|
—
|
%
|
—
|
%
|
|||
|
Expected stock price volatility
|
30
|
%
|
32
|
%
|
28
|
%
|
|||
|
Risk-free interest rate
|
1.0
|
%
|
0.7
|
%
|
0.3
|
%
|
|||
|
Contractual term in years
|
2.8
|
|
2.5
|
|
1.5
|
|
|||
|
Weighted-average fair value estimate per share
|
$
|
28.97
|
|
24.39
|
|
23.68
|
|
||
|
(a)
|
Represents the date awards were granted to employee.
|
|
(b)
|
Represents the date the recoupment policy was amended (see
Recoupment Policy Change in 2014
above) and an additional goal was added (see
2014 Additional Performance Goal for the 2013 and 2014 PSU Grants
above). The employees and employer are deemed to have a mutual understanding of the terms of the award at this date.
|
|
(c)
|
PSUs are not entitled to dividends during the performance period.
|
104
Market Share Units (“MSUs”)
We granted MSUs to senior executives in 2015, 2014 and 2013. MSUs are paid out in shares of Brink’s stock when an award vests. MSUs reward the achievement of the appreciation of Brink’s stock over the performance period (generally
three
years) at a rate of
0%
to
150%
of the initial target number of shares awarded. The multiplier to the initial target number of MSUs awarded is calculated as the ratio of the price of Brink’s stock at the end of the performance period divided by the price of Brink’s stock at the beginning of the performance period.
If the price of Brink’s stock at the end of the performance period is less than
50%
of the initial price, no payout for MSUs will occur.
We measure the fair value of MSUs at the grant date using a Monte Carlo simulation model. The following table provides the terms and the weighted average assumptions used in the valuation of the MSUs:
|
Terms and Assumptions Used to Estimate Fair Value of MSUs
|
MSUs Granted in 2015
|
MSUs Granted in 2014
|
MSUs Granted in 2013
|
||||||
|
Date of Measurement
|
February 20, 2015
(a)
|
July 11, 2014
(b)
|
July 11, 2014
(b)
|
||||||
|
Terms of awards:
|
|||||||||
|
Performance period
|
Jan. 1, 2015 to
|
Jan. 1, 2014 to
|
April 1, 2013 to
|
||||||
|
|
Dec. 31, 2017
|
Dec. 31, 2016
|
Dec. 31, 2015
|
||||||
|
Beginning average price of Brink’s common stock
|
$
|
23.19
|
|
33.29
|
|
27.59
|
|
||
|
Assumptions used to estimate fair value:
|
|
|
|
|
|
|
|||
|
Expected dividend yield
(c)
|
—
|
%
|
—
|
%
|
—
|
%
|
|||
|
Expected stock price volatility
|
30
|
%
|
32
|
%
|
28
|
%
|
|||
|
Risk-free interest rate
|
1
|
%
|
0.7
|
%
|
0.3
|
%
|
|||
|
Contractual term in years
|
2.8
|
|
2.5
|
|
1.5
|
|
|||
|
Weighted-average fair value estimate per share
|
$
|
30.37
|
|
23.34
|
|
27.30
|
|
||
|
(a)
|
Represents the date awards were granted to employee.
|
|
(b)
|
Represents the date the recoupment policy was amended (see
Recoupment Policy Change in 2014
above). The employees and employer are deemed to have a mutual understanding of the terms of the award at this date.
|
|
(c)
|
MSUs are not entitled to dividends during the performance period.
|
The following table summarizes all MSU activity during
2015
:
|
Shares
(in thousands) |
Weighted-Average Grant Date Fair Value
|
|||||
|
Nonvested balance as of December 31, 2014
|
163.3
|
|
$
|
25.47
|
|
|
|
Activity from January 1 to December 31, 2015:
|
|
|
|
|||
|
Granted
|
108.6
|
|
30.37
|
|
||
|
Forfeited
|
(13.1
|
)
|
27.86
|
|
||
|
Nonvested balance as of December 31, 2015
|
258.8
|
|
$
|
27.40
|
|
|
Stock Options
No
stock options were granted in 2015, 2014 and 2013. Prior to 2013, we granted stock options to select senior executives and select employees. When vested, the option entitles the holder to purchase a specified number of shares of Brink’s stock at a price set at the date the options were granted. The option price for Brink’s stock options was equal to the market price of Brink’s stock on the award date. Stock options granted to employees have a maximum term of
six years
and options previously granted to directors have a maximum term of
ten years
.
Stock Option Activity
The table below summarizes the activity in all plans for options of our stock.
|
Shares
(in thousands) |
Weighted-Average Grant Date Fair Value
|
|||||
|
Outstanding balance as of December 31, 2014
|
844.8
|
|
$
|
5.83
|
|
|
|
Activity from January 1 to December 31, 2015:
|
|
|
|
|||
|
Forfeited or expired
|
(6.8
|
)
|
1.75
|
|
||
|
Exercised
|
(149.7
|
)
|
3.96
|
|
||
|
Outstanding balance as of December 31, 2015
|
688.3
|
|
$
|
6.28
|
|
|
105
The table below summarizes additional information related to all plans for options of our stock:
|
Shares
(in thousands)
|
Weighted- Average
Exercise Price Per Share
|
Weighted- Average
Remaining Contractual
Term (in years)
|
Aggregate Intrinsic Value
(a)
(in millions)
|
|||||||||
|
Outstanding at December 31, 2014
|
844.8
|
|
$
|
25.88
|
|
|
|
|
||||
|
Forfeited or expired
|
(6.8
|
)
|
28.32
|
|
|
|
|
|||||
|
Exercised
|
(149.7
|
)
|
25.20
|
|
|
|
|
|||||
|
Outstanding at December 31, 2015
(b)
|
688.3
|
|
26.01
|
|
1.8
|
$
|
2.8
|
|
||||
|
Of the above, as of December 31, 2015:
|
|
|
|
|
|
|
|
|||||
|
Exercisable
|
688.3
|
|
$
|
26.01
|
|
1.8
|
$
|
2.8
|
|
|||
|
(a)
|
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, 2015
was
$28.86
.
|
|
(b)
|
There were
0.7 million
shares of exercisable options with a weighted-average exercise price of
$26.44
per share at
December 31, 2014
and
1.2 million
shares of exercisable options with a weighted-average exercise price of
$30.92
per share at
December 31, 2013
.
|
Deferred Stock Units (“DSUs”)
We have granted DSUs to our directors. DSUs are paid out in shares of Brink’s stock. We measure the fair value of DSUs at the grant date, based on the price of Brink’s stock. The following table summarizes all DSU activity during
2015
:
|
Shares
(in thousands)
|
Weighted-Average Grant-Date Fair Value
|
|||||
|
Nonvested balance as of December 31, 2014
|
28.3
|
|
$
|
24.70
|
|
|
|
Granted
|
21.4
|
|
32.79
|
|
||
|
Vested
|
(28.3
|
)
|
24.70
|
|
||
|
Nonvested balance as of December 31, 2015
|
21.4
|
|
$
|
32.79
|
|
|
The weighted-average grant-date fair value estimate per share for DSUs granted was
$32.79
in
2015
,
$24.70
in
2014
and
$26.80
in
2013
.
Other Share-Based Compensation
We have a deferred compensation plan that allows participants to defer a portion of their compensation into stock units. Units may be redeemed by employees for an equal number of shares of Brink’s stock. Employee accounts held
302,041
units at
December 31, 2015
, and
292,221
units at
December 31, 2014
.
We have a stock accumulation plan for our non-employee directors that, prior to 2014, provided for awards of stock units. Directors’ accounts held
54,050
units at
December 31, 2015
, and
53,335
units at
December 31, 2014
.
106
Common Stock
At
December 31, 2015
, we had
100 million
shares of common stock authorized and
48.9 million
shares issued and outstanding.
Dividends
We paid regular quarterly dividends on our common stock during the last three years. On
January 21, 2016
, the board declared a regular quarterly dividend of
10 cents
per share payable on
March 1, 2016
. The payment of future dividends is at the discretion of the board of directors and is dependent on our future earnings, financial condition, shareholder equity levels, cash flow, business requirements and other factors.
Preferred Stock
At
December 31, 2015
, we had the authority to issue up to
2.0 million
shares of preferred stock with a par value of
$10
per share.
Shares Used to Calculate Earnings per Share
|
Years Ended December 31,
|
||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
|||||
|
Weighted-average shares
|
|
|
|
|||||
|
Basic
(a)
|
49.3
|
|
49.0
|
|
48.7
|
|
||
|
Effect of dilutive stock awards
|
—
|
|
—
|
|
0.3
|
|
||
|
Diluted
(a)
|
49.3
|
|
49.0
|
|
49.0
|
|
||
|
Antidilutive stock awards excluded from denominator
|
1.7
|
|
1.7
|
|
1.3
|
|
||
|
(a)
|
We have deferred compensation plans for directors and certain of our employees. Some amounts owed to participants are denominated in common stock units. Each unit represents one share of common stock. The number of shares used to calculate basic earnings per share includes the weighted-average common stock units credited to employees and directors under the deferred compensation plans. Additionally, nonvested units are also included in the computation of basic weighted average shares when the requisite service period has been completed. Accordingly, basic and diluted shares include weighted-average units of
0.5 million
in
2015
,
0.5 million
in
2014
and
0.6 million
in
2013
.
|
107
|
Years Ended December 31,
|
|||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Loss from operations
(a)(b)
|
$
|
(2.4
|
)
|
(13.3
|
)
|
(17.4
|
)
|
||
|
Gain (loss) on sales
|
(0.8
|
)
|
(18.9
|
)
|
16.3
|
|
|||
|
Adjustments to contingencies of former operations
(c)
:
|
|
|
|
|
|
|
|||
|
Workers' compensation
|
(0.7
|
)
|
(4.4
|
)
|
(1.7
|
)
|
|||
|
Insurance recoveries related to BAX Global indemnification
(d)
|
—
|
|
9.5
|
|
—
|
|
|||
|
Other
|
0.1
|
|
(1.6
|
)
|
1.0
|
|
|||
|
Loss from discontinued operations before income taxes
|
(3.8
|
)
|
(28.7
|
)
|
(1.8
|
)
|
|||
|
Provision (benefit) for income taxes
|
(1.0
|
)
|
0.4
|
|
7.4
|
|
|||
|
Loss from discontinued operations, net of tax
|
$
|
(2.8
|
)
|
(29.1
|
)
|
(9.2
|
)
|
||
|
(a)
|
Discontinued operations include gains and losses related to businesses that we recently sold or shut down.
No
interest expense was included in discontinued operations in 2015 and 2014. Interest expense included in discontinued operations was
$0.4 million
in 2013.
|
|
(b)
|
The loss from operations in 2015 included
$1.0 million
in pension settlement charges related to the Mexican parcel delivery business sold in February 2015. The loss from operations in 2014 included
$15.6 million
in non-cash severance and impairment charges related to the Netherlands cash-in-transit operations. The loss from operations in 2013 included
$16.2 million
of severance expenses paid to terminate certain employees of the German cash-in-transit operations. We contributed a portion of the cost to fund the German severance payments to the business prior to the execution of the December 2013 sale transaction.
|
|
(c)
|
Primarily related to former coal businesses and BAX Global, a former freight forwarding and logistics business.
|
|
(d)
|
BAX Global had been defending a claim related to the apparent diversion by a third party of goods being transported for a customer. In 2010, the Dutch Supreme Court denied the final appeal of BAX Global, letting stand the lower court ruling that BAX Global was liable for this claim. We had contractually indemnified the purchaser of BAX Global for this contingency. Through 2010, we had recognized
$11.5 million
of expense related to the payment made in satisfaction of the judgment. In 2014, we recovered
$9.5 million
from insurance companies related to this matter.
|
Cash-in-transit operations sold or shut down:
|
•
|
Poland (sold in March 2013)
|
|
•
|
Turkey (shut down in June 2013)
|
|
•
|
Hungary (sold in September 2013)
|
|
•
|
Germany (sold in December 2013)
|
|
•
|
Australia (sold in October 2014)
|
|
•
|
Puerto Rico (shut down in November 2014)
|
|
•
|
Netherlands (sold in December 2014)
|
Guarding operations sold:
|
•
|
France (January 2013)
|
|
•
|
Germany (July 2013)
|
Other operations sold:
|
•
|
We sold Threshold Financial Technologies, Inc. in Canada in November 2013. Threshold operated private-label ATM network and payment processing businesses. Brink’s continues to own and operate Brink’s Integrated Managed Services for ATM customers.
|
|
•
|
We sold ICD Limited and other affiliated subsidiaries in November 2013. ICD had operations in China and other locations in Asia. ICD designed and installed security systems for commercial customers.
|
|
•
|
In February 2015, we sold a small Mexican parcel delivery business which met the criteria for classification as a discontinued operation as of December 31, 2014.
|
The results of the above operations have been excluded from continuing operations and are reported as discontinued operations for the current and prior periods. The table below shows revenues by operating segment which have been reclassified to discontinued operations:
|
December 31,
|
|||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Mexico
|
$
|
4.6
|
|
21.2
|
|
26.5
|
|
||
|
Canada
|
—
|
|
—
|
|
41.2
|
|
|||
|
Largest 5 Markets
|
4.6
|
|
21.2
|
|
67.7
|
|
|||
|
Latin America
|
—
|
|
4.9
|
|
6.6
|
|
|||
|
EMEA
|
—
|
|
126.0
|
|
197.1
|
|
|||
|
Asia
|
—
|
|
7.6
|
|
34.6
|
|
|||
|
Global Markets
|
—
|
|
138.5
|
|
238.3
|
|
|||
|
Total
|
$
|
4.6
|
|
159.7
|
|
306.0
|
|
||
108
The table below shows revenues and income (loss) from operations before tax for the Netherlands cash-in-transit operations sold in 2014 and for the German cash-in-transit operations sold in 2013:
|
Years Ended December 31,
|
|||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Netherlands CIT operations:
|
|
|
|
||||||
|
Revenues
|
$
|
—
|
|
126.0
|
|
119.5
|
|
||
|
Income (loss) from operations before tax
|
—
|
|
(2.0
|
)
|
13.0
|
|
|||
|
German CIT operations:
|
|
|
|
|
|
|
|||
|
Revenues
|
$
|
—
|
|
—
|
|
56.4
|
|
||
|
Loss from operations before tax
|
—
|
|
—
|
|
(24.3
|
)
|
|||
Other divestitures not classified as discontinued operations:
|
•
|
We sold an Irish guarding operation in November 2015.
|
|
•
|
We sold our
70%
ownership interest in a Russian cash management business in November 2015 and recognized a
$5.9 million
loss on the disposition. A significant part of the loss (
$5.0 million
) represented the reclassification of foreign currency translation adjustments from accumulated other comprehensive income (loss) into earnings.
|
Revenues and income (loss) from operations before tax were not significant for the Irish guarding business or the Russian cash management business.
109
|
Years Ended December 31,
|
|||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Cash paid for:
|
|
|
|
||||||
|
Interest
|
$
|
18.6
|
|
22.9
|
|
23.7
|
|
||
|
Income taxes, net
|
45.4
|
|
68.6
|
|
92.7
|
|
|||
Argentina Debt Security Transactions
We have elected in the past and could continue in the future to repatriate cash from Brink's Argentina using different means to convert Argentine pesos into U.S. dollars. In 2015, cash outflows from the purchase of debt securities totaled
$25.8 million
and cash inflows from the sale of these securities totaled
$18.7 million
. In 2014, cash outflows from the purchase of debt securities totaled
$11.0 million
and cash inflows from the sale of these securities totaled
$7.4 million
. The net cash flows from these transactions are treated as operating cash flows as the debt securities are purchased specifically for resale and are generally sold within a short period of time from the date of purchase.
Mexico Real Estate Transaction
Brink's Mexico entered into a transaction in 2015 to sell its headquarters building in Mexico City and lease the property back for
two
years. The transaction did not qualify for sale-leaseback accounting due to continuing involvement with the property. Transaction proceeds of
$14.5 million
in 2015 are reported as cash inflows from financing activities.
Non-cash Investing and Financing Activities
We acquired armored vehicles, CompuSafe
®
units and other equipment under capital lease arrangements in the last three years including
$18.9 million
in
2015
,
$12.1 million
in
2014
and
$5.5 million
in
2013
.
|
Years Ended December 31,
|
|||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Foreign currency items:
|
|
|
|
||||||
|
Transaction losses
(a)
|
$
|
(26.8
|
)
|
(127.2
|
)
|
(18.1
|
)
|
||
|
Hedge gains (losses)
|
2.9
|
|
1.4
|
|
(0.4
|
)
|
|||
|
Gains on sale of property and equity investment
(b)
|
0.9
|
|
44.9
|
|
2.4
|
|
|||
|
Argentina conversion losses
|
(7.1
|
)
|
(3.6
|
)
|
(2.1
|
)
|
|||
|
Impairment losses
(c)
|
(37.2
|
)
|
(3.3
|
)
|
(2.9
|
)
|
|||
|
Share in earnings of equity affiliates
|
0.5
|
|
4.3
|
|
6.7
|
|
|||
|
Royalty income
|
2.1
|
|
1.5
|
|
1.9
|
|
|||
|
Gains (losses) on business acquisitions and dispositions
|
(6.3
|
)
|
—
|
|
2.8
|
|
|||
|
Other
|
1.6
|
|
1.0
|
|
0.3
|
|
|||
|
Other operating income (expense)
|
$
|
(69.4
|
)
|
(81.0
|
)
|
(9.4
|
)
|
||
|
(a)
|
Includes losses from devaluations in Venezuela of
$18.1 million
in
2015
,
$121.6 million
in
2014
and
$13.4 million
in
2013
.
|
|
(b)
|
Includes a
$44.3 million
gain on the sale of a noncontrolling interest in a Peruvian cash-in-transit business in 2014.
|
|
(c)
|
Includes
$35.3 million
of impairment losses in 2015 related to property and equipment in Venezuela.
|
|
Years Ended December 31,
|
|||||||||
|
(In millions)
|
2015
|
2014
|
2013
|
||||||
|
Interest income
|
$
|
3.3
|
|
3.0
|
|
2.7
|
|
||
|
Gain on available-for-sale securities
|
1.1
|
|
0.4
|
|
0.4
|
|
|||
|
Foreign currency hedge losses
|
(0.5
|
)
|
(1.0
|
)
|
(1.0
|
)
|
|||
|
Other
|
(0.5
|
)
|
(0.5
|
)
|
(0.6
|
)
|
|||
|
Total
|
$
|
3.4
|
|
1.9
|
|
1.5
|
|
||
110
On
June 19, 2008
, a lawsuit captioned Del Valle Gurria S.C. v. Servicio Pan Americano de Protección, S.A. de C.V. was filed with the Twenty-third Civil Judge in the Federal District in Mexico (the “Court”) against Servicio Pan American de Proteccion, S.A. de C.V. (SERPAPROSA), the Mexico subsidiary that we acquired in November 2010. The plaintiff claims it is owed legal fees and corresponding value-added tax (VAT), interest and expenses related to its legal representation of SERPAPROSA in connection with tax audits covering the 1991, 1992 and 1994 fiscal years. On October 28, 2010, the Court issued a decision in favor of SERPAPROSA in part and the plaintiff in part, ordering SERPAPROSA to pay the plaintiff less than
$1 million
for its previous representation of SERPAPROSA. Between November 2010 and October 2013, the judgment was subject to multiple appeals by both parties to the Fifth Civil Court of Appeal of the Federal District in Mexico (the “Fifth Civil Court of Appeal”) and to the First Civil Collegiate Tribunal of the First Circuit in Mexico (the “First Civil Collegiate Tribunal”), and was remanded twice to the Court for determination of the fees to be paid to the plaintiff. On December 6, 2013, the Fifth Civil Court of Appeal issued a decision in favor of the plaintiff, modifying the lower court’s ruling and ordering SERPAPROSA to pay the plaintiff approximately
$7 million
plus VAT and interest for its previous representation of SERPAPROSA. SERPAPROSA filed a constitutional injunction on January 20, 2014 with the First Civil Collegiate Tribunal. The appeal was granted in favor of SERPAPROSA on September 17, 2014, ordering SERPAPROSA to pay approximately
$2 million
plus VAT and interest. The plaintiff filed an appeal on October 7, 2014, with the Mexico Supreme Court, which was rejected by the court on October 22, 2014. The plaintiff filed two subsequent actions appealing the Supreme Court’s October 22, 2014 decision, one before the First Appellate Court in Civil Matters of the First Circuit (the “Appellate Court”) and one with the Mexico Supreme Court. The action filed before the Appellate Court was rejected on February 16, 2015; the action filed with the Mexico Supreme Court is pending. The Company has accrued
$2 million
, reflecting the Company’s best estimate of exposure, although additional reasonably possible losses could be up to
$10 million
, based on currency exchange rates at
December 31, 2015
. The ultimate resolution of this matter is unknown and the estimated liability may change in the future. The Company denies the allegations asserted by the plaintiff and is vigorously defending itself in this matter.
During the fourth quarter of 2015, we became aware of an investigation initiated by COFECE (the Mexican antitrust agency) related to potential anti-competitive practices among competitors in the cash logistics industry in Mexico (the industry in which Brink’s Mexican subsidiary, SERPAPROSA, is active). Because no legal proceedings have been initiated against SERPAPROSA, we cannot estimate the probability of loss or any range of estimate of possible loss at this time. It is possible that SERPAPROSA could become the subject of legal or administrative claims or proceedings, however, that could result in a loss that could be material to the Company’s results in a future period.
In addition, we are involved in various other lawsuits and claims in the ordinary course of business. We are not able to estimate the loss or range of losses for some of these matters. We have recorded accruals for losses that are considered probable and reasonably estimable. Except as otherwise noted, we do not believe that the ultimate disposition of any of the lawsuits currently pending against the Company should have a material adverse effect on our liquidity, financial position or results of operations.
At
December 31, 2015
, we had noncancellable commitments for
$10.3 million
in equipment purchases, and information technology and other services.
111
2015 Reorganization and Restructuring
Brink's initiated a global restructuring of its business in the third quarter of 2015. We recognized
$11.6 million
in 2015 costs related to employee severance, contract terminations and property impairment associated with the restructuring. The 2015 Reorganization and Restructuring is expected to reduce the global workforce by approximately
1,000
to
1,200
positions and is projected to result in
$25
to
$35 million
in cost savings in 2016.
The following table summarizes the costs incurred and payments and utilization of our 2015 Reorganization and Restructuring accruals:
|
(In millions)
|
Severance Costs
|
Contract Terminations
|
Impairments
|
Total
|
||||||||
|
|
|
|||||||||||
|
Balance as of January 1, 2015
|
$
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
|
Expense
|
9.8
|
|
1.6
|
|
0.2
|
|
11.6
|
|
||||
|
Payments and utilization
|
(3.5
|
)
|
(1.6
|
)
|
(0.2
|
)
|
(5.3
|
)
|
||||
|
Foreign currency exchange effects
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
|
Balance as of December 31, 2015
|
$
|
6.3
|
|
—
|
|
—
|
|
6.3
|
|
|||
2014 Reorganization and Restructuring
In the fourth quarter of 2014, we announced a reorganization and restructuring of Brink’s global organization (“2014 Reorganization and Restructuring”) to accelerate the execution of our strategy by reducing costs and providing for a more streamlined and centralized organization. As part of this program, we reduced our total workforce by approximately
1,700
positions. The restructuring saved annual direct costs of approximately
$50 million
in 2015 compared to 2014, excluding charges for severance, lease termination and accelerated depreciation. We recorded total pretax charges of
$21.8 million
in 2014 and an additional
$1.9 million
of pretax charges in 2015 related to the 2014 Reorganization and Restructuring. The actions under this program were substantially completed by the end of 2015 with cumulative pretax charges estimated to be approximately
$24 million
, primarily severance costs.
The following table summarizes the costs incurred and payments made in our 2014 Reorganization and Restructuring accruals:
|
(In millions)
|
Severance Costs
|
Lease Terminations
|
Total
|
||||||
|
|
|
||||||||
|
Balance as of January 1, 2014
|
$
|
—
|
|
—
|
|
—
|
|
||
|
Expenses
|
21.8
|
|
—
|
|
21.8
|
|
|||
|
Payments
|
(0.3
|
)
|
—
|
|
(0.3
|
)
|
|||
|
Foreign currency exchange effects
|
(0.1
|
)
|
—
|
|
(0.1
|
)
|
|||
|
Balance as of December 31, 2014
|
$
|
21.4
|
|
—
|
|
21.4
|
|
||
|
Expense (benefit)
|
(0.4
|
)
|
2.3
|
|
1.9
|
|
|||
|
Payments and utilization
|
(19.0
|
)
|
(1.9
|
)
|
(20.9
|
)
|
|||
|
Foreign currency exchange effects
|
(1.1
|
)
|
—
|
|
(1.1
|
)
|
|||
|
Balance as of December 31, 2015
|
$
|
0.9
|
|
0.4
|
|
1.3
|
|
||
Executive Leadership and Board of Directors Restructuring
In the fourth quarter of 2015, we recognized
$1.8 million
in costs related to the restructuring of executive leadership and Board of Directors, which was announced in January 2016. The majority of these charges will be paid in cash in 2016. The restructuring actions include the departure of our CEO in 2016 and the retirement of
two
Board members in January 2016.
We expect to recognize an additional
$5
to
$10 million
in costs in 2016 related to the 2015 Reorganization and Restructuring and the Executive Leadership and Board of Directors Restructuring.
112
|
2015 Quarters
|
2014 Quarters
|
||||||||||||||||||||||||
|
(In millions, except for per share amounts)
|
1
st
|
|
2
nd
|
|
3
rd
|
|
4
th
|
|
1
st
|
|
2
nd
|
|
3
rd
|
|
4
th
|
|
|||||||||
|
Revenues
|
$
|
776.1
|
|
760.3
|
|
759.2
|
|
765.8
|
|
$
|
949.6
|
|
859.0
|
|
872.5
|
|
881.2
|
|
|||||||
|
Operating profit
|
12.9
|
|
(14.6
|
)
|
25.3
|
|
33.0
|
|
(73.7
|
)
|
8.7
|
|
61.2
|
|
(23.7
|
)
|
|||||||||
|
Amounts attributable to Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Income (loss) from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Continuing operations
|
$
|
(0.6
|
)
|
(13.0
|
)
|
7.7
|
|
(3.2
|
)
|
$
|
(59.0
|
)
|
0.9
|
|
28.8
|
|
(25.5
|
)
|
|||||||
|
Discontinued operations
|
(2.4
|
)
|
0.1
|
|
(0.1
|
)
|
(0.4
|
)
|
0.5
|
|
0.7
|
|
(8.6
|
)
|
(21.7
|
)
|
|||||||||
|
Net income (loss) attributable to Brink’s
|
$
|
(3.0
|
)
|
(12.9
|
)
|
7.6
|
|
(3.6
|
)
|
$
|
(58.5
|
)
|
1.6
|
|
20.2
|
|
(47.2
|
)
|
|||||||
|
Depreciation and amortization
|
$
|
36.7
|
|
36.5
|
|
33.1
|
|
33.6
|
|
$
|
41.9
|
|
40.9
|
|
39.7
|
|
39.4
|
|
|||||||
|
Capital expenditures
|
14.3
|
|
20.9
|
|
26.0
|
|
39.9
|
|
23.8
|
|
32.3
|
|
26.3
|
|
53.7
|
|
|||||||||
|
Earnings (loss) per share attributable to Brink’s common shareholders:
|
|||||||||||||||||||||||||
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Continuing operations
|
$
|
(0.01
|
)
|
(0.26
|
)
|
0.16
|
|
(0.07
|
)
|
$
|
(1.21
|
)
|
0.02
|
|
0.59
|
|
(0.52
|
)
|
|||||||
|
Discontinued operations
|
(0.05
|
)
|
—
|
|
—
|
|
(0.01
|
)
|
0.01
|
|
0.01
|
|
(0.17
|
)
|
(0.44
|
)
|
|||||||||
|
Net income (loss)
|
$
|
(0.06
|
)
|
(0.26
|
)
|
0.16
|
|
(0.07
|
)
|
$
|
(1.20
|
)
|
0.03
|
|
0.41
|
|
(0.96
|
)
|
|||||||
|
Diluted
|
|||||||||||||||||||||||||
|
Continuing operations
|
$
|
(0.01
|
)
|
(0.26
|
)
|
0.16
|
|
(0.07
|
)
|
$
|
(1.21
|
)
|
0.02
|
|
0.58
|
|
(0.52
|
)
|
|||||||
|
Discontinued operations
|
(0.05
|
)
|
—
|
|
—
|
|
(0.01
|
)
|
0.01
|
|
0.01
|
|
(0.17
|
)
|
(0.44
|
)
|
|||||||||
|
Net income (loss)
|
$
|
(0.06
|
)
|
(0.26
|
)
|
0.15
|
|
(0.07
|
)
|
$
|
(1.20
|
)
|
0.03
|
|
0.41
|
|
(0.96
|
)
|
|||||||
Earnings per share
. Earnings per share amounts for each quarter are required to be computed independently. As a result, their sum may not equal the annual earnings per share.
Discontinued operations.
In early 2015, we sold a small Mexican parcel delivery business. In 2014, we completed the divestitures of cash-in-transit operations in the Netherlands, Australia and Puerto Rico.
The results of these operations have been excluded from continuing operations and are reported as discontinued operations for all periods.
Significant pretax items in a quarter.
In the first quarter of 2015, we recognized an
$18.0 million
remeasurement loss related to our change in February 2015 from the SICAD II exchange mechanism to the SIMADI. In the second quarter of 2015, we recognized a
$34.5 million
impairment of the Venezuela property and equipment (and another
$0.8 million
in the third quarter). In the third quarter of 2015, we initiated a restructuring of our business and recognized a
$2.0 million
charge related to contract terminations, employee severance and property impairment (and another
$9.6 million
in the fourth quarter). In the fourth quarter of 2015, we recognized a
$5.9 million
loss on the sale of our interest in a cash management business in Russia.
In the first quarter of 2014, we recognized a
$121.9 million
remeasurement loss related to our change in March 2014 from the official exchange rate in Venezuela to the SICAD II exchange rate mechanism in Venezuela. In the third quarter of 2014, we recognized a
$44.3 million
gain on the sale of a noncontrolling interest in a Peruvian cash-in-transit business. In the fourth quarter of 2014, we recognized a
$56.1 million
pension settlement charge related to a lump-sum buy-out offer and a
$21.8 million
severance charge related to the reorganization and restructuring of our global organization.
Significant after-tax items in a quarter.
In the fourth quarter of 2015, we recognized a
$23.5 million
increase to current tax expense related to a transaction that accelerated U.S. taxable income.
113
In light of the challenging secure logistics market in the Republic of Ireland, we have decided to wind down the majority of our operations in this country, which had revenues of approximately
$15 million
in 2015. We expect to recognize losses from operations and the disposition in the range of
$20 million
to
$25 million
in
2016
. We will continue to provide international shipments to and from the Republic of Ireland through our Global Services business.
114
Not applicable.
(a) Disclosure Controls and Procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, we carried out an evaluation, with the participation of our management, including our Chief Executive Officer and Executive Vice President and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined under Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Executive Vice President and Chief Financial Officer concluded that our disclosure controls and procedures are effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Executive Vice President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
(b) Internal Controls over Financial Reporting
See pages 62 and 63 for Management’s Annual Report on Internal Control over Financial Reporting and the Attestation Report of the Registered Public Accounting Firm.
(c) Changes in Internal Controls over Financial Reporting
There has been no change in our internal control over financial reporting during the quarter ended December 31, 2015, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Not applicable.
115
|
|
We have adopted a Code of Ethics that applies to all of the directors, officers and employees (including the Chief Executive Officer, Chief Financial Officer and Controller) and have posted the Code of Ethics on our website. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K relating to amendments to or waivers from any provision of the Code of Ethics applicable to the Chief Executive Officer, Chief Financial Officer or Controller by posting this information on the website. The internet address is
www.brinks.com
.
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, 2015. 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, 2015
.
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, 2015
.
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, 2015
.
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, 2015
.
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, 2015
.
116
|
|
|
(a)
|
1.
|
All financial statements – see pages 61–114.
|
|
|
2.
|
Financial statement schedules – not applicable.
|
|
|
3.
|
Exhibits – see exhibit index.
|
117
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 29, 2016
.
|
|
|
The Brink’s Company
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
By
|
/s/ Thomas. C. Schievelbein
|
|
|
|
Thomas C. Schievelbein,
|
|
|
|
(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 29, 2016
.
|
Signature
|
Title
|
|
|
|
|
/s/ Thomas. C. Schievelbein
|
Director, President
and Chief Executive Officer
(Principal Executive Officer)
|
|
Thomas C. Schievelbein
|
|
|
/s/ J.W. Dziedzic
|
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
|
|
Joseph W. Dziedzic
|
|
|
/s/ Thomas R. Colan
|
Controller
(Principal Accounting Officer)
|
|
Thomas R. Colan
|
|
|
|
|
|
*
|
Director
|
|
Betty C. Alewine
|
|
|
|
|
|
*
|
Director
|
|
Paul G. Boynton
|
|
|
|
|
|
*
|
Director
|
|
Ian D. Clough
|
|
|
*
|
Director
|
|
Susan E. Docherty
|
|
|
|
|
|
*
|
Director
|
|
Peter A. Feld
|
|
|
*
|
Director
|
|
Reginald D. Hedgebeth
|
|
|
|
|
|
*
|
Director
|
|
Michael J. Herling
|
|
|
|
|
|
*
|
Director
|
|
George I. Stoeckert
|
|
|
* By:
|
|
/s/ Thomas. C. Schievelbein,
|
|
|
|
Thomas C. Schievelbein, Attorney-in-Fact
|
118
Exhibit Index
Each exhibit listed as a previously filed document is hereby incorporated by reference to such document.
|
Exhibit
Number
|
Description
|
|
|
|
|
|
|
3(i)
|
Second Amended and Restated Articles of Incorporation of the Registrant. Exhibit 3(i) to the Registrant's Quarterly Report on Form 10-Q filed July 31, 2015.
|
|
|
|
|
|
|
3(ii)
|
Bylaws of the Registrant. Exhibit 3(i) to the Registrant’s Current Report on Form 8-K filed January 5, 2016.
|
|
|
|
|
|
|
10(a)*
|
Amended and Restated Key Employees Incentive Plan, amended and restated as of May 6, 2011. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed May 10, 2011.
|
|
|
|
|
|
|
10(b)*
|
Key Employees’ Deferred Compensation Program, as amended and restated as of July 10, 2014. Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.
|
|
|
|
|
|
|
10(c)*
|
Pension Equalization Plan, as amended and restated as of July 23, 2012. Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 (the “Second Quarter 2012 Form 10-Q”).
|
|
|
|
|
|
|
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)*
|
2005 Equity Incentive Plan, as amended and restated as of February 19, 2010. Exhibit 10(f) to the Registrant’s Form 10-K for the year ended December 31, 2009 (the “2009 Form 10-K”).
|
|
|
|
|
|
|
10(f)*
|
2013 Equity Incentive Plan, effective as of February 22, 2013. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed May 9, 2013.
|
|
|
|
|
|
|
10(g)*
|
(i)
|
Form of Option Agreement for options granted before July 8, 2010 under 2005 Equity Incentive Plan. Exhibit 99 to the Registrant’s Current Report on Form 8-K filed July 13, 2005.
|
|
|
|
|
|
|
(ii)
|
Form of Option Agreement for options granted under 2005 Equity Incentive Plan, effective July 8, 2010. Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed July 12, 2010.
|
|
|
|
|
|
|
(iii)
|
Terms and Conditions for options granted under 2005 Equity Incentive Plan, effective July 7, 2011. Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (the “Second Quarter 2011 Form 10-Q”).
|
|
|
|
|
|
|
(iv)
|
Terms and Conditions for options granted under 2005 Equity Incentive Plan, effective July 11, 2012. Exhibit 10.3 to the Registrant’s Second Quarter 2012 Form 10-Q.
|
|
|
|
|
|
10(h)*
|
(i)
|
Terms and Conditions for restricted stock units granted under 2005 Equity Incentive Plan, effective July 7, 2011. Exhibit 10.2 to the Second Quarter 2011 Form 10-Q.
|
|
|
|
|
|
|
(ii)
|
Terms and Conditions for restricted stock units granted under 2005 Equity Incentive Plan, effective July 11, 2012. Exhibit 10.4 to the Second Quarter 2012 Form 10-Q.
|
|
|
|
|
|
|
(iii)
|
Form of Restricted Stock Units Award Agreement, effective May 3, 2013. Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed May 9, 2013.
|
|
|
|
|
|
|
(iv)
|
Form of Restricted Stock Units Award Agreement, effective November 13, 2014. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed February 25, 2015.
|
|
|
|
|
|
10(i)*
|
(i)
|
Form of Market Share Units Award Agreement, effective May 3, 2013. Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed May 9, 2013.
|
|
|
|
|
119
|
|
(ii)
|
Form of Market Share Units Award Agreement, effective November 13, 2014. Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed February 25, 2015.
|
|
|
|
|
|
10(j)*
|
(i)
|
Form of Performance Share Units Award Agreement, effective May 3, 2013. Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed May 9, 2013.
|
|
|
|
|
|
|
(ii)
|
Form of Performance Share Units Award Agreement, effective November 13, 2014. Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed February 25, 2015.
|
|
|
|
|
|
10(k)*
|
Management Performance Improvement Plan, as amended and restated as of February 19, 2010. Exhibit 10(h) to the 2009 Form 10-K.
|
|
|
|
|
|
|
10(l)*
|
Form of Change in Control Agreement. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed November 16, 2015.
|
|
|
|
|
|
|
10(m)*
|
Stock Option Award Agreement, dated as of June 15, 2012, between the Registrant and Thomas C. Schievelbein. Exhibit 10.6 to the Registrant’s Second Quarter 2012 Form 10-Q.
|
|
|
|
|
|
|
10(n)*
|
Restricted Stock Unit Award Agreement, dated as of June 15, 2012, between the Registrant and Thomas C. Schievelbein. Exhibit 10.7 to the Registrant’s Second Quarter 2012 Form 10-Q.
|
|
|
|
|
|
|
10(o)*
|
Form of Indemnification Agreement entered into by the Registrant with its directors and officers. Exhibit 10(l) to the 1991 Form 10-K.
|
|
|
|
|
|
|
10(p)*
|
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(q)*
|
Non-Employee Directors’ Equity Plan, as amended and restated as of July 12, 2012. Exhibit 10.9 to the Registrant’s Second Quarter 2012 Form 10-Q.
|
|
|
|
|
|
|
10(r)*
|
(i)
|
Form of Award Agreement for deferred stock units granted in 2008 under the Non-Employee Directors’ Equity Plan. Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.
|
|
|
|
|
|
|
(ii)
|
Form of Award Agreement for deferred stock units granted in 2009, 2010, 2011, 2012, 2013 and 2014 under the Non-Employee Directors’ Equity Plan. Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009.
|
|
|
|
|
|
|
(iii)
|
Form of Award Agreement for deferred stock units granted in 2014 and 2015 to be distributed upon vesting under the Non-Employee Directors’ Equity Plan. Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (the “Second Quarter 2014 Form 10-Q”).
|
|
|
|
|
|
10(s)*
|
Plan for Deferral of Directors’ Fees, as amended and restated as of May 2, 2014. Exhibit 10.1 to the Second Quarter 2014 Form 10-Q.
|
|
|
|
|
|
|
10(t)
|
Amendment and Restatement of The Brink’s Company Employee Welfare Benefit Trust. Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.
|
|
|
|
|
|
|
10(u)
|
$85,000,000 Amended and Restated Letter of Credit Agreement, dated as of June 17, 2011, among the Registrant, Pittston Services Group Inc., Brink’s Holding Company, Brink’s, Incorporated, and The Royal Bank of Scotland N.V. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed June 20, 2011.
|
|
|
|
|
|
|
10(v)
|
$525,000,000 Credit Agreement, dated as of March 10, 2015, among The Brink’s Company, as Parent Borrower and as a Guarantor, the subsidiary borrowers referred to therein, as Subsidiary Borrowers, certain of Parent Borrower’s subsidiaries, as Guarantors, Wells Fargo Bank, National Association, as Administrative Agent, an Issuing Lender and Swingline Lender, and various other Lenders named therein. Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed March 13, 2015.
|
|
|
10(w)
|
$75,000,000 Credit Agreement, dated as of March 12, 2015, among The Brink’s Company, as Parent Borrower, certain of Parent Borrower’s subsidiaries, as Guarantors, and PNC Bank, National Association, as Lender. Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed March 13, 2015.
|
|
120
|
|
|
|
|
10(x)
|
Note Purchase Agreement, dated as of January 24, 2011, among the Registrant, Pittston Services Group Inc., Brink’s Holding Company, Brink’s, Incorporated, and the purchasers party thereto. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed January 26, 2011.
|
|
|
|
|
|
|
10(y)
|
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(z)
|
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(aa)
|
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(bb)
|
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(cc)
|
Severance Pay Plan of The Brink's Company effective November 13, 2015. Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed November 16, 2015.
|
|
|
10(dd)
|
Nomination and Standstill Agreement by and among the Registrant and Starboard, dated January 3, 2016. Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed January 5, 2016.
|
|
|
10(ee)
|
Succession Agreement by and between the Registrant and Thomas C. Schievelbein dated January 3, 2016. Exhibit 10.2 to the Registrant's Current Report on form 8-K filed January 5, 2016.
|
|
|
|
|
|
|
21
|
Subsidiaries of the Registrant.
|
|
|
|
|
|
|
23
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
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24
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Powers of Attorney.
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31
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Rule 13a-14(a)/15d-14(a) Certifications.
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32
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Section 1350 Certifications.
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99(a)*
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Excerpt from Pension-Retirement Plan relating to preservation of assets of the Pension-Retirement Plan upon a change in control. Exhibit 99(a) to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008.
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101
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Interactive Data File (Annual Report on Form 10-K, for the year ended December 31, 2015, furnished in XBRL (eXtensible Business Reporting Language)).
Attached as Exhibit 101 to this report are the following documents formatted in XBRL: (i) the Consolidated Balance Sheets at December 31, 2015, and December 31, 2014, (ii) the Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013, (iii) the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2015, 2014 and 2013, (iv) the Consolidated Statements of Equity for the years ended December 31, 2015, 2014 and 2013, (v) the Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013, and (vi) the Notes to Consolidated Financial Statements, tagged as blocks of text. Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections. |
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*Management contract or compensatory plan or arrangement.
121
TABLE OF CONTENTS
Part IItem 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Mine Safety DisclosuresPart IIItem 5. Market For Registrant S Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity SecuritiesItem 6. Selected Financial DataItem 7. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 7A. Quantitative and Qualitative Disclosures About Market RiskItem 8. Financial Statements and Supplementary DataNote 1 - Summary Of Significant Accounting PoliciesNote 2 - Segment InformationNote 3 - Retirement BenefitsNote 4 - Income TaxesNote 5 - Property and EquipmentNote 6 - Goodwill and Other Intangible AssetsNote 7 - Prepaid Expenses and OtherNote 8 - Other AssetsNote 9 - Accumulated Other Comprehensive Income (loss)Note 10 - Fair Value Of Financial InstrumentsNote 11 - Accrued LiabilitiesNote 12 - Other LiabilitiesNote 13 - Long-term DebtNote 14 - Accounts ReceivableNote 15 - Operating LeasesNote 16 - Share-based Compensation PlansNote 17 - Capital StockNote 18 - Loss From Discontinued OperationsNote 19 - Supplemental Cash Flow InformationNote 20 - Other Operating Income (expense)Note 21 - Interest and Other Nonoperating Income (expense)Note 22 - Other Commitments and ContingenciesNote 23 - Reorganization and RestructuringNote 24 - Selected Quarterly Financial Data (unaudited)Note 25 - Subsequent EventItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationPart IIIItem 10. Directors, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related Transactions, and Director IndependenceItem 14. Principal Accountant Fees and ServicesPart IVItem 15. Exhibits and Financial Statement Schedules