form_10-k.htm


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(Mark One)
  x  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
   EXCHANGE ACT OF 1934
   For the fiscal year ended December 31, 2010

OR

    o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934
  For the transition period from ____________ to ____________

Commission file number 001-09148

THE BRINK’S COMPANY
(Exact name of registrant as specified in its charter)

 
Virginia
 
54-1317776
 
 
(State or other jurisdiction of
 
(I.R.S. Employer
 
 
incorporation or organization)
 
Identification No.)
 
         
 
P.O. Box 18100,
     
 
1801 Bayberry Court
     
 
Richmond, Virginia
 
23226-8100
 
 
(Address of principal executive offices)
 
(Zip Code)
 
         
 
Registrant’s telephone number, including area code
 
(804) 289-9600
 
         
 
Securities registered pursuant to Section 12(b) of the Act:
     
     
Name of each exchange on
 
 
Title of each class
 
which registered
 
 
The Brink’s Company Common Stock, Par Value $1
 
New York Stock Exchange
 
         
 
Securities registered pursuant to Section 12(g) of the Act:  None
     

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yesx                     No o
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yeso                     No x
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yesx                     No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).        Yes x       No o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 Large accelerated filerx                                    Accelerated filero                             Non-accelerated filero                                   Smaller reporting company o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yeso                     No x
 
As of February 21, 2011, there were issued and outstanding 46,540,415 shares of common stock.  The aggregate market value of shares of common stock held by non-affiliates as of June 30, 2010, was $906,581,912.
 
Documents incorporated by reference:  Part III incorporates information by reference from portions of the Registrant’s definitive 2011 Proxy Statement to be filed pursuant to Regulation 14A.
 



 
 

 

 
THE BRINK’S COMPANY

FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2010

TABLE OF CONTENTS

PART I


   
Page
Item 1.
Business
2
Item 1A.
Risk Factors
10
Item 1B.
Unresolved Staff Comments
15
Item 2.
Properties
15
Item 3.
Legal Proceedings
15
Item 4.
[Removed and Reserved]
15
     
 
Executive Officers of the Registrant
16
     
 
PART II
 
     
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
 
 
    Purchases of Equity Securities
17
Item 6.
Selected Financial Data
19
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
20
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
67
Item 8.
Financial Statements and Supplementary Data
69
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
119
Item 9A.
Controls and Procedures
119
Item 9B.
Other Information
119
     
 
PART III
 
     
Item 10.
Directors, Executive Officers and Corporate Governance
120
Item 11.
Executive Compensation
120
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
120
Item 13.
Certain Relationships and Related Transactions, and Director Independence
120
Item 14.
Principal Accountant Fees and Services
120
     
 
PART IV
 
     
Item 15.
Exhibits and Financial Statement Schedules
121

 


 
1

 



PART I


ITEM 1.  BUSINESS

Based in Richmond, Virginia, The Brink’s Company is a premier provider of secure logistics and security solutions, including the transportation of valuables, cash logistics and other security-related services to banks and financial institutions, retailers, government agencies, mints, jewelers and other commercial operations around the world.  Other services provided are armored transportation, automated teller machine (“ATM”) replenishment and servicing; secure global transportation of valuables (“Global Services”); guarding services (including airport security or “Aviation Security"); currency deposit processing and cash management services.  Cash management services include cash logistics services (“Cash Logistics”), deploying and servicing safes and safe control devices (e.g. our patented CompuSafe® service), coin sorting and wrapping, integrated check and cash processing services (“Virtual Vault Services”), and providing bill payment acceptance and processing services to utility companies and other billers (“Payment Services”).   The Brink’s Company, along with its subsidiaries, is referred to as “we,” “our,” “Brink’s,” or “the Company” throughout this Form 10-K.

Brink’s brand and reputation spans across the globe. Our international network serves customers in more than 100 countries and employs approximately 71,000 people.  Our operations include approximately 1,100 facilities and 12,800 vehicles.  Our globally recognized brand, global infrastructure, expertise, longevity and heritage are important competitive advantages.  Over the past several years, we have changed from a conglomerate (with operations in the U.S. monitored home security, heavy-weight freight transportation, coal and other natural resource industries) into a company focused solely on the security industry.

Our operating segments consist of four geographies:  Europe, Middle East, and Africa (“EMEA”); Latin America; Asia Pacific; and North America, which are aggregated into two reportable segments: International and North America.  Financial information related to our two reportable segments (International and North America) and non-segment income and expenses are included in the consolidated financial statements on pages 69–118.

A significant portion of our business is conducted internationally, with 76% of our $3 billion in revenues earned outside the United States.  In the fourth quarter of 2010, we completed an acquisition in Mexico and another in Canada.  We expect that these operations will generate approximately $450 to 500 million in revenues in 2011.  Financial results are reported in U.S. dollars and are affected by fluctuations in the relative value of foreign currencies.  Our business is also subject to other risks customarily associated with operating in foreign countries including changing labor and economic conditions, political instability, restrictions on repatriation of earnings and capital, as well as nationalization, expropriation and other forms of restrictive government actions.  The future effects of these risks cannot be predicted.  Additional information about risks associated with our foreign operations is provided on pages 11, 43 and 68.

We have significant liabilities associated with our retirement plans, a portion of which has been funded.  See pages 51–53 and 57–61 for more information on these liabilities.  Additional risk factors are described on pages 10–14.

Available Information and Corporate Governance Documents
The following items are available free of charge on our website (www.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

In addition, the following documents are also available free of charge on our website:
·  
Corporate governance policies
·  
Business Code of Ethics
·  
The charters of the following committees of our Board of Directors (the “Board”):  Audit and Ethics, Compensation and Benefits, and Corporate Governance and Nominating

Printed versions of these items will be mailed free of charge to shareholders upon request.  Such requests can be made by contacting the Corporate Secretary at 1801 Bayberry Court, P. O. Box 18100, Richmond, Virginia 23226-8100.

 
2

 


General

Our 2010 segment operating profit was $209 million on revenues of $3.1 billion, resulting in a segment operating profit margin of 6.7%.
 

 

 
Amounts may not add due to rounding.


Brink’s operations are located around the world with the majority of our revenues (71%) and segment operating profits (79%) are earned outside of North America.



                                                              
 

 
3

 

Brink’s serves customers in over 100 countries.  We have ownership interests in operations in approximately 50 countries and have agency relationships with other companies in other countries to complete our global network.  Brink’s ownership interests in subsidiaries and affiliated companies ranged from 36% to 100% at December 31, 2010.  In some instances, local laws limit the extent of Brink’s ownership interest.

International operations has three regions: Europe, Middle East and Africa (“EMEA”); Latin America and Asia Pacific.  On a combined basis, international operations generated 2010 revenues of $2.2 billion (71% of total) and segment operating profit of $165 million (79% of total).

Brink’s EMEA generated $1.2 billion in revenues in 2010 or (38% of Brink’s total 2010 revenues) and operates 261 branches in 24 countries.  Its largest operations are in France, the Netherlands and Germany.  In 2010, France accounted for $533 million or 44% of EMEA revenues (17% of total).

Brink’s Latin America generated $877 million in revenues in 2010 (28%) and operates 388 branches in nine countries.  Its largest operations are in Mexico, Brazil, Venezuela and Colombia.  Brazil accounted for $303 million or 35% of Latin American revenues (10% of total) in 2010.   Venezuela accounted for $186 million or 21% of Latin American revenues (6% of total) in 2010.   Mexico had $52 million of revenues in the last two months of 2010.

Brink’s Asia-Pacific generated $127 million in revenues in 2010 (4%) and operates 106 branches in nine countries.

North American operations include 181 branches in the U.S. and 53 branches in Canada.  North American operations generated 2010 revenues of $918 million (29% of total) and segment operating profit of $44 million (21% of total). We have included our newly acquired Mexican operations with our International – Latin America region.

The largest eight Brink’s operations (U.S., France, Brazil, Venezuela, the Netherlands, Colombia, Canada and Germany) accounted for $2.3 billion or 74% of total 2010 revenues.

(In millions)
 
2010
   
% total
   
% change
   
2009
   
% total
   
% change
   
2008
   
% total
   
% change
 
                                                       
Revenues by region:
                                                     
                                                       
EMEA:
                                                     
France
  $ 533       17       (13 )   $ 615       20       (12 )   $ 698       22       11  
Other
    667       21       4       642       20       (3 )     661       21       18  
Total
    1,200       38       (5 )     1,257       40       (7 )     1,359       43       14  
                                                                         
Latin America:
                                                                       
Brazil
    303       10       17       258       8       33       194       6       20  
Venezuela
    186       6       (51 )     376       12       7       351       11       56  
Other
    388       12       44       271       9       6       256       8       23  
Total
    877       28       (3 )     905       29       13       801       25       35  
                                                                         
Asia Pacific
    127       4       61       79       2       10       72       2       15  
Total International
    2,204       71       (2 )     2,241       71       -       2,232       70       21  
                                                                         
North America
    918       29       3       894       29       (4 )     932       30       5  
                                                                         
Total Revenues
  $ 3,122       100       -     $ 3,135       100       (1 )   $ 3,164       100       16  
 
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 86.


 
4

 


Services
Our primary services include:
·  
Cash-in-transit (“CIT”) – armored vehicle transportation
·  
Automated teller machine (“ATM”) – replenishment and servicing
·  
Global Services – transportation of valuables globally
·  
Cash Logistics – supply chain management of cash
·  
Payment Services – consumers pay utility and other bills at payment locations
·  
Guarding Services – including airport security

Brink’s typically provides customized services under separate contracts designed to meet the distinct needs of customers.  Contracts usually cover an initial term of at least one year and range up to five years, depending on the service.  The contracts generally remain in effect after the initial term until canceled by either party.

Core Services (54% of total revenue in 2010)
CIT and ATM Services are core services we provide to customers throughout the world. Core services generated approximately $1.7 billion of revenues in 2010.

CIT – Serving customers since 1859, our success in CIT is driven by a combination of rigorous security practices, high-quality customer service, risk management and logistics expertise.  CIT services generally include the secure transportation of:
·  
cash between businesses and financial institutions such as banks and credit unions,
·  
cash, securities and other valuables between commercial banks, central banks, and investment banking and brokerage firms, and
·  
new currency, coins, bullion and precious metals for central banks and other customers.

ATM Services – We manage nearly 94,000 ATM units worldwide for banks and other cash dispensing operators.  We provide cash replenishment, monitoring and forecasting capabilities, deposit pickup and processing services.  Advanced online tools deliver consolidated electronic reports for simplified reconciliation.  With our recent acquisition in Canada, we acquired the capability to assist financial institutions in managing the processes and infrastructure that are critical to the deployment of ATM networks and electronic payment networks.

High-value Services (35% of total revenue in 2010)
Our core services, combined with our brand and global infrastructure, provide a substantial platform from which we offer additional high-value services. High-value services generated approximately $1.1 billion of revenues in 2010.

Global Services  – Serving customers in more than 100 countries, Brink’s is a leading global provider of secure logistics for valuables including diamonds, jewelry, precious metals, securities, currency, high-tech devices, electronics and pharmaceuticals.  The comprehensive suite of services provides packing, pickup, secure storage, inventory management, customs clearance, consolidation, and secure transport and delivery through a combination of armored vehicles and secure air and sea transportation to leverage our extensive global network.  Our specialized diamond and jewelry operations have offices in the major diamond and jewelry centers of the world.

Cash Logistics – Brink’s offers a fully integrated approach to managing the supply chain of cash, from point-of-sale through transport, vaulting, bank deposit and related credit.  Cash Logistics services include:
·  
money processing and cash management services,
·  
deploying and servicing “intelligent” safes and safe control devices, including our patented CompuSafeâ service,
·  
integrated check and cash processing services (“Virtual Vault”), and
·  
check imaging services

Money processing services generally include counting, sorting and wrapping currency.  Other currency management services include cashier balancing, counterfeit detection, account consolidation and electronic reporting.  Retail and bank customers use Brink’s to count and reconcile coins and currency, prepare bank deposit information, and replenish coins and currency in specific denominations.

Brink’s offers a variety of advanced technology applications, including online cash tracking, cash inventory management, check imaging for real-time deposit processing, and a variety of other web-based information tools that enable banks and other customers to reduce costs while improving service to their customers.

 
5

 

Brink’s CompuSafeâ service offers customers an integrated, closed-loop system for preventing theft and managing cash.  We market CompuSafe services to a variety of cash-intensive customers such as convenience stores, gas stations, restaurants, retail chains and entertainment venues.  Once the specialized safe is installed, the customer’s employees deposit currency into the safe’s cassettes, which can only be removed by Brink’s personnel.  Upon removal, the cassettes are securely transported to a vault for processing where contents are verified and transferred for deposit.  Our CompuSafe system features currency-recognition and counterfeit-detection technology, multi-language touch screens and an electronic interface between the point-of-sale, back-office systems and external banks.  Our electronic reporting interface with external banks enables our CompuSafe Service customers to receive same-day credit on their cash balances, even if the cash remains on the customer’s premises.

Virtual Vault services combine CIT, Cash Logistics, vaulting and electronic reporting technologies to help banks expand into new markets while minimizing investment in vaults and branch facilities.  In addition to secure storage, we process deposits, provide check imaging and reconciliation services, currency inventory management, ATM replenishment orders, and electronically transmit debits and credits.

We believe the quality and scope of our cash processing and information systems differentiate our Cash Logistics services from competitive offerings.

Payment Services – We provide bill payment acceptance and processing services to utility companies and other billers. Consumers can pay their bills at our payment locations or locations that we operate on behalf of billers and bank customers.

Commercial Security Systems – In certain markets in Asia-Pacific and Europe, we provide commercial security system services.  The services include the design and installation of the security systems, including alarms, motion detectors, closed-circuit televisions, digital video recorders, access control systems including card and biometric readers, electronic locks, and optical turnstiles.  Monitoring services may also be provided after systems have been installed.

Other Security Services (11% of total revenue in 2010)
Security and Guarding – We protect airports, offices, warehouses, stores, and public venues with electronic surveillance, access control, fire prevention and highly trained patrolling personnel.

Our guarding services are generally offered in European markets, including France, Germany, Luxembourg and Greece.  A significant portion of this business involves long-term contracts related primarily to guarding services at airports and embassies. Generally, other guarding contracts are for a one-year period, the majority of which are extended.  Our security officers are typically stationed at customer sites, and responsibilities include detecting and deterring specific security threats.

Growth Strategy

Our growth strategy is summarized below:

·  
Maximize profits in developed markets (primarily North America and Europe)
·  
Accelerate productivity and cost control efforts.
·  
Invest in higher-margin solutions; shift revenue mix to High-value services (primarily Cash Logistics and Global Services).

·  
Invest in emerging markets by acquiring businesses that meet internal metrics for projected growth, profitability and return on investment.

·  
Invest in adjacent security-related markets where we can create value for customers with our brand, security expertise, global infrastructure and other competitive advantages. Current examples include commercial security and payment processing.


 
6

 


Industry and Competition
Brink’s competes with large multinational, regional and smaller companies throughout the world.  Our largest multinational competitors are G4S plc (headquartered in the U.K.); Loomis AB, formerly a division of Securitas AB (Sweden); Prosegur, Compania de Seguridad, S.A. (Spain); and Garda World Security Corporation (Canada).

We believe the primary factors in attracting and retaining customers are security expertise, service quality, and price.  Our competitive advantages include:
·  
brand name recognition
·  
reputation for a high level of service and security
·  
risk management and logistics expertise
·  
global infrastructure and customer base
·  
proprietary cash processing and information systems
·  
proven operational excellence
·  
high-quality insurance coverage and general financial strength

Our cost structure is generally competitive, although certain competitors may have lower costs due to a variety of factors, including lower wages, less costly employee benefits, or less stringent security and service standards.

Although we face competitive pricing pressure in many markets, we resist competing on price alone.  We believe our high levels of service and security, as well as value added solutions differentiate us from competitors.

The availability of high-quality and reliable insurance coverage is an important factor in our ability to attract and retain customers and manage the risks inherent in our business.  We purchase insurance coverage for losses in excess of what we consider to be prudent levels of self-insurance.  Our insurance policies cover losses from most causes, with the exception of war, nuclear risk and certain other exclusions typical in such policies.

Insurance for security is provided by different groups of underwriters at negotiated rates and terms.  Premiums fluctuate depending on market conditions.  The security loss experience of Brink’s and, to a limited extent, other armored carriers affects our premium rates.

Revenues are generated from charges per service performed or based on the value of goods transported.  As a result, revenues are affected by the level of economic activity in various markets as well as the volume of business for specific customers.  CIT and ATM contracts usually cover an initial term of at least one year and in many cases one to three years, and generally remain in effect thereafter until canceled by either party.  Contracts for Cash Logistics are typically longer.  Costs are incurred when preparing to serve a new customer or to transition away from an existing customer.  Operating profit is generally stronger in the second half of the year, particularly in the fourth quarter, as economic activity is typically stronger during this period.

As part of the spin-off of our former monitored home security business, Brink’s Home Security Holdings, Inc. (“BHS”), we agreed to not compete with BHS in the United States, Canada and Puerto Rico with respect to certain activities related to BHS’s security system monitoring and surveillance business until October 31, 2013.

Service Mark and Patents
BRINKS is a registered service mark in the U.S. and certain foreign countries.  The BRINKS mark, name and related marks are of material significance to our business.  We own patents expiring in 2011 and 2012 for certain coin sorting and counting machines.  We also own patents for safes, including our integrated CompuSafeâ service, which expire between 2015 and 2022.  These patents provide us with important advantages; however, we are not dependent on the existence of these patents.

We have licensed the Brink’s name to a limited number of companies, including a distributor of security products (padlocks, door hardware, etc.) offered for sale to consumers through major retail chains.




 
7

 


Government Regulation
Our U.S. operations are subject to regulation by the U.S. Department of Transportation with respect to safety of operations, equipment and financial responsibility.  Intrastate operations in the U.S. are subject to state regulation.  Our International operations are regulated to varying degrees by the countries in which we operate.

Employee Relations
At December 31, 2010, our company had approximately 71,000 full-time and contract employees, including approximately 9,000 employees in the United States (of whom approximately 1,000 were classified as part-time employees) and approximately 62,000 employees outside the United States.  At December 31, 2010, Brink’s was a party to twelve collective bargaining agreements in North America with various local unions covering approximately 1,900 employees.  The agreements have various expiration dates from 2011 to 2015.  Outside of North America, approximately 57% of branch employees are members of labor or employee organizations.  We believe our employee relations are satisfactory.

Acquisitions
We have grown in the last several years partially as a result of acquiring security-related businesses in various markets to meet our Growth Strategy objectives.  Our largest acquisitions in the last two years were in Mexico and Canada in 2010 and Brazil and India in 2009.  In addition, we made smaller but strategically important acquisitions in emerging markets including Russia and China.  Below is a summary of our recent acquisitions.  See note 6 to the consolidated financial statements for more information on these acquisitions.

Mexico.  We acquired a controlling interest in Servicio Pan Americano de Proteccion, S.A. de C.V. (“SPP”), a CIT, ATM and money processing business, for $60 million in November 2010. We previously owned a 20.86% interest in SPP and we acquired an additional 78.89% of the outstanding shares. In compliance with Mexican law, the remaining 0.25% noncontrolling interest is held by a Mexican company. SPP is the largest secure logistics company in Mexico and this acquisition expands our operations in one of the world’s largest CIT markets.  SPP has approximately $400 million in annual revenues with approximately 12,000 full-time and contract employees, 80 branches and 1,350 armored vehicles across its nationwide network of CIT, ATM and money processing operations.

Canada.  We acquired Threshold Financial Technologies Inc. (“Threshold”) from Versent Corporation for $39 million in December 2010.  Threshold is a leading provider of payments solutions in Canada, specializing in managed ATM and transaction processing services for financial institutions and retailers.  Threshold’s annual revenue is approximately $48 million, about half of which is generated by providing outsourced ATM network administration and transaction processing solutions.  The company, which employs approximately 125 people, also owns and operates a network of private-label ATMs in Canada.

Brazil.  We acquired two businesses, Sebival-Seguranca Bancaria Industrial e de Valores Ltda. and Setal Servicos Especializados, for $48 million in January 2009.  The acquisitions expanded our CIT and payment processing operations into the mid-western region of Brazil.

India.  We acquired additional shares of Brink’s Arya, a CIT and Global Services business, in September 2009, increasing our ownership from 40% to 78% for $22 million.

France.  We acquired Est Valeurs S.A., a provider of CIT and cash services in Eastern France in March 2010. Est Valeurs employs approximately 100 people and had 2009 revenue of $13 million.

Russia.  We acquired a majority stake in a Russian cash processing business in April 2010 that complements a Russian CIT business that was acquired in January 2009.  With principal operations in Moscow and approximately 500 employees, the combined operations offer a full range of CIT, ATM, money processing and Global Services operations for domestic and international markets.

China.  We acquired a majority stake in ICD Limited, a commercial security business in the Asia-Pacific region in September 2009.  ICD designs, installs, maintains and manages commercial security systems with offices in Hong Kong, India, Singapore and Australia, and has approximately 200 employees.

Panama. We acquired the remaining outstanding shares in an armored transportation operation in Panama in February 2009.  We previously owned 49% of the company.

Jordan.  We acquired a majority stake in a Jordan CIT and Global Services business in February 2011.  We previously held a 45% ownership interest.  The Jordanian operations employ approximately 90 people.


 
8

 


DISCONTINUED OPERATIONS

Brink’s Home Security Holdings, Inc.
On October 31, 2008, we completed the 100% spin-off of Brink’s Home Security Holdings, Inc. (“BHS”).  BHS offered monitored security services in North America primarily for owner-occupied, single-family residences.  To a lesser extent, BHS offered security services for commercial and multi-family properties.  BHS typically installed and owned the on-site security systems and charged fees to monitor and service the systems.

As part of the spin-off, we agreed not to compete with BHS in the United States, Canada and Puerto Rico with respect to certain activities related to BHS’s security system monitoring and surveillance business until October 31, 2013.

In connection with the spin-off, we entered into certain agreements with BHS to define responsibility for obligations arising before and after the spin-off, including obligations relating to liabilities of the businesses, employees, taxes and intellectual property.  We entered into a Brand Licensing Agreement with BHS.  Under the agreement, BHS licensed the rights to use certain trademarks, including trademarks that contain the word “Brink’s” in the United States, Canada and Puerto Rico.  In exchange for these rights, BHS agreed to pay a royalty fee equal to 1.25% of its net revenues during the period after the spin-off until the expiration date of the agreement.  This royalty income is recorded in continuing operations within other operating income and expense.

On June 28, 2010, we amended our Brand Licensing Agreement with the successor by merger to BHS. The amended agreement (i) fixed a termination date of August 15, 2010, for the Brand Licensing Agreement and established a fixed royalty amount of $2.8 million for the period beginning April 1, 2010, and ending on the termination date, and (ii) provided the successor with the right to extend the termination date to August 27, 2010, for an additional payment of $0.3 million.  During the third quarter, the successor exercised its right to extend the termination date.  The royalty income related to the amended agreement was recognized ratably from April 1, 2010, through the termination date.

Former Coal Business
We have significant liabilities related to benefit plans that pay medical costs for retirees of our former coal operations.  A portion of these liabilities have been funded.  We expect to have ongoing expenses within continuing operations and future cash outflow for these liabilities.  See notes 3 and 17 to the consolidated financial statements for more information.

 
9

 



ITEM 1A.  RISK FACTORS

We are exposed to risk in the operation of our businesses.  Some of these risks are common to all companies doing business in the industries in which we operate and some are unique to our business.  In addition, there are risks associated with investing in our common stock.  These risk factors should be considered carefully when evaluating the company and its businesses.

We may not realize the expected benefits of strategic acquisitions because of integration difficulties and other challenges, which may adversely affect our financial condition, results of operations or cash flows.
 
Our ability to realize the anticipated benefits from recent acquisitions will depend, in part, on successfully integrating each business with our company as well as improving operating performance and profitability through our management efforts and capital investments.  The risks to a successful integration and improvement of operating performance and profitability include, among others, failure to implement our business plan, unanticipated issues in integrating  operations with ours, unanticipated changes in laws and regulations, labor unrest resulting from union operations, regulatory, environmental and permitting issues, the effect on our internal controls and compliance with the regulatory requirements under the Sarbanes-Oxley Act of 2002, and difficulties in fully identifying and evaluating potential liabilities, risks and operating issues.  The occurrence of any of these events may adversely affect our expected benefits of the recent acquisitions and may have a material adverse effect on our financial condition, results of operations or cash flows.

The inability to access capital or significant increases in the cost of capital could adversely affect our business.

Our ability to obtain adequate and cost-effective financing depends on our credit ratings as well as the liquidity of financial markets. A negative change in our ratings outlook or any downgrade in our current investment-grade credit ratings by our rating agencies could adversely affect our cost and/or access to sources of liquidity and capital. Additionally, such a downgrade could increase the costs of borrowing under available credit lines. Disruptions in the capital and credit markets could adversely affect our ability to access short-term and long-term capital. Our access to funds under short-term credit facilities is dependent on the ability of the participating banks to meet their funding commitments. Those banks may not be able to meet their funding commitments if they experience shortages of capital and liquidity. Longer disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives, or failures of significant financial institutions could adversely affect our access to capital needed for our business.

We have significant retirement obligations. Poor investment performance of retirement plan holdings could unfavorably affect our liquidity and results of operations.

We have substantial pension and retiree medical obligations, a portion of which have been funded.  The amount of these obligations is significantly affected by factors that are not in our control, including interest rates used to determine the present value of future payment streams, investment returns, medical inflation rates, participation rates and changes in laws and regulations.  Our liabilities for these plans increased significantly in 2008 primarily as a result of a decline in value of plan investments.  To improve the funded status of The Brink’s Company Pension-Retirement Plan, we made a voluntary $150 million cash and stock contribution in 2009.  The funded status of the plan was approximately 80% as of December 31, 2010.  Based on actuarial assumptions at the end of 2010, we expect that we will be required to make contributions totaling $136 million to The Brink’s Company Pension-Retirement Plan over a five-year period ending in 2016.  This could adversely affect our liquidity and our ability to use our resources to make acquisitions and to otherwise grow our business.  The net periodic costs of our retirement plans in 2009 and 2010 were adversely affected by the investment losses sustained in 2008, and although plan investments have partially recovered in the last two years, we anticipate that expenses in future years will continue to be affected as the unrecognized losses are recognized into earnings.  If these investments have additional losses, our future cash requirements and costs for these plans will be further adversely affected.

 
10

 


We have significant operations outside the United States.

We currently serve customers in more than 100 countries, including approximately 50 countries where we operate subsidiaries.  Seventy-six percent (76%) of our revenue in 2010 came from operations outside the U.S.  We expect revenue outside the U.S. to continue to represent a significant portion of total revenue.  Business operations outside the U.S. are subject to political, economic and other risks inherent in operating in foreign countries, such as:

·  
the difficulty of enforcing agreements, collecting receivables and protecting assets through foreign legal systems;
·  
trade protection measures and import or export licensing requirements;
·  
difficulty in staffing and managing widespread operations;
·  
required compliance with a variety of foreign laws and regulations;
·  
varying permitting and licensing requirements in different jurisdictions;
·  
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; and
·  
inflation levels exceeding that of the U.S.
 
We are exposed to certain risks when we operate in countries that have high levels of inflation, including the risk that:

·  
the rate of price increases for services will not keep pace with 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 try to manage these risks by monitoring current and anticipated political and economic developments and adjusting operations as appropriate.  Changes in the political or economic environments of the countries in which we operate could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Restructuring charges may be required in the future.

There is a possibility we will take restructuring actions in one or more of our markets in the future to reduce expenses if a major customer is lost, if recurring operating losses continue, or if one of the risks described above in connection with our foreign operations materializes.  These actions could result in significant restructuring charges at these subsidiaries, including recognizing impairment charges to write down assets, and recording accruals for employee severance and operating leases.  These charges, if required, could significantly and materially affect results of operations and cash flows.

Earnings of our Venezuelan operations may not be repatriated for the foreseeable future, which will restrict our ability to use these earnings and cash flows for general corporate purposes such as reducing our U.S. debt.

Under a June 2010 law in Venezuela, exchanging local currency for U.S. dollars requires the approval of the government’s central bank.  Approved transactions may not exceed $350,000 per legal entity per month.  We believe the law will limit the repatriation of cash from Venezuela for the foreseeable future, and as a result, will reduce the amount of cash in the future that could be used for general corporate purposes, including reducing our U.S. debt.  At December 31, 2010, our Venezuelan subsidiaries held $3.3 million of cash and short-term investments denominated in U.S. dollars and $18.2 million of cash denominated in bolivar fuertes.

We operate in highly competitive industries.  

We compete in industries that are subject to significant competition and pricing pressures in most markets.  Because we believe we have competitive advantages such as brand name recognition and a reputation for a high level of service and security, we resist competing on price alone.  However, continued pricing pressure could affect our customer base or pricing structure and have an adverse effect on our business, financial condition, results of operations and cash flows.

 
11

 


Our earnings and cash flow could be materially affected by increased losses of customer valuables.

We purchase insurance coverage for losses of customer valuables for amounts in excess of what we consider prudent deductibles and/or retentions.  Insurance is provided by different groups of underwriters at negotiated rates and terms.  Coverage is available to us in major insurance markets, although premiums charged are subject to fluctuations depending on market conditions.  Our loss experience and that of other armored carriers affects premium rates charged to us.  We are self-insured for losses below our coverage limits and recognize expense up to these limits for actual losses.  Our insurance policies cover losses from most causes, with the exception of war, nuclear risk and various other exclusions typical for such policies.  The availability of high-quality and reliable insurance coverage is an important factor in order for us to obtain and retain customers and to manage the risks of our business.  If our losses increase, or if we are unable to obtain adequate insurance coverage at reasonable rates, our financial condition, results of operations and cash flows could be materially and adversely affected.

We have risks associated with confidential individual information.

In the normal course of business, we collect, process and retain sensitive and confidential information about individuals.  Despite the security measures we have in place, our facilities and systems, and those of third-party service providers, could be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming or human errors or other similar events.  Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential information, whether by us or by third-party service providers, could damage our reputation, expose us to the risks of litigation and liability, disrupt our business or otherwise have a material adverse effect on our business, financial condition, results of operations and cash flows.

We operate in regulated industries.

Our U.S. operations are subject to regulation by the U.S. Department of Transportation with respect to safety of operations and equipment and financial responsibility.  Intrastate operations in the U.S. are subject to regulation by state regulatory authorities and interprovincial operations in Canada are subject to regulation by Canadian and provincial regulatory authorities.  Our international operations are regulated to varying degrees by the countries in which we operate.  Many countries have permit requirements for security services and prohibit foreign companies from providing different types of security services.

Changes in laws or regulations could require a change in the way we operate, which could increase costs or otherwise disrupt operations.  In addition, failure to comply with any applicable laws or regulations could result in substantial fines or revocation of our operating permits and licenses.  If laws and regulations were to change or we failed to comply, our business, financial condition, results of operations and cash flows could be materially and adversely affected.

Failures of our IT system could have a material adverse effect on our business.

We are heavily dependent on our information technology (IT) infrastructure.  Significant problems with our infrastructure, such as telephone or IT system failure, computer viruses or other third-party tampering with IT systems, could halt or delay our ability to service our customers, hinder our ability to conduct our business and require significant remediation costs.  In addition, we continue to evaluate and implement upgrades to our IT systems.  We are aware of inherent risks associated with replacing these systems, including accurately capturing data and system disruptions, and believe we are taking appropriate action to mitigate these risks through testing, training, and staging implementation.  However, there can be no assurances that we will successfully launch these systems as planned or that they will occur without disruptions to our operations. Any of these events could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We have retained obligations from the sale of BAX Global. 

In January 2006 we sold BAX Global.   We retained some of the obligations related to these operations, primarily for taxes owed prior to the date of sale and for any amounts paid related to one pending litigation matter for which we paid $11.5 million in 2010.  In addition, we provided indemnification customary for these sorts of transactions.  Future unfavorable developments related to these matters could require us to record additional expenses or make cash payments in excess of recorded liabilities.  The occurrence of these events could have a material adverse affect on our financial condition, results of operations and cash flows.

 
12

 


We are subject to covenants for credit facilities.

We have credit facilities with financial covenants, including a limit on the ratio of debt to earnings before interest, taxes, depreciation, and amortization, limits on the ability to pledge assets, limits on the 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 growth strategy may not be successful.
 
One element of our growth strategy is to extend our brand, strengthen our brand portfolio and expand our geographic reach through active programs of selective acquisitions.  While we may identify numerous acquisition opportunities, our due diligence examinations and positions that we may take with respect to appropriate valuations and other transaction terms and conditions may hinder our ability to successfully complete acquisitions to achieve our strategic goals.  In addition, acquisitions present risks of failing to achieve efficient and effective integration, strategic objectives and anticipated revenue improvements and cost savings. There can be no assurance that:

·  
we will be able to acquire attractive businesses on favorable terms,
·  
all future acquisitions will be accretive to earnings, or
·  
future acquisitions will be rapidly and efficiently integrated into existing operations.

 
Our effective income tax rate could change.

We serve customers in more than 100 countries, including approximately 50 countries where we operate subsidiaries, all of which have different income tax laws and associated income tax rates.  Our effective income tax rate can be significantly affected by changes in the mix of pretax earnings by country and the related income tax rates in those countries.  In addition, our effective income tax rate is significantly affected by the ability to realize deferred tax assets, including those associated with net operating losses.  Changes in income tax laws, income apportionment, or estimates of the ability to realize deferred tax assets, could significantly affect our effective income tax rate, financial position and results of operations.

We have certain environmental and other exposures related to our former coal operations.

We may incur future environmental and other liabilities that are presently unknown in connection with our former coal operations, which could materially and adversely affect our financial condition, results of operations and cash flows.

We may be exposed to certain regulatory and financial risks related to climate change.
   
Growing concerns about climate change may result in the imposition of additional environmental regulations to which we are subject.  Some form of federal regulation may be forthcoming with respect to greenhouse gas emissions (including carbon dioxide) and/or "cap and trade" legislation.  The outcome of this legislation may result in new regulation, additional charges to fund energy efficiency activities or other regulatory actions.  Compliance with these actions could result in the creation of additional costs to us, including, among other things, increased fuel prices or additional taxes or emission allowances. We may not be able to recover the cost of compliance with new or more stringent environmental laws and regulations from our customers, which could adversely affect our business.  Furthermore, the potential effects of climate change and related regulation on our customers are highly uncertain and may adversely affect our operations.


Forward-Looking Statements

This document contains both historical and forward-looking information.  Words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes,” “may,” “should” and similar expressions may identify forward-looking information.  Forward-looking information in this document includes, but is not limited to, statements regarding expected revenue growth and earnings, including organic revenue growth and segment operating profit margin in 2011, the pursuit of growth through acquisitions in developed, emerging and adjacent markets, employee relations, liabilities, expenses and cash outflows related to former operations, including benefit plans to pay retiree medical costs, the outcome of pending litigation, including litigation in Belgium, and the anticipated financial effect of the disposition of these matters, the growth of our Cash Logistics services, expected non-segment income and expenses, the realization of deferred tax assets, our anticipated
 
 
 
13

 
 
effective tax rate for 2011 and our tax position, the reinvestment of earnings on operations outside the U.S., 2011 projected interest expense,  capital expenditures, net income attributable to noncontrolling interests, capital leases and depreciation and amortization, the funding of our acquisition strategy and pension obligations, the trend of capital expenditures exceeding depreciation and amortization, future payment of bonds issued by the Peninsula Ports Authority of Virginia, the ability to meet liquidity needs, estimated contractual obligations for the next five years and beyond, projected contributions, expenses and payouts for the U.S. retirement plans and the non-U.S. pension plans and the expected long-term rate of return and funded status of the primary U.S. pension plan, expected future contributions to the UMWA plans, liability for black lung obligations, the effect of accounting rule changes, our ability to obtain U.S. dollars operate our business in Venezuela at the SITME rate, the repatriation of cash from our Venezuelan operations, the deductibility of goodwill, future amortizations into net periodic pension cost, the recognition of unrecognized tax positions, the purchase of additional shares of Brink’s Arya, minimum repayments of long-term debt and minimum future lease payments.  Forward-looking information in this document is subject to known and unknown risks, uncertainties, and contingencies, which could cause actual results, performance or achievements to differ materially from those that are anticipated.

These risks, uncertainties and contingencies, many of which are beyond our control, include, but are not limited to the timing of the recovery from the global economic slowdown and its impact on our business opportunities, the recent market volatility and its impact on the demand for our services, the implementation of investments in technology and High-value services and cost reduction efforts and their impact on revenue and profit growth, the ability to identify and execute further cost and operational improvements and efficiencies in our core businesses, the willingness of our customers to absorb fuel surcharges and other future price increases, the actions of competitors, regulatory and labor issues in many of our global operations and security threats worldwide, the impact of turnaround actions responding to current conditions in Europe, the stability of the Venezuelan economy and changes in Venezuelan policy regarding exchange rates, fluctuations in value of the Venezuelan bolivar fuerte, variations in costs or expenses and performance delays of any public or private sector supplier, service provider or customer, our ability to obtain appropriate insurance coverage, positions taken by insurers with respect to claims made and the financial condition of insurers, safety and security performance, our loss experience, changes in insurance costs, the outcome of pending and future claims and litigation, including claims in Belgium relating to our former CIT business in that country, risks customarily associated with operating in foreign countries including changing labor and economic conditions, currency devaluations, safety and security issues, political instability, restrictions on repatriation of earnings and capital, nationalization, expropriation and other forms of restrictive government actions, costs associated with the purchase and implementation of cash processing and security equipment, employee and environmental liabilities in connection with our former coal operations, black lung claims incidence, the impact of the Patient Protection and Affordable Care Act on black lung liability and operations, changes to estimated liabilities and assets in actuarial assumptions due to payments made, investment returns and annual actuarial revaluations, the funding requirements, accounting treatment, investment performance and costs and expenses of our retirement plans, the VEBA and other employee benefits, projections regarding the number of participants in and beneficiaries of our employee and retiree benefit plans, mandatory or voluntary retirement plan and VEBA contributions, the number of dependents of mine workers for whom benefits are provided, actual retirement experience of the former coal operation’s employees, actual medical and legal expenses relating to benefits, changes in inflation rates (including medical inflation) and interest rates, changes in mortality and morbidity assumptions, discovery of new facts relating to civil suits, the addition of claims or changes in relief sought by adverse parties, our cash, debt and tax position and growth needs, our demand for capital and the availability and cost of such capital, the nature of our hedging relationships, changes in employee obligations, overall domestic and international economic, political, social and business conditions, capital markets performance, the strength of the U.S. dollar relative to foreign currencies and foreign currency exchange rates, access to the capital and credit markets, changes in estimates and assumptions underlying our critical accounting policies, as more fully described in the section “Application of Critical Accounting Policies” but including the likelihood that net deferred tax assets will be realized, discount rates, expectations of future performance and anticipated return on assets, the timing of deductibility of expenses and inflation, the promulgation and adoption of new accounting standards and interpretations, including ASU 2009-13 and ASU 2009-14, seasonality, pricing and other competitive industry factors, labor relations, new government regulations and interpretations of existing regulations, legislative initiatives, judicial decisions, issuances of permits, variations in costs or expenses and the ability of counterparties to perform.  The information included in this document is representative only as of the date of this document, and The Brink’s Company undertakes no obligation to update any information contained in this document.

 
14

 


ITEM 1B.  UNRESOLVED STAFF COMMENTS

Not applicable.


ITEM 2.  PROPERTIES

We have property and equipment in locations throughout the world.  Branch facilities generally have office space to support operations, a vault to securely process and store valuables and a garage to house armored vehicles and serve as a vehicle terminal.  Many branches have additional space to repair and maintain vehicles. In addition to these branches, we operate approximately 200 leased kiosks in Latin America related to our payment services business.

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, 2010.

   
Facilities
   
Vehicles
 
Region
 
Leased
   
Owned
   
Total
   
Leased
   
Owned
   
Total
 
                                     
U. S.
    172       25       197       2,089       240       2,329  
Canada
    47       12       59       506       50       556  
North America
    219       37       256       2,595       290       2,885  
                                                 
EMEA
    241       41       282       718       3,008       3,726  
Latin America
    339       96       435       451       5,134       5,585  
Asia Pacific
    109       -       109       2       552       554  
International
    689       137       826       1,171       8,694       9,865  
                                                 
Total
    908       174       1,082       3,766       8,984       12,750  

During 2010, we installed approximately 2,000 units, net of dispositions, for our CompuSafe® service.  This is a 19% increase in the installed base since the end of 2009.  Our installed base in the U.S. now stands at approximately 12,300 units.  In 2010, revenues from our CompuSafe® service represented approximately 8% of North America’s revenues.


ITEM 3.  LEGAL PROCEEDINGS

Our former cash-in-transit operation in Belgium (Brink’s Belgium) filed for bankruptcy in November 2010 after a restructuring plan was rejected by local union employees and was placed in bankruptcy on February 2, 2011.  On December 7, 2010, the court-appointed provisional administrators of Brink’s Belgium filed a claim in the Commercial Court of Brussels for €20 million against Brink’s Security International, Inc. (“BSI”), a subsidiary of Brink’s and the majority shareholder of Brink’s Belgium.  The claim alleges that BSI has a binding obligation to support the operations and liabilities of Brink’s Belgium based on a letter of future financial support issued in connection with the statutory audit of Brink’s Belgium’s 2009 accounts.  We do not believe that this claim has merit, and we are pursuing a vigorous defense to contest this action.  We believe that it is reasonably possible that we will incur a loss of up to €20 million (equivalent to $26.5 million at December 31, 2010) if we lose in the court proceeding, but it is also reasonably possible that we will prevail in the court resulting in no loss.  We do not believe that any loss within this range is probable and have not accrued for this matter.  The ultimate resolution of this matter is unknown and the estimated liability may change in the future.  We do not believe that the ultimate disposition of this matter will have a material adverse effect on our liquidity, financial position or results of operations.

In addition, we are involved in various other lawsuits and claims in the ordinary course of business.  We are not able to estimate the range of losses for some of these matters.  We have recorded accruals for losses that are considered probable and reasonably estimable.  We do not believe that the ultimate disposition of any of these matters will have a material adverse effect on our liquidity, financial position or results of operations.

ITEM 4.  [REMOVED AND RESERVED]



 
15

 

Executive Officers of the Registrant

The following is a list as of February 20, 2011, of the names and ages of the executive and other officers of Brink’s indicating the principal positions and offices held by each.  There are no family relationships among any of the officers named.

Name
Age
 
Positions and Offices Held
Held Since
Executive Officers:
       
Michael T. Dan
60
 
President, Chief Executive Officer and Chairman of the Board
1998
Joseph W. Dziedzic
42
 
Vice President and Chief Financial Officer
2009
Frank T. Lennon
69
 
Vice President and Chief Administrative Officer
2005
McAlister C. Marshall, II
41
 
Vice President and General Counsel
2008
Matthew A. P. Schumacher
52
 
Controller
2001
         
Other Officers:
       
Jonathan A. Leon
44
 
Treasurer
2008
Lisa M. Landry
45
 
Vice President - Tax
2009
Michael J. McCullough
40
 
Secretary
2009
Arthur E. Wheatley
68
 
Vice PresidentRisk Management and Insurance
1988

Executive and other officers of Brink’s are elected annually and serve at the pleasure of the Board.

Mr. Dan was elected President, Chief Executive Officer and Director of Brink’s in February 1998 and was elected Chairman of the Board effective January 1, 1999.  He also serves as Chief Executive Officer of Brink’s, Incorporated, a position he has held since July 1993.  From August 1992 to July 1993 he served as President of North American operations of Brink’s, Incorporated and as Executive Vice President of Brink’s, Incorporated from 1985 to 1992.

Mr. Dziedzic is the Vice President and Chief Financial Officer of Brink’s.  Mr. Dziedzic was hired on May 25, 2009 and appointed to this position on August 1, 2009.  Before joining Brink’s, Mr. Dziedzic was Chief Financial Officer for GE Aviation Services, a producer, seller and servicer of jet engines, turboprop and turbo shaft engines and related replacement parts, from March 2006 to May 2009.  Prior to this position, Mr. Dziedzic was Manager-Global Financial Planning & Analysis for GE Energy, a provider of products and services related to energy production, distribution and management, from January 2003 to February 2006.
 
Mr. Lennon was appointed Vice President and Chief Administrative Officer in 2005.  Prior to this position, he was the Vice President, Human Resources and Administration of Brink’s from 1990 through 2005.
 
Mr. Marshall was appointed Vice President and General Counsel of Brink’s in September 2008 and also held the office of Secretary from September 2008 to July 2009.  Prior to joining Brink’s, Mr. Marshall was the Vice President, General Counsel and Secretary at Tredegar Corporation, a manufacturer of plastic films and aluminum extrusions, from October 2006 to September 2008.  Prior to this position, Mr. Marshall was the Assistant General Counsel and Secretary for Brink’s from July 2006 to September 2006.  Prior to this position, Mr. Marshall was the Assistant General Counsel and Director-Corporate Governance and Compliance for Brink’s from July 2004 to July 2006.  Prior to this position, Mr. Marshall was the Assistant General Counsel for Brink’s from July 2000 to July 2004.

Messrs. Schumacher and Wheatley have served in their present positions for more than the past five years.

Ms. Landry was appointed Vice President-Tax of Brink’s on July 10, 2009.  Prior to this position, Ms. Landry was Director of Taxes and Chief Tax Counsel of Brink’s from December 2006 to July 2009.  Prior to this position, Ms. Landry had held various tax management positions from March 1998 to December 2006.

Mr. Leon is the Treasurer of Brink’s.  Mr. Leon was hired in June 2008 and appointed to this position in July 2008. Before joining Brink’s, Mr. Leon was the Assistant Treasurer for Universal Corporation, a leaf tobacco merchant and processor, from January 2007 to June 2008.  Prior to this position, Mr. Leon was the Assistant Treasurer for Brink’s from July 2005 to January 2007.  Prior to this position, Mr. Leon had held various financial management positions with Brink’s from February 1998 to July 2005.

Mr. McCullough was appointed Secretary of Brink’s on July 10, 2009.  Prior to this position, Mr. McCullough was Assistant General Counsel and Director of Corporate Governance and Compliance of Brink’s from October 2006 to July 2009, and served as Assistant Secretary from July 2007 to July 2009.  Prior to this position, Mr. McCullough had held various internal counsel positions with Brink’s from July 2003 to October 2006.


 
16

 


 
 
PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock trades on the New York Stock Exchange under the symbol “BCO.”  As of February 17, 2011, there were 1,896 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:

   
2010 Quarters
   
2009 Quarters
 
   
1st
   
2nd
   
3rd
   
4th
   
1st
   
2nd
   
3rd
   
4th
 
                                                 
Dividends declared per common share
  $ 0.1000       0.1000       0.1000       0.1000     $ 0.1000       0.1000       0.1000       0.1000  
Stock prices:
                                                               
High
  $ 28.93       29.59       23.75       27.42     $ 32.36       31.28       30.66       26.89  
Low
    23.37       19.00       18.30       22.55       20.73       25.79       25.00       22.23  

See note 16 to the consolidated financial statements for a description of limitations of our ability to pay dividends in the future.

 
17

 


The following graph compares the cumulative 5-year total return provided to shareholders on The Brink’s Company’s common stock compared to the cumulative total returns of the S&P Midcap 400 index and the S&P Midcap 400 Commercial Services & Supplies Index. The graph tracks the performance of a $100 investment in our common stock and in each index from December 31, 2005, through December 31, 2010.  The performance of the Brink’s Company’s common stock assumes that the shareholder reinvested all dividends received during the period and reinvested the proceeds of a hypothetical sale of shares received from the spin-off of our former monitored security business on October 31, 2008.


                                                                                        
Source – Research Data Group, Inc.

Comparison of Five-Year Cumulative Total Return Among
Brink’s Common Stock, the S&P MidCap 400 Index and
the S&P Midcap 400 Commercial Services & Supplies Index (1)

   
Years Ended December 31,
   
2005
2006
2007
2008
2009
2010
               
The Brink's Company
$
100.00
133.94
125.89
177.49
163.11
183.27
S&P Midcap 400 Index
 
100.00
110.32
119.12
75.96
104.36
132.16
S&P Midcap 400 Commercial Services & Supplies Index
$
100.00
118.13
135.34
92.16
110.37
136.57
Copyright © 2011, Standard & Poor's, a division of The McGraw-Hill Companies, Inc. All rights reserved.
 
(1)
For the line designated as “The Brink’s Company” the graph depicts the cumulative return on $100 invested in The Brink’s Company’s common stock.  For the S&P Midcap 400 Index and the S&P Midcap 400 Commercial Services & Supplies Index, cumulative returns are measured on an annual basis for the periods from December 31, 2005, through December 31, 2010, with the value of each index set to $100 on December 31, 2005. Total return assumes reinvestment of dividends and the reinvestment of proceeds from the sale of the shares received related to the spin-off of our former monitored security business on October 31, 2008. We chose the S&P Midcap 400 Index and the S&P Midcap 400 Commercial Services & Supplies Index because we are included in these indices, which broadly measure the performance of mid-size companies in the United States market.


 
18

 


ITEM 6. SELECTED FINANCIAL DATA

Five Years in Review

(In millions, except per share amounts)
 
2010
   
2009
   
2008
   
2007
   
2006
 
                               
Revenues and Income
                             
                               
Revenues
  $ 3,121.5       3,135.0       3,163.5       2,734.6       2,354.3  
                                         
Segment operating profit
  $ 208.9       213.4       271.9       223.3       184.1  
Non-segment income (expense)
    (62.6 )     (46.6 )     (43.4 )     (62.3 )     (73.4 )
Operating profit
  $ 146.3       166.8       228.5       161.0       110.7  
                                         
Income attributable to Brink’s:
                                       
Income from continuing operations
    56.8       195.7       131.8       78.4       53.1  
Income from discontinued operations (a)
    0.3       4.5       51.5       58.9       534.1  
Net income attributable to Brink’s
  $ 57.1       200.2       183.3       137.3       587.2  
                                         
Financial Position
                                       
                                         
Property and equipment, net
  $ 698.9       549.5       534.0       1,118.4       981.9  
Total assets
    2,270.5       1,879.8       1,815.8       2,394.3       2,188.0  
Long-term debt, less current maturities
    323.7       172.3       173.0       89.2       126.3  
Brink’s shareholders’ equity
    516.2       534.9       214.0       1,046.3       753.8  
                                         
Supplemental Information
                                       
                                         
Depreciation and amortization
  $ 136.6       135.1       122.3       110.0       93.0  
Capital expenditures
    148.8       170.6       165.3       141.8       113.8  
                                         
Earnings per share attributable to Brink’s common shareholders
                                       
                                         
Basic:
                                       
Continuing operations
  $ 1.18       4.14       2.85       1.68       1.06  
Discontinued operations (a)
    0.01       0.10       1.11       1.27       10.69  
Net income
  $ 1.18       4.23       3.96       2.95       11.75  
                                         
Diluted:
                                       
Continuing operations
  $ 1.17       4.11       2.82       1.67       1.05  
Discontinued operations (a)
    0.01       0.10       1.10       1.25       10.58  
Net income
  $ 1.18       4.21       3.93       2.92       11.64  
                                         
Cash dividends
  $ 0.4000       0.4000       0.4000       0.3625       0.2125  
                                         
Weighted-average Shares
                                       
                                         
Basic
    48.2       47.2       46.3       46.5       50.0  
Diluted
    48.4       47.5       46.7       47.0       50.5  
(a)  
Income from discontinued operations reflects the operations and gains and losses, if any, on disposal of our former home security, and air freight businesses.  Expenses related to postretirement obligations are recorded as a component of continuing operations after the respective disposal dates.  Adjustments to contingent liabilities are recorded within discontinued operations.


 
19

 


ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



THE BRINK’S COMPANY

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2010

 
TABLE OF CONTENTS
 
     
   
Page
OPERATIONS
21
     
RESULTS OF OPERATIONS
 
 
Consolidated Review
24
 
Segment Operating Results
27
 
Non-segment Income (Expense)
34
 
Other Operating Income (Expense)
35
 
Nonoperating Income (Expense)
36
 
Income Taxes
37
 
Noncontrolling Interests
38
 
Income from Discontinued Operations
39
 
Summary of Selected Results and Outlook
40
 
Non-GAAP Results – Reconciled to Amounts Reported under GAAP
41
 
Foreign Operations
43
     
LIQUIDITY AND CAPITAL RESOURCES
 
 
Overview
44
 
Summary Cash Flow Information
44
 
Operating Activities
45
 
Investing Activities
46
 
Financing Activities
47
 
Capitalization
48
 
Off Balance Sheet Arrangements
50
 
Contractual Obligations
51
 
Contingent Matters
54
     
APPLICATION OF CRITICAL ACCOUNTING POLICIES
 
 
Deferred Tax Asset Valuation Allowance
55
 
Goodwill, Other Intangible Assets and Property and Equipment Valuations
56
 
Retirement and Postemployment Benefit Obligations
57
 
Foreign Currency Translation
62
     
RECENT ACCOUNTING PRONOUNCEMENTS
64

 

 
20

 


OPERATIONS

The Brink’s Company

The Brink’s Company offers transportation and logistics management services for cash and valuables throughout the world.  These services include:
·  
armored car transportation, which is also known as cash in transit (“CIT”)
·  
automated teller machine (“ATM”) replenishment and servicing
·  
arranging secure transportation of valuables over long distances and around the world (“Global Services”)
·  
security and guarding services (including airport security)
·  
currency deposit processing and cash management services.  Cash management services include cash logistics services (“Cash Logistics”), deploying and servicing safes and safe control devices (e.g. our patented CompuSafe® service), coin sorting and wrapping, integrated check and cash processing services (“Virtual Vault Services”)
·  
providing bill payment acceptance and processing services to utility companies and other billers (“Payment Services”)


Overview of Results

Non-GAAP Financial Measures
We provide an analysis of our operations below on both a generally accepted accounting principle (“GAAP”) and non-GAAP basis.  The purpose of the non-GAAP information is to report our financial information
·  
without certain income and expense items in 2008, 2009 and 2010,
·  
as if our results from Venezuela had been translated at the less-favorable parallel exchange rate in 2008 and 2009, and
·  
after adjusting tax expense for certain items.

The non-GAAP financial measures are intended to provide information to assist comparability and estimates of future performance.  The adjustments are described in detail and are reconciled to our GAAP results on pages 41- 42.

2010 versus 2009
GAAP Basis:  Our revenues were slightly lower than 2009 and our operating profit declined $21 million or 12% in 2010.  Our earnings per share from continuing operations was $1.17, down from $4.11 last year.  Revenues were lower mainly due to unfavorable currency effects related primarily to a change in the way we translate our Venezuelan results to U.S. dollars.  Revenues also declined due to exiting a French guarding business in 2009 and a CIT business in Belgium in 2010.  Revenues were favorably affected in 2010 by organic growth in our International segment and incremental revenues from the acquisition of a CIT business in Mexico.  Our earnings in 2010 were lower than 2009 primarily because of a $118 million income tax valuation allowance reversal in 2009, lower profits in Venezuela as a result of a change in the way we translate those results, a $14 million gain in 2009 related to an acquisition in India, a $14 million income tax charge in 2010 related to U.S. healthcare legislation, $13 million of losses recognized related to the exit of the CIT business in Belgium, and a $9 million net loss related to the 2010 Mexican acquisition.  Profits in North America were lower than 2009 on price and volume pressure. Our earnings in 2010 were favorably affected by organic improvements in Latin America, improved Global Services performance around the world, lower safety and security losses and higher profits in Europe.

Non-GAAP Basis:  Our revenues increased $224 million or 8% and our operating profit increased $47 million or 39% in 2010.  Our earnings per share from continuing operations was $1.71, up from $1.16 last year.  Revenues increased mainly due to improved performance on an organic basis in our International segment, reflecting higher inflation-based prices.  Revenues were also helped in Latin America from the acquisition of a Mexican CIT business, partially offset by exiting a French guarding business in 2009 and a CIT business in Belgium in 2010.  Our earnings in 2010 were favorably affected by improved Global Services performance around the world, lower safety and security losses, higher profits in Europe, and organic improvements in Latin America.  Profits in North America were lower than 2009 on price and volume pressure.

2009 versus 2008
GAAP basis:  Our revenues and operating profit declined in 2009.  Our segment margin declined in an environment that was extremely difficult for customers in the banking, retail, and diamond and jewelry sectors.  The operating profit decline was primarily due to a highly profitable monetary conversion project in Venezuela in 2008, a $23 million repatriation charge and higher retirement expenses, partially offset by a $14 million gain on an acquisition in India.  The $23 million repatriation charge was the result of our decision to repatriate 76 million bolivar fuertes from our Venezuelan operations at the parallel market rate.  In addition, acquired businesses helped revenues and operating profit in 2009.

 
 
21

 
 
Non-GAAP basis:  Our revenues and operating profit declined in 2009.  Revenues in 2009 decreased primarily due to unfavorable changes in currency exchange rates, partially offset by the net positive effect of businesses acquired and disposed in 2009.  The operating profit decline was primarily due to a highly profitable monetary conversion project in Venezuela in 2008 and higher severance and restructuring costs in 2009.
 
 
Outlook for 2011
Our organic revenue growth rate for 2011 is expected to be in the mid-to-high single-digit range.  After factoring in $450 million of acquisition-related revenue from Mexico and Canada at approximately break-even margin rates, our 2011 segment operating profit margin is expected to be on the high end of a range between 6.5% and 7.0%.  See page 40 for a summary of our 2011 Outlook.

Definition of Organic Growth
Organic growth represents the change in revenues or operating profit between the current and prior period, excluding the effect of the following items:  acquisitions and dispositions, currency effects (as described on page 27), and the 2010 remeasurement of net monetary assets in Venezuela under highly inflationary accounting.

Business and Strategy Overview
We have four geographic operating segments:  Europe, Middle East, and Africa (“EMEA”); Latin America; Asia Pacific; and North America, which are aggregated into two reportable segments: International and North America. Our North America segment includes operations in the U.S. and Canada.  Our newly acquired Mexican operation is included in our Latin American operating segment.

We believe that Brink’s has significant competitive advantages including:
·  
brand name recognition
·  
reputation for a high level of service and security
·  
risk management and logistics expertise
·  
global infrastructure and customer base
·  
proprietary cash processing and information systems
·  
proven operational excellence
·  
high-quality insurance coverage and general financial strength

We focus our time and resources on service quality, protecting and strengthening our brand, and addressing our risks.  We are a premium provider of services in most of the markets we serve.  Our marketing and sales efforts are enhanced by the “Brink’s” brand, so we seek to protect and build its value.  Since our services focus on handling, transporting, protecting, and managing valuables, we strive to understand and manage risk.  Overlaying our approach is an understanding that we must be disciplined and patient enough to charge prices that reflect the value provided, the risk assumed and the need for an adequate return for our investors.

Business environments around the world change constantly.  We must adapt to changes in competitive landscapes, regional economies and each customer’s level of business.  We balance underlying business risk and the effects of changing demand on the utilization of our resources.  As a result, we operate largely on a decentralized basis so local management can react quickly to changes in the business environment.

We measure financial performance on a long-term basis.  The key financial measures are:
·  
Return on capital
·  
Revenue and earnings growth
·  
Cash flow generation

These and similar measures are critical components of our incentive compensation plans and performance evaluations.

Because of our emphasis on managing risks while providing a high level of service, we focus our marketing and selling efforts on customers who appreciate the value and breadth of our services, information and risk management capabilities, and financial strength.

In order to earn an adequate return on capital, we focus on the effective and efficient use of resources as well as appropriate pricing levels.  We attempt to maximize the amount of business that flows through our branches, vehicles and systems in order to obtain the lowest costs possible without compromising safety, security or service.  Due to our higher investment in people and processes, we generally charge higher prices than competitors that do not provide the same level of service and risk management.
 
 
The industries we serve have been consolidating.  As a result, the demands and expectations of customers in these industries have grown.  Customers are increasingly seeking suppliers, such as Brink’s, with broad geographic solutions, sophisticated outsourcing capabilities and financial strength.

 
 
22

 
 
Operating results may vary from period to period.  Since revenues are generated from charges per service performed or based on the value of goods transported, they can be affected by both the level of economic activity and the volume of business for specific customers.  As contracts generally run for one or more years, costs are incurred to prepare to serve, or to transition away, from a customer.  We also periodically incur costs to reduce operations when volumes decline, including costs to reduce the number of employees and close or consolidate branch and administrative facilities.  In addition, safety and security costs can vary depending on performance, cost of insurance coverage, and changes in crime rates (i.e., attacks and robberies).

Cash Logistics is a fully integrated solution that proactively manages the supply chain of cash from point-of-sale through bank deposit.  The process includes cashier balancing and reporting, deposit processing and consolidation, and electronic information exchange (including “same-day” credit capabilities).  Retail customers use Brink’s Cash Logistics services to count and reconcile coins and currency in a secure environment, to prepare bank deposit information, and to replenish customer coins and currency in proper denominations.

Because Cash Logistics involves a higher level of service and more complex activities, customers are charged higher prices, which result in higher margins.  The ability to offer Cash Logistics to customers differentiates Brink’s from many of its competitors.  Management is focused on continuing to grow Cash Logistics revenue.

Brink’s revenues and related operating profit are generally higher in the second half of the year, particularly in the fourth quarter, because of generally increased economic activity associated with the holiday season.

Former Operations
On October 31, 2008, we completed the tax-free spin-off of Brink’s Home Security Holdings, Inc. (“BHS”), a former monitored security business in North America.  We have reported the earnings and cash flows of these operations within discontinued operations for all periods presented.

We have significant liabilities associated with our former coal operations, primarily related to retirement plans, which are partially funded by plan trusts.  These trusts sustained significant market losses during the second half of 2008.

Information about our liabilities related to former operations is contained in the following sections of this report:
·  
Non-segment Income (Expense) on page 34
·  
Liquidity and Capital Resources – Contractual Obligations – on page 51
·  
Application of Critical Accounting Policies – on page 55
·  
Notes 3 and 17 to the consolidated financial statements, which begin on page 87

 
23

 


RESULTS OF OPERATIONS

Consolidated Review


   
GAAP
   
% Change
   
Non-GAAP
   
% Change
 
Years Ended December 31,
 
2010
   
2009
   
2008
   
2010
   
2009
   
2010
   
2009
   
2008
   
2010
   
2009
 
(In millions, except per share amounts)
                                                           
                                                             
Revenues
  $ 3,122       3,135       3,164       -       (1 )   $ 3,122       2,897       2,990       8       (3 )
Segment operating profit (a)
    209       213       272       (2 )     (22 )     226       175       223       29       (22 )
Non-segment expense
    (63 )     (47 )     (43 )     34       7       (59 )     (55 )     (58 )     6       (4 )
Operating profit
    146       167       229       (12 )     (27 )     167       120       166       39       (28 )
Income from continuing operations (b)
    57       196       132       (71 )     48       83       55       98       51       (44 )
Diluted EPS from continuing operations (b)
    1.17       4.11       2.82       (72 )     46       1.71       1.16       2.10       47       (45 )
Amounts may not add due to rounding.

(a)  
Segment operating profit is a non-GAAP measure when presented in any context other than prescribed by Accounting Standards Codification Topic 280, Segment Reporting.  The tables on pages 41 and 42 reconcile the measurement to operating profit, a GAAP measure.  Disclosure of total segment operating profit enables investors to assess the total operating performance of Brink’s excluding non-segment income and expense.  Forward-looking estimates related to total segment operating profit and non-segment income (expense) for 2011 are provided on page 40.
(b)  
Amounts reported in this table are attributable to the shareholders of Brink’s and exclude earnings related to noncontrolling interests.


Summary Reconciliation of Non-GAAP EPS
                   
Years Ended December 31,
 
2010
   
2009
   
2008
 
                   
GAAP EPS
  $ 1.17       4.11       2.82  
Exclude certain large deferred tax adjustments
    0.29       (2.48 )     -  
Exclude Venezuela related items
    0.04       0.04       (0.54 )
Exclude acquisition and disposition-related items
    0.22       (0.52 )     (0.18 )
Non-GAAP EPS
  $ 1.71       1.16       2.10  
Amounts may not add due to rounding.  Non-GAAP results are reconciled to the applicable GAAP results on pages 41-42.

Revenues

GAAP
2010 versus 2009
Revenues in 2010 decreased $14 million or less than 1% primarily due to unfavorable changes in currency exchange rates ($273 million) related primarily to the reporting of 2010 results from Venezuela at a less favorable exchange rate.  Revenues also were affected by the sale of guarding operations in France in 2009 ($48 million) and the exit of unprofitable CIT business in Belgium ($8 million), partially offset by organic growth ($228 million) and the positive effect of businesses acquired in 2010 and 2009 ($88 million).  See page 22 for our definition of “organic.”

Revenues increased 7% on an organic basis due mainly to higher average selling prices (including the effects of inflation in several Latin American countries).

2009 versus 2008
Revenues in 2009 decreased 1% primarily due to unfavorable changes in currency exchange rates ($146 million), mostly offset by the net positive effect of businesses acquired in 2009, net of dispositions ($97 million) and organic growth.

Revenues increased 1% on an organic basis due mainly to higher average selling prices (including the effects of inflation in several Latin American countries), mostly offset by lower volumes in Global Services operations and the loss of guarding contracts in France.


 
24

 

Non-GAAP
2010 versus 2009
Revenues in 2010 increased 8% primarily due to organic growth ($157 million) and revenues from businesses acquired in 2010 and 2009 ($88 million).

Revenues increased 5% on an organic basis due mainly to higher average selling prices (including the effects of inflation in several Latin American countries).

2009 versus 2008
Revenues in 2009 decreased 3% primarily due to unfavorable changes in currency exchange rates ($194 million), partially offset by the net positive effect of businesses acquired and disposed in 2009 ($97 million).

Revenues remained flat on an organic basis compared to 2008.  Higher average selling prices (including the effects of inflation in several Latin American countries), were mostly offset by lower volumes in Global Services operations and the loss of guarding contracts in France.

Operating Profit

GAAP
2010 versus 2009
Operating profit decreased 12% due mainly to:
·  
an unfavorable currency effect ($44 million), related primarily to the reporting of 2010 results from Venezuela at a less favorable exchange rate,
·  
expenses of exiting an unprofitable CIT business in Belgium, and
·  
higher non-segment expenses;
partially offset by growth on an organic basis in our International segment.

2009 versus 2008
Operating profit decreased 27% due mainly to
·  
the inclusion in 2008 results of profits from the monetary conversion project in Venezuela that was completed in 2008,
·  
a $12 million increase in restructuring and severance costs, primarily in Europe,
·  
$6 million in accounting corrections in Belgium, and
·  
higher non-segment expenses.


Non-GAAP
2010 versus 2009
Operating profit increased 39%.  The operating profit increase in the International segment more than offset the decline in North America.  Results were also affected by price and volume pressure across most of our global markets.

2009 versus 2008
Operating profit decreased 28% mainly due to
·  
the inclusion in 2008 results of profits from the monetary conversion project in Venezuela that was completed in 2008,
·  
a $12 million increase in restructuring and severance costs, primarily in Europe, and
·  
$6 million in accounting corrections in Belgium;
partially offset by lower non-segment expenses.


 
25

 

Income from continuing operations and Net income, and related per share amounts
(attributable to Brink’s)

GAAP
2010 versus 2009
Income from continuing operations and net income (and related per share amounts) was lower in 2010 compared to 2009. In addition to the above described factors affecting operating profit, income from continuing operations attributable to Brink’s and earnings per share decreased primarily due to a $118 million income tax valuation allowance reversal in 2009 and a $14 million income tax charge in 2010 related to U.S. healthcare legislation.  These factors were partially offset by a $7 million non-cash income tax benefit related to an income tax settlement.

2009 versus 2008
Income from continuing operations and net income (and related per share amounts) was higher in 2009 compared to 2008 primarily as a result of a release of a deferred tax valuation allowance, as more fully described on page 55, partially offset by lower operating profits.

Non-GAAP
2010 versus 2009
Income from continuing operations and net income (and related per share amounts) was higher in 2010 compared to 2009 primarily as a result of better performance of our International segment.

2009 versus 2008
Income from continuing operations and net income (and related per share amounts) was lower in 2009 compared to 2008 primarily as a result of lower operating profits.




 
26

 


Segment Operating Results
Segment Review
2010 versus 2009
GAAP
         
Organic
   
Acquisitions /
   
Currency
         
% Change
 
(In millions)
 
2009
   
Change
   
Dispositions (b)
   
(c)
   
2010
   
Total
   
Organic
 
Revenues:
                                         
EMEA
  $ 1,258       33       (45 )     (46 )     1,200       (5 )     3  
Latin America
    905       171       52       (250 )     877       (3 )     19  
Asia Pacific
    79       18       25       5       127       61       23  
International
    2,241       222       32       (290 )     2,204       (2 )     10  
North America
    894       7       -       17       918       3       1  
Total
  $ 3,135       228       32       (273 )     3,122       -       7  
                                                         
Operating profit:
                                                       
International
  $ 157       80       (4 )     (68 )     165       5       51  
North America
    57       (13 )     -       1       44       (22 )     (24 )
Segment operating profit
    213       67       (4 )     (67 )     209       (2 )     31  
Non-segment (a)
    (47 )     (15 )     (24 )     23       (63 )     34       32  
Total
  $ 167       52       (28 )     (44 )     146       (12 )     31  
                                                         
Segment operating margin:
                                                       
International
    7.0 %                             7.5 %                
North America
    6.3 %                             4.8 %                
Segment operating margin
    6.8 %                             6.7 %                

Non-GAAP
         
Organic
   
Acquisitions /
   
Currency
         
% Change
 
(In millions)
 
2009
   
Change
   
Dispositions (b)
   
(c)
   
2010
   
Total
   
Organic
 
Revenues:
                                         
EMEA
  $ 1,258       33       (45 )     (46 )     1,200       (5 )     3  
Latin America
    667       100       52       59       877       32       15  
Asia Pacific
    79       18       25       5       127       61       23  
International
    2,003       150       32       19       2,204       10       8  
North America
    894       7       -       17       918       3       1  
Total
  $ 2,897       157       32       36       3,122       8       5  
                                                         
Operating profit:
                                                       
International
  $ 118       49       9       6       181       53       41  
North America
    57       (13 )     -       1       44       (22 )     (24 )
Segment operating profit
    175       35       9       7       226       29       20  
Non-segment (a)
    (55 )     (4 )     -       -       (59 )     6       6  
Total
  $ 120       32       9       7       167       39       26  
                                                         
Segment operating margin:
                                                       
International
    5.9 %                             8.2 %                
North America
    6.3 %                             4.8 %                
Segment operating margin
    6.0 %                             7.2 %                
 
Amounts may not add due to rounding.
 
 (a)
Includes income and expense not allocated to segments (see page 34 for details).
 
(b)
Includes operating results and gains/losses on acquisitions, sales and exit of businesses.
  (c)
Revenue and Segment Operating Profit:  The “Currency” amount in the table is the summation of the monthly currency changes, plus (minus) the U.S. dollar amount of remeasurement currency gains (losses) of bolivar fuerte-denominated net monetary assets recorded under highly inflationary accounting rules in 2010 related to the Venezuelan operations.  The monthly currency change is equal to the Revenue or Operating Profit for the month in local currency, on a country-by-country basis, multiplied by the difference in rates used to translate the current period amounts to U.S. dollars versus the translation rates used in the year-ago month.  The functional currency in Venezuela was the bolivar fuerte in 2009, and became the U.S. dollar in 2010 under highly inflationary accounting rules.  Remeasurement gains and losses under these rules in 2010 are recorded in U.S. dollars but these gains and losses are not recorded in local currency.  Local currency Revenue and Operating Profit in 2010 used in the calculation of monthly currency change for Venezuela have been derived from the U.S. dollar results of the Venezuelan operations under GAAP (excluding remeasurement gains and losses) using current period currency exchange rates.
 
Non-Segment Operating Profit:  The “Currency” amount in the table is the 2009 losses incurred in Venezuela related to increases in cash held in U.S. dollars by Venezuela subsidiaries (see page 42 for details).

 
27

 


Segment Review
2010 versus 2009

Total Segment Operating Profit

GAAP
Segment operating profit decreased 2% as the unfavorable currency effect in our International segment and losses recognized on the exit of unprofitable CIT business in Belgium were mostly offset by organic growth.

Non-GAAP
Segment operating profit increased 29% as growth on an organic basis in the International segment and the net positive effect from acquisitions and dispositions was partially offset by a decline on an organic basis in North America.

International Segment

Total International
GAAP
Revenues in 2010 for our international segment were 2% lower ($37 million) than 2009 as:
·  
revenues in EMEA were 5% lower ($58 million), and
·  
revenues in Latin America were 3% lower ($27 million);
partially offset by 61% ($48 million) higher revenues in Asia Pacific.

Operating profit in our international segment was 5% higher ($8 million) as better results in EMEA and Asia Pacific were mostly offset by lower profits in Latin America.

Non-GAAP
Revenues in 2010 for our international segment were 10% higher ($201 million) than 2009 as:
·  
revenues in Latin America were 32% higher ($211 million), including the positive effect of businesses acquired in 2010, and
·  
revenues in Asia Pacific were 61% higher ($48 million), including the positive effect of businesses acquired in 2009;
partially offset by 5% lower ($58 million) revenues in EMEA.

Operating profit in our international segment was 53% higher as all regions showed improvement.

EMEA
GAAP
EMEA revenues decreased by 5% ($58 million) due mainly to:
·  
negative currency translation ($46 million),
·  
loss of revenue resulting from the sale of certain guarding operations in France in 2009 ($48 million),
·  
loss of guarding contracts in France ($9 million), and
·  
loss of revenue resulting from fourth quarter 2010 exit of CIT business in Belgium ($8 million);
partially offset by organic revenue growth.

Revenue improved on an organic basis by 3% driven by the 2010 rebound of Global Services, as well as improvements in Germany and emerging markets.

EMEA operating profit increased in total ($14 million) as well as on an organic basis ($25 million) driven by:
·  
lower severance ($7 million),
·  
2009 included accounting corrections in Belgium ($6 million),
·  
characterization of a French business tax as an income tax ($6 million),
·  
improved safety and security performance,
·  
the sale of guarding operations in France,
·  
improved results in Global Services,
·  
lower losses resulting from the exit of unprofitable CIT business in Belgium, and
·  
lower software impairment charges.

The operating profit improvements were partially offset by $13 million of charges related to the exit of our CIT business in Belgium (write-off of our carrying value of the investment and advances to the subsidiary) as well as higher costs to support our expansion and growth in emerging markets.

 
 
28

 
 
Non-GAAP

The analysis of EMEA non-GAAP revenues is the same as the analysis of EMEA GAAP revenues.

EMEA operating profit increased in total ($27 million) as well as on an organic basis ($25 million) driven by:
·  
lower severance ($7 million),
·  
2009 included accounting corrections in Belgium ($6 million),
·  
characterization of a French business tax as an income tax ($6 million),
·  
improved safety and security performance,
·  
the sale of guarding operations in France,
·  
improved results in Global Services,
·  
lower losses from the exit of unprofitable CIT business in Belgium, and
·  
and lower software impairment charges;
partially offset by higher costs to support our expansion and growth in emerging markets.

Deconsolidation of Brink’s Belgium
Our cash-in-transit subsidiary in Belgium (Brink’s Belgium) filed for bankruptcy in November 2010 after a restructuring plan was rejected by local union employees.  We deconsolidated the subsidiary in November 2010, when the court-appointed trustee assumed control of the subsidiary, as we no longer control or provide funding for the subsidiary.  See a more detailed discussion in the Contingent Matters section on page 54.

A summary of the revenues and operating losses for Brink’s Belgium in the three years ending December 31, 2010, is as follows:

                   
(In millions)
 
2010
   
2009 (b)
   
2008
 
                   
Revenues
  $ 35.2       51.3       50.1  
Operating loss (a)
    7.6       9.4       0.4  
(a)  
Operating loss includes severance charges of $2 million in 2010 and $2 million in 2009.
(b)  
Operating loss includes accounting corrections of $6 million, which relate to prior periods.

Latin America
GAAP
Revenue in Latin America decreased 3% ($28 million), as unfavorable currency translation ($250 million) more than offset the incremental revenues from our acquisition in Mexico ($52 million) and growth on an organic basis.

The 19% revenue growth on an organic basis ($171 million) was due to inflation-based price increases across the region.

Operating profit decreased $13 million due primarily to unfavorable currency items ($65 million), partially offset by organic volume growth throughout the region and improved safety and security performance.

Non-GAAP
Revenue in Latin America increased 32% ($210 million) due to incremental revenues from our acquisition in Mexico ($52 million), inflation-based price increases and a favorable currency effect ($59 million) primarily in Venezuela, Brazil and Colombia.

The inflation-based price increases were also the primary reason for the organic revenue increase of 15%.

Operating profit increased $29 million due primarily to organic growth and improved safety and security performance.

 
29

 


Asia-Pacific
Revenue in Asia Pacific increased 61% ($48 million) primarily due to Global Services’ strong finish of the year, reflecting increased commodities volumes along with some improvements in the diamond and jewelry business, as well as third-quarter 2009 acquisitions in India ($16 million) and China ($9 million).

Operating profit increased $7 million driven by organic growth ($5 million) and the 2009 acquisitions ($2 million).

North American Segment

Revenues in North America increased 3% ($24 million) on favorable currency rates in Canada ($17 million).  Revenue increased slightly (1% or $7 million) on an organic basis despite continued CIT volume and pricing pressures.

Operating profit declined $13 million or 22% mainly due to CIT volume and pricing pressure, partially offset by improved safety and security performance and Global Services improvement.


 
30

 

Segment Review
2009 versus 2008
GAAP
         
Organic
   
Acquisitions /
   
Currency
         
% Change
 
(In millions)
 
2008
   
Change
   
Dispositions
   
(b)
   
2009
   
Total
   
Organic
 
Revenues:
                                         
EMEA
  $ 1,359       (22 )     3       (83 )     1,258       (7 )     (2 )
Latin America
    801       75       80       (51 )     905       13       9  
Asia Pacific
    72       (4 )     12       (1 )     79       10       (5 )
International
    2,231       49       95       (135 )     2,241       -       2  
North America
    932       (28 )     2       (11 )     894       (4 )     (3 )
Total
  $ 3,164       21       97       (146 )     3,135       (1 )     1  
                                                         
Operating profit: