ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Brink’s Company offers transportation and logistics management services for cash and valuables throughout the world. These services include:
·
|
Cash-in-Transit (“CIT”) Services – armored vehicle transportation of valuables
|
·
|
ATM Services – replenishing and maintaining customers’ automated teller machines; providing network infrastructure services
|
·
|
Global Services – secure international transportation of valuables
|
·
|
Cash Management Services
|
o
|
Currency and coin counting and sorting; deposit preparation and reconciliations; other cash management services
|
o
|
Safe and safe control device installation and servicing (including our patented CompuSafe
®
service)
|
o
|
Check and cash processing services for banking customers (“Virtual Vault Services”)
|
o
|
Check imaging services for banking customers
|
·
|
Payment Services – bill payment and processing services on behalf of utility companies and other billers at any of our Brink’s or Brink’s – operated payment locations in Latin America; Brink’s Money™ prepaid payroll cards; Brink’s Checkout e-commerce online payment services
|
·
|
Security and Guarding Services – protection of airports, offices, and certain other locations in Europe with or without electronic surveillance, access control, fire prevention and highly trained patrolling personnel
|
Brink’s reports its financial results in four segments: Latin America; Europe, Middle East and Africa (“EMEA”); North America and Asia Pacific.
Non-GAAP and Adjusted Non-GAAP Results
Non-GAAP and Adjusted Non-GAAP results described in this filing are financial measures that are not required by, or presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The purpose of the Non-GAAP results is to report financial information without certain income and expense items and to adjust the quarterly Non-GAAP tax rates so that the Non-GAAP tax rate in each of the quarters is equal to the full-year Non-GAAP tax rate. For 2014, a forecasted full-year tax rate is used. The full year Non-GAAP tax rate in both years excludes certain pretax and tax income and expense amounts. The purpose of Adjusted Non-GAAP results is to report historical Non-GAAP information assuming that our Venezuelan operations had been remeasured using a rate of 50 bolivars to the U.S. dollar.
The Non-GAAP and Adjusted Non-GAAP information provides information to assist comparability and estimates of future performance. Brink’s believes these measures are helpful in assessing operations and estimating future results and enable period-to-period comparability of financial performance. In addition, Brink’s believes the measures will help investors assess the ongoing operations. Non-GAAP and Adjusted Non-GAAP results should not be considered as an alternative to revenue, income or earnings per share amounts determined in accordance with GAAP and should be read in conjunction with their GAAP counterparts. Amounts reported for prior periods have been updated in this filing to present information consistently for all periods presented.
The adjustments are described in detail and are reconciled to our GAAP results on pages 35 – 39.
Consolidated projections of Non-GAAP targets for 2016 (including segment margin, segment operating profit, and EPS) are not reconciled to GAAP counterparts because we are unable to quantify certain amounts that would be required to be included in the GAAP measure without unreasonable effort.
|
|
|
|
Second Quarter
|
|
%
|
|
|
First Half
|
|
%
|
|
|
(In millions, except for per share amounts)
|
|
2014
|
|
2013
|
|
Change
|
|
|
2014
|
|
2013
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
901.5
|
|
969.9
|
|
(7)
|
|
$
|
1,893.1
|
|
1,920.4
|
|
(1)
|
|
|
|
Segment operating profit (loss)
(a)
|
|
26.1
|
|
54.4
|
|
(52)
|
|
|
(28.4)
|
|
88.7
|
|
unfav
|
|
|
|
Non-segment expense
|
|
(15.4)
|
|
(21.6)
|
|
(29)
|
|
|
(33.4)
|
|
(38.6)
|
|
(13)
|
|
|
|
Operating profit (loss)
|
|
10.7
|
|
32.8
|
|
(67)
|
|
|
(61.8)
|
|
50.1
|
|
unfav
|
|
|
Income (loss) from continuing operations
(b)
|
|
2.3
|
|
13.2
|
|
(83)
|
|
|
(56.1)
|
|
16.1
|
|
unfav
|
|
|
Diluted EPS from continuing operations
(b)
|
|
0.05
|
|
0.27
|
|
(81)
|
|
|
(1.15)
|
|
0.33
|
|
unfav
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
901.5
|
|
969.9
|
|
(7)
|
|
$
|
1,893.1
|
|
1,920.4
|
|
(1)
|
|
|
|
Segment operating profit
(a)
|
|
39.8
|
|
58.0
|
|
(31)
|
|
|
110.7
|
|
109.4
|
|
1
|
|
|
|
Non-segment expense
|
|
(9.9)
|
|
(11.4)
|
|
(13)
|
|
|
(23.1)
|
|
(19.0)
|
|
22
|
|
|
|
Operating profit
|
|
29.9
|
|
46.6
|
|
(36)
|
|
|
87.6
|
|
90.4
|
|
(3)
|
|
|
Income from continuing operations
(b)
|
|
13.4
|
|
22.9
|
|
(41)
|
|
|
35.5
|
|
41.9
|
|
(15)
|
|
|
Diluted EPS from continuing operations
(b)
|
|
0.27
|
|
0.47
|
|
(43)
|
|
|
0.72
|
|
0.86
|
|
(16)
|
|
Non-GAAP results are reconciled to the applicable GAAP results on pages 35 –
39. 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 ASC Topic 280,
Segment Reporting
. The tables on pages 23 and 26 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 2014 are provided on page 33.
|
(b)
|
Amounts reported in this table are attributable to the shareholders of Brink’s and exclude earnings related to noncontrolling interests.
|
(c)
|
These Non-GAAP results for 2014 reflect Venezuela’s local earnings translated at 6.3 bolivars to the U.S. dollar through March 23, 2014, and at approximately 50 bolivars to the U.S. dollar from March 24 to June 30, 2014. Also see pages 35 –
39 for Non-GAAP Results Adjusted for Venezuelan Results at 50 Bolivars per U.S. dollar for hypothetical historical results had we used a rate of 50 to translate Venezuela’s results for all periods in 2013 and 2014.
|
Organic Growth
Organic growth represents the change in revenues or operating profit between the current and prior period, excluding the effect of the following items: acquisitions and dispositions, changes in currency exchange rates and the remeasurement of net monetary assets in Venezuela under highly inflationary accounting.
Overview
|
|
|
|
|
|
Second Quarter
|
|
% Change
|
|
|
First Half
|
|
% Change
|
|
|
(In millions)
|
|
2014
|
|
2013
|
|
Total
|
|
Organic
|
|
|
2014
|
|
2013
|
|
Total
|
|
Organic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues by region:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mexico
|
$
|
104.1
|
|
117.5
|
|
(11)
|
|
(8)
|
|
$
|
210.0
|
|
228.1
|
|
(8)
|
|
(4)
|
|
|
|
|
Brazil
|
|
110.9
|
|
93.3
|
|
19
|
|
28
|
|
|
215.2
|
|
192.3
|
|
12
|
|
26
|
|
|
|
|
Venezuela
|
|
22.3
|
|
96.1
|
|
(77)
|
|
83
|
|
|
153.6
|
|
191.6
|
|
(20)
|
|
73
|
|
|
|
|
Other
|
|
99.2
|
|
106.7
|
|
(7)
|
|
10
|
|
|
196.1
|
|
214.5
|
|
(9)
|
|
10
|
|
|
|
|
|
Total
|
|
336.5
|
|
413.6
|
|
(19)
|
|
26
|
|
|
774.9
|
|
826.5
|
|
(6)
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
France
|
|
139.6
|
|
132.4
|
|
5
|
|
-
|
|
|
274.9
|
|
263.9
|
|
4
|
|
-
|
|
|
|
|
Other
|
|
163.3
|
|
161.0
|
|
1
|
|
(2)
|
|
|
326.0
|
|
307.3
|
|
6
|
|
3
|
|
|
|
|
|
Total
|
|
302.9
|
|
293.4
|
|
3
|
|
(1)
|
|
|
600.9
|
|
571.2
|
|
5
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
180.3
|
|
178.3
|
|
1
|
|
1
|
|
|
356.1
|
|
353.8
|
|
1
|
|
1
|
|
|
|
|
Canada
|
|
45.4
|
|
48.0
|
|
(5)
|
|
1
|
|
|
89.7
|
|
95.7
|
|
(6)
|
|
1
|
|
|
|
|
|
Total
|
|
225.7
|
|
226.3
|
|
-
|
|
1
|
|
|
445.8
|
|
449.5
|
|
(1)
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia Pacific
|
|
36.4
|
|
36.6
|
|
(1)
|
|
2
|
|
|
71.5
|
|
73.2
|
|
(2)
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
$
|
901.5
|
|
969.9
|
|
(7)
|
|
11
|
|
$
|
1,893.1
|
|
1,920.4
|
|
(1)
|
|
11
|
|
Amounts may not add due to rounding. Organic percentage change in revenue is equal to the total percentage change in revenue less the change associated with acquisitions and dispositions and less the change in revenues due to foreign currency exchange fluctuations as described in the note to the table on page 23.
GAAP
Second Quarter
Our revenues decreased $68.4 million or 7% and our operating profit decreased $22.1 million or 67% in the second quarter of 2014. Revenues decreased due to unfavorable changes in currency exchange rates, partially offset by organic growth in our Latin America segment. Operating profit decreased primarily due to unfavorable changes in currency exchange rates, partially offset by lower non-segment expenses.
Our income from continuing operations in 2014 decreased $10.9 million compared to 2013 primarily due to the operating profit decrease mentioned above, partially offset by the income tax and noncontrolling interest impact of the profit decrease.
Our earnings per share from continuing operations was $0.05, down from $0.27 in 2013.
First Half
Our revenues decreased $27.3 million or 1% and our operating profit decreased $111.9 million, resulting in a loss in the first half of 2014. Revenues decreased due to unfavorable changes in currency exchange rates, partially offset by organic growth in our Latin America segment. Operating profit decreased primarily due to a larger charge related to the remeasurement of net monetary assets as a result of the devaluation of Venezuela currency ($122.2 million in 2014 versus $13.4 million in 2013). The higher Venezuela remeasurement charge was partially offset by lower security losses due to the February 2013 robbery in Brussels, Belgium ($18.7 million in 2013) and organic growth in our Latin America segment.
Our income from continuing operations in 2014 decreased $72.2 million compared to 2013 primarily due to the operating profit decrease mentioned above, partially offset by the income tax and noncontrolling interest impact of the profit decrease.
Our earnings per share from continuing operations was ($1.15), down from $0.33 in 2013.
Non-GAAP
Non-GAAP results include the following adjustments:
|
|
|
Three Months
|
|
Six Months
|
|
|
|
|
Ended June 30,
|
|
Ended June 30,
|
|
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted EPS
|
$
|
0.05
|
|
0.27
|
|
(1.15)
|
|
0.33
|
|
|
|
Exclude expenses related to currency devaluation in Venezuela
|
|
0.12
|
|
-
|
|
1.65
|
|
0.18
|
|
|
|
Exclude U.S. retirement plan expenses
|
|
0.05
|
|
0.16
|
|
0.12
|
|
0.33
|
|
|
|
Exclude employee benefit settlement losses
|
|
0.02
|
|
0.01
|
|
0.03
|
|
0.01
|
|
|
|
Exclude gains and losses on acquisitions, dispositions, and closures
|
|
0.01
|
|
-
|
|
0.01
|
|
(0.02)
|
|
|
|
Exclude share-based compensation adjustment
|
|
0.07
|
|
-
|
|
0.07
|
|
-
|
|
|
|
Adjust quarterly tax rate to full-year average rate
|
|
(0.04)
|
|
0.03
|
|
(0.02)
|
|
0.03
|
|
|
Non-GAAP Diluted EPS
|
$
|
0.27
|
|
0.47
|
|
0.72
|
|
0.86
|
|
Amounts may not add due to rounding. Non-GAAP results are reconciled in more detail to the applicable GAAP results on pages 35 –
39.
Second Quarter
The analysis of Non-GAAP revenues is the same as the analysis of GAAP revenues.
Our operating profit decreased $16.7 million or 36% primarily due to unfavorable changes in currency exchange rates and organic decreases across all segments.
Our income from continuing operations in 2014 decreased 41% primarily due to the operating profit decrease mentioned above, partially offset by
the income tax and noncontrolling interest impact of the profit decrease.
Our earnings per share from continuing operations was $0.27, down from $0.47 in 2013.
First Half
The analysis of Non-GAAP revenues is the same as the analysis of GAAP revenues.
Our operating profit decreased $2.8 million or 3% due to unfavorable changes in currency exchange rates and increased non-segment expenses, partially offset by the $18.7 million loss related to the February 2013 robbery in Brussels, Belgium and organic profit increase in our Latin America segment.
Our income from continuing operations in 2014 decreased 15% due to lower operating profit and the increase in our effective tax rate and income attributable to noncontrolling interests.
Our earnings per share from continuing operations was $0.72, down from $0.86 in 2013.
Outlook for 2014
GAAP
Overall
Our organic revenue growth rate for 2014 is expected to be in the 8% to 10% range, and our estimate of the negative impact of changes in currency exchange rates on revenue is in the 14% to 16% range. We expect our revenue to be $3.7 billion in 2014. Our operating segment margin is expected to be about 2.5%.
By Segment
Latin America organic revenue growth rate for 2014 is expected to be in the 21% to 23% range, and our estimate of the negative impact of changes in currency exchange rates on Latin America revenue is in the 32% to 36% range. Our Latin America segment margin is expected to be in the (1.0)% to (3.0)% range.
EMEA organic revenue growth rate for 2014 is expected to be in the 0% to 2% range, and our estimate of the positive impact of changes in currency exchange rates on EMEA revenue is in the 1% to 3% range. Our EMEA segment margin is expected to be in the 6% to 8% range.
North America organic revenue growth rate for 2014 is expected to be in the 0% to 2% range, with no impact of changes in currency exchange rates. Our North America segment margin is expected to be in the 1.5% to 2.5% range for 2014. We expect the North American margin to improve in 2014 and 2015, and we have a goal to reach 7% in 2016.
Asia Pacific organic revenue growth rate for 2014 is expected to be in the 5% to 7% range, and our estimate of the negative impact of changes in currency exchange rates on Asia Pacific revenue is in the 1% to 3% range. Our Asia Pacific segment margin is expected to be in the 10.5% to 12.5% range.
Non-GAAP
Overall
Our outlook for Non-GAAP revenues is the same as our outlook for GAAP revenues. Our outlook for Non-GAAP operating segment margin is expected to be about 6.5%
.
We are targeting Non-GAAP segment margin rate of 8% resulting in a range of $290 to $330 million of Non-GAAP segment operating profit and $2.50 to $3.00 of earnings per share by 2016.
By Segment
Our outlook for Non-GAAP revenues is the same as our outlook for GAAP revenues. Our outlook for Non-GAAP segment margin is the same as our outlook for GAAP segment margin for our EMEA and Asia Pacific segments. Latin America Non-GAAP segment margin excludes the expenses related to currency devaluation in Venezuela and is expected to be in the 7.0% to 9.0% range. North America Non-GAAP segment margin excludes the cost of U.S. retirement plans and is expected to be in the 2.5% to 3.5% range.
Performing Branches in U.S.
Performing branches is an internal profitability metric we use to measure our U.S. operations. During the second quarter, we revised our definition of a performing branch to better align with the industry. We considered 56% of our branches to be performing branches in the U.S. at the end of 2013. Our goal is to increase performing branches to 85% by the end of 2016. We define a performing branch as a branch that has positive operating profit after all country overhead costs have been allocated to the branches.
See page 33 for a summary of our 2014 Outlook.
Segment Operating Results
Segment Review
Second Quarter 2014 versus Second Quarter 2013
|
GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions /
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic
|
|
Dispositions
|
|
Currency
|
|
|
|
% Change
|
|
|
(In millions)
|
|
2Q '13
|
|
Change
|
|
(a)
|
|
(b)
|
|
2Q '14
|
|
Total
|
|
Organic
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
413.6
|
|
107.9
|
|
-
|
|
(185.0)
|
|
336.5
|
|
(19)
|
|
26
|
|
|
|
EMEA
|
|
293.4
|
|
(2.9)
|
|
-
|
|
12.4
|
|
302.9
|
|
3
|
|
(1)
|
|
|
|
North America
|
|
226.3
|
|
2.4
|
|
-
|
|
(3.0)
|
|
225.7
|
|
-
|
|
1
|
|
|
|
Asia Pacific
|
|
36.6
|
|
0.6
|
|
-
|
|
(0.8)
|
|
36.4
|
|
(1)
|
|
2
|
|
|
|
|
|
Total
|
$
|
969.9
|
|
108.0
|
|
-
|
|
(176.4)
|
|
901.5
|
|
(7)
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
24.4
|
|
(6.1)
|
|
-
|
|
(19.8)
|
|
(1.5)
|
|
unfav
|
|
(25)
|
|
|
|
EMEA
|
|
18.7
|
|
(2.0)
|
|
-
|
|
0.6
|
|
17.3
|
|
(7)
|
|
(11)
|
|
|
|
North America
|
|
6.3
|
|
(0.4)
|
|
-
|
|
(0.2)
|
|
5.7
|
|
(10)
|
|
(6)
|
|
|
|
Asia Pacific
|
|
5.0
|
|
(0.4)
|
|
-
|
|
-
|
|
4.6
|
|
(8)
|
|
(8)
|
|
|
|
|
Segment operating profit
|
|
54.4
|
|
(8.9)
|
|
-
|
|
(19.4)
|
|
26.1
|
|
(52)
|
|
(16)
|
|
|
|
|
Non-segment
|
|
(21.6)
|
|
6.2
|
|
-
|
|
-
|
|
(15.4)
|
|
(29)
|
|
(29)
|
|
|
|
|
|
Total
|
$
|
32.8
|
|
(2.7)
|
|
-
|
|
(19.4)
|
|
10.7
|
|
(67)
|
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
|
5.9%
|
|
|
|
|
|
|
|
(0.4%)
|
|
|
|
|
|
|
|
EMEA
|
|
6.4%
|
|
|
|
|
|
|
|
5.7%
|
|
|
|
|
|
|
|
North America
|
|
2.8%
|
|
|
|
|
|
|
|
2.5%
|
|
|
|
|
|
|
|
Asia Pacific
|
|
13.7%
|
|
|
|
|
|
|
|
12.6%
|
|
|
|
|
|
|
|
|
|
Segment operating margin
|
|
5.6%
|
|
|
|
|
|
|
|
2.9%
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions /
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic
|
|
Dispositions
|
|
Currency
|
|
|
|
% Change
|
|
|
(In millions)
|
|
2Q '13
|
|
Change
|
|
(a)
|
|
(b)
|
|
2Q '14
|
|
Total
|
|
Organic
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
413.6
|
|
107.9
|
|
-
|
|
(185.0)
|
|
336.5
|
|
(19)
|
|
26
|
|
|
|
|
EMEA
|
|
293.4
|
|
(2.9)
|
|
-
|
|
12.4
|
|
302.9
|
|
3
|
|
(1)
|
|
|
|
|
North America
|
|
226.3
|
|
2.4
|
|
-
|
|
(3.0)
|
|
225.7
|
|
-
|
|
1
|
|
|
|
|
Asia Pacific
|
|
36.6
|
|
0.6
|
|
-
|
|
(0.8)
|
|
36.4
|
|
(1)
|
|
2
|
|
|
|
|
|
Total
|
$
|
969.9
|
|
108.0
|
|
-
|
|
(176.4)
|
|
901.5
|
|
(7)
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
25.1
|
|
(4.6)
|
|
-
|
|
(10.0)
|
|
10.5
|
|
(58)
|
|
(18)
|
|
|
|
EMEA
|
|
18.7
|
|
(1.5)
|
|
-
|
|
0.6
|
|
17.8
|
|
(5)
|
|
(8)
|
|
|
|
North America
|
|
9.2
|
|
(2.2)
|
|
-
|
|
(0.2)
|
|
6.8
|
|
(26)
|
|
(24)
|
|
|
|
Asia Pacific
|
|
5.0
|
|
(0.3)
|
|
-
|
|
-
|
|
4.7
|
|
(6)
|
|
(6)
|
|
|
|
|
Segment operating profit
|
|
58.0
|
|
(8.6)
|
|
-
|
|
(9.6)
|
|
39.8
|
|
(31)
|
|
(15)
|
|
|
|
|
Non-segment
|
|
(11.4)
|
|
1.5
|
|
-
|
|
-
|
|
(9.9)
|
|
(13)
|
|
(13)
|
|
|
|
|
|
Total
|
$
|
46.6
|
|
(7.1)
|
|
-
|
|
(9.6)
|
|
29.9
|
|
(36)
|
|
(15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
|
6.1%
|
|
|
|
|
|
|
|
3.1%
|
|
|
|
|
|
|
|
EMEA
|
|
6.4%
|
|
|
|
|
|
|
|
5.9%
|
|
|
|
|
|
|
|
North America
|
|
4.1%
|
|
|
|
|
|
|
|
3.0%
|
|
|
|
|
|
|
|
Asia Pacific
|
|
13.7%
|
|
|
|
|
|
|
|
12.9%
|
|
|
|
|
|
|
|
|
|
Segment operating margin
|
|
6.0%
|
|
|
|
|
|
|
|
4.4%
|
|
|
|
|
|
|
Amounts may not add due to rounding.
|
(a)
|
Includes operating results and gains/losses on acquisitions, sales and exits of businesses.
|
(b)
|
The “Currency” amount in the table is the sum of the “monthly currency changes” adjusted for any additional expense recorded under highly inflationary accounting rules. 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. Venezuela is translated to the U.S. dollar under highly inflationary accounting rules. Net monetary assets in local currency are remeasured to U.S. dollars using current exchange rates with losses recognized in earnings. Nonmonetary assets under these rules are not remeasured to a lower basis in U.S. dollars when the currency devalues. Instead, these assets retain their higher U.S. dollar historical bases and the excess basis is recognized in earnings as each asset is consumed.
|
Segment Review
Second Quarter 2014 versus Second Quarter 2013
Total Segment Operating Profit
GAAP
Revenue decreased 7% to $901.5 million due primarily to unfavorable changes in currency exchange rates partially offset by organic growth of 26% in our Latin America segment.
Cost of revenues decreased 5% to $754.6 million primarily due to currency devaluation in Venezuela. Selling, general and administrative costs decreased 7% to $135.1 million primarily due to currency devaluation in Venezuela.
Segment operating profit decreased 52% to $26.1 million reflecting the negative impact of changes in currency exchange rates and organic decreases in all segments.
Non-GAAP
The analysis of Non-GAAP revenues is the same as the analysis of GAAP revenues.
Segment operating profit decreased 31% to $39.8 million due to the negative impact of changes in currency exchange rates and organic decreases in all segments.
Latin America
GAAP
Revenue in Latin America decreased 19% ($77.1 million) due to unfavorable currency impact ($185 million) primarily driven by devaluation in Venezuela, partially offset by 26% organic growth ($107.9 million) driven by inflation-based price increases in Venezuela and Argentina, and volume and price growth in Brazil.
Latin America operating profit decreased $25.9 million to an operating loss of $1.5 million due to:
·
|
unfavorable currency impact ($19.8 million) and
|
·
|
organic decreases in Mexico, Venezuela, Chile and Colombia,
|
partially offset by organic improvements in Argentina and Brazil.
Non-GAAP
The analysis of Latin America Non-GAAP revenues is the same as the analysis of Latin America GAAP revenues.
Latin America operating profit decreased 58% ($14.6 million) due to:
·
|
organic decreases in Mexico, Venezuela, Chile and Colombia, and
|
·
|
unfavorable currency impact ($10.0 million),
|
partially offset by organic improvements in Argentina and Brazil.
EMEA
GAAP
Revenue in EMEA increased 3% ($9.5 million) due to favorable changes in currency exchange rates ($12.4 million). Revenue decreased 1% ($2.9 million) on an organic basis due to lower volumes in our Global Services line of business, partially offset by organic growth in Russia.
EMEA operating profit decreased 7% ($1.4 million) due to lower profits in France and in our Global Services line of business, partially offset by organic profit growth in the Netherlands and Germany.
Non-GAAP
The analysis of EMEA Non-GAAP revenues is the same as the analysis of EMEA GAAP revenues.
EMEA operating profit decreased 5% ($0.9 million) due to lower profits in France and our Global Services line of business, partially offset by organic profit growth in the Netherlands and Germany.
North America
GAAP
Revenue in North America was flat as unfavorable currency impact ($3.0 million) offset organic growth in the United States and Canada.
Operating profit decreased $0.6 million due to lower CIT demand and continued pricing pressure in the U.S. and investments in our Global Payments line of business offset by improvement from cost efficiency measures.
Non-GAAP
The analysis of North America Non-GAAP revenues is the same as the analysis of North America GAAP revenues.
Operating profit decreased $2.4 million due to lower CIT demand and continued pricing pressure in the U.S. and investments in our Global Payments line of business offset by improvement from cost efficiency measures.
Most of the armored vehicles used by our U.S. operations are accounted for as operating leases. The cost related to these leases is recognized as rental expense in the Consolidated Statements of Income (Loss). Since March 2009, we have acquired armored vehicles in the U.S. either by purchasing or by leasing under agreements that we have accounted for as capital leases. We currently expect to continue acquiring new vehicles in the U.S. with capital leases. The cost of vehicles under capital lease is recognized as depreciation and interest expense. Because of the shift in the way we acquire vehicles in the U.S., our depreciation and interest related to the U.S. fleet is higher and our rental expense is lower compared to earlier periods and we expect this trend to continue.
Asia Pacific
GAAP
Revenue in Asia Pacific was flat as organic growth was offset by unfavorable changes in currency exchange rates.
Operating profit decreased 8%.
Non-GAAP
The analysis of Asia Pacific Non-GAAP revenues is the same as the analysis of Asia Pacific GAAP revenues.
Operating profit decreased 6%.
Segment Review
First Half 2014 versus First Half 2013
|
First Half
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions /
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic
|
|
Dispositions
|
|
Currency
|
|
|
|
% Change
|
|
|
(In millions)
|
|
YTD '13
|
|
Change
|
|
(a)
|
|
(b)
|
|
YTD '14
|
|
Total
|
|
Organic
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
826.5
|
|
202.3
|
|
-
|
|
(253.9)
|
|
774.9
|
|
(6)
|
|
24
|
|
|
|
EMEA
|
|
571.2
|
|
9.1
|
|
-
|
|
20.6
|
|
600.9
|
|
5
|
|
2
|
|
|
|
North America
|
|
449.5
|
|
3.5
|
|
-
|
|
(7.2)
|
|
445.8
|
|
(1)
|
|
1
|
|
|
|
Asia Pacific
|
|
73.2
|
|
1.3
|
|
-
|
|
(3.0)
|
|
71.5
|
|
(2)
|
|
2
|
|
|
|
|
|
Total
|
$
|
1,920.4
|
|
216.2
|
|
-
|
|
(243.5)
|
|
1,893.1
|
|
(1)
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
47.8
|
|
18.1
|
|
-
|
|
(142.2)
|
|
(76.3)
|
|
unfav
|
|
38
|
|
|
|
EMEA
|
|
27.3
|
|
3.9
|
|
-
|
|
0.9
|
|
32.1
|
|
18
|
|
14
|
|
|
|
North America
|
|
4.3
|
|
2.9
|
|
-
|
|
(0.4)
|
|
6.8
|
|
58
|
|
67
|
|
|
|
Asia Pacific
|
|
9.3
|
|
(0.2)
|
|
-
|
|
(0.1)
|
|
9.0
|
|
(3)
|
|
(2)
|
|
|
|
|
Segment operating profit
|
|
88.7
|
|
24.7
|
|
-
|
|
(141.8)
|
|
(28.4)
|
|
unfav
|
|
28
|
|
|
|
|
Non-segment
|
|
(38.6)
|
|
6.3
|
|
(1.1)
|
|
-
|
|
(33.4)
|
|
(13)
|
|
(16)
|
|
|
|
|
|
Total
|
$
|
50.1
|
|
31.0
|
|
(1.1)
|
|
(141.8)
|
|
(61.8)
|
|
unfav
|
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
|
5.8%
|
|
|
|
|
|
|
|
(9.8%)
|
|
|
|
|
|
|
|
EMEA
|
|
4.8%
|
|
|
|
|
|
|
|
5.3%
|
|
|
|
|
|
|
|
North America
|
|
1.0%
|
|
|
|
|
|
|
|
1.5%
|
|
|
|
|
|
|
|
Asia Pacific
|
|
12.7%
|
|
|
|
|
|
|
|
12.6%
|
|
|
|
|
|
|
|
|
|
Segment operating margin
|
|
4.6%
|
|
|
|
|
|
|
|
(1.5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions /
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic
|
|
Dispositions
|
|
Currency
|
|
|
|
% Change
|
|
|
(In millions)
|
|
YTD '13
|
|
Change
|
|
(a)
|
|
(b)
|
|
YTD '14
|
|
Total
|
|
Organic
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
826.5
|
|
202.3
|
|
-
|
|
(253.9)
|
|
774.9
|
|
(6)
|
|
24
|
|
|
|
EMEA
|
|
571.2
|
|
9.1
|
|
-
|
|
20.6
|
|
600.9
|
|
5
|
|
2
|
|
|
|
North America
|
|
449.5
|
|
3.5
|
|
-
|
|
(7.2)
|
|
445.8
|
|
(1)
|
|
1
|
|
|
|
Asia Pacific
|
|
73.2
|
|
1.3
|
|
-
|
|
(3.0)
|
|
71.5
|
|
(2)
|
|
2
|
|
|
|
|
|
Total
|
$
|
1,920.4
|
|
216.2
|
|
-
|
|
(243.5)
|
|
1,893.1
|
|
(1)
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
62.7
|
|
20.3
|
|
-
|
|
(23.1)
|
|
59.9
|
|
(4)
|
|
32
|
|
|
|
EMEA
|
|
27.3
|
|
4.4
|
|
-
|
|
0.9
|
|
32.6
|
|
19
|
|
16
|
|
|
|
North America
|
|
10.1
|
|
(0.6)
|
|
-
|
|
(0.4)
|
|
9.1
|
|
(10)
|
|
(6)
|
|
|
|
Asia Pacific
|
|
9.3
|
|
(0.1)
|
|
-
|
|
(0.1)
|
|
9.1
|
|
(2)
|
|
(1)
|
|
|
|
|
Segment operating profit
|
|
109.4
|
|
24.0
|
|
-
|
|
(22.7)
|
|
110.7
|
|
1
|
|
22
|
|
|
|
|
Non-segment
|
|
(19.0)
|
|
(4.1)
|
|
-
|
|
-
|
|
(23.1)
|
|
22
|
|
22
|
|
|
|
|
|
Total
|
$
|
90.4
|
|
19.9
|
|
-
|
|
(22.7)
|
|
87.6
|
|
(3)
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
|
7.6%
|
|
|
|
|
|
|
|
7.7%
|
|
|
|
|
|
|
|
EMEA
|
|
4.8%
|
|
|
|
|
|
|
|
5.4%
|
|
|
|
|
|
|
|
North America
|
|
2.2%
|
|
|
|
|
|
|
|
2.0%
|
|
|
|
|
|
|
|
Asia Pacific
|
|
12.7%
|
|
|
|
|
|
|
|
12.7%
|
|
|
|
|
|
|
|
|
|
Segment operating margin
|
|
5.7%
|
|
|
|
|
|
|
|
5.8%
|
|
|
|
|
|
|
Amounts may not add due to rounding.
|
|
See page 23 for footnote explanations.
|
Segment Review
First Half 2014 versus First Half 2013
Total Segment Operating Profit
GAAP
Revenue decreased 1% to $1,893.1 million due primarily to unfavorable changes in currency exchange rates partially offset by organic growth of 24% in our Latin America segment.
Cost of revenues decreased 2% to $1,550.2 million as higher freight and equipment costs were offset by devaluation in Venezuela and lower security losses due to the February 2013 robbery in Brussels, Belgium ($18.7 million in 2013). Selling, general and administrative costs increased 1% to $280.5 million as higher overall stock compensation expense was partially offset by devaluation in Venezuela.
Segment operating profit decreased to a loss of $28.4 million reflecting the negative impact of changes in currency exchange rates, partially offset by higher organic profits in our Latin America segment. First half 2014 includes a $122.2 million charge related to the remeasurement of net monetary assets due to a devaluation of Venezuela currency versus a charge of $13.4 million in 2013. First half 2013 results included a charge of $18.7 million related to a robbery in Brussels, Belgium. This charge impacted the Latin America segment by $5.9 million, the EMEA segment by $8.5 million, the North America segment by $3.5 million and the Asia Pacific segment by $0.8 million.
Non-GAAP
The analysis of Non-GAAP revenues is the same as the analysis of GAAP revenues.
Segment operating profit increased 1% ($1.3 million) reflecting higher organic profits in our Latin America segment partially offset by the unfavorable impact of currency changes. 2013 results included a charge of $18.7 million related to the robbery in Brussels, Belgium. This charge impacted the Latin America segment by $5.9 million, the EMEA segment by $8.5 million, the North America segment by $3.5 million and the Asia Pacific segment by $0.8 million.
Latin America
GAAP
Latin America revenue decreased 6% ($51.6 million) due to unfavorable currency impact ($253.9 million) partially offset by organic growth of 24% ($202.3 million) driven by inflation-based price increases in Venezuela and Argentina, and volume and price growth in Brazil.
Latin America had an operating loss of $76.3 million compared to operating profit of $47.8 million in 2013 due to unfavorable currency impact ($142.2 million), including a larger charge for the remeasurement of net monetary assets in Venezuela in 2014 versus 2013 ($108.8 million), and lower results in Mexico, partially offset by improved organic results in Venezuela, Brazil and Argentina, and lower security costs.
Non-GAAP
The analysis of Latin America Non-GAAP revenues is the same as the analysis of Latin America GAAP revenues.
Latin America operating profit decreased 4% ($2.8 million) due primarily to unfavorable currency impact ($23.1 million) and lower results in Mexico, partially offset by organic improvements in Venezuela, Brazil and Argentina, and lower security costs.
EMEA
GAAP
EMEA revenue increased 5% ($29.7 million) due to favorable changes in currency exchange rates ($20.6 million) and organic revenue growth ($9.1 million). Organic growth was driven by increased volumes in Russia and Ireland.
EMEA operating profit increased 18% ($4.8 million) due to lower security costs and higher profits in the Netherlands and Germany, partially offset by lower profits in France, the United Kingdom and Switzerland.
Non-GAAP
The analysis of EMEA Non-GAAP revenues is the same as the analysis of EMEA GAAP revenues.
EMEA operating profit increased 19% ($5.3 million) due to lower security costs and higher profits in the Netherlands and Germany, partially offset by lower profits in France, the United Kingdom and Switzerland.
North America
GAAP
Revenues in North America were down 1% as unfavorable currency impact ($7.2 million) more than offset organic increases in the United States and Canada.
Operating profit increased $2.5 million due to lower security costs, lower pension costs and improvement from cost efficiency measures, which were partially offset by lower CIT demand and continued pricing pressure in the U.S. and investments in our Global Payments business.
Non-GAAP
The analysis of North America Non-GAAP revenues is the same as the analysis of North America GAAP revenues.
Operating profit decreased $1.0 million due to lower CIT demand and continued pricing pressure in the U.S. and investments in our Global Payments line of business, which were partially offset by lower security costs, and improvement from cost efficiency measures.
Most of the armored vehicles used by our U.S. operations are accounted for as operating leases. The cost related to these leases is recognized as rental expense in the Consolidated Statements of Income (loss). Since March 2009, we have acquired armored vehicles in the U.S. either by purchasing or by leasing under agreements that we have accounted for as capital leases. We currently expect to continue acquiring new vehicles in the U.S. with capital leases. The cost of vehicles under capital lease is recognized as depreciation and interest expense. Because of the shift in the way we acquire vehicles in the U.S., our depreciation and interest related to the U.S. fleet is higher and our rental expense is lower compared to earlier periods and we expect this trend to continue.
Asia Pacific
GAAP
Revenue in Asia Pacific decreased 2% ($1.7 million) due mainly to unfavorable currency impact ($3.0 million).
Operating profit was flat.
Non-GAAP
The analysis of Asia Pacific Non-GAAP revenues is the same as the analysis of Asia Pacific GAAP revenues.
Operating profit was flat.
Non-segment Income (Expense)
|
GAAP
|
|
Three Months
|
|
|
|
Six Months
|
|
|
|
|
|
|
|
|
Ended June 30,
|
|
%
|
|
Ended June 30,
|
|
%
|
|
|
(In millions)
|
|
2014
|
|
2013
|
|
change
|
|
2014
|
|
2013
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
$
|
(13.1)
|
|
(11.9)
|
|
10
|
|
(26.6)
|
|
(19.9)
|
|
34
|
|
|
Retirement costs (primarily former operations)
|
|
(2.8)
|
|
(10.2)
|
|
(73)
|
|
(7.6)
|
|
(20.7)
|
|
(63)
|
|
|
Royalty income
|
|
0.5
|
|
0.5
|
|
-
|
|
0.8
|
|
0.9
|
|
(11)
|
|
|
Gains on business acquisitions and dispositions
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1.1
|
|
(100)
|
|
|
|
|
Non-segment income (expense)
|
$
|
(15.4)
|
|
(21.6)
|
|
(29)
|
|
(33.4)
|
|
(38.6)
|
|
(13)
|
|
Second Quarter
Non-segment expenses in the second quarter of 2014 were lower by $6.2 million than the prior year period mainly due to lower retirement costs ($7.4 million), partially offset by higher overall stock compensation expense versus the prior year period ($0.9 million). The higher stock compensation expense was due to a $2.7 million cumulative accounting adjustment described in note 7 partially offset by the timing of annual equity compensation grants which shifted some expense from the first quarter to the second quarter last year.
First Half
Non-segment expenses in the first half of 2014 were $5.2 million lower than 2013 due to lower retirement costs ($13.1 million), partially offset by:
·
|
higher overall stock compensation expense including the cumulative accounting adjustment versus the prior year period ($4.4 million),
|
·
|
a $2.4 million reduction in accrued benefits recognized in the prior year period which did not recur in 2014, and
|
·
|
a 2013 gain related to a favorable purchase price adjustment on the 2010 Mexico acquisition ($1.1 million).
|
Outlook for 2014
We estimate that non-segment expenses on a GAAP basis will be $62 million in 2014, a decrease from 2013 primarily as a result of lower retirement costs. See page 33 for a summary of our 2014 Outlook.
|
Non-GAAP
|
|
Three Months
|
|
|
|
Six Months
|
|
|
|
|
|
|
|
|
Ended June 30,
|
|
%
|
|
Ended June 30,
|
|
%
|
|
|
(In millions)
|
|
2014
|
|
2013
|
|
change
|
|
2014
|
|
2013
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
$
|
(10.4)
|
|
(11.9)
|
|
(13)
|
|
(23.9)
|
|
(19.9)
|
|
20
|
|
|
Royalty income
|
|
0.5
|
|
0.5
|
|
-
|
|
0.8
|
|
0.9
|
|
(11)
|
|
|
|
Non-segment income (expense)
|
$
|
(9.9)
|
|
(11.4)
|
|
(13)
|
|
(23.1)
|
|
(19.0)
|
|
22
|
|
Second Quarter
Non-segment expenses on a Non-GAAP basis in the second quarter of 2014 were lower by $1.5 million than the second quarter of 2013 due to the timing of the annual equity compensation grants.
First Half
Non-segment expenses on a Non-GAAP basis in the first half of 2014 were $4.1 million higher than 2013, due to higher general and administrative costs ($4.0 million) primarily related to a reduction of accrued benefits in the first quarter of 2013 and higher overall stock compensation expense.
Outlook for 2014
We estimate that non-segment expenses on a Non-GAAP basis will be $45 million in 2014, up slightly from 2013. See page 33 for a summary of our 2014 Outlook.
We currently serve customers in more than 100 countries, including 43 countries where we operate subsidiaries.
We are subject to risks customarily associated with doing business in foreign countries, including labor and economic conditions, political instability, controls on repatriation of earnings and capital, nationalization, expropriation and other forms of restrictive action by local governments. Changes in the political or economic environments in the countries in which we operate could have a material adverse effect on our business, financial condition and results of operations. The future effects, if any, of these risks are unknown.
Our international operations conduct a majority of their business in local currencies. Because our financial results are reported in U.S. dollars, they are affected by changes in the value of various local currencies in relation to the U.S. dollar.
From time to time, we use foreign currency forward and swap contracts to hedge transactional risks associated with foreign currencies. At June 30, 2014, the notional value of our shorter term outstanding foreign currency contracts was $82.6 million with remaining weighted average contract maturities of approximately 1 month. These shorter term foreign currency contracts primarily offset exposures in the Mexican peso and Euro. Additionally, these shorter term contracts are not designated as hedges for accounting purposes, and accordingly, changes in their fair value are recorded immediately in earnings. We recognized losses of $0.6 million on such contracts in the first half of 2014. At June 30, 2014, the fair value of these shorter term foreign currency contracts was not significant.
We also have a longer term cross currency swap contract to hedge exposure in Brazilian real which is designated as a cash flow hedge for accounting purposes. At June 30, 2014, the notional value of this longer term contract was $21.0 million with a weighted average maturity of 2.1 years. We recognized net losses of $1.7 million on this contract, of which losses of $1.2 million were included in other operating income (expense) to offset transaction gains of $1.2 million and expenses of $0.5 million were included in interest and other income (expense) in the first half of 2014. At June 30, 2014, the fair value of the longer term cross currency swap was a net asset of $2.5 million.
See note 1 to the consolidated financial statements for a description of Venezuelan government currency processes and restrictions, their effect on our operations, and how we account for currency remeasurement for our Venezuelan subsidiaries.
Other Operating Income (Expense)
Other operating income (expense) includes segment and non-segment other operating income and expense.
|
|
|
|
|
|
Three Months
|
|
|
|
Six Months
|
|
|
|
|
|
|
|
|
|
Ended June 30,
|
|
%
|
|
Ended June 30,
|
|
%
|
|
|
(In millions)
|
|
|
2014
|
|
2013
|
|
change
|
|
2014
|
|
2013
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share in earnings of equity affiliates
|
|
$
|
1.3
|
|
1.6
|
|
(19)
|
|
2.7
|
|
3.3
|
|
(18)
|
|
|
Royalty income
|
|
|
0.5
|
|
0.5
|
|
-
|
|
0.8
|
|
0.9
|
|
(11)
|
|
|
Foreign currency items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction losses
|
|
|
(1.1)
|
|
(2.3)
|
|
(52)
|
|
(125.9)
|
|
(14.5)
|
|
unfav
|
|
|
|
Hedge losses
|
|
|
(0.2)
|
|
(0.1)
|
|
100
|
|
(0.6)
|
|
(0.5)
|
|
20
|
|
|
Gains on business acquisitions and dispositions
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1.1
|
|
(100)
|
|
|
Gains (losses) on sale of property and other assets
|
|
|
0.2
|
|
-
|
|
fav
|
|
0.5
|
|
0.3
|
|
67
|
|
|
Impairment losses
|
|
|
(0.5)
|
|
-
|
|
unfav
|
|
(0.5)
|
|
-
|
|
unfav
|
|
|
Other
|
|
|
(1.3)
|
|
0.4
|
|
unfav
|
|
(1.2)
|
|
0.8
|
|
unfav
|
|
|
|
|
Other operating income (expense)
|
|
$
|
(1.1)
|
|
0.1
|
|
unfav
|
|
(124.2)
|
|
(8.6)
|
|
unfav
|
|
Second Quarter
Other operating expense was slightly higher in the second quarter of 2014 than the second quarter of 2013
First Half
Other operating expense increased in the first six months of 2014 primarily as a result of the remeasurement of net monetary assets in Venezuela due to the adoption of the government’s SICAD II currency exchange process. See note 1 to the consolidated financial statements for a description of the change in currency exchange processes and rates in Venezuela. The published rate for bolivars at June 30, 2014, under the SICAD II process was 50 bolivars to the U.S. dollar, compared to the Venezuelan government official rate of 6.3 previously used to remeasure bolivars into U.S. dollars. The change represents an 87% reduction in value of net monetary assets denominated in bolivars when expressed in U.S. dollars. Net monetary assets denominated in bolivars were $23.5 million at June 30, 2014.
Nonoperating Income and Expense
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
Six Months
|
|
|
|
|
|
Ended June 30,
|
%
|
|
Ended June 30,
|
%
|
|
|
(In millions)
|
|
2014
|
|
2013
|
change
|
|
2014
|
|
2013
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
$
|
5.9
|
|
5.9
|
-
|
|
11.7
|
|
11.8
|
(1)
|
|
Outlook for 2014
We expect our interest expense to be between $24 million and $26 million in 2014. See page 33 for a summary of our 2014 outlook
|
Interest and other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
Six Months
|
|
|
|
|
|
|
Ended June 30,
|
%
|
|
Ended June 30,
|
%
|
|
|
(In millions)
|
|
2014
|
|
2013
|
change
|
|
2014
|
|
2013
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
$
|
0.6
|
|
0.7
|
(14)
|
|
1.5
|
|
1.3
|
15
|
|
|
Gain on sale of available-for-sale securities
|
|
-
|
|
-
|
-
|
|
0.1
|
|
0.2
|
(50)
|
|
|
Foreign currency hedge gains (losses)
|
|
(0.3)
|
|
(0.3)
|
-
|
|
(0.5)
|
|
(0.5)
|
-
|
|
|
Other
|
|
0.3
|
|
(0.1)
|
fav
|
|
(0.8)
|
|
(0.1)
|
unfav
|
|
|
|
Interest and other income (expense)
|
$
|
0.6
|
|
0.3
|
100
|
|
0.3
|
|
0.9
|
(67)
|
|
Outlook for 2014
We expect interest and other income (expense) to be between $1 million and $2 million of income in 2014. See page 33 for a summary of our 2014 outlook.
Income Taxes
|
|
Three Months
|
|
Six Months
|
|
|
|
Ended June 30,
|
|
Ended June 30,
|
|
|
(In millions)
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit) for income taxes (in millions)
|
$
|
4.7
|
|
|
10.7
|
|
|
13.7
|
|
|
16.1
|
|
|
|
Effective tax rate
|
|
87.0
|
%
|
|
39.3
|
%
|
|
(18.7)
|
%
|
|
41.1
|
%
|
|
2014 Compared to U.S. Statutory Rate
The effective income tax rate on continuing operations in the first six months of 2014 was negative and less than the 35% U.S. statutory tax rate primarily due to the significant nondeductible expenses resulting from the currency devaluation in Venezuela in the first quarter. These nondeductible expenses caused our earnings before tax in the period to be negative. Excluding these nondeductible expenses, our effective tax rate on continuing operations in the first six months is 37%. The rate is higher than 35% primarily due to cross border payments, nondeductible expenses in Mexico due to a recent law change and the characterization of a French business tax as an income tax, partially offset by the geographical mix of earnings.
2013 Compared to U.S. Statutory Rate
The effective income tax rate on continuing operations in the first six months of 2013 was higher than the 35% U.S. statutory tax rate primarily due to a nondeductible remeasurement charge related to net monetary assets resulting from a currency devaluation in Venezuela in the first quarter, as well as additional devaluations forecasted in the second half of 2013. Excluding the aforementioned Venezuela remeasurement charge, our effective tax rate on continuing operations in the first six months is 30%.
Outlook for 2014
Due to the significant non-deductible Venezuela remeasurement charge, tax expense is projected to be more than income from continuing operations before tax on a GAAP basis, resulting in a tax rate in excess of 100%. On a Non- GAAP basis, the effective income tax rate for 2014 is expected to be between 35% and 38%. Our effective tax rate may fluctuate materially from these estimates due to changes in the Venezuela foreign exchange rate (SICAD II), permanent book-tax differences, changes in the expected geographical mix of earnings, changes in current or deferred taxes due to legislative changes, changes in valuation allowances or accruals for contingencies and other factors. See page 33 for a summary of our 2014 outlook.
|
|
|
Three Months
|
|
|
Six Months
|
|
|
|
|
|
Ended June 30,
|
%
|
|
Ended June 30,
|
%
|
|
|
(In millions)
|
|
2014
|
|
2013
|
change
|
|
2014
|
|
2013
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to noncontrolling interests
|
$
|
(1.6)
|
|
3.3
|
unfav
|
|
(30.8)
|
|
7.0
|
unfav
|
|
The net loss attributable to noncontrolling interests in the second quarter and first half of 2014 was primarily due to net losses of our Venezuelan subsidiary as a result of the March 2014 currency devaluation. We recognized $122 million in first-quarter 2014 currency exchange losses from the remeasurement of net monetary assets. We also recognized another $11 million in first-half 2014 expenses related to nonmonetary assets. Nonmonetary assets were not remeasured to a lower basis when the currency devalued. Instead, under highly inflationary accounting rules, these assets retained their higher historical bases, with the excess recognized in earnings as the asset is consumed. The after-tax effect of these losses attributable to noncontrolling interests were $3.8 million in the second quarter of 2014 and $44.0 million in the first half of 2014.
Outlook for 2014
We expect the net loss attributable to noncontrolling interests to be $25 million to $29 million on a GAAP basis in 2014 as compared to net income of $24 million in 2013. The 2014 loss attributable to noncontrolling interests is due to the remeasurement of net monetary assets in the first quarter for Venezuela.
We expect the net income attributable to noncontrolling interests to be $18 million to $22 million on a Non-GAAP basis in 2014 as compared to $29 million in 2013. The lower net income attributable to noncontrolling interests in 2014 is due to lower forecasted U.S. dollar earnings for Venezuela in the last nine months of 2014 as a result of less-favorable rates used to translate local results. See page 33 for a summary of our 2014 Outlook.
|
|
|
|
|
GAAP
|
|
|
|
Non-GAAP
|
(In millions except as noted)
|
|
|
Full-Year
|
|
Full-Year 2014
|
|
|
|
Full-Year
|
|
Full-Year 2014
|
|
|
|
|
|
2013
|
|
Estimate
|
|
|
|
2013
|
|
Estimate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic revenue growth
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
|
|
17%
|
|
21– 23%
|
|
|
|
17%
|
|
21– 23%
|
|
EMEA
|
|
|
2
|
|
0 – 2
|
|
|
|
2
|
|
0 – 2
|
|
North America
|
|
|
1
|
|
0 – 2
|
|
|
|
1
|
|
0 – 2
|
|
Asia Pacific
|
|
|
11
|
|
5 – 7
|
|
|
|
11
|
|
5 – 7
|
|
|
Total
|
|
|
8
|
|
8 – 10
|
|
|
|
8
|
|
8 – 10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency impact on revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
|
|
(9)%
|
|
(32) – (36)%
|
|
|
|
(9)%
|
|
(32) – (36)%
|
|
EMEA
|
|
|
2
|
|
1 – 3
|
|
|
|
2
|
|
1 – 3
|
|
North America
|
|
|
(1)
|
|
flat
|
|
|
|
(1)
|
|
flat
|
|
Asia Pacific
|
|
|
(5)
|
|
(1) – (3)
|
|
|
|
(5)
|
|
(1) – (3)
|
|
|
Total
|
|
|
(3)
|
|
(14) – (16)
|
|
|
|
(3)
|
|
(14) – (16)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
3,942
|
|
~3.7 billion
|
|
|
$
|
3,942
|
|
~3.7 billion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment margin
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
(a)
|
|
|
8.7%
|
|
(1.0) – (3.0)%
|
|
|
|
9.8%
|
|
7.0 – 9.0%
|
|
EMEA
|
|
|
6.9
|
|
6.0 – 8.0
|
|
|
|
6.9
|
|
6.0 – 8.0
|
|
North America
(b)
|
|
|
0.5
|
|
1.5 – 2.5
|
|
|
|
1.8
|
|
2.5 – 3.5
|
|
Asia Pacific
|
|
|
11.5
|
|
10.5 – 12.5
|
|
|
|
12.2
|
|
10.5 – 12.5
|
|
|
Total
|
|
|
6.4
|
|
~2.5
|
|
|
|
7.2
|
|
~6.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-segment expense
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
$
|
45
|
|
50
|
|
|
$
|
45
|
|
47
|
|
Retirement plans
(b)
|
|
|
41
|
|
14
|
|
|
|
-
|
|
-
|
|
Acquisition gains
(c)
|
|
|
(3)
|
|
-
|
|
|
|
-
|
|
-
|
|
Royalty income
|
|
|
(2)
|
|
(2)
|
|
|
|
(2)
|
|
(2)
|
|
|
Non-segment expense
|
|
$
|
81
|
|
62
|
|
|
$
|
43
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective income tax rate
(a)
|
|
|
35%
|
|
100%+
|
|
|
|
33%
|
|
35% – 38%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
25
|
|
24 – 26
|
|
|
$
|
25
|
|
24 – 26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income (expense)
|
|
$
|
2
|
|
1 – 2
|
|
|
$
|
2
|
|
1 – 2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
noncontrolling interests
(a)
|
|
$
|
24
|
|
(25) – (29)
|
|
|
$
|
29
|
|
18 – 22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed assets acquired
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
178
|
|
160 – 170
|
|
|
$
|
178
|
|
160 – 170
|
|
Capital leases
(d)
|
|
|
5
|
|
15
|
|
|
|
5
|
|
15
|
|
|
Total
|
|
$
|
183
|
|
175 – 185
|
|
|
$
|
183
|
|
175 – 185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
$
|
174
|
|
175 – 180
|
|
|
$
|
174
|
|
175 – 180
|
Amounts may not add due to rounding.
(a)
|
Expenses related to currency devaluation in Venezuela ($133 million in 2014 and $15 million in 2013) have been excluded from Non-GAAP and Adjusted Non-GAAP results.
|
(b)
|
Costs related to U.S. retirement plans have been excluded from Non-GAAP and Adjusted Non-GAAP results including $12 million in 2013 and $4 million in 2014 related to North America, and $41 million in 2013 and $14 million in 2014 related to non-segment expense.
|
(c)
|
Acquisition gains and losses are excluded from Non-GAAP results.
|
(d)
|
Includes capital leases for newly acquired assets only.
|
For more information about our outlook, see:
·
|
pages 21 – 22 for organic revenue growth
|
·
|
pages 21 – 22 for segment operating margin
|
·
|
page 29 for non-segment expenses
|
·
|
page 31 for interest expense
|
·
|
page 31 for interest income and other income (expense)
|
·
|
page 32 for effective income tax rate
|
·
|
page 32 for net income attributable to noncontrolling interests
|
·
|
page 41 for fixed assets acquired, depreciation and amortization
|
Supplemental Outlook Information – Non-GAAP Adjusted for Venezuela Results at 50 Bolivars per USD
|
|
|
|
|
Adjusted Non-GAAP
|
(In millions except as noted)
|
|
|
Full-Year 2014
|
|
|
|
|
|
Estimate
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic revenue growth
|
|
|
|
|
Latin America
|
|
|
12 – 14%
|
|
EMEA
|
|
|
0 – 2
|
|
North America
|
|
|
0 – 2
|
|
Asia Pacific
|
|
|
5 – 7
|
|
|
Total
|
|
|
4 – 6
|
|
|
|
|
|
|
Currency impact on revenue
|
|
|
|
|
Latin America
|
|
|
(7) – (9)%
|
|
EMEA
|
|
|
1 – 3
|
|
North America
|
|
|
flat
|
|
Asia Pacific
|
|
|
(1) – (3)
|
|
|
Total
|
|
|
(2) – (4)
|
|
|
|
|
|
|
Total revenues
|
|
$
|
~3.6 billion
|
|
|
|
|
|
|
Segment margin
|
|
|
|
|
Latin America
(a)
|
|
|
5.0 – 7.0%
|
|
EMEA
|
|
|
6.0 – 8.0
|
|
North America
(b)
|
|
|
2.5 – 3.5
|
|
Asia Pacific
|
|
|
10.5 – 12.5
|
|
|
Total
|
|
|
~6
|
|
|
|
|
|
|
Non-segment expense:
|
|
|
|
|
General and administrative
|
|
$
|
47
|
|
Royalty income
|
|
|
(2)
|
|
|
Non-segment expense
(b)(c)
|
|
$
|
45
|
|
|
|
|
|
|
Effective income tax rate
(a)
|
|
|
38% – 41%
|
|
|
|
|
|
|
Interest expense
|
|
$
|
24 – 26
|
|
|
|
|
|
|
Interest and other income (expense)
|
|
$
|
1 – 2
|
|
|
|
|
|
|
Net income (loss) attributable to
|
|
|
|
|
noncontrolling interests
(a)
|
|
$
|
10 – 14
|
|
|
|
|
|
|
Fixed assets acquired:
|
|
|
|
|
Capital expenditures
|
|
$
|
160 – 170
|
|
Capital leases
(d)
|
|
|
15
|
|
|
Total
|
|
$
|
175 – 185
|
|
|
|
|
|
|
Depreciation and amortization
|
|
$
|
175 – 180
|
Amounts may not add due to rounding. See page 33 for notes.
|
|
Non-GAAP and Adjusted Non-GAAP
(h)
Results – Reconciled to Amounts Reported under GAAP
Non-GAAP and Adjusted Non-GAAP results described in this filing are financial measures that are not required by, or presented in accordance with GAAP. See page 19 for more information.
|
(In millions, except for per share amounts)
|
GAAP Basis
|
|
Expenses Related to Currency Devaluation in Venezuela
(a)
|
|
Losses Related to Closure
(b)
|
|
Employee Benefit Settlement Losses
(c)
|
|
U.S. Retirement Plans
(d)
|
|
Share-based Compen-
sation Adjust-
ment
(e)
|
|
Adjust Income Tax Rate
(f)
|
|
Non-GAAP Basis
|
|
Adjust Venezuela to 50 Bolivars to the U.S. Dollar
(g)
|
|
Adjusted Non-GAAP Basis
(h)
|
|
|
|
|
|
First Quarter 2014
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
438.4
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
438.4
|
|
(113.1)
|
|
325.3
|
|
|
|
EMEA
|
|
298.0
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
298.0
|
|
-
|
|
298.0
|
|
|
|
North America
|
|
220.1
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
220.1
|
|
-
|
|
220.1
|
|
|
|
Asia Pacific
|
|
35.1
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
35.1
|
|
-
|
|
35.1
|
|
|
|
|
Revenues
|
$
|
991.6
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
991.6
|
|
(113.1)
|
|
878.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
(74.8)
|
|
123.3
|
|
-
|
|
0.9
|
|
-
|
|
-
|
|
-
|
|
49.4
|
|
(28.9)
|
|
20.5
|
|
|
|
EMEA
|
|
14.8
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
14.8
|
|
-
|
|
14.8
|
|
|
|
North America
|
|
1.1
|
|
-
|
|
-
|
|
-
|
|
1.2
|
|
-
|
|
-
|
|
2.3
|
|
-
|
|
2.3
|
|
|
|
Asia Pacific
|
|
4.4
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
4.4
|
|
-
|
|
4.4
|
|
|
|
|
Segment operating profit
|
|
(54.5)
|
|
123.3
|
|
-
|
|
0.9
|
|
1.2
|
|
-
|
|
-
|
|
70.9
|
|
(28.9)
|
|
42.0
|
|
|
|
Non-segment
|
|
(18.0)
|
|
-
|
|
-
|
|
-
|
|
4.8
|
|
-
|
|
-
|
|
(13.2)
|
|
-
|
|
(13.2)
|
|
|
|
|
Operating profit
|
$
|
(72.5)
|
|
123.3
|
|
-
|
|
0.9
|
|
6.0
|
|
-
|
|
-
|
|
57.7
|
|
(28.9)
|
|
28.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
$
|
(58.4)
|
|
74.9
|
|
-
|
|
0.6
|
|
3.8
|
|
-
|
|
1.2
|
|
22.1
|
|
(11.2)
|
|
10.9
|
|
|
Diluted EPS – continuing operations
|
|
(1.19)
|
|
1.53
|
|
-
|
|
0.01
|
|
0.08
|
|
-
|
|
0.02
|
|
0.45
|
|
(0.23)
|
|
0.22
|
|
See page 36 for footnote explanations.
|
Non-GAAP and Adjusted Non-GAAP
(h)
Results – Reconciled to Amounts Reported under GAAP (Continued)
|
|
|
|
GAAP Basis
|
|
Expenses Related to Currency Devaluation in Venezuela
(a)
|
|
Losses Related to Closure
(b)
|
|
Employee Benefit Settlement Losses
(c)
|
|
U.S. Retirement Plans
(d)
|
|
Share-based Compen-
sation Adjust-
ment
(e)
|
|
Adjust Income Tax Rate
(f)
|
|
Non-GAAP Basis
|
|
Adjust Venezuela to 50 Bolivars to the U.S. Dollar
(g)
|
|
Adjusted Non-GAAP Basis
(h)
|
|
|
|
|
|
Second Quarter 2014
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
336.5
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
336.5
|
|
-
|
|
336.5
|
|
|
|
EMEA
|
|
302.9
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
302.9
|
|
-
|
|
302.9
|
|
|
|
North America
|
|
225.7
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
225.7
|
|
-
|
|
225.7
|
|
|
|
Asia Pacific
|
|
36.4
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
36.4
|
|
-
|
|
36.4
|
|
|
|
|
Revenues
|
$
|
901.5
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
901.5
|
|
-
|
|
901.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
(1.5)
|
|
9.8
|
|
0.7
|
|
0.9
|
|
-
|
|
0.6
|
|
-
|
|
10.5
|
|
-
|
|
10.5
|
|
|
|
EMEA
|
|
17.3
|
|
-
|
|
-
|
|
-
|
|
-
|
|
0.5
|
|
-
|
|
17.8
|
|
-
|
|
17.8
|
|
|
|
North America
|
|
5.7
|
|
-
|
|
-
|
|
-
|
|
0.8
|
|
0.3
|
|
-
|
|
6.8
|
|
-
|
|
6.8
|
|
|
|
Asia Pacific
|
|
4.6
|
|
-
|
|
-
|
|
-
|
|
-
|
|
0.1
|
|
-
|
|
4.7
|
|
-
|
|
4.7
|
|
|
|
|
Segment operating profit
|
|
26.1
|
|
9.8
|
|
0.7
|
|
0.9
|
|
0.8
|
|
1.5
|
|
-
|
|
39.8
|
|
-
|
|
39.8
|
|
|
|
Non-segment
|
|
(15.4)
|
|
-
|
|
-
|
|
-
|
|
2.8
|
|
2.7
|
|
-
|
|
(9.9)
|
|
-
|
|
(9.9)
|
|
|
|
|
Operating profit
|
$
|
10.7
|
|
9.8
|
|
0.7
|
|
0.9
|
|
3.6
|
|
4.2
|
|
-
|
|
29.9
|
|
-
|
|
29.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
$
|
2.3
|
|
6.0
|
|
0.7
|
|
0.8
|
|
2.3
|
|
3.4
|
|
(2.1)
|
|
13.4
|
|
(0.6)
|
|
12.8
|
|
|
Diluted EPS – continuing operations
|
|
0.05
|
|
0.12
|
|
0.01
|
|
0.02
|
|
0.05
|
|
0.07
|
|
(0.04)
|
|
0.27
|
|
(0.01)
|
|
0.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Half 2014
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
774.9
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
774.9
|
|
(113.1)
|
|
661.8
|
|
|
|
EMEA
|
|
600.9
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
600.9
|
|
-
|
|
600.9
|
|
|
|
North America
|
|
445.8
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
445.8
|
|
-
|
|
445.8
|
|
|
|
Asia Pacific
|
|
71.5
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
71.5
|
|
-
|
|
71.5
|
|
|
|
|
Revenues
|
$
|
1,893.1
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1,893.1
|
|
(113.1)
|
|
1,780.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
(76.3)
|
|
133.1
|
|
0.7
|
|
1.8
|
|
-
|
|
0.6
|
|
-
|
|
59.9
|
|
(28.9)
|
|
31.0
|
|
|
|
EMEA
|
|
32.1
|
|
-
|
|
-
|
|
-
|
|
-
|
|
0.5
|
|
-
|
|
32.6
|
|
-
|
|
32.6
|
|
|
|
North America
|
|
6.8
|
|
-
|
|
-
|
|
-
|
|
2.0
|
|
0.3
|
|
-
|
|
9.1
|
|
-
|
|
9.1
|
|
|
|
Asia Pacific
|
|
9.0
|
|
-
|
|
-
|
|
-
|
|
-
|
|
0.1
|
|
-
|
|
9.1
|
|
-
|
|
9.1
|
|
|
|
|
Segment operating profit
|
|
(28.4)
|
|
133.1
|
|
0.7
|
|
1.8
|
|
2.0
|
|
1.5
|
|
-
|
|
110.7
|
|
(28.9)
|
|
81.8
|
|
|
|
Non-segment
|
|
(33.4)
|
|
-
|
|
-
|
|
-
|
|
7.6
|
|
2.7
|
|
-
|
|
(23.1)
|
|
-
|
|
(23.1)
|
|
|
|
|
Operating profit
|
$
|
(61.8)
|
|
133.1
|
|
0.7
|
|
1.8
|
|
9.6
|
|
4.2
|
|
-
|
|
87.6
|
|
(28.9)
|
|
58.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
$
|
(56.1)
|
|
80.9
|
|
0.7
|
|
1.4
|
|
6.1
|
|
3.4
|
|
(0.9)
|
|
35.5
|
|
(11.8)
|
|
23.7
|
|
|
Diluted EPS – continuing operations
|
|
(1.15)
|
|
1.65
|
|
0.01
|
|
0.03
|
|
0.12
|
|
0.07
|
|
(0.02)
|
|
0.72
|
|
(0.24)
|
|
0.48
|
|
Amounts may not add due to rounding.
(a)
|
To eliminate the effects of the March 2014 currency devaluation in Venezuela as described in (g) below. Expenses eliminated from Non-GAAP results include first-quarter currency exchange losses totaling $122 million related to remeasured net monetary assets and $1 million first-quarter and $10 million second-quarter expenses related to nonmonetary assets. Nonmonetary assets were not remeasured to a lower basis when the currency devalued. Instead, under highly inflationary accounting rules, these assets retained their higher historical bases, which excess is recognized in earnings as the asset is consumed.
|
(b)
|
To eliminate an impairment loss related to Latin America operations that are expected to be shut down within the next 12 months.
|
(c)
|
To eliminate employee benefit settlement losses in Mexico.
|
(d)
|
To eliminate expenses related to U.S. retirement plans.
|
(e)
|
To eliminate the expense related to an accounting adjustment related to share-based compensation. The accounting adjustment revises the accounting for share-based compensation from fixed to variable fair value accounting as defined in ASC Topic 718,
Stock Compensation
. For more information, see page 15.
|
(f)
|
To adjust effective income tax rate in the interim period to be equal to the midpoint of the estimated range of the full-year Non-GAAP effective income tax rate. The midpoint of the estimated range of the full-year Non-GAAP effective tax rate for 2014 is 36.5%.
|
(g)
|
Effective March 24, 2014, Brink’s began remeasuring its Venezuelan operating results using currency exchange rates reported under a newly established currency exchange process in Venezuela (the “SICAD II process”). The rate published for this process has averaged approximately 50 since opening on March 24, 2014.This adjustment reflects a hypothetical remeasurement of Brink’s Venezuela’s first quarter 2014 revenue and operating results using a rate of 50 bolivars to the U.S. dollar, which approximates the rate observed in the new SICAD II currency exchange process in March 2014.
|
(h)
|
Non-GAAP results adjusted for Venezuelan results at 50 bolivars per U.S. dollar.
|
|
Non-GAAP and Adjusted Non-GAAP
(g)
Results – Reconciled to Amounts Reported under GAAP (Continued)
|
|
|
|
GAAP Basis
|
|
Gains and Losses on Acquisitions and Dispositions
(a)
|
|
Expenses Related to Currency Devaluation in Venezuela
(b)
|
|
Employee Benefit Settlement Losses
(c)
|
|
U.S. Retirement Plans
(d)
|
|
Adjust Income Tax Rate
(e)
|
|
Non-GAAP Basis
|
|
Adjust Venezuela to 50 Bolivars to the U.S. Dollar
(f)
|
|
Adjusted Non-GAAP Basis
(g)
|
|
|
|
|
|
First Quarter 2013
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
412.9
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
412.9
|
|
(84.5)
|
|
328.4
|
|
|
|
EMEA
|
|
277.8
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
277.8
|
|
-
|
|
277.8
|
|
|
|
North America
|
|
223.2
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
223.2
|
|
-
|
|
223.2
|
|
|
|
Asia Pacific
|
|
36.6
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
36.6
|
|
-
|
|
36.6
|
|
|
|
|
Revenues
|
$
|
950.5
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
950.5
|
|
(84.5)
|
|
866.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
23.4
|
|
-
|
|
13.9
|
|
0.3
|
|
-
|
|
-
|
|
37.6
|
|
(18.0)
|
|
19.6
|
|
|
|
EMEA
|
|
8.6
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
8.6
|
|
-
|
|
8.6
|
|
|
|
North America
|
|
(2.0)
|
|
-
|
|
-
|
|
-
|
|
2.9
|
|
-
|
|
0.9
|
|
-
|
|
0.9
|
|
|
|
Asia Pacific
|
|
4.3
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
4.3
|
|
-
|
|
4.3
|
|
|
|
|
Segment operating profit
|
|
34.3
|
|
-
|
|
13.9
|
|
0.3
|
|
2.9
|
|
-
|
|
51.4
|
|
(18.0)
|
|
33.4
|
|
|
|
Non-segment
|
|
(17.0)
|
|
(1.1)
|
|
-
|
|
-
|
|
10.5
|
|
-
|
|
(7.6)
|
|
-
|
|
(7.6)
|
|
|
|
|
Operating profit
|
$
|
17.3
|
|
(1.1)
|
|
13.9
|
|
0.3
|
|
13.4
|
|
-
|
|
43.8
|
|
(18.0)
|
|
25.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
$
|
2.9
|
|
(1.1)
|
|
8.7
|
|
0.2
|
|
8.2
|
|
0.1
|
|
19.0
|
|
(8.9)
|
|
10.1
|
|
|
Diluted EPS – continuing operations
|
|
0.06
|
|
(0.02)
|
|
0.18
|
|
-
|
|
0.17
|
|
-
|
|
0.39
|
|
(0.18)
|
|
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter 2013
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
413.6
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
413.6
|
|
(83.9)
|
|
329.7
|
|
|
|
EMEA
|
|
293.4
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
293.4
|
|
-
|
|
293.4
|
|
|
|
North America
|
|
226.3
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
226.3
|
|
-
|
|
226.3
|
|
|
|
Asia Pacific
|
|
36.6
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
36.6
|
|
-
|
|
36.6
|
|
|
|
|
Revenues
|
$
|
969.9
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
969.9
|
|
(83.9)
|
|
886.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
24.4
|
|
-
|
|
0.2
|
|
0.5
|
|
-
|
|
-
|
|
25.1
|
|
(8.6)
|
|
16.5
|
|
|
|
EMEA
|
|
18.7
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
18.7
|
|
-
|
|
18.7
|
|
|
|
North America
|
|
6.3
|
|
-
|
|
-
|
|
-
|
|
2.9
|
|
-
|
|
9.2
|
|
-
|
|
9.2
|
|
|
|
Asia Pacific
|
|
5.0
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5.0
|
|
-
|
|
5.0
|
|
|
|
|
Segment operating profit
|
|
54.4
|
|
-
|
|
0.2
|
|
0.5
|
|
2.9
|
|
-
|
|
58.0
|
|
(8.6)
|
|
49.4
|
|
|
|
Non-segment
|
|
(21.6)
|
|
-
|
|
-
|
|
-
|
|
10.2
|
|
-
|
|
(11.4)
|
|
-
|
|
(11.4)
|
|
|
|
|
Operating profit
|
$
|
32.8
|
|
-
|
|
0.2
|
|
0.5
|
|
13.1
|
|
-
|
|
46.6
|
|
(8.6)
|
|
38.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
$
|
13.2
|
|
-
|
|
0.1
|
|
0.4
|
|
7.7
|
|
1.5
|
|
22.9
|
|
(5.8)
|
|
17.1
|
|
|
Diluted EPS – continuing operations
|
|
0.27
|
|
-
|
|
-
|
|
0.01
|
|
0.16
|
|
0.03
|
|
0.47
|
|
(0.12)
|
|
0.35
|
|
See page 39 for footnote explanations.
|
Non-GAAP and Adjusted Non-GAAP
(g)
Results – Reconciled to Amounts Reported under GAAP (Continued)
|
|
|
|
GAAP Basis
|
|
Gains and Losses on Acquisitions and Dispositions
(a)
|
|
Expenses Related to Currency Devaluation in Venezuela
(b)
|
|
Employee Benefit Settlement Losses
(c)
|
|
U.S. Retirement Plans
(d)
|
|
Adjust Income Tax Rate
(e)
|
|
Non-GAAP Basis
|
|
Adjust Venezuela to 50 Bolivars to the U.S. Dollar
(f)
|
|
Adjusted Non-GAAP Basis
(g)
|
|
|
|
|
|
First Half 2013
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
826.5
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
826.5
|
|
(168.4)
|
|
658.1
|
|
|
|
EMEA
|
|
571.2
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
571.2
|
|
-
|
|
571.2
|
|
|
|
North America
|
|
449.5
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
449.5
|
|
-
|
|
449.5
|
|
|
|
Asia Pacific
|
|
73.2
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
73.2
|
|
-
|
|
73.2
|
|
|
|
|
Revenues
|
$
|
1,920.4
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1,920.4
|
|
(168.4)
|
|
1,752.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
47.8
|
|
-
|
|
14.1
|
|
0.8
|
|
-
|
|
-
|
|
62.7
|
|
(26.6)
|
|
36.1
|
|
|
|
EMEA
|
|
27.3
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
27.3
|
|
-
|
|
27.3
|
|
|
|
North America
|
|
4.3
|
|
-
|
|
-
|
|
-
|
|
5.8
|
|
-
|
|
10.1
|
|
-
|
|
10.1
|
|
|
|
Asia Pacific
|
|
9.3
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
9.3
|
|
-
|
|
9.3
|
|
|
|
|
Segment operating profit
|
|
88.7
|
|
-
|
|
14.1
|
|
0.8
|
|
5.8
|
|
-
|
|
109.4
|
|
(26.6)
|
|
82.8
|
|
|
|
Non-segment
|
|
(38.6)
|
|
(1.1)
|
|
-
|
|
-
|
|
20.7
|
|
-
|
|
(19.0)
|
|
-
|
|
(19.0)
|
|
|
|
|
Operating profit
|
$
|
50.1
|
|
(1.1)
|
|
14.1
|
|
0.8
|
|
26.5
|
|
-
|
|
90.4
|
|
(26.6)
|
|
63.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
$
|
16.1
|
|
(1.1)
|
|
8.8
|
|
0.6
|
|
15.9
|
|
1.6
|
|
41.9
|
|
(14.7)
|
|
27.2
|
|
|
Diluted EPS – continuing operations
|
|
0.33
|
|
(0.02)
|
|
0.18
|
|
0.01
|
|
0.33
|
|
0.03
|
|
0.86
|
|
(0.30)
|
|
0.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter 2013
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
423.8
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
423.8
|
|
(100.1)
|
|
323.7
|
|
|
|
EMEA
|
|
301.2
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
301.2
|
|
-
|
|
301.2
|
|
|
|
North America
|
|
222.5
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
222.5
|
|
-
|
|
222.5
|
|
|
|
Asia Pacific
|
|
34.9
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
34.9
|
|
-
|
|
34.9
|
|
|
|
|
Revenues
|
$
|
982.4
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
982.4
|
|
(100.1)
|
|
882.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
42.8
|
|
-
|
|
0.2
|
|
0.8
|
|
-
|
|
-
|
|
43.8
|
|
(20.7)
|
|
23.1
|
|
|
|
EMEA
|
|
32.1
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
32.1
|
|
-
|
|
32.1
|
|
|
|
North America
|
|
0.2
|
|
-
|
|
-
|
|
-
|
|
2.9
|
|
-
|
|
3.1
|
|
-
|
|
3.1
|
|
|
|
Asia Pacific
|
|
4.8
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
4.8
|
|
-
|
|
4.8
|
|
|
|
|
Segment operating profit
|
|
79.9
|
|
-
|
|
0.2
|
|
0.8
|
|
2.9
|
|
-
|
|
83.8
|
|
(20.7)
|
|
63.1
|
|
|
|
Non-segment
|
|
(20.7)
|
|
(0.9)
|
|
-
|
|
-
|
|
10.3
|
|
-
|
|
(11.3)
|
|
-
|
|
(11.3)
|
|
|
|
|
Operating profit
|
$
|
59.2
|
|
(0.9)
|
|
0.2
|
|
0.8
|
|
13.2
|
|
-
|
|
72.5
|
|
(20.7)
|
|
51.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
$
|
29.8
|
|
(0.9)
|
|
0.1
|
|
0.6
|
|
7.7
|
|
(1.7)
|
|
35.6
|
|
(11.6)
|
|
24.0
|
|
|
Diluted EPS – continuing operations
|
|
0.61
|
|
(0.02)
|
|
-
|
|
0.01
|
|
0.16
|
|
(0.03)
|
|
0.73
|
|
(0.24)
|
|
0.49
|
|
See page 39 for footnote explanations.
|
Non-GAAP and Adjusted Non-GAAP
(g)
Results – Reconciled to Amounts Reported under GAAP (Continued)
|
|
|
|
GAAP Basis
|
|
Gains and Losses on Acquisitions and Dispositions
(a)
|
|
Expenses Related to Currency Devaluation in Venezuela
(b)
|
|
Employee Benefit Settlement Losses
(c)
|
|
U.S. Retirement Plans
(d)
|
|
Adjust Income Tax Rate
(e)
|
|
Non-GAAP Basis
|
|
Adjust Ve-
nezuela to 50 Bolivars to the U.S. Dollar
(f)
|
|
Adjusted Non-GAAP Basis
(g)
|
|
|
|
|
|
Fourth Quarter 2013
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
470.4
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
470.4
|
|
(123.0)
|
|
347.4
|
|
|
|
EMEA
|
|
305.9
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
305.9
|
|
-
|
|
305.9
|
|
|
|
North America
|
|
226.4
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
226.4
|
|
-
|
|
226.4
|
|
|
|
Asia Pacific
|
|
36.7
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
36.7
|
|
-
|
|
36.7
|
|
|
|
|
Revenues
|
$
|
1,039.4
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1,039.4
|
|
(123.0)
|
|
916.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
59.3
|
|
2.2
|
|
0.3
|
|
0.9
|
|
-
|
|
-
|
|
62.7
|
|
(21.6)
|
|
41.1
|
|
|
|
EMEA
|
|
22.1
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
22.1
|
|
-
|
|
22.1
|
|
|
|
North America
|
|
0.2
|
|
-
|
|
-
|
|
-
|
|
2.9
|
|
-
|
|
3.1
|
|
-
|
|
3.1
|
|
|
|
Asia Pacific
|
|
2.6
|
|
0.9
|
|
-
|
|
-
|
|
-
|
|
-
|
|
3.5
|
|
-
|
|
3.5
|
|
|
|
|
Segment operating profit
|
|
84.2
|
|
3.1
|
|
0.3
|
|
0.9
|
|
2.9
|
|
-
|
|
91.4
|
|
(21.6)
|
|
69.8
|
|
|
|
Non-segment
|
|
(21.8)
|
|
(0.8)
|
|
-
|
|
-
|
|
10.3
|
|
-
|
|
(12.3)
|
|
-
|
|
(12.3)
|
|
|
|
|
Operating profit
|
$
|
62.4
|
|
2.3
|
|
0.3
|
|
0.9
|
|
13.2
|
|
-
|
|
79.1
|
|
(21.6)
|
|
57.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
$
|
26.0
|
|
4.0
|
|
0.2
|
|
0.6
|
|
8.2
|
|
0.1
|
|
39.1
|
|
(9.8)
|
|
29.3
|
|
|
Diluted EPS – continuing operations
|
|
0.53
|
|
0.08
|
|
-
|
|
0.01
|
|
0.17
|
|
-
|
|
0.79
|
|
(0.20)
|
|
0.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year 2013
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
1,720.7
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1,720.7
|
|
(391.5)
|
|
1,329.2
|
|
|
|
EMEA
|
|
1,178.3
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1,178.3
|
|
-
|
|
1,178.3
|
|
|
|
North America
|
|
898.4
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
898.4
|
|
-
|
|
898.4
|
|
|
|
Asia Pacific
|
|
144.8
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
144.8
|
|
-
|
|
144.8
|
|
|
|
|
Revenues
|
$
|
3,942.2
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
3,942.2
|
|
(391.5)
|
|
3,550.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
149.9
|
|
2.2
|
|
14.6
|
|
2.5
|
|
-
|
|
-
|
|
169.2
|
|
(68.9)
|
|
100.3
|
|
|
|
EMEA
|
|
81.5
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
81.5
|
|
-
|
|
81.5
|
|
|
|
North America
|
|
4.7
|
|
-
|
|
-
|
|
-
|
|
11.6
|
|
-
|
|
16.3
|
|
-
|
|
16.3
|
|
|
|
Asia Pacific
|
|
16.7
|
|
0.9
|
|
-
|
|
-
|
|
-
|
|
-
|
|
17.6
|
|
-
|
|
17.6
|
|
|
|
|
Segment operating profit
|
|
252.8
|
|
3.1
|
|
14.6
|
|
2.5
|
|
11.6
|
|
-
|
|
284.6
|
|
(68.9)
|
|
215.7
|
|
|
|
Non-segment
|
|
(81.1)
|
|
(2.8)
|
|
-
|
|
-
|
|
41.3
|
|
-
|
|
(42.6)
|
|
-
|
|
(42.6)
|
|
|
|
|
Operating profit
|
$
|
171.7
|
|
0.3
|
|
14.6
|
|
2.5
|
|
52.9
|
|
-
|
|
242.0
|
|
(68.9)
|
|
173.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
$
|
71.9
|
|
2.0
|
|
9.1
|
|
1.8
|
|
31.8
|
|
-
|
|
116.6
|
|
(36.1)
|
|
80.5
|
|
|
Diluted EPS – continuing operations
|
|
1.47
|
|
0.04
|
|
0.18
|
|
0.04
|
|
0.65
|
|
-
|
|
2.38
|
|
(0.74)
|
|
1.64
|
|
Amounts may not add due to rounding.
·
|
a $1.1 million adjustment in the first quarter of 2013 to the amount of gain recognized on a 2010 business acquisition in Mexico as a result of a favorable adjustment to the purchase price received in the first quarter of 2013.
|
·
|
$1.7 million of adjustments in the third and fourth quarters of 2013 primarily related to the January 2013 acquisition of Rede Trel in Brazil.
|
·
|
$3.1 million in adjustments in the fourth quarter of 2013 related to the increase in a loss contingency assumed in the 2010 Mexico acquisition and the impairment of an intangible asset acquired in the 2009 India acquisition.
|
·
|
a $2.6 million tax adjustment related to the Belgium disposition.
|
(b)
|
To eliminate the effects of the February 2013 currency devaluation in Venezuela in which the official exchange rate in Venezuela declined 16% from 5.3 to 6.3 bolivars to the U.S. dollar. Expenses eliminated from Non-GAAP results include first quarter currency exchange losses totaling $13.4 million related to remeasured net monetary assets as well as expenses related to nonmonetary assets ($0.5 million in the first quarter, $0.2 million in the second quarter, $0.2 million in the third quarter and $0.3 million in the fourth quarter). Nonmonetary assets were not remeasured to a lower basis when the currency devalued. Instead, under highly inflationary accounting rules, these assets retained their higher historical bases, which excess is recognized in earnings as the asset is consumed.
|
(c)
|
To eliminate employee benefit settlement losses in Mexico.
|
(d)
|
To eliminate expenses related to U.S. retirement plans.
|
(e)
|
To adjust effective income tax rate in the interim period to be equal to the full-year Non-GAAP effective income tax rate. The full-year Non-GAAP effective tax rate for 2013 is 33.1%.
|
(f)
|
Effective March 24, 2014, Brink’s began remeasuring its Venezuelan operating results using currency exchange rates reported under a newly established currency exchange process in Venezuela (the “SICAD II process”). This adjustment reflects a hypothetical remeasurement of Brink’s Venezuela’s 2013 revenue and operating results using a rate of 50 bolivars to the U.S. dollar, which approximates the rate observed in the new SICAD II currency exchange process in March 2014. Losses that would have been recognized in 2013 had Brink’s used a rate of 50 bolivars to the U.S. dollar to remeasure its net monetary assets have been excluded from this adjustment and the Adjusted Non-GAAP results.
|
(g)
|
Non-GAAP results adjusted for Venezuelan results at 50 bolivars per U.S. dollar.
|
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities increased by $6.5 million in the first six months of 2014 as compared to the first six months of 2013. Cash used for investing activities decreased by $29.3 million in the first six months of 2014 compared to the first six months of 2013 primarily as a result of a decrease in cash used for business acquisitions and a decrease in capital expenditures. Cash also decreased $93.1 million in 2014 as a result of a change in the exchange rate we used to remeasure net monetary assets including cash in Venezuela (see note 1 to the consolidated financial statements). We financed our liquidity needs in the first six months of 2014 with our revolving credit facility and short-term borrowings.
We entered into a new master lease agreement in late 2009 to finance the acquisition of new armored vehicles in the U.S. Vehicles acquired under the 2009 lease agreement have been accounted for as capital leases. Vehicles acquired under the previous lease agreement were accounted for as operating leases.
|
|
|
|
|
Six Months
|
|
|
|
|
|
|
Ended June 30,
|
|
$
|
|
|
(In millions)
|
|
2014
|
|
2013
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
Non-GAAP basis
|
$
|
38.6
|
|
33.4
|
|
5.2
|
|
|
|
Increase (decrease) in certain customer obligations
(a)
|
|
8.1
|
|
14.2
|
|
(6.1)
|
|
|
|
Discontinued operations
(b)
|
|
0.9
|
|
(6.5)
|
|
7.4
|
|
|
|
|
GAAP basis
|
$
|
47.6
|
|
41.1
|
|
6.5
|
|
(a)
|
To eliminate the change in the balance of customer obligations related to cash received and processed in certain of our secure Cash Management Services operations. The title to this cash transfers to us for a short period of time. The cash is generally credited to customers’ accounts the following day and we do not consider it as available for general corporate purposes in the management of our liquidity and capital resources.
|
(b)
|
To eliminate cash flows related to our discontinued operations.
|
“Non-GAAP cash flows from operating activities” is a supplemental financial measure that is not required by, or presented in accordance with GAAP. The purpose of the Non-GAAP cash flows from operating activities is to report financial information excluding the impact of cash received and processed in certain of our secure Cash Management Services operations, and without cash flows from discontinued operations. We believe this measure is helpful in assessing cash flows from operations, enable period-to-period comparability and are useful in predicting future operating cash flows. Non-GAAP cash flows from operating activities should not be considered as an alternative to cash flows from operating activities determined in accordance with GAAP and should be read in conjunction with our consolidated statements of cash flows.
GAAP
Operating cash flows increased by $6.5 million in the first six months of 2014 compared to the same period in 2013. The increase was primarily due to working capital improvements, including the timing of security loss payments and insurance recoveries, and a decrease in cash used by discontinued operations. These increases in cash flows from operating activities were partially offset by a net increase in contributions to our primary U.S. pension plan and less cash provided from changes in customer obligations of certain of our secure Cash Management Services operations (cash held for customers increased by $8.1 million in the first six months of 2014 compared to an increase of $14.2 million in the same 2013 period).
Non-GAAP
Cash flows from operating activities increased by $5.2 million on a Non-GAAP basis in the first six months of 2014 as compared to the same period in 2013. The increase was primarily due to working capital improvements, including the timing of security loss payments and insurance recoveries, partially offset by an increase in contributions to our primary U.S. pension plan.
Investing Activities
|
|
|
|
|
Six Months
|
|
|
|
|
|
|
|
|
Ended June 30,
|
|
$
|
|
|
(In millions)
|
|
2014
|
|
2013
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$
|
(56.9)
|
|
(78.2)
|
|
21.3
|
|
|
|
Acquisitions
|
|
-
|
|
(18.0)
|
|
18.0
|
|
|
|
Proceeds from the sale of available-for-sale securities and other investments
|
|
1.3
|
|
8.9
|
|
(7.6)
|
|
|
|
Proceeds from sale of property and equipment
|
|
1.6
|
|
0.5
|
|
1.1
|
|
|
|
Other
|
|
(0.1)
|
|
(0.3)
|
|
0.2
|
|
|
|
Discontinued operations
|
|
(4.7)
|
|
(1.0)
|
|
(3.7)
|
|
|
|
|
Investing activities
|
$
|
(58.8)
|
|
(88.1)
|
|
29.3
|
|
Cash used by investing activities decreased by $29.3 million in the first six months of 2014 versus the first six months of 2013. The decrease was primarily due to $18.0 million in cash used for business acquisitions in 2013 and a decrease in capital expenditures of $21.3 million primarily related to armored vehicles, information technology and other equipment. An acquisition of noncontrolling interests of a subsidiary ($18.5 million in 2013) is included in the financing section of our cash flows statement.
Capital expenditures and depreciation and amortization were as follows:
|
|
|
|
|
|
Six Months
|
|
|
|
|
|
|
Full Year
|
|
|
|
|
|
|
|
Ended June 30,
|
|
$
|
|
|
Full Year
|
|
Outlook
|
|
|
(In millions)
|
|
2014
|
|
2013
|
|
change
|
|
|
2013
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment acquired during the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
25.1
|
|
43.1
|
|
(18.0)
|
|
|
88.7
|
|
(a)
|
|
|
|
|
EMEA
|
|
12.3
|
|
14.9
|
|
(2.6)
|
|
|
33.9
|
|
(a)
|
|
|
|
|
North America
|
|
18.0
|
|
18.4
|
|
(0.4)
|
|
|
52.1
|
|
(a)
|
|
|
|
|
Asia Pacific
|
|
1.5
|
|
1.8
|
|
(0.3)
|
|
|
3.0
|
|
(a)
|
|
|
|
|
|
Capital expenditures
|
|
56.9
|
|
78.2
|
|
(21.3)
|
|
|
177.7
|
|
160 – 170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital leases
(b)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
|
1.3
|
|
-
|
|
1.3
|
|
|
0.9
|
|
(a)
|
|
|
|
|
North America
|
|
0.1
|
|
0.5
|
|
(0.4)
|
|
|
4.6
|
|
(a)
|
|
|
|
|
|
Capital leasesa
|
|
1.4
|
|
0.5
|
|
0.9
|
|
|
5.5
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
|
26.4
|
|
43.1
|
|
(16.7)
|
|
|
89.6
|
|
(a)
|
|
|
|
|
EMEA
|
|
12.3
|
|
14.9
|
|
(2.6)
|
|
|
33.9
|
|
(a)
|
|
|
|
|
North America
|
|
18.1
|
|
18.9
|
|
(0.8)
|
|
|
56.7
|
|
(a)
|
|
|
|
|
Asia Pacific
|
|
1.5
|
|
1.8
|
|
(0.3)
|
|
|
3.0
|
|
(a)
|
|
|
|
|
|
Total
|
$
|
58.3
|
|
78.7
|
|
(20.4)
|
|
|
183.2
|
|
175 – 185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
$
|
31.5
|
|
29.7
|
|
1.8
|
|
|
60.8
|
|
(a)
|
|
|
|
EMEA
|
|
22.2
|
|
22.9
|
|
(0.7)
|
|
|
48.8
|
|
(a)
|
|
|
|
North America
|
|
29.9
|
|
28.8
|
|
1.1
|
|
|
58.2
|
|
(a)
|
|
|
|
Asia Pacific
|
|
2.6
|
|
2.9
|
|
(0.3)
|
|
|
5.8
|
|
(a)
|
|
|
|
|
Depreciation and amortization
|
$
|
86.2
|
|
84.3
|
|
1.9
|
|
|
173.6
|
|
175 – 180
|
|
(b)
|
Represents the amount of property and equipment acquired using capital leases. Because the assets are acquired without using cash, the acquisitions are not reflected in the consolidated cash flow statement. Amounts are provided here to assist in the comparison of assets acquired in the current year versus prior years. Sales leaseback transactions are excluded from "Capital leases" in this table.
|
Since 2011, we have increased our spending on information technology to improve business process productivity, and we have reduced our maintenance capital expenditures for vehicles and facilities while continuing to focus on safety and security. We continue to focus on maximizing asset utilization and maintenance of capital expenditures which has enabled us to reduce our annual spend to a level more in line with depreciation. Our reinvestment ratio, which we define as the annual amount of capital expenditures divided by the annual amount of depreciation and amortization, was 1.0 for the twelve months ending June 30, 2014 compared to 1.3 for the twelve months ending June 30, 2013.
Capital expenditures in the first half of 2014 were primarily for information technology, machinery and equipment and Compusafe
®
equipment.
Summary of financing activities
|
|
|
|
|
Six Months
|
|
|
|
|
|
|
Ended June 30,
|
|
|
(In millions)
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided (used) by financing activities
|
|
|
|
|
|
|
Borrowings and repayments:
|
|
|
|
|
|
|
|
Short-term debt
|
$
|
3.9
|
|
69.5
|
|
|
|
Long-term revolving credit facilities
|
|
104.2
|
|
85.0
|
|
|
|
Other long-term debt
|
|
(16.6)
|
|
(14.6)
|
|
|
|
|
Borrowings (repayments)
|
|
91.5
|
|
139.9
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of a noncontrolling interest in a subsidiary
|
|
-
|
|
(18.5)
|
|
|
Payment of acquisition-related obligation
|
|
-
|
|
(8.1)
|
|
|
Dividends attributable to:
|
|
|
|
|
|
|
|
Shareholders of Brink’s
|
|
(9.7)
|
|
(9.6)
|
|
|
|
Noncontrolling interests in subsidiaries
|
|
(6.2)
|
|
(1.6)
|
|
|
Other
|
|
(1.0)
|
|
(1.7)
|
|
|
Discontinued operations
|
|
-
|
|
0.9
|
|
|
Cash flows from financing activities
|
$
|
74.6
|
|
101.3
|
|
Debt borrowings and repayments
Cash provided by financing activities decreased by $26.7 million in the first six months of 2014 compared to the first six months of 2013. This decrease is primarily due to more cash borrowed to fund acquisitions in 2013. In the first half of 2014, we borrowed from our revolving credit facilities and short-term debt to fund operating and investing activities.
Dividends
We paid dividends to Brink’s shareholders of $0.20 per share ($9.7 million) in the first half of 2014, similar to the prior year. Future dividends are dependent on our earnings, financial condition, shareholders’ equity levels, our cash flow and business requirements, as determined by the board of directors.
We use a combination of debt, leases and equity to capitalize our operations.
Tight credit markets in late 2008 and early 2009 resulted in unreliable credit availability under our U.S. armored vehicle master lease agreement and volatile pricing. As a result, from March 2009 to late 2009, we purchased vehicles with cash borrowed under our committed credit facilities instead of leasing. In late 2009 as credit markets stabilized, we began to lease vehicles under a new master agreement. Vehicles acquired under the 2009 master lease agreement are accounted for as capital leases. Vehicles acquired under the previous lease agreement are accounted for as operating leases based on terms of that agreement. We expect to continue financing new vehicles in the U.S. using capital leases.
Reconciliation of Net Debt to U.S. GAAP Measures
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
(In millions)
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
Debt:
|
|
|
|
|
|
|
|
Short-term
|
$
|
79.1
|
|
80.9
|
|
|
|
Long-term
|
|
449.0
|
|
355.1
|
|
|
|
|
Total Debt
|
|
528.1
|
|
436.0
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
224.7
|
|
255.5
|
|
|
|
Amounts held by Cash Management Services operations
(a)
|
|
(39.2)
|
|
(31.3)
|
|
|
|
|
Cash and cash equivalents available for general corporate purposes
|
|
185.5
|
|
224.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Debt
|
$
|
342.6
|
|
211.8
|
|
(a)
|
Title to cash received and processed in certain of our secure Cash Management Services operations transfers to us for a short period of time.
The cash is generally credited to customers’ accounts the following day and we do not consider it as available for general corporate purposes in the management of our liquidity and capital resources and in our computation of Net Debt.
|
Net Debt is a supplemental Non-GAAP financial measure that is not required by, or presented in accordance with GAAP. We use Net Debt as a measure of our financial leverage. We believe that investors also may find Net Debt to be helpful in evaluating our financial leverage. Net Debt should not be considered as an alternative to Debt determined in accordance with GAAP and should be reviewed in conjunction with our consolidated balance sheets. Set forth above is a reconciliation of Net Debt, a Non-GAAP financial measure, to Debt, which is the most directly comparable financial measure calculated and reported in accordance with GAAP. Net Debt excluding cash and debt in Venezuelan operations was $361 million at June 30, 2014, and $306 million at December 31, 2013.
Net Debt increased by $131 million primarily due to the adoption of the less favorable SICAD II exchange rate for currency held in Venezuelan bolivars during the first quarter of 2014 and cash contributions made to our primary U.S. pension plan during the first six months of 2014. See note 1 and note 3 to the consolidated financial statements for more information.
Liquidity Needs
Our operating liquidity needs are typically financed by cash from operations, short-term debt and the Revolving Facility (our debt facilities are described below). We have certain limitations and considerations related to the cash and borrowing capacity that are reported in our consolidated financial statements. Based on our current cash on hand, amounts available under our credit facilities and current projections of cash flows from operations, we believe that we will be able to meet our liquidity needs for more than the next twelve months.
Limitations on dividends from foreign subsidiaries
. A significant portion of our operations are outside the U.S. which may make it difficult to repatriate cash for use in the U.S. See “Risk Factors” in Item 1A of our 2013 Form 10-K, for more information on the risks associated with having businesses outside the U.S.
Incremental taxes.
Of the $224.7 million of cash and cash equivalents at June 30, 2014, $153.0 million is held by subsidiaries that we consider to be permanently invested and for which we do not expect to repatriate to the U.S. If we were to decide to repatriate this cash to the U.S., we may have to accrue and pay additional income taxes. Given the number of foreign operations and the complexities of the tax law, it is not practical to estimate the potential tax liability, but the amount of taxes owed could be material depending on how and when the repatriation were to occur.
Venezuela
. We have $17.1 million of cash and cash equivalents denominated in Venezuelan bolivars (as remeasured at the published SICAD II rate of 50 bolivars to the U.S. dollar) at June 30, 2014. We believe that the SICAD II process to convert bolivars (as described in note 1 to the consolidated financial statements) is the only method for which we are likely to receive U.S. dollars that we need to operate our business and to repatriate earnings. The Venezuelan government has restricted conversions of bolivars into U.S. dollars in the past and may do so in the future.
Argentina.
We have $11.2 million in cash and cash equivalents denominated in Argentinean pesos at June 30, 2014. The Argentinean government has, from time-to-time, imposed limits on the exchange of local pesos into U.S. dollars. As a result, we have elected in the past and may elect in the future to repatriate cash from Argentina using alternative legal methods, which may result in less favorable exchange rates.
U.S. Pension plans.
We have taken some action and are considering further steps to reduce risk to our primary U.S. pension plan and reduce administrative costs associated with the plan.
·
|
We are accelerating a portion of our required annual contributions. This will result in lower Pension Benefit Guaranty Corporation (“PBGC”) insurance premiums – an administrative cost of the plan, and allow us to take steps to further de-risk the plan’s asset allocation. These payments are funded with cash and borrowings under existing credit facilities. We have contributed $26.2 million in the first half of 2014 and expect to contribute up to an additional $61 million in the remainder of 2014.
|
·
|
We are considering settling a portion of the obligation with certain former employees using plan assets, which would further reduce the plan’s PBGC premiums, and, if completed, would result in a significant U.S. GAAP settlement charge in the fourth quarter of 2014.
|
Debt
We have a $480 million unsecured revolving bank credit facility (the “Revolving Facility”) that matures in January 2017. The Revolving Facility’s interest rate is based on LIBOR plus a margin or alternate base rate plus a margin. The Revolving Facility allows us to borrow or issue letters of credit (or otherwise satisfy credit needs) on a revolving basis over the term of the facility. As of June 30, 2014, $255 million was available under the Revolving Facility. Amounts outstanding under the Revolving Facility as of June 30, 2014, were denominated primarily in U.S. dollars and to a lesser extent in euros. The margin on LIBOR borrowings under the Revolving Facility, which ranges from 0.9% to 1.575% depending on our credit rating, was 1.40% at June 30, 2014. The margin on alternate base rate borrowings under the Revolving Facility ranges from 0.0% to 0.575%. We also pay an
annual facility fee on the Revolving Facility based on our credit rating. The facility fee, which ranges from 0.10% to 0.30%, was 0.225% at June 30, 2014.
We have $100 million in unsecured notes issued through a private placement debt transaction (the “Notes”). The Notes comprise $50 million in series A notes with a fixed interest rate of 4.57% and $50 million in series B notes with a fixed interest rate of 5.20%. The Notes are due in January 2021 with principal payments under the series A notes to begin in January 2015.
As of June 30, 2014, we had two unsecured multi-currency revolving bank credit facilities totaling $40 million, of which $19 million was available. A $20 million facility expires in December 2015, and a $20 million facility expires in February 2017. Interest on these facilities is based on LIBOR plus a margin. The margin ranges from 0.9% to 2.0%. We also have the ability to borrow from other banks, at the banks’ discretion, under short-term uncommitted agreements. Various foreign subsidiaries maintain other lines of credit and overdraft facilities with a number of banks.
We have a $24 million unsecured committed credit facility that expires in April 2016. Interest on this facility is based on LIBOR plus a margin, which ranges from 1.20% to 1.575%. As of June 30, 2014, $7 million was available under the facility.
We have three unsecured letter of credit facilities totaling $179 million, of which approximately $67 million was available at June 30, 2014. An $85 million facility expires in June 2015, a $40 million facility expires in December 2015, and a $54 million facility expires in December 2016. The Revolving Facility and the multi-currency revolving credit facilities are also used for issuance of letters of credit and bank guarantees.
The Revolving Facility, the Notes, the unsecured multi-currency revolving bank credit facilities, the unsecured committed credit facility and the letter of credit facilities
contain subsidiary guarantees and various financial and other covenants. The financial covenants, among other things, limit our total indebtedness, limit priority debt, limit asset sales, limit the use of proceeds from asset sales and provide for minimum coverage of interest costs. The credit agreements do not provide for the acceleration of payments should our credit rating be reduced. If we were not to comply with the terms of our various credit agreements, the repayment terms could be accelerated and the commitments could be withdrawn. An acceleration of the repayment terms under one agreement could trigger the acceleration of the repayment terms under the other loan agreements. We were in compliance with all financial covenants at June 30, 2014.
We have $43 million of bonds issued by the Peninsula Ports Authority of Virginia recorded as debt on our balance sheet. Although we are not the primary obligor of the debt, we have guaranteed the debt and we believe that we will ultimately pay this obligation. The guarantee originated as part of a former interest in Dominion Terminal Associates, a deep water coal terminal. We continue to pay interest on the debt. The bonds bear a fixed interest rate of 6.0% and mature in 2033. The bonds may mature prior to 2033 upon the occurrence of specified events such as the determination that the bonds are taxable or if we fail to abide by the terms of the guarantee.
Equity
At June 30, 2014, we had 100 million shares of common stock authorized and 48.5 million shares issued and outstanding.
U.S. Retirement Liabilities
|
Funded Status of U.S. Retirement Plans
|
|
|
|
|
|
|
Actual
|
Actual
|
|
Projected
|
|
|
(In millions)
|
|
|
2013
|
1st Half 2014
|
|
2nd Half 2014
|
2015
|
2016
|
2017
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. pension plans
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning funded status
|
|
$
|
(275.0)
|
(123.1)
|
|
(87.7)
|
(19.5)
|
2.0
|
24.8
|
65.6
|
|
|
Net periodic pension credit
(a)
|
|
|
14.7
|
8.9
|
|
9.7
|
18.9
|
20.6
|
23.6
|
26.4
|
|
|
Payment from Brink’s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary U.S. pension plan
|
|
|
13.0
|
26.2
|
|
61.0
|
-
|
-
|
16.0
|
6.1
|
|
|
|
Other U.S. pension plan
|
|
|
1.1
|
0.3
|
|
0.5
|
0.8
|
0.8
|
0.8
|
0.8
|
|
|
Benefit plan experience gain
|
|
|
123.1
|
-
|
|
(3.0)
|
1.8
|
1.4
|
0.4
|
2.5
|
|
|
Ending funded status
|
|
$
|
(123.1)
|
(87.7)
|
|
(19.5)
|
2.0
|
24.8
|
65.6
|
101.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UMWA plans
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning funded status
|
|
$
|
(256.6)
|
(142.1)
|
|
(141.1)
|
(137.8)
|
(135.1)
|
(132.7)
|
(130.6)
|
|
|
Net periodic postretirement credit
(a)
|
|
|
1.1
|
2.0
|
|
2.3
|
2.7
|
2.4
|
2.1
|
1.8
|
|
|
Prior service credit
|
|
|
55.7
|
-
|
|
-
|
-
|
-
|
-
|
-
|
|
|
Benefit plan experience gain
|
|
|
56.7
|
-
|
|
-
|
-
|
-
|
-
|
-
|
|
|
Other
|
|
|
1.0
|
(1.0)
|
|
1.0
|
-
|
-
|
-
|
-
|
|
|
Ending funded status
|
|
$
|
(142.1)
|
(141.1)
|
|
(137.8)
|
(135.1)
|
(132.7)
|
(130.6)
|
(128.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Black lung and other plans
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning funded status
|
|
$
|
(48.8)
|
(44.3)
|
|
(41.7)
|
(41.3)
|
(38.5)
|
(35.8)
|
(33.3)
|
|
|
Net periodic postretirement cost
(a)
|
|
|
(1.7)
|
(1.0)
|
|
(0.9)
|
(1.7)
|
(1.6)
|
(1.5)
|
(1.4)
|
|
|
Payment from Brink’s
|
|
|
6.9
|
3.6
|
|
1.3
|
4.5
|
4.3
|
4.0
|
3.7
|
|
|
Other
|
|
|
(0.7)
|
-
|
|
-
|
-
|
-
|
-
|
-
|
|
|
Ending funded status
|
|
$
|
(44.3)
|
(41.7)
|
|
(41.3)
|
(38.5)
|
(35.8)
|
(33.3)
|
(31.0)
|
|
(a)
|
Excludes amounts reclassified from accumulated other comprehensive income (loss).
|
U.S. Pension Plans
Pension benefits provided to eligible U.S. employees were frozen on December 31, 2005, and are not provided to employees hired after 2005 or to those covered by a collective bargaining agreement. There are approximately 19,800 beneficiaries in the plans.
UMWA Plans
Retirement benefits related to former coal operations include medical benefits provided by the Pittston Coal Group Companies Employee Benefit Plan for UMWA Represented Employees. There are approximately
4,100 beneficiaries in the UMWA plans. The company does not expect to make additional contributions to these plans until 2033 based on actuarial assumptions.
Black Lung
Under the Federal Black Lung Benefits Act of 1972, Brink’s is responsible for paying lifetime black lung benefits to miners and their dependents for claims filed and approved after June 30, 1973. There are approximately 710 black lung beneficiaries.
Other
We have a plan that provides retirement healthcare benefits to certain eligible salaried employees. Benefits under this plan are not indexed for inflation.
Assumptions for U.S. Retirement Obligations
We have made various assumptions to estimate the amount of payments to be made in the future. The most significant assumptions include:
·
|
Changing discount rates and other assumptions in effect at measurement dates (normally December 31)
|
·
|
Investment returns of plan assets
|
·
|
Contributions to plans from Brink’s including our expectation to accelerate 2015 and 2016 required contributions into 2014
|
·
|
Settlement of obligations to participants
|
·
|
Addition of new participants (historically immaterial due to freezing of pension benefits and exit from coal business)
|
The assumptions used to estimate our U.S. retirement obligations can be found in our Annual Report on Form 10-K for the year ended December 31, 2013.
Summary of Total Expenses Related to All U.S. Retirement Liabilities
This table summarizes actual and projected expense (income) related to U.S. retirement liabilities. Most expenses are allocated to non-segment results, with the balance allocated to North American segment operations.
|
|
|
|
Actual
|
Actual
|
|
Projected
|
|
|
(In millions)
|
|
2013
|
1st Half 2014
|
|
2nd Half 2014
|
FY2014
|
2015
|
2016
|
2017
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. pension plans
|
$
|
30.5
|
5.3
|
|
4.3
(a)
|
9.6
(a)
|
1.9
|
(2.6)
|
(9.1)
|
(14.4)
|
|
|
UMWA plans
|
|
18.5
|
2.3
|
|
1.1
|
3.4
|
6.8
|
6.4
|
6.0
|
5.8
|
|
|
Black lung and other plans
|
|
3.9
|
2.0
|
|
2.0
|
4.0
|
3.8
|
3.7
|
3.6
|
2.9
|
|
|
|
Total
|
$
|
52.9
|
9.6
|
|
7.4
|
17.0
|
12.5
|
7.5
|
0.5
|
(5.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts allocated to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North American Segment
|
$
|
11.6
|
2.0
|
|
1.5
|
3.5
|
0.4
|
(1.3)
|
(3.9)
|
(6.0)
|
|
|
|
Non-segment
|
|
41.3
|
7.6
|
|
5.9
|
13.5
|
12.1
|
8.8
|
4.4
|
0.3
|
|
|
|
Total
|
$
|
52.9
|
9.6
|
|
7.4
|
17.0
|
12.5
|
7.5
|
0.5
|
(5.7)
|
|
(a)
|
Excludes estimated significant settlement loss related to potentially settling a portion of the obligation. See page 45.
|
Summary of Total Payments from Brink’s to U.S. Plans and Payments from U.S. Plans to Participants
This table summarizes actual and projected payments
·
|
from Brink’s to U.S. retirement plans, and
|
·
|
from the plans to participants.
|
|
|
|
|
Actual
|
Actual
|
|
Projected
|
|
|
(In millions)
|
|
2013
|
1st Half 2014
|
|
2nd Half 2014
|
FY2014
|
2015
|
2016
|
2017
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments from Brink’s to U.S. Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary U.S. pension plan
|
$
|
13.0
|
26.2
|
|
61.0
|
87.2
|
-
|
-
|
16.0
|
6.1
|
|
|
Other U.S. pension plan
|
|
1.1
|
0.3
|
|
0.5
|
0.8
|
0.8
|
0.8
|
0.8
|
0.8
|
|
|
Black lung and other plans
|
|
6.9
|
3.6
|
|
1.3
|
4.9
|
4.5
|
4.3
|
4.0
|
3.7
|
|
|
|
Total
|
$
|
21.0
|
30.1
|
|
62.8
|
92.9
|
5.3
|
5.1
|
20.8
|
10.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments from U.S. Plans to participants
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. pension plan
|
$
|
44.1
|
22.5
|
|
25.2
(a)
|
47.7
(a)
|
49.0
|
50.3
|
51.9
|
53.6
|
|
|
UMWA plans
|
|
31.1
|
17.8
|
|
13.7
|
31.5
|
31.9
|
31.5
|
31.3
|
32.9
|
|
|
Black lung and other plans
|
|
6.9
|
3.6
|
|
1.3
|
4.9
|
4.5
|
4.3
|
4.0
|
3.7
|
|
|
|
Total
|
$
|
82.1
|
43.9
|
|
40.2
|
84.1
|
85.4
|
86.1
|
87.2
|
90.2
|
|
(a)
|
Excludes estimated significant payments from Brink’s to U.S participants related to potentially settling a portion of the obligation. See page 45.
|
The amounts in the tables above are based on a variety of estimates, including actuarial assumptions as of the most recent measurement date. The estimated amounts will change in the future to reflect payments made, investment returns, actuarial revaluations, and other changes in estimates. Actual amounts could differ materially from the estimated amounts.
See note 11 to the consolidated financial statements for information about contingent matters at June 30, 2014.