Edgar Filing: BRINKS CO

form_10-q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 001-09148

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

	Virginia		54-1317776
	(State or other jurisdiction of		(I.R.S. Employer
	incorporation or organization)		Identification No.)

1801 Bayberry Court, Richmond, Virginia 23226-8100

(Address of principal executive offices) (Zip Code)

(804) 289-9600

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

(Check one): Large Accelerated Filer x Accelerated Filer ¨ Non-Accelerated Filer ¨ Smaller Reporting Company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

As of October 26, 2010, 46,396,505 shares of $1 par value common stock were outstanding.

Part I - Financial Information

Item 1. Financial Statements

THE BRINK’S COMPANY

and subsidiaries

Consolidated Balance Sheets

(Unaudited)

	September 30,			December 31,
(In millions)	2010			2009

ASSETS

Current assets:
Cash and cash equivalents	$	148.5			143.0
Accounts receivable, net		458.5			427.6
Prepaid expenses and other		137.4			81.0
Deferred income taxes		35.4			38.5
Total current assets		779.8			690.1

Property and equipment, net		583.5			549.5
Goodwill		232.1			213.7
Deferred income taxes		242.4			254.1
Other		174.2			172.4

Total assets	$	2,012.0			1,879.8


LIABILITIES AND EQUITY

Current liabilities:
Short-term borrowings	$	18.3			7.2
Current maturities of long-term debt		14.7			16.1
Accounts payable		108.1			127.2
Accrued liabilities		438.9			369.8
Total current liabilities		580.0			520.3

Long-term debt		250.9			172.3
Accrued pension costs		172.5			192.1
Retirement benefits other than pensions		216.4			198.3
Deferred income taxes		25.1			30.5
Other		160.1			170.5
Total liabilities		1,405.0			1,284.0

Commitments and contingent liabilities (notes 4, 5 and 12)

Equity:
The Brink’s Company (“Brink’s”) shareholders’ equity:
Common stock		46.4			47.9
Capital in excess of par value		540.7			550.2
Retained earnings		522.4			514.8
Accumulated other comprehensive loss		(568.2	)		(578.0	)
Total Brink’s shareholders’ equity		541.3			534.9

Noncontrolling interests		65.7			60.9

Total equity		607.0			595.8

Total liabilities and equity	$	2,012.0			1,879.8

See accompanying notes to consolidated financial statements.

THE BRINK’S COMPANY

and subsidiaries

Consolidated Statements of Income

(Unaudited)

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
(In millions, except per share amounts)	2010			2009			2010			2009

Revenues	$	776.1			801.8			2,240.9			2,286.2

Costs and expenses:
Cost of revenues		626.5			647.5			1,840.2			1,859.1
Selling, general and administrative expenses		107.6			107.6			310.2			314.5
Total costs and expenses		734.1			755.1			2,150.4			2,173.6
Other operating income (expense)		2.1			14.2			8.9			16.7

Operating profit		44.1			60.9			99.4			129.3

Interest expense		(4.2	)		(2.8	)		(9.0	)		(8.3	)
Interest and other income		0.6			1.2			2.7			7.2
Income from continuing operations before tax		40.5			59.3			93.1			128.2
Provision for income taxes		15.5			20.6			46.1			37.7

Income from continuing operations		25.0			38.7			47.0			90.5

Income (loss) from discontinued operations		2.2			1.0			(0.4	)		6.1

Net income		27.2			39.7			46.6			96.6
Less net income attributable to noncontrolling interests		(3.3	)		(5.3	)		(9.4	)		(18.9	)

Net income attributable to Brink’s	$	23.9			34.4			37.2			77.7

Amounts attributable to Brink’s:
Income from continuing operations	$	21.7			33.4			37.6			71.6
Income (loss) from discontinued operations		2.2			1.0			(0.4	)		6.1

Net income attributable to Brink’s	$	23.9			34.4			37.2			77.7

Earnings per share attributable to Brink’s common shareholders:
Basic:
Continuing operations	$	0.45			0.70			0.78			1.53
Discontinued operations		0.05			0.02			(0.01	)		0.13
Net income		0.50			0.72			0.77			1.66

Diluted:
Continuing operations	$	0.45			0.70			0.77			1.52
Discontinued operations		0.05			0.02			(0.01	)		0.13
Net income		0.50			0.72			0.76			1.65

Weighted-average shares
Basic		47.8			47.6			48.4			46.8
Diluted		47.9			47.9			48.7			47.0

Cash dividends paid per common share	$	0.10			0.10			0.30			0.30

See accompanying notes to consolidated financial statements.

THE BRINK’S COMPANY

and subsidiaries

Consolidated Statement of Shareholders’ Equity

Nine months ended September 30, 2010

(Unaudited)

	Attributable to Brink’s
							Capital						Accumulated			Attributable
							in Excess						Other			to
				Common			of Par			Retained			Comprehensive			Noncontrolling
(In millions)	Shares			Stock			Value			Earnings			Loss			Interests			Total

Balance as of December 31, 2009		47.9		$	47.9			550.2			514.8			(578.0	)		60.9			595.8

Net income		-			-			-			37.2			-			9.4			46.6
Other comprehensive income (loss)		-			-			-			-			9.8			4.4			14.2
Share repurchases		(1.7	)		(1.7	)		(19.5	)		(12.5	)		-			-			(33.7	)
Dividends:
Brink’s common shareholders
($0.30 per share)		-			-			-			(14.3	)		-			-			(14.3	)
Noncontrolling interests		-			-			-			-			-			(11.9	)		(11.9	)
Share-based compensation:
Stock options and awards:
Compensation expense		-			-			5.1			-			-			-			5.1
Consideration received from
exercise of stock options		0.4			0.4			5.9			-			-			-			6.3
Excess tax benefits of stock
compensation		-			-			0.7			-			-			-			0.7
Other share-based benefit programs		(0.2	)		(0.2	)		(1.7	)		(2.8	)		-			-			(4.7	)
Acquisition of new subsidiaries		-			-			-			-			-			2.9			2.9

Balance as of September 30, 2010		46.4		$	46.4			540.7			522.4			(568.2	)		65.7			607.0

See accompanying notes to consolidated financial statements.

THE BRINK’S COMPANY

and subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months
	Ended September 30,
(In millions)	2010			2009

Cash flows from operating activities:
Net income	$	46.6			96.6
Adjustments to reconcile net income to net cash provided by operating activities:
(Income) loss from discontinued operations, net of tax		0.4			(6.1	)
Depreciation and amortization		100.0			97.2
Stock compensation expense		5.1			5.5
Deferred income taxes		8.8			29.2
Retirement benefit funding (more) less than expense:
Pension		(4.0	)		(93.7	)
Other than pension		11.9			9.4
Gains:
Sales of property and other assets		(1.2	)		(8.3	)
Acquisitions of controlling interest of equity-method investments		-			(14.9	)
Impairment losses		0.5			2.3
Other operating		7.7			2.1
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		(29.2	)		8.1
Accounts payable, income taxes payable and accrued liabilities		38.1			9.1
Prepaid and other current assets		(34.6	)		(33.5	)
Other		2.3			3.8
Discontinued operations		(9.9	)		23.5
Net cash provided by operating activities		142.5			130.3

Cash flows from investing activities:
Capital expenditures		(102.5	)		(112.5	)
Acquisitions		(13.9	)		(74.6	)
Marketable securities:
Purchases		(2.6	)		(10.6	)
Sales		1.0			4.4
Short-term investments		(10.2	)		-
Other		(2.9	)		7.8
Net cash used by investing activities		(131.1	)		(185.5	)

Cash flows from financing activities:
Borrowings (repayments) of debt:
Short-term debt		9.6			(0.3	)
Long-term revolving credit facilities		56.1			69.4
Other long-term debt:
Borrowings		3.6			-
Repayments		(14.9	)		(8.7	)
Cash proceeds from sale-leaseback transactions		1.2			-
Debt financing costs		(2.4	)		-
Repurchase shares of common stock of Brink’s		(33.7	)		(6.9	)
Dividends to:
Shareholders of Brink’s		(14.3	)		(13.7	)
Noncontrolling interests in subsidiaries		(11.9	)		(10.3	)
Proceeds from exercise of stock options		1.1			1.3
Excess tax benefits associated with stock compensation		0.5			0.3
Minimum tax withholdings associated with stock compensation		(1.8	)		(0.4	)
Net cash provided (used) by financing activities		(6.9	)		30.7

Effect of exchange rate changes on cash		1.0			8.1

Cash and cash equivalents:
Increase (decrease)		5.5			(16.4	)
Balance at beginning of period		143.0			250.9
Balance at end of period	$	148.5			234.5

See accompanying notes to consolidated financial statements.

THE BRINK’S COMPANY

and subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 – Basis of presentation

The Brink’s Company (along with its subsidiaries, “Brink’s” or “we”) has two geographic reportable segments:

· International

· North America

Our unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting and applicable quarterly reporting regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, the unaudited consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. For further information, refer to our Annual Report on Form 10-K for the year ended December 31, 2009.

We have made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements. Actual results could differ materially from these estimates. The most significant estimates are related to goodwill and other long-lived assets, pension and other retirement benefit obligations, legal contingencies, foreign currency translation and deferred tax assets.

Foreign Currency Translation

Our consolidated financial statements are reported in U.S. dollars. Our foreign subsidiaries maintain their records primarily in the currency of the country in which they operate.

Our accounting policy for foreign currency translation is different depending on whether the economy in which our foreign subsidiary operates has been designated as highly inflationary or not. Economies with a three-year cumulative inflation rate of more than 100% are considered as highly inflationary.

Assets and liabilities of foreign subsidiaries in non-highly inflationary economies are translated into U.S. dollars using rates of exchange at the balance sheet date. Translation adjustments are recorded in other comprehensive income (loss). Revenues and expenses are translated at rates of exchange in effect during the year. Transaction gains and losses are recorded in net income.

Foreign subsidiaries that operate in highly inflationary countries use the reporting currency (the U.S. dollar) as the functional currency. Local-currency monetary assets and liabilities are remeasured into U.S. dollars each balance sheet date, with remeasurement adjustments and other transaction gains and losses recognized in earnings. Non-monetary assets and liabilities do not fluctuate with changes in local currency exchange rates to the U.S. dollar.

Venezuela

Our Venezuelan operations accounted for $128 million or 6% of total Brink’s revenues in the nine months ended September 30, 2010. Our operating margins in Venezuela have varied depending on the mix of business during any quarter and have been up to three times our overall international segment operating margin rate. The economy in Venezuela has had significant inflation in the last several years. In December 2009, the three-year cumulative inflation rate exceeded 100%. As a result, beginning January 1, 2010, we designated Venezuela’s economy as highly inflationary for accounting purposes, and we consolidated our Venezuelan results using our accounting policy for subsidiaries operating in highly inflationary economies.

In determining whether Venezuela is a highly inflationary economy, we previously used the consumer price index ("CPI") which is based on the inflation rates for the metropolitan area of Caracas, Venezuela. Beginning January 1, 2008, a national consumer price index ("NCPI") was developed for the entire country of Venezuela. However, because inflation data is not available to compute a cumulative three-year inflation rate for Venezuela using only NCPI, we use a blended NCPI and CPI rate to determine whether the three-year cumulative inflation rate has exceeded 100%. At December 31, 2009, the blended three-year cumulative inflation rate was approximately 100.5%.

Effective June 9, 2010, the Venezuelan government replaced a previously legal market-based method of converting bolivar fuertes to U.S. dollars (the “parallel” rate) with a new exchange process that requires each transaction be approved by the government’s central bank (the “SITME” rate). On a daily basis, the central bank publishes ranges of prices at which it may approve transactions to purchase dollar-denominated bonds, resulting in an exchange rate range of 4.3 to 5.3 bolivar fuertes to the U.S. dollar. To date, approved transactions have been at the upper end of the range. To the extent we need to obtain U.S. dollars, we currently expect our bolivar fuerte-denominated net monetary assets to be settled at a rate of 5.3 bolivar fuertes to the U.S. dollar. We have used this rate to remeasure our local currency-denominated monetary assets and liabilities into U.S. dollars at September 30, 2010, resulting in bolivar fuerte-denominated net monetary assets at September 30, 2010, of $24.6 million. The rate we used to remeasure bolivar fuerte-denominated net monetary assets did not change in the third quarter of 2010, therefore, no currency remeasurement gains or losses were recognized. For the nine months ended September 30, 2010, we recognized a $3.2 million net remeasurement loss.

Under the new law, approved transactions may not exceed $350,000 per legal entity per month. Despite the new law, we believe that we will be able to obtain sufficient U.S. dollars to purchase imported supplies and fixed assets to operate our business in Venezuela. We believe the new law will limit the repatriation of cash invested in Venezuela for the foreseeable future. At September 30, 2010, our Venezuelan subsidiaries held $6.0 million of cash and short-term investments denominated in U.S. dollars and $15.0 million of cash denominated in bolivar fuertes. On an equity-method basis, we had investments in our Venezuelan operations of $46.3 million at September 30, 2010. The amount represents retained earnings net of currency translation adjustments of the business.

Recently Adopted Accounting Standards

We adopted the accounting principles established by Accounting Standards Update (“ASU”) 2009-16, Transfers and Servicing: Accounting for Transfers of Financial Assets, effective January 1, 2010. This ASU removes the concept of a qualifying special-purpose entity (QSPE) from SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities, and removes the exception from applying FASB Interpretation 46R, Consolidation of Variable Interest Entities. This statement also clarifies the requirements for isolation and limitations on portions of financial assets that are eligible for sale accounting. The adoption of this new guidance did not have a material effect on our financial statements.

We adopted the accounting principles established by ASU 2009-17, Consolidations: Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, effective January 1, 2010. This ASU requires an ongoing reassessment and replaces the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest entity (“VIE”) with a primarily qualitative analysis. The qualitative analysis is based on identifying the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance (the “power criterion”) and the obligation to absorb losses from or the right to receive benefits of the VIE that could potentially be significant to the VIE (the “losses/benefit criterion”). The party that meets both these criteria is deemed to have a controlling financial interest. The party with the controlling financial interest is considered to be the primary beneficiary and as a result is required to consolidate the VIE. The adoption of this new guidance did not have a material effect on our financial statements.

In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements. ASU 2010-06 both expands and clarifies the disclosure requirements related to fair value measurements. Entities are required to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 of the fair value valuation hierarchy and describe the reasons for the transfers. Additionally, entities are required to disclose information about purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair-value measurements. The new guidance also clarifies existing fair-value measurement disclosure guidance about the level of disaggregation, inputs, and valuation techniques. We adopted the new disclosures effective January 1, 2010, except for the Level 3 rollforward disclosures. The Level 3 rollforward disclosures will be effective for us January 1, 2011. The adoption of the ASU did not have a material impact on our disclosures as we did not have any significant transfers in and out of Level 1 and Level 2 of the fair value valuation hierarchy in the first half of 2010.

We adopted the accounting principles established by ASU 2010-09, Subsequent Events: Amendments to Certain Recognition and Disclosure Requirements, effective January 1, 2010. Under this amended guidance, SEC filers are no longer required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements.

In May 2010, the FASB issued ASU 2010-19, Foreign Currency (Topic 830): Foreign Currency Issues: Multiple Foreign Currency Exchange Rates, which codified an SEC Staff Announcement made at the March 18, 2010, Emerging Issues Task Force (“EITF”) meeting. The Staff Announcement provides the SEC staff’s view on certain exchange rates related to investments in Venezuela. The use of different rates for remeasurement and translation purposes causes Venezuelan reported balances for financial reporting purposes and the actual U.S. dollar denominated balances to be different. The SEC staff indicated that any differences between the amounts reported for financial reporting purposes and actual U.S. dollar denominated balances that may have existed prior to the application of the highly inflationary accounting requirements (January 1, 2010, for calendar year-end registrants) should be recognized in the income statement, unless the issuer can document that the difference was previously recognized as a cumulative translation adjustment, in which case the difference should be recognized as a currency translation adjustment. We adopted the guidance effective March, 31, 2010, and recognized these differences as a currency translation adjustment as of January 1, 2010, upon the adoption of highly inflationary accounting in Venezuela. See related disclosures above in Note 1 – Basis of Presentation – Foreign Currency Translation – Venezuela.

Standards Not Yet Adopted

In October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue Arrangements, which will be effective for us on January 1, 2011. ASU 2009-13 establishes a selling price hierarchy for determining the selling price of a deliverable in a multiple-deliverable arrangement. In addition, the revised guidance requires additional disclosures about the methods and assumptions used to evaluate multiple-deliverable arrangements and to identify the significant deliverables within those arrangements. We are currently evaluating the potential impact of the amended guidance on our financial statements.

In October 2009, the FASB issued ASU 2009-14, Certain Revenue Arrangements that Include Software Elements, which will be effective for us on January 1, 2011. ASU 2009-14 amends ASC Topic 985 to exclude from its scope tangible products that contain both software and non-software components that function together to deliver a product’s essential functionality. We are currently evaluating the potential impact of the amended guidance on our financial statements.

Note 2 – Segment information

We identify our operating segments based on how resources are allocated and operating decisions are made. Management evaluates performance and allocates resources based on segment operating profit or loss, which excludes non-segment income (expense). We have four geographic operating segments, and under the aggregation criteria set forth in FASB ASC Topic 280, Segment Reporting, we have two reportable segments: International and North America.

The primary services of the reportable segments include:

·	Cash-in-transit (“CIT”) armored car transportation

·	Automated teller machine (“ATM”) replenishment and servicing

·	Global Services – arranging secure long-distance transportation of valuables

·	Cash Logistics – supply chain management of cash; from point-of-sale through transport, vaulting and bank deposit

·	Payment Services – consumers pay utility and other bills at payment locations

·	Guarding services, including airport security

Brink’s operates in more than 50 countries.

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
(In millions)	2010			2009			2010			2009

Revenues:
International	$	547.4			579.2			1,556.1			1,620.8
North America		228.7			222.6			684.8			665.4
Revenues	$	776.1			801.8			2,240.9			2,286.2

Operating profit:
International	$	52.6			51.3			110.9			105.1
North America		5.4			10.4			26.1			37.9
Segment operating profit		58.0			61.7			137.0			143.0
Non-segment		(13.9	)		(0.8	)		(37.6	)		(13.7	)
Operating profit	$	44.1			60.9			99.4			129.3

Note 3 – Shares used to calculate earnings per share

Shares used to calculate earnings per share were as follows:

	Three Months				Nine Months
	Ended September 30,				Ended September 30,
(In millions)	2010		2009		2010		2009

Weighted-average shares:
Basic (a)		47.8		47.6		48.4		46.8
Effect of dilutive stock awards		0.1		0.3		0.3		0.2
Diluted		47.9		47.9		48.7		47.0

Antidilutive stock options and awards excluded from denominator		2.7		2.4		2.6		2.4

(a)

We have deferred compensation plans for directors and certain of our employees. Amounts owed to participants are denominated in common stock units. Each unit represents one share of common stock. The number of shares used to calculate basic earnings per share includes the weighted-average units credited to employees and directors under the deferred compensation plans. Accordingly, included in basic shares are weighted-average units of 1.0 million in the three months and 0.9 million in the nine months ended September 30, 2010, as well as 0.9 million in the three months and 0.8 million in nine months ended September 30, 2009.

Note 4 – Retirement benefits

Pension plans

We have various defined-benefit pension plans covering eligible current and former employees. Benefits under most plans are based on salary and years of service.

The components of net periodic pension cost (credit) for our pension plans were as follows:

	U.S. Plans						Non-U.S. Plans						Total
(In millions)	2010			2009			2010			2009			2010			2009

Three months ended September 30,

Service cost	$	-			-			1.5			1.5			1.5			1.5
Interest cost on projected benefit obligation		11.6			12.2			3.2			3.2			14.8			15.4
Return on assets – expected		(16.7	)		(16.3	)		(2.6	)		(2.3	)		(19.3	)		(18.6	)
Amortization of losses		4.9			2.0			0.8			0.9			5.7			2.9
Net periodic pension cost (credit)	$	(0.2	)		(2.1	)		2.9			3.3			2.7			1.2

Nine months ended September 30,

Service cost	$	-			-			4.6			4.4			4.6			4.4
Interest cost on projected benefit obligation		34.9			35.5			9.8			9.0			44.7			44.5
Return on assets – expected		(50.1	)		(44.8	)		(7.9	)		(6.6	)		(58.0	)		(51.4	)
Amortization of losses		14.6			7.0			2.5			2.6			17.1			9.6
Settlement loss		-			0.3			-			-			-			0.3
Net periodic pension cost (credit)	$	(0.6	)		(2.0	)		9.0			9.4			8.4			7.4

Based on December 31, 2009, data, assumptions and funding regulations, we are not required to make a contribution to our primary U.S. plan during 2010.

Retirement benefits other than pensions

We provide retirement health care benefits for eligible current and former U.S. and Canadian employees, including former employees of our former U.S. coal operation. Retirement benefits related to our former coal operation include medical benefits provided by the Pittston Coal Group Companies Employee Benefit Plan for UMWA Represented Employees (the “UMWA plans”) as well as costs related to Black Lung obligations.

The components of net periodic postretirement cost related to retirement benefits other than pensions were as follows:

	UMWA plans						Black lung and other plans					Total
(In millions)	2010			2009			2010		2009			2010			2009

Three months ended September 30,

Interest cost on accumulated postretirement
benefit obligations	$	6.8			6.2			0.8		0.7			7.6			6.9
Return on assets – expected		(6.3	)		(5.6	)		-		-			(6.3	)		(5.6	)
Amortization of losses (gains)		4.1			3.9			0.6		(0.1	)		4.7			3.8
Net periodic postretirement cost	$	4.6			4.5			1.4		0.6			6.0			5.1

Nine months ended September 30,

Interest cost on accumulated postretirement
benefit obligations	$	20.2			19.6			2.2		2.1			22.4			21.7
Return on assets – expected		(19.0	)		(16.9	)		-		-			(19.0	)		(16.9	)
Amortization of losses (gains)		12.1			12.8			1.3		(0.1	)		13.4			12.7
Net periodic postretirement cost	$	13.3			15.5			3.5		2.0			16.8			17.5

Note 5 – Income taxes

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2010			2009			2010			2009

Continuing operations
Provision for income taxes (in millions)	$	15.5			20.6			46.1			37.7
Effective tax rate		38.3	%		34.7	%		49.5	%		29.4	%

2010 Compared to U.S. Statutory Rate

The effective income tax rate on continuing operations in the first nine months of 2010 was higher than the 35% U.S. statutory tax rate largely due to a $13.9 million reduction in deferred tax assets as a result of recently enacted U.S. healthcare legislation, and $6.2 million in higher taxes related to non-U.S. tax jurisdictions, partially offset by a $7.9 million non-cash income tax benefit related to a tax settlement. The non-U.S. taxes were higher than 35% primarily due to the designation of Venezuela as highly inflationary for accounting purposes, the geographical mix of earnings, and the characterization of a French business tax as an income tax based upon legislative changes effective January 1, 2010.

2009 Compared to U.S. Statutory Rate

The effective income tax rate on continuing operations in the first nine months of 2009 was lower than the 35% U.S. statutory tax rate due to $5.7 million in lower tax expense primarily resulting from the net effect of permanent book-tax differences offset by increases in valuation allowances in our non-U.S. jurisdictions. Included in the $5.7 million net benefit is an $8.9 million tax benefit from inflation adjustments in Venezuela that would not be recorded under highly inflationary accounting rules. In addition, the rate was impacted by $3.6 million in lower taxes due to the nontaxable acquisition-related gains, and $1.5 million in higher U.S. taxes due to changes in elections for the recently filed U.S. tax returns and changes in tax laws.

Note 6 – Share-based compensation plans

The fair value of options granted during the 2010 and 2009 periods was calculated using the Black Scholes option-pricing model and the following estimated weighted-average assumptions:

	Three and Nine Months
	Ended September 30,
Options Granted	2010			2009

Number of shares underlying options, in thousands		367			289
Weighted-average exercise price per share	$	19.05			27.59

Assumptions used to estimate fair value:
Expected dividend yield:
Weighted-average		2.1	%		1.4	%
Range		2.1	%		1.4	%
Expected volatility:
Weighted-average		36	%		36	%
Range		35% - 39	%		35% - 39	%
Risk-free interest rate:
Weighted-average		1.4	%		1.8	%
Range		0.6% - 1.9	%		0.9% - 2.4	%
Expected term in years:
Weighted-average		3.8			3.8
Range		1.9 – 5.3			1.9 – 5.3

Weighted-average fair value estimates at grant date:
In millions	$	1.7			2.1
Per share	$	4.65			7.24

Nonvested Share Activity

	Number of Shares									Weighted-Average
	2005			Directors’						Grant-Date
(in thousands of shares, except per share amounts)	Plan			Plan			Total			Fair Value (a)

Balance as of December 31, 2009		214.2			22.7			236.9		$	28.45
Granted		144.4			29.1			173.5			18.42
Cancelled awards		(3.5	)		-			(3.5	)		23.11
Vested		(76.7	)		(22.7	)		(99.4	)		29.12
Balance as of September 30, 2010		278.4			29.1			307.5		$	22.63

(a)	Fair value is measured at the date of grant based on the average of the high and low per share quoted sales price of Brink’s common stock, adjusted for a discount on units that do not receive or accrue dividends.

Note 7 – Common stock

In September, 2007, our board of directors authorized the purchase of up to $100 million of our outstanding common shares. We purchased $100 million of shares of our common stock as follows:

·	We used $60.2 million to purchase 1,044,300 shares of common stock through the end of 2008 at an average price of $57.58 per share.

·	In the first quarter of 2009, we used $6.1 million to purchase 234,456 shares of common stock at an average price of $26.20 per share. No shares were purchased in the remainder of 2009.

·	During the first nine months of 2010, we purchased 1,682,845 shares of our common stock for $33.7 million at an average price of $20.03 per share.

Note 8 – Acquisitions

Acquisition in France

On March 1, 2010, we acquired Est Valeurs S.A., a provider of CIT and cash services in Eastern France. Est Valeurs employs approximately 100 people and had 2009 revenue of $13 million.

Acquisition in Russia

On April 22, 2010, we acquired a majority stake in a Russian cash processing business that complements the company’s acquisition of a CIT business in Russia in the first quarter of 2009. With principal operations in Moscow and approximately 500 employees in Russia at the time of acquisition, we offer a full range of CIT, ATM, money processing and Global Services operations for domestic and international markets.

Note 9 – Supplemental cash flow information

	Nine Months
	Ended September 30,
(In millions)	2010		2009

Cash paid for:
Interest	$	7.7		6.9
Income taxes		48.7		15.7	(a)

(a) Payments in 2009 are net of $43 million of U.S. federal income tax refunds.

We entered into 20.4 million of new capital lease arrangements in the first nine months of 2010 ($12.0 million in the first nine months of 2009). The new capital lease agreements relate to acquisitions of armored vehicles and CompuSafe® equipment in North America.

Note 10 – Comprehensive income

	Three Months					Nine Months
	Ended September 30,					Ended September 30,
(In millions)	2010		2009			2010			2009

Amounts attributable to Brink’s:
Net income	$	23.9		34.4			37.2			77.7
Benefit plan experience gain		6.0		54.4			18.9			63.2
Benefit plan prior service cost (a)		0.6		0.3			(11.5	)		2.2
Foreign currency translation adjustments		43.0		28.6			0.1			48.5
Marketable securities		2.0		0.4			2.3			1.3
Other comprehensive income		51.6		83.7			9.8			115.2
Comprehensive income attributable to Brink’s		75.5		118.1			47.0			192.9

Amounts attributable to noncontrolling interests:
Net income		3.3		5.3			9.4			18.9
Foreign currency translation adjustments		2.6		1.4			3.9			1.9
Marketable securities		-		(0.2	)		0.5			(0.2	)
Other comprehensive income		2.6		1.2			4.4			1.7
Comprehensive income attributable to noncontrolling interests		5.9		6.5			13.8			20.6

Comprehensive income	$	81.4		124.6			60.8			213.5

(a) Includes $19.3 million loss (net of $7.0 million income tax benefit) in the first quarter of 2010 related to a remeasurement of our black lung obligation.

Note 11 – Fair value of financial instruments

Investments in Available-for-sale Securities

We have available-for-sale securities that are carried at fair value in the financial statements. For these investments, fair value was estimated based on quoted prices categorized as a Level 1 valuation, except for non-U.S. debt securities, which are categorized as a Level 3 valuation (valuation levels were defined in our 2009 Form 10-K).

	September 30,		December 31,
(In millions)	2010		2009

Cost
Mutual funds	$	16.7		15.0
Non-U.S. debt securities		3.7		3.7
Equity securities		0.2		0.2
Total	$	20.6		18.9

Gross Unrealized Gains
Mutual funds	$	3.1		2.6
Non-U.S. debt securities		-		-
Equity securities		3.6		1.8
Total	$	6.7		4.4

Gross Unrealized Losses
Mutual funds	$	-		-
Non-U.S. debt securities		-		(0.6	)
Equity securities		-		-
Total	$	-		(0.6	)

Fair Value
Mutual funds	$	19.8		17.6
Non-U.S. debt securities		3.7		3.1
Equity securities		3.8		2.0
Total	$	27.3		22.7

Fixed-Rate Debt

Fair value estimates of our obligation related to the fixed-rate Dominion Terminal Associates (“DTA”) bonds are based on quoted prices. The fair value (Level 1 valuation) and carrying value of our DTA bonds are as follows:

	September 30,		December 31,
(In millions)	2010		2009

DTA bonds
Carrying value	$	43.2		43.2
Fair value		45.6		42.7

Other Financial Instruments

Other financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, short-term fixed rate deposits, accounts receivable, floating rate debt, accounts payable and accrued liabilities. The financial statement carrying amounts of these items approximate the fair value due to their short-term nature.

Note 12 – Commitments and contingent matters

Operating leases

We have made residual value guarantees of approximately $41.9 million at September 30, 2010, related to operating leases, principally for trucks and other vehicles.

Other

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

THE BRINK’S COMPANY

and subsidiaries

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 armored car transportation, automated teller machine (“ATM”) replenishment and servicing, currency deposit processing and cash management services. Cash management services include cash logistics services (“Cash Logistics”), deploying and servicing safes and safe control devices (e.g. our patented CompuSafe® service), coin sorting and wrapping, integrated check and cash processing services (“Virtual Vault Services”), arranging secure transportation of valuables over long distances and around the world (“Global Services”), providing bill payment acceptance and processing services to utility companies and other billers (“Payment Services”), and guarding services (including airport security).

We identify our operating segments based on how resources are allocated and operating decisions are made. Management evaluates performance and allocates resources based on operating profit or loss, excluding non-segment income and expenses. We have four geographic operating segments: Europe, Middle East, and Africa (“EMEA”); Latin America; Asia Pacific and North America, which are aggregated into two reportable segments: International and North America.

RESULTS OF OPERATIONS

Consolidated Review

Non-GAAP Financial Measures

We provide an analysis of our operations below on both a GAAP and Non-GAAP basis. The 2010 and 2009 non-GAAP amounts are adjusted to exclude certain income and expense items. The supplemental disclosures are intended to provide information to assist comparability and estimates of future performance. The adjustments are described in detail and are reconciled to our GAAP results on pages 30 – 34.

	Third Quarter						%			Nine Months						%
(In millions, except per share amounts)	2010			2009			Change			2010			2009			Change

GAAP
Revenues	$	776			802			(3	)	$	2,241			2,286			(2	)
Segment operating profit (a)		58			62			(6	)		137			143			(4	)
Non-segment expense		(14	)		(1	)	unfav				(38	)		(14	)	unfav
Operating profit		44			61			(28	)		99			129			(23	)
Income from continuing operations (b)		22			33			(35	)		38			72			(47	)
Diluted EPS from continuing operations (b)		0.45			0.70			(36	)		0.77			1.52			(49	)

Non-GAAP
Revenues	$	776			738			5		$	2,241			2,109			6
Segment operating profit (a)		58			54			8			140			123			14
Non-segment expense		(15	)		(17	)		(8	)		(43	)		(42	)		1
Operating profit		43			37			15			98			81			21
Income from continuing operations (b)		21			20			9			47			38			23
Diluted EPS from continuing operations (b)		0.44			0.41			7			0.95			0.81			17

(a)

Segment operating profit is a non-GAAP measure when presented in any context other than prescribed by Accounting Standards Codification Topic 280, Segment Reporting. The tables on pages 18 and 21 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 2010 are provided on page 29.

(b)	Amounts reported in this filing are attributable to the shareholders of The Brink’s Company and exclude earnings related to noncontrolling interests.

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, foreign currency translation, and the 2010 remeasurement of net monetary assets in Venezuela under highly inflationary accounting.

Overview

GAAP

Third Quarter

Revenues in the quarter declined 3% from the prior year. The decrease was mainly due to an unfavorable currency impact, related primarily to the reporting of 2010 results from Venezuela at a less favorable exchange rate, which more than offset organic revenue growth of 9%. Operating profit declined during the third quarter of 2010 compared to the same period of 2009 reflecting an increase in non-segment expenses and profit declines in North America, which more than offset higher International segment profits.

Income from continuing operations attributable to Brink’s and earnings per share in the third quarter of 2010 were lower than 2009. In addition to the above described factors affecting operating profit, income from continuing operations attributable to Brink’s and earnings per share also declined due to a higher effective tax rate and higher interest costs, partially offset by less net income attributable to noncontrolling interests driven by reporting 2010 results from Venezuela at a less favorable exchange rate.

Nine Months

Revenues and operating profit were down in the first nine months compared to the prior year. The decrease was mainly due to an unfavorable currency impact, related primarily to the reporting of 2010 results from Venezuela at a less favorable exchange rate. The negative currency impact was partially offset by organic revenue and profit growth in Latin America.

Income from continuing operations attributable to Brink’s and earnings per share in 2010 were lower than 2009. In addition to the above described factors affecting operating profit, income from continuing operations attributable to Brink’s and earnings per share also reflected a $14 million income tax charge resulting from the reduction in our deferred tax assets related to provisions in U.S. healthcare legislation that was enacted in March 2010, partially offset by an $8 million non-cash income tax benefit related to an income tax settlement.

Non-GAAP

Non-GAAP results include the following adjustments:

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2010			2009			2010			2009

GAAP EPS	$	0.45			0.70			0.77			1.52
Adjust quarterly tax rate to full-year average rate		0.01			0.08			0.20			0.03
Exclude impact of net monetary asset remeasurements in Venezuela		-			-			0.04			-
Exclude royalties from former home security unit		(0.01	)		(0.02	)		(0.06	)		(0.07	)
Report 2009 Venezuela results at a less favorable exchange rate		-			(0.06	)		-			(0.25	)
Exclude non-segment gains on asset sales and acquisitions		-			(0.29	)		-			(0.43	)
Non-GAAP EPS	$	0.44			0.41			0.95			0.81

Amounts may not foot due to rounding. Non-GAAP results for 2010 and 2009 are reconciled to the applicable GAAP results on pages 30– 34.

Third Quarter

Revenues increased by 5% due to organic growth in both segments. Operating profit increased in Latin America and Asia Pacific, which more than offset the decline in North America and EMEA. Third-quarter results were also helped by lower non-segment expenses.

Nine Months

Revenues increased by 6% due mainly to organic improvement and favorable currency impact in Latin America. The operating profit increase in the International segment more than offset the decline in North America. Year to date results were also affected by price and volume pressure across most of our global markets.

Segment Operating Results

Third Quarter

GAAP
				Organic			Acquisitions/ /			Currency					% Change
(In millions)		3Q ‘09		Change			Dispositions			(b)			3Q ‘10		Total			Organic
Revenues:
EMEA	$	324			12			(10	)		(27	)	300			(8	)		4
Latin America		235			48			-			(67	)	216			(8	)		20
Asia Pacific		20			6			6			1		32			61			29
International		579			65			(4	)		(93	)	547			(5	)		11
North America		223			4			-			2		229			3			2
Total	$	802			69			(4	)		(90	)	776			(3	)		9
Operating profit:
International	$	51			18			-			(17	)	53			3			35
North America		10			(5	)		-			-		5			(48	)		(50	)
Segment operating profit		62			13			-			(17	)	58			(6	)		20
Non-segment (a)		(1	)		(13	)		-			-		(14	)	unfav			unfav
Total	$	61			(1	)		-