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 June 30, 2012

¨ 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 July 24, 2012, 47,737,797 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)

					June 30,	December 31,
(In millions)					2012	2011

ASSETS

Current assets:
	Cash and cash equivalents			$	126.9	182.9
	Accounts receivable, net				600.4	550.5
	Prepaid expenses and other				154.8	134.1
	Deferred income taxes				75.8	66.4
		Total current assets			957.9	933.9

Property and equipment, net					748.7	749.2
Goodwill					240.0	231.4
Other intangibles					58.5	63.8
Deferred income taxes					373.9	350.8
Other					81.2	77.1

		Total assets		$	2,460.2	2,406.2


LIABILITIES AND EQUITY

Current liabilities:
	Short-term borrowings			$	37.5	25.4
	Current maturities of long-term debt				30.8	28.7
	Accounts payable				147.3	159.5
	Accrued liabilities				484.0	488.5
		Total current liabilities			699.6	702.1

Long-term debt					337.5	335.3
Accrued pension costs					361.9	369.6
Retirement benefits other than pensions					317.2	315.4
Deferred income taxes					28.7	23.0
Other					179.9	178.4
		Total liabilities			1,924.8	1,923.8

Commitments and contingent liabilities (notes 3, 4 and 9)

Equity:
	The Brink’s Company (“Brink’s”) shareholders:
		Common stock			47.6	46.9
		Capital in excess of par value			570.1	559.5
		Retained earnings			627.3	589.5
		Accumulated other comprehensive loss			(785.1)	(787.9)
			Brink’s shareholders		459.9	408.0

	Noncontrolling interests				75.5	74.4

		Total equity			535.4	482.4

		Total liabilities and equity		$	2,460.2	2,406.2

See accompanying notes to consolidated financial statements.

THE BRINK’S COMPANY

and subsidiaries

Consolidated Statements of Income

(Unaudited)

				Three Months		Six Months
				Ended June 30,		Ended June 30,
(In millions, except per share amounts)			2012		2011	2012	2011

Revenues			$	967.1	979.3	1,933.9	1,892.6

Costs and expenses:
Cost of revenues				798.9	808.6	1,585.9	1,566.2
Selling, general and administrative expenses				140.4	142.0	280.0	263.7
	Total costs and expenses			939.3	950.6	1,865.9	1,829.9
Other operating income (expense)				(1.3)	(8.3)	0.9	(5.3)

	Operating profit			26.5	20.4	68.9	57.4

Interest expense				(5.4)	(5.9)	(11.7)	(11.7)
Interest and other income (expense)				0.9	1.1	4.8	5.5
	Income from continuing operations before tax			22.0	15.6	62.0	51.2
Provision (benefit) for income taxes				(10.1)	5.6	6.1	17.0

	Income from continuing operations			32.1	10.0	55.9	34.2

Income from discontinued operations, net of tax				-	2.6	-	3.7

	Net income			32.1	12.6	55.9	37.9
		Less net income attributable to noncontrolling interests		(1.6)	(4.7)	(8.4)	(10.0)

	Net income attributable to Brink’s			30.5	7.9	47.5	27.9

Income attributable to Brink’s:
	Continuing operations			30.5	5.3	47.5	24.2
	Discontinued operations			-	2.6	-	3.7

	Net income attributable to Brink’s		$	30.5	7.9	47.5	27.9

Earnings per share attributable to Brink’s common shareholders:
	Basic:
		Continuing operations	$	0.63	0.11	0.98	0.51
		Discontinued operations		-	0.05	-	0.08
		Net income		0.63	0.17	0.98	0.58

	Diluted:
		Continuing operations	$	0.63	0.11	0.98	0.50
		Discontinued operations		-	0.05	-	0.08
		Net income		0.63	0.16	0.98	0.58

Weighted-average shares
	Basic			48.5	47.8	48.3	47.7
	Diluted			48.6	48.1	48.5	48.0

Cash dividends paid per common share			$	0.10	0.10	0.20	0.20

See accompanying notes to consolidated financial statements.

THE BRINK’S COMPANY

and subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

						Three Months		Six Months
						Ended June 30,		Ended June 30,
(In millions)						2012	2011	2012	2011

Net income					$	32.1	12.6	55.9	37.9

Other comprehensive income (loss):
	Benefit plan adjustments:
		Net experience gains (losses) arising during the period				(1.3)	(3.7)	(7.3)	(3.7)
		Tax benefit (provision) related to net experience gains and losses arising during the period				0.3	1.0	2.0	1.0
		Reclassification adjustment for amortization of prior net experience loss included in net income				16.5	12.6	38.0	24.2
		Tax benefit related to reclassification adjustment for prior net experience loss				(5.8)	(4.4)	(13.7)	(8.7)
		Prior service cost from plan amendment during the period				(12.2)	-	(12.2)	-
		Tax benefit related to prior service cost from plan amendment during the period				4.2	-	4.2	-
		Reclassification adjustment for amortization of prior service cost (credit) included in net income				0.9	0.9	1.8	1.8
		Tax provision (benefit) related to reclassification adjustment for prior service cost (credit)				(0.2)	(0.3)	(0.5)	(0.6)
		Deferred profit sharing				0.1	0.3	0.3	0.3
		Benefit plan adjustments, net of tax				2.5	6.4	12.6	14.3

	Foreign currency translation adjustments					(37.3)	16.3	(10.9)	39.4

	Available-for-sale securities:
		Unrealized net gains (losses) on available-for-sale securities arising during the period				(0.2)	0.5	0.5	3.3
		Tax benefit (provision) related to unrealized net gains and losses on available-for-sale securities				0.1	(0.2)	(0.1)	(0.4)
		Reclassification adjustment for net (gains) losses realized in net income				-	-	(2.1)	(4.4)
		Tax provision (benefit) related to reclassification adjustment				-	-	0.8	0.9
		Unrealized net gains (losses) on available-for-sale securities, net of tax				(0.1)	0.3	(0.9)	(0.6)
			Other comprehensive income (loss)			(34.9)	23.0	0.8	53.1

				Comprehensive income (loss)	$	(2.8)	35.6	56.7	91.0

Summary by Equity Interest
Amounts attributable to Brink’s:
		Net income			$	30.5	7.9	47.5	27.9
		Benefit plan adjustments				5.6	6.4	15.7	14.3
		Foreign currency				(36.4)	15.6	(12.0)	38.7
		Available-for-sale securities				(0.1)	0.3	(0.9)	(0.7)
			Other comprehensive income (loss)			(30.9)	22.3	2.8	52.3
				Comprehensive income (loss) attributable to Brink’s		(0.4)	30.2	50.3	80.2

Amounts attributable to noncontrolling interests:
		Net income				1.6	4.7	8.4	10.0
		Benefit plan adjustments				(3.1)	-	(3.1)	-
		Foreign currency				(0.9)	0.7	1.1	0.7
		Available-for-sale securities				-	-	-	0.1
			Other comprehensive income (loss)			(4.0)	0.7	(2.0)	0.8
				Comprehensive income (loss) attributable to noncontrolling interests		(2.4)	5.4	6.4	10.8

				Comprehensive income (loss)	$	(2.8)	35.6	56.7	91.0

See accompanying notes to consolidated financial statements.

THE BRINK’S COMPANY

and subsidiaries

Consolidated Statement of Equity

Six Months ended June 30, 2012

(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, 2011			46.9	$	46.9	559.5	589.5	(787.9)	74.4	482.4

Net income			-		-	-	47.5	-	8.4	55.9
Other comprehensive income (loss)			-		-	-	-	2.8	(2.0)	0.8
Shares contributed to pension plan (see note 6)			0.4		0.4	8.6	-	-	-	9.0
Dividends:
	Brink’s common shareholders ($0.20 per share)		-		-	-	(9.4)	-	-	(9.4)
	Noncontrolling interests		-		-	-	-	-	(5.7)	(5.7)
Share-based compensation
	Stock options and awards:
		Compensation expense	-		-	5.1	-	-	-	5.1
		Consideration from exercise of stock options	-		-	0.1	-	-	-	0.1
	Other share-based benefit programs		0.3		0.3	(3.2)	(0.3)	-	-	(3.2)
Capital contributions from noncontrolling interest			-		-	-	-	-	0.4	0.4

Balance as of June 30, 2012			47.6	$	47.6	570.1	627.3	(785.1)	75.5	535.4

See accompanying notes to consolidated financial statements.

THE BRINK’S COMPANY

and subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

				Six Months
				Ended June 30,
(In millions)				2012	2011

Cash flows from operating activities:
Net income			$	55.9	37.9
Adjustments to reconcile net income to net cash provided (used) by operating activities:
	Income from discontinued operations, net of tax			-	(3.7)
	Depreciation and amortization			83.9	80.0
	Share-based compensation expense			5.1	1.4
	Deferred income taxes			(32.9)	(11.2)
	Gains and losses:
		Sales of available-for-sale securities		(2.1)	(4.4)
		Sales of property and other assets		(0.4)	(0.5)
		Business acquisitions and dispositions		(0.9)	(0.4)
	Retirement benefit funding (more) less than expense:
		Pension		0.2	4.5
		Other than pension		11.9	5.7
	Other operating			8.7	5.3
	Changes in operating assets and liabilities, net of effects of acquisitions:
		Accounts receivable		(68.3)	(55.4)
		Accounts payable, income taxes payable and accrued liabilities		(9.4)	27.7
		Prepaid and other current assets		(15.9)	(20.0)
		Other		(5.5)	1.2
	Discontinued operations			-	1.2
		Net cash provided by operating activities		30.3	69.3

Cash flows from investing activities:
Capital expenditures				(73.0)	(71.6)
Acquisitions				(16.4)	(1.4)
Available-for-sale securities:
	Sales			11.8	12.2
Cash proceeds from sale of property, equipment and investments				0.5	1.2
Cash settlements of foreign currency derivatives				-	(1.5)
Other				(1.2)	-
		Net cash used by investing activities		(78.3)	(61.1)

Cash flows from financing activities:
Borrowings (repayments) of debt:
	Short-term debt			12.0	6.5
	Long-term revolving credit facilities			2.9	(116.3)
	Issuance of private placement notes			-	100.0
	Other long-term debt:
		Borrowings		7.1	-
		Repayments		(14.3)	(14.6)
Debt financing costs				(1.5)	(0.6)
Dividends to:
	Shareholders of Brink’s			(9.4)	(9.3)
	Noncontrolling interests in subsidiaries			(5.7)	(11.4)
Proceeds from exercise of stock options				0.1	4.5
Excess tax benefits associated with share-based compensation				-	0.9
Minimum tax withholdings associated with share-based compensation				(0.5)	(1.6)
		Net cash used by financing activities		(9.3)	(41.9)
Effect of exchange rate changes on cash				1.3	6.6
Cash and cash equivalents:
	Increase (decrease)			(56.0)	(27.1)
	Balance at beginning of period			182.9	183.0
		Balance at end of period	$	126.9	155.9

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 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, 2011.

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.

The consolidated financial statements include all of the assets, liabilities, revenues, expenses and cash flows of Brink’s and all entities in which Brink’s has a controlling voting interest. Intercompany accounts and transactions between consolidated companies have been eliminated in consolidation.

Foreign Currency Translation

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

The method of translating local currency financial information into U.S. dollars depends on whether the economy in which our foreign subsidiary operates has been designated as highly inflationary or not. Economies with a three-year cumulative inflation rate of more than 100% are considered highly inflationary.

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

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

Venezuela

Our Venezuelan operations accounted for $151.7 million or 8% of total Brink’s revenues in the six months ended June 30, 2012. Our operating margins in Venezuela have varied depending on the mix of business during any year 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. 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 June 2010, the Venezuelan government established 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 U.S. dollar-denominated transactions to be settled at a rate of 5.3 bolivar fuertes to the U.S. dollar. We have

used this rate to remeasure our bolivar fuerte-denominated monetary assets and liabilities into U.S. dollars at June 30, 2012, resulting in bolivar fuerte-denominated net monetary assets at June 30, 2012, of $60.5 million. For the six months ended June 30, 2012 and for the twelve months ended December 31, 2011, we did not recognize any remeasurement gains or losses as the SITME rate did not change.

Under the SITME process, approved transactions may not exceed $350,000 per legal entity per month. We have obtained sufficient U.S. dollars to purchase imported supplies and fixed assets to operate our business in Venezuela but our continued ability to do this is less certain. Although we believe the repatriation of cash invested in Venezuela will be limited in the future, we have been successful at converting some bolivar fuertes to U.S. dollars through other legal channels, at a rate not as favorable as the SITME rate.

At June 30, 2012, our Venezuelan subsidiaries held $1.8 million of cash and short-term investments denominated in U.S. dollars and $26.8 million of cash and short-term investments denominated in bolivar fuertes. On an equity-method basis, we had investments in our Venezuelan operations of $81.0 million at June 30, 2012.

Recently Adopted Accounting Standards

In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. ASU 2011-04 changes how fair value guidance is applied in certain circumstances and expands the disclosure requirements around fair value measurements. For entities with fair value measurements classified as Level 3, required disclosures include a quantitative disclosure of the unobservable inputs and assumptions used in the measurement, a description of the valuation processes in place, a narrative description of the sensitivity of the fair value to changes in unobservable inputs and interrelationships between those inputs, and quantitative disclosures about unobservable inputs used in fair value measurements other than those valuations that use net asset value as a practical expedient. We adopted the guidance effective January 1, 2012. The adoption of this guidance did not have a material effect on our financial statements.

In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income. For annual periods, an entity has the option to present the components of comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. For interim periods, total comprehensive income is required to be disclosed either below net income on the income statement or as a separate statement. The ASU does not change the items that must be reported as other comprehensive income. Whether presenting two separate statements or one continuous statement in annual periods, the ASU required entities to present reclassifications from other comprehensive income in the statement reporting net income. In December 2011, however, the FASB deferred this requirement when it issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassification of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05, which has the same effective date as ASU 2011-05. Companies must continue to disclose reclassifications from other comprehensive income on the statement that reports other comprehensive income, or in the notes to the financial statements. We adopted this guidance effective January 1, 2012, and included a statement of comprehensive income in our interim financial statements. The adoption of this guidance did not have a material effect on our financial statements.

Note 2 – Segment information

We identify our operating segments based on how resources are allocated and operating decisions are made. Management evaluates performance and allocates resources based on operating profit or loss, excluding non-segment expenses. Under the criteria set forth in FASB ASC 280, Segment Reporting, we have four geographic operating segments, which are aggregated into two reportable segments: International and North America. We currently serve customers in more than 100 countries, including approximately 50 countries where we operate subsidiaries.

The primary services of the reportable segments include:

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

·	Automated teller machine (“ATM”) – replenishment and servicing, network infrastructure services

·	Global Services – transportation of valuables globally

·	Cash Management Services – supply chain management of cash

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

·	Guarding Services – including airport security


				Three Months		Six Months
				Ended June 30,		Ended June 30,
(In millions)				2012	2011	2012	2011

Revenues:
	International		$	729.5	732.5	1,459.9	1,406.8
	North America			237.6	246.8	474.0	485.8
		Revenues	$	967.1	979.3	1,933.9	1,892.6


				Three Months		Six Months
				Ended June 30,		Ended June 30,
(In millions)				2012	2011	2012	2011

Operating profit:
	International		$	36.4	26.2	97.3	71.4
	North America			11.4	10.4	17.2	17.2
		Segment operating profit		47.8	36.6	114.5	88.6
	Non-segment			(21.3)	(16.2)	(45.6)	(31.2)
		Operating profit	$	26.5	20.4	68.9	57.4

Note 3 – 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)		2012	2011	2012	2011	2012	2011

Three months ended June 30,

Service cost	$	-	-	2.8	2.5	2.8	2.5
Interest cost on projected benefit obligation		11.0	11.6	4.8	4.3	15.8	15.9
Return on assets – expected		(14.9)	(16.2)	(3.1)	(3.0)	(18.0)	(19.2)
Amortization of losses		9.7	7.0	1.0	0.7	10.7	7.7
Amortization of prior service cost		-	-	0.4	0.4	0.4	0.4
Settlement loss		-	-	0.3	1.0	0.3	1.0
Net periodic pension cost	$	5.8	2.4	6.2	5.9	12.0	8.3

Six months ended June 30,

Service cost	$	-	-	5.4	5.3	5.4	5.3
Interest cost on projected benefit obligation		22.0	23.1	8.9	8.6	30.9	31.7
Return on assets – expected		(30.0)	(32.5)	(6.1)	(6.1)	(36.1)	(38.6)
Amortization of losses		19.7	14.0	2.1	1.5	21.8	15.5
Amortization of prior service cost		-	-	0.8	0.8	0.8	0.8
Settlement loss		4.0	-	1.1	1.0	5.1	1.0
Net periodic pension cost	$	15.7	4.6	12.2	11.1	27.9	15.7

We made a $9 million stock contribution to our primary U.S. pension plan in the first three months of 2012 and another $7 million cash contribution to the plan in July 2012. Based on the law in effect at June 30, 2012, we are required to contribute an additional $15.5 million to the primary U.S. pension plan during the remainder of 2012. New legislation titled Moving Ahead for Progress in the 21st Century was passed in July 2012 that has the effect of spreading the expected funding requirements for our primary U.S. pension plan over a longer period of time. We have not yet estimated the effect of the new law on our projected contributions to our primary U.S. pension plan, but the remaining 2012 funding requirement is expected to be lower.

We recognized a $4.0 million settlement loss in the first six months of 2012 related to the payment of U.S. pension benefits.

Retirement benefits other than pensions

We provide retirement healthcare 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 United Mine Workers of America 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)		2012	2011	2012	2011	2012	2011

Three months ended June 30,

Service cost	$	-	-	0.1	-	0.1	-
Interest cost on accumulated postretirement benefit obligations		5.6	5.9	0.7	0.7	6.3	6.6
Return on assets – expected		(5.3)	(6.4)	-	-	(5.3)	(6.4)
Amortization of losses		5.1	3.8	0.4	0.1	5.5	3.9
Amortization of prior service cost		-	-	0.5	0.5	0.5	0.5
Net periodic pension cost	$	5.4	3.3	1.7	1.3	7.1	4.6

Six months ended June 30,

Service cost	$	-	-	0.1	-	0.1	-
Interest cost on accumulated postretirement benefit obligations		11.2	12.0	1.5	1.4	12.7	13.4
Return on assets – expected		(10.6)	(12.8)	-	-	(10.6)	(12.8)
Amortization of losses		10.5	7.5	0.6	0.2	11.1	7.7
Amortization of prior service cost		-	-	1.0	1.0	1.0	1.0
Net periodic pension cost	$	11.1	6.7	3.2	2.6	14.3	9.3

Note 4 – Income taxes

		Three Months				Six Months
		Ended June 30,				Ended June 30,
		2012		2011		2012		2011

Continuing operations
Provision (benefit) for income taxes (in millions)	$	(10.1)		5.6		6.1		17.0
Effective tax rate		(45.9)	%	35.9	%	9.8	%	33.2	%

2012 Compared to U.S. Statutory Rate

The effective income tax rate on continuing operations in the first six months of 2012 was lower than the 35% U.S. statutory tax rate largely due to a $21 million non-cash income tax benefit as a result of the Company changing its funding strategy for retiree health care obligations (as described below), partially offset by higher taxes due to the geographical mix of earnings, withholding taxes, and the characterization of a French business tax as an income tax.

The Company changed its funding strategy for certain retiree health care obligations and, as a result, no longer expects to be affected by an income tax deduction limitation enacted by The Patient Protection and Affordable Care Act and The Health Care and Education Reconciliation Act of 2010 (“the Act”). The Act disallows deductions for prescription drug benefit costs funded after December 31, 2012, to the extent these costs are reimbursed by a “Medicare Part D Subsidy.”

2011 Compared to U.S. Statutory Rate

The effective income tax rate on continuing operations in the first six months of 2011 was lower than the 35% U.S. statutory tax rate largely due to a $2.8 million benefit for changes in legislation in various jurisdictions and tax claims and audit settlements, partially offset by higher taxes due to the geographical mix of earnings and the characterization of a French business tax as an income tax.

Note Note 5 – Share-based compensation plans

We have share-based compensation plans to retain employees and nonemployee directors and to more closely align their interests with those of our shareholders.

The 2005 Equity Incentive Plan (the “2005 Plan”) permits grants of stock options, restricted stock, stock appreciation rights, performance stock and other share-based awards to employees. Only stock options and restricted stock units have been granted under the 2005 Plan to date.

We provide share-based awards to directors through the Non-Employee Directors’ Equity Plan (the “Directors’ Plan”). Only deferred stock units have been granted under the Directors’ Plan to date.

The fair value of the options granted during the three months ended June 30, 2012, was calculated using the following estimated weighted-average assumptions:

			Three Months
			Ended June 30,
Options Granted			2012

Number of shares underlying options, in thousands						207
Weighted-average exercise price per share			$			22.39

Assumptions used to estimate fair value
	Expected dividend yield (a):
		Weighted-average				1.8 %
		Range				1.8 %
	Expected volatility (b):
		Weighted-average				40 %
		Range				40 %
	Risk-free interest rate (c):
		Weighted-average				0.7 %
		Range		0.5 %	–	0.9 %
	Expected term in years (d):
		Weighted-average				4.25
		Range		3.25	–	5.25

Weighted-average fair value estimates at grant date:
	In millions		$			1.3
	Fair value per share		$			6.29

(a)	The expected dividend yield is the calculated yield on Brink’s common stock at the time of the grant.

(b)	The expected volatility was estimated after reviewing the historical volatility of our stock using daily close prices.

(c)	The risk-free interest rate was based on U.S. Treasury debt yields at the time of the grant.

(d)	The expected term of the options was based on our historical option exercise, expiration and post-vesting cancellation behaviors.

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, 2011	299.6	15.8	315.4	$	25.99
Granted	98.1	-	98.1		22.98
Cancelled awards	(0.1)	-	(0.1)		26.40
Vested	(42.1)	-	(42.1)		25.50
Balance as of June 30, 2012	355.5	15.8	371.3	$	25.26

(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.

On July 11, 2012, we granted options to purchase 149,473 shares of common stock and 170,618 restricted stock units under the 2005 Plan. The options have an exercise price of $22.57 per share.

On July 12, 2012, we granted 23,023 deferred stock units under the Directors’ Plan.

Note 6 – Capital stock

Shelf Registration of Common Stock

On February 28, 2012, we filed a shelf registration statement under Form S-3ASR with the SEC for $150 million of our common stock. Under this shelf registration, we are able to issue up to $150 million of new common stock. On March 6, 2012, we issued 361,446 shares of our common stock and contributed the shares to our primary U.S. pension plan. Sales of these shares by the plan are covered under our shelf registration statement. The common stock was valued for purposes of the contribution at $24.90 per share, or $9 million in the aggregate, which reflected a 2.4% discount from the $25.51 per share closing share price of our common stock on March 5, 2012.

Shares Used to Calculate Earnings per Share

		Three Months		Six Months
		Ended June 30,		Ended June 30,
(In millions)		2012	2011	2012	2011

Weighted-average shares:
	Basic (a)	48.5	47.8	48.3	47.7
	Effect of dilutive stock options and awards	0.1	0.3	0.2	0.3
	Diluted	48.6	48.1	48.5	48.0

Antidilutive stock options and awards excluded from denominator		2.6	1.5	2.6	2.2

(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 1.1 million in the three months and 1.2 million in the six months ended June 30, 2012, and 1.1 million in both the three months and six months ended June 30, 2011.

Note 7 – Supplemental cash flow information

			Six Months
			Ended June 30,
(In millions)			2012	2011

Cash paid for:
	Interest	$	11.2	9.8
	Income taxes		48.8	39.6

Non-cash Investing and Financing Activities

We acquired $8.7 million of armored vehicles under capital lease arrangements in the first six months of 2012, as compared to $29.7 million in the first six months of 2011.

We contributed $9 million of Brink’s common stock to our primary U.S. pension plan in the first three months of 2012.

Note 8 – Fair value of financial instruments

Investments in Available-for-sale Securities

We have investments in mutual funds designated as available-for-sale securities that are carried at fair value in the financial statements. For these investments, fair value was estimated based on quoted prices categorized as a Level 1 valuation. Valuation levels are defined in our 2011 Form 10-K.

				June 30,	December 31,
(In millions)				2012	2011

Mutual Funds
	Cost		$	7.0	16.9
	Gross unrealized gains			1.5	3.1
		Fair value	$	8.5	20.0

Fixed-Rate Debt

The fair value estimate of our obligation related to the fixed-rate Dominion Terminal Associates (“DTA”) bonds is based on price information observed in a less-active market, which we have categorized as a Level 2 valuation.

The fair value estimate of our unsecured private-placement notes is based on the present value of future cash flows, discounted at rates for similar instruments at the measurement date, which we have categorized as a Level 3 valuation.

The fair value and carrying value of our DTA bonds and our unsecured notes are as follows:

			June 30,	December 31,
(In millions)			2012	2011

DTA bonds
	Carrying value	$	43.2	43.2
	Fair value		44.1	44.0

Unsecured notes issued in a private placement
	Carrying value		100.0	100.0
	Fair value		108.6	106.4

Other Financial Instruments

Other financial instruments 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.

The fair value of outstanding foreign currency contracts was not significant. There were no transfers in or out of any of the levels of the valuation hierarchy in the first six months of 2012.

Note 9 – Commitments and contingent matters

Operating leases

We have made residual value guarantees of approximately $22.5 million at June 30, 2012, related to operating leases, principally for trucks and other vehicles.

Bankruptcy of Brink’s Belgium

Our former cash-in-transit subsidiary in Belgium (Brink’s Belgium) filed for bankruptcy in November 2010 after a restructuring plan was rejected by local union employees and was placed into bankruptcy on February 2, 2011. We continue to operate our Global Services unit in Belgium, which provides secure transport of diamonds, jewelry, precious metals, banknotes and other commodities.

Legal Dispute. In December 2010, the court-appointed provisional administrators of Brink’s Belgium filed a claim for €20 million against a subsidiary of Brink’s. In June 2011, the Brink’s subsidiary entered into a settlement agreement related to this claim. Under the terms of the settlement agreement, the Brink’s subsidiary agreed to contribute, upon the satisfaction of certain conditions, €7 million toward social payments to former Brink’s Belgium employees in exchange for the bankruptcy receivers requesting withdrawal of the pending litigation and agreeing not to file additional claims. The conditions of the settlement agreement included a release from liability by affected employees, the Belgian tax authority and the Belgian social security authority. After these conditions were satisfied, the settlement was finalized in September 2011, the request to withdraw the litigation was accepted by the court in March 2012 and the case was dismissed. We recorded a pretax charge of €7 million (approximately $10 million) in the second quarter of 2011 related to this claim.

Other

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

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 vehicles transportation, which we refer to as cash in transit (“CIT”)

·	automated teller machine (“ATM”) - replenishment and servicing, network infrastructure services

·	arranging secure transportation of valuables over long distances and around the world (“Global Services”)

·	supply chain management of cash (“Cash Management Services”) including cash logistics services, deploying and servicing safes and safe control devices (e.g., our patented CompuSafe® service), coin sorting and wrapping, integrated check and cash processing services (“Virtual Vault Services”)

·	providing bill payment acceptance and processing services to utility companies and other billers (“Payment Services”)

·	security and guarding services (including airport security)

We have four geographic operating segments: Latin America; Europe, Middle East, and Africa (“EMEA”); Asia Pacific; and North America, which are aggregated into two reportable segments: International and North America.

RESULTS OF OPERATIONS

Consolidated Review

Non-GAAP Results

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 2012, 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 non-GAAP results provide 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. 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. The adjustments are described in detail and are reconciled to our GAAP results on pages 32 – 33.

			Second Quarter		%		First Half		%
(In millions, except per share amounts)			2012	2011	Change		2012	2011	Change

GAAP
Revenues		$	967.1	979.3	(1)	$	1,933.9	1,892.6	2
	Segment operating profit (a)		47.8	36.6	31		114.5	88.6	29
	Non-segment expense		(21.3)	(16.2)	31		(45.6)	(31.2)	46
	Operating profit		26.5	20.4	30		68.9	57.4	20
Income from continuing operations (b)			30.5	5.3	fav		47.5	24.2	96
Diluted EPS from continuing operations (b)			0.63	0.11	fav		0.98	0.50	96

Non-GAAP (c)
Revenues		$	967.1	979.3	(1)	$	1,933.9	1,892.6	2
	Segment operating profit (a)		50.3	48.5	4		120.0	101.2	19
	Non-segment expense		(11.7)	(10.0)	17		(21.3)	(19.2)	11
	Operating profit		38.6	38.5	-		98.7	82.0	20
Income from continuing operations (b)			19.2	17.0	13		47.1	35.8	32
Diluted EPS from continuing operations (b)			0.40	0.35	14		0.97	0.74	31

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 20 and 23 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 2012 are provided on page 31.

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

(c)	Non-GAAP earnings information is contained on pages 32 – 33, including reconciliation to amounts reported under GAAP.

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. No remeasurement of net monetary assets in Venezuela under highly inflationary accounting was required as the exchange rate did not change.

Overview

GAAP

Second Quarter

Our revenues decreased $12 million or 1% and our operating profit increased $6 million or 30% in 2012. Revenues decreased due to unfavorable changes in currency exchange rates, partially offset by organic growth in our International segment. Operating profit increased primarily due to organic profit improvement in our International segment ($15 million), partially offset by increased U.S. retirement plan expenses ($6 million) and the negative impact of changes in currency exchange rates ($5 million).

Our income from continuing operations in 2012 increased $25 million compared to 2011 primarily due to lower tax expense ($16 million) mainly resulting from a $21 million tax benefit related to a change in retiree health care funding strategy. The operating profit increase mentioned above and the decrease in income attributable to noncontrolling interests ($3 million) also contributed to higher income from continuing operations.

Our earnings per share from continuing operations was $0.63, up from $0.11 in 2011.

First Half

Our revenues increased $41 million or 2% and our operating profit increased $12 million or 20% in 2012. Revenues increased due to organic growth in our International segment, partially offset by unfavorable changes in currency exchange rates. Operating profit increased primarily due to organic profit improvement in our International segment ($33 million), partially offset by increased U.S. retirement plan expenses ($16 million) and the negative impact of changes in currency exchange rates ($7 million).

Our income from continuing operations in 2012 increased 96% compared to 2011 primarily due to lower tax expense ($11 million) mainly resulting from a $21 million tax benefit related to a change in retiree health care funding strategy. The operating profit increase mentioned above and the decrease in income attributable to noncontrolling interests ($2 million) also contributed to higher income from continuing operations.

Our earnings per share from continuing operations was $0.98, up from $0.50 in 2011.

Non-GAAP

Non-GAAP results include the following adjustments:

			Three Months		Six Months
			Ended June 30,		Ended June 30,
			2012	2011	2012	2011

GAAP Diluted EPS		$	0.63	0.11	0.98	0.50
	Exclude U.S. retirement plan expenses		0.16	0.09	0.38	0.18
	Exclude Belgium settlement charge		-	0.13	-	0.13
	Exclude employee benefit settlement charge		-	0.01	0.02	0.01
	Exclude gains on acquisitions and dispositions		(0.01)	-	(0.04)	(0.06)
	Exclude tax benefit from change in retiree health care funding strategy		(0.43)	-	(0.43)	-
	Adjust quarterly tax rate to full-year average rate		0.04	-	0.06	(0.03)
Non-GAAP Diluted EPS		$	0.40	0.35	0.97	0.74

Amounts may not add due to rounding. Non-GAAP results are reconciled in more detail to the applicable GAAP results on pages 32 – 33.

Second Quarter

The analysis of non-GAAP revenues is the same as the analysis of GAAP revenues. Operating profit was flat in 2012 versus 2011 due to the negative impact of changes in currency exchange rates ($5 million) and higher non-segment costs ($2 million) offset by organic improvement in both our International ($4 million) and North America ($3 million) segments.

Our income from continuing operations in 2012 increased 13% primarily due to lower income attributable to noncontrolling interests ($2 million).

Our earnings per share from continuing operations was $0.40, up from $0.35 in 2011.

First Half

The analysis of non-GAAP revenues is the same as the analysis of GAAP revenues. Operating profit increased $17 million or 20% in 2012 primarily due to organic improvement in our International segment ($23 million) partially offset by the negative impact of changes in currency exchange rates ($7 million).

Our income from continuing operations in 2012 increased 32% primarily due to higher operating profit, partially offset by higher tax expense.

Our earnings per share from continuing operations was $0.97, up from $0.74 in 2011.

Outlook for full-year 2012

GAAP

Our organic revenue growth rate for 2012 is expected to be in the 5% to 8% range, and our operating segment margin is expected to be approximately 7%. Our assumptions behind the annual segment margin include continued strength in Latin America and modestly better results in Europe. Our International organic revenue growth rate for 2012 is expected to be in the 7% to 10% range, and our International segment margin is expected to be in the 7.0% to 8.0% range. Our North America organic revenue growth rate for 2012 is expected to be flat, and our North America segment margin is expected to be in the 3.6% to 4.6% range.

Non-GAAP

Our outlook for non-GAAP revenues is the same as our outlook for GAAP revenues.

Our operating segment margin is expected to be approximately 7%. Our assumptions behind the annual segment margin include continued strength in Latin America and modestly better results in North America and Europe. Our International segment margin is expected to be in the 7.0% to 8.0% range and our North America segment margin is expected to be in the 4.5% to 5.5% range.

See page 31 for a summary of our 2012 Outlook.

Segment Operating Results

Segment Review

Second Quarter 2012 versus Second Quarter 2011

GAAP
				Organic			Acquisitions /			Currency						% Change
(In millions)	2Q '11			Change			Dispositions (b)			(c)			2Q '12			Total			Organic
Revenues:
International:
Latin America	$	360.5			56.0			-			(40.6	)		375.9			4			16
EMEA		333.5			18.5			-			(36.9	)		315.1			(6	)		6
Asia Pacific		38.5			2.2			-			(2.2	)		38.5			-			6
International		732.5			76.7			-			(79.7	)		729.5			-			10
North America		246.8			(5.3	)		(1.3	)		(2.6	)		237.6			(4	)		(2	)
Total	$	979.3			71.4			(1.3	)		(82.3	)		967.1			(1	)		7
Operating profit:
International	$	26.2			15.1			-			(4.9	)		36.4			39			58
North America		10.4			1.1			0.1			(0.2	)		11.4			10			11
Segment operating profit		36.6			16.2			0.1			(5.1	)		47.8			31			44
Non-segment (a)		(16.2	)		(5.1	)		-			-			(21.3	)		31			31
Total	$	20.4			11.1			0.1			(5.1	)		26.5			30			54
Segment operating margin:
International		3.6	%											5.0	%
North America		4.2	%											4.8	%
Segment operating margin		3.7	%											4.9	%

Non-GAAP

Organic

Acquisitions /

Currency

% Change

(In millions)

2Q '11

Change

Dispositions (b)

(c)

2Q '12

Total

Organic

Revenues: