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, 2013

¨  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 22, 2013, 48,225,739 shares of $1 par value common stock were outstanding.
 

 
1
 

Part I - Financial Information
Item 1.  Financial Statements

THE BRINK’S COMPANY
and subsidiaries
 
Consolidated Balance Sheets
(Unaudited)

           
June 30,
  
December 31,
 
(In millions)
  
2013 
  
2012 
                 
 
ASSETS
        
                 
 
Current assets:
        
   
Cash and cash equivalents
$
 239.8 
  
 201.7 
   
Accounts receivable, net
  
 660.0 
  
 612.3 
   
Prepaid expenses and other
  
 147.0 
  
 122.1 
   
Deferred income taxes
  
 62.3 
  
 59.4 
     
Total current assets
  
 1,109.1 
  
 995.5 
                 
 
Property and equipment, net
  
 771.6 
  
 793.8 
 
Goodwill
  
 248.5 
  
 243.8 
 
Other intangibles
  
 61.0 
  
 56.1 
 
Deferred income taxes
  
 392.7 
  
 385.3 
 
Other
  
 87.6 
  
 79.4 
                 
     
Total assets
$
 2,670.5 
  
 2,553.9 
                 
                 
 
LIABILITIES AND EQUITY
        
                 
 
Current liabilities:
        
   
Short-term borrowings
$
 94.1 
  
 26.7 
   
Current maturities of long-term debt
  
 25.9 
  
 27.0 
   
Accounts payable
  
 179.1 
  
 172.8 
   
Accrued liabilities
  
 550.8 
  
 516.5 
     
Total current liabilities
  
 849.9 
  
 743.0 
                 
 
Long-term debt
  
 406.9 
  
 335.6 
 
Accrued pension costs
  
 381.7 
  
 397.8 
 
Retirement benefits other than pensions
  
 300.6 
  
 304.6 
 
Deferred income taxes
  
 20.2 
  
 18.7 
 
Other
  
 167.9 
  
 177.4 
     
Total liabilities
  
 2,127.2 
  
 1,977.1 
                 
 
Commitments and contingent liabilities (notes 3, 4 and 12)
        
                 
 
Equity:
        
   
The Brink’s Company (“Brink’s”) shareholders:
        
     
Common stock
  
 48.0 
  
 47.8 
     
Capital in excess of par value
  
 560.8 
  
 568.3 
     
Retained earnings
  
 641.4 
  
 659.1 
     
Accumulated other comprehensive loss
  
 (779.5)
  
 (773.4)
       
Brink’s shareholders
  
 470.7 
  
 501.8 
                 
   
Noncontrolling interests
  
 72.6 
  
 75.0 
                 
     
Total equity
  
 543.3 
  
 576.8 
                 
     
Total liabilities and equity
$
 2,670.5 
  
 2,553.9 
                 
 
See accompanying notes to consolidated financial statements.

 
2
 

THE BRINK’S COMPANY
and subsidiaries
 
Consolidated Statements of Income (Loss)
(Unaudited)

         
Three Months
  
Six Months
         
Ended June 30,
  
Ended June 30,
 
(In millions, except for per share amounts)
2013 
  
2012 
  
2013 
  
2012 
                       
 
Revenues
$
 990.5 
  
 935.6 
  
 1,962.0 
  
 1,871.1 
                       
 
Costs and expenses:
                
 
Cost of revenues
  
 810.0 
  
 767.1 
  
 1,620.1 
  
 1,521.6 
 
Selling, general and administrative expenses
  
 147.4 
  
 135.9 
  
 282.9 
  
 271.4 
   
Total costs and expenses
  
 957.4 
  
 903.0 
  
 1,903.0 
  
 1,793.0 
 
Other operating income (expense)
  
 0.1 
  
 (1.2)
  
 (8.6)
  
 0.9 
                       
   
Operating profit
  
 33.2 
  
 31.4 
  
 50.4 
  
 79.0 
                       
 
Interest expense
  
 (6.1)
  
 (5.4)
  
 (12.1)
  
 (11.7)
 
Interest and other income (expense)
  
 0.4 
  
 0.9 
  
 0.9 
  
 4.8 
   
Income from continuing operations before tax
  
 27.5 
  
 26.9 
  
 39.2 
  
 72.1 
 
Provision (benefit) for income taxes
  
 11.0 
  
 (9.1)
  
 16.3 
  
 7.6 
                       
   
Income from continuing operations
  
 16.5 
  
 36.0 
  
 22.9 
  
 64.5 
                       
 
Loss from discontinued operations, net of tax
  
 (4.5)
  
 (3.9)
  
 (23.8)
  
 (8.6)
                       
   
Net income (loss)
  
 12.0 
  
 32.1 
  
 (0.9)
  
 55.9 
     
Less net income attributable to noncontrolling interests
  
 (3.3)
  
 (1.6)
  
 (7.0)
  
 (8.4)
                       
   
Net income (loss) attributable to Brink’s
  
 8.7 
  
 30.5 
  
 (7.9)
  
 47.5 
                       
 
Amounts attributable to Brink’s
                
   
Continuing operations
  
 13.2 
  
 34.4 
  
 15.9 
  
 56.1 
   
Discontinued operations
  
 (4.5)
  
 (3.9)
  
 (23.8)
  
 (8.6)
                       
   
Net income (loss) attributable to Brink’s
$
 8.7 
  
 30.5 
  
 (7.9)
  
 47.5 
                       
 
Earnings (loss) per share attributable to Brink’s common shareholders(a)
                
   
Basic:
                
     
Continuing operations
$
 0.27 
  
 0.71 
  
 0.33 
  
 1.16 
     
Discontinued operations
  
 (0.10)
  
 (0.08)
  
 (0.49)
  
 (0.18)
     
Net income (loss)
  
 0.18 
  
 0.63 
  
 (0.16)
  
 0.98 
                       
   
Diluted:
                
     
Continuing operations
$
 0.27 
  
 0.71 
  
 0.33 
  
 1.16 
     
Discontinued operations
  
 (0.09)
  
 (0.08)
  
 (0.49)
  
 (0.18)
     
Net income (loss)
  
 0.18 
  
 0.63 
  
 (0.16)
  
 0.98 
                       
 
Weighted-average shares
                
   
Basic
  
 48.6 
  
 48.5 
  
 48.6 
  
 48.3 
   
Diluted
  
 48.9 
  
 48.6 
  
 48.9 
  
 48.5 
                       
 
Cash dividends paid per common share
$
 0.10 
  
 0.10 
  
 0.20 
  
 0.20 
                       
 
(a)
Amounts may not add due to rounding
                
                       
 
See accompanying notes to consolidated financial statements.
      

 
3
 

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)
  
2013 
  
2012 
  
2013 
  
2012 
                         
 
Net income (loss)
$
 12.0 
  
 32.1 
  
 (0.9)
  
 55.9 
                         
 
Benefit plan adjustments:
                
   
Benefit plan experience gains
  
 17.6 
  
 15.2 
  
 35.4 
  
 30.7 
   
Benefit plan prior service (costs) credits
  
 0.3 
  
 (11.3)
  
 1.3 
  
 (10.4)
   
Deferred profit sharing
  
 -   
  
 0.1 
  
 -   
  
 0.3 
   
Total benefit plan adjustments
  
 17.9 
  
 4.0 
  
 36.7 
  
 20.6 
                         
 
Foreign currency translation adjustments
  
 (25.4)
  
 (37.3)
  
 (32.1)
  
 (10.9)
 
Unrealized losses on available-for-sale securities
  
 (0.1)
  
 (0.2)
  
 (0.1)
  
 (1.6)
 
Gains on cash flow hedges
  
 1.2 
  
 -   
  
 0.8 
  
 -   
     
Other comprehensive income (loss) before tax
  
 (6.4)
  
 (33.5)
  
 5.3 
  
 8.1 
 
Provision for income taxes
  
 6.4 
  
 1.4 
  
 12.9 
  
 7.3 
                         
   
Other comprehensive income (loss)
  
 (12.8)
  
 (34.9)
  
 (7.6)
  
 0.8 
                         
     
Comprehensive income (loss)
  
 (0.8)
  
 (2.8)
  
 (8.5)
  
 56.7 
       
Less comprehensive income (loss) attributable to noncontrolling interests
  
 2.1 
  
 (2.4)
  
 5.2 
  
 6.4 
                         
     
Comprehensive income (loss) attributable to Brink's
$
 (2.9)
  
 (0.4)
  
 (13.7)
  
 50.3 
                         
 
See accompanying notes to consolidated financial statements.
                

 
4
 

THE BRINK’S COMPANY
and subsidiaries
 
Consolidated Statement of Equity

Six Months ended June 30, 2013
(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, 2012
 47.8 
  
$
 47.8 
  
 568.3 
  
 659.1 
  
 (773.4)
  
 75.0 
  
 576.8 
  
                                       
 
Net income (loss)
 -   
    
 -   
  
 -   
  
 (7.9)
  
 -   
  
 7.0 
  
 (0.9)
  
 
Other comprehensive income (loss)
 -   
    
 -   
  
 -   
  
 -   
  
 (5.8)
  
 (1.8)
  
 (7.6)
  
 
Dividends to:
                              
   
Brink’s common shareholders ($0.20 per share)
 -   
    
 -   
  
 -   
  
 (9.6)
  
 -   
  
 -   
  
 (9.6)
  
   
Noncontrolling interests
 -   
    
 -   
  
 -   
  
 -   
  
 -   
  
 (1.6)
  
 (1.6)
  
 
Share-based compensation:
                              
   
Stock options and awards:
                              
     
Compensation expense
 -   
    
 -   
  
 5.5 
  
 -   
  
 -   
  
 -   
  
 5.5 
  
     
Consideration from exercise of stock options
 -   
    
 -   
  
 0.4 
  
 -   
  
 -   
  
 -   
  
 0.4 
  
   
Other share-based benefit programs
 0.2 
    
 0.2 
  
 (1.6)
  
 (0.2)
  
 -   
  
 -   
  
 (1.6)
  
 
Acquisition of a noncontrolling interest in a subsidiary
 -   
    
 -   
  
 (11.8)
  
 -   
  
 (0.3)
  
 (6.4)
  
 (18.5)
  
 
Capital contributions from noncontrolling interest
 -   
    
 -   
  
 -   
  
 -   
  
 -   
  
 0.4 
  
 0.4 
  
                                       
 
Balance as of June 30, 2013
 48.0 
  
$
 48.0 
  
 560.8 
  
 641.4 
  
 (779.5)
  
 72.6 
  
 543.3 
  
                                       
 
See accompanying notes to consolidated financial statements.
  

 
5
 

THE BRINK’S COMPANY
and subsidiaries
 
Consolidated Statements of Cash Flows
(Unaudited)

           
Six Months
  
           
Ended June 30,
  
 
(In millions)
  
2013 
  
2012 
  
                   
 
Cash flows from operating activities:
          
 
Net income (loss)
$
 (0.9)
  
 55.9 
  
 
Adjustments to reconcile net income to net cash provided (used) by operating activities:
          
   
Loss from discontinued operations, net of tax
  
 23.8 
  
 8.6 
  
   
Depreciation and amortization
  
 88.6 
  
 81.2 
  
   
Share-based compensation expense
  
 5.5 
  
 5.1 
  
   
Deferred income taxes
  
 (28.2)
  
 (32.7)
  
   
Gains and losses:
          
     
Sales of available-for-sale securities
  
 (0.2)
  
 (2.1)
  
     
Sales of property and other assets
  
 (0.3)
  
 (0.4)
  
     
Business acquisitions and dispositions
  
 (1.1)
  
 (0.9)
  
   
Retirement benefit funding (more) less than expense:
          
     
Pension
  
 14.7 
  
 0.2 
  
     
Other than pension
  
 7.2 
  
 11.9 
  
   
Loss on Venezuela currency devaluation
  
 13.4 
  
 -   
  
   
Other operating
  
 0.6 
  
 7.5 
  
   
Changes in operating assets and liabilities, net of effects of acquisitions:
          
     
Accounts receivable
  
 (86.4)
  
 (67.0)
  
     
Accounts payable, income taxes payable and accrued liabilities
  
 23.5 
  
 12.3 
  
     
Customer obligations
  
 14.8 
  
 (20.4)
  
     
Prepaid and other current assets
  
 (8.8)
  
 (14.0)
  
     
Other
  
 (14.9)
  
 (5.0)
  
   
Discontinued operations
  
 (10.2)
  
 (9.9)
  
     
Net cash provided by operating activities
  
 41.1 
  
 30.3 
  
                   
 
Cash flows from investing activities:
          
 
Capital expenditures
  
 (79.7)
  
 (70.9)
  
 
Acquisitions
  
 (18.0)
  
 (16.4)
  
 
Sales of available-for-sale securities and other investments
  
 8.9 
  
 11.8 
  
 
Cash proceeds from sale of property and equipment
  
 0.5 
  
 0.5 
  
 
Cash settlements of foreign currency derivatives
  
 (0.3)
  
 -   
  
 
Other
  
 -   
  
 (1.2)
  
 
Discontinued operations
  
 0.5 
  
 (2.1)
  
     
Net cash used by investing activities
  
 (88.1)
  
 (78.3)
  
                   
 
Cash flows from financing activities:
          
 
Borrowings (repayments) of debt:
          
 
 
Short-term debt
  
 70.0 
  
 12.0 
  
 
 
Long-term revolving credit facilities
  
 85.5 
  
 1.1 
  
   
Other long-term debt:
          
     
Borrowings
  
 -   
  
 7.1 
  
 
 
  
Repayments
  
 (14.7)
  
 (14.3)
  
 
Acquisition of a noncontrolling interest in a subsidiary
  
 (18.5)
  
 -   
  
 
Payment of acquisition-related obligation
  
 (8.1)
  
 -   
  
 
Debt financing costs
  
 -   
  
 (1.5)
  
 
Dividends to:
          
   
Shareholders of Brink’s
  
 (9.6)
  
 (9.4)
  
   
Noncontrolling interests in subsidiaries
  
 (1.6)
  
 (5.7)
  
 
Proceeds from exercise of stock options
  
 0.4 
  
 0.1 
  
 
Minimum tax withholdings associated with share-based compensation
  
 (1.8)
  
 (0.5)
  
 
Other
  
 (0.3)
  
 -   
  
 
Discontinued operations
  
 -   
  
 1.8 
  
     
Net cash provided (used) by financing activities
  
 101.3 
  
 (9.3)
  
 
Effect of exchange rate changes on cash
  
 (16.2)
  
 1.3 
  
 
Cash and cash equivalents:
          
   
Increase (decrease)
  
 38.1 
  
 (56.0)
  
   
Balance at beginning of period
  
 201.7 
  
 182.9 
  
     
Balance at end of period
$
 239.8 
  
 126.9 
  
                   
 
See accompanying notes to consolidated financial statements.
  

 
6
 

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 interim 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.  These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes in our Annual Report on Form 10-K for the year ended December 31, 2012.

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 $191.6 million or 9.8% of total Brink’s revenues and represented a significant component of total segment operating profit in the six months ended June 30, 2013.

The economy in Venezuela has had significant inflation in the last several years.  We consolidate our Venezuelan results using our accounting policy for subsidiaries operating in highly inflationary economies.

In June 2010, the Venezuelan government established an exchange process that required that each transaction be approved by the government’s central bank (the “SITME” rate).  The majority of SITME transactions were approved at a rate of 5.3 bolivar fuertes to the dollar and we used this rate to remeasure our bolivar fuerte-denominated earnings into U.S. dollars each period, and monetary assets and liabilities into U.S. dollars from June  2010 to January 2013.

 
7
 


In February 2013, the Venezuelan government devalued the official exchange rate resulting in a new official rate of 6.3 bolivar fuertes to the dollar.  The government also announced the elimination of the SITME rate.  Beginning in February 2013, we began to use the official exchange rate to remeasure our bolivar-fuerte denominated earnings, monetary assets and liabilities.  For the six months ended June 30, 2013, we recognized a $13.4 million net remeasurement loss as a result of the devaluation.

At June 30, 2013, we had bolivar fuerte-denominated net monetary assets of $85.6 million, including $66.9 million of cash denominated in bolivar fuertes.  On an equity-method basis, we had investments in our Venezuelan operations of $97.6 million at June 30, 2013.

We are currently unsure whether we will be able to continue to obtain sufficient U.S. dollars to purchase imported supplies and fixed assets to operate our business in Venezuela, and as a result, we may experience business interruptions and higher operating costs in the future.

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:
·  
armored vehicle transportation, which we refer to as cash-in-transit (“CIT”)
·  
automated teller machine replenishment, and servicing, and network infrastructure services (“ATM Services”)
·  
secure international transportation of valuables (“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”)
·  
bill payment acceptance and processing services to utility companies and other billers (“Payment Services”)
·  
security and guarding services (including airport security)

                         
         
Three Months
  
Six Months
  
         
Ended June 30,
  
Ended June 30,
  
 
(In millions)
  
2013 
  
2012 
  
2013 
  
2012 
  
                         
 
Revenues:
                  
   
International
$
 751.8 
  
 698.0 
  
 1,487.7 
  
 1,397.1 
  
   
North America
  
 238.7 
  
 237.6 
  
 474.3 
  
 474.0 
  
     
Revenues
$
 990.5 
  
 935.6 
  
 1,962.0 
  
 1,871.1 
  
                         
                         
         
Three Months
  
Six Months
  
         
Ended June 30,
  
Ended June 30,
  
 
(In millions)
  
2013 
  
2012 
  
2013 
  
2012 
  
                         
 
Operating profit:
                  
   
International
$
 48.0 
  
 41.3 
  
 84.6 
  
 107.4 
  
   
North America
  
 6.8 
  
 11.4 
  
 4.4 
  
 17.2 
  
     
Segment operating profit
  
 54.8 
  
 52.7 
  
 89.0 
  
 124.6 
  
   
Non-segment
  
 (21.6)
  
 (21.3)
  
 (38.6)
  
 (45.6)
  
     
Operating profit
$
 33.2 
  
 31.4 
  
 50.4 
  
 79.0 
  

 
8
 

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 for our pension plans were as follows:

     
U.S. Plans
  
Non-U.S. Plans
  
Total
  
 
(In millions)
  
2013 
  
2012 
  
2013 
  
2012 
  
2013 
  
2012 
  
                             
 
Three months ended June 30,
                          
                             
 
Service cost
$
 -   
  
 -   
  
 3.8 
  
 2.8 
  
 3.8 
  
 2.8 
  
 
Interest cost on projected benefit obligation
  
 10.5 
  
 11.0 
  
 4.8 
  
 4.8 
  
 15.3 
  
 15.8 
  
 
Return on assets – expected
  
 (14.3)
  
 (14.9)
  
 (3.2)
  
 (3.1)
  
 (17.5)
  
 (18.0)
  
 
Amortization of losses
  
 11.4 
  
 9.7 
  
 1.5 
  
 1.0 
  
 12.9 
  
 10.7 
  
 
Amortization of prior service cost
  
 -   
  
 -   
  
 (0.1)
  
 0.4 
  
 (0.1)
  
 0.4 
  
 
Settlement loss
  
 -   
  
 -   
  
 0.5 
  
 0.3 
  
 0.5 
  
 0.3 
  
 
Net periodic pension cost
$
 7.6 
  
 5.8 
  
 7.3 
  
 6.2 
  
 14.9 
  
 12.0 
  
                             
 
Six months ended June 30,
                          
                             
 
Service cost
$
 -   
  
 -   
  
 7.4 
  
 5.4 
  
 7.4 
  
 5.4 
  
 
Interest cost on projected benefit obligation
  
 21.1 
  
 22.0 
  
 9.6 
  
 8.9 
  
 30.7 
  
 30.9 
  
 
Return on assets – expected
  
 (28.5)
  
 (30.0)
  
 (6.4)
  
 (6.1)
  
 (34.9)
  
 (36.1)
  
 
Amortization of losses
  
 22.7 
  
 19.7 
  
 3.1 
  
 2.1 
  
 25.8 
  
 21.8 
  
 
Amortization of prior service cost
  
 -   
  
 -   
  
 0.5 
  
 0.8 
  
 0.5 
  
 0.8 
  
 
Settlement loss
  
 -   
  
 4.0 
  
 0.8 
  
 1.1 
  
 0.8 
  
 5.1 
  
 
Net periodic pension cost
$
 15.3 
  
 15.7 
  
 15.0 
  
 12.2 
  
 30.3 
  
 27.9 
  

In the first six months of 2013, we made a $4.5 million cash contribution to our primary U.S. pension plan.  We are required to contribute an additional $8.4 million to the primary U.S. pension plan during the second half of 2013.

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

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)
  
2013 
  
2012 
  
2013 
  
2012 
  
2013 
  
2012 
  
                               
 
Three months ended June 30,
                          
                               
 
Service cost
$
 -   
  
 -   
  
 0.1 
  
 0.1 
  
 0.1 
  
 0.1 
  
 
Interest cost on accumulated postretirement benefit obligations
  
 4.9 
  
 5.6 
  
 0.5 
  
 0.7 
  
 5.4 
  
 6.3 
  
 
Return on assets – expected
  
 (5.2)
  
 (5.3)
  
 -   
  
 -   
  
 (5.2)
  
 (5.3)
  
 
Amortization of losses
  
 4.8 
  
 5.1 
  
 0.2 
  
 0.4 
  
 5.0 
  
 5.5 
  
 
Amortization of prior service cost
  
 -   
  
 -   
  
 0.4 
  
 0.5 
  
 0.4 
  
 0.5 
  
 
Net periodic postretirement cost
$
 4.5 
  
 5.4 
  
 1.2 
  
 1.7 
  
 5.7 
  
 7.1 
  
                               
 
Six months ended June 30,
                          
                               
 
Service cost
$
 -   
  
 -   
  
 0.2 
  
 0.1 
  
 0.2 
  
 0.1 
  
 
Interest cost on accumulated postretirement benefit obligations
  
 9.9 
  
 11.2 
  
 1.0 
  
 1.5 
  
 10.9 
  
 12.7 
  
 
Return on assets – expected
  
 (10.4)
  
 (10.6)
  
 -   
  
 -   
  
 (10.4)
  
 (10.6)
  
 
Amortization of losses
  
 9.8 
  
 10.5 
  
 0.3 
  
 0.6 
  
 10.1 
  
 11.1 
  
 
Amortization of prior service cost
  
 -   
  
 -   
  
 0.8 
  
 1.0 
  
 0.8 
  
 1.0 
  
 
Net periodic postretirement cost
$
 9.3 
  
 11.1 
  
 2.3 
  
 3.2 
  
 11.6 
  
 14.3 
  

 
9
 

Note 4 – Income taxes

     
Three Months
    
Six Months
    
     
Ended June 30,
    
Ended June 30,
    
 
(In millions)
  
2013 
    
2012 
    
2013 
    
2012 
    
                             
 
Continuing operations
                          
 
Provision (benefit) for income taxes
$
 11.0 
    
 (9.1)
    
 16.3 
    
 7.6 
    
 
Effective tax rate
  
 40.0 
%
  
 (33.8)
%
  
 41.6 
%
  
 10.5 
%
  

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 resulting from a currency devaluation in Venezuela in the first quarter, as well as additional devaluations forecasted in the second half of 2013. 

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 a change in our funding strategy for retiree health care obligations (as described below), partially offset by withholding taxes and the characterization of a French business tax as an income tax.

We changed our funding strategy for certain retiree health care obligations and, as a result, we no longer expect 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.”   

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
Note 5 – Share-based compensation plans
 
We have share-based compensation plans to retain employees and non-employee directors and to more closely align their interests with those of our shareholders.

The 2005 Equity Incentive Plan (the “2005 Plan”) was replaced by the 2013 Equity Incentive Plan (the “2013 Plan”) effective in February 2013.

The 2013 Plan permits grants of stock options, restricted stock, restricted stock units, stock appreciation rights, performance stock, performance units, as well as other share-based and cash awards to eligible employees.

The 2005 Plan permitted grants of stock options, restricted stock, restricted stock units, stock appreciation rights, performance stock, performance units, and other share-based awards to eligible employees.  No further grants of awards will be made under the 2005 Plan.

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.

 
Nonvested Share Activity
                    
   
Number of Shares
  
Weighted-Average
 
   
2013 
  
2005 
  
Directors’
      
Grant-Date
  
 
(In thousands of shares, except per share amounts)
Plan
  
Plan
  
Plan
  
Total
  
Fair Value(a)
  
                       
 
Balance as of December 31, 2012
 -   
  
 407.9 
  
 23.0 
  
 430.9 
$
 23.19 
  
 
Granted
 468.2 
  
 -   
  
 -   
  
 468.2 
  
 26.01 
  
 
Cancelled awards
 (6.8)
  
 (36.0)
  
 -   
  
 (42.8)
  
 23.75 
  
 
Vested
 -   
  
 (22.7)
  
 -   
  
 (22.7)
  
 23.15 
  
 
Balance as of June 30, 2013
 461.4 
  
 349.2 
  
 23.0 
  
 833.6 
$
 24.75 
  

(a)  
For restricted stock units and deferred stock units granted under the 2005 Plan and the Directors’ Plan, fair value was 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.  For restricted stock units granted under the 2013 Plan, fair value was measured at the date of grant based on the closing per share quoted sales price of Brink’s common stock, adjusted for a discount on units that do not receive or accrue dividends.  For performance share units and market share units granted under the 2013 Plan, fair value was measured based on a Monte-Carlo simulation pricing model.  Assumptions used in the Monte-Carlo model included, among other variables,  a grant date closing price of $26.44, a beginning average price of $27.59, expected volatility of 39%,  and correlation coefficients based on the price data used the calculate the historical volatilities.
 
 

 
10
 

On May 3, 2013, we granted: 207,095 performance share units (weighted average grant date fair value of $26.21); 96,175 market share units (weighted average grant date fair value of $26.42); and 164,977 restricted stock units (weighted average grant date fair value of $25.54) under the 2013 Plan.
 
Performance share units reward the achievement of pre-established financial goals over the performance period (April 1, 2013 through December 31, 2015) and will be paid out in shares of Brink’s common stock at a rate of 0 to 200% based on the achievement of the goals, with an additional +/- 25% multiplier that will be applied to the payout based on Brink’s total shareholder return relative to companies in the S&P 500 index.
 
Market share units will be paid out in shares of Brink’s common stock at the end of the performance period (April 1, 2013 through December 31, 2015) at a rate of 0 to 150%, calculated by multiplying the target award by the ratio of the price of Brink’s stock at the end of the performance period divided by the price of Brink’s stock at the beginning of the performance period.  The stock prices used in the calculation of the ratio will be the average closing price for the twenty days preceding each date.
 
Restricted stock units are settled in shares of the Brink’s common stock, subject to vesting requirements.
 
On July 11, 2013, we granted 12,502 restricted stock units and 1,403 performance share units under the 2013 Plan.
 
On July 12, 2013, we granted 19,201 deferred stock units under the Directors’ Plan.
 
No options have been granted in 2013.  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
          
     
Weighted-average(a):
      
 1.8 %
  
   
Expected volatility(b):
          
     
Weighted-average
      
 40 %
  
   
Risk-free interest rate(c):
          
     
Weighted-average
      
 0.7 %
  
     
Range
  
 0.5 %
–
 0.9 %
  
   
Expected term in years(d):
          
     
Weighted-average
      
 4.3 
  
     
Range
  
 3.3 
–
 5.3 
  
                 
 
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.

 
11
 

Note 6 – Shares used to calculate earnings per share

     
Three Months
  
Six Months
  
     
Ended June 30,
  
Ended June 30,
  
 
(In millions)
2013 
  
2012 
  
2013 
  
2012 
  
                     
 
Weighted-average shares:
                
   
Basic (a)
 48.6 
  
 48.5 
  
 48.6 
  
 48.3 
  
   
Effect of dilutive stock options and awards
 0.3 
  
 0.1 
  
 0.3 
  
 0.2 
  
   
Diluted
 48.9 
  
 48.6 
  
 48.9 
  
 48.5 
  
                     
 
Antidilutive stock options and awards excluded from denominator
 1.9 
  
 2.6 
  
 1.9 
  
 2.6 
  

(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.  Additionally, non-participating nonvested units are also included in the computation of basic weighted average shares when the requisite service period has been completed.  Accordingly, included in basic shares are weighted-average units of 0.6 million in the three months and 0.6 million in the six months ended June 30, 2013, and 1.1 million in the three months and 1.2 million in the six months ended June 30, 2012.

Note 7 – Acquisitions

We acquired 100% of the capital stock of Brazil-based Rede Transacoes Eletronicas Ltda. (Rede Trel) on January 31, 2013.  The purchase price of approximately $27.7 million included $25.9 million in cash and the $1.8 million acquisition-date fair value of contingent consideration. On the acquisition date, Rede Trel had $10 million of cash and cash equivalents that it uses as working capital, resulting in a net cash outflow of $16 million related to the acquisition.  Rede Trel distributes electronic prepaid products, including mobile phone airtime, via a network of approximately 20,000 retail locations across Brazil.  Rede Trel’s strong distribution network supplements Brink’s existing payments business, ePago, which has operations in Brazil, Mexico, Colombia and Panama.

We have provisionally estimated fair values for the assets purchased and liabilities assumed as of the date of the acquisition in the following table. The determination of estimated fair value required management to make significant estimates and assumptions. The amounts reported are considered provisional as we are completing the valuations that are required to allocate the purchase price. As a result, the allocation of the purchase price and the amount of goodwill and intangible assets may change in the future.

         
     
Estimated Fair
  
     
Value at
  
 
(In millions)
  
January 31, 2013
  
         
 
Fair value of purchase consideration
      
         
 
Cash paid for 100% of shares
$
25.9 
  
 
Fair value of contingent consideration
  
1.8 
  
 
Fair value of purchase consideration
$
27.7 
  
         
         
 
Fair value of net assets acquired
      
         
 
Cash
$
10.0 
  
 
Accounts receivable
  
7.8 
  
 
Other current assets
  
19.9 
  
 
Property and equipment
  
4.0 
  
 
Intangible assets(a)
  
11.8 
  
 
Goodwill(b)
  
14.0 
  
 
Current liabilities
  
(38.8)
  
 
Noncurrent liabilities
  
(1.0)
  
 
Fair value of net assets acquired
$
27.7 
  

(a)  
Intangible assets are primarily comprised of agent relationships and contractual agreements with the major Brazilian telecommunications companies.  Final allocation will be determined once the valuation is complete.
(b)  
Consists of intangible assets that do not qualify for separate recognition, combined with synergies expected from integrating Rede Trel's distribution network into our existing ePago business.  All of the goodwill has been assigned to the Latin America reporting unit and is expected to be deductible for tax purposes.

We acquired the remaining 26% ownership interest in our cash logistics business in Chile for approximately $18 million in cash on January 10, 2013.  We now own 100% of this business.
 

 
12
 

Note 8 – Supplemental cash flow information

       
Six Months
  
       
Ended June 30,
  
 
(In millions)
  
2013 
  
2012 
  
               
 
Cash paid for:
          
   
Interest
$
 11.6 
  
 11.2 
  
   
Income taxes
  
 46.1 
  
 48.8 
  

Non-cash Investing and Financing Activities
We acquired $0.5 million of armored vehicles under capital lease arrangements in the first six months of 2013, as compared to $8.7 million in the first six months of 2012.

Note 9 – Accumulated other comprehensive income (loss)
 
The following tables provide the components of other comprehensive income (loss), including the amounts reclassified from accumulated other comprehensive income (loss) into earnings for the three months and six months ended June 30, 2013 and 2012:

       
Amounts Arising During
  
Amounts Reclassified to
      
       
 the Current Period
  
Net Income (Loss)
      
                       
Total Other
  
           
Income
      
Income
  
Comprehensive
  
 
(In millions)
  
Pretax
  
Tax
  
Pretax
  
Tax
  
Income (Loss)
  
                           
 
Three months ended June 30, 2013
                      
                           
 
Amounts attributable to Brink's:
                      
   
Benefit plan adjustments
$
 (0.8)
  
 0.3 
  
 18.7 
  
 (6.7)
  
 11.5 
  
   
Foreign currency translation adjustments
  
 (24.2)
  
 -   
  
 -   
  
 -   
  
 (24.2)
  
   
Unrealized gains (losses) on available-for-sale securities
  
 -   
  
 -   
  
 (0.1)
  
 -   
  
 (0.1)
  
   
Gains (losses) on cash flow hedges
  
 2.8 
  
 -   
  
 (1.6)
  
 -   
  
 1.2 
  
     
 (22.2)
  
 0.3 
  
 17.0 
  
 (6.7)
  
 (11.6)
  
                           
 
Amounts attributable to noncontrolling interests:
                      
   
Benefit plan adjustments
  
 -   
  
 -   
  
 -   
  
 -   
  
 -   
  
   
Foreign currency translation adjustments
  
 (1.2)
  
 -   
  
 -   
  
 -   
  
 (1.2)
  
   
Unrealized gains (losses) on available-for-sale securities
  
 -   
  
 -   
  
 -   
  
 -   
  
 -   
  
   
Gains (losses) on cash flow hedges
  
 -   
  
 -   
  
 -   
  
 -   
  
 -   
  
     
 (1.2)
  
 -   
  
 -   
  
 -   
  
 (1.2)
  
                           
 
Total
                      
   
Benefit plan adjustments(a)
  
 (0.8)
  
 0.3 
  
 18.7 
  
 (6.7)
  
 11.5 
  
   
Foreign currency translation adjustments(b)
  
 (25.4)
  
 -   
  
 -   
  
 -   
  
 (25.4)
  
   
Unrealized gains (losses) on available-for-sale securities(c)
  
 -   
  
 -   
  
 (0.1)
  
 -   
  
 (0.1)
  
   
Gains (losses) on cash flow hedges(d)
  
 2.8 
  
 -   
  
 (1.6)
  
 -   
  
 1.2 
  
   
$
 (23.4)
  
 0.3 
  
 17.0 
  
 (6.7)
  
 (12.8)
  
                           
 
Three months ended June 30, 2012
                      
                           
 
Amounts attributable to Brink's:
                      
   
Benefit plan adjustments
$
 (10.3)
  
 4.5 
  
 17.4 
  
 (6.0)
  
 5.6 
  
   
Foreign currency translation adjustments
  
 (36.4)
  
 -   
  
 -   
  
 -   
  
 (36.4)
  
   
Unrealized gains (losses) on available-for-sale securities
  
 (0.2)
  
 0.1 
  
 -   
  
 -   
  
 (0.1)
  
     
 (46.9)
  
 4.6 
  
 17.4 
  
 (6.0)
  
 (30.9)
  
                           
 
Amounts attributable to noncontrolling interests:
                      
   
Benefit plan adjustments
  
 (3.1)
  
 -   
  
 -   
  
 -   
  
 (3.1)
  
   
Foreign currency translation adjustments
  
 (0.9)
  
 -   
  
 -   
  
 -   
  
 (0.9)
  
   
Unrealized gains (losses) on available-for-sale securities
  
 -   
  
 -   
  
 -   
  
 -   
  
 -   
  
     
 (4.0)
  
 -   
  
 -   
  
 -   
  
 (4.0)
  
                           
 
Total
                      
   
Benefit plan adjustments(a)
  
 (13.4)
  
 4.5 
  
 17.4 
  
 (6.0)
  
 2.5 
  
   
Foreign currency translation adjustments
  
 (37.3)
  
 -   
  
 -   
  
 -   
  
 (37.3)
  
   
Unrealized gains (losses) on available-for-sale securities(c)
  
 (0.2)
  
 0.1 
  
 -   
  
 -   
  
 (0.1)
  
   
$
 (50.9)
  
 4.6 
  
 17.4 
  
 (6.0)
  
 (34.9)
  

 
13
 


       
Amounts Arising During
  
Amounts Reclassified to
      
       
 the Current Period
  
Net Income (Loss)
      
                       
Total Other
  
           
Income
      
Income
  
Comprehensive
  
 
(In millions)
  
Pretax
  
Tax
  
Pretax
  
Tax
  
Income (Loss)
  
                           
 
Six months ended June 30, 2013
                      
                           
 
Amounts attributable to Brink's:
                      
   
Benefit plan adjustments
$
 (1.3)
  
 0.4 
  
 37.9 
  
 (13.4)
  
 23.6 
  
   
Foreign currency translation adjustments
  
 (30.1)
  
 -   
  
 (0.1)
  
 0.1 
  
 (30.1)
  
   
Unrealized gains (losses) on available-for-sale securities
  
 0.2 
  
 (0.1)
  
 (0.3)
  
 0.1 
  
 (0.1)
  
   
Gains (losses) on cash flow hedges
  
 2.6 
  
 -   
  
 (1.8)
  
 -   
  
 0.8 
  
     
 (28.6)
  
 0.3 
  
 35.7 
  
 (13.2)
  
 (5.8)
  
                           
 
Amounts attributable to noncontrolling interests:
                      
   
Benefit plan adjustments
  
 -   
  
 -   
  
 0.1 
  
 -   
  
 0.1 
  
   
Foreign currency translation adjustments
  
 (1.9)
  
 -   
  
 -   
  
 -   
  
 (1.9)
  
   
Unrealized gains (losses) on available-for-sale securities
  
 -   
  
 -   
  
 -   
  
 -   
  
 -   
  
   
Gains (losses) on cash flow hedges
  
 -   
  
 -   
  
 -   
  
 -   
  
 -   
  
     
 (1.9)
  
 -   
  
 0.1 
  
 -   
  
 (1.8)
  
                           
 
Total
                      
   
Benefit plan adjustments(a)
  
 (1.3)
  
 0.4 
  
 38.0 
  
 (13.4)
  
 23.7 
  
   
Foreign currency translation adjustments(b)
  
 (32.0)
  
 -   
  
 (0.1)
  
 0.1 
  
 (32.0)
  
   
Unrealized gains (losses) on available-for-sale securities(c)
  
 0.2 
  
 (0.1)
  
 (0.3)
  
 0.1 
  
 (0.1)
  
   
Gains (losses) on cash flow hedges(d)
  
 2.6 
  
 -   
  
 (1.8)
  
 -   
  
 0.8 
  
   
$
 (30.5)
  
 0.3 
  
 35.8 
  
 (13.2)
  
 (7.6)
  
                           
 
Six months ended June 30, 2012
                      
                           
 
Amounts attributable to Brink's:
                      
   
Benefit plan adjustments
$
 (16.1)
  
 6.2 
  
 39.8 
  
 (14.2)
  
 15.7 
  
   
Foreign currency translation adjustments
  
 (12.0)
  
 -   
  
 -   
  
 -   
  
 (12.0)
  
   
Unrealized gains (losses) on available-for-sale securities
  
 0.5 
  
 (0.1)
  
 (2.1)
  
 0.8 
  
 (0.9)
  
     
 (27.6)
  
 6.1 
  
 37.7 
  
 (13.4)
  
 2.8 
  
                           
 
Amounts attributable to noncontrolling interests:
                      
   
Benefit plan adjustments
  
 (3.1)
  
 -   
  
 -   
  
 -   
  
 (3.1)
  
   
Foreign currency translation adjustments
  
 1.1 
  
 -   
  
 -   
  
 -   
  
 1.1 
  
   
Unrealized gains (losses) on available-for-sale securities
  
 -   
  
 -   
  
 -   
  
 -   
  
 -   
  
     
 (2.0)
  
 -   
  
 -   
  
 -   
  
 (2.0)
  
                           
 
Total
                      
   
Benefit plan adjustments(a)
  
 (19.2)
  
 6.2 
  
 39.8 
  
 (14.2)
  
 12.6 
  
   
Foreign currency translation adjustments
  
 (10.9)
  
 -   
  
 -   
  
 -   
  
 (10.9)
  
   
Unrealized gains (losses) on available-for-sale securities(c)
  
 0.5 
  
 (0.1)
  
 (2.1)
  
 0.8 
  
 (0.9)
  
   
$
 (29.6)
  
 6.1 
  
 37.7 
  
 (13.4)
  
 0.8 
  

(a)  
The amortization of prior experience losses and prior service cost is part of total net periodic retirement benefit cost when reclassified to net income.  Net periodic retirement benefit cost also includes service costs, interest costs, expected returns on assets, and settlement costs.  The total pretax expense is allocated between cost of revenues and selling, general and administrative expenses on a plan-by-plan basis:

       
Three Months
  
Six Months
  
       
Ended June 30,
  
Ended June 30,
  
       
2013 
  
2012 
  
2013 
  
2012 
  
                       
 
Total net periodic retirement benefit cost included in:
                  
   
Cost of revenues
$
 16.2 
  
 15.4 
  
 33.2 
  
 31.1 
  
   
Selling, general and administrative expenses
  
 4.4 
  
 3.7 
  
 8.7 
  
 11.1 
  

(b)  
Pretax foreign currency translation adjustments reclassified to the income statement in 2013 relate to the sale of operations in Poland.  The amounts are included in loss from discontinued operations in the income statement.
(c)  
Gains and losses on sales of available-for-sale securities are reclassified from accumulated other comprehensive loss to the income statement when the gains or losses are realized.  Pretax amounts are classified in the income statement as interest and other income (expense).
(d)  
Pretax gains and losses on cash flow hedges are classified in the income statement as
·  
other operating expense  ($0.1 million in the three months and $0.5 million in the six months ended June 30, 2013), and
·  
interest and other income (expense) (($0.3) million in the three months and ($0.5) million in the six months ended June 30, 2013).




 
14
 


The changes in accumulated other comprehensive loss attributable to Brink’s are as follows:

       
Benefit Plan Adjustments
  
Foreign Currency Translation Adjustments
  
Unrealized Gains (Losses) on Available-for-Sale Securities
  
Gains (Losses) on Cash Flow Hedges
  
Total
  
 
(In millions)
            
 
Balance as of December 31, 2012
$
 (665.1)
  
 (109.9)
  
 1.6 
  
 -   
  
 (773.4)
  
   
Other comprehensive income (loss) before reclassifications
  
 (0.9)
  
 (30.1)
  
 0.1 
  
 2.6 
  
 (28.3)
  
   
Amounts reclassified from accumulated other comprehensive loss
  
 24.5 
  
 -   
  
 (0.2)
  
 (1.8)
  
 22.5 
  
 
Other comprehensive income (loss) attributable to Brink's
  
 23.6 
  
 (30.1)
  
 (0.1)
  
 0.8 
  
 (5.8)
  
 
Acquisitions of noncontrolling interests
  
 -   
  
 (0.3)
  
 -   
  
 -   
  
 (0.3)
  
 
Balance as of June 30, 2013
$
 (641.5)
  
 (140.3)
  
 1.5 
  
 0.8 
  
 (779.5)
  

Note 10 – 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 were defined in our 2012 Form 10-K.

           
June 30,
  
December 31,
  
 
(In millions)
    
2013 
  
2012 
  
                   
 
Mutual Funds
          
   
Cost
$
 3.6 
  
 4.3 
  
   
Gross unrealized gains
  
 1.1 
  
 1.0 
  
     
Fair value
$
 4.7 
  
 5.3 
  

Fixed-Rate Debt
The fair value and carrying value of our fixed-rate debts are as follows:
       
June 30,
  
December 31,
  
 
(In millions)
  
2013 
  
2012 
  
               
 
DTA bonds
          
   
Carrying value
$
 43.2 
  
 43.2 
  
   
Fair value
  
 43.1 
  
 43.4 
  
               
 
Unsecured notes issued in a private placement
          
   
Carrying value
  
 100.0 
  
 100.0 
  
   
Fair value
  
 106.1 
  
 110.5 
  

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 respective measurement dates, which we have categorized as a Level 3 valuation.

There were no transfers in or out of any of the levels of the valuation hierarchy in the first six months of 2013.

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.

We have outstanding foreign currency forward and swap contracts to hedge transactional risks associated with foreign currencies.  Our short term contracts have a weighted average maturity of approximately one month.  In 2013, we additionally entered into a cross-currency swap to hedge against the change in value of a long-term intercompany loan denominated in a currency other than the lending subsidiary’s functional currency.  The fair values of these currency contracts, including the cross-currency swap, are determined using Level 2 valuation techniques and are based on the present value of net future cash payments and receipts.  Accordingly, the fair values will fluctuate based on changes in market interest rates and the respective foreign currency to U.S. dollar exchange rate.  The fair values of our outstanding short-term foreign

 
15
 

currency contracts at June 30, 2013, were not significant.  At June 30, 2013, the fair value of the cross-currency swap was an asset of $2.9 million.  There were no transfers in or out of any of the levels of the valuation hierarchy in the first six months of 2013.

Note 11 – Loss from discontinued operations

       
Three Months
  
Six Months
  
       
Ended June 30,
  
Ended June 30,