Acquisitions

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements [Abstract]

Acquisitions

Note 6 – Acquisitions

We acquired security operations in various countries over the last three years. We accounted for the acquisitions as business combinations using the acquisition method. Under the acquisition method of accounting, assets acquired and liabilities assumed from these operations are recorded at fair value on the date of acquisition. The consolidated statements of income include the results of operations for each acquired entity from the date of acquisition.

Businesses acquired in 2012

We acquired Kheops, SAS, a provider of logistics software and related services, for approximately $17 million in January 2012. This acquisition gives us proprietary control of software used primarily in our cash-in-transit and money processing operations in France.

Businesses acquired in 2011

There were no significant acquisitions in 2011.

Businesses acquired in 2010

Servicio Pan Americano de Proteccion, S.A. de C.V.

Mexican Cash in Transit (“CIT”), ATM and money processing business

On November 17, 2010, we acquired a controlling interest in Servicio Pan Americano de Proteccion, S.A. de C.V.(“SPP”) for $59.8 million in cash. In 2011, this purchase price was reduced for final working capital adjustments to $58.7 million. We previously owned a 20.86% interest in SPP and we acquired an additional 78.89% of the outstanding shares through our existing Mexican ownership structure. In compliance with Mexican law, the remaining 0.25% noncontrolling interest is held by a third-party Mexican trust. SPP is the largest secure logistics company in Mexico and this acquisition expands our operations in one of the world's largest CIT markets. SPP has approximately 12,000 full-time and contract employees, 80 branches and 1,350 armored vehicles across its nationwide network of CIT, ATM and money processing operations.

We recognized a loss of $13.7 million in 2010 on the conversion from the cost method of accounting to consolidation. The loss represents the difference between the fair value and the book value of our previously held 20.86% investment as of the acquisition date. The 2010 loss was included in other operating income of non-segment income (expense). The fair value of the previously held noncontrolling interest in SPP, a private entity, was estimated to be $9.7 million by applying a market approach. This fair value measurement is based on significant inputs that are not observable in the market and thus represents a Level 3 measurement as described in ASC 820 Fair Value Measurements and Disclosures, Section HYPERLINK "javascript:;" 820-10-35. Key assumptions include adjustments because of the lack of control and lack of marketability that market participants would consider when estimating the fair value of the noncontrolling interest in SPP. The lack of marketability discount was determined using a Black-Scholes put option model and the discount for lack of control was determined based on identified control premiums on recent comparable transactions.

We recognized a $5.1 million bargain purchase gain in 2010 related to acquisition of the additional 78.89% ownership interest in SPP. In 2011, when we completed purchase accounting, we recognized an additional $2.1 million bargain purchase gain. The gain is equal to the difference between the fair value of the net assets acquired and the fair value of the purchase consideration (see table below). In both 2010 and 2011, the gain was included in other operating income of non-segment income (expense).

During 2010, we provisionally estimated fair values for the assets purchased and liabilities assumed as of the date of the acquisition. We made significant estimates and assumptions to estimate the fair values. The amounts reported were considered provisional as we were completing the valuation work required to allocate the purchase price. We finalized the analysis in 2011 and present the adjustments to the purchase accounting adjustments below.

		Estimated Fair	Purchase	Revised Fair
		Value at	Price	Value as of
(In millions)		November 17, 2010	Adjustments (a)	November 17, 2010
Fair value of purchase consideration
Cash paid for 78.89% of shares	$	59.8	(1.1)	58.7
Fair value of noncontrolling interest		0.1	(0.1)	-
Fair value of previously held 20.86% noncontrolling interest		9.7	-	9.7
Fair value of purchase consideration	$	69.6	(1.2)	68.4

• In accordance with the purchase agreement, the purchase price was adjusted subsequent to closing based on the working capital held as of the acquisition date.

		Amounts Recognized as of	Measurement	Amounts Recognized as of
		Acquisition Date	Period	Acquisition Date
(In millions)		(Provisional) (a)	Adjustments (b)	(Final)
Fair value of net assets acquired
Cash	$	12.2	(0.1)	12.1
Accounts receivable		58.8	-	58.8
Other current assets		12.3	(0.9)	11.4
Property and equipment, net		106.4	-	106.4
Indefinite-lived intangible asset (trade name)		12.1	-	12.1
Other noncurrent assets		18.7	-	18.7
Current liabilities		(75.1)	(0.8)	(75.9)
Noncurrent liabilities		(70.7)	2.7	(68.0)
Fair value of net assets acquired		74.7	0.9	75.6
Less: Fair value of purchase consideration		69.6	(1.2)	68.4
Bargain purchase gain	$	5.1	2.1	7.2

• As previously reported in Brink's 2010 Annual Report on Form 10-K.
• These measurement period adjustments were recorded to reflect changes in the estimated fair value of the associated assets and liabilities and better reflect market participant assumptions about facts and circumstances existing as of the acquisition date. The measurement period adjustments did not result from events after the acquisition date. We have not recast the acquisition adjustments to the 2010 financial statements as we do not consider them material.

Threshold

Canadian payment solutions provider

On December 23, 2010, we acquired Threshold Financial Technologies Inc. (“Threshold”) from Versent Corporation for $38.8 million. Based in Mississauga, Canada, Threshold is a leading provider of payments solutions, specializing in managed ATM and transaction processing services for financial institutions and retailers throughout Canada. Threshold's annual revenue is approximately $48 million, about half of which is generated by providing outsourced ATM network administration and transaction processing solutions. The company, which employs approximately 125 people, also owns and operates a network of private-label ATMs in Canada.

During 2010, we provisionally estimated fair values for the assets purchased and liabilities assumed as of the date of the acquisition. We made significant estimates and assumptions to estimate the fair values. The amounts reported were considered provisional as we were completing the valuation work required to allocate the purchase price. We finalized the analysis in 2011 and present the adjustments to the purchase accounting adjustments below

		Amounts Recognized as of	Measurement	Amounts Recognized as of
		Acquisition Date	Period	Acquisition Date
(In millions)		(Provisional) (a)	Adjustments (b)	(Final)
Cash	$	0.5	-	0.5
Accounts receivable		5.0	-	5.0
Other current assets		2.5	-	2.5
Property and equipment, net		10.6	5.8	16.4
Identifiable intangible assets		16.3	(5.1)	11.2
Goodwill (c)		12.9	0.4	13.3
Current liabilities		(4.2)	(0.8)	(5.0)
Noncurrent liabilities		(4.8)	(0.3)	(5.1)
Fair value of net assets acquired	$	38.8	-	38.8

(a)       As previously reported in Brink's 2010 Annual Report on Form 10-K.

(b) These measurement period adjustments were recorded to reflect changes in the estimated fair value of the associated assets and liabilities and better reflect market participant assumptions about facts and circumstances existing as of the acquisition date. The measurement period adjustments did not result from events after the acquisition date. We have not recast the acquisition adjustments to the 2010 financial statements as we do not consider them material.

(c)       Consists of intangible assets that do not qualify for separate recognition, combined with synergies expected from integrating Threshold's operations into our existing Canadian operations. All of the goodwill has been assigned to the North America reporting unit and is not expected to be deductible for tax purposes.

Other acquisitions in 2010

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

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