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Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2013
Summary of Significant Accounting Policies [Abstract]  
Summary of Significant Accounting Policies [Text Block]

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.  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

Brink's Venezuela accounted for $306.3 million or 10% of total Brink's revenues and represented a significant component of total segment operating profit in the nine months ended September 30, 2013. At September 30, 2013, we had investments in our Venezuelan operations of $110.0 million on an equity-method basis. At September 30, 2013, we had bolivar fuerte-denominated net monetary assets of $101.7 million, including $84.9 million of cash denominated in bolivar fuertes.

 

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.

 

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. We recognized a $13.4 million net remeasurement loss as a result of the devaluation in the first quarter of 2013.

 

Brink's Venezuela has been unable to obtain sufficient U.S. dollars to purchase certain imported supplies and fixed assets to operate its business in Venezuela, and as a result, has purchased more expensive, locally denominated supplies and fixed assets, and we expect it will continue to do so in the future.