04/15/2014
"Since Brink's has been able to obtain U.S. dollars at the SICAD II rate (approximately 50), and is not eligible to apply for exchange at the official rate (6.3), and does not expect to be able to access the SICAD rate (11), it is adopting the SICAD II rate for reporting Venezuela results," the company said. Applying the SICAD II rate, Brink's says 2013 revenue of $447 million from Venezuela would have been reduced to about $56 million.
RICHMOND, VIRGINIA -- The Brink's Company (BCO) announced today that it will no longer use Venezuela's official exchange rate of 6.3 bolivars per U.S. dollar and has adopted the government's SICAD II floating rate of approximately 50 bolivars per U.S. dollar, which took effect on March 24.
As a result of the devaluation, Brink's expects to incur a first-quarter remeasurement charge related to the write down of substantially all of its bolivar-denominated net monetary assets. At December 31, 2013, bolivar-denominated net monetary assets totaled $120 million.
Tom Schievelbein, chairman, president and chief executive officer, said: "Brink's has been operating in Venezuela for more than 40 years, through numerous economic cycles. We remain committed to this business, which is extremely well-managed by our local team and has demonstrated strong operational and financial performance."
For comparative purposes, Brink's provided hypothetical 2013 quarterly and full-year non-GAAP results, adjusted to reflect the devaluation (pages 4-7). Applying the current SICAD II rate, the $447 million of 2013 revenue from Venezuela operations would have declined 88% to approximately $56 million, which is consistent with the company's disclosure in its 2013 annual report on Form 10-K that a substantial devaluation could reduce revenue by $400 million.
In 2013, non-GAAP net income from continuing operations would have been $1.55 per share, a decrease of $.82 from reported earnings of $2.37 per share ($1.47 on a GAAP basis), which is consistent with previous disclosure that Venezuela operations represented a significant component of the company's operating profit. Brink's also indicated in previous disclosures that a devaluation would put at risk the company's bolivar-denominated cash and cash equivalents, which totaled $94 million on December 31, 2013.
Applying the current SICAD II rate, these assets would have been valued at $12 million as of December 31, 2013.
Brink's is scheduled to report its first-quarter 2014 earnings on April 24. First-quarter GAAP and non-GAAP earnings will include results from Venezuela for January 1 through March 23 at the official rate (6.3), with the balance of March results reported at the SICAD II rate (approximately 50). For comparative purposes, the company also will provide first-quarter results with Venezuela results translated at the SICAD II rate for the entire period and additional information, including an update to its full-year guidance.
Brink's had been reporting its Venezuela results at the official exchange rate (6.3) but, as disclosed in its 2013 annual report on Form 10-K, was unable to convert bolivars at this rate. In 2013, the Venezuelan government introduced a new exchange rate mechanism, known as SICAD, which enables some companies to convert currency for certain transactions at a rate of approximately 11 bolivars per U.S. dollar. On March 24, the newly created SICAD II exchange mechanism became available and is the only rate at which Brink's has been able to successfully exchange its bolivars for U.S. dollars. Since Brink's is eligible and has been able to obtain U.S. dollars at the SICAD II rate (approximately 50), and is not eligible to apply for exchange at the official rate (6.3), and does not expect to be able to access the SICAD rate (11), it is adopting the SICAD II rate for reporting Venezuela results.
Non-GAAP and Adjusted Non-GAAP Results
Non-GAAP and Adjusted Non-GAAP results described in this press release 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 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. The full year Non-GAAP tax rate in both years excludes certain pretax and tax income and expense amounts. The purpose of Adjusted Non-GAAP results is to report historical Non-GAAP financial information assuming that our Venezuelan operations had been remeasured using a rate of 50 bolivars to the U.S. dollar.
The Non-GAAP and Adjusted Non-GAAP information provides 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. In addition, Brink's believes the measures will help investors assess the ongoing operations. Non-GAAP and Adjusted 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.
Forward-Looking Statements
This release contains both historical and forward-looking information. Words such as "anticipates," "assumes," "estimates," "expects," "projects," "predicts," "intends," "plans," "believes," "potential," "may," "should" and similar expressions may identify forward-looking information. Forward-looking information in this release includes, but is not limited to an expected first quarter charge related to a devaluation in Venezuela and future access to exchange mechanisms in Venezuela. Forward-looking information in this document is subject to known and unknown risks, uncertainties and contingencies, which are difficult to predict or quantify, and which could cause actual results, performance or achievements to differ materially from those that are anticipated.
These risks, uncertainties and contingencies, many of which are beyond our control, include, but are not limited to:
"Since Brink's has been able to obtain U.S. dollars at the SICAD II rate (approximately 50), and is not eligible to apply for exchange at the official rate (6.3), and does not expect to be able to access the SICAD rate (11), it is adopting the SICAD II rate for reporting Venezuela results," the company said. Applying the SICAD II rate, Brink's says 2013 revenue of $447 million from Venezuela would have been reduced to about $56 million.
RICHMOND, VIRGINIA -- The Brink's Company (BCO) announced today that it will no longer use Venezuela's official exchange rate of 6.3 bolivars per U.S. dollar and has adopted the government's SICAD II floating rate of approximately 50 bolivars per U.S. dollar, which took effect on March 24.As a result of the devaluation, Brink's expects to incur a first-quarter remeasurement charge related to the write down of substantially all of its bolivar-denominated net monetary assets. At December 31, 2013, bolivar-denominated net monetary assets totaled $120 million.
Tom Schievelbein, chairman, president and chief executive officer, said: "Brink's has been operating in Venezuela for more than 40 years, through numerous economic cycles. We remain committed to this business, which is extremely well-managed by our local team and has demonstrated strong operational and financial performance."
For comparative purposes, Brink's provided hypothetical 2013 quarterly and full-year non-GAAP results, adjusted to reflect the devaluation (pages 4-7). Applying the current SICAD II rate, the $447 million of 2013 revenue from Venezuela operations would have declined 88% to approximately $56 million, which is consistent with the company's disclosure in its 2013 annual report on Form 10-K that a substantial devaluation could reduce revenue by $400 million.
In 2013, non-GAAP net income from continuing operations would have been $1.55 per share, a decrease of $.82 from reported earnings of $2.37 per share ($1.47 on a GAAP basis), which is consistent with previous disclosure that Venezuela operations represented a significant component of the company's operating profit. Brink's also indicated in previous disclosures that a devaluation would put at risk the company's bolivar-denominated cash and cash equivalents, which totaled $94 million on December 31, 2013.
Applying the current SICAD II rate, these assets would have been valued at $12 million as of December 31, 2013.
Brink's is scheduled to report its first-quarter 2014 earnings on April 24. First-quarter GAAP and non-GAAP earnings will include results from Venezuela for January 1 through March 23 at the official rate (6.3), with the balance of March results reported at the SICAD II rate (approximately 50). For comparative purposes, the company also will provide first-quarter results with Venezuela results translated at the SICAD II rate for the entire period and additional information, including an update to its full-year guidance.
Brink's had been reporting its Venezuela results at the official exchange rate (6.3) but, as disclosed in its 2013 annual report on Form 10-K, was unable to convert bolivars at this rate. In 2013, the Venezuelan government introduced a new exchange rate mechanism, known as SICAD, which enables some companies to convert currency for certain transactions at a rate of approximately 11 bolivars per U.S. dollar. On March 24, the newly created SICAD II exchange mechanism became available and is the only rate at which Brink's has been able to successfully exchange its bolivars for U.S. dollars. Since Brink's is eligible and has been able to obtain U.S. dollars at the SICAD II rate (approximately 50), and is not eligible to apply for exchange at the official rate (6.3), and does not expect to be able to access the SICAD rate (11), it is adopting the SICAD II rate for reporting Venezuela results.
Non-GAAP and Adjusted Non-GAAP Results
Non-GAAP and Adjusted Non-GAAP results described in this press release 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 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. The full year Non-GAAP tax rate in both years excludes certain pretax and tax income and expense amounts. The purpose of Adjusted Non-GAAP results is to report historical Non-GAAP financial information assuming that our Venezuelan operations had been remeasured using a rate of 50 bolivars to the U.S. dollar.
The Non-GAAP and Adjusted Non-GAAP information provides 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. In addition, Brink's believes the measures will help investors assess the ongoing operations. Non-GAAP and Adjusted 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.
Forward-Looking Statements
This release contains both historical and forward-looking information. Words such as "anticipates," "assumes," "estimates," "expects," "projects," "predicts," "intends," "plans," "believes," "potential," "may," "should" and similar expressions may identify forward-looking information. Forward-looking information in this release includes, but is not limited to an expected first quarter charge related to a devaluation in Venezuela and future access to exchange mechanisms in Venezuela. Forward-looking information in this document is subject to known and unknown risks, uncertainties and contingencies, which are difficult to predict or quantify, and which could cause actual results, performance or achievements to differ materially from those that are anticipated.
These risks, uncertainties and contingencies, many of which are beyond our control, include, but are not limited to:
- risks customarily associated with operating in foreign countries including changing labor and economic conditions, currency devaluations, safety and security issues, political instability, restrictions on repatriation of earnings and capital, nationalization, expropriation and other forms of restrictive government actions,
- the strength of the U.S. dollar relative to foreign currencies and foreign currency exchange rates,
- the stability of the Venezuelan economy, changes in Venezuelan policy regarding foreign-owned businesses,
- changes in currency restrictions and in foreign exchange rates,
- fluctuations in value of the Venezuelan bolivar,
- changes in estimates and assumptions underlying our critical accounting policies, and
- the promulgation and adoption of new accounting standards and interpretations, new government regulations and interpretations of existing regulations.
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