Management’s Discussion and Analysis

Liquidity and Capital Resources

Capitalization

The Company has a combination of debt, off-balance sheet instruments and equity that capitalizes its operations. As of December 31, 2003, debt as a percentage of capitalization (total debt and shareholders’ equity) was 36% compared to 49% at December 31, 2002. The decrease was due to $114 million higher equity and $85 million lower debt. Equity increased in 2003 primarily as a result of favorable currency translation adjustments ($48 million), net income ($29 million) and a decrease in the minimum pension liability adjustments ($15 million).

Summary of Debt, Equity and Other Liquidity Information

	Amount available under revolving credit facilities		Outstanding Balance
	December 31,		December 31,
(In millions)	2003		2003	2002	$ change (b)
Debt:
Short-term debt:
Multi-Currency revolving facilities and uncommitted facilities	$ 52.6	$	35.8	41.8	$	(6.0)
Long-term debt:
U.S. Revolving Facility	239.9		30.9	129.0		(98.1)
Senior Notes			95.0	95.0		-
Dominion Terminal Associates (“DTA”) bonds			43.2	43.2		-
Other			69.6	50.3		19.3
Debt		$	274.5	359.3	$	(84.8)
Shareholders’ equity		$	495.6	381.2	$	114.4
Other Liquidity Information:
Cash and cash equivalents		$	128.7	102.3	$	26.4
Amount sold under accounts receivable securitization facility			77.0	72.0		5.0
Net Debt (a)			145.8	257.0		(111.2)
Net Financings (a)			222.8	329.0		(106.2)

(a) These are Non-GAAP measures. Net Debt is equal to short-term debt plus the current and noncurrent portion of long-term debt (“Debt” in the tables), less cash and cash equivalents. Net Financings are equal to Net Debt plus the amount sold under the accounts receivable securitization facility. See reconciliation below.
(b) In addition to cash borrowings and repayments, the change in the debt balance also includes changes in currency exchange rates and borrowings under new capital leases.

Reconciliation of Net Debt and Net Financings to GAAP Measures

		December 31,
(In millions)		2003	2002	2001	2000	1999
Short-term debt	$	35.8	41.8	27.8	51.0	90.1
Long-term debt		238.7	317.5	270.1	345.8	424.4
DTA bonds		-	-	43.2	43.2	30.2
Debt		274.5	359.3	341.1	444.0	544.7
Less cash and cash equivalents		(128.7)	(102.3)	(86.7)	(97.8)	(131.2)
Net Debt		145.8	257.0	254.4	342.2	413.5
Amounts sold under accounts receivable securitization facility		77.0	72.0	69.0	85.0	-
Net Financings	$	222.8	329.0	323.4	427.2	413.5

The Company believes the presentation of Net Debt and Net Financings are useful measures of the Company’s financial leverage.

Debt

The Company has an unsecured $350 million U.S. revolving bank credit facility (the “U.S. Revolving Facility”) with a syndicate of banks under which it may borrow (or otherwise satisfy credit needs) on a revolving basis over a three-year term ending September 2005. At December 31, 2003, $239.9 million was available under the U.S. Revolving Facility.

The Company has three unsecured multi-currency revolving bank credit facilities with a total of $110 million in available credit, of which $52.6 million was available at December 31, 2003. When rates are favorable, the Company also borrows from other U.S. banks under short-term uncommitted agreements. Various foreign subsidiaries maintain other secured and unsecured lines of credit and overdraft facilities with a number of banks. Amounts borrowed under these agreements are included in short-term borrowings.

The U.S. Revolving Facility and the multi-currency revolving credit facilities are also used for the issuance of letters of credit and bank guarantees, in addition to providing funds for operating purposes.

At December 31, 2003, the Company had $95.0 million of Senior Notes outstanding that are scheduled to be repaid in 2005 through 2008. The Company has the option to prepay all or a portion of the Senior Notes prior to maturity with a prepayment penalty. The Senior Notes are unsecured.

The Company’s Brink’s, BHS, and BAX Global subsidiaries have guaranteed the U.S. Revolving Facility and the Senior Notes. The U.S. Revolving Facility, the agreement under which the Senior Notes were issued and the multi-currency revolving bank credit facilities each contain various financial and other covenants. The financial covenants, among other things, limit the Company’s total indebtedness, provide for minimum coverage of interest costs, and require the Company to maintain a minimum level of net worth. If the Company were not to comply with the terms of its various loan agreements, the repayment terms could be accelerated. An acceleration of the repayment terms under one agreement could trigger the acceleration of the repayment terms under the other loan agreements. The Company was in compliance with all financial covenants at December 31, 2003.

In September 2003, at the Company’s request, the Peninsula Ports Authority of Virginia issued a new series of bonds to replace the previous bonds related to Dominion Terminal Associates, a deep water coal terminal in which the Company no longer has an interest. The Company continues to pay interest on and guarantee payment of the $43.2 million principal of the new bonds and ultimately will have to pay for the retirement of the new bonds in accordance with the terms of the guarantee. The new bonds bear a fixed interest rate of 6.0% (versus a fixed interest rate of 7.375% for the previous bonds) and mature in 2033. The new bonds may mature prior to 2033 upon the occurrence of certain specified events such as the determination that the bonds are taxable or the failure of the Company to abide by the terms of its guarantee.

The Company believes it has adequate sources of liquidity to meet its near-term requirements.

Equity

At December 31, 2003, the Company had 100 million shares of common stock authorized and 54.3 million shares issued and outstanding. The Company has the authority to issue up to 2.0 million shares of preferred stock, par value $10 per share.

The Company has the authority to repurchase up to 1.0 million shares of common stock with an aggregate purchase price limitation of $19.1 million. The Company made no repurchases during 2003.