Management’s Discussion and Analysis

Operations Results of Operations Liquidity and Capital Resources Market Risk Exposures Application of Critical Accounting Pronouncements Recent Accounting Pronouncements Forward-Looking Information

Overview Summary of Cash Flow Information Operating Activities Investing Activities Business Segment Cash Flows Financing Activities Capitalization Off Balance Sheet Arrangements Contractual Obligations Other Potential Use of Credit Other Contingent Gains and Losses

Liquidity and Capital Resources

Operating Activities

2003

Cash provided by operating activities was $59.5 million higher in 2003 compared to 2002 primarily due to outflows in 2002 related to former coal operations while they were still operating. Cash provided by operating activities was also higher due to an increase in the amount of cash provided by operating activities at Brink’s and BHS, partially offset by lower amounts provided by BAX Global. In addition, the Company contributed $15 million more to its pension plan in 2002 than it did in 2003.

Coal-related cash outflows were classified as discontinued operations in the 2002 statements of cash flows, including approximately $60.6 million (before current tax benefit) related to obligations the Company ultimately retained. In 2003, cash outflows of $59.6 million for these retained obligations are included in continuing operations. In addition to the payments related to retained obligations, the Company’s former coal operations used cash in 2002 largely due to the poor performance of its operations in the face of difficult industry conditions.

2002

Cash provided by operating activities was $78.8 million lower in 2002 than 2001 primarily due to an increase of $75.5 million in cash used by discontinued operations. In addition, $31.1 million higher income from continuing operations was more than offset by a $35.1 million contribution to the Company’s primary U.S. pension plan and the lower level of cash provided by working capital changes. The increase in cash used by the Company’s discontinued coal operations in 2002 was primarily related to higher operating losses resulting from weak coal market conditions, lower FBLET refunds and the payment of litigation settlements.

Cash provided by working capital in 2001 reflected lower accounts receivable levels at BAX Global associated with lower 2001 revenue.

MD&A Quicklinks