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Management’s Discussion and Analysis

	Operations Results of Operations Liquidity and Capital Resources Market Risk Exposures Application of Critical Accounting Policies Recent Accounting Pronouncements Foreward-looking Information
	Overview of Results Consolidated Review Brink’s, Incorporated Brink’s Home Security BAX Global Corporate Expense – The Brink’s Company Retained Liabilities and Assets of Former Natural Resource Operations Other operating income, net Nonoperating Income and Expense Income Taxes Foreign Operations

Results of Operations

Foreign Operations

A portion of the Company’s financial results is derived from activities in over 100 countries, each with a local currency other than the U.S. dollar. Because the financial results of the Company are reported in U.S. dollars, they are affected by changes in the value of various foreign currencies in relation to the U.S. dollar. Changes in exchange rates may also affect transactions which are denominated in currencies other than the functional currency. The diversity of foreign operations helps to mitigate a portion of the impact that foreign currency fluctuations in any one country may have on the translated results.

The Company, from time to time, uses foreign currency forward contracts to hedge transactional risks associated with foreign currencies. (See “Market Risk Exposures” below.)

Brink’s Venezuelan subsidiaries (“Brink’s Venezuela”) were considered to be operating in a highly inflationary country in 2002. However, at January 1, 2003, Brink’s Venezuela was no longer treated as highly inflationary. The Company estimates that had Brink’s Venezuela not been treated as highly inflationary effective January 1, 2002, revenues in 2002 would have decreased by $1.1 million, operating profit would have increased by $2.4 million and pretax income would have increased by $1.9 million. Additionally on March 3, 2005, Venezuela’s central bank devalued the local currency by approximately 12%. The effect of this devaluation on the Company’s December 31, 2004 net assets in Brink’s Venezuela would have been a decrease in net assets of approximately $3.7 million. It is possible that Venezuela may be considered highly inflationary again at some time in the future.

The Company is exposed to certain risks when it operates in highly inflationary economies, including the risk that

• the rate of price increases for services will not keep pace with cost inflation;
• adverse economic conditions in the highly inflationary country may discourage business growth which could affect demand for the Company’s services; and
• the devaluation of the currency may exceed the rate of inflation and reported U.S dollar revenues and profits may decline.

The Company is also subject to other risks customarily associated with doing business in foreign countries, including labor and economic conditions, political instability, controls on repatriation of earnings and capital, nationalization, expropriation and other forms of restrictive action by local governments. The future effects, if any, of these risks on the Company cannot be predicted.