2005 Financial Review

MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES

Overview

Over the last three years, the Company has used the cash generated from operations and the divestiture of the natural resources businesses to acquire security operations in Europe and to strengthen its balance sheet by reducing debt and making contributions to the VEBA and its primary U.S. pension plan. Cash flows before financing activities in the last three years were also used in part to make significant cash payments associated with retained liabilities of the former coal operations. Net cash proceeds from the sale of natural resource businesses totaled $179 million over the last three years.

During the past three years, the Company acquired security operations for an aggregate purchase price of $75 million. Debt repayments, net, aggregated $64 million and the Company has contributed $132 million to the VEBA and $31 million to the primary U.S. pension plan over the last three years.

In January 2006, the Company received $1.1 billion in cash from the sale of BAX Global. The Company immediately used the proceeds to contribute $225 million to the VEBA and pay down $46 million of short-term debt. In addition, the Company expects to use proceeds to pay down up to a further $140 million of debt and repurchase between $400 million and $600 million of Company common stock.

The Company may elect to pay up to $30.5 million to satisfy a former coal multi-employer pension withdrawal liability in 2006.

In addition, in conjunction with the Company’s decision to freeze U.S. defined benefit pension plan benefit levels and enhance the benefits associated with the U.S. 401(k) plan, the Company announced that the funding of the Company’s U.S. defined contribution matching expense would be in cash rather than Company stock. Using the rates of salary and employee participation in effect during 2005, the Company expects $13 million to $15 million higher cash outflows in 2006 as a result of this change.