2005 Financial Review

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

RECENT ACCOUNTING PRONOUNCEMENTS

Adopted Standards

In March 2005, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation 47, “Accounting for Conditional Asset Retirement Obligations” (“FIN 47”), an interpretation of SFAS 143, “Asset Retirement Obligations.” FIN 47 clarifies that the term “conditional asset retirement obligation” as used in SFAS 143 includes a legal obligation associated with the retirement of a tangible long-lived asset in which the timing and/or method of settlement is conditional on a future event that may or may not be within the control of the entity. An entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated, even if conditional on a future event. The Company has conditional asset retirement obligations primarily associated with leased facilities. The Company adopted FIN 47 on December 31, 2005 and recognized the following:

(a)

Includes $1.1 million of assets held for sale.

(b)

Includes $2.1 million of liabilities held for sale.

(c)

Includes $1.0 million of cumulative effect of change in accounting principle, net of tax, related to BAX Global.

In July 2005 the FASB issued FASB Staff Position (“FSP”) APB 18-1, “Accounting by an Investor for Its Proportionate Share of Accumulated Other Comprehensive Income of an Investee Accounted for under the Equity Method in Accordance with APB Opinion 18 upon a Loss of Significant Influence.” FSP APB 18-1 requires an investor’s proportionate share of an investee’s equity adjustments for other comprehensive income to be offset against the carrying value of the investment at the time significant influence is lost. FSP APB 18-1 requires comparative financial statements be retrospectively adjusted to reflect the provisions of the FSP APB 18-1. The Company adopted FSP APB 18-1 on October 1, 2005. The carrying value (before the effect of FSP APB 18-1) of Brink’s cost method investment that was previously accounted for under the equity method was $8.9 million at December 31, 2005 and 2004. Cumulative currency losses of $14.5 million at December 31, 2005 and 2004 were reclassified from accumulated other comprehensive loss and increased the carrying value of the Company’s related investment to $23.4 million. This reclassification had no effect on net income.

Effective January 1, 2004, the Company adopted FASB Interpretation 46 (revised December 2003), “Consolidation of Variable Interest Entities,” which addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity through a means other than voting rights. The implementation of this new standard did not have a material effect on the Company’s results of operations or financial position.

Effective December 31, 2003, the Company adopted SFAS 132R, “Employers’ Disclosure about Pensions and Other Postretirement Benefits.” SFAS 132R does not change the way liabilities are valued and expenses are calculated for those plans. The standard requires, among other things, additional disclosures about the assets held in employer sponsored plans, disclosures relating to plan asset investment policy and practices and disclosure of expected contributions to be made to the plans and expected benefit payments to be made by the plans.

In December 2004, the FASB issued FSP FAS 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004.” The American Jobs Creation Act introduced a limited-time 85% dividends-received deduction on the repatriation of foreign earnings to U.S. taxpayers, provided certain criteria are met. FSP FAS 109-2 provides accounting and disclosure guidance for the repatriation provision. FSP FAS 109-2 was effective immediately and the required disclosures have been included in note 17 to the Company’s consolidated financial statements.

Standards not yet adopted

In December 2004, the FASB issued SFAS 123R, “Share-Based Payment.” SFAS 123R is a revision of SFAS 123 and supersedes APB 25. SFAS 123R eliminates the use of the intrinsic value method of accounting, and requires companies to recognize the cost of employee services received in exchange for awards of equity instruments based on the fair value of those awards. Compensation expense related to stock options that are subject to continued vesting upon retirement will be recognized over the period of employment up to the retirement-eligible date. The Company is required to adopt SFAS 123R effective January 1, 2006. SFAS 123R permits companies to adopt its requirements using either a “modified prospective” method or a “modified retrospective” method. Under the “modified prospective” method, compensation cost is recognized in the financial statements beginning with the effective date, based on the requirements of SFAS 123R for all share-based payments granted after that date, and based on the requirements of SFAS 123 for all unvested awards granted prior to the effective date of SFAS 123R. Under the “modified retrospective” method, the requirements are the same as under the “modified prospective” method, except that entities also are allowed to restate financial statements of previous periods based on pro forma disclosures made in accordance with SFAS 123. The Company will apply the modified prospective method upon adoption of SFAS 123R.

Based on current estimates, the Company believes that it will record in continuing operations pretax expense of between $8 million and $10 million during 2006 for stock option grants issued under these plans. The actual 2006 expense will be different from the estimate because the number of options to be granted in 2006 and other variables assumed in estimating the fair value of the 2006 grants are not currently known. The Company believes that a significant portion of the estimated 2006 expense will be recorded in the third quarter.

Proposed Standards

In 2005, the FASB announced a project to consider changing the accounting model for pension plans that are currently accounted for under SFAS 87 and other postretirement benefit plans currently accounted for under SFAS 106. Phase I of the proposed rule modification is designed to address only balance sheet presentation of asset and liabilities, and Phase II of the proposed rule modification is designed to address how changes in the assets and liabilities are reflected in earnings. The principal effect of Phase I, as presently conceived, would be to require companies to record assets and liabilities on the balance sheet including the effect of actuarial and other gains and losses that are presently unrecognized under existing accounting guidance. Phase I is targeted to be in place by the end of 2006. Because the Company has significant pretax losses not recognized in equity ($331 million at December 31, 2005), the effect of the proposed new rule, as presently conceived, could materially reduce the reported equity of the Company upon adoption.