Edgar Filing: BRINKS CO

form_10-k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number 1-9148

THE BRINK’S COMPANY

(Exact name of registrant as specified in its charter)

	Virginia		54-1317776
	(State or other jurisdiction of		(I.R.S. Employer
	incorporation or organization)		Identification No.)

	P.O. Box 18100,
	1801 Bayberry Court
	Richmond, Virginia		23226-8100
	(Address of principal executive offices)		(Zip Code)

	Registrant’s telephone number, including area code		(804) 289-9600

	Securities registered pursuant to Section 12(b) of the Act:
			Name of each exchange on
	Title of each class		which registered
	The Brink’s Company Common Stock, Par Value $1		New York Stock Exchange

	Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer o Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of February 22, 2008, there were issued and outstanding 48,056,236 shares of common stock. The aggregate market value of shares of common stock held by nonaffiliates as of June 30, 2007, was $2,557,760,646.

Documents incorporated by reference: Part III incorporates information by reference from portions of the Registrant’s definitive 2008 Proxy Statement to be filed pursuant to Regulation 14A.

THE BRINK’S COMPANY

FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, 2007

TABLE OF CONTENTS

PART I

		Page

Item 1.	Business	3
Item 1A.	Risk Factors	15
Item 1B.	Unresolved Staff Comments	20
Item 2.	Properties	20
Item 3.	Legal Proceedings	20
Item 4.	Submission of Matters to a Vote of Security Holders	20

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
	Purchases of Equity Securities	22
Item 6.	Selected Financial Data	24
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	71
Item 8.	Financial Statements and Supplementary Data	72
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	119
Item 9A.	Controls and Procedures	119
Item 9B.	Other Information	119

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	120
Item 11.	Executive Compensation	120
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	120
Item 13.	Certain Relationships and Related Transactions, and Director Independence	120
Item 14.	Principal Accountant Fees and Services	120

PART IV

Item 15.	Exhibits and Financial Statement Schedules	121

PART I

ITEM 1. BUSINESS

The Brink’s Company

The Brink’s Company (the “Company”) conducts business in the security industry through two wholly owned subsidiaries: Brink’s, Incorporated (“Brink’s”) and Brink’s Home Security, Inc. (“BHS”). We employ approximately 57,500 people, with approximately 53,900 at Brink’s and 3,600 at BHS.

Over the past several years, the Company has changed from a conglomerate (with operations in the security, heavy-weight freight transportation, coal and other natural resource industries) into a company focused solely on the security industry.

On February 25, 2008, the board of directors approved a strategic decision to spin-off BHS in a tax-free stock distribution to the shareholders of the Company. Immediately after the spin-off, BHS will be owned directly by the shareholders receiving shares in the distribution. In addition, these shareholders will retain their shares in the Company, whose operations will consist primarily of Brink’s, its secure transportation and cash management services unit. The distribution, which is expected to be completed in the fourth quarter of 2008, is subject to a number of customary conditions, including execution of appropriate inter-company agreements, filing of required documents with the Securities and Exchange Commission and receipt of an opinion of counsel or a private letter ruling from the Internal Revenue Service that the spin-off will be tax-free to the Company’s shareholders.

Total revenues were $3.2 billion and segment operating profit was $337.5 million in 2007. Of these amounts, Brink’s generated $2.7 billion in revenues and $223 million of operating profit. BHS had revenues of $484 million and operating profit of $114 million.

Financial information related to The Brink’s Company, our two operating segments (Brink’s and BHS), and former operations is included in the consolidated financial statements on pages 76 – 80 and in notes to consolidated financial statements on pages 81 – 118.

A significant portion of our business (approximately 57% of revenue) is conducted outside North America. Our financial results are reported in U.S. dollars and are affected by fluctuations in the relative value of foreign currencies. Our business is also subject to other risks customarily associated with operating in foreign countries including changing labor and economic conditions, political instability, restrictions on repatriation of earnings and capital, as well as nationalization, expropriation and other forms of restrictive government actions. The future effects of these risks cannot be predicted.

We continue to have significant liabilities associated with our former coal business, a substantial portion of which has been funded with cash contributions to a Voluntary Employees’ Beneficiary Association trust (“VEBA”). For more information on these liabilities and the VEBA, see pages 41 – 44.

Additional risk factors are described on pages 15 – 18.

Available Information and Corporate Governance Documents

The following items are available free of charge on our website (www.brinkscompany.com) as soon as reasonably possible after filing or furnishing them with the Securities and Exchange Commission:

Annual reports on Form 10-K

Quarterly reports on Form 10-Q

Current reports on Form 8-K and amendments to those reports

In addition, the following documents are also available free of charge on our website:

Corporate governance policies

Business Code of Ethics

The charters of the following Board Committees: Audit and Ethics, Compensation and Benefits, and Corporate Governance, Nominating and Management Development.

Printed versions of these items will be mailed free of charge to shareholders upon request. Such requests can be made by contacting the Corporate Secretary at 1801 Bayberry Court, P. O. Box 18100, Richmond, Virginia 23226-8100.

Brink’s, Incorporated (“Brink’s”)

Executive Summary

Brink’s is a leading provider of secure transportation, cash logistics and other security-related services to banks and financial institutions, retailers, government agencies, mints, jewelers and other commercial operations around the world. Brink’s international network serves customers in more than 50 countries and employs approximately 53,900 people. Our operations include approximately 800 facilities and 9,100 vehicles. We believe Brink’s brand, global infrastructure and logistics expertise are important competitive advantages.

Brink’s 2007 operating profit was $223 million on revenues of $2.7 billion, resulting in an operating profit margin of 8.2%.

General

Brink’s is the oldest and largest secure transportation and cash logistics company in the U.S., and is a market leader in many other countries. Reported revenues and operating profit are disclosed as “North America” and “International” operations.

North American operations has 182 branches in the U.S. and 55 branches in Canada. North American operations generated 2007 revenues of $886.3 million (32% of Brink’s total revenues) and operating profit of $70.4 million (32% of Brink’s total operating profit).

International operations has three regions: Europe, Middle East, and Africa (“EMEA”), Latin America and Asia Pacific. On a combined basis, International operations generated 2007 revenues of $1.8 billion (68% of Brink’s total revenues) and operating profit of $152.9 million (68% of total Brink’s operating profit). Over the past three years, Brink’s has acquired security operations in numerous countries in EMEA and Latin America.

Brink’s EMEA, which generated $1.2 billion or 44% of Brink’s total 2007 revenues, operates 249 branches in 21 countries. Its largest operations are in France, the Netherlands and Germany. In 2007, France accounted for $629 million or 53% of EMEA revenues (23% of total Brink’s revenues).

Brink’s Latin America, which generated $594 million or 22% of Brink’s total 2007 revenues, operates 211 branches in 7 countries. Its largest operations are in Venezuela, Brazil and Colombia. In 2007, Venezuela accounted for $225 million or 38% of Latin American revenues (8% of total Brink’s revenues).

Brink’s Asia-Pacific operates 32 branches in 9 countries, and accounted for $63 million or 2% of total Brink’s 2007 revenues.

In 2007, Brink’s operations in France, Venezuela, Brazil, the Netherlands, Colombia and Germany accounted for $1,303 million or 70% of Brink’s revenues from International operations (48% of total Brink’s revenues).

(In millions)	2007		% total		% change			2006		% total		% change			2005		% total		% change

Revenues by region:
North America	$	886.3		32		7		$	830.0		35		7		$	778.2		37		6

EMEA:
France		628.8		23		15			546.5		23		8			508.1		24		9
Other		562.7		21		23			456.6		20		14			400.3		19		23
Total		1,191.5		44		19			1,003.1		43		10			908.4		43		15

Latin America:
Venezuela		224.9		8		31			171.7		7		33			129.0		6		15
Other		369.3		14		31			282.5		12		25			226.1		11		18
Total		594.2		22		31			454.2		19		28			355.1		17		17

Asia Pacific		62.6		2		(7	)		67.0		3		(6	)		71.6		3		5
Total International		1,848.3		68		21			1,524.3		65		14			1,335.1		63		15
Total Revenues	$	2,734.6		100		16		$	2,354.3		100		11		$	2,113.3		100		11

Brink’s ownership interests in subsidiaries and affiliated companies ranged from 10% to 100% at December 31, 2007. In some instances, local laws limit the extent of Brink’s ownership interest.

Growth Strategy

Over the past several years we have expanded the Brink’s business largely through internal growth which has been supplemented by acquisitions. For example, the growth in revenue in the last three years from existing operations and acquisitions is as follows:

(In percentages)	2007			2006			2005

Organic (a)		15	%		9	%		6	%
Acquisitions		1	%		2	%		5	%

(a)	Including the effects of changes in currency exchange rates. See reconciliation of non-GAAP measure on pages 33 and 35.

We intend to continue to pursue growth through acquisitions as long as we are able to acquire businesses that meet our internal metrics for projected growth, profitability and return on investment. We are interested in growth in both new and existing markets and in both core and value-added services. Although there are risks and start-up expenses when entering new markets, we believe that growth through a combination of organic and acquisition is the best long-term strategy.

Services

Our primary services include:

Cash-in-transit (“CIT”) armored car transportation

Automated teller machine (“ATM”) replenishment and servicing

Global Services – arranging secure long-distance transportation of valuables

Cash Logistics – supply chain management of cash

Guarding services, including airport security

Secure Data Solutions – transporting, storing and destroying sensitive information

Brink’s typically provides individualized services under separate contracts designed to meet the distinct needs of our customers. Contracts usually cover an initial term of at least one year, and in many cases, multiple years, and generally remain in effect thereafter until canceled by either party.

Core Services

CIT and ATM Services are core services we provide to customers throughout the world.

CIT We have been servicing customers since 1859. Our success in CIT is driven by a combination of rigorous security practices, high quality customer service, risk management expertise and logistics expertise. CIT services generally include the secure transportation of:

cash between businesses and banks

cash, securities and other valuables between commercial banks, central banks, and investment banking and brokerage firms

new currency, coins and precious metals for central banks

ATM Services Brink’s manages nearly 72,000 ATM units worldwide for banks and other cash dispensing operators. We provide cash replenishment, cash monitoring and forecasting capabilities, deposit pick-up and processing services. Advanced online tools deliver consolidated electronic reports for simplified reconciliation.

Value-Added Services

Our core services, combined with our brand and global infrastructure, provide a substantial platform from which we offer additional value-added services to our customers.

Global Services With operations spanning approximately 50 countries, Brink’s is a leading global provider of secure long-distance logistics for valuables including diamonds, jewelry, precious metals, securities, currency, high-tech devices, electronics and pharmaceuticals. We typically employ a combination of armored car and secure air transportation to leverage our extensive global network. Our specialized diamond and jewelry operation has offices in the major diamond and jewelry centers of the world.

Cash Logistics Brink’s offers a fully integrated approach to managing the supply chain of cash, from point-of-sale through transport, vaulting and bank deposit and related credit. Cash Logistics services include:

money processing and cash management services

deploying and servicing safes and safe control devices, including our patented CompuSafeâ service

integrated check and cash processing services (“Virtual Vault”)

check imaging services

Money processing services include counting, sorting and wrapping currency. Other currency management services include cashier balancing, checking for counterfeit currency, account consolidation and electronic reporting. Retail and bank customers use Brink’s to count and reconcile coins and currency in a secure environment, to prepare bank deposit information, and to replenish coins and currency in specific denominations.

Brink’s offers a variety of advanced technology applications including online cash tracking, cash inventory management, check imaging for real-time deposit processing, and a variety of other web-based information tools that enable banks and other customers to reduce costs while improving service.

CompuSafeâ service offers customers an integrated, closed-loop system for preventing theft and managing cash. We market CompuSafeâ services to a variety of cash-intensive customers such as convenience stores, gas stations, restaurants, retail chains and entertainment venues. Our service includes the installation of a specialized safe in the customer’s facility. The customer’s employees deposit currency into the safe’s cassettes, which can only be removed by Brink’s personnel. Upon removal, the cassettes are transported to a secure location where contents are verified and transferred for deposit. For added security and ease of use, our CompuSafeâ service system features currency-recognition technology, multi-language touch screens and electronic interface between point-of-sale and back-office systems.

Virtual Vault services combine CIT, Cash Logistics, vaulting and electronic reporting technologies to help banks expand into new markets while minimizing investment in vaults and branch facilities. In addition to secure storage, we process deposits, provide check imaging and reconciliation services, and electronically transmit debits and credits.

We believe the quality and scope of our cash processing and information systems differentiate our Cash Logistics services from competitive offerings.

In 2007, Cash Logistics generated $434 million (16% of Brink’s revenues). This figure includes coin and currency processing.

Other Security Services

Security and Guarding We protect airports, offices, warehouses, stores, and public venues with electronic surveillance, access control, fire prevention and highly trained patrolling personnel. Our guarding services are generally offered in European markets including France, Germany, Luxembourg and Greece. A significant portion of this business involves long-term contracts related primarily to guarding services at airports. Generally, other guarding contracts are for a one-year period, the majority of which are extended. Our security officers are typically stationed at customer sites, and responsibilities include detecting and deterring specific security threats.

Secure Data Solutions Our CIT, Global Services and document destruction services provide secure transportation, storage and shredding services for confidential records, back-up data tapes, product overruns and other sensitive information and media.

Industry and Competition

Brink’s competes with large multinational, regional and smaller companies throughout the world. Our largest multinational competitors are Group 4 Securicor plc (headquartered in the U.K.), Securitas AB (Sweden), Prosegur, Compania de Seguridad, S.A. (Spain) and Garda World Security Corporation (Canada).

We believe the primary factors in attracting and retaining customers are security expertise, service quality and price. We believe our competitive advantages include:

brand name recognition

reputation for a high level of service and security

proprietary cash processing and information systems

high-quality insurance coverage and general financial strength

risk management capabilities

global infrastructure and customer base

We believe our cost structure is generally competitive, although certain competitors may have lower costs due to a variety of factors including lower wages, less costly employee benefits, or less stringent security and service standards.

Although Brink’s faces competitive pricing pressure in many markets, we resist competing on price alone. We believe our high levels of service and security differentiate us from competitors.

The availability of high-quality and reliable insurance coverage is an important factor in our ability to attract and retain customers and to manage the risks inherent in our business. Brink’s is self-insured for much of the liability related to potential losses of cash or valuables while such items are in our possession. However, we purchase insurance coverage for losses in excess of what we consider to be prudent levels of self insurance. Our insurance policies cover losses from most causes, with the exception of war, nuclear risk and certain other exclusions typical in such policies.

Insurance for security is provided by different groups of underwriters at negotiated rates and terms. Premiums fluctuate depending on market conditions. The security loss experience of Brink’s and, to a limited extent, other armored carriers affects our premium rates.

Revenues are generated from charges per service performed or based on the value of goods transported. As a result, revenues are affected by the level of economic activity in our various markets as well as the volume of business for specific customers. Contracts generally run for a period of one year. Costs are incurred in preparing to service a new customer or to transition away from an existing customer. Our operating profit is generally stronger in the second half of the year, particularly in the fourth quarter, as economic activity is stronger during this period.

Service Mark and Patents

BRINKS is a registered service mark in the U.S. and certain foreign countries. The BRINKS mark, name and related marks are of material significance to our business. We own patents expiring in 2008 and 2009 for certain coin sorting and counting machines. We also own patents for safes, including our integrated CompuSafeâ service, that expire between 2015 and 2018. These patents provide important advantages to Brink’s. However, Brink’s operations are not dependent on the existence of these patents.

We have entered into certain agreements to license the Brink’s and the Brink’s Home Security names. Examples include licenses to distributors of security products (padlocks, door hardware, etc.) offered for sale to consumers through major retail chains.

Government Regulation

Our U.S. operations are subject to regulation by the U.S. Department of Transportation with respect to safety of operations, equipment and financial responsibility. Intrastate operations in the U.S. are subject to state regulation. Intraprovince operations in Canada are subject to federal and provincial regulations. Brink’s International operations are regulated to varying degrees by the countries in which they operate.

Employee Relations

At December 31, 2007, Brink’s and its subsidiaries had approximately 53,900 employees, including 11,500 employees in North America (of whom 1,800 were classified as part-time employees) and 42,400 employees outside North America. At December 31, 2007, Brink’s was a party to 11 collective bargaining agreements in North America with various local unions covering approximately 2,200 employees, almost all of whom are employees in Canada and members of unions affiliated with the International Brotherhood of Teamsters. Two agreements will expire in 2008 and are expected to be renegotiated. The remaining agreements have various expiration dates after 2008 and extending through 2011. Outside of North America, approximately 63% of branch employees are members of labor or employee organizations. We believe our employee relations are satisfactory.

Brink’s Home Security

Executive Summary

Brink’s Home Security (“BHS”) markets, installs, services and monitors security alarm systems for approximately 1.2 million customers throughout North America, covering more than 250 metropolitan areas in all 50 states and two Canadian provinces. Based on revenues, we believe BHS is the second largest provider of security alarm monitoring services for residential and commercial properties in North America. Our primary customers are residents of single-family homes, which comprise more than 90% of our subscriber base. New home construction is a relatively small market for BHS, accounting for approximately 7% of new subscribers in 2007 and approximately 6% of our total customer base. Our small but growing presence in the commercial market includes more than 58,000 business customers, about 5% of our total customer base.

In 2007, BHS reported operating profit of $114 million on revenues of $484 million, resulting in an operating profit margin of 24%. At the end of 2007, our monthly recurring revenue (“MRR”) was $37.2 million. See reconciliation of non-GAAP measure on page 40.

General

BHS monitors signals originating from our alarm systems, which can be designed to detect intrusion, fire (heat and smoke), medical and environmental conditions. A typical BHS security system consists of sensors (both hardwired and wireless) and other devices that are installed at a subscriber's home or commercial location. When an alarm is triggered, a signal is sent to an operator at one of our two monitoring stations. Signals can be originated over standard telephone lines, Digital Subscriber Lines (“DSL”), wireless services, fiber telephony, and Voice over Internet Protocol (“VoIP”). Wireless devices can serve as the primary method of alarm communication or as a backup to land-line telephone services.

Monitoring services and a large portion of maintenance services are generally governed by three-year contracts with automatic renewal provisions on an annual basis after the initial term has expired. More than 50% of new customers purchase extended service protection that covers most repair costs.

For the last several years, BHS’ average up-front cash investment per installation, including amounts expensed and capitalized, has ranged between $1,250 and $1,450. This amount excludes customer down payments, which generally range between $280 and $340 per site. Including these payments, our net cost per new installation in 2007 was approximately $1,100. Our cash break-even point per site is reached in less than 4 years after installation.

Monitoring Facilities

Our monitoring facilities are located in Irving, Texas, and Knoxville, Tennessee. Both facilities hold Underwriters’ Laboratories (“UL”) listings as protective signaling services stations. UL specifications for monitoring centers cover building integrity, back-up computer and power systems, staffing and standard operating procedures. Many jurisdictions have laws requiring that security alarms for certain buildings be monitored by UL-listed facilities. In addition, a UL listing is required by insurers of certain commercial customers as a condition of coverage.

Our monitoring facilities operate 24 hours a day on a year-round basis. The facilities employ communications and computer systems that route incoming alarm signals to the next available operator in either facility. Operators use a customized computer system to determine the nature of the alarm signal and to identify the customer by name and location. Our system automatically processes non-emergency administrative signals, which can be generated by a variety of conditions including test signals, low batteries, and the intentional or unintentional arming and disarming of sites by customers. Depending upon the type of service specified by the customer contract, operators respond to emergency-related alarms by calling the customer by phone and relaying information to local fire or police departments. Other actions may be taken as appropriate.

In the event of an emergency at one of our two monitoring facilities (i.e., fire, tornado, major interruption in telephone or computer service, or any other event affecting the functionality of the facility), all monitoring operations can be absorbed by the other facility. If additional operators are required in an emergency situation, employees assigned to other departments at each facility are cross-trained to handle monitoring signals.

Marketing and Sales

BHS markets its alarm systems primarily through television, direct mail, yellow pages and internet advertising, alliances with other service companies, inbound telemarketing and field sales employees. Our “direct response” marketing efforts are designed to direct telephone calls and internet traffic into our centralized inbound telemarketing sales group. Sales are closed by this group or by field personnel at on-site consultations with prospective customers.

Branch Operations

Most of our security systems are installed and serviced by BHS technicians. Subcontractors are occasionally used in some markets if demand exceeds internal staffing levels. Each branch provides sales, installation and service support for a market area defined by specific zip codes.

Our technical staff operates in 68 branch locations, which also provide space for the field sales force. Branch offices are staffed to handle a steady flow of sales opportunities, installations and service calls. We coordinate staffing of sales and technical personnel at individual branch locations, based on near-term activity forecasts for each market.

BHS does not manufacture the equipment used in its security systems. Equipment is purchased from a limited number of suppliers and distributors. We maintain minimal inventories of equipment at each branch office. Certain key items are maintained as safety stock by third-party distributors to cover minor supply chain disruptions. We do not anticipate any major interruptions in our supply chain.

Dealers

To expand geographic coverage and leverage national advertising, BHS has an authorized dealer program. In 2007, the dealer program accounted for 20% of new customer installations and 11% of the subscriber base. At year-end, approximately 150 dealers covering all 50 states were authorized to participate in the program. Dealers install equipment and initiate service for both residential and commercial customers. All BHS dealers are required to install the same type of equipment installed by our branches and are required to adhere to the same quality standards.

BHS purchases security system installations and related monitoring contracts from its dealers. We conduct thorough due diligence on each dealer to ensure reliability and consistently high-quality installations. Subscribers secured by our dealers are geographically diversified and are primarily single-family homeowners. Approximately 6% of 2007 dealer installations were in commercial businesses.

BHS typically has a right of first refusal to purchase sites and related customer relationships sold by authorized dealers. Subscriber contracts are typically three years in duration and generally have automatic renewal provisions. If a contract is canceled during an initial guarantee period, the dealer must compensate BHS for the lost revenue stream by either replacing the site and contract or by refunding the purchase price. To help ensure the dealers’ obligations, we typically withhold a portion of the purchase price for each site and contract that we purchase.

We provide dealers with a full range of services designed to assist them in all aspects of their business including forwarding sales opportunities, sales training, detailed weekly account summaries, sales support materials, and discounts on security system hardware and installation supplies purchased through our third-party distributor. We also provide comprehensive on-line account access.

Brink’s Home Technologies

To supplement our branch operations and dealer programs, we also obtain residential subscribers through our Brink's Home Technologies (“BHT”) division. Working directly with major national, regional and local home builders, BHT markets and installs residential security systems, as well as a variety of low-voltage security, home networking, communications and entertainment options, into homes under construction. BHT currently does business with all of the top 10 and 15 of the top 20 residential home builders in the U.S.

The BHT activation process consists of three phases:

Early construction wiring for security systems and potential non-security-low voltage applications in certain markets.

Installation of systems equipment near the end of construction.

Activation of security service contracts.

In 2007, BHT accounted for 7% of new BHS subscribers. BHT operations are currently conducted in 22 markets located in most regions of the U.S.

Brink’s Business Security (Commercial)

BHS also installs and monitors commercial security systems. Expansion of our commercial customer base is a significant growth opportunity. In addition to the typical intrusion detection offerings, products and services currently offered to commercial customers include installation of non-monitored closed circuit television (“CCTV”) systems, enhanced event reporting and in selected markets where applicable certifications and licenses have been obtained, commercial-grade fire detection systems. We are continuing to develop additional capabilities in commercial security, including installation of access control systems. Commercial installation volume grew approximately 12% in 2007. Commercial customers represented approximately 5% of subscribers at year-end and 8% of new customer installations in 2007.

Multifamily

BHS provides monitored security to owners and managers of multifamily apartment and condominium complexes, who then offer monitoring security service to tenants. Installations are handled by subcontractors or our branch network. At year-end, multifamily customers represented approximately 2% of total subscribers. We are no longer actively pursuing installation growth in this market segment.

Customer Care

We strive to maintain high levels of customer satisfaction and retention by directly controlling customer and technical service. Customer care specialists answer non-emergency telephone calls regarding service, billing and alarm activation issues. Our two monitoring centers provide telephone and internet coverage 24 hours a day on a year-round basis. To ensure that technical service requests are handled promptly and professionally, all requests are routed through our customer contact center. Customer care specialists help customers resolve minor service and operating issues related to security systems. In many cases, the customer care specialist is able to remotely resolve technical issues. When an issue is not able to be resolved by the customer contact center, our specialists schedule a field technician service appointment during the same phone call.

BHS employees are trained to provide high-quality service through prompt handling of calls and quick resolution of most subscriber issues. We use a customized information system that quickly and accurately provides our customer care specialists with technical and administrative information regarding customers and their security systems, including detailed account and site history. This system enables BHS to resolve most customer issues in one telephone call. Our emphasis on customer service results in fewer false alarms, more satisfied customers, and longer retention rates.

Customer Retention

The annual customer disconnect rate at BHS was 7.0% in 2007, and has ranged between 6.4% and 7.2% over the last five years. Our success in retaining customers is driven in part by our discipline in accepting new customers with generally stronger credit backgrounds, and by providing high-quality equipment, installation, monitoring, and customer service. Additionally, in order to enhance customer service and customer loyalty, our system control panel and keypads are designed to be user-friendly and to minimize false alarms.

Our disconnect rates are typically higher in the second and third calendar quarters of the year because of the normal increase in residential moves during summer months. More than 50% of annual gross disconnect activity is caused by household and business relocations. Another 20% to 30% of disconnects occur for financial reasons (including accounts disconnected for non-payment).

The strength of our economic model is highly dependent on customer retention, and we believe that the reductions achieved in our annual disconnect rate have strengthened our economic returns. We do not expect disconnects rates to increase or decline materially in the foreseeable future.

(a)

The disconnect rate is a ratio, the numerator of which is the number of customer cancellations during the period and the denominator of which is the average number of customers during the period. The gross number of customer cancellations is reduced for customers who move from one location and then initiate a new monitoring agreement at a new location, accounts charged back to the dealers because the customers cancelled service during the specified contractual term, and inactive sites that are returned to active service during the period.

Industry and Competition

According to industry estimates, the market for electronic security system sales, leasing, installation, monitoring and service was approximately $30 billion in 2006. Factors driving industry growth include heightened security awareness, demographic changes, an increase in dual income households, and higher capital spending by businesses.

BHS competes in most major metropolitan markets in the U.S. and several markets in western Canada through branch and dealer operations. The monitored security alarm industry has many competitors including more than 14,000 local and regional companies, the vast majority of which generate annual revenue of less than $500,000. We believe our primary competitors with national scope include:

ADT Security Services, Inc., a part of Tyco International, Ltd.

Protection One, Inc.

Monitronics International, Inc.

BHS is generally recognized as the second largest provider (behind ADT Security Services) of monitored security services to residential and commercial properties in North America. Our key competitive advantages include brand name recognition and service quality.

Success in this market depends on a variety of factors including company reputation, market visibility, service quality, product quality, price and the ability to identify and solicit prospective customers. There is substantial competitive pressure on installation fees. Several significant competitors offer installation prices that match or are lower than our prices. Other competitors charge significantly more for installation but, in many cases, less for monitoring. Competitive pressure on monitoring and service rates is significant. We believe that the monitoring and service rates offered by BHS are generally comparable to rates offered by other major security companies.

Government Regulation and Other Regulatory Matters

Our U.S. operations are subject to various federal, state and local consumer protection laws, licensing laws, and other laws and regulations. Most states have licensing laws that apply specifically to the alarm industry. In certain jurisdictions, BHS must obtain licenses or permits in order to comply with standards governing employee selection, training and business conduct.

Our business relies primarily on the use of standard wire telephone service to transmit alarm signals. Wire telephone companies, the cost of telephone lines, and the type of equipment used in telephone line transmission are regulated by the federal and state governments. The Federal Communications Commission and state public utilities commissions regulate the operation and use of wireless telephone and radio frequencies.

Our advertising and sales practices are regulated by the U.S. Federal Trade Commission and state consumer protection laws. In addition, BHS is subject to certain administrative requirements and laws of the jurisdictions in which we operate. These laws and regulations include restrictions on the manner in which we promote the sale of our security alarm services and require us to provide purchasers of our services with rescission rights.

Our Canadian operations are subject to the national laws of Canada, and local laws of British Columbia and Alberta.

Some local government authorities have adopted or are considering various measures aimed at reducing false alarms. Such measures include requiring permits for individual alarm systems; revoking such permits following a specified number of false alarms; imposing fines on alarm customers or alarm monitoring companies for false alarms; limiting the number of times police will respond to alarms at a particular location after a specified number of false alarms; and requiring additional verification of an alarm signal before the police response.

The alarm industry is also subject to requirements imposed by various insurance, approval, listing and standards organizations. Depending upon the type of customer served, the type of security service provided, and the requirements of the applicable local governmental jurisdiction, adherence to the requirements and standards of such organizations is mandatory in some instances and voluntary in others.

Employees

BHS employs approximately 3,600 people, none of whom are currently covered by a collective bargaining agreement. We believe our employee relations are satisfactory.

DISCONTINUED OPERATIONS

Former Coal Business

The Company has significant liabilities and expenses related to postretirement medical plans and black lung benefits of our former coal operations. The Company established a Voluntary Employees’ Beneficiary Associate trust (“VEBA”) to finance its postretirement medical plan obligations. The Company expects to have ongoing expense and cash outflow for these liabilities. See notes 4, 17 and 21 to the consolidated financial statements.

ITEM 1A. RISK FACTORS

The Brink’s Company is exposed to risk in the operation of its businesses. Some of these risks are common to all companies doing business in the industries in which we operate and some are unique to The Brink’s Company. In addition, there are risks associated with investing in the common stock of The Brink’s Company. These risk factors should be considered carefully when evaluating the company and its businesses.

We may not be able to complete the tax-free stock distribution of BHS to our shareholders. Our plan is to distribute the shares of BHS (the "spin-off") to the shareholders of The Brink's Company in the fourth quarter of 2008. The spin-off is subject to a number of conditions, and there may be reasons why the spin-off is not able to be completed within our anticipated time frame or at all, including not receiving appropriate assurances that the distribution will be tax free to the shareholders of The Brink’s Company. If the spin-off is not completed, or is not completed within our anticipated time frame, the share price of The Brink’s Company could be adversely affected.

The Company has not yet determined certain significant characteristics of the contemplated spin-off of BHS to our shareholders. The spin-off is subject to a number of conditions, including execution of appropriate inter-company agreements between the Company and BHS. These agreements will address a number of significant matters, among other things, the allocation of assets and liabilities between the Company and BHS and other similar matters. In particular, the Company has not yet determined whether the BRINKS brand will be shared by BHS and the Company, or if BHS will be rebranded. The alternative branding possibilities include BHS paying royalties to The Brink’s Company, BHS rebranding itself without using the BRINKS brand, or other possibilities. The decisions regarding the manner in which BHS will be separated from the Company in the spin-off could affect the future results of operations of the Company and the prospective BHS company. For example, the Company may not fully control the use of the BRINKS brand in the future, which could also affect the long-term value of the brand, and, accordingly, the long-term value of the Company.

Completing the spin-off will require significant resources. The contemplated spin-off of BHS to our shareholders will require significant Company resources, and the Company expects corporate expense in 2008 to be higher as a result of professional fees associated with the spin-off. In addition, completing the spin-off will require significant attention from our management, which could divert focus from other aspects of the Company’s business and adversely affect the Company’s results of operations.

The Company has significant operations outside the United States. We currently operate in approximately 50 countries. Revenue outside the U.S. was over 60% of total revenue in 2007. We expect revenue outside the U.S. to continue to represent a significant portion of total revenue. Business operations outside the U.S. are subject to political, economic and other risks inherent in operating in foreign countries, such as:

the difficulty of enforcing agreements, collecting receivables and protecting assets through foreign legal systems

trade protection measures and import or export licensing requirements

difficulty in staffing and managing widespread operations

required compliance with a variety of foreign laws and regulations

changes in the general political and economic conditions in the countries where we operate, particularly in emerging markets

threat of nationalization and expropriation

higher costs and risks of doing business in a number of foreign jurisdictions

limitations on the repatriation of earnings

fluctuations in equity and revenues due to changes in foreign currency exchange rates

We try to effectively manage these risks by monitoring current and anticipating future political and economic developments and adjusting operations as appropriate. Changes in the political or economic environments in the countries in which we operate could have a material adverse effect on our business, financial condition and results of operations.

We operate in highly competitive industries. We compete in industries that are subject to significant competition and pricing pressures. Brink’s faces significant pricing pressures from competitors in most markets. BHS experiences competitive pricing pressures on installation and monitoring rates. Because we believe we have competitive advantages such as brand name recognition and a reputation for a high level of service and security, we resist competing on price alone. However, continued pricing pressure could impact our customer base or pricing structure and have an adverse effect on results of operations.

Weak economies could reduce demand for our services and increase BHS’ disconnect rate. If economies weaken in regions where we provide our Brink’s and BHS services, demand for our services may lessen. In addition, current home security customers may decide to disconnect our services in an effort to reduce their household spending. If this happens, our revenues, operating profit and cash flow could decline, and subscriber growth at BHS could suffer.

Brink’s earnings and cash flow could be materially affected by increased losses of customer valuables. Brink's purchases insurance coverage for losses of customer valuables for amounts in excess of what it considers prudent deductibles and/or retentions. Insurance is provided by different groups of underwriters at negotiated rates and terms. Coverage is available to Brink’s in major insurance markets, although premiums charged are subject to fluctuations depending on market conditions. The loss experience of Brink’s and other armored carriers affects premium rates charged to Brink’s. Brink’s is self-insured for losses below its coverage limits and recognizes expense up to these limits for actual losses. Brink’s insurance policies cover losses from most causes, with the exception of war, nuclear risk and various other exclusions typical for such policies. The availability of high-quality and reliable insurance coverage is an important factor in order for Brink's to obtain and retain customers and to manage the risks of its business. If our losses increase, or if we are unable to obtain adequate insurance coverage at reasonable rates, our financial condition and results of operations could be materially and adversely affected.

Restructuring charges may be required in the future. There is a possibility we will take restructuring actions in one of our markets in the future to reduce expenses if a major customer is lost or if recurring operating losses continue. These actions could result in significant restructuring charges at these subsidiaries, including recognizing impairment charges to write down assets, and recording accruals for employee severance and operating leases. These charges, if required, could significantly affect results of operations and cash flows.

The Company depends heavily on the availability of fuel and the ability to pass higher fuel costs to customers. Fuel prices have fluctuated significantly in recent years. In some periods, the Company’s operating profit has been adversely affected because it is not able to immediately fully offset the impact of higher fuel prices through increased prices or fuel surcharges. The Company does not have any long-term fuel purchase contracts, and has not entered into any other hedging arrangements that protect against fuel price increases. Volatile fuel prices and potential increases in fuel taxes will continue to affect the Company. A significant increase in fuel costs and an inability to pass increases on to customers or a shortage of fuel could adversely affect the Company’s results of operations.

BHS may not be able to sustain the expansion of its subscriber base at recently achieved growth rates. BHS has a history of significantly increasing its subscriber base each year as a result of growth in new installations and a relatively low number of subscriber disconnects. The majority of our subscribers are residents of single-family households and we intend to continue to grow our subscriber base through a number of sales channels, including relationships with new home builders. As a result, BHS’ business benefited from strong growth in the housing market through 2005. The housing market experienced a downturn in 2006 and 2007, and a continued downturn in the housing market (new construction and/or resale of existing houses) could have an impact on our ability to continue to maintain strong growth in the subscriber base. In addition, our disconnect rate has been favorably affected in the past several years by the cumulative effect of improved subscriber selection and retention processes and high-quality customer service. A substantial number of disconnects cannot be prevented, including, for example, disconnects that occur because of customer moves. If we fail to continue to provide high-quality service or take other actions that have improved the disconnect rates in the past, the disconnect rate could increase, and the subscriber base growth rate could suffer. Slower growth in the subscriber base from materially lower installations and/or materially higher disconnects could adversely affect results of operations.

The Company has significant obligations and liabilities related to its former coal operations. The Company has substantial pension and retiree medical obligations, many of which arose during its long history of operating in the coal industry. The Company has contributed cash to segregated trusts that pay benefits to satisfy these obligations. The Company may have to make additional contributions to fund the obligations. The amount of these obligations is significantly impacted by factors that are not in the Company’s control, including interest rates used to determine the present value of future payment streams, investment returns, medical inflation rates, participation rates and changes in laws and regulations. Changes in any of these factors could have a significant effect on the amount of the Company’s obligations and could materially and adversely affect the Company’s financial condition, results of operations and cash flows. The Company also has ongoing reclamation and remediation obligations, the future cost of which is from time to time reviewed and adjusted, as necessary. The Company may also incur future environmental and other liabilities that are presently unknown in connection with these former operations.

BHS intends to grow new lines of business and operating margins may suffer. BHS intends to expand its presence in commercial alarm installation and monitoring. As a result, the cost of investment in new subscribers may continue to grow faster than installations and related revenue as BHS develops the resources needed to achieve its objectives. If BHS is unable to increase the subscriber base while incurring the additional investment costs, BHS’ results of operations would be adversely affected.

BHS’ earnings and cash flow could be materially affected by a sudden shift in its customers’ selection of voice and data communications services. BHS’ operating model relies on its customers’ selection and continued payment for high quality, reliable telecommunications services. In recent years, a small but increasing number of existing customers and prospective new customers exclusively use wireless telephone service within their homes. Although BHS monitoring service can be connected using wireless telephone service, its solution is more expensive to the customer than its traditional product and service package that uses wire-line telecommunications. In this scenario, customer dissatisfaction could increase, driving up BHS’ disconnect rate, as wireless service may be less reliable depending on the performance of the wireless service provider. If there were a sudden shift to such wireless services by a significant portion of BHS’ existing subscriber base, BHS’ results of operations and cash flows could be adversely affected.

BHS’ earnings and cash flow could be materially affected by penalties assessed for false alarms. BHS believes its false alarm rate compares favorably to many other companies’ rates. Some local governments impose assessments, fines, penalties and limitations on either subscribers or the alarm companies for false alarms. A few municipalities have adopted ordinances under which both permit and alarm dispatch fees are charged directly to the alarm companies. BHS’ alarm service contracts generally allow BHS to pass these charges on to customers. If more local governments were to impose assessments, fines or penalties, and BHS was not able to pass the increase in costs to its customers, the growth of BHS’ subscriber base could be adversely affected.

BHS’ earnings and cash flow could be materially affected by the refusal of police departments to automatically respond to calls from monitored security service companies. Police departments in a limited number of U.S. cities are not required to automatically respond to calls from monitored security service companies unless an emergency has been visually verified. BHS has offered affected customers the option of receiving response from private guard companies, which in most cases have contracted with BHS. This increases the overall cost to customers. If more police departments were to refuse to automatically respond to calls from monitored security service companies without visual verification, BHS’ ability to retain subscribers could be negatively impacted and results of operations and cash flow could be materially and adversely affected.

BHS relies on third party providers for the components of its security systems. The components for the security systems that BHS installs are manufactured by third parties. BHS is therefore susceptible to interruptions in supply and to the receipt of components that do not meet BHS’ high standards. BHS mitigates these risks through the selection of vendors with strong reputations for producing quality products. However, any interruption in supply could cause delays in installations and repairs and the loss of current and potential customers. Also, if a previously installed component were found to be defective, BHS might not be able to recover the costs associated with its repair or replacement and the diversion of BHS’ technical force to address such an issue could affect subscriber and revenue growth.

BHS is exposed to greater risks of liability for employee acts or omissions, or system failure, than may be inherent in other businesses. Substantially all of BHS’ alarm monitoring product sales or services agreements contain provisions limiting liability to customers in an attempt to reduce this risk. However, in the event of litigation with respect to such matters, there can be no assurance that these limitations will be enforced.

BHS carries insurance of various types, including general liability and professional liability insurance in amounts management considers adequate and customary for the industry. Some of BHS’ insurance policies, and the laws of some states, may limit or prohibit insurance coverage for punitive or certain other types of damages, or liability arising from gross negligence. If the Company incurs increased losses related to employee acts or omissions, or system failure, or if the Company is unable to obtain adequate insurance coverage at reasonable rates, or if the Company is unable to receive reimbursements from insurance carriers, the Company’s financial condition and results of operations could be materially and adversely affected.

The Company’s business operates in regulated industries. The U.S. operations of Brink's are subject to regulation by the U.S. Department of Transportation with respect to safety of operations and equipment and financial responsibility. Intrastate operations in the U.S. are subject to regulation by state regulatory authorities and intraprovince operations in Canada are subject to regulation by Canadian and provincial regulatory authorities. Brink's International operations are regulated to varying degrees by the countries in which they operate.

BHS and its employees are subject to various U.S. federal, state and local consumer protection, licensing and other laws and regulations. Most states in which BHS operates have licensing laws directed specifically toward the monitored security services industry. BHS' business relies heavily upon wireline telephone service to communicate signals. Wireline telephone companies are currently regulated by both the federal and state governments. BHS' Canadian operation is subject to the laws of Canada, British Columbia and Alberta.

Changes in laws or regulations could require the Company to change the way it operates, which could increase costs or otherwise disrupt operations. In addition, failure to comply with any applicable laws or regulations could result in substantial fines or revocation of the Company’s operating permits and licenses. If laws and regulations were to change or the Company failed to comply, the Company’s business, financial condition and results of operations could be materially and adversely affected.

The Company could be materially affected by an unfavorable outcome related to non-payment of value-added taxes and custom duties. During 2004, the Company determined that one of its non-U.S. Brink's business units had not paid foreign customs duties and value-added taxes with respect to the importation of various goods and services. The Company has been advised that there could be civil and criminal penalties asserted for the non-payment of these customs duties and value-added taxes. To date no penalties have been asserted. The Company believes that the range of reasonably possible losses related to customs duties penalties is between $0 and approximately $35 million. These penalties could be asserted at any time. The business unit has discussed this matter with the appropriate government authorities, provided an accounting of unpaid customs duties and taxes and made payments covering its calculated unpaid value added taxes. An adverse outcome in this matter could materially affect the Company’s financial condition, results of operations and cash flows.

The Company has retained obligations from the sale of BAX Global. In January 2006 the Company sold BAX Global. The Company retained some of the obligations related to these operations, primarily for taxes owed prior to the date of sale and for any amounts paid related to one pending litigation matter for which losses could be between $0 and $11 million at the date of sale. In addition, the Company provided indemnification customary for these sorts of transactions. Future unfavorable developments related to these matters could require the Company to record additional expenses or make cash payments in excess of recorded liabilities. The occurrence of these events could have a material adverse affect on the Company’s financial condition, results of operations and cash flows.

The Company is subject to covenants for credit facilities. The Company has credit facilities with financial covenants, including a limit on the ratio of debt to earnings before interest, taxes, depreciation, and amortization, limits on the ability to pledge assets, limits on the use of proceeds of asset sales and minimum coverage of interest costs. Although the Company believes none of these covenants are presently restrictive to operations, the ability to meet the financial covenants can be affected by changes in the Company’s results of operations or financial condition. The Company cannot provide assurance that it will meet these covenants. A breach of any of these covenants could result in a default under existing credit facilities. Upon the occurrence of an event of default under any of our credit facilities, the lenders could cause amounts outstanding to be immediately payable and terminate all commitments to extend further credit. The occurrence of these events would have a significant impact on the Company’s liquidity and cash flows.

The Company’s effective income tax rate could change. The Company operates in approximately 50 countries, all of which have different income tax laws and associated income tax rates. The Company’s effective income tax rate can be significantly affected by changes in the mix of pretax earnings by country and the related income tax rates in those countries. In addition, the Company’s effective income tax rate is significantly affected by its estimate of its ability to realize deferred tax assets, including those associated with net operating losses. Changes in income tax laws, income apportionment, or estimates of the ability to realize deferred tax assets, could significantly affect the Company’s effective income tax rate, financial position and results of operations.

Forward-Looking Information

This document contains both historical and forward-looking information. Words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes,” “may,” “should” and similar expressions may identify forward-looking information. Forward-looking information in this document includes, but is not limited to, statements regarding the strategic decision to spin-off BHS, the tax free nature and other expected characteristics of the spin-off, competitive advantages at Brink’s and BHS, expected revenue growth, cash flow and earnings for The Brink’s Company and its subsidiaries in 2008 and through 2010, including revenue growth and operating profit margin at Brink’s and revenue, profit and subscriber growth at BHS, Brink’s pursuit of growth through acquisitions in new and existing markets, the differentiation of Cash Logistics services, Brink’s cost structure, the seasonality of Brink’s operating profit, employee relations, the lack of interruptions in the BHS supply chain, BHS’ dealer due diligence process, BHS’ continued expansion into the commercial market, the effectiveness of BHS’ customer care efforts on false alarms, customer satisfaction and retention, the disconnect rate at BHS, monitoring and service rates offered by BHS, significant liabilities and ongoing expenses and cash outflows related to former coal operations, the anticipated effective tax rate for 2008 and the Company’s future tax position, expected improved Brink’s performance in EMEA, actions to improve long-term performance, Brink’s expected revenue increases in Venezuela and the increased risk of operational issues, the effect of the U.S. economy on BHS’ performance, the future disconnect rate at BHS, instability in the housing and credit markets, anticipated difficulties in the BHT business, increased market share through expanded relationships with major home builders, possible increases in BHS’ investment per new subscriber, expected additional professional, legal and advisory fees in 2008, expenses and cash outflows related to former coal operations, expenses in continuing operations, future contributions to and use of the VEBA and expected investment returns on funds held by the VEBA, expected, future cash payments and expense levels for black lung obligations, projected payments and expense for the primary U.S. pension plan and its expected long-term rate of return, future pension plan contributions, anticipated dividends from a real estate investment, the assumption of additional liability by the buyer of Brink’s United Kingdom domestic cash handling operations, the impact of exchange rates, the possibility that Venezuela may be considered highly inflationary again, the possibility that Brink’s Venezuela may be subject to less favorable exchange rates on dividend remittances, capital expenditures in 2008, the adequacy of sources of liquidity to meet the Company’s near term requirements, estimated contractual obligations for the next five years, the Company’s borrowing capacity under the Letter of Credit Facility and the Revolving Facility, the Company’s provision for contingent income tax liabilities and interest, the outcome of pending litigation, the outcome of the issue relating to the non-payment of customs duties and value-added tax by a non-U.S.

subsidiary of Brink’s, Incorporated, future realization of deferred tax assets, the carrying value of Brink’s goodwill, estimates of future reconnection experience at BHS and the impact of any change in estimates on BHS’ impairment charges, estimated discount rates, the assumed inflation rate for a number of the Company’s benefit plans, the impact of recent and future accounting rule changes, the likelihood of losses due to non-performance by parties to hedging instruments, the use of earnings from foreign subsidiaries and equity affiliates, future recognition of unrecognized tax benefits and uncertain tax positions, and the contractual indemnities associated with the sale of BAX Global, involve forward-looking information which is subject to known and unknown risks, uncertainties, and contingencies, which could cause actual results, performance or achievements, to differ materially from those that are anticipated.

These risks, uncertainties and contingencies, many of which are beyond the control of The Brink’s Company and its subsidiaries, include, but are not limited to the ability of the Company to complete a successful spin-off of BHS, the satisfaction of all conditions in order to complete a spin-off of BHS, demand for the products and services of Brink’s and BHS, the ability to identify and execute further cost and operational improvements and efficiencies in the core businesses, the impact of continuing initiatives to control costs and increase profitability, the ability of the businesses to cost effectively match customer demand with appropriate resources, the willingness of Brink’s and BHS’ customers to absorb future price increases and the actions of competitors, the Company’s ability to identify strategic opportunities and integrate them successfully, acquisitions and dispositions made in the future, Brink’s ability to integrate recent acquisitions, corporate expenses due to the implementation of the spin-off decision and shareholder initiatives, decisions by the Company’s Board of Directors, Brink’s ability to perform currency conversion cash handling services in Venezuela successfully and without adverse operational issues, regulatory and labor issues and higher security threats in European countries, the impact of restructuring and other actions responding to current market conditions in European countries, the assumption of certain contractual obligations by the buyer of Brink’s United Kingdom domestic cash handling operations, the return to profitability of operations in jurisdictions where Brink’s has recorded valuation adjustments, the input of governmental authorities regarding the non-payment of customs duties and value-added tax, the stability of the Venezuelan economy and changes in Venezuelan policy regarding exchange rates for dividend remittances, variations in costs or expenses and performance delays of any public or private sector supplier, service provider or customer, the ability of the Company and its subsidiaries to obtain appropriate insurance coverage at reasonable prices, positions taken by insurers with respect to claims made and the financial condition of insurers, safety and security performance, Brink’s loss experience, changes in insurance costs, risks customarily associated with operating in foreign countries including changing labor and economic conditions, political instability, restrictions on repatriation of earnings and capital, nationalization, expropriation and other forms of restrictive government actions, costs associated with information technology and other ongoing contractual obligations, BHS’ ability to maintain subscriber growth, the number of household moves, the level of home sales or new home construction, potential instability in housing credit markets, the performance of BHS’ equipment suppliers and dealers, BHS’ ability to cost-effectively develop or incorporate new systems in a timely manner, decisions regarding continued support of the developing commercial business, the ability of the home security industry to dissuade law enforcement and municipalities from refusing to respond to alarms, the willingness of BHS’ customers to pay for private response personnel or other alternatives to police responses to alarms, estimated reconnection experience at BHS, costs associated with the purchase and implementation of cash processing and security equipment, changes in the scope or method of remediation or monitoring of the Company’s former coal operations, the timing of the pass-through of certain costs to third parties and the timing of approvals by governmental authorities relating to the disposal of the coal assets, changes to estimated liabilities and assets in actuarial assumptions due to payments made, investment returns, annual actuarial revaluations, and periodic revaluations of reclamation liabilities, the funding levels, accounting treatment, investment performance and costs of the company’s pension plans and the VEBA, whether the Company’s assets or the VEBA’s assets are used to pay benefits, projections regarding the number of participants in and beneficiaries of the Company’s employee and retiree benefit plans, black lung claims incidence, the number of dependents of mine workers for whom benefits are provided, actual retirement experience of the former coal operation’s employees, actual medical and legal expenses relating to benefits, changes in inflation rates (including medical inflation) and interest rates, changes in mortality and morbidity assumptions, mandatory or voluntary pension plan contributions, discovery of new facts relating to civil suits, the addition of claims or changes in relief sought by adverse parties, the cash, debt and tax position and growth needs of the Company, the demand for capital by the Company and the availability and cost of such capital, the satisfaction or waiver of limitations on the use of proceeds contained in various of the Company’s financing arrangements, the nature of the Company’s hedging relationships, the financial performance of the Company, utilization of third-party advisors and the ability of the Company to hire and retain corporate staff, changes in employee obligations, overall domestic and international economic, political, social and business conditions, capital markets performance, the strength of the U.S. dollar relative to foreign currencies, foreign currency exchange rates, changes in estimates and assumptions underlying the Company’s critical accounting policies, as more fully described in the section “Application of Critical Accounting Policies” but including the likelihood that net deferred tax assets will be realized, discount rates, expectations of future performance, the timing of deductibility of expenses, inflation, and the promulgation and adoption of new accounting standards and interpretations, including SFAS 157, SFAS 159, SFAS 141(R), and SFAS 160, anticipated return on assets, inflation, the promulgation and adoption of new accounting standards and interpretations, seasonality, pricing and other competitive industry factors, labor relations, fuel and copper prices, new government regulations and interpretations of existing regulations, legislative initiatives, judicial decisions, issuance of permits, variations in costs or expenses and the ability of counterparties to perform. The information included in this document is representative only as of the date of this document, and The Brink’s Company undertakes no obligation to update any information contained in this document.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

Brink’s

Brink’s has property and equipment in locations throughout the world. Branch facilities generally have office space to support operations, a vault to securely process and store valuables and a garage to house armored vehicles and serve as a vehicle terminal. Many branches have additional space to repair and maintain vehicles.

Brink’s owns or leases armored vehicles, panel trucks and other vehicles that are primarily service vehicles. Brink’s armored vehicles are of bullet-resistant construction and are specially designed and equipped to provide security for the crew and cargo.

The following table discloses leased and owned facilities and vehicles for Brink’s most significant operations as of December 31, 2007.

	Facilities						Vehicles
Region	Leased		Owned		Total		Leased		Owned		Total

U. S.		173		24		197		1,972		361		2,333
Canada		42		13		55		435		73		508
EMEA (a)		255		26		281		694		2,508		3,202
Latin America		183		50		233		241		2,649		2,890
Asia Pacific		33		-		33		2		130		132
Total		686		113		799		3,344		5,721		9,065

(a)	Europe, Middle East, and Africa

As of December 31, 2007, the Company had approximately 6,500 Brink’s-owned CompuSafeâ devices located on customers’ premises, of which 6,400 are in North America.

BHS

BHS has 67 leased field office facilities located throughout the U.S. and one leased office in Canada. BHS’ headquarters are located in Irving, Texas. This owned facility houses many administrative and technical support personnel. Additional administrative personnel are located in portions of two nearby buildings in office spaces that are leased for terms ending in 2010 and 2012. The primary Irving facility also serves as one of two central monitoring facilities. The second owned monitoring and service center is located near Knoxville, Tennessee.

BHS leases approximately 1,600 vehicles which are used in the process of installing and servicing its security systems.

BHS retains ownership of most of the approximately 1.2 million systems currently being monitored. When a customer cancels monitoring services, BHS typically disables the system. In a limited number of cases, BHS removes the equipment. When a customer cancels monitoring services because of an impending household move or business relocation, the retention of the BHS system at the site facilitates the marketing of monitoring services to the subsequent homeowner or business.

ITEM 3. LEGAL PROCEEDINGS

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

Executive Officers of the Registrant

The following is a list as of February 15, 2008, of the names and ages of the executive and other officers of The Brink’s Company and the names and ages of certain officers of its subsidiaries, indicating the principal positions and offices held by each. There are no family relationships among any of the officers named.

Name	Age	Positions and Offices Held	Held Since

Executive Officers:
Michael T. Dan	57	President, Chief Executive Officer and Chairman of the Board	1998
James B. Hartough	60	Vice President – Corporate Finance and Treasurer	1988
Frank T. Lennon	66	Vice President and Chief Administrative Officer	2005
Austin F. Reed	56	Vice President, General Counsel and Secretary	1994
Robert T. Ritter	56	Vice President and Chief Financial Officer	1998

Other Officers:
Matthew A. P. Schumacher	49	Controller	2001
Arthur E. Wheatley	65	Vice President – Risk Management and Insurance	1988

Subsidiary Officers:
Robert B. Allen	54	President of Brink’s Home Security, Inc.	2001

Executive and other officers of The Brink’s Company are elected annually and serve at the pleasure of its board of directors.

Mr. Dan was elected President, Chief Executive Officer and Director of The Brink’s Company in February 1998 and was elected Chairman of the Board effective January 1, 1999. He also serves as Chief Executive Officer of Brink’s, Incorporated, a position he has held since July 1993. From August 1992 to July 1993 he served as President of North American operations of Brink’s, Incorporated and as Executive Vice President of Brink’s, Incorporated from 1985 to 1992.

Mr. Lennon was appointed Vice President and Chief Administrative Officer in 2005. Prior to this position, he was the Vice President, Human Resources and Administration from 1990 through 2005.

During the fourth quarter of 2007, the Company announced the planned retirement of Mr. Ritter who is expected to leave the Company after the 2007 Form 10-K and 2008 proxy statement have been filed and a successor has been named.

Messrs. Allen, Hartough, Reed, Ritter, Schumacher and Wheatley have served in their present positions for more than the past five years.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s common stock trades on the New York Stock Exchange under the symbol “BCO.” As of February 22, 2008, there were approximately 2,200 shareholders of record of common stock.

The dividends declared by the Company and the high and low prices of its common stock for each full quarterly period within the last two years are as follows:

	2007 Quarters								2006 Quarters
	1st		2nd		3rd		4th		1st		2nd		3rd		4th

Dividends declared per common share	$	0.0625		0.1000		0.1000		0.1000	$	0.0250		0.0625		0.0625		0.0625
Stock prices:
High	$	65.50		68.47		67.65		64.83	$	54.03		57.90		58.35		66.12
Low		57.77		61.44		52.42		55.69		46.90		49.98		52.40		52.10

See note 16 to the consolidated financial statements for a description of limitations of the ability of the Company to pay dividends in the future.

The following table provides information about common stock repurchases by the Company during the quarter ended December 31, 2007.

				(d) Maximum Number
			(c) Total Number	(or Approximate
			of Shares Purchased	Dollar Value) of
	(a) Total Number		as Part of Publicly	Shares that May Yet
	of Shares	(b) Average Price	Announced Plans	be Purchased Under
Period	Purchased (1)	Paid per Share	or Programs	the Plans or Programs
December 5 through
December 31, 2007	60,500	$60.30	60,500	$96,351,953

(1)

On September 14, 2007, the Company’s board of directors authorized the Company to make repurchases of up to $100 million of common stock from time to time as market conditions warrant and as covenants under existing agreements permit. The program does not require the Company to acquire any specific numbers of shares and may be modified or discontinued at any time.

The following graph shows a five-year comparison of cumulative total returns for The Brink’s Company common stock outstanding from December 31, 2002, to December 31, 2007, versus the S&P MidCap 400 Index and the S&P MidCap Diversified Commercial & Professional Services Index.

Comparison of Five-Year Cumulative Total Return Among

Brink’s Common Stock, the S&P MidCap 400 Index and

the S&P MidCap Diversified Commercial & Professional Services Index (1)

	Years Ended December 31,
	2002		2003		2004		2005		2006		2007

The Brink's Company	$	100.00		123.14		215.96		262.52		351.62		330.48
S&P MidCap 400 Index	$	100.00		135.62		157.97		177.81		196.16		211.81
S&P MidCap Diversified Commercial & Professional Services Index	$	100.00		129.89		174.76		187.85		209.01		206.57
Copyright © 2007, Standard & Poor's, a division of The McGraw-Hill Companies, Inc. All rights reserved.

(1)

For the line designated as “The Brink’s Company” the graph depicts the cumulative return on $100 invested in The Brink’s Company’s Common Stock. For the S&P MidCap 400 Index and the S&P MidCap Diversified Commercial & Professional Services Index, cumulative returns are measured on an annual basis for the periods from December 31, 2002 through December 31, 2007, with the value of each index set to $100 on December 31, 2002. Total return assumes reinvestment of dividends. The Company chose the S&P MidCap 400 Index and the S&P MidCap Diversified Commercial & Professional Services Index because the Company is included in these indices, which broadly measure the performance of mid-size companies in the United States market.

ITEM 6. SELECTED FINANCIAL DATA

Five Years in Review

(In millions, except per share amounts)	2007			2006		2005			2004		2003

Revenues and Income

Revenues	$	3,219.0			2,793.3		2,505.4			2,243.6		1,974.1
Income from continuing operations		148.6			113.1		51.0			76.8		49.1
Income (loss) from discontinued operations (a)		(11.3	)		474.1		96.8			44.7		(19.7	)
Cumulative effect of change in accounting principle (b)		-			-		(5.4	)		-		-
Net income	$	137.3			587.2		142.4			121.5		29.4

Financial Position

Property and equipment, net	$	1,118.4			981.9		867.4			914.0		873.2
Total assets		2,394.3			2,188.0		3,036.9			2,692.7		2,548.6
Long-term debt, less current maturities		89.2			126.3		251.9			181.6		221.5
Shareholders’ equity		1,046.3			753.8		837.5			688.5		495.6

Per Common Share

Basic, net income (loss):
Continuing operations	$	3.19			2.26		0.91			1.41		0.92
Discontinued operations (a)		(0.24	)		9.49		1.72			0.82		(0.37	)
Cumulative effect of change in accounting principle (b)		-			-		(0.10	)		-		-
Net income	$	2.95			11.75		2.53			2.23		0.55

Diluted, net income (loss):
Continuing operations	$	3.16			2.24		0.89			1.39		0.92
Discontinued operations (a)		(0.24	)		9.39		1.70			0.81		(0.37	)
Cumulative effect of change in accounting principle (b)		-			-		(0.09	)		-		-
Net income	$	2.92			11.64		2.50			2.20		0.55

Cash dividends	$	0.3625			0.2125		0.1000			0.1000		0.1000

Weighted Average Common Shares Outstanding

Basic		46.5			50.0		56.3			54.6		53.1
Diluted		47.0			50.5		57.0			55.3		53.2

(a)

Income (loss) from discontinued operations reflects the operations and gains and losses on disposal of the Company’s former coal, natural gas, timber, gold, BAX Global and Brink’s United Kingdom domestic cash handling operations. Ongoing expenses related to former operations primarily consist of postretirement and other employee benefits associated with Company-sponsored pension plans and black lung obligations, and administrative and legal expenses to oversee retained benefit obligations. See notes 4, 17 and 21 to the consolidated financial statements. Expenses related to Company-sponsored pension and postretirement benefit obligations, black lung obligations and related administrative costs are recorded as a component of continuing operations after the respective disposal dates. Adjustments to contingent liabilities are recorded within discontinued operations.

(b)	The Company’s 2005 results of operations includes a noncash after-tax charge of $5.4 million or $0.09 per diluted share to reflect the cumulative effect of a change in accounting principle pursuant to the adoption of FIN 47.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE BRINK’S COMPANY

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2007

TABLE OF CONTENTS

	Page

OPERATIONS	26

RESULTS OF OPERATIONS
Overview of Results	28
Consolidated Review	30
Brink’s, Incorporated	31
Brink’s Home Security, Inc.	37
Corporate Expense – The Brink’s Company	40
Former Operations	40
Retained Liabilities and Assets of Former Operations	41
Primary U.S. Pension Plan	45
Other Operating Income, Net	46
Nonoperating Income and Expense	47
Income Taxes	48
Minority Interest	49
Discontinued Operations	50
Foreign Operations	52

LIQUIDITY AND CAPITAL RESOURCES
Overview	53
Summary of Cash Flow Information	53
Operating Activities	54
Investing Activities	54
Business Segment Cash Flows	55
Financing Activities	57
Capitalization	58
Off Balance Sheet Arrangements	60
Contractual Obligations	61
Surety Bonds and Letters of Credit	61
Contingent Matters	62

APPLICATION OF CRITICAL ACCOUNTING POLICIES
Deferred Tax Asset Valuation Allowance	63
Goodwill, Other Intangible Assets and Property and Equipment Valuations	64
Employee and Retiree Benefit Obligations	65

RECENT ACCOUNTING PRONOUNCEMENTS	69

OPERATIONS

The Brink’s Company

Executive Overview

The Brink’s Company (along with its subsidiaries, the “Company”) conducts business in the security industry in two segments:

· Brink’s, Incorporated (“Brink’s”)	Brink’s offers transportation and logistics management services for cash and valuables throughout the world. These services include armored car transportation, automated teller machine (“ATM”) replenishment and servicing, currency deposit processing and cash management services including cash logistics services (“Cash Logistics”), deploying and servicing safes and safe control devices, including its patented CompuSafe® service, coin sorting and wrapping, integrated check and cash processing services (“Virtual Vault Services”), arranging the secure transportation of valuables (“Global Services”), transporting, storing and destroying sensitive information (“Secure Data Solutions”) and guarding services, including airport security.

· Brink’s Home Security, Inc. (“BHS”)	BHS offers monitored security services in North America for owner-occupied, single-family residences and, to a lesser extent, commercial properties. BHS typically installs and owns the on-site security systems and charges fees to monitor and service the systems.

Management’s approach to each of its security businesses is similar, with a focus on quality service, the brand, risk management and a patient and disciplined approach to markets. Management believes each business is a premium provider of services in the markets that it serves. The Company’s marketing and sales efforts are enhanced by its brands so the Company seeks to protect their value. Since the Company’s services focus on handling, transporting, protecting, and managing valuables, its employees strive to understand and manage risk. Overlaying management’s approach is an understanding that the Company must be disciplined and patient enough to charge fair prices that reflect the value provided, the risk assumed and the need for an adequate return for the Company’s investors.

The business environments in which the Company’s security businesses operate around the world are constantly changing. Management must continually adapt to changes in the competitive landscapes, economies in different parts of the world and even each customer’s level of business. To be successful, management must be able to balance requirements of local laws and regulations, risk, and the effects of changing demand on the utilization of its resources. As a result, the Company operates largely on a decentralized basis so local management can adjust operations to its unique circumstances.

For the same reasons that the Company operates on a decentralized basis, short-term forecasts of performance are difficult to make with precision. As a result, the Company does not provide detailed earnings forecasts.

The Company measures financial performance on a long-term basis. The key financial factors on which it focuses are:

Creation of value through solid returns on capital

Growth in revenues and earnings

Generation of cash flow

These and similar measures are critical components of the Company’s incentive compensation programs and performance evaluations.

On January 31, 2006, the Company sold BAX Global Inc. (“BAX Global”), a wholly owned freight transportation subsidiary, for approximately $1 billion in cash and recorded a pretax gain of approximately $587 million. On August 5, 2007, the Company sold Brink’s United Kingdom domestic cash handling operations. Both of these operations have been reported within discontinued operations for all periods presented. See “Discontinued Operations” for a description of the transactions and see “Liquidity and Capital Resources” for a description of how the Company used the proceeds.

The Company has significant liabilities associated with its former coal operations. Since these liabilities generate ongoing expenses and require significant cash outflows, the Company considers liability management and funding to be an important activity.

Information about the Company’s liabilities related to its former businesses is contained in a number of sections of this report, including:

Retained Liabilities and Assets of Former Operations

Application of Critical Accounting Policies

Disclosures in the first section show five-year projections for estimated ongoing payments and expense associated with the retained obligations of the former operations. The second section discusses critical estimates used and provides a sensitivity analysis for these estimates.

RESULTS OF OPERATIONS

Overview of Results

	Years Ended December 31,								% change
(In millions)	2007			2006		2005			2007			2006

Income from:
Continuing operations	$	148.6			113.1		51.0			31			122
Discontinued operations		(11.3	)		474.1		96.8		NM				200	+
Cumulative effect of change in accounting principle		-			-		(5.4	)		-		NM
Net income	$	137.3			587.2		142.4			(77	)		200	+

The income items in the above table are reported after tax.

Continuing Operations

2007

Income from continuing operations was higher in 2007 compared to 2006 primarily due to a $64.5 million improvement in operating profit driven by increases at Brink’s and BHS and lower expenses related to former operations. Brink’s operating profit increased primarily due to growth in Latin America, improved performance in Europe and lower safety and security costs worldwide. BHS operating profit improved due primarily to subscriber growth. Interest expense decreased in 2007 as a result of reduced debt levels. The effective tax rate for 2007 was approximately 1.3 percentage points lower than 2006 largely because of a change in the mix of income and losses by jurisdiction.

The Company’s income from continuing operations in 2008 could be adversely affected by the U.S. economy as well as other economies around the world, if one or more were to significantly decline.

2006

Income from continuing operations was higher in 2006 compared to 2005 primarily due to an $86.5 million improvement in operating profit driven by increases at Brink’s and BHS and lower expenses related to former operations. This improvement was partially offset by an $11.1 million increase ($7.3 million at Corporate, $2.6 million at Brink’s and $1.2 million at BHS) in compensation charges for stock options as a result of adopting Statement of Financial Accounting Standards (“SFAS”) 123(R), Share Based Payment, on January 1, 2006. Similar charges were not recorded in 2005. Brink’s operating profit increased primarily due to growth in Latin America and France, lower restructuring costs in international operations, and lower U.S. pension costs. BHS operating profit improved due primarily to subscriber growth. Interest expense decreased in 2006 as a result of reduced debt levels. The effective tax rate for 2006 was approximately 4.4 percentage points lower than 2005 as a result of a lower level of charges for valuation allowances, as further described below.

Business Segments

Brink’s and BHS reported improved operating profit in both 2007 and 2006 over the prior-year periods.

Brink’s. Revenues in 2007 increased from 2006 primarily due to growth in existing operations with particularly strong growth in Latin America and Europe, Middle East, and Africa (“EMEA”). Exchange rate fluctuations favorably impacted reported revenues in 2007 compared to 2006. Operating profit was higher in 2007 compared to 2006, largely due to stronger performance in EMEA and Latin America and lower safety and security costs. In addition, operating profit benefited from the weaker U.S. dollar.

Revenues in 2006 increased from 2005 primarily due to growth in existing operations with particularly strong growth in Latin America and EMEA. Exchange rate fluctuations had little impact on revenues in 2006 compared to 2005. Operating profit was higher in 2006 versus 2005, largely due to strong performance in Latin America, lower pension and other benefits expenses in the U.S., and lower costs and improved margins in EMEA.

BHS. BHS reported 10% growth in revenues in 2007 and 12% in 2006. BHS experienced strong growth in operating profit in 2007 (14%) and 2006 (15%) resulting primarily from subscriber growth and improved efficiency from the providing of recurring services to a larger subscriber base. The average number of subscribers increased 10% both in 2007 over 2006 and in 2006 over 2005. Growth in operating profit in 2007 over 2006 was weaker than in 2006 over 2005 primarily as a result of selling and advertising expenses increasing more rapidly than revenues. In addition, higher legal settlement expenses were offset by insurance gains related to Hurricane Katrina.

Former Operations

Expenses related to former operations in 2007 were $12.6 million lower than 2006 due to lower pension and postretirement medical expenses.

Expenses related to former operations in 2006 were $12.7 million lower than 2005 due to earnings on the $225 million VEBA contribution made in the first quarter of 2006. The contribution was funded by proceeds from the sale of BAX Global.

Income Taxes

The Company’s effective tax rate on income from continuing operations was 37.4% in 2007, 38.7% in 2006 and 43.1% in 2005. The effective tax rate varied from statutory rates in these periods primarily due to changes in valuation allowances for deferred tax assets and state income taxes. The effective tax rate in 2005 was unusually high due to $10 million in new valuation allowances, a higher amount of pretax losses incurred in countries for which the Company does not recognize a tax benefit from losses, and the recording of $3 million in additional tax on the repatriation of $49 million in dividends under the American Jobs Creation Act.

The Company currently estimates its 2008 effective tax rate will approximate 37% to 39%. The actual 2008 tax rate could be materially different from the Company’s estimate.

Discontinued Operations

On January 31, 2006, the Company sold BAX Global for approximately $1 billion in cash resulting in a pretax gain of approximately $587 million. On August 5, 2007, the Company sold Brink’s United Kingdom domestic cash handling operations. Both of these operations have been reported within discontinued operations for all periods presented.

The Company has accrued for significant contingencies related to benefits for former coal employees. Revisions to estimated amounts related to these contingent liabilities, including those related to obligations under the Coal Industry Retiree Health Benefit Act of 1992 (“the Health Benefit Act”), are recorded in discontinued operations.

In 2006, the Company recognized:

a $148.3 million pretax benefit primarily as a result of a 2006 federal law amending the Health Benefit Act that reduced the Company’s obligation for healthcare and death benefits for former coal miners, and

a $9.9 million pretax benefit on the settlement of liabilities related to two coal industry multi-employer pension plans.

In 2005, the Company recognized $15.1 million of pretax income related to a final settlement of claims for refund of Federal Black Lung Excise Tax amounts.

Cumulative Effect of a Change in Accounting Principle

On December 31, 2005, the Company adopted the Financial Accounting Standard Board (“FASB”) Interpretation 47, Accounting for Conditional Asset Retirement Obligations (“FIN 47”). As a result, the Company recorded the cumulative effect of a change in accounting principle of $5.4 million, net of tax, for conditional asset retirement obligations primarily associated with leased facilities. See note 1 to the consolidated financial statements.

Consolidated Review

Executive Overview

	Revenues										Operating Profit
	Years Ended December 31,						% change				Years Ended December 31,									% change
(In millions)	2007		2006		2005		2007		2006		2007			2006			2005			2007			2006

Business Segments

Brink’s	$	2,734.6		2,354.3		2,113.3		16		11	$	223.3			184.1			119.5			21			54
BHS		484.4		439.0		392.1		10		12		114.2			100.3			87.4			14			15
Business segments		3,219.0		2,793.3		2,505.4		15		11		337.5			284.4			206.9			19			37
Corporate		-		-		-		-		-		(49.6	)		(48.4	)		(44.7	)		2			8
Former operations		-		-		-		-		-		(13.9	)		(26.5	)		(39.2	)		(48	)		(32	)
	$	3,219.0		2,793.3		2,505.4		15		11	$	274.0			209.5			123.0			31			70

2007

Revenues in 2007 were 15% higher than 2006 primarily due to the effects of growth in existing operations and favorable changes in foreign currency exchanges rates at Brink’s and continuing growth in the subscriber base at BHS. The Company’s operating profit increased by 31% in 2007 versus 2006 due to significant operating profit growth in Latin America at Brink’s, continued subscriber growth at BHS and lower costs related to former operations.

2006

Revenues in 2006 were 11% higher than 2005 primarily due to the effects of growth in existing operations at Brink’s and continuing growth in the subscriber base of BHS. The Company’s operating profit increased by 70% in 2006 versus 2005 due to improved performance and lower restructuring charges at Brink’s and continued subscriber growth at BHS. These increases were partially offset by higher corporate expenses due to $7.3 million of share-based compensation costs recorded as a result of the adoption of SFAS 123(R) on January 1, 2006.

The Company froze the U.S. defined benefit pension plans effective December 31, 2005, and enhanced benefits for its U.S. defined contribution 401(k) plan effective January 1, 2006. As a result, net expenses were lower in 2006 as follows:

Brink’s – approximately $11.4 million

BHS – approximately $2.5 million

Corporate – approximately $1.9 million

Brink’s, Incorporated

Executive Overview

Brink’s provides services related to cash and other valuables to the financial community, retailers and other businesses. These services include securely transporting and handling valuable assets, managing and processing currency and deposits and preparing and transmitting financial information.

The Company believes that Brink’s has significant competitive advantages including:

brand name recognition

reputation for high-quality service

proprietary cash processing and information systems

high-quality insurance coverage and general financial strength

risk management capabilities

the ability to serve a customer in multiple markets through a global network

Because of Brink’s emphasis on managing the risks inherent in handling cash and valuables and the high level of service provided, Brink’s believes it spends more than its competitors on training and retaining people and on the facilities and processes needed to provide quality services to customers.

As a result of management’s emphasis on high-quality services and risk management, Brink’s focuses its marketing and selling efforts on customers who appreciate the value and breadth of the services delivered and the information capabilities, risk management and financial strength underlying the Brink’s approach to business.

In order to earn an adequate return on capital employed in the business, Brink’s focuses on the effective and efficient use of its resources and the adequacy of pricing. First, Brink’s attempts to maximize the amount of business which flows through its branches, vehicles and systems in order to obtain the lowest costs possible without compromising safety, security or service. Second, due to its higher costs of people and processes, Brink’s generally charges higher prices than competitors that may not provide the same level of service and risk management. The Company believes that Brink’s operations are capable of generating operating profit margins at or above 8% in 2008. The Company has established a goal to boost operating margins to 10% by the end of 2010.

The industries to which Brink’s provides services have been consolidating. As a result, the strength of customers in these industries has been increasing. Customers are seeking suppliers, such as Brink’s, with broad geographic solutions, sophisticated outsourcing capabilities and financial strength.

Operationally, Brink’s performance may vary from period to period. Since revenues are generated from charges per service performed or based on the value of goods transported, revenues can be affected by both the level of activity in economies and the volume of business for specific customers. As contracts generally run for one or more years, there are costs which must be incurred to prepare to service a new customer or to transition away from one. Brink’s also periodically incurs costs to reduce operations when volumes decline, including costs to reduce the number of employees and close or consolidate branch and administrative facilities. In addition, safety and security costs can vary from period to period depending on Company and industry performance and cost of insurance coverage.

Cash Logistics is a fully integrated solution that proactively manages the supply chain of cash from point-of-sale through deposit at a bank. The process includes cashier balancing and reporting, deposit processing and consolidation, and electronic information exchange. Retail customers use Brink’s Cash Logistics services to count and reconcile coins and currency in a Brink’s secure environment, to prepare bank deposit information and to replenish retail locations’ coins and currency in proper denominations.

Because Cash Logistics involves a higher level of service and more complex activities, customers are willing to pay prices which result in higher margins. The ability to offer Cash Logistics to customers also differentiates Brink’s from many of its competitors. As a result, management is committed and focused on continuing to grow Cash Logistics revenue. Revenues from Cash Logistics, including coin and note processing, were $434.3 million for 2007, $373.0 million for 2006 and $333.9 million for 2005.

Brink’s revenues and related operating profit are generally higher in the second half of the year, particularly in the fourth quarter, because of the generally increased economic activity associated with the holiday season. As a result, margins are typically lower in the first half than in the second half of the year.

Summary of Brink’s Results

	Years Ended December 31,						% change
(In millions)	2007		2006		2005		2007		2006

Revenues

North America (a)	$	886.3		830.0		778.2		7		7
International		1,848.3		1,524.3		1,335.1		21		14
	$	2,734.6		2,354.3		2,113.3		16		11

Operating Profit

North America (a)	$	70.4		69.9		49.4		1		41
International		152.9		114.2		70.1		34		63
	$	223.3		184.1		119.5		21		54

Cash Flow Information

Depreciation and amortization	$	109.6		92.3		87.3		19		6
Capital expenditures		141.6		113.5		107.3		25		6

(a)	U.S. and Canada.

2007

Overview

Revenues at Brink’s were 16% higher in 2007 compared to 2006 primarily as a result of a combination of the effects of Organic Revenue Growth, as defined later, and favorable changes in currency exchange rates. Operating profit in 2007 was higher than 2006 largely as a result of strong performance in Latin America, particularly in Venezuela, Brazil and Colombia, improved performance in Europe and lower safety and security costs.

Supplemental Revenue Analysis

The following table and the similar table for 2006 (included in the 2006 Overview) provide supplemental information related to Organic Revenue Growth which is not required by U.S. generally accepted accounting principles (“GAAP”). The Company defines Organic Revenue Growth as the change in revenue from the prior year due to factors such as changes in prices for products and services (including the effect of fuel surcharges), changes in business volumes and changes in product mix. Estimates of changes due to fluctuations in foreign currency exchange rates and the effects of new acquisitions are excluded from Organic Revenue Growth.

The supplemental Organic Revenue Growth information presented is non-GAAP financial information that management uses to evaluate results of existing operations without the effects of acquisitions, dispositions and currency exchange rates. The Company believes that this information may help investors evaluate the performance of the Company’s operations. The limitation of this measure is that the effects of acquisitions, dispositions and changes in values of foreign currencies cannot be completely separated from changes in prices (including prices increased due to inflation) and volume of the base business. This supplemental non-GAAP information does not affect net income or any other reported amounts. This supplemental non-GAAP information should be viewed in conjunction with the Company’s consolidated statements of operations.

Revenue growth rates for operations outside the U.S. include the effect of changes in currency exchange rates. On occasion in this report, the change in revenue versus the prior year has been disclosed using constant currency exchange rates in order to provide information about growth rates without the impact of fluctuating foreign currency exchange rates. Growth at constant-currency exchange rates equates to growth as measured in local currency. This measurement of growth using constant-currency exchange rates is higher than growth computed using actual currency exchange rates when the U.S. dollar is strengthening and lower when the U.S. dollar is weakening. Changes in currency exchange rates increased segment operating profit by $9 million for 2007 compared to 2006, and the impact for 2006 compared to 2005 was not significant.

	Year Ended		% change
(In millions)	December 31,		from 2006

2006 Revenues	$	2,354.3
Effects on revenue of:
Organic Revenue Growth		212.9		9
Acquisitions and dispositions, net		24.8		1
Changes in currency exchange rates		142.6		6

2007 Revenues	$	2,734.6		16

North America

Revenues increased in 2007 compared to 2006 primarily as the result of improvements in all service lines, except U.S. Global Services. Operating profit in 2007 was higher than 2006 as increased operating profit in Canada on higher revenues was partially offset by lower operating profit in the U.S. as a result of increased expenses for sales and marketing, and a lower operating profit contribution from U.S. Global Services operations. Operating profit in 2007 included $1.0 million of other operating income in the U.S. for final settlement of business interruption claims related to Hurricane Katrina.

International

Revenues increased in 2007 over 2006 in all regions except for Asia-Pacific. Increased revenues in EMEA and Latin America were primarily the result of Organic Revenue Growth and favorable changes in currency exchange rates. Revenue decreased in Asia-Pacific primarily due to the loss of a major customer in Australia during the second quarter of 2006. International operating profit in 2007 was higher due to the effects of strong volumes in Latin America.

EMEA. Revenues increased to $1,191.5 million in 2007 from $1,003.1 million in 2006, an increase of $188.4 million or 19% (9% on a constant currency basis) largely as a result of Organic Revenue Growth and favorable changes in currency exchange rates.

Operating profit increased 24% in 2007 compared to 2006 due to improved results in several countries, partially offset by $2.1 million of impairment charges recorded on long-lived assets and $2.4 million of restructuring charges.

The Company is highly focused on improving pricing and performance in EMEA and expects to continue to see operating margin improvements in 2008. If operating margins do not improve in the near term, the Company may decide to take actions to improve long-term performance. Restructuring charges may result from these decisions and could lower margins in 2008.

Latin America. Revenues increased to $594.2 million in 2007 from $454.2 million in 2006, an increase of 31% (24% on a constant currency basis). This increase was due primarily to price increases in economies with relatively higher levels of inflation and higher volumes. Increases in volume were a reflection of the overall improvement in Latin American economies. Operating profit in 2007 was 38% higher than in 2006 due to the above-mentioned price and volume increases, and cost reduction and productivity improvements across the region.

Venezuela changed its national currency from the bolivar to the bolivar fuerte on January 1, 2008, and Brink’s performed additional cash handling services in late 2007 to assist in the conversion. Brink’s expects increased revenue in Venezuela during the first quarter of 2008 related to these services. Due to the temporary increase in volume associated with the conversion, there is an increased risk of operational issues. The Company increased resources, training and established special procedures to mitigate the risk.

Asia-Pacific. Revenues decreased to $62.6 million in 2007 from $67.0 million in 2006, a decrease of 7% (9% on a constant currency basis). This decrease was primarily due to the loss of Australia’s largest customer during the second quarter of 2006, partially offset by stronger performance in Hong Kong, Taiwan and Japan.

The Company restructured the Australian operation in 2006 after the loss of the customer and recorded charges of $4.6 million. The charges principally related to employee severance payments and lease obligations for closed branches. Operating profit in 2007 was slightly lower than 2006, excluding the restructuring charges.

2006

Overview

Revenues at Brink’s were 11% higher in 2006 compared to 2005 primarily as a result of a combination of the effects of Organic Revenue Growth and acquisitions of new operations. Operating profit in 2006 was higher than 2005 largely as a result of:

strong performance in Latin America, particularly in Venezuela, Brazil and Colombia,

improved margins in the U.S. on lower pension and other benefits expenses, and

lower costs in EMEA including restructuring and severance expenses and improved margins in some operations, particularly France.

Supplemental Revenue Analysis

	Year Ended		% change
(In millions)	December 31,		from 2005

2005 Revenues	$	2,113.3
Effects on revenue of:
Organic Revenue Growth		173.5		8
Acquisitions and dispositions, net		39.3		2
Changes in currency exchange rates		28.2		1

2006 Revenues	$	2,354.3		11

North America

Revenues increased in 2006 compared to 2005 primarily as the result of increased volumes in armored transportation, Global Services and Cash Logistics. Operating profit in 2006 was higher than 2005, partially as a result of higher revenues, but primarily as a result of lower expenses related to pensions and other employee benefits in the U.S.

Pension expense was $17.3 million lower during 2006 as a result of the Company’s decision to freeze U.S. defined benefit pension plan benefits at December 31, 2005. This decrease was partially offset by a $5.9 million increase in the expense associated with the U.S. defined contribution plans in 2006 as these benefits were enhanced effective January 1, 2006.

International

Revenues increased in 2006 over 2005 in all regions except for Asia-Pacific. Increased revenue in EMEA was primarily the result of Organic Revenue Growth and acquisitions. Revenue increases in Latin America were primarily due to Organic Revenue Growth, including the effects of inflation. The revenue decrease in Asia-Pacific was primarily due to the loss of a major customer in Australia during the second quarter of 2006. International operating profit in 2006 was higher due to the effects of strong volumes in EMEA and Latin America and lower restructuring costs.

EMEA. Revenues increased to $1,003.1 million in 2006 from $908.4 million in 2005, an increase of $94.7 million or 10% (9% on a constant currency basis) largely as a result of Organic Revenue Growth and acquisitions. In addition, 2006 revenues were affected by competitive pressures. Brink’s acquired operations in:

Mauritius in the second quarter of 2006

Poland, Hungary, and the Czech Republic (sold in January 2007) in the second quarter of 2005

Luxembourg, Scotland (sold with the United Kingdom domestic cash handling operations in 2007) and Ireland in the first quarter of 2005

These acquisitions increased revenues by approximately $36 million in 2006 over 2005 but did not have a significant impact on operating profit.

Operating profit increased approximately $23 million in 2006 compared to 2005 due to:

lower restructuring and severance expenses which had been primarily recorded in Belgium and the Netherlands in 2005. The actions leading to such charges in 2005 improved operating profit in 2006

improved operations in France

Latin America. Revenues increased to $454.2 million in 2006 from $355.1 million in 2005, an increase of 28% (26% on a constant currency basis). This increase was due primarily to price increases in economies with relatively higher levels of inflation and higher volumes, particularly in Venezuela, Brazil, Colombia, Argentina and Chile. The increase in volumes was a reflection of the overall improvement in Latin American economies.

Operating profit in 2006 was 67% higher than 2005 due to the above-mentioned volume increases, and cost reduction and productivity improvements across the region. The increase in operating profit in the region was also bolstered by pricing improvement in Brazil.

Asia-Pacific. Revenues decreased to $67.0 million in 2006 from $71.6 million in 2005, a decrease of 6% (6% on a constant currency basis). This decrease was primarily due to the loss of a major customer in Australia, partially offset by stronger performance of the Global Service operations in Hong Kong and Japan. The Company took actions to restructure the Australian operation in 2006 and recorded charges of $4.6 million. The charges principally related to paying or accruing employee severance payments and lease obligations for closed branches. Excluding the restructuring charges, operating profit in 2006 was about the same as 2005.

Brink’s Home Security

Executive Overview

BHS has reported strong growth in revenues and operating profit for several years due to its ability to attract and retain customers through brand reputation and quality service while operating as efficiently as possible consistent with the desired level of service.

In order to increase efficiency and effectiveness, BHS focuses on controlling initial marketing and installation costs by matching sales representative staffing levels with the number of sales opportunities and the size of the technician workforce with available installation volume. BHS then strives to keep customer service and monitoring costs low without detracting from high-quality service levels.

The Company believes customer retention is driven by disciplined customer selection practices and high customer service levels. In order to obtain customers who are less likely to disconnect, the Company seeks to attract customers with solid credit scores and the willingness to pay reasonable up-front fees. Once there is agreement to install an alarm system, the Company provides a high-quality installation followed by continuing high-quality customer service and alarm monitoring. BHS believes its disconnect rate benefits from consistently following this strategy.

The Company believes that the performance of the U.S. economy may affect the performance of BHS. However, the Company believes this effect is not as significant as it is for industries with close ties to national economic performance. Since more household moves take place during the second and third quarters of each year, the disconnect rate and related expenses are typically higher in those quarters than in the first and fourth quarters.

Summary of Brink’s Home Security’s Results

	Years Ended December 31,									% change
(In millions)	2007			2006			2005			2007			2006

Revenues	$	484.4			439.0			392.1			10			12

Operating Profit
Recurring services (a)		206.4			184.3			167.5			12			10
Investment in new subscribers (b)		(92.2	)		(84.0	)		(80.1	)		10			5
	$	114.2			100.3			87.4			14			15

Monthly recurring revenues (c)	$	37.2			33.1			29.1			12			14

Cash Flow Information
Depreciation and amortization (d)	$	77.7			67.6			58.1			15			16
Impairment charges from subscriber disconnects		50.4			47.1			45.2			7			4
Amortization of deferred revenue (e)		(34.2	)		(31.2	)		(29.5	)		10			6
Deferral of subscriber acquisition costs
(current year payments)		(23.8	)		(24.4	)		(22.9	)		(2	)		7
Deferral of revenue from new subscribers
(current year receipts)		47.4			44.9			40.7			6			10
Capital expenditures:
Security systems	$	(165.2	)		(150.1	)		(138.3	)		10			9
Other (f)		(12.6	)		(13.8	)		(23.9	)		(9	)		(42	)
Capital expenditures	$	(177.8	)		(163.9	)		(162.2	)		8			1

(a)	Reflects operating profit generated from the existing subscriber base including the amortization of deferred revenues.

(b)	Primarily marketing and selling expenses, net of the deferral of subscriber acquisition costs (primarily a portion of sales commissions) incurred in the acquisition of new subscribers.

(c)	This measure is reconciled below under the caption “Reconciliation of Non-GAAP Measures – Monthly Recurring Revenues.”

(d)	Includes amortization of deferred subscriber acquisition costs.

(e)	Includes amortization of deferred revenue related to active subscriber accounts as well as recognition of deferred revenue related to subscriber accounts that disconnect.

(f)

Other capital expenditures include the construction costs and equipment purchased for the Knoxville, Tennessee, facility ($6.1 million in 2006 and $7.4 million in 2005), which became operational in early 2006. Other capital expenditures also include $10.2 million in 2005 for the purchase of BHS’s headquarters in Irving, Texas, which was formerly leased.

Overview

Operating profit comprises recurring services minus the cost of the investment in new subscribers. Recurring services reflect the monthly monitoring and service earnings generated from the existing subscriber base, including the amortization of deferred revenues. Non cash impairment charges from subscriber disconnects, and depreciation and amortization expenses, including the amortization of deferred subscriber acquisition costs, are also charged to recurring services. Operating profits from recurring services are affected by the size of the subscriber base, the amount of operational costs including depreciation, the level of subscriber disconnect activity and changes in the average monthly monitoring fee per subscriber.

Investment in new subscribers is the net expense (primarily marketing and selling expenses) incurred to add to the subscriber base every year. The amount of the investment in new subscribers charged to income may be influenced by several factors, including the growth rate of new subscriber installations and the level of costs incurred to attract new subscribers. As a result, increases in the rate of investment (the addition of new subscribers) may have a negative effect on current operating profit but a positive impact on long-term operating profit, cash flow and economic value.

Capital expenditures are primarily for the equipment, labor and overhead costs associated with system installations for new subscribers.

Subscriber Activity

	Years Ended December 31,						% change
(Subscriber data in thousands)	2007		2006		2005		2007	2006

Number of subscribers:
Beginning of period		1,124.9		1,018.8		921.4