Edgar Filing: BRINKS CO

form_10-q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2008

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.)

1801 Bayberry Court, Richmond, Virginia 23226-8100

(Address of principal executive offices) (Zip Code)

(804) 289-9600

(Registrant's telephone number, including area code)

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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer, accelerated filer and smaller reporting company” in Rule 12b-2 of the Exchange Act.

(Check one): Large Accelerated Filer x Accelerated Filer o Non-Accelerated Filer o Smaller Reporting Company 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 October 29, 2008, 45,769,171 shares of $1 par value common stock were outstanding.

Part I - Financial Information

Item 1. Financial Statements

THE BRINK’S COMPANY

and subsidiaries

Consolidated Balance Sheets

(Unaudited)

	September 30,			December 31,
(In millions)	2008			2007

ASSETS

Current assets:
Cash and cash equivalents	$	257.7			196.4
Accounts receivable, net		513.1			491.9
Prepaid expenses and other		115.7			93.5
Deferred income taxes		59.0			63.9
Total current assets		945.5			845.7

Property and equipment, net		1,181.4			1,118.4
Goodwill		140.4			141.3
Deferred income taxes		84.6			90.1
Other		208.5			198.8

Total assets	$	2,560.4			2,394.3


LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Short-term borrowings	$	6.2			12.4
Current maturities of long-term debt		11.6			11.0
Accounts payable		153.8			171.9
Income taxes payable		16.1			14.9
Accrued liabilities		479.9			429.7
Total current liabilities		667.6			639.9

Long-term debt		144.5			89.2
Accrued pension costs		52.3			58.0
Postretirement benefits other than pensions		101.7			111.9
Deferred revenue		182.0			178.6
Deferred income taxes		33.1			29.8
Minority interest		84.6			68.2
Other		160.2			172.4
Total liabilities		1,426.0			1,348.0

Commitments and contingencies (notes 4, 5, 8 and 11)

Shareholders’ equity:
Common stock		45.8			48.4
Capital in excess of par value		486.2			452.6
Retained earnings		749.0			675.8
Accumulated other comprehensive loss		(146.6	)		(130.5	)

Total shareholders’ equity		1,134.4			1,046.3

Total liabilities and shareholders’ equity	$	2,560.4			2,394.3

See accompanying notes to consolidated financial statements.

THE BRINK’S COMPANY

and subsidiaries

Consolidated Statements of Operations

(Unaudited)

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
(In millions, except per share amounts)	2008			2007			2008			2007

Revenues	$	948.8			817.0			2,801.1			2,336.2

Cost and Expenses:
Cost of revenues		718.6			624.7			2,112.3			1,791.8
Selling, general and administrative expenses		146.8			130.0			432.9			363.0
Total expenses		865.4			754.7			2,545.2			2,154.8
Other operating income (expense), net		(4.5	)		(1.8	)		(5.1	)		2.6

Operating profit		78.9			60.5			250.8			184.0

Interest expense		(3.3	)		(2.5	)		(9.1	)		(8.0	)
Interest and other income, net		4.6			3.0			9.7			6.7
Income from continuing operations before income taxes and
minority interest		80.2			61.0			251.4			182.7
Provision for income taxes		26.4			27.3			78.7			74.0
Minority interest		7.5			3.7			29.9			14.5

Income from continuing operations		46.3			30.0			142.8			94.2

Income (loss) from discontinued operations, net of income taxes		1.7			(4.1	)		4.0			(11.3	)

Net income	$	48.0			25.9			146.8			82.9

Earnings per common share
Basic:
Continuing operations	$	1.01			0.64			3.09			2.02
Discontinued operations		0.03			(0.09	)		0.08			(0.24	)
Net income		1.04			0.56			3.18			1.78

Diluted:
Continuing operations	$	1.00			0.64			3.06			2.00
Discontinued operations		0.03			(0.08	)		0.08			(0.24	)
Net income		1.03			0.55			3.15			1.76

Weighted-average common shares outstanding
Basic		46.1			46.6			46.2			46.5
Diluted		46.6			47.1			46.7			47.0

Cash dividends paid per common share	$	0.10			0.10			0.30			0.2625

See accompanying notes to consolidated financial statements.

THE BRINK’S COMPANY

and subsidiaries

Consolidated Statement of Shareholders’ Equity

Nine months ended September 30, 2008

(Unaudited)

							Capital						Accumulated
							in Excess						Other
				Common			of Par			Retained			Comprehensive
(In millions)	Shares			Stock			Value			Earnings			Loss			Total

Balance as of December 31, 2007		48.4		$	48.4			452.6			675.8			(130.5	)		1,046.3

Net income		-			-			-			146.8			-			146.8
Other comprehensive loss		-			-			-			-			(16.1	)		(16.1	)
Shares repurchased and retired:														-
Termination of The Brink’s Company
Employee Benefits Trust (a)		(1.7	)		(1.7	)		1.7			-			-			-
Other		(1.0	)		(1.0	)		(11.0	)		(59.8	)		-			(71.8	)
Dividends		-			-			-			(13.6	)		-			(13.6	)
Share-based compensation:
Stock options:
Compensation expense		-			-			8.3			-			-			8.3
Consideration received from
exercise of stock options		0.1			0.1			18.5			-			-			18.6
Other share-based benefit programs		-			-			3.7			(0.2	)		-			3.5
Excess tax benefit of stock compensation		-			-			12.4			-			-			12.4

Balance as of September 30, 2008		45.8		$	45.8			486.2			749.0			(146.6	)		1,134.4

(a)	The Brink’s Company Employee Benefits Trust was terminated in September 2008 and 1.7 million shares then held by the trust were repurchased and retired – see note 7.

See accompanying notes to consolidated financial statements.

THE BRINK’S COMPANY

and subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months
	Ended September 30,
(In millions)	2008			2007

Cash flows from operating activities:
Net income	$	146.8			82.9
Adjustments to reconcile net income to net cash provided (used) by operating activities:
(Income) loss from discontinued operations, net of tax		(4.0	)		11.3
Depreciation and amortization		156.5			137.2
Impairment charges:
Subscriber disconnects		41.4			37.9
Other		0.5			2.1
Amortization of deferred revenue		(30.5	)		(25.6	)
Minority interest		29.9			14.5
Deferred income taxes		10.6			26.6
Provision for uncollectible accounts receivable		10.6			8.1
Compensation expense for stock options		8.3			9.7
Other operating, net		0.3			1.6
Postretirement expense (credits), net of funding:
Pension		(9.0	)		(7.6	)
Other than pension		(3.7	)		(4.2	)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		(47.4	)		(17.9	)
Accounts payable, income taxes payable and accrued liabilities		55.1			36.6
Deferral of subscriber acquisition cost		(17.9	)		(18.0	)
Deferral of revenue from new subscribers		34.3			35.8
Prepaid and other current assets		(25.0	)		(13.9	)
Other, net		(12.5	)		7.3
Discontinued operations, net		-			(3.5	)
Net cash provided by operating activities		344.3			320.9

Cash flows from investing activities:
Capital expenditures		(254.7	)		(228.6	)
Acquisitions		(6.1	)		(11.3	)
Other, net		3.3			8.6
Discontinued operations, net		-			0.3
Net cash used by investing activities		(257.5	)		(231.0	)

Cash flows from financing activities:
Revolving credit facilities borrowings, net		59.8			(1.8	)
Long term debt:
Additions		-			1.1
Repayments		(8.6	)		(9.7	)
Short-term repayments, net		(6.0	)		(24.5	)
Repurchase shares of common stock of The Brink’s Company		(70.3	)		-
Dividends to:
Shareholders of The Brink’s Company		(13.6	)		(11.9	)
Minority interest holders in subsidiaries		(9.9	)		(6.9	)
Proceeds from exercise of stock options		16.2			6.8
Excess tax benefits associated with stock compensation		11.7			4.2
Other, net		-			(0.2	)
Discontinued operations, net		-			(14.8	)
Net cash used by financing activities		(20.7	)		(57.7	)

Effect of exchange rate changes on cash		(4.8	)		6.0

Cash and cash equivalents:
Increase		61.3			38.2
Balance at beginning of period		196.4			137.2
Balance at end of period	$	257.7			175.4

See accompanying notes to consolidated financial statements.

THE BRINK’S COMPANY

and subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 – Basis of presentation

The Brink’s Company (along with its subsidiaries, the “Company”) has two operating segments:

· Brink’s, Incorporated (“Brink’s”)

· Brink’s Home Security, Inc. (“BHS”)

The Company’s unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting and applicable quarterly reporting regulations of the SEC. Accordingly, the unaudited consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements. Actual results could differ materially from those estimates. The most significant estimates used by management are related to goodwill and other long-lived assets, pension and other postretirement benefit obligations, legal contingencies and income taxes.

Spin-Off of Brink’s Home Security Holdings, Inc.

On September 12, 2008, the Company announced a distribution date of October 31, 2008, for the 100% spin-off of Brink’s Home Security Holdings, Inc. (“BHSH”), a newly formed subsidiary of the Company that will hold the shares of BHS at the time of the spin-off. The spin-off of BHSH will be in the form of a tax-free stock distribution to The Brink’s Company shareholders of record as of the close of business on October 21, 2008. The Company will distribute one share of BHSH common stock for every share of its common stock outstanding. BHSH filed a Registration Statement on Form 10 with the Securities and Exchange Commission (the “SEC”) which was declared effective by the SEC on October 8, 2008. The Form 10 provides information about BHSH and the spin-off, including historical and pro forma financial information. BHSH will be publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “CFL,” reflecting its corporate mission of creating “Customers for Life.” The Company will remain a public company traded on the NYSE and will continue to use the ticker symbol “BCO.” The Company will continue to operate Brink's, its secure transportation and cash management unit.

After the spin-off, the Company will report BHS’ results of operations, including previously reported results and corporate expenses directly related to the spin-off within discontinued operations in its annual financial statements for 2008 to be filed with the SEC on Form 10-K.

In connection with the spin-off, Brink’s Network, Incorporated, a subsidiary of the Company, will enter into a Brand Licensing Agreement (the “Brand Licensing Agreement”) with BHSH. Under the Brand Licensing Agreement, BHSH will license the rights to use certain trademarks, including trademarks that contain the word “Brink’s”, in the United States, Canada and Puerto Rico. In exchange for these rights, BHSH has agreed to pay a licensing fee equal to 1.25% of its net revenues during the period after the spin-off until the expiration date of the agreement. The license will expire on October 31, 2011, subject to earlier termination upon the occurrence of certain events.

The Company will also enter into a Non-Compete Agreement (the “Non-Compete Agreement”) with BHSH, which will expire on October 31, 2013, pursuant to which the Company will agree not to compete with BHSH in the United States, Canada and Puerto Rico with respect to certain restricted activities specified in the Non-Compete Agreement in which BHSH currently is, or is currently planning to be, engaged.

As described in the Form 10, the Company will contribute $50 million in cash to BHSH at the time of the spin-off. The Company will also forgive all the existing intercompany debt owed by BHSH to the Company and its subsidiaries as of the distribution date.

Accounting Corrections

During the second quarter of 2008, the Company determined that the amount of certain revenue and expenses recognized between December 1, 2001, and March 31, 2008, related to security systems disconnect at BHS had been understated. The correction of these understatements increased BHS revenues by $2.0 million, BHS operating profit by $2.5 million and consolidated income from continuing operations by $1.6 million in the second quarter of 2008. These corrections had no effect on the third quarter of 2008, and the effect of these corrections was not material to any prior quarter or annual period.

Recently Adopted Accounting Standards

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) 157, Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosure of fair value measurements. SFAS 157 emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and states that a fair value measurement should be determined based on assumptions that market participants would use in pricing the asset or liability.

In February 2008, the FASB issued FASB Staff Position 157-2, Partial Deferral of the Effective Date of SFAS 157, which delayed the effective date of SFAS 157 for all nonrecurring fair value measurements of nonfinancial assets and nonfinancial liabilities until January 1, 2009. The Company is currently evaluating the potential impact, if any, on its non-financial assets and liabilities. The Company adopted SFAS 157, effective January 1, 2008 for financial assets and financial liabilities. The implementation of SFAS 157, as it relates to the Company’s financial assets and financial liabilities did not have a material effect on the Company’s results of operations or financial position.

The Company adopted SFAS 159, The Fair Value Option for Financial Assets and Liabilities – Including an amendment of FASB Statement No. 115, effective January 1, 2008. SFAS 159 permits entities to choose to measure certain financial assets and liabilities at fair value (the “fair-value option”). Unrealized gains and losses, arising subsequent to the election of the fair-value option, are reported in earnings. The Company did not elect the fair-value option for any existing assets or liabilities upon adoption. Therefore, the implementation of SFAS 159 did not have an effect on the Company’s results of operations or financial position.

In December 2007, the FASB issued SFAS 141R, Business Combinations, which will change the accounting for business combinations. Under SFAS 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS 141R will also change the accounting treatment and disclosures with respect to certain specific items in a business combination. SFAS 141R applies to the Company prospectively for business combinations occurring on or after January 1, 2009. SFAS 141R will have an impact on accounting for business combinations, but the effect will depend on the terms of future acquisitions.

In December 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated Financial Statements – An Amendment of ARB No. 51. SFAS 160 establishes new accounting and reporting standards for the noncontrolling interest, also known as minority interest, in a subsidiary and for the deconsolidation of a subsidiary. This Statement clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS 160 is effective for the Company beginning in 2009. The Company is still assessing the potential effect of the adoption of SFAS 160 on its results of operations or financial position.

Note 2 – Segment information

The Company conducts business in two operating segments: Brink’s and BHS. These segments are identified by the Company based on how resources are allocated and operating decisions are made. Management evaluates performance and allocates resources based on operating profit or loss, excluding corporate allocations.

Brink’s 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 – money processing, supply chain management of cash; from point-of-sale through transport, vaulting and bank deposit

Guarding services, including airport security

Secure Data Solutions – transporting, storing and destroying sensitive information

Brink’s operates in approximately 50 countries.

BHS offers monitored security services in North America primarily 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.

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
(In millions)	2008			2007			2008			2007

Revenues:
Brink’s	$	813.4			692.7			2,404.0			1,977.8
BHS		135.4			124.3			397.1			358.4
Revenues	$	948.8			817.0			2,801.1			2,336.2

Operating profit:
Brink’s	$	68.1			53.0			202.7			146.9
BHS		32.2			25.5			99.7			84.5
Business segments		100.3			78.5			302.4			231.4
Corporate		(21.9	)		(14.3	)		(51.3	)		(36.8	)
Former operations		0.5			(3.7	)		(0.3	)		(10.6	)
Operating profit	$	78.9			60.5			250.8			184.0

Corporate expenses in the third quarter of 2008 included $4.3 million of foreign currency transaction losses related to the remeasurement of a euro-denominated intercompany dividend.

Note 3 – Earnings per share

Shares used to calculate earnings per share were as follows:

	Three Months				Nine Months
	Ended September 30,				Ended September 30,
(In millions)	2008		2007		2008		2007

Weighted-average common shares outstanding:
Basic (a)		46.1		46.6		46.2		46.5
Effect of dilutive stock options		0.5		0.5		0.5		0.5
Diluted		46.6		47.1		46.7		47.0

Antidilutive stock options excluded from denominator		0.4		0.7		0.3		0.3

(a) The Company has deferred compensation plans for its employees and directors denominated in common stock units. Each unit represents oneshare of common stock. The number of shares used to calculate basic earnings per share in the three months ended September 30, 2008,includes 0.5 million weighted-average shares (0.6 million weighted-average shares for the nine months ended September 30, 2008) related to units of deferred compensation held by employees and directors. The number of shares used to calculate basic earnings per share in the three months ended September 30, 2007, includes 1.0 million weighted-average shares (1.0 million weighted-average shares for the nine months ended September 30, 2007) related to units of deferred compensation held by employees and directors.

Shares of the Company’s common stock held by The Brink’s Company Employee Benefits Trust that have not been allocated to participants under the Company’s various benefit plans are excluded from earnings per share calculations since they are treated as treasury shares for the calculation of earnings per share. The trust held 1.9 million unallocated shares at September 30, 2007. As described in note 7, the trust was terminated in September 2008.

Note 4 – Employee and retiree benefits

Pension plans

The Company has various defined benefit plans for eligible employees.

The components of net periodic pension cost (credit) for the Company’s pension plans were as follows:

	U.S. Plans						Non-U.S. Plans						Total
(In millions)	2008			2007			2008			2007			2008			2007

Three months ended September 30,

Service cost	$	-			-			2.6			2.3			2.6			2.3
Interest cost on projected benefit obligation		11.5			11.1			3.3			2.6			14.8			13.7
Return on assets – expected		(14.7	)		(13.3	)		(2.9	)		(2.5	)		(17.6	)		(15.8	)
Amortization of losses		0.5			3.5			0.9			0.7			1.4			4.2
Net periodic pension cost (credit)	$	(2.7	)		1.3			3.9			3.1			1.2			4.4

Nine months ended September 30,

Service cost	$	-			-			7.6			6.6			7.6			6.6
Interest cost on projected benefit obligation		34.4			33.0			9.9			7.4			44.3			40.4
Return on assets – expected		(44.2	)		(40.0	)		(9.0	)		(7.2	)		(53.2	)		(47.2	)
Amortization of losses		1.2			9.7			2.8			2.2			4.0			11.9
Net periodic pension cost (credit)	$	(8.6	)		2.7			11.3			9.0			2.7			11.7

On September 7, 2007, the Company made a voluntary contribution to its primary U.S. pension plan of $13 million. The Company does not expect to make any contributions to the primary U.S. pension plan during 2008.

Postretirement benefits other than pensions

Company-Sponsored Plans

The Company provides postretirement health care benefits (the “Company-sponsored plans”) for eligible current and former employees in the U.S. and Canada, including former employees of the former coal operations (the “coal-related” plans).

The components of net periodic postretirement cost (credit) related to Company-sponsored plans were as follows:

	Coal-related plans						Other plans						Total
(In millions)	2008			2007			2008			2007			2008			2007

Three months ended September 30,

Service cost	$	-			-			-			0.1			-			0.1
Interest cost on accumulated postretirement
benefit obligations		7.8			7.8			0.2			0.1			8.0			7.9
Return on assets – expected		(9.7	)		(9.7	)		-			-			(9.7	)		(9.7	)
Amortization of losses (gains)		2.0			2.8			(0.1	)		(0.1	)		1.9			2.7
Net periodic postretirement cost	$	0.1			0.9			0.1			0.1			0.2			1.0

Nine months ended September 30,

Service cost	$	-			-			0.1			0.2			0.1			0.2
Interest cost on accumulated postretirement
benefit obligations		23.5			23.5			0.5			0.5			24.0			24.0
Return on assets – expected		(29.0	)		(29.0	)		-			-			(29.0	)		(29.0	)
Amortization of losses (gains)		6.0			8.6			(0.3	)		(0.2	)		5.7			8.4
Curtailment gain		-			-			(2.0	)		-			(2.0	)		-
Net periodic postretirement cost (credit)	$	0.5			3.1			(1.7	)		0.5			(1.2	)		3.6

In January 2008, Brink’s announced the freezing of the Canadian postretirement benefit plan. Some employees will not meet the eligibility requirement to receive benefits. As a result, the Company recorded a $2.0 million curtailment gain in the first quarter of 2008.

Pneumoconiosis (Black Lung) Obligations

The Company is self-insured with respect to almost all of its black lung obligations. The components of net periodic postretirement benefit cost related to black lung obligations were as follows:

	Three Months				Nine Months
	Ended September 30,				Ended September 30,
(In millions)	2008		2007		2008		2007

Interest cost on accumulated postretirement
benefit obligations	$	0.6		0.7		1.9		2.0
Amortization of losses		0.1		0.5		0.4		1.2
Net periodic postretirement cost	$	0.7		1.2		2.3		3.2

Note 5 – Income taxes

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2008			2007			2008			2007

Continuing operations
Provision for income taxes (in millions)	$	26.4			27.3			78.7			74.0
Effective tax rate		32.9	%		44.7	%		31.3	%		40.5	%

Discontinued operations
Provision (benefit) for income taxes (in millions)	$	0.3			-			1.2			(1.6	)
Effective tax rate		15.0	%		-			23.1	%	NM

The effective income tax rate on continuing operations in the first nine months of 2008 was lower than the 35% U.S. statutory tax rate primarily due to the geographical mix of earnings and an $8.8 million valuation allowance release for non-U.S. jurisdictions, partially offset by a $7.5 million tax charge resulting from the decision to spin off BHS and $3.9 million of state tax expense.

The effective income tax rate on continuing operations in the first nine months of 2007 was higher than the 35% U.S. statutory tax rate primarily due to a $6.1 million increase in the valuation allowances for non-U.S. jurisdictions and $2.4 million of state tax expense.

The Company establishes or reverses valuation allowances for non-U.S. deferred tax assets depending on all available information including historical and expected future operating performance of its subsidiaries. Changes in judgment about the future realization of deferred tax assets could result in significant adjustments to the valuation allowances.

Note 6 – Share-based compensation plans

The fair value of options granted during the 2008 and 2007 periods was calculated using the Black Scholes option-pricing model and the following estimated weighted-average assumptions:

	Three and Nine Months
	Ended September 30,
Options Granted	2008			2007

Number of shares underlying options, in thousands		541			636
Weighted-average exercise price per share	$	64.24			63.60

Assumptions used to estimate fair value:
Expected dividend yield:
Weighted-average		0.6	%		0.6	%
Range		0.6	%		0.6	%
Expected volatility:
Weighted-average		26	%		27	%
Range		26% - 27	%		26% - 31	%
Risk-free interest rate:
Weighted-average		2.8	%		4.9	%
Range		2.0% - 3.1	%		4.9% - 5.0	%
Expected term in years:
Weighted-average		3.6			3.8
Range		2.1 - 5.4			2.1 - 6.1

Weighted-average fair value estimates at grant date:
In millions	$	7.8			10.7
Fair value per share	$	14.39			16.84

Nonvested Shares

	Number of		Weighted-Average Grant-Date
	Shares		Fair Value

Balance as of January 1, 2008		-	$	-
Granted (a)		43,316		66.27
Balance as of September 30, 2008		43,316	$	66.27

(a)	Includes 30,259 restricted stock units under the 2005 Equity Incentive Plan and 13,057 deferred stock units under the Non-Employee Directors’ Equity Plan.

Note 7 – Common stock

On September 14, 2007, the Company’s board of directors authorized the purchase of up to $100 million of the Company’s outstanding common shares. Under the program, the Company used $56.3 million to purchase 883,800 shares of common stock between December 5, 2007, and May 2, 2008, at an average price of $63.67 per share. As of September 30, 2008, the Company had $43.7 million under the program available to purchase shares. The repurchase authorization does not have an expiration date. No shares were repurchased during the quarter ended September 30, 2008.

In September 2008, the Company terminated The Brink’s Company Employee Benefits Trust. In conjunction with the termination, the shares held by the trust were distributed to the Company, whereupon 1.7 million shares were retired.

Note 8 – Discontinued operations

	Three Months					Nine Months
	Ended September 30,					Ended September 30,
(In millions)	2008		2007			2008		2007

Brink’s United Kingdom domestic cash handling operations (a):
Gain on sale	$	-		0.7			-		0.7
Results of operations		-		(3.1	)		-		(13.9	)
Adjustments to contingent liabilities of former operations		2.0		(1.7	)		5.2		0.3
Income (loss) from discontinued operations before income taxes		2.0		(4.1	)		5.2		(12.9	)
Provision (benefit) for income taxes		0.3		-			1.2		(1.6	)
Income (loss) from discontinued operations	$	1.7		(4.1	)		4.0		(11.3	)

(a)

Brink’s United Kingdom domestic cash handling operations were sold in August 2007. Revenues of the operations were $5.8 million for the third quarter of 2007 and $28.9 million for the first nine months of 2007. Results of Brink’s United Kingdom domestic cash handling operations included a $7.5 million asset impairment charge in the nine month period ended September 30, 2007.

Note 9 – Supplemental cash flow information

	Nine Months
	Ended September 30,
(In millions)	2008		2007

Cash paid for:
Interest	$	7.7		7.2
Income taxes, net		56.4		48.4

Note 10 – Comprehensive income

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
(In millions)	2008			2007			2008			2007

Net income	$	48.0			25.9			146.8			82.9
Other comprehensive income (loss), net of reclasses and taxes:
Benefit plan experience loss		1.9			7.1			5.8			15.9
Benefit plan prior service cost		0.4			0.3			1.1			1.0
Foreign currency translation adjustments		(47.3	)		16.2			(20.5	)		27.9
Marketable securities		(1.6	)		(0.1	)		(2.5	)		0.9
Other comprehensive income (loss)		(46.6	)		23.5			(16.1	)		45.7
Comprehensive income	$	1.4			49.4			130.7			128.6

Note 11 – Commitments and contingent matters

Operating leases

The Company has made residual value guarantees of approximately $71.9 million at September 30, 2008, related to operating leases, principally for trucks and other vehicles. The Company estimates that approximately $8.9 million of these residual value guarantees will remain solely with BHSH after the spin-off occurs on October 31, 2008.

BAX Global litigation

BAX Global is defending a claim related to the apparent diversion by a third party of goods being transported for a customer. Although BAX Global is defending this claim vigorously and believes that its defenses have merit, it is possible that this claim ultimately may be decided in favor of the claimant. If so, the Company believes that the ultimate amount of reasonably possible unaccrued losses could range from $0 to $14 million. The Company has contractually indemnified the purchaser of BAX Global for this contingency.

Value-added taxes (“VAT”) and customs duties

During 2004, the Company determined that one of its non-U.S. Brink’s business units had not paid customs duties and VAT with respect to the importation of certain goods and services. The Company was advised that civil and criminal penalties could be asserted for the non-payment of these customs duties and VAT. Although no penalties have been asserted to date, they could be asserted at any time. The business unit has provided the appropriate government authorities with an accounting of unpaid customs duties and VAT and has made payments covering its calculated unpaid VAT. The Company believes that the range of reasonably possible losses is between $0.4 million and $3.0 million for potential penalties on unpaid VAT and has accrued $0.4 million. The Company believes that the range of possible losses for unpaid customs duties and associated penalties, none of which has been accrued, is between $0 and $35 million. The Company believes that the assertion of the penalties on unpaid customs duties would be excessive and would vigorously defend against any such assertion. The Company does not expect to be assessed interest charges in connection with any penalties that may be asserted. The Company continues to diligently pursue the resolution of this matter and, accordingly, the Company’s estimate of the potential losses could change materially in future periods. The assertion of potential penalties may be material to the Company’s financial position and results of operations.

BHS Patent Lawsuits

On September 26, 2008, and September 29, 2008, two patent infringement lawsuits were filed against BHS and numerous other defendants. These lawsuits have not yet been served. Based on a preliminary analysis of all of the information currently available, the Company is not yet able to conclude that a loss is probable or remote with respect to these cases; therefore, the Company has concluded that the risk of loss is reasonably possible, as required by applicable accounting rules. The Company is not able to estimate the range of potential loss for these matters. BHS intends to utilize all available defenses to defend vigorously against these claims.

Other

The Company is involved in various lawsuits and claims in the ordinary course of business. The Company is not able to estimate the range of losses for some of these matters. The Company has recorded accruals for losses that are considered probable and reasonably estimable. The Company does not believe that the ultimate disposition of any of these matters will have a material adverse effect on its liquidity, financial position or results of operations.

THE BRINK’S COMPANY

and subsidiaries

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The Brink’s Company (along with its subsidiaries, the “Company”) has two operating 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 primarily for owner-occupied, single-family residences. To a lesser extent, BHS offers security services for commercial and multi-family properties. BHS typically installs and owns the on-site security systems and charges fees to monitor and service the systems.

The Company has significant liabilities associated with its former coal operations and expects to have ongoing expenses and cash outflows related to its former coal operations.

RESULTS OF OPERATIONS

Overview

	Three Months					Nine Months
	Ended September 30,					Ended September 30,
(In millions)	2008		2007			2008		2007

Income (loss) from:
Continuing operations	$	46.3		30.0			142.8		94.2
Discontinued operations		1.7		(4.1	)		4.0		(11.3	)
Net income	$	48.0		25.9			146.8		82.9

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

Income from continuing operations increased by 54% in the third quarter of 2008 versus the third quarter of the prior year primarily due to improved performance at Brink’s and BHS and a lower effective tax rate. Higher corporate expenses were partially offset by lower expenses related to former operations. Brink’s operating profit increased in the third quarter of 2008 from the prior-year period primarily due to higher operating profit in Latin America and Europe, Middle East, and Africa (“EMEA”), partially offset by lower operating profit in North America. BHS continued a trend of reporting higher operating profit.

Income from continuing operations increased by 52% in the first nine months of 2008 versus the same period of the prior year primarily due to improved performance at Brink’s and BHS and a lower effective tax rate. Higher corporate expenses were partially offset by lower expenses related to former operations. Brink’s operating profit increased in the first nine months of 2008 from the prior-year period primarily due to higher operating profit in Latin America and EMEA, partially offset by lower operating profit in North America. BHS continued a trend of reporting higher operating profit.

As mentioned above, BHSH is scheduled to be spun-off on October 31, 2008. After the spin-off, the Company will reclassify the results of BHS from continuing operations to discontinued operations in its 2008 Form 10-K. All prior-year and current-year periods (through the date of spin-off) will be reclassified.

Consolidated Review

	Three Months									Nine Months
	Ended September 30,						%			Ended September 30,						%
(In millions)	2008			2007			change			2008			2007			change

Revenues:
Brink’s	$	813.4			692.7			17			2,404.0			1,977.8			22
BHS		135.4			124.3			9			397.1			358.4			11
Revenues	$	948.8			817.0			16			2,801.1			2,336.2			20

Operating profit:
Brink’s	$	68.1			53.0			28			202.7			146.9			38
BHS		32.2			25.5			26			99.7			84.5			18
Business segments		100.3			78.5			28			302.4			231.4			31
Corporate		(21.9	)		(14.3	)		53			(51.3	)		(36.8	)		39
Former operations		0.5			(3.7	)	NM				(0.3	)		(10.6	)		(97	)

Operating profit		78.9			60.5			30			250.8			184.0			36

Interest expense		(3.3	)		(2.5	)		32			(9.1	)		(8.0	)		14
Interest and other income, net		4.6			3.0			53			9.7			6.7			45
Income from continuing operations before
income taxes and minority interest		80.2			61.0			31			251.4			182.7			38
Provision for income taxes		26.4			27.3			(3	)		78.7			74.0			6
Minority interest		7.5			3.7			103			29.9			14.5			106

Income from continuing operations		46.3			30.0			54			142.8			94.2			52

Income (loss) from discontinued operations,
net of income taxes		1.7			(4.1	)	NM				4.0			(11.3	)	NM
Net income	$	48.0			25.9			85			146.8			82.9			77

COMPARISON OF RESULTS FOR THE THIRD QUARTER

Revenues - Consolidated

The Company’s consolidated revenue during the third quarter of 2008 increased from the prior-year period as a result of growth at both operating segments. Brink’s revenues in the third quarter of 2008 increased over the prior-year period due to organic revenue growth (defined below) and favorable changes in foreign currency exchange rates. Organic revenue growth includes revenues associated with the conversion project, as discussed on page 21. BHS’ revenues increased year over year primarily as a result of growth in the subscriber base and higher average monitoring rates.

Operating Profit - Consolidated

The Company’s consolidated operating profit in the third quarter of 2008 increased from the prior-year period as a result of growth from both operating segments. Brink’s operating profit improved in Latin America and EMEA, partially offset by lower operating profit in North America. Operating profit in Latin America increased significantly over the prior-year quarter as a result of improvements in operating performance in Venezuela, Brazil, Argentina and Colombia. Operating profit in EMEA was higher than the prior-year quarter as a result of improvements in operating performance in a number of countries. North American operating profit was lower than the prior-year quarter due primarily to higher labor expenses. BHS’ operating profit for the current quarter improved over the prior-year period due to higher profit from recurring services and lower legal settlement expenses, partially offset by increased investment in new subscribers.

Corporate expenses in the third quarter of 2008 included $4.3 million of foreign currency transaction losses related to the remeasurement of a euro-denominated intercompany dividend. Also, corporate expense in the third quarter of 2008 included $2 million of professional and legal costs related to the planned spin-off of BHS. For the full year, the Company expects to incur $18 million to $19 million of professional, legal and advisory fees related to the strategic reviews conducted by the Company, proxy matters and the spin-off of BHS.

Expenses related to former operations were lower in the third quarter of 2008 compared to the same period last year primarily due to lower pension and other postretirement expenses.

Recent market conditions have reduced the market value of the investments held by the Company’s retiree benefit plans. If these conditions exist as of the year-end measurement date, the Company’s 2009 net periodic pension and postretirement cost may increase from 2008 levels. Based on the market conditions as of October 2008, the Company’s 2009 expenses would increase by approximately $25 million to $30 million. The actual expense to be recognized in 2009 will be based on conditions as of December 31, 2008, and the Company will disclose the amount of projected 2009 expense in its 2008 Form 10-K.

COMPARISON OF RESULTS FOR THE NINE-MONTH PERIOD

Revenues - Consolidated

The Company’s consolidated revenue during the first nine months of 2008 increased from the prior-year period as a result of growth at both operating segments. Brink’s revenues in the first nine months of 2008 increased over the prior-year period due to organic revenue growth (defined below) and favorable changes in foreign currency exchange rates. Organic revenue growth includes revenues associated with the conversion project in Venezuela. BHS’ revenues increased year over year primarily as a result of growth in the subscriber base and higher average monitoring rates.

Operating Profit - Consolidated

The Company’s consolidated operating profit in the first nine months of 2008 increased from the prior-year period as a result of growth from both operating segments. Brink’s operating profit included significant growth in Latin America including significant operating profit from the conversion project in the first half of 2008. Operating profit in EMEA was higher than the prior-year period as a result of favorable changes in currency exchange rates and broad improvement in operating performance in a number of countries. North American operating profit was lower than the prior-year period due primarily to higher labor and legal settlement expenses. BHS’ operating profit for the current period improved due to higher profit from recurring services, partially offset by increased investment in new subscribers.

Corporate expense in the first nine months of 2008 included $11 million of professional, legal and advisory fees incurred related to the strategic reviews conducted by the Company, proxy matters and the spin-off of BHS. Corporate expenses included $4.3 million of foreign currency transaction losses related to the remeasurement of a euro-denominated intercompany dividend in the third quarter of 2008.

Expenses related to former operations were lower in the first nine months of 2008 compared to the same period last year primarily due to lower pension and other postretirement expenses.

Brink’s, Incorporated

	Three Months						Nine Months
	Ended September 30,				%		Ended September 30,				%
(In millions)	2008		2007		change		2008		2007		change

Revenues:
International	$	575.8		468.5		23		1,701.4		1,323.3		29
North America (a)		237.6		224.2		6		702.6		654.5		7
	$	813.4		692.7		17		2,404.0		1,977.8		22

Operating profit:
International