Greetings and welcome to The Brink’s Company Fourth Quarter 2011 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. Now for the company’s Safe Harbor statement. This call and the Q&A session contain forward-looking statements. Actual results could differ materially from projected or estimated results. Information regarding factors that could cause such differences is available in today’s release and in the Company’s most recent SEC filings. Information discussed on this call is representative as of today only, and Brink’s assumes no obligation to update any forward-looking statements. The call is copyrighted and may not be used without written permission from Brink’s. The Company’s earnings release was issued this morning, and is available on its website at brinks.com. It is now my pleasure to introduce your host, Ed Cunningham, Director of Investor Relations for The Brink's Company. Mr. Cunningham, you may begin.

Thank you, Rob. Good morning and thanks for joining our call. Joining me today are Interim President and CEO, Tom Schievelbein; and CFO, Joe Dziedzic. As Rob mentioned, our press release was issued before the market opened this morning. We also filed an 8-K that includes the release and slides we’re going to cover on today’s call. For those of you listening by phone, the release and slides are available on our website at brinks.com. As most of you are aware, we report results on both the GAAP and non-GAAP basis. Our comments this morning will focus primarily on the non-GAAP results, which we believe make it easier for investors to assess operating performance between 2 period. On a non-GAAP basis, earnings came in at $0.56 per share versus a very strong $0.80 last year. Revenue for the quarter grew 13% to $997 million. Organic revenue growth which excludes acquisitions, dispositions and currency items was 9% for the quarter. The total segment margin was 7.4%, which includes North America at 2.6% and international operations at 8.9% both well off of year ago levels. As we noted on our call in October, and in today’s press release, the year ago results were boosted by exceptionally lower security costs. In 2011, these costs were significantly higher, but were also more in line with historical norms. The higher security costs combined with continued weakness in North America and Europe were the major drivers of the profit decline, which more than offset another strong performance in Latin America. The non-GAAP results exclude certain items related to time and expenses, income taxes, asset sales, acquisitions and dispositions. The non-GAAP results also adjust the tax rate to our full year rate of 38.6%. Summary reconciliation of non-GAAP to GAAP EPS is provided on page 4 of the press release, and a detailed reconciliation of other measures is provided beginning on page 15 of the release. In addition, page 7 provides the summary of selected results and outlook items that should help in forecasting 2012 results. It includes our latest revenue and segment margin guidance along with estimated non-segment expense, interest expense, tax rate, non-controlling interest, capital expenditures, capital leases, and depreciation and amortization. I’ll now turn the call over to Tom.

Thanks, Ed. Good morning, everyone. Joe will provide some additional information on the results for both the quarter and the full year. To the extent possible, I do want to avoid repetition of the earnings release. It's clear that performance needs to improve, and that's what I want to talk about. I'm going to address some of the broader issues that our team is dealing with, and in doing so I hope you’ll get some idea of how we’re managing the company during this period of management transition. I have no new news on our CEO search process other than to say it’s ongoing. We have a search firm, and we're considering both internal and external candidates. We expect to make a decision as soon as possible, but certainly by the end of June. In terms of the criteria, we're looking at candidates, who can execute the strategy that we have in place, which we believe will create meaningful value for shareholders. More specifically, we’re looking for a CEO who can accelerate our turnaround efforts in North America and Europe, but who also has the vision and entrepreneurial skills to grow high value solutions and leverage the Brink’s brand into new markets. We also want a leader who can develop a high performance team and strengthen relationships with all of our constituencies, customers, employees, communities, as well as current and perspective owners of our stock. We want to continuously improve our disclosure efforts and be more accessible to investors. I hope to start that process today and continue through the transition to a permanent CEO. So that’s where we are on the search. The Board’s job is to find the best CEO for Brink's. I’m happy to entertain questions at the end of the call, but cannot discuss any specifics…

Thanks, Tom, and good morning, everyone. I’m going to start with a brief summary of our fourth quarter results versus last year. Revenue grew 13% in total, primarily from organic growth as growth from the Mexico acquisition was partially offset by unfavorable currency. Segment operating profit declined by $11 million due primarily to the impact of security cost. 2011 was an average year for security cost, but we had a tough comparison with an exceptionally good year in 2010 when we didn’t have any sizable losses. Because of how we administer our insurance programs, the fourth quarter often includes the impact of the full year security loss performance. The decrease in earnings per share from last year was driven by the decline in segment profit, an increase in non-controlling interest, primarily driven by Venezuela, and an increase in the tax rate as the full year non-GAAP rate closed at 38.6% versus 36.2% in 2010. Clearly, the decline in profitability in North America is not acceptable, and we continue to take actions to address this. The most recent actions that Tom mentioned, should put us back on the path of growing profits. Moving on to the full year results, 2011, non-GAAP earnings per share was $1.90 compared to $1.99 in 2010. I'll provide a brief overview of each of the drivers on the slide, starting with segment op profit. We delivered 10% growth in segment op profit on 24% revenue growth. The revenue growth included a full year of the Mexico and Canada acquisitions, as well as favorable currency movements. The full-year organic revenue growth was a strong 8%. I’ll cover the segment profit results in more detail on the next few slides, after I finish covering the earnings per share details. The non-segment expense increase was due to numerous small…

[Operator Instructions] Our first question is coming from the line of Clint Fendley of Davenport & Company.

First question, Tom, it was a fairly swift move that you guys have taken here to reduce the cost structure in North America, I’m wondering are you looking at any other geographies for similar cuts?

Well, we’re certainly working with EMEA with the European operation to see what we can do there. It’s more difficult to make some of those immediate impactful cuts in Europe than it is in the U.S., but we’re working there. I mean fundamentally, we’re going to accelerate the review of every part of the company and where we need to get more efficient, that’s what we’re going to do. So it’s not just the U.S. or the U.S. was the biggest recipient of the -- of our attention in January.

And when we look at Europe, it seem that in the past, Germany has been the topic of a lot of debate, and clearly plenty of headlines from Europe and in Germany in the last few months. I mean has anything about the new cycle and turmoil that we’ve seen there may be changed your outlook and your longer-term opportunity with regard to that country?

I going to let Joe, take out in terms of the details, but fundamentally our problem in Germany has nothing to do with the Euro problem or with Greece or anything else. So it’s a problem in terms of the operations that we need to fix. So with that, Joe, you want to provide more details?

We’re still in Germany, because we feel like there is still actions we can take, that can get the business to a level of profitability that we deem acceptable. We have a long way to go. There is a number of actions we have to take that we’re working on. But we’re still there because we feel like we can still control our destiny to the degree that achieves a level of profitability that we require. As I think we’ve demonstrated in the past over many years, if we reach a point where we conclude, we can’t control our destiny enough and affect the results enough will take the necessary actions to reduce our size or exit. But that’s a statement that applies to anywhere in the world, not just Germany.

And then, switching gears a minute on here, Joe, I’m wondering if you can help us, I mean you’ve done a great job of providing a lot more thoughts at least regarding the guidance on several aspects of your company. But how should we think about the share count and the expected dilution from the pension costs here in the early part of 2012?

I think, our intention is to make the 2012 required pension contribution with company stock. So I look at maybe somewhere in the neighborhood of 1.5 million shares impacting the dilution.

And I mean, any color just, but on the -- obviously it's going to be the weighted average calculation, but the split between maybe Q1 or Q2, or any color on the happening here?

The funding requirements are spread throughout the year. We, depending upon the environment may make the full contribution earlier in the year, or we may spread them out over the course of the year. It will depend upon the environment and the factors at the time of the funding -- first funding requirement which is in April.

Our next question is from the line of Jamie Clement with Sidoti.

I’m going to cut to chase, Tom, because that's -- you were doing that in your prepared remarks. I’m just curious about the Board's logic of funding the pension with equity. When you’re coming off a bad year, the company doesn't have a full-time CEO, your leverage less than 1x EBITDA on a net debt basis, and interest rates are at historical low levels. I mean it’s sort of -- that to me is a little, I'm sort of confused why you guys would go down that road. Is there -- I mean are there acquisitions in the pipeline here that you’d be willing to make without a full time CEO in place?

Jamie, I'll take a shot at that one. The thought process is, when we look at our U.S. taxable earnings, given the pension contribution itself, and you guys see the profitability in North America, which is primarily the U.S. And then when you factor in the corporate support cost that’s not charged out to all the countries that are receiving benefits for that, you end up with U.S. taxable earnings, it’s negative. And so when you take on debt, you put interest expense in the U.S. that you get no deduction on, then you put yourself in a position where it becomes very costly to repatriate earnings. Now, this is an environment that we face for the next few years and until a couple of things change. The first thing that needs to change is the profitability and U.S. needs to improve, and that will put us in a different situation regarding our U.S. taxable earnings and as well as whatever the pension contribution is. So if the pension contribution goes down for whatever reason in the future, that would mitigate some of this. So at least for 2012, when we look at what we think is tax efficient and an efficient use of company resources, what we decided was a pension or stock contribution for 2012 at least make sense. It also allowed us to realign our debt so that we don’t have interest expense -- or we minimize our interest expense in the U.S., which is something we did last year as well. And so, this an issue for the foreseeable future with the pension contributions. And we do see us -- we definitely see ourselves getting out of this situation in a few years, a few years is more than 2, but that’s with the U.S. profitability improvement, and the pension contributions could change based upon the various factors that impact that.

Yes. And Joe, just a follow up there, I mean, I would just hope that your analysis would factor in a situation that theoretic -- if your plan works out and your earnings improve, theoretically the stock price goes up. So down the road, you said, you might be more inclined to use debt rather than equity to make these contributions, you could be issuing debt in a much higher interest rate environment, and have a flip situation where it would be -- you’re issuing stock when it’s very expensive for you to issue stock right now, and then down the road, issuing debt when it’s more expensive for you to issue debt. I mean, I’d hope that, that scenario was part of the decision here?

Absolutely. The other piece to it is, as we improve earnings down the road, we have free cash flow that could fund it.

Yes, that will.

Obviously.

Our next question is from the line of Ian Zaffino of Oppenheimer.

The question, you spent a lot of time talking about cost front. I guess, maybe I didn’t hear it, and if I missed it, can you just help reiterate it. I guess when you were talking on the cost front, but I’m not so sure I heard that much on the revenue side, and what you’re actually going to do from that perspective. And then, what are you assumptions kind of as you look back in fourth quarter or third quarter or second quarter with those under performance call it. How much is per se related to the market, like a market decline, how much is related to a share loss, how much is related to pricing? If you can just tell me -- help disaggregate those for us, and help us understand a little bit better, what’s going on?

Yes, I mean, I know that because of the discussion about going back for 2 or 3 quarters, let Joe take the first shot at it, then I’ll add something at the end. So, Joe?

Ian, assuming your question specific to North America, the cost actions in kind of the middle of 2011, we took actions in the field, in the branches. We consolidated some of the management structure, we streamlined some of the branch support functions within the branch. And we did that because we were experiencing CIT volume declines which when you look at our revenues in total, the CIT volume declines were offset by CompuSafe increase and fuel recovery. So it resulted in roughly flat revenues. But underneath that, you have volume decline which means you have to reduce the size of your operations, and so we did that. That doesn’t mean we closed branches, but we reduced the cost within the branches. And the reality is that that leaves an infrastructure cost. It leaves fixed cost in the branches and in the business that the volume isn’t covering -- the flat revenues because the fuel surcharge is just recovering the cost of fuel, and it doesn't bring any margin with it. The other issue is, as we have lost business because the price points have been driven below a point that we can be profitable. That business has been replaced with lower margin business, and that’s caused a mix shift, it’s caused an additional margin deterioration. Looking at the trends and looking at the U.S. competitive environment, we don’t see anything changing in the fourth quarter, and we don’t foresee any change in the environment for the foreseeable future. So in early January, we took an additional action where we addressed the back office at the head quarter and the region level, so not in the branch but the support functions. And we took actions there, and when you put all those actions together, and we look at the volumes that we expect in 2012, we feel we can get to the 4.5% margin range based upon the actions we’re taking to get closer to the 5.5% margin range in North America. We need the market to improve, whether it's the economy, the market environment or some abatement of the price pressures. But we’re not counting on that, we’re not planning for it, which is why we’ve provided the range.

I mean in the end, we had to take those actions to reverse the decline that we saw in the fourth quarter. We will continue to monitor that and take whatever other actions we need to if it doesn't improve.

So I guess, what I’m hearing is, there has been competitive price actions, so pricing is going down, you obviously are giving up business you are losing some share, the market is down. Is there anything secularly going on as well?

What, what, what?

Is the market decline a economic issue, is it a secular issue, is it a little bit of both?

It’s fundamentally the largest portion of our customer base, the large financial institutions are under incredible pressure from all fronts. That’s driving the market to be incredibly price focused, and driving prices to level that we can’t provide the level of safety, security and service and invest in our business at those price points. So we have to walk away from that business. And yet, we have to find a way to serve those customer at that price point, but today, we can’t and today, we’re not going to because we can’t continue to provide that level of safety and security and service. So that means we’re going to have a mix shift in our customer base because we’re not going to be able to serve at those price points. And that’s the volume that we’re walking away from, and that’s the position we’re in today. We’re taking necessary cost actions to make us more competitive at those price points, but we don’t see those price points as sustainable because we don’t see how you sustain a level of safety and security and service at those price points that makes it feasible over the long term.

Our next question is from the line of Doug Greiner with Compass Point.

Joe, just curious regarding the pension plan and with interest rates where they are now, and where the fed is saying they might stay through 2014 in debt levels. What’s conformable in terms of debt levels for Brink’s now that home security is gone and the other businesses are gone?

We have a lot of credit capacity today, we just renewed our revolver. We increased it from $400 million to $480 million and extended it out to 2017. And because rates come down in the past year, we also got lower rates. So we’re very comfortable where we are, we’re very comfortable with additional debt if the right opportunities arise in the market place for us. So I’d say, we feel like we have plenty of capacity and capability to continue investing and growing the business.

And then switching gears a little bit, there was a market share analysis in a recent slide deck, Brink’s, something like 21% share, and that was a little ways ahead of the number 2 and 3 players. I think their shares were 14% and 11%, and it’s at 40% of the market remains fragmented. Have those numbers moved materially since that side deck, any comments are helpful?

No, I think on a global basis those numbers haven’t changed materially.

And so, longer term is there a market share target or just generally where do you think the business can move to?

We’re not share focused. We’re focused on returns, we’re focused on growing in the faster growing segments of the industry. We want to grow more in the emerging markets particularly Latin America, Asia, there is some spots in Europe, Middle East that we want to grow in. And another big focus is to shift the revenue mix to more of the high value services, whether that’s the global services line of business or whether it’s money processing activity, whether it’s leveraging the ATM capability that we acquired with our acquisition in Canada a year ago. So it’s not about revenue or market share, it’s about delivering returns, and ensuring we’re growing the business profitably?

And then one for you, Tom. You’ve mentioned the labor contract in Mexico, any details that you can talk about there? And then just generally, what sorts of things -- can you help me build the bridge on how you take the margin there from break-even and build it up to levels that you see elsewhere, geographically?

Yes, I mean we did get the labor agreement, so that was a big deal so that we could continue to work on improving the productivity and the operations of Mexico. A lot of it is improving the overhead of that particular operation. We are investing in terms of equipment so that we can improve the operations. Joe, you want to talk about any other specifics in terms of the growth in the margin, but primarily it is improving the operations of the entire company down there.

So there are tremendous opportunities in Mexico, it is roughly break-even business when we acquired it, and it had been for a number of years. It had been underinvested in for a number of years, and treated more as a call center not a service provider. We were able to get the revenues up to 2.6%, I'm sorry the margins up to 2.6% in 2012. We did take some of the cost actions that we anticipate taking, some of those were implemented very early in the year, and others throughout the year. We’re not counting on 2012 being a year of significant margin expansion in Mexico. Tom mentioned the labor agreement that we did sign in November, where we feel like we have a very good working relationship with our workforce and the union there. There is a number of changes that we need to implement to improve the productivity and efficiencies in that business. When we do that, it will create even more capacity to reinvest in the business. There is tremendous opportunities in the money processing lines of business and in the global services line of business in Mexico. Having full ownership now of this operations allows us to really put emphasis and grow those lines of business, which are even higher margins. But we don't have to have those lines, those new businesses to get to 10% margin. We feel what the existing business, the productivity and efficiency can get us there. But we probably need, we need another year to continue putting those changes in place. And then starting in 2013, we expect to see even more margin expansion getting us to our 10%, no later than 2015.

Our next question is from Brad Safalow with PAA Research.

Can you enlighten [ph] for us, what percentage of your cash is in the U.S. versus foreign markets?

We do have a portion in the U.S., I think it’s in the neighborhood of 15%. Other than the long-term debt in the U.S., we don’t have any short term debt in the U.S., so we don’t anticipate adding any debt in the U.S. for the foreseeable future. That was part of our decision making process on the stock contribution of the pension, a part of how we realigned our debt to be for the short term revolver debt to be outside the U.S.

So that will be your strategy going forward, and I guess in that context it’s understandable why you are kind of pursuing this pension funding GAAP with stock issuance?

Right, so given our U.S. taxable income position, at least for the next couple of years, recognizing this is driven by the pension contributions, which when you make the contribution is when it becomes a taxable item, not when you record it on books -- book for GAAP. So with the contributions we go into a negative position in the U.S., and so you don’t want any interest expense in the U.S., that you can’t deduct.

All right, that makes sense. And then just shifting gears, I know your CapEx, those numbers would come up, I understand some of that is Mexico. I think you said, you spent $32 million in ’11, I think it’s $30 million to $35 million in ’12. Is ’12 the last year of making capital investment there or should we expect that for several more years?

We expect in the $30 million range in Mexico for the next couple of years. When we modeled the business and the investments, we thought it was going to require, we said $30 million to $35 million -- in the neighborhood of $30 million for at least 3 years. It had been so underinvested for a number of years. This is what was necessary to start to drive the productivity and efficiencies in the business. You simply can’t afford to have vehicles that you can’t finish a route on, and money processing equipment that has as high uptime as you can possibly sustain. So those investments were necessary. And we expect $30 million to $35 million this year in the net range next year, and as we grow the business looking at 2013, 2014, 2015 we’ll have to reassess that the number may come down a little bit in the out-years, but the profit should also be significantly higher in the out-years.

I was just thinking about it from a company-wide perspective, I know you’re spending some undefined amount of money on building on gold storage facility, I guess what I’m trying to get to is, what is the real CapEx profile of the business now for the next couple of years?

So when you look at, let’s take 2011 versus 2010. For example we increased $58 million, $32 million of that was Mexico. We spent about $15 million more in IT in 2011 versus 2010. And we’ve talked about the increased investment in technology that’s going to help us streamline our operations and drive efficiencies in operations as well as increase business intelligence, so that our decision making improves. So the investment in IT, which is happening in most regions and predominantly it’s North America and Latin America, but we are expecting significant returns in the out-years for that investment. We’re obviously going to very prudent on CapEx. Last year we gave a guidance of $220 million to $240 million, we were at $239 million, this year our guidance is $240 million to $260 million, and we’re going to make sure that we’re in that range.

I guess beyond this year, ’12, I mean does CapEx revert to what [indiscernible] say where historical norms is what I’m going to try and get to.

We may need another year, especially with the Mexico investment and the increase in IT before it might start to taper back a little.

Okay. And then, you guys provide us some more detail on how you’re thinking about the North American market, but make sure I don’t want the term credits, you have not changed your branch infrastructure in terms of footprint, right, you’ve just cutback cost?

Correct. That’s correct. We have not shut any branches. We are looking at making those branches much more efficient to reach what we can.

What would be the circumstances under which you would alter your branch footprint?

If we determine that branch in a particular location because of the customer base couldn’t be profitable, we would look to do that. That’s pretty much, what we would look at we’re not - if we lost a significant amount of business in a particular branch, that made it unprofitable, we’d look at that closure. Joe, do you want to add anything to that?

Yes, that would be the criteria.

Okay, so at this point, though just a bit of general dynamics of the market place. You are at the point where you feel like you need to exit specific geographies, specific branches?

Not at this point.

Our next question is from the line of Michael Kim with Imperial Capital.

Just to go back to the segment operating target for North America. Even if we sort of take the low end of the range at 4.5% considering sort of the mixed shift you talked about and the pressure on CIT volume. Even with your cost reductions, annualized at $10 million to $20 million, and I think you said, it would be sort of in the middle of the year. I’m still having a hard time getting up to 4.5% for the full year. It would seem to imply that you would be exiting the year at 5% or maybe even better?

The actions we’ve taken -- all of the actions combined with the volume and pricing pressures that we anticipate in 2012 is what puts us in the 4.5% to 5.5% range. And we feel that we can get to the 4.5%, get into the range with the actions we can execute on, things that we foresee in terms of contracts that are coming up for bid in 2012. And so, we obviously look at the trends and look at where the competition has been from a price point and we project forward what volume we think we are going to lose. And we’ve had a 3 year to slide here, that we are planning on the continuation of the difficult competitive environment, continuation of the pressure on our large customers and we built a plan that assumes, that occurs and we take the necessary actions to get us into this range. If the environment improves at all, maybe we get to the higher end of the range. But we would need help, to get to the higher end of the range.

And you’re assuming sort of flat growth in North America for 2012, given some of the issues you said, what’s the risk you could see in organic decline?

Well, we’re counting on a certain amount of contracts going away in 2012 and being replaced by other volumes. And the pricing on those -- that new volume difficult compared to the pricing it’s going away because of the environment. So we’re counting on it to a certain level of churn in revenue in the U.S., so there is absolute possibility that it could be a decline. But we’re building our case that says, we mix shift to different margin business and that we’re going to lose a certain amount of the volumes with the large customers because that’s been the trend, and we have taken the necessary efficiency actions and structure actions to count for that. So that’s all been factored into our 2012 guidance.

Okay. Great and then just switching gears to emerging markets, especially in Latin America and some other comps in the sector I’ve talk about, some continued strong growth there, but perhaps at a slowing rate. Are you seeing sort of similar dynamics or is it fairly consistent growth in ‘12?

We’ve seen pretty consistent growth in the past few quarters. We don’t anticipate that to change dramatically. I mean, we’re projecting that we continue to grow and we’ve said for the international segment 7% to 10%. We are expecting Europe to continue to be very difficult and we expect Latin America to continue to grow at the trends they have been on. Asia’s volume has been very strong, particularly with our global services line of business. So we’re not projecting any kind of a significant change from the trend other than maybe Europe getting a little tougher than it’s been. When you look at the macroeconomic environment there and there is a number of elections coming up in Europe that are making the business environment even more difficult.

And then lastly on the pension plan contribution, are there any limitations on using stock versus cash? Yes, and just to clarify these are mandatory contributions and none of its voluntary?

That’s correct. These are mandatory contributions and the limitations on the amount of stock you can contribute is, up to 10% of your stock assets. That would be the maximum you could do.

And I assume that’s been, it’s approved from a fiduciary basis?

Yes.

Yes.

Our next question is from the line of Alex Yaggy with Cortina Asset Management.

I wanted to talk about the North American business a little more. I understand that over the past number of years the theory is always been to be patient, pricing will come back, service prime levels, et cetera. And it seems clearly the Board was dissatisfied with the answer and so you made a change. Can you talk a little bit more about, maybe 2 things, about what you can do on the revenue side, whether there are new services you can either add or acquire that would make you more competitive and a few competitors are actually offering those services already? And I am also wondering whether structurally your business is at a disadvantage, I think some of your competitors are foreign based and if that’s part of the problem and there is a cost structure you can’t really solve as a U.S. company?

Let me first address there are things that, new revenue we can continue to pursue, certainly to an extent we can translate the -- what we bought in terms of Canada with threshold for higher value services. That’s something that we’re going to look at very closely. We’re going to continue to fix CompuSafe, so that we can continue to grow CompuSafe in the U.S. So I still think that there is a lot of things we can do in terms of revenue increase in the U.S. I’m going to let Joe take the -- and the other thing gets over looked a lot is the integration with the BGS, Brink’s Global. I think we can do a lot to continue to drive more revenue on the global side, which comes with high margin. So those are the things that I think are upsides that will help to offset the reduction in CIT. Joe, do you want to comment on the competitive situation?

So the issue we have in the U.S. is, our customers are under intense pressure in driving prices to a level that we can’t be profitable serving them at those price points. There are competitors who feel that they can be. We don’t feel that, that is sustainable. We’re not going to sit by though and wait until that unsustainable moment arrives. We are going to take the actions necessary to deliver the returns in North America with the volume that we can win if the price points that will allow us to maintain the level of safety and security and continue investing the business. We do feel there are growth opportunities in the U.S., Tom went through those. They will take more time than in 2012 for sure. So we’re positioning the business to be able to continue to invest in those. And that’s our strategy for 2012.

I mean, I think it’s important to note that we’re going to work on things that we can control. We are not going to work on things that are outside of our control. So we are going to take the actions necessary to improve the profitability.

Our next question is from the line of Richard Rosen of Columbia Management.

I have 2 questions. #1, one of the things that - one the ways the North American market has always been characterized has been where the quality of service is paramount and that’s how the cycles always come back. And it seems to me that $10 million or $20 million worth of expense cuts, it seem like a lot over a short period of time. Is that an acknowledgement that your end customer cares a lot less about service than they did in the past or is there any risk that the quality of the service that you do deliver is being compromised?

Certainly, Richard, my time digging into this, it would appear at least, some of the customers are moving away from what historically has been a focus on that quality and on the service side. And Joe talked about some of the large financial institutions that are in the current situation, our focus is strictly on cost. Don’t know how long that will last, don't know how long that - it will happen before safety and security and other things, of course a change in that particular habit. But at this point, we do see at least in part of that customer base a change.

I’d guess that it’s kind of risky that you get away from having a -- possibly having a distinguished service. The second question is with respect to Mexico, if I understand you correctly, you said that you may swing from a profit to a slight loss this year because of an increase and spending required. Can you put a little more flesh on the bones? I would have thought that a lot of this spending would have been in the last year as well, and this was a business that I believe was counted as being potentially as large as $1 billion with 10% plus margin. So if you could update how it is that the Mexico is coming along and whether there has been any change in the long-term expectations?

Sure. So let me clarify my statement, we said 2000 - we believe 2012, in Mexico, the margin rate may not expand and the margin rate may contract a little bit. It’s going to be profitable in 2012. It went from a breakeven business in 2010 to 2.6% margin on a little over $400 million in revenue in 2011. The question becomes how fast can we make the necessary changes and the costs associated with that and we’re not limiting ourselves on how much it cost. It’s really about how quickly can we execute the operational changes in the branches, in the field, with our workforce. And that’s something that November collective borrowing agreement moves us one step closer to that. But 2012 is the year when we start to implement some of the things that we’ve come to agreement on. That takes a little bit of time and we would do that as quickly as the business can possibly manage and observe that. So we don’t expect it, it’s a loose money. What we do expect is to continue taking the actions and incurring the necessary cost to put us on a trajectory of expanding margins. So we expect productivity and efficiency improvements in Mexico that in the absence of additional cost to fix the business, we would show more margin expansion by considering what we may spend to fix the business in 2012, you may end up with a flat to slightly down margin rate on year-over-year basis, but still profitably.

And as far as the thought that it’s still $1 billion business with double-digit margins?

Yes, I think the issue on the billion is that’s the entire market in Mexico, which we are roughly 40% up. So…

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