Attached files
file | filename |
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8-K - EQUIFAX INC | v210353_8k.htm |
Exhibit
99.1
|
1550
Peachtree Street, N.W. Atlanta, Georgia
30309
|
NEWS
RELEASE
Contact:
Jeff
Dodge
|
Tim
Klein
|
Investor
Relations
|
Media
Relations
|
(404)
885-8804
|
(404)
885-8555
|
jeff.dodge@equifax.com
|
tim.klein@equifax.com
|
Equifax
Reports Strong Fourth Quarter and Full Year 2010 Results
|
·
|
Fourth
quarter revenue was $482 million, up 11 percent from the fourth quarter of
2009.
|
|
·
|
Fourth
quarter diluted EPS from continuing operations attributable to Equifax was
$0.50, up 16 percent from the fourth quarter of
2009.
|
|
·
|
Fourth
quarter adjusted EPS from continuing operations attributable to Equifax
was $0.62, up 10 percent from the fourth quarter of
2009.
|
|
·
|
Full
year 2010 revenue was $1.86 billion, up 8 percent from full year 2009
revenue.
|
|
·
|
Full
year 2010 diluted EPS from continuing operations attributable to Equifax
was $1.86, up 9 percent from full year 2009 and full year 2010 adjusted
EPS from continuing operations attributable to Equifax was $2.31, up 6
percent from full year 2009.
|
ATLANTA, February 9, 2011 --
Equifax Inc. (NYSE: EFX) today announced financial results for the quarter ended
December 31, 2010. The company reported revenue from continuing
operations of $482 million in the fourth quarter of 2010, an 11 percent increase
from the fourth quarter of 2009. Fourth quarter 2010 net income from
continuing operations attributable to Equifax was $62.2 million, a 13 percent
increase from the prior year. On a non-GAAP basis, adjusted EPS from
continuing operations attributable to Equifax, excluding the impact of
acquisition-related amortization expense, was $0.62.
For the
full year 2010, revenue from continuing operations was $1.86 billion, an 8
percent increase from 2009. Full year 2010 net income from continuing
operations attributable to Equifax was $235.2 million compared to $217.8 million
in 2009, up 8 percent. Diluted EPS from continuing operations was $1.86
compared to $1.70 for the full year 2009. On a non-GAAP basis, full year
adjusted EPS from continuing operations, which excludes the impact of
acquisition-related amortization expense, restructuring charges (both net of
tax) and an income tax benefit, was $2.31, up 6 percent from the prior year
period.
“Our
solid performance in the fourth quarter completes a year where this management
team executed very well and made significant investments in our strategic
initiatives, including New Product Innovation, merger and acquisition activity,
and Decision 360 ®. Constant dollar organic growth for the quarter was 9
percent, the strongest growth we have experienced in several years,” said
Richard F. Smith, Equifax’s Chairman and Chief Executive Officer. “As a result,
our strong performance and the opportunities that we are pursuing gave the Board
the confidence to increase our quarterly dividend from 4 cents per share to 16
cents per share. We enter 2011 a much stronger and better positioned company to
take on challenges as well as capitalize on market
opportunities.”
Fourth Quarter 2010 Report
|
·
|
In
addition to the financial highlights noted above, operating margin from
continuing operations was 22.8 percent for the fourth quarter of
2010. On a non-GAAP basis, excluding the impact of a 2009
restructuring charge, operating margin in 2009 was also 22.8
percent.
|
|
·
|
On
October 1, 2010, we acquired Anakam, Inc., a provider of large-scale,
software-based, multi-factor authentication solutions for approximately
$64 million. The results of this acquisition are included in our
U.S. Consumer Information Solutions
segment.
|
|
·
|
The
Board of Directors declared a quarterly dividend of $0.16 per share, a 300
percent increase from previous quarterly dividends of $0.04 per
share.
|
|
·
|
We
repurchased 1.5 million of our common shares on the open market for $51
million during the fourth quarter of 2010. At December 31, 2010, our
remaining authorization for future share repurchases was $104.5
million.
|
U.S.
Consumer Information Solutions (USCIS)
Total
revenue was $191.2 million in the fourth quarter of 2010 compared to $170.1
million in the fourth quarter of 2009, an increase of 12 percent.
|
·
|
Online
Consumer Information Solutions revenue was $116.8 million, up 1 percent
from a year ago.
|
|
·
|
Mortgage
Solutions revenue was $29.3 million, up 27 percent from a year
ago.
|
|
·
|
Consumer
Financial Marketing Services revenue was $45.1 million, up 46 percent when
compared to a year ago.
|
Operating
margin for USCIS was 36.3 percent in the fourth quarter of 2010 compared to 33.8
percent in the fourth quarter of 2009.
International
Total
revenue was $125.9 million in the fourth quarter of 2010, a 7 percent increase
over the fourth quarter of 2009. In local currency, revenue was up 6
percent compared to the fourth quarter of 2009.
|
·
|
Latin
America revenue was $60.4 million, up 7 percent in local currency and 10
percent in U.S. dollars from a year
ago.
|
|
·
|
Europe
revenue was $36.2 million, up 6 percent in local currency and 1 percent in
U.S. dollars from a year ago.
|
|
·
|
Canada
Consumer revenue was $29.3 million, up 5 percent in local currency and 10
percent in U.S. dollars from a year
ago.
|
Operating
margin for International was 23.6 percent in the fourth quarter of 2010 compared
to 27.5 percent in the fourth quarter of 2009.
2
TALX
Total
revenue was $102.2 million in the fourth quarter of 2010, a 14 percent increase
over the fourth quarter of 2009.
|
·
|
The
Work Number revenue was $54.2 million, up 30 percent from a year
ago.
|
|
·
|
Tax
and Talent Management Services revenue was $48 million, consistent with a
year ago.
|
Operating
margin for TALX was 24.4 percent in the fourth quarter of 2010 compared to 21.1
percent in the fourth quarter of 2009.
North
America Personal Solutions
Revenue
was $37.8 million, a 5 percent increase from the fourth quarter of
2009. Operating margin was 30.9 percent, up from 28.1 percent in the fourth
quarter of 2009.
North
America Commercial Solutions
Revenue
was $24.9 million, up 11 percent in local currency and up 12 percent in U.S.
dollars compared to the fourth quarter of 2009. Operating margin was 32.3
percent, compared to 34 percent in the fourth quarter of 2009.
Full
Year 2010 Report
|
·
|
Revenue
from continuing operations was $1.86 billion, up 8 percent from $1.72
billion in 2009.
|
|
·
|
Total
revenue from continuing operations for USCIS was $743.0 million in 2010, a
4 percent increase from 2009.
|
|
·
|
Total
revenue for International was $482.8 million in 2010, a 10 percent
increase from 2009. In local currency, revenue was up 5 percent when
compared to the same period in the prior
year.
|
|
·
|
Total
revenue for TALX was $395.6 million in 2010, a 14 percent increase over
2009.
|
|
·
|
Total
revenue for North America Personal Solutions was $157.6 million in 2009, a
6 percent increase from 2009.
|
|
·
|
Total
revenue for North America Commercial Solutions was $80.5 million in 2010,
a 15 percent increase from 2009. In local currency, revenue was up
12 percent when compared to 2009.
|
|
·
|
During
2010, we sold our APPRO loan origination software business (“APPRO”), for
approximately $72 million, and we also sold substantially all the assets
of our Direct Marketing Services division (“DMS”) for approximately $117
million. Both of these businesses are reported as discontinued
operations and were previously included in the results of our U.S.
Consumer Information Solutions segment.
|
|
·
|
Operating
margin from continuing operations was 23.1 percent for the full year
2010. On a non-GAAP basis, excluding the impact of a 2009
restructuring charge, operating margin in 2009 was 23.7
percent.
|
|
·
|
Total
debt was $1.0 billion at December 31, 2010, a decrease of $174.5 million
from December 31, 2009.
|
3
First
Quarter 2011 Outlook
Based on
the current level of domestic and international business activity and current
foreign exchange rates, consolidated revenue from continuing operations for the
first quarter of 2011 is expected to be up 6 to 8 percent from the year-ago
quarter. First quarter 2011 adjusted EPS from continuing operations
attributable to Equifax, which excludes the impact of acquisition-related
amortization expense, is expected to be between $0.56 and $0.59, up 6 to 11
percent from 2010.
About Equifax
(www.equifax.com)
Equifax
empowers businesses and consumers with information they can trust. A global
leader in information solutions, we leverage one of the largest sources of
consumer and commercial data, along with advanced analytics and proprietary
technology, to create customized insights that enrich both the performance of
businesses and the lives of consumers.
With a
strong heritage of innovation and leadership, Equifax continuously delivers
innovative solutions with the highest integrity and reliability.
Businesses – large and small – rely on us for consumer and business credit
intelligence, portfolio management, fraud detection, decisioning technology,
marketing tools, and much more. We empower individual consumers to manage
their personal credit information, protect their identity, and maximize their
financial well-being.
Headquartered
in Atlanta, Georgia, Equifax Inc. operates in the U.S. and 15 other countries.
Equifax is a member of Standard & Poor’s (S&P) 500® Index. Our common
stock is traded on the New York Stock Exchange under the symbol
EFX.
Earnings Conference Call and
Audio Webcast
In
conjunction with this release, Equifax will host a conference call tomorrow,
February 10, 2010, at 8:30 a.m. (EDT) via a live audio webcast. To access
the webcast, go to the Investor Center of our website at www.equifax.com. The
discussion will be available via replay at the same site shortly after the
conclusion of the webcast. This press release is also available at that
website.
Non-GAAP Financial
Measures
This
earnings release presents operating income and margin excluding restructuring
charges and diluted EPS from continuing operations attributable to Equifax which
excludes acquisition-related amortization expense, restructuring charges in the
prior year, all net of tax, and an income tax benefit in the prior year.
These are important financial measures for Equifax but are not financial
measures as defined by GAAP.
These
non-GAAP financial measures should be reviewed in conjunction with the relevant
GAAP financial measures and are not presented as an alternative measure of
operating income, operating margin or EPS as determined in accordance with
GAAP.
Reconciliations
of these non-GAAP financial measures to the most directly comparable GAAP
financial measures and related notes are presented in the Q&A. This
information can also be found under “Investor Center/GAAP/Non-GAAP Measures” on
our website at www.equifax.com.
4
Forward-Looking
Statements
Management
believes certain statements in this earnings release may constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are made on the basis of
management’s views and assumptions regarding future events and business
performance as of the time the statements are made. Management does not
undertake any obligation to update any forward-looking statements.
Actual
results may differ materially from those expressed or implied. Such
differences may result from actions taken by Equifax, including restructuring or
strategic initiatives (including capital investments or asset acquisitions or
dispositions), as well as from developments beyond Equifax’s control, including,
but not limited to, changes in worldwide and U.S. economic conditions that
materially impact consumer spending, consumer debt and employment and the demand
for Equifax's products and services. Other risk factors include our ability
to develop new products and services, respond to pricing and other competitive
pressures, complete and integrate acquisitions and other investments and achieve
targeted cost efficiencies; risks relating to illegal third party efforts to
access data; changes in laws and regulations governing our business, including
the Dodd-Frank Wall Street Reform and Consumer Protection Act and related
regulations, federal or state responses to identity theft concerns; and the
outcome of our pending litigation. Certain additional factors are set
forth in Equifax’s Annual Report on Form 10-K for the year ended December 31,
2009 under Item 1A, “Risk Factors”, and our other filings with the Securities
and Exchange Commission.
5
EQUIFAX
CONSOLIDATED STATEMENTS OF
INCOME
Three
Months Ended
|
||||||||
December 31,
|
||||||||
2010
|
2009
|
|||||||
(In
millions, except per share amounts)
|
(Unaudited)
|
|||||||
Operating
revenue
|
$ | 482.0 | $ | 435.4 | ||||
Operating
expenses:
|
||||||||
Cost
of services (exclusive of depreciation and amortization
below)
|
193.3 | 183.8 | ||||||
Selling,
general and administrative expenses
|
137.0 | 130.2 | ||||||
Depreciation
and amortization
|
42.0 | 38.5 | ||||||
Total
operating expenses
|
372.3 | 352.5 | ||||||
Operating
income
|
109.7 | 82.9 | ||||||
Interest
expense
|
(13.8 | ) | (14.1 | ) | ||||
Other
income, net
|
0.3 | 0.4 | ||||||
Consolidated
income from continuing operations before income taxes
|
96.2 | 69.2 | ||||||
Provision
for income taxes
|
(32.2 | ) | (12.6 | ) | ||||
Consolidated
income from continuing operations
|
64.0 | 56.6 | ||||||
Discontinued
operations, net of tax
|
- | 5.3 | ||||||
Consolidated
net income
|
64.0 | 61.9 | ||||||
Less: Net
income attributable to noncontrolling interests
|
(1.8 | ) | (1.7 | ) | ||||
Net
income attributable to Equifax
|
$ | 62.2 | $ | 60.2 | ||||
Amounts
attributable to Equifax:
|
||||||||
Income
from continuing operations attributable to Equifax
|
$ | 62.2 | $ | 54.9 | ||||
Discontinued
operations, net of tax
|
- | 5.3 | ||||||
Net
income
|
$ | 62.2 | $ | 60.2 | ||||
Basic
earnings per common share:
|
||||||||
Income
from continuing operations attributable to Equifax
|
$ | 0.51 | $ | 0.44 | ||||
Discontinued
operations attributable to Equifax
|
- | 0.04 | ||||||
Net
income attributable to Equifax
|
$ | 0.51 | $ | 0.48 | ||||
Weighted-average
shares used in computing basic earnings per share
|
123.1 | 126.4 | ||||||
Diluted
earnings per common share:
|
||||||||
Income
from continuing operations attributable to Equifax
|
$ | 0.50 | $ | 0.43 | ||||
Discontinued
operations attributable to Equifax
|
- | 0.04 | ||||||
Net
income attributable to Equifax
|
$ | 0.50 | $ | 0.47 | ||||
Weighted-average
shares used in computing diluted earnings per share
|
124.9 | 127.5 | ||||||
Dividends
per common share
|
$ | 0.16 | $ | 0.04 |
6
CONSOLIDATED STATEMENTS OF
INCOME
Twelve
Months Ended
|
||||||||
December 31,
|
||||||||
2010
|
2009
|
|||||||
(In
millions, except per share amounts)
|
(Unaudited)
|
|||||||
Operating
revenue
|
$ | 1,859.5 | $ | 1,716.0 | ||||
Operating
expenses:
|
||||||||
Cost
of services (exclusive of depreciation and amortization
below)
|
759.9 | 718.8 | ||||||
Selling,
general and administrative expenses
|
507.4 | 470.2 | ||||||
Depreciation
and amortization
|
162.2 | 145.2 | ||||||
Total
operating expenses
|
1,429.5 | 1,334.2 | ||||||
Operating
income
|
430.0 | 381.8 | ||||||
Interest
expense
|
(56.1 | ) | (57.0 | ) | ||||
Other
income, net
|
1.3 | 6.2 | ||||||
Consolidated
income from continuing operations before income taxes
|
375.2 | 331.0 | ||||||
Provision
for income taxes
|
(131.9 | ) | (106.6 | ) | ||||
Consolidated
income from continuing operations
|
243.3 | 224.4 | ||||||
Discontinued
operations, net of tax
|
31.5 | 16.1 | ||||||
Consolidated
net income
|
274.8 | 240.5 | ||||||
Less: Net
income attributable to noncontrolling interests
|
(8.1 | ) | (6.6 | ) | ||||
Net
income attributable to Equifax
|
$ | 266.7 | $ | 233.9 | ||||
Amounts
attributable to Equifax:
|
||||||||
Income
from continuing operations attributable to Equifax
|
$ | 235.2 | $ | 217.8 | ||||
Discontinued
operations, net of tax
|
31.5 | 16.1 | ||||||
Net
income
|
$ | 266.7 | $ | 233.9 | ||||
Basic
earnings per common share:
|
||||||||
Income
from continuing operations attributable to Equifax
|
$ | 1.89 | $ | 1.72 | ||||
Discontinued
operations attributable to Equifax
|
0.25 | 0.13 | ||||||
Net
income attributable to Equifax
|
$ | 2.14 | $ | 1.85 | ||||
Weighted-average
shares used in computing basic earnings per share
|
124.8 | 126.3 | ||||||
Diluted
earnings per common share:
|
||||||||
Income
from continuing operations attributable to Equifax
|
$ | 1.86 | $ | 1.70 | ||||
Discontinued
operations attributable to Equifax
|
0.25 | 0.13 | ||||||
Net
income attributable to Equifax
|
$ | 2.11 | $ | 1.83 | ||||
Weighted-average
shares used in computing diluted earnings per share
|
126.5 | 127.9 | ||||||
Dividends
per common share
|
$ | 0.28 | $ | 0.16 |
7
EQUIFAX
CONSOLIDATED BALANCE
SHEETS
December 31,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(In
millions, except par values)
|
(Unaudited)
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 119.4 | $ | 103.1 | ||||
Trade
accounts receivable, net of allowance for doubtful accounts of $7.5 and
$15.1 at December 31, 2010 and 2009, respectively
|
262.6 | 258.7 | ||||||
Prepaid
expenses
|
26.1 | 27.6 | ||||||
Other
current assets
|
21.1 | 27.4 | ||||||
Total
current assets
|
429.2 | 416.8 | ||||||
Property
and equipment:
|
||||||||
Capitalized
internal-use software and system costs
|
315.9 | 316.6 | ||||||
Data
processing equipment and furniture
|
181.0 | 184.2 | ||||||
Land,
buildings and improvements
|
169.5 | 164.5 | ||||||
Total
property and equipment
|
666.4 | 665.3 | ||||||
Less
accumulated depreciation and amortization
|
(368.0 | ) | (346.0 | ) | ||||
Total
property and equipment, net
|
298.4 | 319.3 | ||||||
Goodwill
|
1,914.7 | 1,943.2 | ||||||
Indefinite-lived
intangible assets
|
95.6 | 95.5 | ||||||
Purchased
intangible assets, net
|
593.9 | 687.0 | ||||||
Other
assets, net
|
101.8 | 88.7 | ||||||
Total
assets
|
$ | 3,433.6 | $ | 3,550.5 | ||||
LIABILITIES
AND EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Short-term
debt and current maturities
|
$ | 20.7 | $ | 183.2 | ||||
Accounts
payable
|
24.6 | 35.9 | ||||||
Accrued
expenses
|
61.9 | 67.7 | ||||||
Accrued
salaries and bonuses
|
71.9 | 58.1 | ||||||
Deferred
revenue
|
58.7 | 69.8 | ||||||
Other
current liabilities
|
81.7 | 77.5 | ||||||
Total
current liabilities
|
319.5 | 492.2 | ||||||
Long-term
debt
|
978.9 | 990.9 | ||||||
Deferred
income tax liabilities, net
|
244.2 | 249.3 | ||||||
Long-term
pension and other postretirement benefit liabilities
|
129.0 | 142.5 | ||||||
Other
long-term liabilities
|
53.6 | 60.6 | ||||||
Total
liabilities
|
1,725.2 | 1,935.5 | ||||||
Equifax
shareholders' equity:
|
||||||||
Preferred
stock, $0.01 par value: Authorized shares - 10.0; Issued shares -
none
|
- | - | ||||||
Common
stock, $1.25 par value: Authorized shares - 300.0; Issued shares - 189.3
at December 31, 2010 and 2009; Outstanding shares - 122.6 and 126.2 at
December 31, 2010 and 2009, respectively
|
236.6 | 236.6 | ||||||
Paid-in
capital
|
1,105.8 | 1,102.0 | ||||||
Retained
earnings
|
2,725.7 | 2,494.2 | ||||||
Accumulated
other comprehensive loss
|
(344.5 | ) | (318.7 | ) | ||||
Treasury
stock, at cost, 64.6 shares and 61.0 shares at December 31, 2010 and 2009,
respectively
|
(1,991.0 | ) | (1,871.7 | ) | ||||
Stock
held by employee benefits trusts, at cost, 2.1 shares at December 31, 2010
and 2009
|
(41.2 | ) | (41.2 | ) | ||||
Total
Equifax shareholders' equity
|
1,691.4 | 1,601.2 | ||||||
Noncontrolling
interests
|
17.0 | 13.8 | ||||||
Total
equity
|
1,708.4 | 1,615.0 | ||||||
Total
liabilities and equity
|
$ | 3,433.6 | $ | 3,550.5 |
8
EQUIFAX
CONSOLIDATED STATEMENTS OF
CASH FLOWS
Twelve
Months Ended
|
||||||||
December 31,
|
||||||||
2010
|
2009
|
|||||||
(In
millions)
|
(Unaudited)
|
|||||||
Operating
activities:
|
||||||||
Consolidated
net income
|
$ | 274.8 | $ | 240.5 | ||||
Adjustments
to reconcile consolidated net income to net cash provided by operating
activities:
|
||||||||
Gain
on divestitures
|
(27.1 | ) | - | |||||
Depreciation
and amortization
|
167.8 | 158.8 | ||||||
Stock-based
compensation expense
|
21.8 | 19.6 | ||||||
Excess
tax benefits from stock-based compensation plans
|
(3.5 | ) | (1.3 | ) | ||||
Deferred
income taxes
|
0.1 | 14.7 | ||||||
Changes
in assets and liabilities, excluding effects of
acquisitions:
|
||||||||
Accounts
receivable, net
|
(3.6 | ) | 12.8 | |||||
Prepaid
expenses and other current assets
|
6.1 | (1.4 | ) | |||||
Other
assets
|
(1.4 | ) | (6.9 | ) | ||||
Current
liabilities, excluding debt
|
(32.4 | ) | 4.2 | |||||
Other
long-term liabilities, excluding debt
|
(50.0 | ) | (22.6 | ) | ||||
Cash
provided by operating activities
|
352.6 | 418.4 | ||||||
Investing
activities:
|
||||||||
Capital
expenditures
|
(99.8 | ) | (70.7 | ) | ||||
Acquisitions,
net of cash acquired
|
(82.6 | ) | (196.0 | ) | ||||
Proceeds
received from divestitures
|
181.7 | - | ||||||
Investment
in unconsolidated affiliates, net
|
1.7 | (3.4 | ) | |||||
Cash
provided by (used in) investing activities
|
1.0 | (270.1 | ) | |||||
Financing
activities:
|
||||||||
Net
short-term (repayments) borrowings
|
(134.0 | ) | 101.8 | |||||
Net
repayments under long-term revolving credit facilities
|
(5.0 | ) | (415.2 | ) | ||||
Payments
on long-term debt
|
(20.8 | ) | (31.8 | ) | ||||
Proceeds
from issuance of long-term debt
|
- | 274.4 | ||||||
Treasury
stock purchases
|
(167.5 | ) | (23.8 | ) | ||||
Dividends
paid to Equifax shareholders
|
(35.2 | ) | (20.2 | ) | ||||
Dividends
paid to noncontrolling interests
|
(5.1 | ) | (4.0 | ) | ||||
Proceeds
from exercise of stock options
|
29.3 | 10.2 | ||||||
Excess
tax benefits from stock-based compensation plans
|
3.5 | 1.3 | ||||||
Other
|
(0.5 | ) | (1.0 | ) | ||||
Cash
used in financing activities
|
(335.3 | ) | (108.3 | ) | ||||
Effect
of foreign currency exchange rates on cash and cash
equivalents
|
(2.0 | ) | 4.9 | |||||
Increase
in cash and cash equivalents
|
16.3 | 44.9 | ||||||
Cash
and cash equivalents, beginning of period
|
103.1 | 58.2 | ||||||
Cash
and cash equivalents, end of period
|
$ | 119.4 | $ | 103.1 |
9
Common
Questions & Answers (Unaudited)
(Dollars
in millions)
1.
Can you provide a further analysis of operating revenue and
operating income by operating segment?
Operating
revenue and operating income consist of the following components:
(in
millions)
|
Three
Months Ended December 31,
|
|||||||||||||||||||
Local
Currency
|
||||||||||||||||||||
2010
|
2009
|
$ Change
|
% Change
|
% Change*
|
||||||||||||||||
Operating
revenue:
|
||||||||||||||||||||
Online
Consumer Information Solutions
|
$ | 116.8 | $ | 116.2 | $ | 0.6 | 1 | % | ||||||||||||
Mortgage
Solutions
|
29.3 | 23.0 | 6.3 | 27 | % | |||||||||||||||
Consumer
Financial Marketing Services
|
45.1 | 30.9 | 14.2 | 46 | % | |||||||||||||||
Total
U.S. Consumer Information Solutions
|
191.2 | 170.1 | 21.1 | 12 | % | |||||||||||||||
Latin
America
|
60.4 | 55.1 | 5.3 | 10 | % | 7 | % | |||||||||||||
Europe
|
36.2 | 35.9 | 0.3 | 1 | % | 6 | % | |||||||||||||
Canada
Consumer
|
29.3 | 26.7 | 2.6 | 10 | % | 5 | % | |||||||||||||
Total
International
|
125.9 | 117.7 | 8.2 | 7 | % | 6 | % | |||||||||||||
The
Work Number
|
54.2 | 41.6 | 12.6 | 30 | % | |||||||||||||||
Tax
and Talent Management Services
|
48.0 | 47.8 | 0.2 | 0 | % | |||||||||||||||
Total
TALX
|
102.2 | 89.4 | 12.8 | 14 | % | |||||||||||||||
North
America Personal Solutions
|
37.8 | 36.0 | 1.8 | 5 | % | |||||||||||||||
North
America Commercial Solutions
|
24.9 | 22.2 | 2.7 | 12 | % | 11 | % | |||||||||||||
Total
operating revenue
|
$ | 482.0 | $ | 435.4 | $ | 46.6 | 11 | % | 10 | % |
(in millions)
|
Twelve Months Ended December
31,
|
|||||||||||||||||||
Local
Currency
|
||||||||||||||||||||
2010
|
2009
|
$ Change
|
% Change
|
% Change*
|
||||||||||||||||
Operating
revenue:
|
||||||||||||||||||||
Online
Consumer Information Solutions
|
$ | 485.2 | $ | 501.4 | $ | (16.2 | ) | -3 | % | |||||||||||
Mortgage
Solutions
|
113.5 | 99.5 | 14.0 | 14 | % | |||||||||||||||
Consumer
Financial Marketing Services
|
144.3 | 111.3 | 33.0 | 30 | % | |||||||||||||||
Total
U.S. Consumer Information Solutions
|
743.0 | 712.2 | 30.8 | 4 | % | |||||||||||||||
Latin
America
|
231.3 | 200.4 | 30.9 | 15 | % | 8 | % | |||||||||||||
Europe
|
137.6 | 138.4 | (0.8 | ) | -1 | % | 2 | % | ||||||||||||
Canada
Consumer
|
113.9 | 99.8 | 14.1 | 14 | % | 4 | % | |||||||||||||
Total
International
|
482.8 | 438.6 | 44.2 | 10 | % | 5 | % | |||||||||||||
The
Work Number
|
209.1 | 158.2 | 50.9 | 32 | % | |||||||||||||||
Tax
and Talent Management Services
|
186.5 | 188.2 | (1.7 | ) | -1 | % | ||||||||||||||
Total
TALX
|
395.6 | 346.4 | 49.2 | 14 | % | |||||||||||||||
North
America Personal Solutions
|
157.6 | 149.0 | 8.6 | 6 | % | |||||||||||||||
North
America Commercial Solutions
|
80.5 | 69.8 | 10.7 | 15 | % | 12 | % | |||||||||||||
Total
operating revenue
|
$ | 1,859.5 | $ | 1,716.0 | $ | 143.5 | 8 | % | 7 | % |
(in millions)
|
Three Months Ended December
31,
|
|||||||||||||||||||||||
Operating
|
Operating
|
|||||||||||||||||||||||
|
2010
|
Margin
|
2009
|
Margin
|
$ Change
|
% Change
|
||||||||||||||||||
Operating income: | ||||||||||||||||||||||||
U.S.
Consumer Information Solutions
|
$ | 69.4 | 36.3 | % | $ | 57.5 | 33.8 | % | $ | 11.9 | 21 | % | ||||||||||||
International
|
29.7 | 23.6 | % | 32.3 | 27.5 | % | (2.6 | ) | -8 | % | ||||||||||||||
TALX
|
24.9 | 24.4 | % | 18.9 | 21.1 | % | 6.0 | 32 | % | |||||||||||||||
North
America Personal Solutions
|
11.7 | 30.9 | % | 10.2 | 28.1 | % | 1.5 | 15 | % | |||||||||||||||
North
America Commercial Solutions
|
8.0 | 32.3 | % | 7.5 | 34.0 | % | 0.5 | 7 | % | |||||||||||||||
General
Corporate Expense
|
(34.0 | ) |
nm
|
(43.5 | ) |
nm
|
9.5 | 22 | % | |||||||||||||||
Total
operating income
|
$ | 109.7 | 22.8 | % | $ | 82.9 | 19.1 | % | $ | 26.8 | 32 | % |
(in millions)
|
Twelve Months Ended December
31,
|
|||||||||||||||||||||||
Operating
|
Operating
|
|||||||||||||||||||||||
|
2010
|
Margin
|
2009
|
Margin
|
$ Change
|
% Change
|
||||||||||||||||||
Operating income: | ||||||||||||||||||||||||
U.S.
Consumer Information Solutions
|
$ | 269.8 | 36.3 | % | $ | 259.4 | 36.4 | % | $ | 10.4 | 4 | % | ||||||||||||
International
|
119.4 | 24.7 | % | 118.9 | 27.1 | % | 0.5 | 0 | % | |||||||||||||||
TALX
|
92.1 | 23.3 | % | 75.4 | 21.8 | % | 16.7 | 22 | % | |||||||||||||||
North
America Personal Solutions
|
44.6 | 28.3 | % | 34.3 | 23.0 | % | 10.3 | 30 | % | |||||||||||||||
North
America Commercial Solutions
|
19.5 | 24.2 | % | 15.1 | 21.7 | % | 4.4 | 29 | % | |||||||||||||||
General
Corporate Expense
|
(115.4 | ) |
nm
|
(121.3 | ) |
nm
|
5.9 | 5 | % | |||||||||||||||
Total
operating income
|
$ | 430.0 | 23.1 | % | $ | 381.8 | 22.3 | % | $ | 48.2 | 13 | % |
nm - not
meaningful
*
Reflects percentage change in revenue conforming 2010 results using 2009
exchange rates.
10
(Dollars
in millions)
2.
What drove the fluctuation in the effective tax rate?
Our
effective tax rate was 33.5% for the three months ended December 31, 2010 up
from 18.2% for the same period in 2009 due primarily to the recognition of a
$7.3 million income tax benefit during the fourth quarter of 2009 related to our
ability to utilize foreign tax credits beyond 2009.
3.
Can you provide depreciation and amortization by
segment?
Depreciation
and amortization are as follows:
Three
Months Ended
|
Twelve
Months Ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
U.S.
Consumer Information Solutions
|
$ | 11.0 | $ | 9.9 | $ | 41.4 | $ | 35.4 | ||||||||
International
|
6.7 | 6.1 | 25.6 | 23.2 | ||||||||||||
TALX
|
17.3 | 16.2 | 67.9 | 62.6 | ||||||||||||
North
America Personal Solutions
|
1.4 | 1.3 | 5.4 | 4.8 | ||||||||||||
North
America Commercial Solutions
|
1.6 | 1.5 | 6.2 | 5.8 | ||||||||||||
General
Corporate Expense
|
4.0 | 3.5 | 15.7 | 13.4 | ||||||||||||
Total
depreciation and amortization
|
$ | 42.0 | $ | 38.5 | $ | 162.2 | $ | 145.2 |
4.
What was the currency impact on the foreign
operations?
The U.S.
dollar impact on operating revenue and operating income is as
follows:
Three Months Ended December 31,
2010
|
||||||||||||||||
Operating Revenue
|
Operating Income
|
|||||||||||||||
Amount
|
%
|
Amount
|
%
|
|||||||||||||
Canada
Consumer
|
$ | 1.2 | 4 | % | $ | 0.5 | 4 | % | ||||||||
Canada
Commercial
|
0.3 | 4 | % | 0.1 | 4 | % | ||||||||||
Europe
|
(1.7 | ) | -5 | % | (0.4 | ) | -5 | % | ||||||||
Latin
America
|
1.2 | 2 | % | 0.1 | 1 | % |
Twelve Months Ended December 31,
2010
|
||||||||||||||||
Operating Revenue
|
Operating Income
|
|||||||||||||||
Amount
|
%
|
Amount
|
%
|
|||||||||||||
Canada
Consumer
|
$ | 10.6 | 11 | % | $ | 4.2 | 10 | % | ||||||||
Canada
Commercial
|
2.3 | 10 | % | 0.9 | 10 | % | ||||||||||
Europe
|
(3.2 | ) | -2 | % | (0.8 | ) | -3 | % | ||||||||
Latin
America
|
14.3 | 7 | % | 1.4 | 2 | % |
5.
|
What
are the 2009 and 2008 quarterly revenue and operating income impacts of
the discontinued operations on the U.S. Consumer Information Solutions
segment?
|
U.S. Consumer Information
Solutions
|
||||||||||||||||||||||||
Operating Revenue
|
Operating Income
|
Operating Margin
|
||||||||||||||||||||||
As Reported
|
Adjusted
|
As Reported
|
Adjusted
|
As Reported
|
Adjusted
|
|||||||||||||||||||
Q1
2009
|
$ | 210.0 | $ | 183.6 | $ | 75.5 | $ | 69.7 | 36 | % | 38 | % | ||||||||||||
Q2
2009
|
211.0 | 184.7 | 74.3 | 69.1 | 35 | % | 37 | % | ||||||||||||||||
Q3
2009
|
200.7 | 173.8 | 69.4 | 63.1 | 35 | % | 36 | % | ||||||||||||||||
Q4
2009
|
199.0 | 170.1 | 66.0 | 57.5 | 33 | % | 34 | % | ||||||||||||||||
2009
|
$ | 820.7 | $ | 712.2 | $ | 285.2 | $ | 259.4 | 35 | % | 36 | % | ||||||||||||
Q1
2008
|
$ | 233.2 | $ | 202.7 | $ | 90.1 | $ | 81.8 | 39 | % | 40 | % | ||||||||||||
Q2
2008
|
228.6 | 198.0 | 86.9 | 77.9 | 38 | % | 39 | % | ||||||||||||||||
Q3
2008
|
220.6 | 190.8 | 84.2 | 75.3 | 38 | % | 39 | % | ||||||||||||||||
Q4
2008
|
208.4 | 177.2 | 75.9 | 63.9 | 36 | % | 36 | % | ||||||||||||||||
2008
|
$ | 890.8 | $ | 768.7 | $ | 337.1 | $ | 298.9 | 38 | % | 39 | % |
11
Reconciliations
of Non-GAAP Financial Measures to the Comparable GAAP Financial Measures
(Unaudited)
|
||||||||||
(Dollars
in millions, except per share amounts)
|
A.
|
Reconciliation
of net income from continuing operations attributable to Equifax to
diluted EPS from continuing operations attributable to Equifax,
adjusted for acquisition-related amortization expense, restructuring
charge and income tax benefit:
|
Three Months Ended
|
||||||||||||||||
December 31,
|
||||||||||||||||
2010
|
2009
|
$ Change
|
% Change
|
|||||||||||||
Net
income from continuing operations attributable to Equifax
|
62.2 | 54.9 | 7.3 | 13 | % | |||||||||||
Restructuring
charge, net of tax (1)
|
- | 10.4 | (10.4 | ) |
nm
|
|||||||||||
Income
tax benefit (2)
|
- | (7.3 | ) | 7.3 |
nm
|
|||||||||||
Net
income from continuing operations attributable to Equifax, adjusted for
restructuring charge and income tax benefit
|
62.2 | 58.0 | 4.2 | 7 | % | |||||||||||
Acquisition-related
amortization expense, net of tax
|
14.7 | 13.6 | 1.1 | 8 | % | |||||||||||
Net
income from continuing operations attributable to Equifax, adjusted for
restructuring charge, income tax benefit and acquisition-related
amortization expense
|
$ | 76.9 | $ | 71.6 | $ | 5.3 | 7 | % | ||||||||
Diluted
EPS from continuing operations attributable to Equifax, adjusted for
restructuring charge, income tax benefit and acquisition-related
amortization expense
|
$ | 0.62 | $ | 0.56 | $ | 0.06 | 10 | % | ||||||||
Weighted-average
shares used in computing diluted EPS
|
124.9 | 127.5 |
Twelve Months Ended
|
||||||||||||||||
December 31,
|
||||||||||||||||
2010
|
2009
|
$ Change
|
% Change
|
|||||||||||||
Net
income from continuing operations attributable to
Equifax
|
235.2 | 217.8 | 17.4 | 8 | % | |||||||||||
Restructuring
charge, net of tax (1)
|
- | 15.8 | (15.8 | ) |
nm
|
|||||||||||
Income
tax benefit (2)
|
- | (7.3 | ) | 7.3 |
nm
|
|||||||||||
Net
income from continuing operations attributable to Equifax, adjusted for
restructuring charge and income tax benefit
|
235.2 | 226.3 | 8.9 | 4 | % | |||||||||||
Acquisition-related
amortization expense, net of tax
|
57.2 | 51.2 | 6.0 | 12 | % | |||||||||||
Net
income from continuing operations attributable to Equifax, adjusted for
restructuring charge, income tax benefit and acquisition-related
amortization expense
|
$ | 292.4 | $ | 277.5 | $ | 14.9 | 5 | % | ||||||||
Diluted
EPS from continuing operations attributable to Equifax, adjusted for
restructuring charge, income tax benefit and acquisition-related
amortization expense
|
$ | 2.31 | $ | 2.17 | $ | 0.14 | 6 | % | ||||||||
Weighted-average
shares used in computing diluted EPS
|
126.5 | 127.9 |
nm - not
meaningful
(1)
Restructuring charge includes $16.4 million of primarily severance expense in
the fourth quarter of 2009 and $8.4 million of severance expense in
the first quarter of 2009. See the Notes to this reconciliation for
additional detail.
(2) We
recorded a $7.3 million income tax benefit during the fourth quarter of 2009
related to our ability to utilize foreign tax credits beyond 2009.
See the Notes to this reconciliation for additional detail.
12
Reconciliations
of Non-GAAP Financial Measures to the Comparable GAAP Financial Measures
(Unaudited)
(Dollars
in millions, except per share amounts)
B.
|
Reconciliation
of operating income to adjusted operating income, excluding restructuring
charge, and presentation of adjusted operating
margin:
|
Three Months Ended
|
||||||||||||||||
December 31,
|
||||||||||||||||
2010
|
2009
|
$ Change
|
% Change
|
|||||||||||||
Revenue
|
$ | 482.0 | $ | 435.4 | $ | 46.6 | 11 | % | ||||||||
Operating
income
|
$ | 109.7 | $ | 82.9 | $ | 26.8 | 32 | % | ||||||||
Restructuring
charge (1)
|
- | 16.4 | (16.4 | ) |
nm
|
|||||||||||
Adjusted
operating income, excluding restructuring charge
|
$ | 109.7 | $ | 99.3 | $ | 10.4 | 10 | % | ||||||||
Adjusted
operating margin
|
22.8 | % | 22.8 | % |
Twelve Months Ended
|
||||||||||||||||
December 31,
|
||||||||||||||||
2010
|
2009
|
$ Change
|
% Change
|
|||||||||||||
Revenue
|
$ | 1,859.5 | $ | 1,716.0 | $ | 143.5 | 8 | % | ||||||||
Operating
income
|
$ | 430.0 | $ | 381.8 | $ | 48.2 | 13 | % | ||||||||
Restructuring
charge (1)
|
- | 24.8 | (24.8 | ) |
nm
|
|||||||||||
Adjusted
operating income, excluding restructuring charge
|
$ | 430.0 | $ | 406.6 | $ | 23.4 | 6 | % | ||||||||
Adjusted
operating margin, excluding restructuring
charge
|
23.1 | % | 23.7 | % |
nm - not
meaningful
(1)
Restructuring charge includes $16.4 million of primarily severance expense in
the fourth quarter of 2009 and $8.4 million of severance expense in
the first quarter of 2009. See the Notes to this reconciliation for
additional detail.
13
Notes
to Reconciliations of Non-GAAP Financial Measures to the Comparable GAAP
Financial
Measures
Restructuring Charge – During
the fourth and first quarters of 2009, we recorded restructuring charges
primarily related to severance expense of $16.4 million, pretax, ($10.4 million,
net of tax) and $8.4 million, pretax, ($5.4 million, net of tax) respectively,
in selling, general and administrative expenses on our Consolidated Statements
of Income. Management believes excluding this charge from certain
financial results provides meaningful supplemental information regarding our
financial results for the three and twelve months ended December 31, 2010, as
compared to 2009, since a charge of such an amount is not comparable among the
periods. This is consistent with how our management reviews and assesses
Equifax’s historical performance and is useful when planning, forecasting and
analyzing future periods.
Income Tax Benefit – During the fourth
quarter of 2009, we recorded a $7.3 million income tax benefit related to our
ability to utilize foreign tax credits beyond 2009. The income tax benefit
was recorded in provision for income taxes on our Consolidated Statements of
Income. Management believes excluding the income tax benefit from certain
financial results provides meaningful supplemental information regarding our
financial results for the year ended December 31, 2010, as compared to 2009,
since income tax benefits of such material amounts are not comparable among
the periods. This is consistent with how our management reviews and
assesses Equifax’s historical performance and is useful when planning,
forecasting and analyzing future periods.
Diluted EPS from continuing
operations attributable to Equifax, adjusted for acquisition-related
amortization expense, restructuring charge and income tax benefit - We
calculate this financial measure by excluding acquisition-related amortization
expense and the 2009 restructuring charges, all net of tax, and the 2009 income
tax benefit from the determination of net income attributable to Equifax in the
calculation of diluted EPS. These financial measures are not prepared in
conformity with GAAP. Management believes that these
measures are useful because management excludes acquisition-related
amortization expense and other items that are not comparable when measuring
operating profitability, evaluating performance trends, and setting performance
objectives, and it allows investors to evaluate our performance for different
periods on a more comparable basis by excluding items that relate to
acquisition-related intangible assets and items that impact
comparability.
Adjusted operating income and
operating margin, excluding restructuring charges - Management believes
excluding the restructuring charges from the calculation of operating income and
margin, on a non-GAAP basis, is useful because management excludes items that
are not comparable when measuring operating profitability, evaluating
performance trends, and setting performance objectives, and it allows investors
to evaluate our performance for different periods on a more comparable basis by
excluding items that impact comparability.
14