Equifax 2003 Annual Report Download - page 33

M ANAGEM ENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As of December 31, 2003, a 10% weaker U.S. dollar against the
currencies of all foreign countries in which we had operations
during 2002, would have resulted in an increase of our revenues
by $33.3 million, and an increase of our pre-tax operating profit
by $8.2 million. A 10% stronger U.S. dollar would have resulted
in similar decreases to our revenues and pre-tax operating profit.
INTEREST RATE RISK
Our exposure to market risk for changes in interest rates primarily
relates to our variable rate revolving credit debt and the interest
rate swap agreements associated with portions of our fixed rate
public debt.
We attempt to achieve the lowest all-in weighted average cost of
debt while simultaneously taking into account the mix of our fixed
and floating rate debt, and the average life and scheduled maturi-
ties of our debt. At December 31, 2003, our weighted average cost
of debt was 4.0% and the weighted average life of our debt was
6.3 years.
We generally target a mix of fixed and floating rate debt which
lies within a range of 30-70% fixed, with the balance being floating
rate. As of December 31, 2003, 49% of our debt was fixed rate, and
the remaining 51%, floating rate. We use derivatives to manage
our exposure to changes in interest rates by entering into interest
rate swaps. As of December 31, 2003, we had $279.0 million,
notional amount, of interest rate swap agreements outstanding
with bank counterparties.
Our variable rate indebtedness consists primarily of our $465.0 mil-
lion revolving credit facility and a separate C$100.0 million revolv-
ing credit facility in Canada. The rate of interest we pay on our
$465.0 million facility is based on a floating rate pricing grid tied to
our long-term senior unsecured debt rating. We are currently rated
A- by Standard & Poor’s and Baa1 by Moody’s Investor Service.
In the case of a split rating, pricing is based on the higher rating,
i.e. A- from S&P. We can borrow under the facility at floating rates
of interest tied to Base Rate and LIBOR. A competitive bid option
is also available, dependent on liquidity in the bank market. At
December 31, 2003, $137.1 million of debt was outstanding and
$327.9 million of additional borrowing capacity was available
under this facility. Borrowings under our Canadian facility bear
interest at a floating rate tied to Prime, LIBOR, or Canadian
Banker’s Acceptances. As of December 31, 2003, C$20.0 million
(US$15.4 million) of debt was outstanding, and C$80.0 million
(US$61.7 million) of additional borrowing capacity was available
under our Canadian facility.
30 EQUIFAX. INFORMATION THAT EMPOWERS.
Reconciliation of GAAP to Non-GAAP information (in millions, except per share data) is as follows:
2003 EPS 2001 EPS
Operating revenue, GAAP $1,139.0
Divested operations (29.2)
Operating revenue, Non-GAAP $1,109.8
Operating income, GAAP $312.0 $ 253.8
Divested operations –2.9
Goodwill amortization –25.4
Asset impairment, restructuring, and
other related charges 35.8 60.4
Operating income, Non-GAAP $347.8 $ 342.5
Income from continuing operations, GAAP $178.5 $1.31 $ 117.3 $0.84
Divested operations –6.6 0.06
Goodwill amortization –18.5 0.13
Asset impairment, restructuring, and
other related charges 22.6 0.17 35.3 0.25
Income from continuing operations, Non-GAAP $201.1 $1.48 $ 177.7 $1.28
Shares used in computing diluted earnings per share 136.7 139.0