Equifax 2006 Annual Report Download - page 28

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
26 EQUIFAX 2006 ANNUAL REPORT
As used herein, the terms “Equifax,” “the Company,” “we,”
“our” and “us” refer to Equifax Inc., a Georgia corporation,
and its consolidated subsidiaries as a combined entity, except
where it is clear that the terms mean only Equifax Inc.
All references to earnings per share data in
Management’s Discussion and Analysis (“MD&A”) are to
diluted earnings per share (“EPS”) unless otherwise noted.
Diluted EPS is calculated to refl ect the potential dilution
that would occur if stock options or other contracts to issue
common stock were exercised and resulted in additional
common shares outstanding.
BUSINESS OVERVIEW
Our business plan is focused on providing a comprehensive
information database, analytical resources to transform
information into value-add insight for our customers and
technology platforms that deliver highly customized deci-
sioning tools that enable our customers to make decisions
about their customers in “real time” at the point of interac-
tion. Our products and services include consumer credit
information, information database management, marketing
information, commercial credit information, decisioning and
analytical tools, and identity verifi cation services, which
enable businesses to make informed decisions about extend-
ing credit or service, mitigate fraud, managing portfolio risk
and developing strategies for marketing to consumers and
businesses. We also enable consumers to manage and protect
their fi nancial affairs through a portfolio of products that we
sell directly and indirectly via the Internet and other market-
ing distribution channels.
Information. We collect, organize and manage numerous
types of credit, fi nancial, public record, demographic and
marketing information regarding individuals and busi-
nesses. This information originates from a variety of
sources including fi nancial or credit granting institutions,
which provide loan and accounts receivable information;
governmental entities, which provide public records of
bankruptcies, liens and judgments; and consumers who
participate in surveys and submit warranty registration
cards from which we gather demographic and marketing
information. The original data is compiled and processed
utilizing our proprietary software and systems and distrib-
uted to customers in a variety of user-friendly and value-
add formats.
Analytics and Insights. We have developed analytical tools
for customers to use in their consumer- and commercial-
oriented decisioning activities. These decisioning activities
include numerous types of consumer interactions including
customer acquisition, relationship management (e.g., up-
selling and cross-selling) and risk management.
Enabling Technologies. Our enabling technologies include
products such as ePort, Equifax APPLY™, Decision Power,
ID Authentication, Accel CM, Accel DM, LoanCenter and
InterConnect. These platforms are generally distributed
using the application service provider model to allow for
ease of integration into customers’ in-house technology
systems and to leverage our extensive technological sys-
tems and communication networks.
Segments. We are organized and report our business results
in three reportable segments: North America, Europe and
Latin America. The North America segment consists of
three operating segments: Information Services, Marketing
Services and Personal Solutions. The Europe and Latin
America reportable segments are made up of varying mixes
of three product lines: Information Services, Marketing
Services and Personal Solutions. Information Services rev-
enue is principally transaction-based and is derived from
our sales of the following product lines, a signifi cant major-
ity of which are delivered electronically: credit reporting
and scoring, mortgage reporting, identity verifi cation, fraud
detection and modeling services, and certain of our deci-
sioning products that facilitate and automate a variety of
credit-oriented decisions. Marketing Services revenue is
principally transaction-based and derived from sales of
products that help customers acquire new customers,
cross-sell to existing customers and manage portfolio risk.
Personal Solutions revenue is both transaction- and sub-
scription-based and is derived from sales of credit monitor-
ing and identity theft protection products, which we deliver
to consumers through the mail and electronically via the
Internet. For additional information regarding our report-
able and operating segments, including detailed fi nancial
results, see Note 14 of the Notes to Consolidated Financial
Statements as well as further discussion within MD&A.
As of December 31, 2006, we operated in 14 countries
covered by reportable segments: North America (the U.S.,
Canada and Costa Rica), Europe (the United Kingdom,
Republic of Ireland, Spain and Portugal) and Latin
America (Brazil, Argentina, Chile, El Salvador, Honduras,
Peru and Uruguay). We serve customers across a wide
range of industries, including the fi nancial services, retail,
telecommunications, utilities, automotive, brokerage,
healthcare and insurance industries, as well as government
agencies. We also serve consumers directly in the United
States, Canada, and the United Kingdom. Our revenue
stream is highly diversifi ed with our largest customer only
providing slightly more than 2% of total 2006 operating
revenue. Our revenues are sensitive to a variety of factors,
such as demand for, and price of, our services, technological
competitiveness, our reputation for providing timely and
reliable service, competition within our industry, federal,
state and foreign regulatory requirements governing pri-
vacy and use of data, and general economic conditions.