Equifax 2006 Annual Report Download - page 32

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
30 EQUIFAX 2006 ANNUAL REPORT
North America
Information Services
For the twelve months ended December 31, 2006,
Information Services revenue was $835.5 million, an
increase of $29.2 million, or 4%, when compared to the
same period in 2005. Fluctuations in the Canadian dollar
against the U.S. dollar favorably impacted our 2006
Information Services revenue by $7.6 million.
U.S. Consumer and Commercial Services revenue for the
twelve months ended December 31, 2006 totaled $645.6 mil-
lion, an increase of $35.2 million, or 6%, when compared to
the same period in 2005. This increase is primarily due to
higher sales volume to our fi nancial services customers and
increased revenue from our commercial information services
products, which offset some decline in telecommunication
accounts and price compression. In our U.S. Consumer
Information business, online volume was approximately
650 million transactions, up 6% year-over-year.
Mortgage Solutions revenue for the twelve months
ended December 31, 2006 totaled $71.7 million, a decrease
of $13.4 million, or 16%, as compared to the same period a
year ago. This decrease is primarily due to volume declines
from a large customer that changed its retail mortgage
business model, as well as less favorable mortgage market
conditions, including higher interest rates that resulted in
lower refi nancing and mortgage origination activity.
Canadian revenue for the twelve months ended
December 31, 2006 totaled $118.2 million, an increase of
$7.4 million, or 7%, when compared to the same period in
2005. Local currency fl uctuation against the U.S. dollar
favorably impacted our Canadian revenue by $7.6 million,
or 7%. Accordingly, in local currency, revenue in Canada
for the twelve months ended December 31, 2006 was fl at
when compared to the same period in 2005.
Information Services operating income was $343.3 mil-
lion, a decrease of $2.2 million, or 1%, from the same period
a year ago. Information Services operating margin was 41.1%
for the twelve months ended December 31, 2006, versus
42.8% for the same period in 2005. The decline in
Information Services operating income and operating mar-
gin was primarily driven by changes in business mix which
resulted in price compression; increased tax and legal
expenses; higher technology and fulfi llment-related costs;
and the $4.0 million, pretax, loss contingency related to
certain pending legal matters.
Marketing Services
For the twelve months ended December 31, 2006,
Marketing Services revenue was $277.2 million, an increase
of $23.5 million, or 9%, when compared to the same period
in 2005. Credit Marketing Services revenue for the twelve
months ended December 31, 2006 totaled $166.3 million,
an increase of $15.6 million, or 10%, when compared to the
same period in 2005. The increase in Credit Marketing
Services revenue is primarily due to higher volume mainly
from national and regional customers for certain of our
products that target new customers and our account man-
agement product offerings, as well as continued demand
for core prescreen products and data sales. Direct Marketing
Services revenue for the twelve months ended December 31,
2006, totaled $110.9 million, an increase of $7.9 million, or
8%, as compared to the same period in 2005. This increase
was primarily due to the acquisition of BeNow, Inc.
(“BeNow”) in August 2005.
Total Marketing Services operating income for the twelve
months ended December 31, 2006, was $99.1 million, an
increase of $13.9 million, or 16%. Total Marketing Services
operating margin was 35.7% for the twelve months ended
December 31, 2006, versus 33.5% for the same period in
2005. The increase in total Marketing Services operating
income was due to revenue growth, mainly related to higher
volume, and lower production expenses as more projects
migrate to our Accel platform, which was offset partly by
increased royalty costs.
Personal Solutions
Personal Solutions revenue for the twelve months ended
December 31, 2006 totaled $126.0 million, an increase of
$11.3 million, or 10%, compared to the same period in
2005. This increase is primarily due to higher revenue
related to subscription-based products, mainly driven by
our 3-in-1 Monitoring product, as we continue to transition
from a transaction-based product mix to subscription-
based products. We also increased revenues through tar-
geted advertising and improvement in the conversion of
inquiries to sales. Revenue also increased due to solutions
provided in third-party data breaches.
Personal Solutions operating income for the twelve
months ended December 31, 2006 increased $0.1 million,
to $13.6 million, compared to $13.5 million for the same
period in 2005. Personal Solutions operating margin was
10.8% for the twelve months ended December 31, 2006,
versus 11.8% for the same period in 2005. The slight
increase in operating income was due to growth from
increased subscription-based revenue, largely offset by vol-
ume-related costs and the recognition of $5.0 million in
pretax loss contingencies related to certain legal matters.
Of this $5.0 million loss, $4.0 million was recognized in
selling, general and administrative expenses and $1.0 mil-
lion was recorded in cost of services on our Consolidated
Statement of Income during the twelve months ended
December 31, 2006.