Equifax 2000 Annual Report Download

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2000 Annual Report

Table of contents

  • Page 1
    2000 Annual Report

  • Page 2
    FINANCIAL HIGHLIGHTS (Dollars in millions, except per share amounts) Year Ended December 31 Operating Revenue Operating Income Operating Income Margin Net Income Diluted Earnings per Share EBITDA per Share* Cash Dividends per Share 2000 $1,965.9 $ 455.4 23.2% $ 228.0 $ $ 1.68 4.44 1999 $1,772.7 $ ...

  • Page 3
    ... established product lines, Credit Marketing Services. This business, which provides prescreening and portfolio management for credit card issuers, grew revenues by 28 percent as a result of a gain in market share. How? In one word: Quality. This was confirmed in a recent customer survey conducted...

  • Page 4
    ... consumer, lifestyle and demographic databases. This data facilitates new product introductions and cross-selling synergies with our existing data businesses. Compliance Data Center (CDC) was another acquisition we completed this year. This leading provider of noncompliance reports is helping...

  • Page 5
    ... benefits of Internet technology to lower costs, speed delivery and increase product penetration for our existing credit information services. The success of this distribution vehicle is evident in its growing use. Since Equifax ePORT was introduced in the second quarter of 2000, active users have...

  • Page 6
    ... consumer and commercial information to the Pan-European business community. Overseas markets represent an extraordinary opportunity for Payment Services, the area of the Company that provides credit card processing and check risk management services. The dramatic increase in credit card use outside...

  • Page 7
    ...of Check Solutions in 2000 tells quite a different story. This business had its best year ever with new products and superior technology driving this growth. As a result, Check Solutions added some of the biggest names in retailing to its customer list. A new product, ® PayCheck Accept, lowers risk...

  • Page 8
    ... value for our shareholders. The Small Business Exchange has the potential to make a significant difference for small businesses in every community in this country. Advanced technological applications can make a significant impact on the security of Internet commerce. Our consumer products...

  • Page 9
    ... Internet Solutions Products and Services: " Online Identity Authentication and Security, Digital Certificate Issuance and Management and Direct-toConsumer Online Credit Profiles, Credit Monitoring/Identity Theft Detection, Credit Scoring Customer Base: " Individual Consumers, Internet Companies...

  • Page 10
    ..., Ireland, France, Brazil, Chile, Australia and New Zealand. MAJOR OPERATING UNITS Card Solutions Products and Services: " Credit and Debit Card Processing, Card Processing Software, Portfolio Management and Analysis, Cardholder Customer Service, Card Enhancements, Credit Marketing, Risk Management...

  • Page 11
    FINANCIAL PERFORMANCE In millions 2000 1999 1998 1997 1996 OPERATING REVENUE $1,965.9 $1,772.7 $1,621.0 $1,366.1 $1,222.8 In millions 2000 1999 Lorem 1998ipsu 1997 1996 OPERATING INCOME* $455.4 $414.5 $365.7 $323.9 $266.9 In millions 2000...FROM CONTINUING OPERATIONS*** 2000 1999 1998 1997 1996...

  • Page 12
    FINANCIAL REVIEW FINANCIALS Management's Discussion and Analysis Summary of Selected Financial Data Consolidated Balance ... Notes to Consolidated Financial Statements Report of Independent Public Accountants and Report of Management Board of Directors and Officers Shareholder Information 12 20 22...

  • Page 13
    ... 2000 from growth in both Check Solutions and Card Solutions. The growth in 2000 revenue was also influenced by the acquisition of Consumer Information Services ("CIS") on May 1, 2000, the dispositions of the global risk management businesses on October 1, 2000, and the vehicle information business...

  • Page 14
    ... in 1998. During 2000, sales of the Divested Operations and the sale of an investment in a card processing operation in India resulted in a net pretax loss of $2.0 million. In 1999, the Company sold its investment in Proceda S.A. in Brazil and three risk management offices located in the U.S. that...

  • Page 15
    ...Solutions Total Payment Services General Corporate Expense Information Services North American Information Services North American Information Services includes U.S. Credit Information and Marketing Services, Mortgage Services, Canadian Operations, Knowledge Engineering, Consumer Direct and Equifax...

  • Page 16
    ... in operating margins to 20.9% in 2000 from 18.3% in 1999. Consumer Information Services Consumer Information Services includes Direct Marketing Solutions and City Directory, which were acquired on May 1, 2000. Total revenue for this eight-month period amounted to $110.5 million and includes...

  • Page 17
    ...acquired Procard, Chile's second-largest credit card processor. Also in 2000, the Company signed a five-year agreement with the National Australia Bank to process cards in Australia, New Zealand, U.K. and Ireland, starting in the second quarter of 2001. This customer will be serviced from a new card...

  • Page 18
    ... in 2000. Card Solutions has de-emphasized card software sales as it grows its global processing operations, which will utilize this proprietary software to service its customers. Partially offsetting international revenue growth was the strengthening of the U.S. dollar in 2000 and 1999. Exchange...

  • Page 19
    ... its credit reporting business to the Company (Note 8), additional sources of financing would be required. However, the agreement with CSC requires a six-month notice period, and management believes the Company could arrange alternative sources of financing within that time to fund this potential...

  • Page 20
    ... in the form of a tax-free stock dividend. The Information Services businesses will retain the Equifax Inc. corporate identity. Separating Payment Services from Equifax Inc. will create two companies, each with its own management and Board of Directors focused on taking advantage of growth...

  • Page 21
    ...) BALANCE SHEET DATA (at December 31) Total assets - continuing operations Total assets Long-term debt Shareholders' equity Common shares outstanding OTHER INFORMATION (at December 31) Stock price per share** Book value per share Market capitalization** Employees - continuing operations 2000 1999...

  • Page 22
    FINANCIAL REVIEW 1998 1997 1996 1995 1994 1993 1992 $1,620,978 $1,366,087 $1,222,798 $1,105,309 $ ... $ 2.45 $5,053,706 10,000 $ 27.41 $ 2.93 $3,970,444 9,500 $ 19.13 $ 2.40 $2,816,061 9,800 $ 11.80 $ 2.38 $1,790,667 9,600 $ 12.25 $ 1.70 $1,832,821 8,000 $ 9.23 $ 1.70 $1,399,413 7,500 $ 2 1

  • Page 23
    ...receivables Deferred income tax assets Other current assets Total current assets 2000 1999 $ 89,413 325,444 48,173 75,827 23,236 42,816 604,909 $ 136,596 302,809 67,963 19,910 28,015 54,140 609,433 Property and Equipment: Land, buildings and improvements Data processing equipment and furniture...

  • Page 24
    FINANCIAL REVIEW CONSOLIDATED BALANCE SHEETS (In thousands, except par values) December 31 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term debt and current maturities of long-term debt Accounts payable, trade Settlement payables Accrued salaries and bonuses Income taxes ...

  • Page 25
    FINANCIAL REVIEW CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) Year Ended December 31 Operating revenue Costs and expenses: Costs of services Selling, general and administrative expenses Total... diluted earnings per share Dividends per common share 2000 $1,965,881 1,119...

  • Page 26
    ... amortization Income tax benefit from stock plans Loss (gain) from sale of businesses Changes in assets and liabilities, excluding effects of acquisitions: Accounts receivable, net Current liabilities, excluding debt Settlement receivables and payables, net Other current assets Deferred income taxes...

  • Page 27
    ... retirement plan Shares issued under stock plans Treasury stock purchased Treasury stock reissued for acquisitions Cost of treasury stock transferred to employee benefits trust Cash dividends Income tax benefit from stock plans Dividends from employee benefits trusts Balance, December 31, 2000...

  • Page 28
    FINANCIAL REVIEW Accumulated Other Comprehensive Income: Minimum Foreign Liability Under Currency Supplemental Translation Retirement Plan Total Treasury Stock Stock Held By Employee Total Benefits Shareholders' Comprehensive Trust Equity Income $(13,684) - (15,313 28,997) - (128,283 157,280) ...

  • Page 29
    ...reclassified to conform with the current year presentation. Nature of Operations and Spin-off The Company principally provides information services to businesses to help them grant credit, authorize and process credit card and check transactions, and market to their customers. The principal lines of...

  • Page 30
    ... in the Company's settlement process with merchants, financial institutions, and credit card associations related to merchant and card transaction processing. Cash balances associated with the clearing system amounted to $29.0 million, $50.4 million and $25.4 million at December 31, 2000, 1999 and...

  • Page 31
    ...,885 In 2000, 1999, and 1998, the Company acquired various businesses that were accounted for as purchases (Note 2). In conjunction with these transactions, liabilities were assumed as follows: 2000 1999 1998 Fair value of assets acquired $415,657 $24,783 $540,078 Cash paid for acquisitions 383,938...

  • Page 32
    ... to the businesses above, the Company acquired the credit files of 12 credit affiliates located in the United States and 14 affiliates in Canada, as well as a portfolio of credit card merchant contracts from Heartland Payment Systems. These acquisitions were accounted for as purchases and had...

  • Page 33
    ... the Company sold its 50% interest in a credit card processing operation in India. In October 2000, the Company sold its risk management businesses located in the U.S., Canada, and the U.K., and in December 2000 sold its vehicle information business in the U.K. as well as a direct marketing business...

  • Page 34
    ... credit information products and services over several years, and was recorded in current and long-term deferred revenue. In conjunction with the U.S. risk management sale, the Company guaranteed approximately $60 million of the buyer's third-party acquisition financing which related to a portfolio...

  • Page 35
    ... credit facility with a group of commercial banks. The new facility expires November 2002. The agreement provides interest rate options tied to Base Rate, LIBOR, or Money Market indexes and contains certain financial covenants related to interest coverage, funded debt to cash flow, and limitations...

  • Page 36
    ... Plan). The Rights Plan contains provisions to protect the Company's shareholders in the event of an unsolicited offer to acquire the Company, including offers that do not treat all shareholders equally, the acquisition in the open market of shares constituting control without offering fair value...

  • Page 37
    ... of a prior year acquisition. In 1993, the Company established the Equifax Inc. Employee Stock Benefits Trust to fund various employee benefit plans and compensation programs and transferred 6,200,000 treasury shares to the Trust. In 1994 and 2000, the Company transferred 600,000 and 1,500...

  • Page 38
    ...) Balance, beginning of year Granted: At market price In excess of market price Canceled Exercised Balance, end of year Exercisable at end of year The following table summarizes information about stock options outstanding at December 31, 2000 (shares in thousands): Options Outstanding Weighted...

  • Page 39
    ... accounting for its stock option and performance share plans. Accordingly, the Company does not recognize compensation cost in connection with its stock option plans and records compensation expense related to its performance share plan based on the current market price of the Company's common stock...

  • Page 40
    ... of these plans. U.S. Retirement Plan The Company has a noncontributory qualified retirement plan covering most U.S. salaried employees. Benefits are primarily a function of salary and years of service. A reconciliation of the benefit obligation, plan assets, and funded status of the plan is as...

  • Page 41
    ... the sale of three risk management offices. At December 31, 2000, the plan's assets included 1,764,538 shares of the Company's common stock with a market value of approximately $50,620,000. Foreign Retirement Plans The Company maintains a defined benefits plan for most salaried employees in Canada...

  • Page 42
    ... option price is determined by appraisal. On November 25, 1997, CSC exercised an option, also contained in the agreement, to sell its collection businesses to the Company at a purchase price of approximately $38 million. Subsequent to November 25, 1997, the Company determined that the fair value of...

  • Page 43
    ... Services Agreements The Company has separate agreements with IBM, EDS, and Xerox Connect which outsource portions of its computer data processing operations and related functions, and expire between 2004 and 2009. The aggregate contractual obligation remaining under these agreements is currently...

  • Page 44
    ... financial data for 2000 and 1999 are as follows (in thousands, except per share amounts): 2000 Operating revenue: Information Services: North American Information Services Consumer Information Services Equifax Europe Equifax Latin America Divested Operations Other Payment Services: Card Solutions...

  • Page 45
    ...190,837 $464,239 Operating income (loss): Information Services: North American Information Services Consumer Information Services Equifax Europe Equifax Latin America Divested Operations Other Payment Services: Card Solutions Check Solutions General Corporate Expense $ 59,910 - (2,821) 4,187 6,902...

  • Page 46
    ... credit reporting in Canada; Internet identity verification and digital certificate services; and through September 2000, risk management and collection services. Consumer Information Services Consumer demographic and lifestyle information, and directories of residents and businesses. Equifax Europe...

  • Page 47
    ... Consumer Information Services Equifax Europe Equifax Latin America Divested Operations Other Payment Services: Card Solutions Check Solutions General Corporate Expense Total Assets at December 31: Information Services: North American Information Services Consumer Information Services Equifax Europe...

  • Page 48
    ... property and equipment and other assets acquired in acquisitions): Information Services: North American Information Services Consumer Information Services Equifax Europe Equifax Latin America Divested Operations Other Payment Services: Card Solutions Check Solutions Corporate $ 35,232 5,330 13,761...

  • Page 49
    ... CONSOLIDATED FINANCIAL STATEMENTS continued... Financial information by geographic area is as follows: 2000 1999 1998 Amount Operating revenue (based on location of customer): United States $1,415,153 Canada 99,849 United Kingdom 200,195 Brazil 127,367 Other 123,317 $1,965,881 Long-lived assets at...

  • Page 50
    ... consistent with cost effectiveness, and the application of formal policies and procedures that are consistent with good standards of accounting and administrative practices. Atlanta, Georgia February 23, 2001 Philip J. Mazzilli Executive Vice President and Chief Financial Officer 4 9

  • Page 51
    ... and Chief Financial Officer Larry J. Towe Executive Vice President - Payment Services Virgil P. Gardaya Corporate Vice President and Chief Technology Officer Karen H. Gaston Corporate Vice President, Human Resources & Community Relations Kent E. Mast Corporate Vice President, General Counsel and...

  • Page 52
    .... INVESTOR RELATIONS Investor requests for financial information may be directed by phone to (404) 885-8735, in writing to P.O.Box 4081, Atlanta, Georgia 30302, or by e-mail to [email protected]. Requests may be faxed to (404) 885-8988. Form10-K, the Annual Report to the Securities and Exchange...

  • Page 53
    ... where we live and work. We also thank the customers who allow us to help them facilitate and secure commerce around the world. And to our shareholders, we look forward to rewarding your support with ever-increasing value. Equifax Inc. 1550 Peachtree Street, NW Atlanta, GA, 30309 www.equifax.com