Equifax 2001 Annual Report Download - page 24

22
Equifax
M anagement’s Discussion & Analysis of
Financial Condition & Results of Operations
Overview
For an understanding of the significant factors
that influenced the Company’s results, the
following discussion should be read in conjunc-
tion with the consolidated financial statements
and related notes.
Equifax Inc. is a leading source of consumer
and commercial credit information worldwide.
The Company provides to a wide range of cus-
tomers information management, consumer
credit information, marketing, business infor-
mation, and identity verification services to
enable credit and business decisions. The
Company, through its Consumer Direct busi-
ness, provides credit reporting and identity
theft monitoring services direct to consumers
enabling them to proactively manage their
credit health and safeguard against identity
theft. The Company is the market leader for
credit information services in North America.
Equifax Inc.’s 2001 financial reporting was signif-
icantly impacted by the spin-off of its Payment
Services business (“ Certegy” ), divestitures of
non-core businesses (“ Divested Operations” ),
and restructuring and other charges recorded
in the fourth quarter of 2001. Excluding these
transactions, Equifax reported record revenues,
earnings and cash flow for its core business,
largely attributable to performance in its North
American Information Services businesses.
Significant 2001 financial highlights were:
– Consolidated revenues increased 8% to
$1.1 billion.
– Diluted earnings per share increased 5% to
$1.15, before restructuring and other charges
of $60 million (pre-tax).
– Consolidated operating margins were 29%.
– North American revenues increased 13% and
operating income increased 14%.
– U.S. consumer reporting volumes grew 20%.
– The Consumer Direct business more than
tripled revenues.
– Free cash flow grew to $208 million,
a 72% increase over 2000.
Significant Transactions
On July 7, 2001, Equifax completed the spin-off
of Certegy into a separate, publicly traded com-
pany. The spin-off permitted both companies to
focus on growth in their core businesses with
dedicated resources, and the continued cre-
ation of shareholder value. As a result of the
spin-off, the Company’s financial statements
have been prepared with Certegy’s net assets,
results of operations and cash flows classified
as “discontinued operations,” with all histori-
cal financial statements restated to conform
to this presentation.
In October 2001, the Company divested its City
Directory business and, in the fourth quarter of
2000, sold its global risk management and U.K.
vehicle information businesses. Combined rev-
enues for these businesses in 2001 and 2000 were
$29 million and $162 million, respectively,
with a 2001 operating loss of $3.6 million and
2000 operating income of $9.0 million. The
operating results of these businesses are clas-
sified in Divested Operations for segment
reporting purposes.
In the fourth quarter of 2001, restructuring and
other charges were recorded in connection with
efforts to properly size and configure our post-
spin business and to align our cost structure in
our international operations. The charge totaled
$60 million ($35 million after tax or $0.25 per
diluted share) and consisted of approximately
$37 million for employee severance and facili-
ties consolidation and $23 million to write down
several technology investments.
Financial Results
The following table summarizes Equifax’s Core
Business and As Reported results from continu-
ing operations for each of the three years in the
period ended December 31, 2001.