Equifax 2002 Annual Report Download - page 23

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results
of operations should be read in conjunction with our financial
statements and the related notes included in this Annual Report.
This discussion contains forward-looking statements. Also see the
section “Forward-Looking Statements” on page 33, and “Risk
Factors” in our Form 10-K filed with the Securities and Exchange
Commission for a discussion of the uncertainties, risks, and
assumptions associated with these statements.
OVERVIEW
As a leading source of consumer and commercial credit informa-
tion, we collect, organize and manage various types of financial,
demographic, and marketing information. Our products and serv-
ices enable businesses to make credit and service decisions,
manage their portfolio risk, and develop marketing strategies con-
cerning consumers and commercial enterprises. We serve cus-
tomers across a wide range of industries, including the financial
services, mortgage, retail, telecommunications, utilities, automo-
tive, brokerage, healthcare and insurance industries, as well as
state and federal governments. We also enable consumers to
manage and protect their financial health through a portfolio of
products offered directly to individuals. We have approximately
5,000 employees worldwide, and manage our business globally
through the following three operating segments: Equifax North
America, Equifax Europe, and Equifax Latin America. Our opera-
tions are predominantly located within the United States, with
foreign operations principally located in Canada, the United
Kingdom, and Brazil.
Our products and services are categorized as follows: Information
Services, Marketing Services, and Consumer Direct. Our Information
Services products and services allow customers to make credit
decisions about consumers and commercial enterprises. Our
Marketing Services information products and databases enable
customers to identify a target audience for marketing purposes,
and our Consumer Direct products and services provide informa-
tion to consumers that enable them to reduce their exposure to
identity fraud and to monitor their credit health.
We develop, maintain, and enhance secured proprietary information
databases through compilation of accounts receivable information
about consumers and businesses that we obtain from a variety
of sources, such as credit granting institutions, public record
information, including bankruptcies, liens, and judgments, and mar-
keting information from surveys and warranty cards. We process
this information utilizing our information management systems and
make it available to our customers in a user-friendly format.
SUMMARY OF SELECTED
RECENT EVENTS
Acquisitions. In November 2002, we acquired consumer credit
files, contractual rights to territories, and customer relationships
and related businesses from CBC Companies, Inc., or CBC, an
independent credit reporting agency, for $95.0 million in cash.
The purchased CBC database includes customers from Ohio,
Florida, West Virginia, South Dakota, North Dakota and Indiana.
In August 2002, we acquired Naviant, Inc. for $135.0 million in
cash. Naviant is a direct marketing company with a database of
permission-based email addresses. Naviant’s products and serv-
ices enable marketers to identify, target, and build consumer rela-
tionships through email marketing.
$250.0 Million Note Offering. In October 2002, we completed
the sale of $250.0 million aggregate principal amount of our
4.95% senior unsecured notes, which mature November 1, 2007.
The proceeds were used to pay down our revolving credit facility
and for general corporate purposes, including the November 2002
acquisition of assets from CBC. In turn, we will borrow $200.0 mil-
lion under our revolving credit facility to retire our $200.0 million
aggregate principal amount of outstanding 6.5% senior unsecured
notes, which mature June 2003. See Note 6 to our Consolidated
Financial Statements.
Discontinued Operations – 2002 Spain Commercial and 2001
Spin-off of Certegy. In the third quarter of 2002, we initiated a plan
to exit our commercial reporting business in Spain, which is now
held for sale. Our decision to exit the business was driven by unfa-
vorable growth prospects in this market and unsatisfactory finan-
cial performance. Discontinued after tax losses totaled $13.3 million
in 2002 including a $9.0 million ($0.07 per share) estimated loss on
disposal. The results for this business in 2001 and 2000 were not
material, as revenues were less than 1% of our total sales, and
thus have not been reclassified to Discontinued Operations.
On July 7, 2001, we completed the spin-off of our Payment
Services segment. The spin-off was accomplished by the consoli-
dation of the business units that comprised our Payment Services
segment into a separate, wholly-owned subsidiary, Certegy Inc.,
and the subsequent distribution of all of the common stock of
Certegy to our shareholders. As a result of the spin-off, our his-
torical financial statements have been restated with Certegy’s
net assets, results of operations and cash flows classified as
“Discontinued Operations.” See Note 2 to the Consolidated
Financial Statements.
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