Equifax 2003 Annual Report Download - page 22

M ANAGEM ENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EQUIFAX. INFORMATION THAT EMPOWERS. 19
SEGM ENT RESULTS
Our segment results for each of the three years in the period ended
December 31, 2003 are as follows:
(in millions) 2003 2002 2001
Revenues:
Equifax North America $1,015.0 $902.2 $ 852.4
Equifax Europe 130.5 126.1 141.1
Equifax Latin America 79.9 76.6 106.7
Other –4.4 9.6
Divested Operations ––29.2
Total Revenue $1,225.4 $1,109.3 $1,139.0
Operating Income (Loss):
Equifax North America $324.3 $361.6 $ 340.6
Equifax Europe 20.7 12.7 5.8
Equifax Latin America 20.0 20.3 32.0
Other –4.4 8.9
General Corporate Expense(1) (53.0) (47.7) (44.8)
312.0 351.3 342.5
Divested Operations ––(2.9)
Goodwill Amortization ––(25.4)
Restructuring and Other Charges
(Note 6) (30.6) –(60.4)
$281.4 $351.3 $ 253.8
(1)Includes shared services and administrative and legal expenses.
EQUIFAX NORTH AM ERICA
In 2003, Equifax North America generated 83% of our revenue and
89% of our operating profit before corporate expense. This seg-
ment’s revenue increased 13% in 2003. This growth was driven by
volume increases across our Information Services and Consumer
Direct operating segments. Information Services growth was
fueled by 12% growth in our U.S. consumer and commercial services
business due to higher volumes primarily from financial services
and telecommunications customers and by 30% growth in our
Mortgage Services due to higher refinancing volumes when com-
pared to 2002. Marketing Services was flat when compared to
2002. Consumer Direct revenues grew 76% when compared to
2002 due to continued growth in consumer subscriptions and
number of transactions. In 2002, the Naviant acquisition, included
in Marketing Services, positively impacted revenue growth 3.5%
for the year. As shown in the following table, our Equifax North
America segment includes revenues from our:
• U.S. Consumer and Commercial Services, which comprise
the Consumer and Commercial Services that we provide
in the U.S., which we previously referred to as U.S. Credit
Information Services;
• Mortgage Services that we provide in the U.S., which we
previously referred to as U.S. Credit Information Services;
• Canadian Operations, which comprise the Consumer Services,
Commercial Services and Credit Marketing Services that we
provide in Canada;
• Credit Marketing Services that we provide in the U.S.;
• Direct Marketing Services, comprised of the direct and email
marketing services that we provide in the U.S. and including
the products and services that we formerly referred to as our
Consumer Information Services, now including eMarketing’s
products and services; and
• Consumer Direct products and services.
EQUIFAX NORTH AM ERICA REVENUE
Revenue
(in millions) 2003 2002 2001
U.S. Consumer and
Commercial Services $508.5 $455.4 $449.2
Mortgage Services 71.6 55.2 44.4
Canadian Operations 90.8 77.4 77.5
North America Information
Services 670.9 588.0 571.1
Credit Marketing Services 158.6 164.3 166.5
Direct Marketing Services 115.8 110.5 92.9
Total M arketing Services 274.4 274.8 259.4
Consumer Direct 69.6 39.4 21.9
$1,015.0* $902.2 $852.4
*Does not total due to rounding.
YEAR 2003 COM PARED W ITH 2002
U.S. Consumer and Commercial Services revenues for 2003 grew by
$53.1 million, or 12%, when compared to 2002. The increase was
largely due to a combination of new accounts and increased volume
in existing accounts. For 2003, in our Consumer Information business,
volume increased 18% while the average price per unit decreased
9%. Average price per unit was driven by mix, volume from higher-
tiered unit pricing and new customers. Mortgage refinancing slowed
down in the second half of 2003 as mortgage interest rates rose from
their 40-year low. Mortgage Services revenue growth increased 30%
for 2003 over 2002. Our business mix shifted during 2003 toward
increased volumes in our marketing and consumer-related businesses
which have a lower price per unit of online activity. Canadian opera-
tions revenue increased by $13.4 million, or 17%, due to increased
volumes in consumer and decision solutions businesses.
Credit M arketing Services revenues decreased $5.7 million, or 3%,
compared to 2002. The year-over-year comparison reflects price
compression exacerbated by net volume decreases. Direct M arket-
ing Services revenues increased by $5.3 million, or 5%, with the
eMarketing portion being flat when 2003 is compared to 2002.
2003 provided challenges in our Direct Marketing Services busi-
nesses, especially as the regulatory environment surrounding the
business was in lengthy transition. As discussed above, we have
restructured our eMarketing business and consolidated its opera-
tions into our Direct Marketing Services. Consumer Direct revenues
were $30.2 million or 76% over the prior year due to new subscrip-
tions and an increase in renewals of our Credit Watch products.