Equifax 2004 Annual Report Download - page 32

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
O F F I N A N C I A L C O N D I T I O N A N D R E S U L T S O F O P E R A T I O N S
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Revenue for 2003 increased $115.4 million, or 11%, com-
pared to 2002 primarily with growth in Information Services
and Personal Solutions. Consolidated operating margin for
2003 was 26% compared to 32% for the prior year with total
costs and expenses as a percent of total revenue increasing
to 74% from 68% the prior year. The primary causes for
the increase in operating expenses in 2003 were increased
eMarketing Services operating expenses, the December 2003
eMarketing asset impairment and related charges.
North America operating profi t for 2003 declined $37.3 mil-
lion, or 10%, compared to 2002 due primarily to increased
eMarketing Services operating expenses, the December
2003 eMarketing asset impairment and related charges.
Operating profi t in Europe improved $9.0 million, or 65%,
due primarily to expense reductions and operating effi cien-
cies. Operating profi t in Latin America was relatively fl at
compared to 2002.
EQUIFAX฀NORTH฀AMERICA
INFORMATION฀SERVICES
U.S. Consumer and Commercial Services revenues for
2003 increased by $61.9 million, or 14%, when compared
to 2002 due to higher volumes and market share primar-
ily from our fi nancial services and telecommunications
customers. For 2003, in our Consumer Information busi-
ness, 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 Services revenue increased 30% for
the year ended December 31, 2003, when compared to
2002. Mortgage refi nancing slowed down in the second
half of 2003 as mortgage interest rates rose from their 40
year low. Canadian operations increased $13.5 million, or
17%; excluding the favorable impact of currency, revenue
was up 5% when compared to 2002. Operating income
for 2003 was $296.9 million for Information Services, an
increase of $29.7 million, or 11%. The increase in oper-
ating income is primarily the result of increased revenue
offsetting increased costs in correlation to increased volume
in our fi nancial services, utilities and telecommunications
vertical lines of business.
MARKETING฀SERVICES
Credit Marketing Services revenues for 2003 decreased
$14.5 million, or 9%, compared to 2002. The year-over-
year comparison is primarily due to net volume decreases.
Direct Marketing Services revenues increased by $5.4 mil-
lion, or 5%, with the eMarketing portion being fl at when
2003 is compared to 2002. 2003 provided challenges in our
Direct Marketing Services businesses, especially as the regu-
latory environment surrounding the business was in lengthy
transition. As discussed above, we have restructured our
eMarketing business and consolidated its operations into
Direct Marketing Services.
Marketing Services operating income for 2003, net of
$30.6 million in asset impairment and related charges, was
$18.2 million, a decrease of $67.2 million. In the second
quarter of 2003 in our eMarketing business, $4.3 million
in purchased data that was determined to be of no value
and $4.2 million in receivables that were determined to be
uncollectible were written off. We severed our relationship
with those members responsible for these write-offs. In the
fourth quarter of 2003, to bring eMarketing costs in line
with eMarketing revenue, we recorded $30.6 million in
asset impairments and related charges to complete the con-
solidation of eMarketing services into Direct Marketing
(in millions)
2003 % of Revenue
2002 % of Revenue $ Change % Change
Equifax North America Revenue:
U.S. Consumer and
Commercial Services
$ 517.3 51%
$455.4 51% $
61.9 14%
Mortgage Services
71.6 7%
55.2 6% 16.4 30%
Canadian Operations
90.9 9%
77.4 9% 13.5 17%
Total North America
Information Services
679.8 67%
588.0 66% 91.8 16%
Credit Marketing Services
149.8 15%
164.3 18% (14.5) –9%
Direct Marketing Services
115.9 11%
110.5 12% 5.4 5%
Total Marketing Services
265.7 26%
274.8 30% (9.1) –3%
Personal Solutions
69.5 7%
39.4 4% 30.1 76%
$1,015.0 100%
$902.2 100% $112.8 13%