Equifax 2004 Annual Report Download - page 33

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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Services. These asset write-downs, personnel reductions and
facility consolidations provided a more effi cient operating
structure for 2004.
PERSONAL฀SOLUTIONS
Personal Solutions revenues for 2003 increased $30.1 mil-
lion, or 76%, compared to 2002 due to increased volume.
Personal Solutions operating income was $9.2 million, an
increase of $0.2 million.
EQUIFAX฀EUROPE
Equifax Europe, which includes the results of our opera-
tions in the U.K., Spain and Portugal, and our support
operations in Ireland, continued to improve its profi t and
operating margins through expense reductions and operat-
ing effi ciencies. Revenues increased from $112.1 million
to $115.8 million, including a favorable currency impact
of $13.2 million. Our U.K. operations generated 88% of
Equifax Europe’s revenues in 2003.
Operating expenses in 2003 of $92.9 million declined
5%. U.K. expenses were fl at for 2003, driven by our 2002
restructuring plan focused on rationalizing our U.K. opera-
tions and productivity. The commercial business in Spain
has been held for sale since the third quarter of 2002. We
were negotiating with a new prospective buyer at the end of
2003. We wrote down the carrying value of the discontinued
operation an additional $2.8 million to refl ect the impact of
the current offer. Operating income of $22.9 million increased
65% over 2002 driven by U.K. expense reductions. We con-
tinue to focus on driving operational effi ciencies in our
European businesses and expected continued margin
improvement in 2004.
EQUIFAX฀LATIN฀AMERICA
Revenues of our Equifax Latin America segment, which
includes results of our operations in Brazil, Argentina, Chile,
Peru, Uruguay and El Salvador, operated in an environment
of economic stabilization and increased 4% to $79.9 mil-
lion. Currency devaluation negatively impacted our Latin
America revenues by $3.0 million, of which Brazil accounted
for $2.3 million. Brazil’s revenues grew 6% in 2003 driven by
performance in commercial reporting services.
Operating income stayed fl at at $20.0 million compared to
2002. Equifax Latin America delivered solid operating mar-
gins of 25% in 2003 versus 26% in 2002.
GENERAL฀CORPORATE
Our general corporate expenses are expenses that are
incurred at the corporate level and have no clear relation-
ship in their support of our business units, and ultimately
the reportable segments. Included are shared services
and administrative and legal expenses. General corporate
expense increased $5.3 million in 2003 primarily due to
higher compensation expense from salaries absorbed due
to the repatriation of our previously outsourced accounting
operations and human resources center.
CONSOLIDATED฀OUTLOOK฀FOR฀2005
Looking forward, we believe that the performance of our
business units in 2004 positions our company well for 2005.
During 2005 we expect:
• Modest improvement in the U.S. economy. The rate at
which the economy grows is one of the key indicators of
fi nancial condition and operating performance for our
company. As the economy improves, the need for our
services also increases. However, if the economy does
not improve as forecasted, we expect low interest rates to
sustain demand in mortgage-related activity and to offset
slower growth in our other markets.
• U.S. Consumer and Commercial Services will continue its
solid performance. Revenue growth was 3% in 2004 and
14% in 2003. Unit growth was 20% in 2004 and 18% in
2003. Based on our ability to develop new business, we
expect current trends to continue and that revenue and
unit growth will be sustainable for 2005, and favorable
when compared to 2004.
• Marketing Services’ performance will depend greatly
on the overall U.S. economy. Year over year declines in
revenue over the last two years refl ects declining overall
customer demand for these types of services. Assuming
an improvement in the overall U.S. economy, however, we
expect revenue to grow in 2005 compared to 2004. New
leadership and implementation of our new Accel technol-
ogy platform will support revenue growth and additional
expense reductions in 2005.
• Personal Solutions will continue to grow, aided by con-
sumers’ increased focus on fi scal responsibility and iden-
tity theft. As the FACT Act is fully implemented in 2005,
consumer awareness regarding fi scal responsibility and
identity theft should increase. We have signifi cant oppor-
tunities to market additional Personal Solutions products
and services to consumers. Additionally, we continue to
observe positive trends in customers renewing subscrip-
tions and ordering additional products and services.