Equifax 2007 Annual Report Download - page 39

EQUIFAX | 2007 ANNUAL REPORT 37
The 2006 decline in operating margin was primarily driven
by changes in business mix which resulted in price compression;
increased sales tax and legal expenses; higher technology and
fulfillment-related costs; and the $4.0 million, pretax, loss
contingency related to litigation loss contingency recorded in the
third quarter of 2006.
The 2007 and 2006 increases in revenue are attributable to
growth in all three geographical areas. Local currency fl uctuation
against the U.S. dollar favorably impacted our International
revenue by $31.0 million, or 7%, in 2007 and $17.1 million, or 5%,
in 2006. Revenue was up 10% in local currency in 2007 and
7% in 2006.
Europe. The 2007 increase in revenue was mainly attributable
to our consumer risk products, with volume increases in the U.K.
and new customers and pricing management strategies in Spain and
Portugal. Local currency fl uctuation against the U.S. dollar favorably
impacted our European revenue by $14.6 million, or 10%, as revenue
was up 10% in local currency.
The 2006 increase in revenue was primarily due to higher
consumer information services activity associated with new
business and increased volumes from existing customers, as well
as increased volumes related to our commercial services business.
Local currency fl uctuation against the U.S. dollar favorably impacted
our European revenue by $2.2 million, or 1%, as revenue was up
7% in local currency.
Latin America. The 2007 increase in revenue was driven by double
digit sales growth in 6 of the 7 country markets in which we operate,
primarily due to higher volumes of our online solutions, enabling
technologies and marketing products. This was partially offset by
weaker performance, in local currency, from Brazil due to increased
competition, as volumes from small- and medium-sized customers
declined. Local currency fl uctuation against the U.S. dollar favorably
impacted our Latin America revenue by $10.2 million, or 7%, as
revenue grew 12% in local currency in 2007.
The 2006 increase was primarily due to broad-based pricing
increases in core information products, higher pricing for high-
value products, new product introductions and favorable foreign
currency impact. Six country markets in Latin America experienced
double-digit revenue growth in U.S. dollars in 2006 and 5 of the 7
country markets had double-digit growth in local currency. Local
currency fl uctuation against the U.S. dollar favorably impacted
our Latin America revenue by $8.9 million, or 7%, as revenue grew
14% in local currency in 2006.
Canada Consumer. The 2007 increase in revenue was primarily
driven by price and volume increases for our consumer risk
products, as well as increased volumes for marketing products.
Local currency fl uctuation against the U.S. dollar favorably
impacted our Canada Consumer revenue by $6.1 million, or 6%,
as revenue grew 6% in local currency in 2007.
The 2006 increase in revenue was primarily due to the impacts
of favorable currency fl uctuations. Local currency fl uctuation
against the U.S. dollar favorably impacted our Canada Consumer
revenue by $6.0 million, or 6%, as revenue growth was fl at in
local currency in 2006.
International Operating Margin. The 2007 increase in operating
margin was primarily driven by revenue growth, partially offset by
higher production costs and increased salary costs due to additional
headcount as we invest for international growth. The increase in
production costs was impacted by certain vendor price reductions
received by our European business during 2006 that did not recur
in 2007. We also invested in our Canada Consumer business for
mainframe and data center improvements.
The 2006 increase in operating margin was primarily driven by
higher pricing for selected high-value products in Latin America,
and higher sales volume and continued focus on controlling
expenses, including certain vendor price reductions received during
the six months ended June 30, 2006 in Europe. These increases
were partially offset by higher production costs from rising sales
volumes related to our consumer and commercial businesses and
increased investment in the business in Europe.
INTERNATIONAL
Twelve Months Ended December 31, Change
2007 vs. 2006 2006 vs. 2005
(Dollars in millions) 2007 2006 2005 $ % $ %
Operating revenue:
Europe $183.8 $153.6 $142.0 $30.2 20% $11.6 8%
Latin America 182.5 154.0 126.7 28.5 19% 27.3 21%
Canada Consumer 106.5 95.2 89.6 11.3 12% 5.6 6%
Total operating revenue $472.8 $402.8 $358.3 $70.0 17% $44.5 12%
% of Consolidated Revenue 26% 26% 25% nm nm nm nm
Total operating income $141.1 $118.1 $100.8 $23.0 20% $17.3 17%
Operating margin 29.8% 29.3% 28.1% nm 0.5% nm 1.2%
nm - not meaningful