Equifax 2008 Annual Report Download - page 16

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MANAGEMENT’S DISCUSSION AND ANALYSIS continued
2008 revenue increased 5%, or $92.7 million, compared to impact expected 2009 revenue growth by approximately
2007 primarily due to the full year inclusion of TALX, which four percent.
was acquired on May 15, 2007. Revenue in our four other The 2007 increase in revenue, as compared to 2006, is
business units collectively declined by $33.0 million, or two primarily due to $179.4 million of incremental revenue from
percent, as growth in our International, North America Per- our acquisition of TALX. Additionally, double-digit growth in
sonal Solutions and North America Commercial Solutions our International, North America Personal Solutions and
segments through the first nine months of the year was North America Commercial Solutions segments also con-
able to partially, but not fully, offset an eight percent decline tributed to the increase in revenue, as discussed in greater
in our USCIS business. Although the impact of foreign cur- detail in ‘‘Segment Financial Results’’ below. Foreign cur-
rency exchange rates on 2008 full year revenue growth rency had a favorable impact on 2007 revenue growth of
was minimal, a strengthening of the U.S. dollar in the fourth $32.5 million, or 2%, when using 2006 exchange rates.
quarter of 2008 compared to 2007 exchange rates nega-
tively impacted fourth quarter revenue growth. If foreign
exchange rates remain at levels consistent with Decem-
ber 31, 2008, foreign currency translation would negatively
Operating Expenses
Operating Expenses Twelve Months Ended December 31, Change
2008 vs. 2007 2007 vs. 2006
(Dollars in millions) 2008 2007 2006 $ % $ %
Consolidated cost of services $ 778.8 $ 752.0 $ 626.4 $ 26.8 4% $ 125.6 20%
Consolidated selling, general and
administrative expenses 524.3 477.1 401.0 47.2 10% 76.1 19%
Consolidated depreciation and
amortization expense 155.4 127.7 82.8 27.7 22% 44.9 54%
Consolidated operating expenses $ 1,458.5 $ 1,356.8 $ 1,110.2 $ 101.7 8% $ 246.6 22%
Cost of Services. Cost of services in 2008 increased, as year-over-year. This increase was also due to a $14.4 mil-
compared to 2007, mainly as a result of our acquisition of lion charge recorded in the third quarter of 2008 related to
TALX, which contributed $38.3 million of incremental cost headcount reductions and certain contractual costs. These
period-over-period, as well as increased production and charges were related to our business realignment to better
salary costs related to growth in our Latin America opera- support our strategic objectives in the current economic
tions. These increases were partially offset by declining environment. These increases were partially offset by
costs due to decreased revenue and expense efficiency reduced personnel costs, incentive expenses and discre-
initiatives in USCIS. tionary spending based on actions taken as a response to
the deteriorating U.S. economy in 2008.
The 2007 increase in cost of services, as compared to
2006, was significantly affected by our acquisition of TALX, The 2007 increase in selling, general and administrative
which contributed $60.1 million of this increase. The expenses, as compared to 2006, was mainly due to our
remainder of the increase is primarily due to (1) higher pro- acquisition of TALX, which contributed $51.8 million of this
duction and related costs due to revenue growth, including increase. The remainder of the increase is primarily due to
costs related to converting a major customer to our ena- (1) salary costs related to increased headcount for the
bling technologies; (2) the impact of foreign currency trans- expansion of corporate capabilities in key support areas,
lation; (3) expenditures to enhance the efficiency, effective- including marketing and technology; (2) the impact of for-
ness and reliability of our information technology platforms, eign currency translation; and (3) expenses related to Aus-
processes, and development capabilities in support of our tin-Tetra (which was acquired in October 2006). This
long-term growth strategy; and (4) higher salary and con- increase was partially offset by lower litigation costs.
tractor staffing costs, partly due to increased call volume Depreciation and Amortization. The increase in deprecia-
and a second outsourced call center related to North tion and amortization expense for 2008, as compared to
America Personal Solutions. 2007, was primarily due to the inclusion of a full year of
Selling, General and Administrative Expenses. Selling, results from our acquisition of TALX, which contributed
general and administrative expense for 2008, as compared $24.3 million of incremental depreciation and amortization
to 2007, increased mainly as a result of our acquisition of expense in 2008, and a $2.4 million software write-down
TALX, which contributed $39.2 million of incremental cost charge recorded in the third quarter of 2008 associated
with our business realignment.
14 EQUIFAX INC.