Equifax 2008 Annual Report Download - page 20

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MANAGEMENT’S DISCUSSION AND ANALYSIS continued
increase in postage rates, partially offset by increased reve- to take steps to streamline operations and increase effi-
nue from new and renewed contracts to provide services ciency in order to minimize the potential negative effect on
related to our customers’ marketing databases. operating margins of lower annual revenue.
U.S. Consumer Information Solutions Operating Mar- The 2007 decline in operating margin, as compared to
gin. Operating margin decreased for 2008, as compared to 2006, was primarily a result of the fixed cost nature of the
2007, mainly due to the decline in revenue described USCIS business in the midst of revenue declines in our
above. With a high portion of fixed costs, USCIS operating Mortgage Solutions, Credit Marketing Services and Direct
expenses generally do not decline at the same rate as our Marketing Services business units. While revenue of the
revenue. The decline in revenue was partially offset by entire USCIS business was essentially flat, the operating
lower production and royalty costs due to a decrease in expense of maintaining the databases, products, and cus-
volume, as well as the impact of cost saving initiatives. tomer support capabilities required for the business
Recognizing the continuing impact in 2009 of current eco- increased by 2.4%, reflecting annual compensation
nomic conditions, management has taken and is continuing increases and enhanced product, processing and support
capabilities.
International
International Twelve Months Ended December 31, Change
2008 vs. 2007 2007 vs. 2006
(Dollars in millions) 2008 2007 2006 $ % $ %
Operating revenue:
Europe $ 175.0 $ 183.8 $ 153.6 $ (8.8) (5)% $ 30.2 20%
Latin America 219.9 182.5 154.0 37.4 20% 28.5 19%
Canada Consumer 110.8 106.5 95.2 4.3 4% 11.3 12%
Total operating revenue $ 505.7 $ 472.8 $ 402.8 $ 32.9 7% $ 70.0 17%
% of consolidated revenue 26% 26% 26%
Total operating income $ 149.9 $ 141.1 $ 118.1 $ 8.8 6% $ 23.0 20%
Operating margin 29.6% 29.8% 29.3% (0.2) pts 0.5 pts
For 2008, as compared to 2007, revenue increased primar- fluctuation against the U.S. dollar favorably impacted
ily due to growth in Latin America and Canada; offset by a 2007 Europe revenue growth by $14.6 million, or 10%, as
decline in Europe due to weakness in the U.K. economy. revenue was up 10% in local currency.
Local currency fluctuation against the U.S. dollar minimally Latin America. For 2008, as compared to 2007, increased
impacted our International revenue in 2008 and provided a revenue was driven by double-digit growth in all countries
favorable impact in 2007 of $31.0 million, or 7%. In local in which we operate. Local currency fluctuation against the
currency, revenue was up 7% in 2008 and 10% in 2007, U.S. dollar favorably impacted Latin America revenue
when compared to the prior year. The 2007 increase in growth by $9.3 million, or 5%, for 2008, when compared
revenue, as compared to 2006, is attributable to growth in to 2007, as revenue in local currency grew 15%, when
all three geographical areas. As noted above regarding our comparing these periods. This broad-based revenue
consolidated operating revenue, if foreign exchange rates growth was primarily due to higher volumes related to our
remain at levels consistent with December 31, 2008, for- online solutions, enabling technologies and marketing prod-
eign currency translation would negatively impact expected ucts, as well as a new contract in Brazil to provide data to
2009 revenue by approximately $80 million. a large regional consumer services data provider. The
Europe. The decrease in revenue for 2008, as compared increases were also impacted by acquisitions of several
to 2007, was primarily due to the impact of foreign cur- small businesses in Ecuador, Chile, Argentina, Brazil and El
rency. Local currency fluctuation against the U.S. dollar Salvador during 2008.
negatively impacted Europe revenue by $8.4 million, or 5%, The 2007 increase in revenue, as compared to 2006, was
for 2008, when compared to 2007. Growth in the U.K. in driven by double-digit sales growth in six of the seven
the first half of 2008 was offset by declines in revenue, country markets in which we operate, primarily due to
when compared to 2007, in the last six months of 2008 higher volumes of our online solutions, enabling technolo-
attributable to the weakening U.K. economy. The 2007 gies and marketing products. This was partially offset by
increase in revenue, as compared to 2006, was mainly weaker performance, in local currency, from Brazil due to
attributable to our consumer risk products, with volume increased competition, as volumes from small- and
increases in the U.K. and new customers and pricing man-
agement strategies in Spain and Portugal. Local currency
18 EQUIFAX INC.