Equifax 2009 Annual Report Download - page 16

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued
The decrease in revenue for 2009, as compared to 2008, was pri- 2008 revenue increased 5%, or $92.7 million, compared to 2007
marily due to continued global economic weakness, which signifi- primarily due to the full year inclusion of TALX, which was acquired
cantly impacted demand for our U.S. Consumer Information Solu- on May 15, 2007. Revenue in our four other business units collec-
tions, International and North America Personal Solutions business tively declined by $33.0 million, or 2%, as growth in our Interna-
units when compared to 2008, as well as the unfavorable effects of tional, North America Personal Solutions and North America Com-
foreign exchange rates. Foreign currency negatively impacted 2009 mercial Solutions segments through the first nine months of the year
revenue by $48.9 million, or 3%. This decrease was partially offset was able to partially, but not fully, offset an 8% decline in our USCIS
by strength in our TALX segment and Mortgage Solutions business business. Although the impact of foreign currency exchange rates
within U.S. Consumer Information Solutions. For additional informa- on 2008 full year revenue growth was minimal, a strengthening of
tion about revenue fluctuations and operating income by segment, the U.S. dollar in the fourth quarter of 2008 compared to 2007
see ‘‘Segment Financial Results’’ below. exchange rates negatively impacted fourth quarter revenue growth.
Operating Expenses
Operating Expenses Twelve Months Ended December 31, Change
2009 vs. 2008 2008 vs. 2007
(Dollars in millions) 2009 2008 2007 $ % $ %
Consolidated cost of services $ 767.8 $ 792.0 $ 757.4 $ (24.2) (3)% $ 34.6 5%
Consolidated selling, general and administrative expenses 490.3 511.1 471.7 (20.8) (4)% 39.4 8%
Consolidated depreciation and amortization expense 158.8 155.4 127.7 3.4 2% 27.7 22%
Consolidated operating expenses $ 1,416.9 $ 1,458.5 $ 1,356.8 $ (41.6) (3)% $ 101.7 8%
Cost of Services. The decrease in cost of services for 2009, as Selling, general and administrative expense for 2008, as compared
compared to the prior year, was primarily due to the impact of to 2007, increased mainly as a result of our acquisition of TALX,
foreign currency translation. The impact of foreign currency transla- which contributed $39.2 million of incremental cost year-over-year.
tion decreased our cost of services by $19.2 million during 2009. This increase was also due to a $14.4 million charge recorded in
The remaining decrease was due to lower technology outsourcing the third quarter of 2008 related to headcount reductions and cer-
costs resulting from a renegotiated contract with a large service tain contractual costs. These charges were related to our business
provider and lower personnel costs resulting from our third quarter realignment to better support our strategic objectives in the current
2008 and 2009 headcount reductions. This decrease was partially economic environment. These increases were partially offset by
offset by increased production costs related to growth in demand reduced personnel costs, incentive expenses and discretionary
for our settlement services products within our Mortgage Solutions spending based on actions taken as a response to the deteriorating
business and increased postretirement employee benefit costs. We U.S. economy in 2008.
reclassified $13.2 million and $5.4 million of selling, general and
administrative expense during the twelve months ended Decem- Depreciation and Amortization. Depreciation and amortization
ber 31, 2008 and 2007, respectively, to cost of services to conform expense increased $3.4 million over 2008. Excluding the positive
to the current period presentation. foreign currency translation impact of $2.6 million, depreciation and
amortization expense increased $6.0 million over the prior year. The
Cost of services in 2008 increased, as compared to 2007, mainly increase is primarily due to our fourth quarter 2009 acquisitions of
as a result of our acquisition of TALX, which contributed $38.3 mil- IXI Corporation and Rapid Reporting Verification Company which
lion of incremental cost period-over-period, as well as increased contributed $1.8 million of incremental depreciation and amortization
production and salary costs related to growth in our Latin America expense and the inclusion of a full year of depreciation and amorti-
operations. These increases were partially offset by declining costs zation expense for our 2008 acquisitions, partially offset by the
due to decreased revenue and expense efficiency initiatives in absence of a $2.4 million software write-down charge recognized in
USCIS. 2008.
Selling, General and Administrative Expenses. Selling, general The increase in depreciation and amortization expense for 2008, as
and administrative expenses for 2009 decreased $20.8 million when compared to 2007, was primarily due to the inclusion of a full year
compared to 2008. Of this decline, $12.7 million resulted from for- of results from our acquisition of TALX, which contributed $24.3 mil-
eign currency translation. The remaining decrease was primarily due lion of incremental depreciation and amortization expense in 2008,
to reduced legal expenses, lower technology and occupancy costs and a $2.4 million software write-down charge recorded in the third
and reduced personnel and incentive costs due to the 2008 and quarter of 2008 associated with our business realignment.
2009 headcount reductions, partially offset by a $10.4 million
increase in restructuring charges in 2009, increased advertising and
insurance costs and higher postretirement employee benefits cost.
14 EQUIFAX 2009 ANNUAL REPORT
11943 Equifax_Financials.indd 14 3/4/10 4:20 PM