Equifax 2011 Annual Report Download - page 18

Operating Income and Operating Margin
Operating Income and
Operating Margin Twelve Months Ended December 31, Change
2011 vs. 2010 2010 vs. 2009
(Dollars in millions) 2011 2010 2009 $ % $ %
Consolidated operating revenue $ 1,959.8 $ 1,859.5 $ 1,716.0 $100.3 5% $143.5 8%
Consolidated operating expenses (1,488.8) (1,429.5) (1,334.2) (59.3) 4% (95.3) 7%
Consolidated operating income $ 471.0 $ 430.0 $ 381.8 $ 41.0 10% $ 48.2 13%
Consolidated operating margin 24.0% 23.1% 22.2% 0.9 pts 0.9 pts
Operating income from continuing operations for 2011 increased
faster than revenue due to better operating leverage from revenue
growth and business mix as well as the deconsolidation of Brazil,
which reduced reported revenue, but which had little impact on
operating profit because it had been operating near break-even.
These factors resulted in operating margin improvement of 90 basis
points to 24.0% compared to 2010.
The increase in operating income from continuing operations and
operating margin for 2010, as compared to 2009, is primarily
attributed to the 8% increase in revenue and $24.8 million of
restructuring charges in 2009 that did not recur in 2010.
Other Expense, Net
Other Expense, Net Twelve Months Ended December 31, Change
2011 vs. 2010 2010 vs. 2009
(Dollars in millions) 2011 2010 2009 $ % $ %
Consolidated interest expense $ 55.1 $ 56.1 $ 57.0 $ (1.0) -2% $ (0.9) -2%
Consolidated other expense (income), net 7.7 (1.3) (6.2) 9.0 nm 4.9 -79%
Consolidated other expense, net $ 62.8 $ 54.8 $ 50.8 $ 8.0 15% $ 4.0 8%
Average cost of debt 5.5% 5.2% 4.8%
Total consolidated debt, net, at year end $1,013.2 $999.6 $1,174.1 $13.6 1% $(174.5) -15%
nm — not meaningful
Interest expense decreased slightly in 2011, when compared to the
same period in 2010, due to lower average debt balances outstand-
ing for 2011 as compared to 2010. Our consolidated debt balance
has increased at December 31, 2011, as a result of additional bor-
rowings in the form of commercial paper, on which interest rates and
accordingly interest expense are currently very low. The increase in
the average cost of debt for 2011 is due to less low rate commercial
paper outstanding on average year to date which caused the average
cost of debt to increase as compared to the prior year period.
Interest expense decreased slightly for 2010, when compared to
2009, as a decrease in our average debt balance from $1.18 billion
to $1.07 billion more than offset an increase in the average interest
rate on our total debt from 4.8% in 2009 to 5.2% in 2010. The
increase in our average interest rate paid was caused by a reduction
in short term, floating rate commercial paper, while longer term fixed
rate debt outstanding remained essentially unchanged.
Other expense (income), net, from continuing operations for 2011
increased $9.0 million as compared to the prior year. The increase is
primarily due to the merger of our Brazilian business during the
second quarter of 2011. On May 31, 2011, we completed the merger
of our Brazilian business with BVS, which was accounted for as a
sale and was deconsolidated, in exchange for a 15% equity interest
in BVS. We recorded a $10.3 million pre-tax loss on the Brazilian
Transaction in other expense (income), net.
Other expense (income), net, for 2010 as compared to 2009,
declined, as 2009 included a $2.2 million mark-to-market adjustment
on certain insurance policies, a $1.1 million gain on our repurchase of
$7.5 million principal amount of our ten-year senior notes due 2017
and a $1.3 million gain related to a litigation settlement.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued
EQUIFAX 2011 ANNUAL REPORT
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