Equifax 2012 Annual Report Download - page 17

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Equifax 2012 Annual Report
Operating Expenses
Operating Expenses Twelve Months Ended December 31, Change
2012 vs. 2011 2011 vs. 2010
(Dollars in millions) 2012 2011 2010 $% $%
Consolidated cost of services $ 829.1 $ 758.8 $ 759.9 $ 70.3 9% $ (1.1) 0%
Consolidated selling, general and administrative expenses 678.7 564.5 507.4 114.2 20% 57.1 11%
Consolidated depreciation and amortization expense 163.7 165.5 162.2 (1.8) -1% 3.3 2%
Consolidated operating expenses $1,671.5 $1,488.8 $1,429.5 $182.7 12% $59.3 4%
Cost of Services. Cost of services from continuing operations
increased $70.3 million in 2012 compared to the prior year. The
increase was due primarily to the impact of increased salary expense,
direct production expenses and contract service expenses of $79.7
million as well as smaller increases in other expenses to support
revenue growth. The increase in expense in 2012 was partially offset
by decreases related to the deconsolidation of our Brazilian business.
The impact of changes in foreign currency exchange rates decreased
our cost of services by $3.4 million.
The slight increase in cost of services from continuing operations in
2011, when compared to 2010, was due primarily to the impact of
increased salary and benefits expense and contract services
expenses of $31.1 million, and by the impact of changes in foreign
currency exchange rates which increased our cost of services by
$7.2 million, largely offset by decreases related to the deconsolidation
of our Brazilian business.
Selling, General and Administrative Expenses. The increase in sell-
ing, general and administrative expense from continuing operations in
2012, as compared to 2011, included a $38.7 million non-cash pen-
sion settlement charge that occurred in the fourth quarter of 2012.
The remaining increase was primarily due to increased salary, incen-
tive, and professional and contractor services expenses of $70.2
million as well as higher marketing and other expenses partially offset
by decreases in expenses related to the deconsolidation of our Brazil-
ian business. The impact of changes in foreign currency exchange
rates decreased our selling, general and administrative expense by
$2.7 million.
Selling, general and administrative expense from continuing opera-
tions increased $57.1 million in 2011 compared to 2010. The
increase was primarily due to increased salary and incentive expense
of $33.3 million, higher advertising expenses of $9.1 million and
higher severance costs offset by decreases in expenses related to
the deconsolidation of our Brazilian business. The impact of changes
in foreign currency exchange rates increased our selling, general and
administrative expense by $5.2 million in 2011.
Depreciation and Amortization. The slight decrease in depreciation
and amortization expense in 2012, as compared to 2011, is primarily
due to the decline in amortization of certain purchased intangibles
acquired as part of the TALX acquisition in 2007 which fully amortized
during the second quarter of 2011 and the amortization and
depreciation decrease resulting from the deconsolidation of our
Brazilian business. This decrease was partially offset by our two 2011
acquisitions within Workforce Solutions.
Depreciation and amortization expense from continuing operations
increased in 2011 as compared to 2010 due to $6.6 million of
incremental depreciation and amortization expense related to our
fourth quarter 2010 acquisition of Anakam and our 2011 acquisitions
partially offset by the decline in amortization of certain purchased
intangibles acquired as part of TALX in 2007 which fully amortized at
the end of the second quarter of 2011 and the amortization and
depreciation decrease resulting from the deconsolidation of our
Brazilian business.