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20 Equifax 2012 Annual Report
Revenue increased 10% compared to the same period in 2010 due
to increased volumes for our technology and analytical services
products, primarily due to growth in the customer base for a fraud
mitigation product, and the favorable impact of changes in foreign
exchange rates. In local currency, revenue was up 6% in 2010. Local
currency fluctuations against the U.S. dollar favorably impacted
revenue by $5.1 million, or 4%.
International Operating Margin. Operating margin increased in
2012 as compared to 2011 primarily due to the deconsolidation of
our Brazilian business, whose margins had declined in recent
periods, slightly offset by restructuring expenses in the third quarter
of 2012. Operating margin increased in 2011 as compared to the
prior year period also due to the deconsolidation of our Brazilian busi-
ness part way through the year. The 2011 operating margins were
also impacted by increased investments in new product development
and increased sales force, particularly in Brazil prior to the deconsoli-
dation of the business.
Workforce Solutions
Workforce Solutions Twelve Months Ended December 31, Change
2012 vs. 2011 2011 vs. 2010
(Dollars in millions) 2012 2011 2010 $% $%
Operating Revenue:
Verification Services $258.5 $192.5 $183.4 $66.0 34% $ 9.1 5%
Employer Services 204.6 211.8 212.2 (7.2) -3% (0.4) 0%
Total operating revenue $463.1 $404.3 $395.6 $58.8 15% $ 8.7 2%
% of consolidated revenue 21% 21% 21%
Total operating income $107.9 $ 90.7 $ 92.1 $17.2 19% $(1.4) -2%
Operating margin 23.3% 22.4% 23.3% 0.9 pts -0.9 pts
Verification Services. Revenue increased 34% in 2012, compared
to 2011, due to 36% growth in mortgage-related verification revenue
resulting from the strong level of mortgage refinancing activity during
2012, 18% growth in non-mortgage verification revenue, and the
benefit of our third quarter 2011 acquisition of DataVision Resources.
As we anniversary the DataVision Resources acquisition and begin
comparing future results to 2012 when mortgage refinancing activity
was strong, growth rates in 2013 will likely be lower than those
in 2012.
Revenue increased in 2011, compared to the prior year period, as
high single digit percentage revenue growth in verifications provided
to non-mortgage customers and the benefit of our third quarter 2011
acquisition of DataVision Resources were partially offset by high
single digit declines in verification revenue from mortgage customers
due to reduced mortgage activity.
Employer Services. Revenue decreased 3% in 2012 as compared
to 2011. Revenue declined in our Tax Management Services busi-
ness due to lower overall claims activity in our unemployment cost
management business and, beginning in the third quarter, the delay
in the renewal of the federal Work Opportunity Tax Credit program
which was renewed on December 31, 2012. Revenue also declined
in our Talent Management Services business due to decreased
government hiring activity. These declines were partially offset by
growth achieved in our transaction-based complementary services.
Revenue for 2011 as compared to 2010 slightly decreased. Declines
in our talent recruitment and management services business due to
decreased government hiring activity at the U.S. Transportation
Security Administration and reduced licensing revenue were largely
offset by revenue growth in our complementary services business.
Workforce Solutions Operating Margin. Operating margin for 2012
increased as compared to 2011. The increase in margin was driven
by the revenue growth during the year in products with a high degree
of fixed costs. Operating margin for 2011, when compared to the
prior year period, decreased due to revenue and associated margin
declines in government-based tax transcript verification services and
talent recruitment and management services as a result of a
slowdown in mortgage-related activity and decreased license
revenue, respectively. There was also increased acquisition-related
amortization associated with our two acquisitions in the latter half
of 2011.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued