Equifax 2013 Annual Report Download - page 36

67 EQUIFAX 2013 ANNUAL REPORT
The reference in the ‘‘Financial Highlights’’ section to ‘‘Diluted earn-
ings per share from continuing operations attributable to Equifax,
adjusted for certain items,’’ ‘‘Adjusted operating revenue’’ and
‘‘Adjusted operating margin’’ on the inside cover excludes certain
items from the nearest equivalent presentation under U.S. generally
accepted accounting principles, or GAAP. The non-GAAP measures
are provided to show the performance of our core operations without
the effect of the excluded items, consistent with how our manage-
ment reviews and assesses Equifax’s historical performance when
measuring operating profitability, evaluating performance trends and
setting performance objectives. The non-GAAP measures are not a
measurement of financial performance under GAAP, should not be
considered as an alternative to net income, operating income,
operating margin or earnings per share, and may not be comparable
to non-GAAP financial measures used by other companies.
2013 2012
Diluted earnings per share from continuing operations attributable to Equifax — GAAP $ 2.69 $ 2.18
Collection of certain reserved 2012 billings (0.04) —
Change related to resource alignment 0.05 —
Impairment of BVS investment 0.09 —
Fees associated with the acquisition of CSC credit services —0.03
Pension settlement —0.20
International tax restructuring —0.17
Income tax benefits —(0.13)
Acquisition-related amortization expense, net of tax, and cash income tax benefit of acquisition-related amortization
expense of certain acquired intangibles 0.81 0.46
Diluted earnings per share from continuing operations attributable to Equifax, adjusted for certain items — Non-GAAP $ 3.60 $ 2.91
Diluted Earnings per Share, Adjusted for Certain Items and
Adjusted Earnings per Share — These non-GAAP measures
exclude the following items:
Collection of certain reserved 2012 billings — During the
fourth quarter of 2013, we recorded revenue of $7.2 million
($4.5 million, net of tax) that relates to the collection of revenue
attributable to certain reserved billings prior to 2013 that did not
originally meet the revenue recognition criteria due to collectability
issues. Management believes excluding this revenue is useful as it
allows investors to evaluate our performance for different periods
on a more comparable basis. Management makes these adjust-
ments to revenue when measuring operating profitability,
evaluating performance trends, setting performance objectives and
calculating our return on invested capital. This is consistent with
how management reviews and assesses Equifax’s historical
performance and is useful when planning, forecasting and analyz-
ing future periods.
Charge related to resource realignment — During the fourth of
2013, we recorded a restructuring charge primarily to realign
internal resources with our strategic opportunities. This charge of
$9.3 million, pretax, ($5.9 million, net of tax) is reflected in selling,
general and administrative expenses in our Consolidated State-
ments of Income. Management believes excluding this charge
from certain financial results provides meaningful supplemental
information regarding our financial results for the three and twelve
months ended December 31, 2013, as compared to the cor-
responding periods in 2012, since a charge of such an amount is
not comparable among the periods. This is consistent with how
our management reviews and assesses Equifax’s historical
performance and is useful when planning, forecasting and analyz-
ing future periods.
Impairment of BVS investment — During the fourth of 2013, we
recorded an impairment of our cost method investment in BVS of
$17.0 million, pretax, ($11.2 million, net of tax) in other expense in
our Consolidated Statements of Income due to indicators of
impairment that arose during the quarter. Management believes
excluding this charge from certain financial results provides
meaningful supplemental information regarding our financial results
for the three and twelve months ended December 31, 2013, as
compared to the corresponding periods in 2012, since a charge of
such an amount is not comparable among the periods. This is
consistent with how our management reviews and assesses
Equifax’s historical performance and is useful when planning,
forecasting and analyzing future periods.
Fees associated with the acquisition of CSC credit
services — During the fourth quarter of 2012, the Company
acquired certain business assets and the operations of CSC Credit
Services, Inc., a subsidiary of Computer Sciences Corporation. In
conjunction with this acquisition, the Company incurred
approximately $5.0 million of transaction fees ($3.2 million, net of
tax). Management believes excluding these fees from certain
financial results provides meaningful supplemental information
regarding our financial results for the three and twelve months
ended December 31, 2012, as compared to the corresponding
periods in 2013, since an acquisition and fees of such an amount
RECONCILIATIONS RELATED TO NON-GAAP FINANCIAL MEASURES
68 EQUIFAX 2013 ANNUAL REPORT
are not comparable among the periods. This is consistent with
how our management reviews and assesses Equifax’s historically
performance and is useful when planning, forecasting and analyz-
ing future periods.
Pension settlement — During the fourth quarter of 2012, the
Company offered certain employees a voluntary lump sum pay-
ment option of their pension benefits or a reduced monthly
annuity. The Company recorded a non-cash settlement charge of
$38.7 million ($24.1 million, net of tax). Management believes
excluding this charge from certain financial results provides
meaningful supplemental information regarding our financial results
for the three and twelve months ended December 31, 2012, as
compared to the corresponding periods in 2013, since this charge
is unusual in nature and not comparable among the periods. This
is consistent with how our management reviews and assesses
Equifax’s historically performance and is useful when planning,
forecasting and analyzing future periods.
International tax restructuring — During the fourth quarter of
2012, the Company completed an international tax restructuring
resulting in the recognition of tax expense of $20.5 million.
Management believes excluding this income tax expense from
certain financial results provides meaningful supplemental informa-
tion regarding our financial results for the three and twelve months
ended December 31, 2012, as compared to the corresponding
periods in 2013, since income tax expense associated with tax
restructuring of such an amount is not comparable among the
periods. This is consistent with how our management reviews and
assesses Equifax’s historical performance and is useful when plan-
ning, forecasting and analyzing future periods.
Income tax benefits — During the fourth quarter of 2012, the
Company recorded a tax benefit as a result of tax authorities
approving a tax method change which impacted the tax expense
recorded in connection with the merger of our Brazilian business in
the second quarter of 2011. Management believes excluding these
income tax benefits from certain financial results provides
meaningful supplemental information regarding our financial results
for the three and twelve months ended December 31, 2012, as
compared to the corresponding periods in 2013, since these
specific income tax benefits of such an amount are not
comparable among the periods. This is consistent with how our
management reviews and assesses Equifax’s historical
performance and is useful when planning, forecasting and analyz-
ing future periods.
Acquisition-Related Amortization Expense — Excluding
acquisition-related amortization expense, net of tax, and including
a benefit to reflect the material cash income tax savings resulting
from the income tax deductibility of amortization for certain
acquired intangibles for a total of $99.9 million and $57.3 million in
2013 and 2012, respectively, provides meaningful supplemental
information regarding our financial results for the years ended
December 31, 2013 and 2012, as it allows investors to evaluate
our performance for different periods on a more comparable basis
by excluding items that relate to acquisition-related intangible
assets.
2013 2012
Operating revenue $2,303.9 $2,073.0
Collection of certain reserved 2012 billings (7.2) —
Adjusted operating revenue — Non-GAAP $2,296.7 $2,073.0
Adjusted Operating Revenue — This non-GAAP measure excludes
the following item:
Adjusted Operating Revenue, Excluding the collection of
certain reserved 2012 billings — Management believes excluding
the collection of certain reserved billings from the calculation of
operating revenue, on a non-GAAP basis, is useful because
management excludes items that are not comparable when
measuring operating profitability, evaluating performance trends,
and setting performance objectives, and it allows investors to
evaluate our performance for different periods on a more
comparable basis by excluding items that impact comparability.