Equifax Reports Fourth Quarter and Full Year 2009 Results
ATLANTA, Feb. 3 /PRNewswire-FirstCall/ --
-- Fourth quarter revenue was $464.3 million, up 3 percent from the third
quarter of 2009 and 4 percent from the fourth quarter of 2008; 3
business units delivered double-digit revenue growth from fourth quarter
of 2008.
-- Fourth quarter EPS was $0.47 and fourth quarter adjusted EPS was $0.61.
-- Completed two strategic acquisitions -- IXI Corporation and Rapid
Reporting Verification Company.
-- Full year 2009 revenue was $1.82 billion compared to $1.94 billion in
2008.
-- Full year 2009 EPS was $1.83 per share and full year adjusted EPS was
$2.33.
Equifax Inc. (NYSE: EFX) today announced financial results for the quarter and year ended December 31, 2009. The company reported revenue of $464.3 million in the fourth quarter of 2009, a 4 percent increase from the fourth quarter of 2008, of which 3 percent was due to the favorable effect of foreign exchange rates. Fourth quarter 2009 net income was $60.2 million, a 6 percent decrease from the prior year. On a non-GAAP basis, excluding acquisition-related amortization expense, a restructuring charge (both net of tax) and an income tax benefit, net income was $77.9 million, flat when compared to the fourth quarter of 2008. Diluted earnings per share ("EPS") for the fourth quarter of 2009 was $0.47 compared to $0.50 in the same period of the prior year. On a non-GAAP basis, adjusted EPS, which excludes the impact of acquisition-related amortization expense, the restructuring charge and income tax benefit, was $0.61, flat when compared to the fourth quarter of 2008.
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For the full year 2009, revenue was $1.82 billion, a 6 percent decrease from 2008 of which 3 percent was due to the unfavorable effect of foreign exchange rates. Full year 2009 net income was $233.9 million compared to $272.8 million in 2008, down 14 percent. On a non-GAAP basis, excluding acquisition-related amortization expense, restructuring charges (both net of tax) and certain income tax benefits, net income was $297.7 million, an 8 percent decrease from 2008. EPS was $1.83 compared to $2.09 for the full year 2008. On a non-GAAP basis, adjusted EPS, which excludes the impact of acquisition-related amortization expense, restructuring charges and income tax benefits, was $2.33, down 6 percent from the prior year period.
"We delivered solid performance in the fourth quarter, aggressively managing our expense base and continuing to drive double digit revenue growth in TALX and Mortgage Solutions. We also completed two strategic acquisitions that will add to our growth in 2010 and beyond through new product initiatives and further market penetration," said Richard F. Smith, Equifax's Chairman and Chief Executive Officer. "Throughout 2009 we prepared ourselves for the opportunities and challenges of 2010 and enter the year in a much stronger position. We expanded the strategic charter of our Technology and Analytical Services organization, created exciting new products that leverage our increasingly unique data assets and decisioning capabilities, leveraged LEAN and other expense initiatives to improve our operating leverage, and established a Key Client Program to drive product penetration with our largest and most influential customers."
Fourth Quarter 2009 Report
-- Revenue increased 3 percent versus the third quarter of 2009.
-- During the fourth quarter of 2009, we took further steps to realign our
business to better support our strategic objectives and recorded a $16.4
million restructuring charge primarily related to severance expense
associated with staff reductions. We also recognized a tax benefit of
$7.3 million related to our ability to utilize foreign tax credits
beyond 2009.
-- Operating margin was 19.7 percent. On a non-GAAP basis, excluding the
impact of a restructuring charge, operating margin was 23.2 percent in
the fourth quarter of 2009 compared to 23.5 percent in the third quarter
of 2009 and 26.0 percent in the fourth quarter of 2008.
-- Total debt at December 31, 2009 increased $105.0 million from September
30, 2009 reflecting additional borrowings to finance a portion of our
fourth quarter acquisitions.
U.S. Consumer Information Solutions (USCIS)
Total revenue was $199.0 million in the fourth quarter of 2009, down 1 percent
from the third quarter of 2009 and 4 percent from the fourth quarter of 2008.
-- Online Consumer Information Solutions revenue was $122.2 million, down
10 percent from a year ago.
-- Mortgage Solutions revenue was $23.0 million, up 27 percent from a
year ago.
-- Consumer Financial Marketing Services revenue was $30.9 million, flat
when compared to a year ago.
-- Direct Marketing Services revenue was $22.9 million, down 6 percent
from a year ago.
Operating margin for USCIS was 33.2 percent in the fourth quarter of 2009
compared to 34.6 percent in the third quarter of 2009. Fourth quarter 2008
operating margin was 36.4 percent.
International
Total revenue was $117.7 million in the fourth quarter of 2009, a 2 percent
increase over the third quarter of 2009 and an 11 percent increase over the
fourth quarter of 2008. In local currency, revenue was down 1 percent when
compared to both the third quarter of 2009 and the fourth quarter of 2008.
-- Latin America revenue was $55.1 million, up 3 percent in local
currency and 19 percent in U.S. dollars from a year ago.
-- Europe revenue was $35.9 million, down 6 percent in local currency and
flat in U.S. dollars from a year ago.
-- Canada Consumer revenue was $26.7 million, down 1 percent in local
currency, but up 13 percent in U.S. dollars from a year ago.
Operating margin for International was 27.5 percent in the fourth quarter of
2009 compared to 27.0 percent in both the third quarter of 2009 and fourth
quarter of 2008.
TALX
Total revenue was $89.4 million in the fourth quarter of 2009, an 8 percent
increase over the third quarter of 2009 and a 19 percent increase over the
fourth quarter of 2008.
-- The Work Number revenue was $41.6 million, up 33 percent from a year
ago.
-- Tax and Talent Management Services revenue was $47.8 million, up 8
percent from a year ago.
Operating margin for TALX was 21.1 percent in the fourth quarter of 2009, down
slightly from 21.4 percent in the third quarter of 2009, but up from 19.9
percent in the fourth quarter of 2008.
North America Personal Solutions
Total revenue was $36.0 million, a 3 percent decrease from both the third
quarter of 2009 and fourth quarter of 2008. Operating margin was 28.1 percent,
up from 27.3 percent in the third quarter of 2009, but down from 33.9 percent
in the fourth quarter of 2008.
North America Commercial Solutions
Total revenue was $22.2 million, up 38 percent in both local currency and U.S.
dollars from the third quarter of 2009. Revenue was up 8 percent in local
currency and 11 percent in U.S. dollars compared to the fourth quarter of
2008. Operating margin was 34.0 percent, up from 17.8 percent in the third
quarter of 2009 and from 28.3 percent in the fourth quarter of 2008.
Full Year 2009 Report
-- Revenue was $1.82 billion, down from $1.94 billion in 2008.
o Total revenue for USCIS was $820.7 million in 2009, an 8 percent
decrease from 2008.
o Total revenue for International was $438.6 million in 2009, a 13
percent decrease from 2008. In local currency, revenue was down 4
percent when compared to the same period in the prior year.
o Total revenue for TALX was $346.4 million in 2009, a 14 percent
increase over 2008.
o Total revenue for North America Personal Solutions was $149.0 million
in 2009, an 8 percent decrease from 2008.
o Total revenue for North America Commercial Solutions was $69.8 million
in 2009, flat in local currency and down 2 percent in U.S. dollars
from 2008.
-- During 2009, we recorded restructuring charges of $24.8 million
primarily related to severance expense associated with staff reductions.
We also recognized a $7.3 million tax benefit related to our ability to
utilize foreign tax credits beyond 2009.
-- Operating margin was 22.3 percent for the full year 2009 compared to
24.7 percent for the full year 2008. On a non-GAAP basis, excluding the
impact of restructuring and asset write-down charges, operating margin
for the full year 2009 was 23.7 percent compared to 25.5 percent for the
full year 2008.
-- Total debt was $1.17 billion at December 31, 2009, a decrease of $45.2
million from December 31, 2008.
First Quarter 2010 Outlook
Based on the current level of domestic and international business activity and current foreign exchange rates, consolidated revenue for the first quarter of 2010 is expected to be up in the low single digit range from the year-ago quarter. First quarter 2010 adjusted EPS is expected to be between $0.53 and $0.57.
About Equifax (www.equifax.com)
Equifax empowers businesses and consumers with information they can trust. A global leader in information solutions, we leverage one of the largest sources of consumer and commercial data, along with advanced analytics and proprietary technology, to create customized insights that enrich both the performance of businesses and the lives of consumers.
With a strong heritage of innovation and leadership, Equifax continuously delivers innovative solutions with the highest integrity and reliability. Businesses – large and small – rely on us for consumer and business credit intelligence, portfolio management, fraud detection, decisioning technology, marketing tools, and much more. We empower individual consumers to manage their personal credit information, protect their identity, and maximize their financial well-being.
Headquartered in Atlanta, Georgia, Equifax Inc. operates in the U.S. and 14 other countries. Equifax is a member of Standard & Poor's (S&P) 500® Index. Our common stock is traded on the New York Stock Exchange under the symbol EFX.
Earnings Conference Call and Audio Webcast
In conjunction with this release, Equifax will host a conference call tomorrow, February 4, 2010, at 8:30 a.m. (EST) via a live audio webcast. To access the webcast, go to the Investor Center of our website at www.equifax.com. The discussion will be available via replay at the same site shortly after the conclusion of the webcast. This press release is also available at that website.
Non-GAAP Financial Measures
This earnings release presents operating income and margin excluding restructuring and asset write-down charges and net income and diluted EPS excluding acquisition-related amortization expense, restructuring and asset write-down charges, both net of tax, and income tax benefits. These are important financial measures for Equifax but are not financial measures as defined by GAAP.
These non-GAAP financial measures should be reviewed in conjunction with the relevant GAAP financial measures and are not presented as alternative measures of operating income, operating margin, net income or EPS as determined in accordance with GAAP.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures and related notes are presented in the Q&A. This information can also be found under "Investor Center/GAAP/Non-GAAP Measures" on our website at www.equifax.com.
Forward-Looking Statements
Management believes certain statements in this earnings release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are made on the basis of management's views and assumptions regarding future events and business performance as of the time the statements are made. Management does not undertake any obligation to update any forward-looking statements.
Actual results may differ materially from those expressed or implied. Such differences may result from actions taken by Equifax, including restructuring or strategic initiatives (including capital investments or asset acquisitions or dispositions), as well as from developments beyond Equifax's control, including but not limited to changes in worldwide and U.S. economic conditions that materially impact consumer spending, consumer debt and employment, changes in demand for Equifax's products and services, our ability to develop new products and services, pricing and other competitive pressures, our ability to achieve targeted cost efficiencies, risks relating to illegal third party efforts to access data, risks associated with our ability to complete and integrate acquisitions and other investments, changes in laws and regulations governing our business, including federal or state responses to identity theft concerns, and the outcome of our pending litigation. Certain additional factors are set forth in Equifax's Annual Report on Form 10-K for the year ended December 31, 2008 under Item 1A, "Risk Factors", and our other filings with the Securities and Exchange Commission.
EQUIFAX
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
Three Months Ended
December 31,
------------
2009 2008
---- ----
(In millions, except per share amounts) (Unaudited)
-----------
Operating revenue $464.3 $446.6
------ ------
Operating expenses:
Cost of services (exclusive of
depreciation and amortization below) 196.1 184.4
Selling, general and administrative
expenses 134.9 108.0
Depreciation and amortization 41.9 38.1
---- ----
Total operating expenses 372.9 330.5
----- -----
Operating income 91.4 116.1
Interest expense (14.1) (17.4)
Other income, net 0.3 3.5
--- ---
Consolidated income before income taxes 77.6 102.2
Provision for income taxes (15.7) (37.0)
----- -----
Consolidated net income 61.9 65.2
Less: Net income attributable to
noncontrolling interests (1.7) (1.2)
---- ----
Net income attributable to Equifax $60.2 $64.0
===== =====
Basic earnings per common share $0.48 $0.51
===== =====
Weighted-average shares used in
computing basic earnings per share 126.4 126.3
===== =====
Diluted earnings per common share $0.47 $0.50
===== =====
Weighted-average shares used in
computing diluted earnings per share 127.5 128.0
===== =====
Dividends per common share $0.04 $0.04
===== =====
EQUIFAX
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
Twelve Months Ended
December 31,
------------
2009 2008
---- ----
(In millions, except per share
amounts) (Unaudited)
-----------
Operating revenue $1,824.5 $1,935.7
-------- --------
Operating expenses:
Cost of services (exclusive of
depreciation and amortization
below) 767.8 792.0
Selling, general and administrative
expenses 490.3 511.1
Depreciation and amortization 158.8 155.4
----- -----
Total operating expenses 1,416.9 1,458.5
------- -------
Operating income 407.6 477.2
Interest expense (57.0) (71.3)
Other income, net 6.0 6.2
--- ---
Consolidated income before income taxes 356.6 412.1
Provision for income taxes (116.1) (133.1)
------ ------
Consolidated net income 240.5 279.0
Less: Net income attributable to
noncontrolling interests (6.6) (6.2)
---- ----
Net income attributable to Equifax $233.9 $272.8
====== ======
Basic earnings per common share $1.85 $2.13
===== =====
Weighted-average shares used in
computing basic earnings per share 126.3 128.1
===== =====
Diluted earnings per common share $1.83 $2.09
===== =====
Weighted-average shares used in
computing diluted earnings per
share 127.9 130.4
===== =====
Dividends per common share $0.16 $0.16
===== =====
EQUIFAX
CONSOLIDATED BALANCE SHEETS
---------------------------
December 31,
------------
2009 2008
---- ----
(In millions, except par values) (Unaudited)
-----------
ASSETS
Current assets:
Cash and cash equivalents $103.1 $58.2
Trade accounts receivable, net of
allowance for doubtful accounts of
$15.1 and $14.5 at December 31, 2009
and 2008, respectively 258.7 253.4
Prepaid expenses 27.6 22.9
Other current assets 27.4 19.3
---- ----
Total current assets 416.8 353.8
----- -----
Property and equipment:
Capitalized internal-use software and
system costs 316.6 313.9
Data processing equipment and furniture 184.2 176.6
Land, buildings and improvements 164.5 124.0
----- -----
Total property and equipment 665.3 614.5
Less accumulated depreciation and
amortization (346.0) (328.2)
------ ------
Total property and equipment, net 319.3 286.3
----- -----
Goodwill 1,943.2 1,760.0
Indefinite-lived intangible assets 95.5 95.1
Purchased intangible assets, net 687.0 682.2
Other assets, net 88.7 82.9
------ ------
Total assets $3,550.5 $3,260.3
======== ========
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt and current maturities $154.2 $31.9
Capital lease obligation 29.0 -
Accounts payable 35.9 29.9
Accrued expenses 67.7 57.6
Accrued salaries and bonuses 58.1 54.2
Deferred revenue 69.8 65.7
Other current liabilities 77.5 78.7
---- ----
Total current liabilities 492.2 318.0
Long-term debt 990.9 1,187.4
Deferred income tax liabilities, net 249.3 215.3
Long-term pension and other
postretirement benefit liabilities 142.5 166.0
Other long-term liabilities 60.6 50.1
------ ------
Total liabilities 1,935.5 1,936.8
------- -------
Equifax shareholders' equity:
Preferred stock, $0.01 par value: Authorized
shares -10.0; Issued shares -none - -
Common stock, $1.25 par value: Authorized
shares -300.0; Issued shares -189.3 and
189.2 at December 31, 2009 and 2008,
respectively; Outstanding shares -126.2
and 126.3 at December 31, 2009 and 2008,
respectively 236.6 236.5
Paid-in capital 1,102.0 1,075.2
Retained earnings 2,494.2 2,281.0
Accumulated other comprehensive loss (318.7) (390.6)
Treasury stock, at cost, 61.0 shares and
59.7 shares at December 31, 2009 and
2008, respectively (1,871.7) (1,837.9)
Stock held by employee benefits trusts,
at cost, 2.1 shares and 3.2 shares at
December 31, 2009 and 2008, respectively (41.2) (51.8)
----- -----
Total Equifax shareholders' equity 1,601.2 1,312.4
Noncontrolling interests 13.8 11.1
---- ----
Total equity 1,615.0 1,323.5
------- -------
Total liabilities and equity $3,550.5 $3,260.3
======== ========
EQUIFAX
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
Twelve Months Ended
December 31,
------------
2009 2008
---- ----
(In millions) (Unaudited)
Operating activities:
Consolidated net income $240.5 $279.0
Adjustments to reconcile consolidated
net income to net cash provided
by operating activities:
Depreciation and amortization 158.8 155.4
Stock-based compensation expense 19.6 19.9
Tax effects of stock-based
compensation plans 0.9 2.9
Excess tax benefits from stock-based
compensation plans (1.3) (2.1)
Deferred income taxes 14.7 7.7
Changes in assets and liabilities,
excluding effects of acquisitions:
Accounts receivable, net 12.8 24.2
Prepaid expenses and other current
assets (1.4) 3.5
Other assets (6.9) (2.2)
Current liabilities, excluding debt 3.3 (23.4)
Other long-term liabilities,
excluding debt (22.6) (16.8)
----- -----
Cash provided by operating activities 418.4 448.1
----- -----
Investing activities:
Capital expenditures (70.7) (110.5)
Investment in unconsolidated affiliates (3.4) (3.7)
Acquisitions, net of cash acquired (196.0) (27.4)
------ -----
Cash used in investing activities (270.1) (141.6)
------ ------
Financing activities:
Net short-term borrowings (repayments) 101.8 (184.8)
Net (repayments) borrowings under
long-term revolving credit facilities (415.2) 45.0
Proceeds from issuance of long-term debt 274.4 2.3
Payments on long-term debt (31.8) (17.8)
Treasury stock purchases (23.8) (155.7)
Dividends paid to Equifax shareholders (20.2) (20.5)
Dividends paid to noncontrolling interests (4.0) (3.4)
Proceeds from exercise of stock options 10.2 14.7
Excess tax benefits from stock-based
compensation plans 1.3 2.1
Other (1.0) (1.0)
------ ------
Cash used in financing activities (108.3) (319.1)
------ ------
Effect of foreign currency exchange
rates on cash and cash equivalents 4.9 (10.8)
--- -----
Increase (decrease) in cash and cash
equivalents 44.9 (23.4)
Cash and cash equivalents, beginning
of period 58.2 81.6
---- ----
Cash and cash equivalents, end of period $103.1 $58.2
====== =====
Common Questions & Answers (Unaudited)
(Dollars in millions)
1. Can you provide a further analysis of operating revenue and operating
income by operating segment?
Operating revenue and operating income consist of the following
components:
(in millions) Three Months Ended December 31,
------------- -------------------------------
Local
Operating Currency
revenue: 2009 2008 $Change % Change % Change*
---- ---- ------- -------- ---------
Online
Consumer
Information
Solutions $122.2 $135.2 $(13.0) -10%
Mortgage
Solutions 23.0 18.2 4.8 27%
Consumer
Financial
Marketing
Services 30.9 30.8 0.1 0%
Direct
Marketing
Services 22.9 24.2 (1.3) -6%
---- ---- ----
Total U.S.
Consumer
Information
Solutions 199.0 208.4 (9.4) -4%
Europe 35.9 35.9 - 0% -6%
Latin America 55.1 46.3 8.8 19% 3%
Canada
Consumer 26.7 23.6 3.1 13% -1%
---- ---- ---
Total
International 117.7 105.8 11.9 11% -1%
The Work
Number 41.6 31.3 10.3 33%
Tax and
Talent
Management
Services 47.8 44.1 3.7 8%
---- ---- ---
Total TALX 89.4 75.4 14.0 19%
North America
Personal
Solutions 36.0 37.1 (1.1) -3%
North America
Commercial
Solutions 22.2 19.9 2.3 11% 8%
---- ---- ---
Total
operating
revenue $464.3 $446.6 $17.7 4% 1%
====== ====== =====
(in millions) Twelve Months Ended December 31,
------------- --------------------------------
Local
Currency
Operating revenue: 2009 2008 $Change % Change % Change*
---- ---- ------- -------- ---------
Online Consumer
Information
Solutions $525.6 $594.5 $(68.9) -12%
Mortgage Solutions 99.5 70.2 29.3 42%
Consumer Financial
Marketing Services 111.3 132.0 (20.7) -16%
Direct Marketing
Services 84.3 94.1 (9.8) -10%
---- ---- ----
Total U.S. Consumer
Information
Solutions 820.7 890.8 (70.1) -8%
Europe 138.4 175.0 (36.6) -21% -9%
Latin America 200.4 219.9 (19.5) -9% 0%
Canada Consumer 99.8 110.8 (11.0) -10% -4%
---- ----- -----
Total International 438.6 505.7 (67.1) -13% -4%
The Work Number 158.2 131.9 26.3 20%
Tax and Talent
Management Services 188.2 173.2 15.0 9%
----- ----- ----
Total TALX 346.4 305.1 41.3 14%
North America
Personal Solutions 149.0 162.6 (13.6) -8%
North America
Commercial Solutions 69.8 71.5 (1.7) -2% 0%
---- ---- ----
Total operating
revenue $1,824.5 $1,935.7 $(111.2) -6% -3%
======== ======== =======
(in millions) Three Months Ended December 31,
------------- -------------------------------
Operating Operating Operating
income: 2009 Margin 2008 Margin $Change % Change
---- ------ ---- ------ ------- --------
U.S. Consumer
Information
Solutions $66.0 33.2% $75.9 36.4% $(9.9) -13%
International 32.3 27.5% 28.5 27.0% 3.8 13%
TALX 18.9 21.1% 15.0 19.9% 3.9 26%
North America
Personal
Solutions 10.2 28.1% 12.6 33.9% (2.4) -20%
North America
Commercial
Solutions 7.5 34.0% 5.7 28.3% 1.8 34%
General
Corporate
Expense (43.5) nm (21.6) nm (21.9) -101%
----- ----- -----
Total
operating
income $91.4 19.7% $116.1 26.0% $(24.7) -21%
===== ====== ======
(in millions) Twelve Months Ended December 31,
------------- --------------------------------
Operating Operating Operating
income: 2009 Margin 2008 Margin $Change % Change
---- ------ ---- ------ ------- --------
U.S. Consumer
Information
Solutions $285.2 34.8% $337.1 37.9% $(51.9) -15%
International 118.9 27.1% 149.9 29.6% (31.0) -21%
TALX 75.4 21.8% 53.1 17.4% 22.3 42%
North America
Personal
Solutions 34.3 23.0% 46.3 28.4% (12.0) -26%
North America
Commercial
Solutions 15.1 21.7% 13.6 19.0% 1.5 11%
General
Corporate
Expense (121.3) nm (122.8) nm 1.5 1%
------ ------ ---
Total
operating
income $407.6 22.3% $477.2 24.7% $(69.6) -15%
====== ====== ======
nm - not meaningful
* Reflects percentage change in revenue conforming 2009 results using
2008 exchange rates.
Common Questions & Answers (Unaudited)
(Dollars in millions)
2. Can you provide the percentage change in revenue from the third
quarter of 2009 in U.S. dollars and local currency?
U.S.
Dollars Local Currency
Operating revenue: % Change % Change*
-------- ---------
U.S. Consumer Information
Solutions -1%
International 2% -1%
TALX 8%
North America Personal
Solutions -3%
North America Commercial
Solutions 38% 38%
Total operating revenue 3% 2%
* Reflects percentage change in revenue conforming Q4 2009 results using
Q3 2009 exchange rates.
3. What drove the fluctuation in the effective tax rate?
Our effective income tax rate was 20.3% for the three months ended
December 31, 2009, down from 36.2% for the same period in 2008, due
primarily to the recognition of a $7.3 million income tax benefit
during the fourth quarter of 2009 related to our ability to utilize
foreign tax credits beyond 2009. Additionally, we recorded
favorable discrete items during the fourth quarter of 2009 related
to foreign and state taxes.
The effective tax rate was 32.6% for the twelve months ended December
31, 2009, up from 32.3% for the same period in 2008. Our 2009 rate
reflects the previously mentioned income tax benefits and our 2008
rate reflects the reversal of a $14.6 million income tax reserve
related to the expiration of the statute of limitations for an
uncertain tax position regarding our Brazilian operations.
4. Can you provide depreciation and amortization by segment?
Depreciation and amortization are as follows:
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
U.S. Consumer
Information Solutions $13.3 $11.9 $49.0 $46.2
International 6.1 5.4 23.2 23.8
TALX 16.2 15.5 62.6 62.6
North America Personal
Solutions 1.3 0.8 4.8 3.1
North America Commercial
Solutions 1.5 1.4 5.8 5.4
General Corporate
Expense 3.5 3.1 13.4 14.3
--- --- ---- ----
Total depreciation and
amortization $41.9 $38.1 $158.8 $155.4
===== ===== ====== ======
5. What was the currency impact on the foreign operations?
The U.S. dollar impact on operating revenue and operating income is
as follows:
Three Months Ended December 31, 2009
------------------------------------
Operating Revenue Operating Income
----------------- ----------------
Amount % Amount %
------ --- ------ ---
Canada Consumer $3.5 14% $1.4 15%
Canada Commercial 0.8 14% 0.3 16%
Europe 2.0 6% 0.4 7%
Latin America 7.3 16% 1.1 9%
--- ---
$13.6 3% $3.2 3%
===== ====
Twelve Months Ended December 31, 2009
-------------------------------------
Operating Revenue Operating Income
----------------- ----------------
Amount % Amount %
------ --- ------ ---
Canada Consumer $(7.0) -6% $(2.8) -6%
Canada Commercial (1.7) -7% (0.7) -8%
Europe (21.3) -12% (4.2) -11%
Latin America (18.9) -9% (6.7) -10%
----- ----
$(48.9) -3% $(14.4) -3%
====== ======
6. Can you provide detail regarding your fourth quarter 2009
acquisitions?
On October 27, 2009, we acquired IXI Corporation ("IXI"), a provider
of information on consumer financial assets, income and spending for
$124.0 million. The results of IXI are included in our Consumer
Financial Marketing Services reporting unit, which also includes our
Credit Marketing Services business.
On November 2, 2009, we acquired Rapid Reporting Verification Company
("Rapid"), a provider of IRS tax transcript information and social
security number authentication services for $72.5 million. The
results of Rapid are included in The Work Number reporting unit.
7. 2008 expense reclassification
Certain prior year amounts have been reclassified to conform to
current year presentation. $3.1 million and $13.2 million of
selling, general and administrative expense for the three and twelve
months ended December 31, 2008, respectively, have been reclassified
to cost of services.
Reconciliations of Non-GAAP Financial Measures to the Comparable
GAAP Financial Measures (Unaudited)
(Dollars in millions, except per share amounts)
A. Reconciliation of net income attributable to Equifax to diluted EPS,
adjusted for acquisition-related amortization expense, restructuring
and asset write-down charges and income tax benefit:
Three Months Ended
December 31,
------------
2009 2008 $Change % Change
---- ---- ------- --------
Net income attributable to
Equifax $60.2 $64.0 $(3.8) -6%
Restructuring charge, net
of tax (1) 10.4 - 10.4 nm
Income tax benefit (2) (7.3) - (7.3) nm
---- --- ----
Net income attributable to
Equifax, adjusted for
restructuring charge
and income tax benefit 63.3 64.0 (0.7) -1%
Acquisition-related
amortization expense, net
of tax 14.6 13.7 0.9 7%
---- ---- ---
Net income attributable to
Equifax, adjusted for
restructuring charge,
income tax benefit and
acquisition-related
amortization expense $77.9 $77.7 $0.2 0%
===== ===== ====
Diluted EPS, adjusted for
restructuring charge,
income tax benefit
and acquisition-related
amortization expense $0.61 $0.61 $- 0%
===== ===== ===
Weighted-average shares
used in computing diluted
EPS 127.5 128.0
Twelve Months Ended
December 31,
------------
2009 2008 $Change % Change
---- ---- ------- --------
Net income
attributable to
Equifax $233.9 $272.8 $(38.9) -14%
Restructuring and
asset write-down
charges, net of tax
(1) 15.8 10.5 5.3 50%
Income tax benefits(2) (7.3) (14.6) 7.3 -50%
---- ----- ---
Net income
attributable to
Equifax, adjusted for
restructuring and
asset write-down
charges and income
tax benefits 242.4 268.7 (26.3) -10%
Acquisition-related
amortization expense,
net of tax 55.3 54.7 0.6 1%
---- ---- ---
Net income
attributable to
Equifax, adjusted for
restructuring and
asset write-down charges,
income tax benefits
and acquisition-related
amortization expense $297.7 $323.4 $(25.7) -8%
====== ====== ======
Diluted EPS, adjusted
for restructuring and
asset write-down
charges, income tax
benefits and acquisition-
related amortization
expense $2.33 $2.48 $(0.15) -6%
===== ===== ======
Weighted-average
shares used in
computing diluted EPS 127.9 130.4
nm - not meaningful
(1) Restructuring and asset write-down charges include $16.4 million
of primarily severance expense in the fourth quarter of 2009, $8.4
million of severance expense in the first quarter of 2009, and $10.3
million of severance expense, $4.1 million of certain contractual
costs and $2.4 million of asset write-down charges in the third
quarter of 2008. See the Notes to this reconciliation for
additional detail.
(2) We recorded a $7.3 million income tax benefit during the fourth
quarter of 2009 related to our ability to utilize foreign tax
credits beyond 2009. We recorded a $14.6 million income tax benefit
in 2008 related to uncertain tax positions associated with our
Brazilian operations, for which the statute of limitations expired
during the third quarter of 2008. See the Notes to this
reconciliation for additional detail.
Reconciliations of Non-GAAP Financial Measures to the Comparable
GAAP Financial Measures (Unaudited)
(Dollars in millions, except per share amounts)
B. Reconciliation of operating income to adjusted operating income,
excluding restructuring and asset write-down charges, and
presentation of adjusted operating margin:
Three Months Ended
December 31,
------------
2009 2008 $Change % Change
---- ---- ------- --------
Revenue $464.3 $446.6 $17.7 4%
Operating income $91.4 $116.1 $(24.7) -21%
Restructuring charge (1) 16.4 - 16.4 nm
---- --- ----
Adjusted operating income,
excluding restructuring
charge $107.8 $116.1 $(8.3) -7%
====== ====== =====
Adjusted operating margin 23.2% 26.0%
Twelve Months Ended
December 31,
------------
2009 2008 $Change % Change
---- ---- ------- --------
Revenue $1,824.5 $1,935.7 $(111.2) -6%
Operating income $407.6 $477.2 $(69.6) -15%
Restructuring and asset
write-down charges (1) 24.8 16.8 8.0 47%
---- ---- ---
Adjusted operating income,
excluding restructuring
and asset write-down
charges $432.4 $494.0 $(61.6) -12%
====== ====== ======
Adjusted operating margin 23.7% 25.5%
C. Reconciliation of our effective tax rate to an effective tax rate,
excluding certain items:
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Effective tax rate 20.3% 36.2% 32.6% 32.3%
Income tax benefits(2) 9.4% - 2.1% 3.5%
---- ---- ---- ----
Effective tax rate,
excluding certain
items 29.7% 36.2% 34.7% 35.8%
==== ==== ==== ====
nm - not meaningful
(1) Restructuring and asset write-down charges include $16.4 million
of primarily severance expense in the fourth quarter of 2009, $8.4
million of severance expense in the first quarter of 2009, and $10.3
million of severance expense, $4.1 million of certain contractual
costs and $2.4 million of asset write-down charges in the third
quarter of 2008. See the Notes to this reconciliation for
additional detail.
(2) We recorded a $7.3 million income tax benefit during the fourth
quarter of 2009 related to our ability to utilize foreign tax
credits beyond 2009. We recorded a $14.6 million income tax benefit
in 2008 related to uncertain tax positions associated with our
Brazilian operations, for which the statute of limitations expired
during the third quarter of 2008. See the Notes to this
reconciliation for additional detail.
Notes to Reconciliations of Non-GAAP Financial Measures to the Comparable GAAP Financial Measures
Restructuring and Asset Write-Down Charges – During the fourth and first quarters of 2009, the company recorded restructuring charges primarily related to severance expense of $16.4 million, pretax, ($10.4 million, net of tax) and $8.4 million, pretax, ($5.4 million, net of tax) respectively, in selling, general and administrative expenses on our Consolidated Statements of Income. During the third quarter of 2008, we recorded restructuring and asset write-down charges of $16.8 million, pretax ($10.5 million, net of tax). Of this amount, $10.3 million related to severance expense and $4.1 million related to certain contractual costs, including office exit and cancellation fees, both of which were recorded in selling, general and administrative expenses on our Consolidated Statements of Income. The remaining $2.4 million represents software asset write-down charges that were recorded in depreciation and amortization on our Consolidated Statements of Income.
Management believes excluding these charges from certain financial results provides meaningful supplemental information regarding our financial results for the three and twelve months ended December 31, 2009, as compared to 2008, since charges of such material amounts 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 analyzing future periods.
Income Tax Benefits – During the fourth quarter of 2009, we recorded a $7.3 million income tax benefit related to our ability to utilize foreign tax credits beyond 2009. During the third quarter of 2008, the applicable statute of limitations related to an uncertain tax position regarding our Brazilian operations expired resulting in the reversal of the related income tax reserves. The reversal of the reserves resulted in the recognition of a $14.6 million income tax benefit. These income tax benefits were recorded in provision for income taxes on our Consolidated Statements of Income. Management believes excluding these income tax benefits from certain financial results provides meaningful supplemental information regarding our financial results for the years ended December 31, 2009 and 2008, since income tax benefits of such material amounts 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 analyzing future periods.
Net income and diluted EPS, adjusted for acquisition-related amortization expense, restructuring and asset write-down charges and income tax benefits - We calculate these financial measures by excluding acquisition-related amortization expense, restructuring and asset write-down charges, all net of tax, and income tax benefits from the determination of net income in the calculation of diluted EPS. These financial measures are not prepared in conformity with GAAP. Management believes that these measures are useful because management excludes acquisition-related amortization expense and other 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 relate to acquisition-related intangible assets and items that impact comparability.
Adjusted operating income and operating margin, excluding restructuring and asset write-down charges - Management believes excluding the restructuring and asset write-down charges from the calculation of operating income and margin, 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.
SOURCE Equifax Inc.
Released February 3, 2010