1550 Peachtree Street, N.W. Atlanta, Georgia 30309
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Jeff Dodge
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Tim Klein
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Investor Relations
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Media Relations
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(404) 885-8804
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(404) 885-8555
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jeff.dodge@equifax.com
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tim.klein@equifax.com
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·
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First quarter revenue was $472.6 million, up 7 percent from the first quarter of 2010.
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First quarter diluted EPS from continuing operations attributable to Equifax was $0.46, up 9 percent from the first quarter of 2010.
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First quarter adjusted EPS from continuing operations attributable to Equifax was $0.58, up 9 percent from the first quarter of 2010.
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In addition to the financial highlights noted above, operating margin from continuing operations was 23.1 percent for the first quarter of 2011 compared to 23.5 percent in the first quarter of 2010.
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·
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With our strategic acquisition of Workload Financial Business Consultants Limited in the U.K., we broadened our U.K. data assets with unique deposit, savings, and investment information. Workload’s database covers 5 years of historical information and is updated quarterly.
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Entered into a new, 4 year unsecured revolving credit facility providing up to $500 million in available credit, replacing a bank credit facility that was scheduled to expire on July 24, 2011.
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Online Consumer Information Solutions revenue was $120.2 million, consistent with a year ago.
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Mortgage Solutions revenue was $27.3 million, up 18 percent from a year ago.
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Consumer Financial Marketing Services revenue was $33.5 million, up 11 percent when compared to a year ago.
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Latin America revenue was $59.9 million, up 5 percent in local currency and 9 percent in U.S. dollars from a year ago.
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Europe revenue was $37.4 million, up 9 percent in local currency and 11 percent in U.S. dollars from a year ago.
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Canada Consumer revenue was $29.9 million, up 4 percent in local currency and 10 percent in U.S. dollars from a year ago.
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The Work Number revenue was $53.5 million, up 8 percent from a year ago.
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Tax and Talent Management Services revenue was $45.9 million, up 1 percent from a year ago.
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Three Months Ended
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March 31,
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||||||||
2011
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2010
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|||||||
(In millions, except per share amounts)
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(Unaudited)
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|||||||
Operating revenue
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$ | 472.6 | $ | 443.0 | ||||
Operating expenses:
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||||||||
Cost of services (exclusive of depreciation and amortization below)
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194.3 | 190.1 | ||||||
Selling, general and administrative expenses
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126.5 | 109.5 | ||||||
Depreciation and amortization
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42.7 | 39.1 | ||||||
Total operating expenses
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363.5 | 338.7 | ||||||
Operating income
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109.1 | 104.3 | ||||||
Interest expense
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(13.8 | ) | (14.2 | ) | ||||
Other income, net
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0.3 | (0.5 | ) | |||||
Consolidated income from continuing operations before income taxes
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95.6 | 89.6 | ||||||
Provision for income taxes
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(36.3 | ) | (33.7 | ) | ||||
Consolidated income from continuing operations
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59.3 | 55.9 | ||||||
Discontinued operations, net of tax
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- | 2.7 | ||||||
Consolidated net income
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59.3 | 58.6 | ||||||
Less: Net income attributable to noncontrolling interests
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(2.0 | ) | (1.9 | ) | ||||
Net income attributable to Equifax
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$ | 57.3 | $ | 56.7 | ||||
Amounts attributable to Equifax:
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Income from continuing operations attributable to Equifax
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$ | 57.3 | $ | 54.0 | ||||
Discontinued operations, net of tax
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- | 2.7 | ||||||
Net income
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$ | 57.3 | $ | 56.7 | ||||
Basic earnings per common share:
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Income from continuing operations attributable to Equifax
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$ | 0.47 | $ | 0.43 | ||||
Discontinued operations attributable to Equifax
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- | 0.02 | ||||||
Net income attributable to Equifax
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$ | 0.47 | $ | 0.45 | ||||
Weighted-average shares used in computing basic earnings per share
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122.8 | 126.3 | ||||||
Diluted earnings per common share:
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Income from continuing operations attributable to Equifax
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$ | 0.46 | $ | 0.42 | ||||
Discontinued operations attributable to Equifax
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- | 0.02 | ||||||
Net income attributable to Equifax
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$ | 0.46 | $ | 0.44 | ||||
Weighted-average shares used in computing diluted earnings per share
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124.7 | 128.1 | ||||||
Dividends per common share
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$ | 0.16 | $ | 0.04 |
March 31,
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December 31,
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2011
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2010
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(In millions, except par values)
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(Unaudited)
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ASSETS
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Current assets:
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Cash and cash equivalents
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$ | 86.9 | $ | 119.4 | ||||
Trade accounts receivable, net of allowance for doubtful accounts of $7.4 and $7.5 at March 31, 2011 and December 31, 2010, respectively
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283.5 | 262.6 | ||||||
Prepaid expenses
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34.4 | 26.1 | ||||||
Other current assets
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22.4 | 21.1 | ||||||
Total current assets
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427.2 | 429.2 | ||||||
Property and equipment:
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Capitalized internal-use software and system costs
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327.4 | 315.9 | ||||||
Data processing equipment and furniture
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189.4 | 181.0 | ||||||
Land, buildings and improvements
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174.9 | 169.5 | ||||||
Total property and equipment
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691.7 | 666.4 | ||||||
Less accumulated depreciation and amortization
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(385.3 | ) | (368.0 | ) | ||||
Total property and equipment, net
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306.4 | 298.4 | ||||||
Goodwill
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1,946.1 | 1,914.7 | ||||||
Indefinite-lived intangible assets
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95.7 | 95.6 | ||||||
Purchased intangible assets, net
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586.6 | 593.9 | ||||||
Other assets, net
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106.8 | 101.8 | ||||||
Total assets
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$ | 3,468.8 | $ | 3,433.6 | ||||
LIABILITIES AND EQUITY
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Current liabilities:
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Short-term debt and current maturities
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$ | 40.7 | $ | 20.7 | ||||
Accounts payable
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22.4 | 24.6 | ||||||
Accrued expenses
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58.7 | 61.9 | ||||||
Accrued salaries and bonuses
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30.9 | 71.9 | ||||||
Deferred revenue
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59.5 | 58.7 | ||||||
Other current liabilities
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91.3 | 81.7 | ||||||
Total current liabilities
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303.5 | 319.5 | ||||||
Long-term debt
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974.8 | 978.9 | ||||||
Deferred income tax liabilities, net
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250.2 | 244.2 | ||||||
Long-term pension and other postretirement benefit liabilities
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116.4 | 129.0 | ||||||
Other long-term liabilities
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54.1 | 53.6 | ||||||
Total liabilities
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1,699.0 | 1,725.2 | ||||||
Equifax shareholders' equity:
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Preferred stock, $0.01 par value: Authorized shares - 10.0; Issued shares - none
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- | - | ||||||
Common stock, $1.25 par value: Authorized shares - 300.0; Issued shares - 189.3 at March 31, 2011 and December 31, 2010; Outstanding shares - 123.0 and 122.6 at March 31, 2011 and December 31, 2010, respectively
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236.6 | 236.6 | ||||||
Paid-in capital
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1,104.2 | 1,105.8 | ||||||
Retained earnings
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2,763.1 | 2,725.7 | ||||||
Accumulated other comprehensive loss
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(331.3 | ) | (344.5 | ) | ||||
Treasury stock, at cost, 64.2 shares and 64.6 shares at March 31, 2011 and December 31, 2010, respectively
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(1,980.8 | ) | (1,991.0 | ) | ||||
Stock held by employee benefits trusts, at cost, 2.1 shares at March 31, 2011 and December 31, 2010
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(41.2 | ) | (41.2 | ) | ||||
Total Equifax shareholders' equity
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1,750.6 | 1,691.4 | ||||||
Noncontrolling interests
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19.2 | 17.0 | ||||||
Total equity
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1,769.8 | 1,708.4 | ||||||
Total liabilities and equity
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$ | 3,468.8 | $ | 3,433.6 |
Three Months Ended
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March 31,
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2011
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2010
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(In millions)
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(Unaudited)
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Operating activities:
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Consolidated net income
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$ | 59.3 | $ | 58.6 | ||||
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
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Depreciation and amortization
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42.7 | 42.5 | ||||||
Stock-based compensation expense
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4.7 | 4.4 | ||||||
Excess tax benefits from stock-based compensation plans
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(0.5 | ) | (1.4 | ) | ||||
Deferred income taxes
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(0.1 | ) | (0.1 | ) | ||||
Changes in assets and liabilities, excluding effects of acquisitions:
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Accounts receivable, net
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(17.0 | ) | (5.8 | ) | ||||
Prepaid expenses and other current assets
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(9.4 | ) | (7.9 | ) | ||||
Other assets
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0.1 | 3.5 | ||||||
Current liabilities, excluding debt
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(48.0 | ) | (32.7 | ) | ||||
Other long-term liabilities, excluding debt
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(8.7 | ) | (23.4 | ) | ||||
Cash provided by operating activities
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23.1 | 37.7 | ||||||
Investing activities:
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Capital expenditures
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(26.2 | ) | (50.0 | ) | ||||
Acquisitions, net of cash acquired
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(30.7 | ) | (6.0 | ) | ||||
Investment in unconsolidated affiliates, net
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(2.7 | ) | - | |||||
Cash used in investing activities
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(59.6 | ) | (56.0 | ) | ||||
Financing activities:
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Net short-term borrowings
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19.8 | 2.7 | ||||||
Net repayments under long-term revolving credit facilities
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- | (4.6 | ) | |||||
Payments on long-term debt
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(1.7 | ) | (3.1 | ) | ||||
Proceeds from issuance of long-term debt
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- | 1.4 | ||||||
Treasury stock purchases
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- | (9.4 | ) | |||||
Dividends paid to Equifax shareholders
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(19.6 | ) | (5.0 | ) | ||||
Dividends paid to noncontrolling interests
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- | (0.3 | ) | |||||
Proceeds from exercise of stock options
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5.1 | 11.6 | ||||||
Excess tax benefits from stock-based compensation plans
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0.5 | 1.4 | ||||||
Other
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(2.5 | ) | (0.2 | ) | ||||
Cash provided by (used in) financing activities
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1.6 | (5.5 | ) | |||||
Effect of foreign currency exchange rates on cash and cash equivalents
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2.4 | (2.2 | ) | |||||
Decrease in cash and cash equivalents
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(32.5 | ) | (26.0 | ) | ||||
Cash and cash equivalents, beginning of period
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119.4 | 103.1 | ||||||
Cash and cash equivalents, end of period
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$ | 86.9 | $ | 77.1 |
1.
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Can you provide a further analysis of operating revenue and operating income by operating segment?
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(in millions)
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Three Months Ended March 31,
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Local Currency
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Operating revenue:
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2011
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2010
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$ Change
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% Change
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% Change*
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Online Consumer Information Solutions
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$ | 120.2 | $ | 119.7 | $ | 0.5 | 0 | % | ||||||||||||
Mortgage Solutions
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27.3 | 23.2 | 4.1 | 18 | % | |||||||||||||||
Consumer Financial Marketing Services
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33.5 | 30.2 | 3.3 | 11 | % | |||||||||||||||
Total U.S. Consumer Information Solutions
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181.0 | 173.1 | 7.9 | 5 | % | |||||||||||||||
Latin America
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59.9 | 55.1 | 4.8 | 9 | % | 5 | % | |||||||||||||
Europe
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37.4 | 33.9 | 3.5 | 11 | % | 9 | % | |||||||||||||
Canada Consumer
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29.9 | 27.2 | 2.7 | 10 | % | 4 | % | |||||||||||||
Total International
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127.2 | 116.2 | 11.0 | 9 | % | 6 | % | |||||||||||||
The Work Number
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53.5 | 49.7 | 3.8 | 8 | % | |||||||||||||||
Tax and Talent Management Services
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45.9 | 45.6 | 0.3 | 1 | % | |||||||||||||||
Total TALX
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99.4 | 95.3 | 4.1 | 4 | % | |||||||||||||||
North America Personal Solutions
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44.4 | 39.7 | 4.7 | 12 | % | |||||||||||||||
North America Commercial Solutions
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20.6 | 18.7 | 1.9 | 10 | % | 8 | % | |||||||||||||
Total operating revenue
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$ | 472.6 | $ | 443.0 | $ | 29.6 | 7 | % | 6 | % |
(in millions)
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Three Months Ended March 31,
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Operating
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Operating
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Operating income:
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2011
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Margin
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2010
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Margin
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$ Change
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% Change
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U.S. Consumer Information Solutions
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$ | 61.7 | 34.1 | % | $ | 60.1 | 34.6 | % | $ | 1.6 | 3 | % | ||||||||||||
International
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29.8 | 23.4 | % | 28.7 | 24.7 | % | 1.1 | 4 | % | |||||||||||||||
TALX
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21.7 | 21.9 | % | 21.5 | 22.6 | % | 0.2 | 1 | % | |||||||||||||||
North America Personal Solutions
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12.7 | 28.7 | % | 10.0 | 25.2 | % | 2.7 | 27 | % | |||||||||||||||
North America Commercial Solutions
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5.1 | 24.9 | % | 4.4 | 23.5 | % | 0.7 | 16 | % | |||||||||||||||
General Corporate Expense
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(21.9 | ) |
nm
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(20.4 | ) |
nm
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(1.5 | ) | -8 | % | ||||||||||||||
Total operating income
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$ | 109.1 | 23.1 | % | $ | 104.3 | 23.5 | % | $ | 4.8 | 5 | % |
2.
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What drove the fluctuation in the effective tax rate?
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3.
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Can you provide depreciation and amortization by segment?
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Three Months Ended
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March 31,
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2011
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2010
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U.S. Consumer Information Solutions
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$ | 11.2 | $ | 10.0 | ||||
International
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7.0 | 5.9 | ||||||
TALX
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17.5 | 16.6 | ||||||
North America Personal Solutions
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1.4 | 1.3 | ||||||
North America Commercial Solutions
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1.5 | 1.5 | ||||||
General Corporate Expense
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4.1 | 3.8 | ||||||
Total depreciation and amortization
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$ | 42.7 | $ | 39.1 |
4.
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What was the currency impact on the foreign operations?
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Three Months Ended March 31, 2011
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Operating Revenue
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Operating Income
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Amount
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%
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Amount
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%
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Canada Consumer
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$ | 1.6 | 6 | % | $ | 0.6 | 5 | % | ||||||||
Canada Commercial
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0.3 | 5 | % | 0.1 | 5 | % | ||||||||||
Europe
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0.7 | 2 | % | 0.1 | 2 | % | ||||||||||
Latin America
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2.0 | 4 | % | (0.1 | ) | -1 | % |
A.
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Reconciliation of net income from continuing operations attributable to Equifax to diluted EPS from continuing operations attributable to Equifax, adjusted for acquisition-related amortization expense:
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Three Months Ended
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March 31,
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2011
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2010
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$ Change
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% Change
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Net income from continuing operations attributable to Equifax
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57.3 | 54.0 | 3.3 | 6 | % | |||||||||||
Acquisition-related amortization expense, net of tax
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14.8 | 14.0 | 0.8 | 6 | % | |||||||||||
Net income from continuing operations attributable to Equifax, adjusted for acquisition-related amortization expense
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$ | 72.1 | $ | 68.0 | $ | 4.1 | 6 | % | ||||||||
Diluted EPS from continuing operations attributable to Equifax, adjusted for acquisition-related amortization expense
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$ | 0.58 | $ | 0.53 | $ | 0.05 | 9 | % | ||||||||
Weighted-average shares used in computing diluted EPS
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124.7 | 128.1 |