10-KPeriod: FY2001

EQUIFAX INC Annual Report, Year Ended Dec 31, 2001

Filed March 12, 2002For Securities:EFX

Summary

Equifax Inc. (EFX) reported fiscal year 2001 results reflecting a strategic shift, marked by the spin-off of its Payment Services division (Certegy Inc.) in July 2001. Excluding discontinued operations and divested businesses, the company achieved record operating results, with consolidated revenues increasing by 8% to $1.1 billion and diluted earnings per share rising by 5% to $1.15. This performance was largely driven by its North American Information Services segment, which saw a 13% revenue increase and a 14% operating income growth. The Consumer Direct business experienced significant expansion, more than tripling its revenues, indicating strong growth potential. Despite overall positive core business performance, the company recorded $60 million in pre-tax restructuring and other charges in the fourth quarter of 2001. These charges were related to employee severance, facility consolidation, and technology investments, aimed at aligning costs with the post-spin-off business structure and international operations. While revenue growth in North America was robust, international segments like Equifax Europe and Equifax Latin America faced headwinds from economic conditions and currency fluctuations, leading to a decline in operating income in those regions. The company demonstrated strong free cash flow generation, increasing by 72% to $208 million, which allowed for a significant reduction in long-term debt. Equifax also continued its dividend payments, although the quarterly rate was reduced following the Certegy spin-off. The company's focus in 2001 was on refining its business model and strengthening its core information services offerings, positioning it for future growth in key markets.

Key Highlights

  • 1Consolidated revenues increased 8% to $1.1 billion (excluding divested/discontinued operations).
  • 2Diluted earnings per share increased 5% to $1.15 (before restructuring charges).
  • 3North American Information Services segment showed robust growth with revenues up 13% and operating income up 14%.
  • 4Consumer Direct business significantly expanded, more than tripling revenues.
  • 5Free cash flow grew 72% to $208 million, supporting debt reduction.
  • 6Recorded $60 million in restructuring and other charges in Q4 2001 for cost alignment and efficiency improvements.
  • 7Completed the spin-off of its Payment Services division (Certegy Inc.) in July 2001.

Frequently Asked Questions

The spin-off of Equifax's Payment Services division, Certegy Inc., was completed in July 2001. As a result, Certegy's financial results were classified as 'discontinued operations' for fiscal year 2001 and historical statements were restated. This allowed Equifax to focus on its core information services business, and the spin-off significantly impacted the company's balance sheet and income statement by removing Certegy's assets and operations.

Revenue growth in 2001 was primarily driven by the North American Information Services segment, particularly strong performance in U.S. consumer credit reporting volumes (up 20%) and the rapid growth of the Consumer Direct business (revenues more than tripled). However, revenue growth was negatively impacted by the strengthening U.S. dollar against foreign currencies, particularly in Latin America and Europe, and slower economic growth in some international markets.

Equifax recorded $60 million in pre-tax restructuring and other charges in the fourth quarter of 2001. These charges were primarily for employee severance and facilities consolidation, as well as the write-down of certain technology investments. They were incurred to align the company's cost structure with its post-spin-off business model and improve operational efficiencies, especially in its international operations.

Equifax significantly reduced its long-term debt in 2001, decreasing it by $298.9 million. This reduction was funded by operating cash flows and the cash dividend received from Certegy in conjunction with the spin-off. The company also managed its revolving credit facility, replacing a larger one with a new $465 million facility.