10-QPeriod: Q2 FY2001

EQUIFAX INC Quarterly Report for Q2 Ended Jun 30, 2001

Filed August 13, 2001For Securities:EFX

Summary

Equifax Inc. (EFX) reported its second-quarter and first-half 2001 financial results, marked by the significant event of spinning off its Payment Services segment, Certegy Inc., which was completed on July 7, 2001. This spin-off is a major focus, with historical financials restated to reflect Certegy as discontinued operations. The company experienced a notable increase in operating income from continuing operations, driven primarily by growth in its North American Information Services segment, despite some headwinds from a slowing U.S. economy affecting marketing services and mixed performance in international segments due to currency fluctuations and local economic conditions. Despite a decrease in net income attributable to the spin-off costs and the exclusion of Certegy's contributions, the core business demonstrated resilience. Revenue growth, particularly in U.S. Credit Information Services and Mortgage Services, along with strong volume increases, showcased the underlying strength of Equifax's continuing operations. The company is also actively managing its debt and has plans for a new credit facility, positioning itself for future strategic initiatives and potential acquisitions.

Key Highlights

  • 1Completed the spin-off of its Payment Services segment (Certegy Inc.) on July 7, 2001, with historical financial data restated to reflect this as discontinued operations.
  • 2Recorded a significant expense of $28.4 million (after tax) in the second quarter of 2001 related to the costs associated with the spin-off.
  • 3Income from continuing operations for the second quarter of 2001 increased by 19.7% to $38.3 million, with diluted EPS rising to $0.28 from $0.24 in the prior year.
  • 4For the first six months of 2001, income from continuing operations grew by 19.6% to $72.4 million, and diluted EPS increased to $0.52 from $0.45.
  • 5North American Information Services segment showed strong revenue growth of 13.2% for the quarter and 12.2% for the first six months, driven by U.S. Credit Information Services and Mortgage Services.
  • 6Marketing Services revenue experienced a decline due to the slowing U.S. economy.
  • 7International segments (Europe and Latin America) showed mixed results, with revenue declines influenced by unfavorable foreign currency exchange rates and local economic conditions, though local currency revenues showed modest growth in some areas.

Frequently Asked Questions

The spin-off of Certegy Inc. is presented as discontinued operations for all historical periods. While this reduces reported net income and total assets, it allows investors to better assess the performance of Equifax's continuing core businesses. The spin-off also incurred significant costs of $28.4 million (after tax) in the second quarter of 2001.

The North American Information Services segment is a key driver of growth, with revenue increasing by 13.2% in the second quarter and 12.2% in the first six months of 2001. This growth is attributed to strong performance in U.S. Credit Information Services (driven by volume increases) and Mortgage Services (benefiting from refinancing activity), and also includes contributions from Consumer Direct initiatives.

Equifax's international operations in Europe and Latin America showed mixed performance. While local currency revenues experienced some growth, overall reported revenues declined due to the strengthening U.S. dollar and weaker local economic conditions in some regions. Management is focused on cost containment in these segments.

Equifax has been actively managing its debt, with a reduction due to Certegy's assumption of $275 million in debt post-spin-off. The company has significant availability under its revolving credit facility and is negotiating a new, larger facility. Management believes it can secure additional financing if needed for future strategic initiatives, such as the potential acquisition of CSC's credit reporting business.