2008-07-24 07:55:00
ChoicePoint(R) Reports Second Quarter 2008 Results
- Internal revenue in the Insurance Services segment grew 10.5 percent
- Completed the sale of our government software business for a cash
purchase price of $175.6 million, subject to final working capital
adjustments
- Sold the Database Solutions portion of the Marketing Services segment to
Acxiom Corporation in July
- Net Free Cash Flow from continuing operations increased sequentially from
$32.7 million in the first quarter of 2008 to $48.5 million for the second
quarter
- Net Debt reduced by $279.6 million from December 31, 2007 to $310.2
million
ALPHARETTA, Ga., July 24 /EMWNews/ -- For the second
quarter of 2008, ChoicePoint Inc. (NYSE: CPS) reported total revenue from
continuing operations of $240.7 million, compared to $227.2 million for the
second quarter of 2007. Diluted earnings per share from continuing
operations ("EPS") for the second quarter of 2008 was $0.28, compared to
$0.41 for the second quarter of 2007. Excluding certain other operating
charges, EPS would have increased 10 percent to $0.45 for the second
quarter of 2008, compared to $0.41 for the same period of 2007.
The following table provides a reconciliation of EPS excluding other
operating charges to EPS calculated in accordance with generally accepted
accounting principles ("GAAP") for the second quarter of 2008 and 2007:
Quarter Ended
June 30,
2008 2007
EPS excluding other operating charges $0.45 $0.41
Other operating charges (0.17) -
EPS $0.28 $0.41
Other operating charges of $16.4 million ($11.9 million net of taxes),
or $0.17 per share, incurred during the second quarter of 2008 were
primarily for costs associated with the Company's pending sale to Reed
Elsevier and lease abandonment and asset impairment charges at various
business units. See Note (b) to Financial Highlights for additional detail
of 2008 and 2007 other operating charges.
Cash Flow and Balance Sheet Highlights - Second Quarter
-- Cash flows from operating activities of continuing operations were
$64.3 million for the three months ended June 30, 2008, compared to
$72.2 million for the three months ended June 30, 2007. With $15.8
million in capital expenditures during the second quarter of 2008 and
$11.3 million during the same period in 2007, net free cash flow from
continuing operations (cash flows from operating activities of
continuing operations less capital expenditures) for the quarter ended
June 30, 2008, was $48.5 million, compared to $61.0 million for the
quarter ended June 30, 2007. However, through the first six months of
2008, net free cash flow from continuing operations totaled $81.2
million compared to $83.8 million for the six months ended June 30,
2007. The decline in net free cash flow for the six months ended June
30, 2008 compared to the same period in 2007 is primarily a result of
increased capital expenditures.
-- Net debt (total debt of $485.0 million less cash and cash equivalents
of $174.8 million) at June 30, 2008, decreased by $279.6 million from
December 31, 2007 to $310.2 million, with an average effective interest
rate of 4.5 percent. The Company utilized its cash flows from
operations to fund capital expenditures and pay down debt, while
investing the cash proceeds from the sale of the government software
business in short-term cash equivalents. The remaining debt capacity at
June 30, 2008 under our committed financing lines was $389.5 million.
Financial Highlights - Second Quarter
-- Second quarter total revenue from continuing operations increased 5.9
percent to $240.7 million in 2008, from $227.2 million in 2007.
Internal revenue (total revenue less revenue from acquisitions) from
continuing operations in the second quarter of 2008 increased 3.7
percent from the second quarter of 2007. Continued strong internal
revenue growth of 10.5 percent in the Insurance Services segment
(excluding $3.0 million of revenue related to an acquisition completed
in the first quarter of 2008) was offset by declines in the Business
Services segment, primarily due to continued difficult macroeconomic
conditions faced by our customers in the financial services market.
-- Operating income from continuing operations for the second quarter of
2008 was $41.5 million, compared to $57.9 million for the same period
of 2007. Operating income from continuing operations for the three
months ended June 30, 2008 was reduced by other operating charges of
$16.4 million ($11.9 million net of taxes) consisting of the following:
-- Charges of $11.8 million for transaction-related expenses associated
with the Company's pending sale to Reed Elsevier.
-- Charges of $4.6 million consisting primarily of lease abandonment
and asset impairment charges.
-- Operating income from continuing operations for the quarter ended June
30, 2007 included other operating charges of $0.2 million ($0.1 million
net of taxes) consisting of the following:
-- Charges of $1.7 million for severance and lease abandonment
primarily associated with the consolidation of facilities; and
-- A net benefit of $1.5 million due to a partial reversal of third
party legal accruals related to the previously disclosed fraudulent
data access.
-- Excluding the other operating charges discussed above, operating income
from continuing operations would have been $57.9 million and $58.1
million for the second quarter of 2008 and 2007, respectively.
-- The Company's effective tax rate for continuing operations in the
second quarter of 2008 was 44.5 percent, compared to 39.7 percent for
the second quarter of 2007. The increase in the effective tax rate in
2008 is due primarily to the non-deductibility of certain charges
incurred in connection with the Company's pending sale to Reed
Elsevier.
-- Interest expense was $6.4 million for each of the second quarters of
2008 and 2007.
Operational Highlights
Insurance Services
-- Total revenue increased 12.9 percent to $141.3 million in the second
quarter of 2008, compared to $125.2 million in the same period of the
prior year. Excluding revenue of $3.0 million related to an
acquisition in the first quarter of 2008, internal revenue increased
10.5 percent in the Insurance Services segment. This growth was led by
double-digit internal revenue growth in data services and claims and
fraud analytics. The delayed timing of new contract signings resulted
in nominal growth in our software business.
-- Operating income increased 10.7 percent in Insurance Services to $69.4
million for the second quarter of 2008, compared with $62.7 million for
the second quarter of 2007. Operating profit margin was 49.1% for the
second quarter of 2008, compared to 50.1% in the second quarter of
2007. This decrease is primarily due to changes in product mix and
ongoing investments in new product initiatives.
Screening and Authentication Services
-- Total revenue and internal revenue grew 0.1 percent in the second
quarter of 2008, achieving revenue of $65.9 million in each of the
second quarters of 2008 and 2007. Double-digit internal revenue growth
from our tenant screening, Bridger, and VitalChek businesses was offset
by continued negative total and internal revenue growth in our
employment-related screening business, due primarily to a reduction in
hiring levels by our largest customers.
-- Operating income in Screening and Authentication Services was $13.1
million for the second quarter of 2008, compared to $12.7 million in
the same period of the prior year. Operating profit margin increased
to 19.8% for the second quarter of 2008, improving from 19.3% in the
second quarter of 2007 and 16.7% in the first quarter of 2008. This
increase is primarily due to the impact of cost management initiatives
implemented in 2007 and 2008.
Business Services
-- Total revenue decreased 7.5 percent to $33.5 million in the second
quarter of 2008 from $36.2 million in the second quarter of 2007. The
results include the impact of our Charles Jones joint venture, which
was effective July 1, 2007. Excluding the impact of $2.0 million of
incremental revenue for the Charles Jones joint venture, internal
revenue declined 13.1 percent during the second quarter of 2008,
compared to the same period of the prior year, as revenues from our on-
demand business due diligence ("BIS") products continued to decline due
to macroeconomic conditions impacting our customers.
-- Operating loss in the Business Services segment was $0.4 million for
the second quarter of 2008, compared to operating income of $2.9
million for the same period of 2007. Operating loss margin was 1.3%
for the second quarter of 2008, compared to an operating profit margin
of 8.1% in the second quarter of 2007, as margins declined in all three
businesses in the segment: Public Records, Charles Jones and BIS.
Corporate and Shared Expenses
-- For the second quarter of 2008, corporate and shared expenses were
$19.7 million, or 8.2 percent of total revenue, compared to $15.3
million, or 6.7 percent of total revenue, in the second quarter of
2007. The increase in corporate and shared expenses is primarily due
to $2.8 million of specific third party legal costs, as well as
incremental incentive compensation. For additional information on
corporate and shared expenses, please refer to the table at the end of
this release.
-- The Company recorded stock-based compensation expense of $4.5 million
($3.3 million net of taxes) during the second quarter of 2008.
Approximately $0.8 million of stock-based compensation expense is
included in cost of revenue, with the remaining $3.7 million of stock
based compensation expense included in selling, general and
administrative expenses. These amounts include restricted stock
expense of $2.4 million ($1.5 million net of taxes), and stock option
expense of $2.1 million ($1.8 million net of taxes). The Company
recorded $5.0 million ($3.8 million net of taxes) of stock-based
compensation expense in the second quarter of 2007, which includes
restricted stock expense of $2.1 million ($1.3 million net of taxes)
and stock option expense of $2.9 million ($2.5 million net of taxes).
Disposition of Assets Held for Sale
On June 10, 2008, the Company completed the sale of its government
software business ("i2"), to Silver Lake Sumeru, a leader in private
investments in technology, technology-enabled and related growth
industries, in a cash purchase of $175.6 million, subject to the
finalization of working capital adjustments. The Company had reclassified
the operations of i2 as discontinued operations in the fourth quarter of
2007 as part of its previously-announced strategy of divesting businesses
that did not fit within its strategic focus of helping customers manage
economic risks.
Marketing Services Segment Divestiture
During the second quarter of 2008, the Company decided to divest its
Marketing Services segment. As a result, the Company is reporting the
segment as discontinued operations and eliminating the reporting of the
Marketing Services segment. In connection with the divestiture decision,
the Company recorded a pre-tax charge of $17.1 million to record the
Marketing Services segment assets at their currently estimated fair value
less costs to sell. On July 9, 2008, the Company sold the Database
Solutions portion of this segment to Acxiom Corporation. The Company
expects to divest the remaining portion of the segment within the next 12
months. Neither the Acxiom transaction nor the divestiture of the remaining
portion of the segment is expected to have a material impact on our
financial results.
Shareholders Approve Merger with Reed Elsevier
On April 16, 2008 at a special meeting of the shareholders of the
Company, ChoicePoint shareholders overwhelmingly voted to approve the
previously- disclosed Agreement and Plan of Merger, dated as of February
20, 2008, by and among ChoicePoint, Reed Elsevier Group plc and Deuce
Acquisition Inc., under which ChoicePoint would be acquired by Reed
Elsevier.
The consummation of the transaction remains subject to receipt of
required regulatory approval and satisfaction of customary closing
conditions as described in the merger agreement.
On April 29, 2008, the Company announced that it and Reed Elsevier had
received a request for additional information from the Federal Trade
Commission regarding the proposed merger between the companies. In
addition, the companies have been notified of parallel reviews by the
attorneys general of certain states. The Federal Trade Commission
information request was issued under notification requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The
companies intend to cooperate fully and respond expeditiously to the FTC
and the attorneys general. It is expected that the transaction will close
later in the year.
Reed Elsevier and the Company submitted a Notice of the proposed
transaction to the Committee on Foreign Investment in the United States
("CFIUS") pursuant to the Exon-Florio provisions of the Defense Production
Act of 1950, as amended. After being informed by the Department of the
Treasury that CFIUS would not be able to complete its review within the
review period allotted, the parties withdrew their Notice on May 5, 2008,
and refiled on May 7, 2008. After consultation with the Department of
Treasury, the parties again withdrew the Notice on July 18, 2008 and
refiled on July 21, 2008. The review is expected to be completed within 45
days.
About ChoicePoint
ChoicePoint (NYSE: CPS) provides businesses, government agencies and
non- profit organizations with technology, software, information and
marketing services to help manage economic and physical risks as well as
identify business opportunities. Consumers have free access to the reports
we create at http://www.ChoiceTrust.com. Learn what we do to protect consumer
privacy by visiting http://www.PrivacyatChoicePoint.com and, for more information
on our company, go to http://www.ChoicePoint.com.
Forward-Looking Statements
Certain written statements in this release and oral statements made by
or on behalf of the Company may constitute "forward-looking statements" as
defined under the Private Securities Litigation Reform Act of 1995. Words
or phrases such as "should result," "are expected to," "anticipate,"
"estimate," "project," or similar expressions are intended to identify
forward-looking statements. These statements are subject to certain risks
and uncertainties that could cause actual results to differ materially from
those expressed in any forward-looking statements. These risks and
uncertainties include, but are not limited to, the following important
factors: the results of our ongoing review of fraudulent data access and
other events, the risk that the proposed merger between the Company and a
wholly owned subsidiary of Reed Elsevier Group plc will not be consummated
within the time frame contemplated by the Company or at all, the results of
litigation or government proceedings, demand for the Company's services,
product development, maintaining acceptable margins, the continued revenue
decline from customers in the sub-prime mortgage lending industry,
maintaining our data supply, maintaining secure systems including personal
privacy systems, our ability to minimize system interruptions, our ability
to control costs, the impact of federal, state and local regulatory
requirements on the Company's business, privacy matters and any federal or
state legislative responses to identify theft concerns, the impact of
competition and customer consolidations, our ability to continue our
long-term business strategy, the implementation of plans to divest the
software business of our Government Services segment, including
unanticipated losses realized in connection with any such sales, our
ability to attract and retain qualified personnel, and the uncertainty of
economic conditions in general. Additional information concerning these and
other risks and uncertainties is contained in the Company's filings with
the Securities and Exchange Commission, including the Company's Annual
Report on Form 10.K for the year ended December 31, 2007 (collectively, the
"SEC Filings"). Readers are cautioned not to place undue reliance on
forward-looking statements, since the statements speak only as of the date
that they are made, and the Company undertakes no obligation to publicly
update these statements based on events that may occur after the date of
this press release.
ChoicePoint Inc.
Financial Highlights
(Unaudited) Three Months Ended Six Months Ended
(Dollars in thousands, except June 30, June 30,
per share data) 2008 2007 2008 2007
Total revenue (a) $240,699 $227,225 $481,591 $449,642
Cost of revenue 124,580 116,162 250,026 232,405
Selling, general and
administrative expenses 58,230 52,959 116,666 104,604
Other operating charges (b) 16,438 163 20,195 952
Total costs and expenses 199,248 169,284 386,887 337,961
Operating income 41,451 57,941 94,704 111,681
Interest expense 6,419 6,361 14,088 12,677
Income from continuing operations
before income taxes 35,032 51,580 80,616 99,004
Provision for income taxes 15,585 20,495 33,806 38,578
Income from continuing operations 19,447 31,085 46,810 60,426
Income from discontinued
operations, net of taxes (c) 22,554 1,485 18,176 3,066
Net income $42,001 $32,570 $64,986 $63,492
Effective tax rate, continuing
operations 44.5% 39.7% 41.9% 39.0%
EPS - diluted
Income from continuing
operations $0.28 $0.41 $0.68 $0.79
Income from discontinued
operations 0.32 0.02 0.26 0.04
Net income $0.60 $0.43 $0.94 $0.83
Weighted average shares -
diluted 69,648 75,852 69,003 76,566
See accompanying notes.
ChoicePoint Inc.
Financial Highlights
Reconciliation to financial information excluding other expenses and
discontinued operations
(Unaudited) Three Months Ended Six Months Ended
(Dollars in thousands, except per June 30, June 30,
share data) 2008 2007 2008 2007
Net income $42,001 $32,570 $64,986 $63,492
Income from discontinued
operations, net of taxes (c) 22,554 1,485 18,176 3,066
Provision for income taxes 15,585 20,495 33,806 38,578
Interest expense 6,419 6,361 14,088 12,677
Operating income 41,451 57,941 94,704 111,681
Add back other operating
charges (b) (d) 16,438 163 20,195 952
Operating income before other
expenses (e) 57,889 58,104 114,899 112,633
Interest expense 6,419 6,361 14,088 12,677
Income from continuing operations
before income taxes & other
expenses (e) 51,470 51,743 100,811 99,956
Provision for income taxes 20,094 20,557 39,586 38,941
Net income from continuing
operations before other
expenses (e) $31,376 $31,186 $61,225 $61,015
Effective tax rate from continuing
operations excluding
other expenses (e) 39.0% 39.7% 39.3% 39.0%
Earnings per share from continuing
operations - diluted excluding
other expenses (e) $0.45 $0.41 $0.89 $0.80
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Earnings per share from
continuing operations - diluted
excluding other expenses (e) $0.45 $0.41 $0.89 $0.80
Other operating charges (0.17) - (0.21) (0.01)
Earnings per share from
continuing operations $0.28 $0.41 $0.68 $0.79
See accompanying notes.
ChoicePoint Inc.
Financial Highlights
(Unaudited) Three months Ended Six months Ended
June 30, June 30,
(dollars in thousands) 2008 2007 2008 2007
Cash Flow Highlights
Income from continuing operations $19,447 $31,085 $46,810 $60,426
Depreciation & amortization 14,349 15,091 28,095 29,851
Changes in assets & liabilities
and other 30,467 26,062 35,986 14,752
Net cash provided by operating
activities - continuing
operations $64,263 $72,238 $110,891 $105,029
Proceeds from the disposition of
discontinued operations, net of
cash disposed of $170,000 $734 $171,800 $28,598
Acquisitions & investments, net
of cash acquired (3,400) (376) (9,629) (583)
Capital expenditures (15,814) (11,269) (29,741) (21,185)
Net cash provided by (used in)
investing activities -
continuing operations $150,786 $(10,911) $132,430 $6,830
Net cash used in financing
activities - continuing
operations $(76,433) $(74,004) $(95,019) $(116,926)
Net cash provided by operating,
investing, and financing
activities of discontinued
operations $3,999 $746 $6,076 $5,719
Reconciliation of Net Free Cash
Flow (f)
Net cash provided by operating
activities - continuing
operations $64,263 $72,238 $110,891 $105,029
Capital expenditures (15,814) (11,269) (29,741) (21,185)
Net free cash flow from
continuing operations $48,449 $60,969 $81,150 $83,844
See accompanying notes.
ChoicePoint Inc.
Financial Highlights
(Unaudited)
(Dollars in thousands)
Key Balance Sheet Highlights & June 30, June 30,
Reconciliation of Net Debt to Total Debt 2008 2007
Short-term debt and current
maturities of long-term debt $- $90,011
Long-term debt, net of current maturities 485,000 335,019
Total debt 485,000 425,030
Cash and cash equivalents 174,752 27,544
Net debt (g) $310,248 $397,486
Shareholders' equity $417,845 $618,884
Net debt to book capital 42.6% 39.1%
Days sales outstanding for continuing
operations (adjusted for pass-through
expenses) 41 days 42 days
Calculation of EBITDA and Ratio of Twelve Months Ended
Net Debt to EBITDA Ratio (h) June 30,
(Dollars in thousands) 2008 2007
Net Income - as reported $33,917 $14,944
Loss from discontinued operations, net
of taxes 68,782 97,454
Income from continuing operations 102,699 112,398
Provision for income taxes 69,563 69,271
Interest expense 28,443 23,432
Operating income 200,705 205,101
Add back: other expenses:
Other operating charges 24,475 10,396
Operating income - continuing
operations - as adjusted 225,180 215,497
Depreciation and amortization 56,862 59,230
Stock-based compensation 18,956 21,367
Earnings before Interest, Taxes,
Depreciation & Amortization (EBITDA) $300,998 $296,094
Net Debt to EBITDA Ratio (h) 1.03 1.34
Share Repurchase Summary
(In thousands, except per share data)
Total number
of shares Average cost Total cost
repurchased per share for shares
Three months ended June 30, 2008 - $- $-
Inception of buyback program
through June 30, 2008 25,482 $38.56 $982,486
See accompanying notes.
ChoicePoint Inc.
Notes to Financial Highlights
(a) Pass-through expenses such as motor vehicle registry fees are
accounted for on a net basis and, as such, excluded from revenues in our
financial statements in accordance with generally accepted accounting
principles ("GAAP"). Second quarter pass-through expenses related to
continuing operations totaled $214.1 million in 2008 and $208.2 million in
2007. Pass-through expenses related to continuing operations for the six
months ended June 30 were $430.6 million in 2008 and $422.4 million in
2007.
(b) Other operating charges includes the following components:
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2008 2007 2008 2007
Asset impairments $1,584 $- $2,070 $-
Transaction-related expenses 11,785 - 13,786 -
Lease abandonment, severance
and other expenses 3,059 1,664 4,230 1,886
Fraudulent data access related
expense 10 (1,501) 109 (934)
Total other operating charges $16,438 $163 $20,195 $952
Transaction-related expenses above consist primarily of legal fees
incurred in connection with the request for additional information from the
Federal Trade Commission regarding the Company's pending sale to Reed
Elsevier and investment banking fees payable in connection with the pending
sale to Reed Elsevier.
(c) Income from discontinued operations, net of tax, includes the
following components:
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2008 2007 2008 2007
Income (loss) from discontinued
operations, net of taxes $(10,910) $1,356 $(15,327) $3,303
Gain (loss) on sale of
discontinued operations,
net of taxes 33,464 129 33,503 (237)
Income from discontinued
operations, net of taxes $22,554 $1,485 $18,176 $3,066
(d) The Company has presented this analysis with and without these
items because they represent costs that management excludes in its
assessments of operating results of the business.
(e) To supplement the Company's consolidated financial statements
presented on a GAAP basis, the Company provides the following non-GAAP
financial measures: "operating income before other expenses," "income from
continuing operations before income taxes and other expenses," "net income
from continuing operations before other expenses," "effective tax rate from
continuing operations excluding other expenses" and "earnings per share
from continuing operations - diluted excluding other expenses". In each
case, these non-GAAP financial measures differ from the equivalent GAAP
financial measures in that they exclude the other operating charges
described in Note (b), which include expenses related to the pending merger
with Reed Elsevier, severance, lease abandonment, fraudulent data access,
and other costs relating to the consolidation of facilities.
Management uses these non-GAAP financial measures for internal purposes
in evaluating and forecasting the Company's operating performance because
they exclude expenses that are not reflective of the Company's ongoing
operating performance and, in the case of expenses related to the
fraudulent data access and consolidation of operating platforms, are
expected to be limited in duration and decreasing over time. The Company
also uses certain of these non-GAAP financial measures in setting bonus
targets and targets for other performance-based compensation plans.
Management believes these non- GAAP financial measures assist investors in
comparing the Company's results with prior periods in which such expenses
were not taken.
These adjusted financial measures should not be considered in isolation
or as a substitute for GAAP operating income, income before taxes, net
income or earnings per share. In addition, there are limitations associated
with the use of these non-GAAP financial measures. For example, expenses
associated with items such as the fraudulent data access or consolidation
of technology platforms could have a material impact on cash flows or
liquidity. These effects are reflected in our GAAP financial statements.
These non-GAAP financial measures reflect an additional way of viewing
aspects of our operations that, when viewed with our GAAP results and
reconciliations to corresponding GAAP financial measures, provide a more
complete understanding of our business. The Company strongly encourages
investors to review its financial statements and publicly-filed reports in
their entirety and not to rely on any single financial measure. Other
companies may use different methodologies for calculating their non-GAAP
financial measures and, accordingly, the Company's non-GAAP financial
measures may not be comparable to those measures.
(f) Net free cash flow is not defined under GAAP. Therefore, it should
not be considered a substitute for income or cash flow data prepared in
accordance with GAAP and may not be comparable to similarly-titled measures
used by other companies. The Company defines net free cash flow as cash
flows from operating activities of continuing operations less capital
expenditures. It should not be inferred that the entire net free cash flow
amount is available for discretionary expenditures. The Company believes
net free cash flow is a useful measure of performance and its ability to
generate cash.
(g) Net debt is not defined under GAAP. The Company defines net debt as
total debt less cash and cash equivalents. Management believes that net
debt provides useful information regarding the level of the Company's
indebtedness by reflecting cash and investments that could be used to repay
debt. Therefore, it should not be considered a substitute for total debt
data prepared in accordance with GAAP and may not be comparable to
similarly titled measures used by other companies.
(h) To supplement the Company's balance sheet information presented on
a GAAP basis, the Company also uses "net debt to EBITDA ratio". Net debt to
EBITDA ratio is a non-GAAP measure, which may be determined or calculated
differently by other companies, and is obtained by dividing the Company's
net debt as of a specific date by its EBITDA for the specified period
ending on such date. Net debt is calculated by subtracting cash and cash
equivalents from total debt. The Company defines EBITDA as net income from
continuing operations before taxes, interest, other operating charges,
depreciation and amortization, including amortization associated with
stock-based compensation. The Company's net debt to EBITDA ratio is
required to be calculated by the Company's loan covenants and Management
uses it to evaluate the Company's ability to repay or refinance its debt
obligations. Management believes that net debt is a useful measure because
it represents the amount of debt obligations that are not covered by
available cash and temporary investments. Management believes that EBITDA
is a useful measure in this context because it assists management in
comparing the Company's performance on a consistent basis without regard to
depreciation and amortization, which are non-cash in nature and can vary
significantly depending upon accounting methods or non- operating factors
such as historical cost.
The Company's net debt to EBITDA ratio should not be considered in
isolation or as a substitute for a ratio of GAAP total debt to net income.
The Company strongly encourages investors to review its financial
statements and publicly-filed reports in their entirety and not to rely on
any single financial measure. Other companies may use different
methodologies for calculating their non-GAAP financial measures and,
accordingly, the Company's non-GAAP financial measures may not be
comparable to those measures.
ChoicePoint Inc.
2008 Segment Results - Continuing Operations
(Dollars in thousands) Q1 2008 Q2 2008
Revenue
Insurance Services $142,686 $141,307
Screening and Authentication Services 62,319 65,940
Business Services 35,887 33,452
Total Revenue $240,892 $240,699
Operating Income
Insurance Services $72,024 $69,440
Screening and Authentication Services 10,401 13,071
Business Services 1,392 (419)
Corporate & shared expenses (a) (21,740) (19,660)
Stock-based compensation (b) (5,067) (4,543)
Operating income before other expenses 57,010 57,889
Other operating charges (c) (3,757) (16,438)
Operating income $53,253 $41,451
Total Revenue Growth Rates
Insurance Services 13.9% 12.9%
Screening and Authentication Services 1.4% 0.1%
Business Services 0.5% -7.5%
Total operations 8.3% 5.9%
Internal Revenue Growth Rates
Insurance Services 12.2% 10.5%
Screening and Authentication Services 1.4% 0.1%
Business Services -5.8% -13.1%
Total operations 6.3% 3.7%
Operating Profit Margins
Insurance Services 50.5% 49.1%
Screening and Authentication Services 16.7% 19.8%
Business Services 3.9% -1.3%
Operating income before other operating
charges as a percentage of total revenue (c) 23.7% 24.1%
Operating income as a percentage of
total revenue 22.1% 17.2%
ChoicePoint Inc.
2007 Segment Results - Continuing Operations
(Dollars in thousands) Q1 2007 Q2 2007 Q3 2007 Q4 2007 Total 2007
Revenue
Insurance Services $125,282 $125,185 $129,211 $125,909 $505,587
Screening and
Authentication Services 61,438 65,881 64,556 60,974 252,849
Business Services 35,697 36,159 36,456 33,857 142,169
Total Revenue $222,417 $227,225 $230,223 $220,740 $900,605
Operating Income
Insurance Services $65,179 $62,726 $65,032 $65,239 $258,176
Screening and
Authentication Services 10,067 12,714 13,237 10,583 46,601
Business Services 940 2,918 2,205 825 6,888
Corporate & shared
expenses (a) (16,585) (15,277) (17,894) (19,598) (69,354)
Stock-based
compensation (b) (5,073) (4,977) (4,997) (4,349) (19,396)
Operating income before
other expenses 54,528 58,104 57,583 52,700 222,915
Other operating
charges (c) (789) (163) (2,499) (1,781) (5,232)
Operating income $53,739 $57,941 $55,084 $50,919 $217,683
Total Revenue Growth Rates
Insurance Services 11.5% 11.5% 11.3% 10.7% 11.3%
Screening and
Authentication Services -0.7% 1.4% -3.4% -3.9% -1.6%
Business Services -4.3% -1.9% 2.7% -5.3% -2.2%
Total operations 5.2% 6.1% 5.4% 3.7% 5.1%
Internal Revenue Growth
Rates
Insurance Services 8.0% 9.3% 11.0% 10.7% 9.7%
Screening and
Authentication Services -1.4% 1.2% -3.4% -3.9% -1.9%
Business Services -4.3% -1.9% -4.1% -11.0% -5.3%
Total operations 3.1% 4.9% 4.1% 2.7% 3.7%
Operating Profit Margins
Insurance Services 52.0% 50.1% 50.3% 51.8% 51.1%
Screening and
Authentication Services 16.4% 19.3% 20.5% 17.4% 18.4%
Business Services 2.6% 8.1% 6.0% 2.4% 4.8%
Operating income before
other operating charges
as a percentage of
total revenue (c) 24.5% 25.6% 25.0% 23.9% 24.8%
Operating income as a
percentage of total
revenue 24.2% 25.5% 23.9% 23.1% 24.2%
ChoicePoint Inc.
Segment Results - Continuing Operations
Notes to Segment Results
(a) Corporate and shared expenses benefit all segments and include the
following:
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Group Centers $10,303 $11,812 $21,159 $23,012
Third-Party Legal, Audit, and Tax
Costs 4,640 1,700 8,358 3,552
Incentive Compensation/ Benefits 4,583 1,155 10,990 4,317
Other 134 610 893 981
Total $19,660 $15,277 $41,400 $31,862
Group centers include functions such as finance, accounting, audit,
legal, credentialing, executives, facilities, purchasing, marketing, human
resources and select technology costs. Total headcount related to these
functions was 175 at June 30, 2008 and 192 at June 30, 2007.
(b) Stock-based compensation includes the following components:
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Stock option expense $2,159 $2,925 $4,368 $5,938
Restricted stock expense 2,384 2,052 5,242 4,113
Total $4,543 $4,977 $9,610 $10,051
(c) The Company has presented analysis above with and without these
items because they represent costs that management excludes in its
assessments of operating results.
Major Newsire & Press Release Distribution with Basic Starting at only $19 and Complete OTCBB / Financial Distribution only $89
Get Unlimited Organic Website Traffic to your WebsiteÂ
TheNFG.com now offers Organic Lead Generation & Traffic Solutions
