Equifax is winning in the marketplace with game-changing initiatives. As a result, 2006 was one of the most successful years in Equifax’s 108-year history. Our Company developed a powerful strategic plan for future growth. We created a new vision and a new set of values to guide that growth. We realigned the organization to better execute our strategic plan and to make our culture more customer-centric. Throughout this transformation, our team generated outstanding financial results. We asked a lot from our associates, and they delivered. I am very proud of their accomplishments and extremely excited about the level of momentum we have created together. In fact, based on 2006 performance, Equifax was named to the FORTUNE 2007 list of America’s Most Admired Companies in the Financial Data Services category.
A Record Year
As the Company’s financial results demonstrate, 2006 once again reflects
this management team’s commitment to deliver performance for Equifax
shareholders. Revenue rose 7 percent to $1.55 billion, reflecting growth
across all businesses. Net income was $275 million, up 11 percent.
Earnings per share, excluding certain items, were $2.01 in 2006
compared to $1.86 in 2005, up 8%.
Approximately 27 percent of our U.S. online transactions were processed by year-end through one of our enabling technologies, up from 23 percent in 2005 and working toward our goal of 50 percent by 2010. Commercial Solutions grew 66 percent in the U.S. and was strengthened through the acquisition of Austin-Tetra, a leading provider of business-to-business data management solutions for FORTUNE 1000 companies and government agencies. Our Personal Solutions direct-to-consumer business grew revenue 10 percent over last year and increased its subscription-revenue business, which will result in faster, more profitable growth in that segment. Latin America continued to drive 21 percent revenue growth and margin improvement, and Europe achieved 8 percent revenue growth while maintaining its margin.
A New Game Plan
Throughout its history, Equifax has transformed
itself whenever new challenges and opportunities
were presented. The most recent transformation
has been driven by the ever-changing market realities,
and, even more importantly, by the untapped
potential of our organization. Our goal is not simply
to sustain growth, but also to take Equifax to
an entirely new level of performance. To do that,
we realigned our organization to better focus business
unit resources on the customer and leverage
our support expertise globally.
At the foundation of the plan is our new vision statement that positions Equifax “to be the trusted provider of information solutions empowering our customers to make critical decisions with greater confidence.” It reflects our ongoing belief that data, particularly unique data, is core to what we do. We create the most value for our customers when our people combine analytics and enabling technologies into empowering solutions. Trust is fundamental. We take this responsibility very seriously on behalf of consumers, customers, shareholders and employees.
The process of putting together a game-changing strategic plan was almost as beneficial as the result. Roughly 150 employees from around the world were involved in making decisions, galvanizing into one team to own our strategy and commit to its execution. Working over six months, this team developed a powerful framework for growth. We call it smartGROWTH. This strategy sets goals that are ambitious yet achievable, balances risk with return, and analyzes and exercises discipline at every turn.
The mission of the Marketing Center of Excellence is to lead the innovation and revenue growth initiatives for Equifax. During 2006, Marketing worked closely with the business and support units to create the smartGROWTH strategic plan. A global New Product Innovation (NPI) process was also implemented. NPI focused corporate resources on developing and launching new products within each business unit and market. The new products launched, or that are in development, have the potential to generate up to $50 million in revenue in 2007. Marketing also works closely with the businesses to acquire new data sources, enter new geographic markets, expand into new industry verticals, develop customer segmentation strategies and create initiatives to expand current market share. In addition, this Center of Excellence includes branding, marketing communications and public relations.
smartGROWTH Initiatives
Our smartGROWTH planning took place from the
corporate level down through each individual
business unit. We ultimately distilled the work into
four areas that will change the game and drive our
growth through 2010:
• Capture a greater share-of-wallet from our customers through enhanced customer segmentation and targeting, aggressive new product development and a focus on multiproduct solutions
• Focus on enabling technologies and predictive sciences, which deliver faster growth and increased retention rates when integrated into customer business processes and technology platforms
• Invest in unique data assets that can further differentiate Equifax in the marketplace
• Expand into adjacent markets, new geographies and new industries where we can leverage our intellectual capital and proprietary capabilities
Supporting three of four smartGROWTH initiatives, on February 14, 2007, we entered into an agreement and plan of merger with TALX Corporation, a leading provider of workplace verification data and employment services, in a transaction valued on that date at approximately $1.4 billion, including the assumption of debt. The pending transaction, which is structured to consist of 75 percent Equifax common stock and 25 percent cash, is subject to approval of TALX’s shareholders, regulatory review and other customary closing conditions.
Organized for Growth
To ensure the success of our smartGROWTH
initiatives, our strategy will be supported by a
structure that can facilitate faster growth. Therefore,
our organizational realignment was another critical
accomplishment in 2006. Our game-changing structure,
which was effective January 1, 2007, is built
around four distinct market-facing business units:
U.S. Consumer Information Solutions, International,
North America Commercial Solutions and North
America Personal Solutions. These four businesses
are supported by global Centers of Excellence, including
technology, operations, marketing, finance, legal,
enabling technologies, corporate development and
human resources.
A Culture of Game Changers
Part of moving to a more customer-centric culture
means acting as one team, speaking with one voice
and driving toward one vision. Behind this entire
transformation are the people of Equifax. They
exhibit a tremendous amount of energy and commitment
to changing the game.
We are moving to a high-performance organization focused on meritocracy, where outstanding work is rewarded. I commend the almost 5,000 Equifax associates for their work as Game Changers. They are making this transformation a reality. More than 92 percent participated in our employee survey that helped shape faster decision making, as well as helped create new ideas to fuel growth. This is a transformation that has been driven by market needs, but built on the voice of the people who conduct our business every day.
The Human Resources Center of Excellence is responsible for attracting, acquiring, rewarding and developing the necessary talent to ensure the successful execution of the business strategy. The human resources organization led the alignment of the Company to the new growth strategy. The alignment included a rigorous assessment of the culture, work, structure, capabilities and talent required to deliver the growth initiatives. This Center of Excellence will be instrumental in the transition of our culture to a more performance-driven organization with greater challenges, accountabilities, opportunities for development, and rewards for employees. The focus in 2007 is to launch new performance and total reward programs which will enable Equifax to acquire, develop and retain the best talent in our industry.
In Position to Change the Game
It is personally thrilling to see an organization of our
size, with a heritage of more than 100 years, transform
itself and its future. Equifax emerged from 2006 better
positioned than ever before to create value for
customers and shareholders, and to be a place where
smart, hard-working people can flourish professionally.
As 2007 unfolds, our key priorities will drive performance:
executing the strategy put in place during
2006, instilling the values of a high-performance
culture; exploring strategic opportunities which
may include acquisitions; developing innovative
products; and incorporating more efficiency into
our operations.
To all of the Equifax Game Changers who contributed to an outstanding 2006 and positioned us for a strong 2007, you have my personal thanks. To all of our consumer and business customers, as well as shareholders, who will benefit from our efforts, you have my promise that Equifax will work diligently to fully realize its potential.
Sincerely,
Richard F. Smith
Chairman and Chief Executive Officer