Equifax
had a strong 2003, with consolidated revenues up 10 percent to a record
$1.2 billion. These were hard-fought results. The world economy faces
tough times. Customers operate in a chaotic business environment–
compressed, consolidated, ever changing. Yet, Equifax continues to grow,
excel and innovate, achieving notable increases in volume, market share
and cash flow from operating activities, as well as attaining significant
cost savings.
Our constant goal is to exceed this performance and to generate even more value for our shareholders. And to this end, we have strategically realigned the Company’s business structure in 2003 to include:
This organization places each business closer to its customers in order
to be more responsive to customer needs and alert to growth opportunities
for Equifax. While the structure has changed, two things have not: our
passion to protect the integrity and privacy of information and
the fundamental importance of knowledge
to commerce.
Knowledge fuels the world’s economic engine, and Equifax has been providing this fuel for 105 years. Whether business is conducted over the Internet or face-to-face, Equifax knowledge empowers our customers to manage throughout their customers’ life cycles. In doing so, we become an inherent part of their business process, which drives stronger customer loyalty. In turn, this loyalty enables Equifax to grow even during periods of economic weakness. Combined, these dynamics create a tremendous enterprise upon which to build a future. For Equifax shareholders, customers and employees, our time is now.
Providing the Knowledge to Empower
Through Predictive Sciences
In 2003, Equifax amplified its role as a knowledge provider. Indeed, our
customers view us as “information scientists.” We apply complex
modeling applications to billions of data attributes stored in our files
to empower companies as they acquire, enhance and grow their
customer relationships. We then package and deliver an answer in seconds
through electronic technology to provide real-time answers to increasingly
complex questions for our customers such as:
- Who is most likely to purchase this product?
- How can we acquire and retain more customers?
- Is this consumer or business a good risk?
- What trends surface when I analyze my customer base?
- How can we improve speed of launching a new product?
- Will a process improvement lead to a revenue increase or more
efficient operations?
In short, this is Predictive Sciences. By leveraging the integrity, breadth and depth of our data and advanced technology, we are becoming the world’s premier provider of critical, “think-ahead” knowledge.
Capitalizing on Opportunity in North America
Our capabilities will expand further this year with the introduction of
a new software solution, Equifax InterConnect™,
that delivers faster, more accurate decision-making capabilities to customers.
For example, with InterConnect, an Equifax customer who wants to extend
credit to a consumer will be able to simultaneously process the application,
gather information, reach a decision and open the account – all
in the blink of an eye, all at the point of sale, all when the consumer
is ready to buy, and with less risk to our customer. InterConnect meets
these needs regardless of the data source or system application a customer
prefers, creating an exceptionally broad market for this solution.
Small business is another expanding opportunity in North America and
one that is essential to economic growth. According to the U.S. Small
Business Administration, these businesses represent more than 99.7 percent
of all employers, employ more than half of all private sector employees
and generate up to 80 percent of net new jobs annually. But growth often
requires financing. Historically, this has been a risk difficult for lenders
to assess, due to the lack of information about creditworthiness. We have
the solution! Equifax Small Business has the largest information database
in the United States, with more than
22 million unique files. We have excellent traction. Ninety percent of
the largest small-business lenders use our services and we are expanding
into other markets serving smaller commercial customers. Clearly, for
the economy at large and for Equifax, small business translates into opportunity.
Our
leadership in all aspects of our core information services business translated
into extraordinary performance in 2003. North America had its best year
ever, increasing revenue by 13 percent and adding nearly 10,000 new customers.
Our billable transactions were up 18 percent over 2002, demonstrating
growth across our entire customer base. We performed exceptionally well
in Canada, where revenues increased 17 percent – setting a new record.
Gaining New Ground in Europe
Our efforts in Europe paid off in 2003. We grew operating profit by 64
percent and posted best-ever operating margin of 16 percent. This performance
reflects excellent improvements in product penetration, cost control and
productivity. Differentiation is key. In the United Kingdom, for instance,
Equifax introduced its upgraded, market-leading generic risk score, Risk
Navigator™. Additionally, 
late
in the third quarter we released the first in a series of Consumer Direct
products, starting with the United Kingdom’s first online credit
report. These products operate on Equifax’s proven technology and
our patent-protected, online authentication system. Our unique decision-making
software is driving customer wins across the region.
Growing With the Market in Latin America
This region has one of the fastest-growing middle classes in the world,
elevating commerce to an entirely new level. As these economies continue
to stabilize, Equifax is taking full advantage by launching new Consumer
Direct information products alongside our already successful business-to-business
products, including behavioral models and scores along with state-of-the-art,
decision-support services. Last year, our Latin American businesses demonstrated
their market leadership through solid four percent revenue growth and
an impressive 25 percent operating margin, placing Equifax among the most
profitable U.S. companies operating in Latin America today.
Accelerating Momentum in Consumer Direct
American consumers represent two-thirds of the gross domestic product
and have current credit debt exceeding $2 trillion.*
The more we enlighten, enable and empower individuals to better manage
their financial health and better protect themselves from identity theft,
the more we foster consumer confidence and economic growth. The demand
for personal solutions is evident in the growth of our online Consumer
Direct business. Revenue has grown from zero to
Marketing with Credibility
We know that consumers want to buy, value a wide range of choices, and
seek information about these choices. Our Marketing Services business
delivers world-class solutions by bringing the best buyers and
the best sellers together, because Equifax has the largest storehouse
of unique, current and highly predictive demographic and lifestyle data
in the United States. Prospects for this business are strong, as direct
mail and Internet retailing continue to grow. Given our record of data
integrity and meaningful consumer information privacy practices, Equifax
is especially well-positioned, as industry awareness and sensitivity to
these
issues grows.
Taking a Stand Against Unwarranted Legislation
Part of our responsibility to customers and shareholders demands that
we stay in touch with industry change, particularly regulatory change.
The enactment of the Fair and Accurate Credit Transaction Act (FACT Act)
is intended to promote accuracy in the files of consumer reporting agencies,
particularly as it relates to identity theft.
We absolutely support the intention of this Act. We absolutely disagree
with how this good intention has translated into bad legislation, and
Equifax has led the fight against it. Specifically, we opposed a requirement
to provide annual free credit reports to individuals – a requirement
that we consider to be unconstitutional and politically motivated.
Equifax has led the industry in empowering consumers about their credit by offering accessible and affordable products. For the government to require us to give away a service is simply wrong. Despite our opposition, we will comply with the law. The Federal Trade Commission is now crafting implementation rules, and we continue to actively participate in this process. Be assured, regardless of this legislation, we will continue to offer unique products and solutions, find even better ways to serve consumers and seek to mitigate any potential impact this legislation may have on our business.
Meeting Challenge with Talent and Integrity
Life is about challenges, and so is business. Equifax has been dealing
with challenges for more than a century, overcoming those that our customers
face in the daily course of doing business. And, in the rapidly changing,
always complex world of global commerce, the opportunity to solve more
problems and meet more needs continues to bring out the best in the 4,600
women and men of Equifax around the world. Not only do we appreciate their
talents, but also the absolute integrity that they bring to this mission.
Together, all of us at Equifax are meeting the challenge and seizing the
opportunity in order to serve our customers and reward our shareholders.
As Adlai Stevenson noted, “If we value the pursuit of knowledge,
we must be free to follow wherever that search may lead us.” I am
confident this search is leading Equifax toward its best and most rewarding
achievements yet. Our time is now.
Sincerely,
Thomas F. Chapman
Chairman and Chief Executive Officer
March 2004