CHOICEPOINT INC. 
By 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 first quarter of 2008 and 2007:
Quarter ended
March 31,
2008 2007
EPS excluding other operating charges $0.43 $0.39
Other operating charges (0.04) (0.01)
EPS $0.39 $0.38
Other operating charges of
Cash Flow and Balance Sheet Highlights - First Quarter
-- Cash flows from operating activities of continuing operations were
$43.9 million for the three months ended March 31, 2008, compared to
$37.8 million for the three months ended March 31, 2007. With $14.9
million in capital expenditures during the first quarter of 2008 and
$10.5 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
March 31, 2008 was $29.0 million, compared to $27.2 million for the
quarter ended March 31, 2007. The improved cash flow results for the
three months ended March 31, 2008 compared to the same period in 2007
primarily reflect improved working capital management, partially offset
by increased capital expenditures.
-- Net debt (total debt of $573.8 million less cash and cash equivalents
of $31.9 million) at March 31, 2008, decreased by $47.9 million from
December 31, 2007 to $541.9 million, with an average effective interest
rate of 4.8 percent, as the Company utilized its cash flows to fund
capital expenditures and pay down debt. The remaining debt capacity at
March 31, 2008 under our committed financing lines was $440.7 million.
-- The Company did not repurchase any shares of its common stock during
the first quarter of 2008.
Financial Highlights - First Quarter
-- First quarter service revenue from continuing operations increased 5.5
percent to $252.9 million in 2008, from $239.6 million in 2007.
Internal revenue (service revenue less revenue from acquisitions) from
continuing operations in the first quarter of 2008 increased 3.7
percent from the first quarter of 2007. Continued strong internal
revenue growth of 12.2 percent in the Insurance Services segment
(excluding $2.1 million of revenue related to an acquisition completed
in the first quarter of 2008) was offset by declines in the Marketing
Services and Business Services segments, primarily due to poor
macroeconomic conditions faced by our customers in these segments.
-- Operating income from continuing operations for the first quarter of
2008 was $51.7 million, compared to $54.1 million for the same period
of 2007. Operating income from continuing operations for the three
months ended March 31, 2008 was reduced by other operating charges of
$4.1 million ($2.7 million net of taxes) consisting of the following:
* Charges of $2.0 million for transaction-related expenses associated
with the Company's pending sale to Reed Elsevier.
* Charges of $2.1 million consisting primarily of severance and asset
impairment charges.
-- Operating income from continuing operations for the quarter ended March
31, 2007 included other operating charges of $1.2 million ($0.7 million
net of taxes) consisting of the following:
* Charges of $0.6 million for lease abandonment, severance, and
impairment charges associated with the consolidation of facilities.
* Charges of $0.6 million for third party expenses related to the
previously disclosed fraudulent data access.
Excluding these charges, operating income from continuing operations
would have been $55.7 million and $55.3 million for the first quarter
of 2008 and 2007, respectively.
-- The Company's effective tax rate for continuing operations in the first
quarter of 2008 was 40.0 percent, compared to 38.1 percent for the
first 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 proposed acquisition of ChoicePoint by Reed
Elsevier, and the December 31, 2007 expiration of the Federal R&D Tax
Credit.
-- Interest expense was $7.7 million for the first quarter of 2008, an
increase of $1.4 million from the first quarter of 2007, due to higher
average debt outstanding, which is primarily associated with the
Company's share repurchases throughout 2007.
Operational Highlights
Insurance Services
-- Total revenue increased 13.9 percent to $142.7 million in the first
quarter of 2008, compared to $125.3 million in the same period of the
prior year. Excluding revenue of $2.1 million related to an
acquisition in the first quarter of 2008, internal revenue increased
12.2 percent in the Insurance Services segment. This growth was a
result of double-digit internal revenue growth in all three insurance
businesses: data services, claims and fraud analytics, and our software
business.
-- Operating income increased 10.5 percent in Insurance Services to $72.0
million for the first quarter of 2008, compared with $65.2 million for
the first quarter of 2007. Operating profit margin was 50.5% for the
first quarter of 2008, compared to 52.0% in the first 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 both increased by 1.4 percent in the
first quarter of 2008 to $62.3 million, compared to $61.4 million in
the first quarter of 2007. Double-digit internal revenue growth from
our occupational health, tenant screening, Bridger, and VitalChek
businesses was offset by continued negative internal revenue growth in
our employment-related screening business, due primarily to reduced
hiring levels by our customers, particularly customers in the retail
sector.
-- Operating income in Screening and Authentication Services was $10.4
million for the first quarter of 2008, compared to $10.1 million in the
same period of the prior year. Operating profit margin increased to
16.7% for the first quarter of 2008, from 16.4% in the first quarter of
2007. This increase is primarily due to the impact of the revenue
increase discussed above.
Business Services
-- Total revenue increased by 0.5 percent to $35.9 million in the first
quarter of 2008 from $35.7 million in the first quarter of 2007. These
results include the impact of our Charles Jones joint venture, which
was effective July 1, 2007. Excluding the impact of the Charles Jones
joint venture, internal revenue declined 5.8 percent during the first
quarter of 2008, as compared to the same period of the prior year, as
we experienced declining revenues, particularly from our on-demand
business due diligence products.
-- Operating income in the Business Services segment was $1.4 million for
the first quarter of 2008, compared to $0.9 million for the same period
of 2007. Operating profit margin was 3.9% for the first quarter of
2008, compared to 2.6% in the first quarter of 2007, as improved
margins in our public records business offset declines in the Charles
Jones and BIS business units.
Marketing Services
-- First quarter total revenue and internal revenue for Marketing Services
(which includes all of the Company's revenue from reimbursable
expenses) declined 29 percent to $15.6 million in 2008 from $22.1
million in 2007. Marketing Services' service revenue for the first
quarter of 2008 declined 30 percent to $12.0 million from $17.2 million
in the first quarter of 2007, primarily due to continued reductions in
spending by our customers in the financial services market.
-- Marketing Services incurred an operating loss of $1.1 million in the
first quarter of 2008, compared with operating income of $1.2 million
for the same period of 2007. The operating profit margin decline from
7.0% in the first quarter of 2007 to a negative 9.1% in the first
quarter of 2008 was due to the revenue decrease from 2007 to 2008.
Corporate and Shared Expenses
-- For the first quarter of 2008, corporate and shared expenses were $21.7
million, or 8.6 percent of consolidated service revenue, compared to
$16.6 million, or 6.9 percent of service revenue, in the first quarter
of 2007. The increase in corporate and shared expenses is due to $1.9
million of incremental third party legal costs, and $3.2 million of
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 $5.3 million
($3.9 million net of taxes) during the first quarter of 2008.
Approximately $0.9 million of stock-based compensation expense is
included in cost of revenue, with the remaining $4.4 million of stock-
based compensation expense included in selling, general and
administrative expenses. These amounts include restricted stock
expense of $2.9 million ($1.8 million net of taxes), and stock option
expense of $2.3 million ($2.1 million net of taxes). The Company
recorded $5.5 million ($4.1 million net of taxes) of stock-based
compensation expense in the first quarter of 2007, which includes
restricted stock expense of $2.3 million ($1.4 million net of taxes)
and stock option expense of $3.2 million ($2.7 million net of taxes).
Disposition of Assets Held for Sale
On
Shareholders Approve Merger with
On
More than 99.5 percent of all votes cast were voted in favor of the transaction. 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.
About ChoicePoint
ChoicePoint (NYSE: CPS) provides businesses, government agencies and non- profit organizations with technology, software, information and marketing services to help manage economic 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 disclosed 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
ChoicePoint Inc.
Financial Highlights
(Unaudited) Three Months Ended
March 31,
(Dollars in thousands, except per share data) 2008 2007
Service revenue (a) $252,907 $239,617
Reimbursable expenses per EITF 01-14 (b) 3,539 4,859
Total revenue 256,446 244,476
Cost of revenue 136,930 130,428
Reimbursable expenses 3,539 4,859
Selling, general and administrative expenses 60,244 53,926
Other operating charges (c) 4,069 1,157
Total costs and expenses 204,782 190,370
Operating income 51,664 54,106
Interest expense 7,669 6,316
Income from continuing operations
before income taxes 43,995 47,790
Provision for income taxes 17,591 18,222
Income from continuing operations 26,404 29,568
Income (loss) from discontinued
operations, net of taxes (d) (3,419) 1,354
Net income $22,985 $30,922
Effective tax rate, continuing operations 40.0% 38.1%
EPS - diluted
Income from continuing operations $0.39 $0.38
Income (loss) from discontinued
operations (0.05) 0.02
Net income $0.34 $0.40
Weighted average shares - diluted 68,200 77,362
See accompanying notes.
ChoicePoint Inc.
Financial Highlights
Reconciliation to financial information excluding other expenses and
discontinued operations
(Unaudited) Three Months Ended
March 31,
(Dollars in thousands, except per share data) 2008 2007
Net income $22,985 $30,922
Income (loss) from discontinued
operations, net of taxes (d) (3,419) 1,354
Provision for income taxes 17,591 18,222
Interest expense 7,669 6,316
Operating income 51,664 54,106
Add back other operating charges (c) (e) 4,069 1,157
Operating income before other expenses (f) 55,733 55,263
Interest expense 7,669 6,316
Income from continuing operations
before income taxes & other expenses (f) 48,064 48,947
Provision for income taxes 18,985 18,663
Net income from continuing operations
before other expenses (f) $29,079 $30,284
Effective tax rate from continuing
operations excluding other expenses (f) 39.5% 38.1%
Earnings per share from continuing
operations - diluted excluding
other expenses (f) $0.43 $0.39
Three Months Ended
March 31,
2008 2007
Earnings per share from continuing
operations - diluted excluding
other expenses (f) $0.43 $0.39
Other operating charges (0.04) (0.01)
Earnings per share from continuing
operations $0.39 $0.38
See accompanying notes.
ChoicePoint Inc.
Financial Highlights
(Unaudited) Three months ended
March 31,
(dollars in thousands) 2008 2007
Cash Flow Highlights
Income from continuing operations $26,404 $29,568
Depreciation & amortization 14,824 16,100
Changes in assets & liabilities and other 2,651 (7,898)
Net cash provided by operating
activities - continuing operations $43,879 $37,770
Proceeds from the disposition of
discontinued operations $1,800 $27,864
Acquisitions & investments, net of
cash acquired (6,229) (207)
Capital expenditures (14,888) (10,534)
Net cash provided by (used in)
investing activities - continuing
operations $(19,317) $17,123
Net cash used in financing activities
- continuing operations $(18,586) $(42,922)
Net cash provided by operating,
investing, and financing activities of
discontinued operations $5,787 $612
Reconciliation of Net Free Cash Flow
(g)
Net cash provided by operating
activities - continuing operations $43,879 $37,770
Capital expenditures (14,888) (10,534)
Net free cash flow from continuing
operations 28,991 27,236
See accompanying notes.
ChoicePoint Inc.
Financial Highlights
(Unaudited)
(Dollars in thousands)
Key Balance Sheet Highlights &
Reconciliation of Net Debt to Total Debt March 31, March 31,
2008 2007
Short-term debt and current
maturities of long-term debt $11,342 $110,011
Long-term debt, net of current maturities 562,500 350,025
Total debt 573,842 460,036
Cash and cash equivalents 31,956 39,242
Net debt (h) $541,886 $420,794
Shareholders' equity $351,235 $614,409
Net debt to book capital 60.7% 40.6%
Days sales outstanding for continuing
operations (adjusted
for pass-through expenses) 43 days 40 days
Calculation of EBITDA and Ratio of Twelve Months Ended
Net Debt to EBITDA Ratio (i) March 31,
(Dollars in thousands) 2008 2007
Net Income - as reported $24,486 $17,234
Loss from discontinued operations, net
of taxes 35,338 39,186
Income from continuing operations 59,824 56,420
Provision for income taxes 41,141 34,693
Interest expense 28,385 20,031
Operating income 129,350 111,144
Add back: other expenses:
Other operating charges 94,610 112,742
Operating income - continuing
operations - as adjusted 223,960 223,886
Depreciation and amortization 62,468 63,799
Stock-based compensation 20,949 22,514
Earnings before Interest, Taxes,
Depreciation & Amortization (EBITDA) $307,377 $310,199
Net Debt to EBITDA Ratio (i) 1.76 1.36
Share Repurchase Summary
(In thousands, except per share data)
Total number Average cost Total cost
of shares per for
repurchased share shares
Three months ended March 31, 2008 - $- $-
Inception of buyback program through
March 31, 2008 25,482 $38.56 $982,486
See accompanying notes.
ChoicePoint Inc.
Notes to Financial Highlights
(a) Service revenue excludes revenue from reimbursable expenses (see (b)
below). The Company uses service revenue to measure its continuing
operations without the effect of reimbursable expenses.
(b) Reimbursable expenses per Emerging Issues Task Force 01-14, "Income
Statement Characterization of Reimbursements Received for 'Out-of-
Pocket' Expenses Incurred" ("EITF 01-14"), represent out-of-pocket
expenses fully reimbursed by ChoicePoint's customers and recorded as
revenues and expenses in accordance with EITF 01-14. As these
expenses are fully reimbursed, without mark-up, by our customers and
in a majority of cases prepaid by the customers, there is no impact on
operating income, net income, EPS, cash flows or the balance sheet.
In addition, management excludes these expenses from its revenue
analysis for operational management and incentive purposes; therefore,
we have separately identified these expenses and excluded their impact
in our calculations of service revenue, internal revenue growth and
operating margins. Other pass-through expenses such as motor vehicle
registry fees will continue to be accounted for on a net basis and, as
such, excluded from revenues in our financial statements in accordance
with generally accepted accounting principles ("GAAP"). First quarter
pass-through expenses related to continuing operations totaled $216.9
million in 2008 and $214.7 million in 2007.
(c) Other operating charges includes the following components:
Three Months Ended
March 31,
(Dollars in thousands) 2008 2007
Asset impairments $486 $279
Transaction-related expenses 2,044 -
Lease abandonment, severance and other 1,440 311
Fraudulent data access related expense 99 567
Total other operating charges $4,069 $1,157
Included in transaction-related expenses above are investment banking
and other costs related to the Company's pending sale to Reed
Elsevier.
(d) Income (loss) from discontinued operations, net of tax, includes the
following components:
Three Months Ended
March 31,
(Dollars in thousands) 2008 2007
Income (loss) from discontinued operations,
net of taxes $(3,456) $1,719
Gain (loss) on sale of discontinued operations,
net of taxes 37 (365)
Income (loss) from discontinued operations,
net of taxes $(3,419) $1,354
(e) 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.
(f) 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 (c), 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.
(g) 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.
(h) 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.
(i) 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
Revenue
Insurance Services $142,686
Screening and Authentication Services 62,319
Business Services 35,887
Marketing Services 12,015
Service Revenue 252,907
Reimbursable Expenses per EITF 01-14 3,539
Total Revenue $256,446
Operating Income
Insurance Services $72,024
Screening and Authentication Services 10,401
Business Services 1,392
Marketing Services (1,091)
Corporate & shared expenses (a) (21,740)
Stock-based compensation (b) (5,253)
Operating income before other expenses 55,733
Other operating charges (c) (4,069)
Operating income $51,664
Total Service Revenue Growth Rates
Insurance Services 13.9%
Screening and Authentication Services 1.4%
Business Services 0.5%
Marketing Services -30.1%
Total operations 5.5%
Internal Revenue Growth Rates
Insurance Services 12.2%
Screening and Authentication Services 1.4%
Business Services -5.8%
Marketing Services -30.1%
Total operations 3.7%
Operating Profit Margins
Insurance Services 50.5%
Screening and Authentication Services 16.7%
Business Services 3.9%
Marketing Services (d) -9.1%
Operating income before other operating
charges as a percentage of service revenue (c) 22.0%
Operating income as a percentage of total revenue 20.1%
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
Marketing Services 17,200 15,313 14,320 13,140 59,973
Service Revenue 239,617 242,538 244,543 233,880 960,578
Reimbursable Expenses
per EITF 01-14 4,859 5,412 5,640 5,466 21,377
Total Revenue $244,476 $247,950 $250,183 $239,346 $981,955
Operating Income
Insurance Services $65,179 $62,727 $65,032 $65,239 $258,177
Screening and
Authentication
Services 10,067 12,714 13,237 10,583 46,601
Business Services 940 2,918 2,205 825 6,888
Marketing Services 1,197 752 495 (33) 2,411
Corporate & shared
expenses (a) (16,585) (15,277) (17,894) (19,598) (69,354)
Stock-based
compensation (b) (5,535) (5,528) (5,447) (4,721) (21,231)
Operating income
before other
expenses 55,263 58,306 57,628 52,295 223,492
Other operating charges
(c) (1,157) (278) (2,499) (87,764) (91,698)
Operating income $54,106 $58,028 $55,129 $(35,469) $131,794
Total Service 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%
Marketing Services -21.4% -20.0% -25.0% -33.0% -24.8%
Total operations 2.7% 4.0% 2.9% 0.6% 2.6%
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%
Marketing Services -21.4% -20.0% -25.0% -33.0% -24.8%
Total operations 0.8% 2.9% 1.8% -0.3% 1.3%
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%
Marketing Services (d) 7.0% 4.9% 3.5% -0.3% 4.0%
Operating income before
other operating charges
as a percentage of
service revenue (c) 23.1% 24.0% 23.6% 22.4% 23.3%
Operating income as a
percentage of total
revenue 22.1% 23.4% 22.0% -14.8% 13.4%
ChoicePoint Inc.
Segment Results - Continuing Operations
Notes to Segment Results
(a) Corporate and shared expenses benefit all segments and include the
following:
Q1 2008 Q1 2007
Group Centers $10,856 $11,201
Third-Party Legal, Audit, and Tax Costs 3,718 1,852
Incentive Compensation/ Benefits 6,407 3,162
Other 759 370
Total $21,740 $16,585
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 183 at March 31, 2008 and 190 at March 31,
2007.
(b) Stock-based compensation includes the following components:
Q1 2008 Q1 2007
Stock option expense $2,333 $3,243
Restricted stock expense 2,920 2,292
Total $5,253 $5,535
(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.
(d) Represents operating income as a percentage of service revenue.
SOURCE ChoicePoint Inc.
