EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

 

  Contact:    Chuck Jones
     770-752-3594, office
     770-289-0894, cell
     chuck.jones@choicepoint.com
  Release No.:    06-020

ChoicePoint® Announces Intent to Divest Businesses;

Provides New Segment Reporting Structure

ALPHARETTA, Ga. – July 10, 2006 – ChoicePoint (NYSE: CPS) today announced its intent to divest various businesses resulting from its company-wide strategic review. The previously disclosed review process resulted in the company adopting a new strategic focus on helping customers manage economic or physical risks, as well as the decision to divest businesses that either do not fit within the new strategic direction or are unlikely to gain critical mass in the marketplace under ChoicePoint’s ownership. This process is ongoing and is expected to continue throughout 2006. Included in the announced divestiture plan are ChoicePoint’s direct marketing, forensic DNA and shareholder services businesses.

“Our company, technology and the needs of our customers have changed tremendously since we became a public company in 1997,” said company Chairman and Chief Executive Officer Derek V. Smith. “Over time, we have transformed our company from a labor-intensive data business to a provider of information-based technology tools that help customers make decisions. Going forward, we will focus on products and services that help customers manage the decision process to reduce economic and physical risks.

“These changes will focus our resources and energies on those businesses that we believe have the greatest growth potential and leverage our core competencies,” Smith said. “We also believe this sharper focus will allow us to strengthen our relationships with customers and enhance shareholder value.”


The individual businesses designated for divestiture are:

 

    ChoicePoint Precision Marketing, with 671 employees in Peoria, Ill.; El Paso, Texas; Las Cruces, N.M.; Pensacola, Fla.; Andover, Mass.; Alpharetta, Ga.; and Durham, N.C.;

 

    The Bode Technology Group, with 94 employees in Springfield, Va.; and

 

    EquiSearch, with 38 employees in White Plains, N.Y.

ChoicePoint intends to continue normal operations at the affected businesses until they are sold. Outside advisors have been retained to assist in the sale of the businesses, the proceeds of which are expected to be used to repurchase company stock and for general corporate purposes. The company did not provide a deadline for completing these divestitures.

Segment Realignment:

To reflect how the ChoicePoint businesses will operate under its new strategic focus, the company will revise the segments in which it reports its financial results.

The three businesses slated for divestiture will be reported as discontinued operations beginning in the second quarter of 2006 – eliminating the reporting of the Marketing Services segment, and removing EquiSearch from the Business Services segment and Bode from the Government Services segment.

Additionally, the current Business Services segment will be divided into two new segments: the Screening and Authentication Services segment and the Financial and Professional Services segment. The Screening and Authentication Services segment will consist of the company’s pre-employment, tenant and vendor screening services, as well as associated authentication and credentialing businesses. The Financial and Professional Services segment will include the company’s businesses involved in the sale of public information to the banking, mortgage and professional services markets.

The new segment presentation for 2005 and for the first quarter of 2006 are shown in the exhibit to this release. Additional historical results using the new segment structure will be available July 11, 2006, on the company’s Web site at www.choicepoint.com.

 

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Based on these reporting changes and recent trends, ChoicePoint expects internal revenue (core revenue less revenue from acquisitions) growth from continuing operations for the second quarter of 2006 to be modestly higher than the first quarter of 2006 and in the mid-single digit range. Operating margins from continuing operations for the quarter are projected to be in the 26 percent to 27 percent range, excluding the impact of stock option expense, ongoing legal expenses related to the fraudulent data access and operating charges related to the company’s centralization of functions and consolidation of certain technology platforms. Operating margins including these expenses are projected to be approximately 24 percent. The financial records for the second quarter are not yet finalized. Second quarter financial results will be finalized and disclosed on July 20, 2006, in connection with the second quarter earnings release. The company did not repurchase any of its stock during the quarter, pending the announcement of these actions resulting from its strategic review.

ChoicePoint will release its second quarter 2006 results, discuss business trends and provide its full-year outlook on Thursday, July 20, 2006, before the market opens.

Following the earnings announcement, a live Web cast of a conference call with ChoicePoint management will be broadcast at 8:30 a.m. EDT. The Web cast can be accessed at www.choicepoint.com and will be available for Web replay at the same address.

About ChoicePoint

ChoicePoint (NYSE: CPS) helps businesses, government agencies and nonprofit organizations make better decisions through information and technology solutions. Each year, ChoicePoint helps more than six million people get the jobs they deserve and more than 100 million people get fairly priced home and auto insurance. Small businesses can obtain affordable commercial insurance because of our products. Businesses cut costs through our authentication and anti-fraud tools. Government agencies use our data and technology to fulfill their missions in all parts of the world. Visit www.choicepoint.com for more information.

 

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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,” “we anticipate,” “we estimate,” “we project,” “we expect,” “we believe” or similar expressions are intended to identify forward-looking statements. These statements include, among others, statements regarding plans to divest certain businesses and certain expected financial results for the 2006 second quarter. 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 company’s ability to successfully identify purchasers for the businesses to be divested and to negotiate and consummate such dispositions, the satisfaction of conditions, including for example third party consents and regulatory approvals, to such dispositions, the results of our ongoing review of fraudulent data access and other events, the impact of our decision to divest certain businesses, the results of our re-credentialing of customer accounts, the results of any litigation or government proceedings, demand for the Company’s services, product development, maintaining acceptable margins, maintaining our data supply, maintaining secure systems including personal privacy systems, ability to minimize system interruptions, ability to control costs, the impact of federal, state and local regulatory requirements on the Company’s business, specifically the direct marketing and public filings markets, privacy matters and any federal or state legislative responses to identify theft concerns, the impact of competition and customer consolidations, ability to continue our long-term business strategy including growth through acquisition, 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, 2005. 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.

 

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ChoicePoint Inc.

2005 Segment Results - Continuing Operations

 

(Dollars in thousands)

   Q1 2005     Q2 2005     Q3 2005     Q4 2005     Total 2005  

Revenue

          

Insurance Services

   $ 99,727     $ 102,097     $ 106,042     $ 99,623     $ 407,489  

Screening and Authentication Services

     55,552       61,346       63,687       61,469       242,054  

Financial and Professional Services

     36,333       33,486       32,248       28,503       130,570  

Government Services

     31,080       29,981       35,326       32,971       129,358  

Royalty

     797       526       954       121       2,398  
                                        

Total Revenue

   $ 223,489     $ 227,436     $ 238,257     $ 222,687     $ 911,869  
                                        

Operating Income

          

Insurance Services

   $ 54,262     $ 55,266     $ 57,981     $ 54,123     $ 221,632  

Screening and Authentication Services

     11,192       14,476       16,415       16,897       58,980  

Financial and Professional Services

     9,863       6,223       5,074       2,651       23,811  

Government Services

     5,363       2,208       6,487       5,268       19,326  

Royalty

     770       325       506       121       1,722  

Corporate & Shared Expenses (b)

     (19,722 )     (18,183 )     (20,685 )     (17,633 )     (76,223 )
                                        

Operating Income before other charges

     61,728       60,315       65,778       61,427       249,248  

Other operating charges (a)

     (5,412 )     (6,040 )     (4,006 )     (13,315 )     (28,773 )
                                        

Operating Income

   $ 56,316     $ 54,275     $ 61,772     $ 48,112     $ 220,475  
                                        

Core Revenue Growth Rates

          

Insurance Services

     15.0 %     15.8 %     16.7 %     14.5 %     15.5 %

Screening and Authentication Services

     19.7 %     15.0 %     12.5 %     9.1 %     13.8 %

Financial and Professional Services

     39.3 %     5.5 %     -4.9 %     -13.6 %     4.7 %

Government Services

     121.8 %     52.4 %     89.2 %     81.5 %     83.4 %
                                        

Total operations

     28.1 %     17.1 %     18.3 %     14.1 %     19.2 %
                                        

Internal Revenue Growth Rates

          

Insurance Services

     11.8 %     12.7 %     12.4 %     13.1 %     12.6 %

Screening and Authentication Services

     12.2 %     11.5 %     12.5 %     9.1 %     11.3 %

Financial and Professional Services

     -1.4 %     -6.0 %     -4.9 %     -13.6 %     -6.8 %

Government Services

     0.4 %     -7.4 %     12.5 %     3.3 %     2.2 %
                                        

Total operations

     8.8 %     6.8 %     9.3 %     6.2 %     7.8 %
                                        

Operating Profit Margins

          

Insurance Services

     54.4 %     54.1 %     54.7 %     54.3 %     54.4 %

Screening and Authentication Services

     20.1 %     23.6 %     25.8 %     27.5 %     24.4 %

Financial and Professional Services

     27.1 %     18.6 %     15.7 %     9.3 %     18.2 %

Government Services

     17.3 %     7.4 %     18.4 %     16.0 %     14.9 %
                                        

Operating income before other operating charges as a percentage of total revenue (a)

     27.6 %     26.5 %     27.6 %     27.6 %     27.3 %
                                        

Operating income as a percentage of total revenue

     25.2 %     23.9 %     25.9 %     21.6 %     24.2 %
                                        

 

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ChoicePoint Inc.

2006 Segment Results - Continuing Operations

 

(Dollars in thousands)

   Q1 2006  

Revenue

  

Insurance Services

   $ 113,389  

Screening and Authentication Services

     61,845  

Financial and Professional Services

     29,381  

Government Services

     31,375  
        

Total Revenue

   $ 235,990  
        

Operating Income

  

Insurance Services

   $ 60,628  

Screening and Authentication Services

     14,238  

Financial and Professional Services

     2,169  

Government Services

     3,834  

Corporate & Shared Expenses (b)

     (16,521 )
        

Operating Income before other expenses

     64,348  

Other expenses (a):

  

Accelerated depreciation

     (5,463 )

Stock option expense

     (3,237 )

Other operating charges

     (5,987 )
        

Operating Income

   $ 49,661  
        

Core Revenue Growth Rates

  

Insurance Services

     13.7 %

Screening and Authentication Services

     11.3 %

Financial and Professional Services

     -19.1 %

Government Services

     0.9 %
        

Total operations

     5.6 %
        

Internal Revenue Growth Rates

  

Insurance Services

     12.6 %

Screening and Authentication Services

     11.1 %

Financial and Professional Services

     -19.1 %

Government Services

     -2.4 %
        

Total operations

     4.6 %
        

Operating Profit Margins

  

Insurance Services

     53.5 %

Screening and Authentication Services

     23.0 %

Financial and Professional Services

     7.4 %

Government Services

     12.2 %
        

Operating income before other operating charges as a percentage of total revenue (a)

     27.3 %
        

Operating income as a percentage of total revenue

     21.0 %
        

(a) The Company has presented analysis above with and without these items because they represent costs that management excludes in its assessments of operating results.
(b) Corporate and shared expenses represent costs of support functions, research and development initiatives, incentives and profit sharing that benefit all segments.

 

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ChoicePoint Inc.

2005 Segment Results - Discontinued Operations

 

(Dollars in thousands)

   Q1 2005    Q2 2005    Q3 2005     Q4 2005     Total 2005

Revenue

            

Marketing Services

   $ 23,099    $ 23,018    $ 23,138     $ 22,274     $ 91,529

Bode

     4,213      6,960      4,222       3,496       18,891

EquiSearch

     1,938      2,004      1,644       1,982       7,568
                                    

Service Revenue

     29,250      31,982      29,004       27,752       117,988

Reimbursable Expenses per EITF 01-14

     6,543      6,623      7,480       7,411       28,057
                                    

Total Revenue

   $ 35,793    $ 38,605    $ 36,484     $ 35,163     $ 146,045
                                    

Operating Income

            

Marketing Services

   $ 4,257    $ 3,661    $ 3,840     $ 4,141     $ 15,899

Bode

     102      852      (462 )     (445 )     47

EquiSearch

     413      65      (173 )     419       724
                                    

Operating Income

   $ 4,772    $ 4,578    $ 3,205     $ 4,115     $ 16,670
                                    

 

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ChoicePoint Inc.

2006 Segment Results - Discontinued Operations

 

(Dollars in thousands)

   Q1 2006  

Revenue

  

Marketing Services

   $ 21,876  

Bode

     3,026  

EquiSearch

     2,252  
        

Service Revenue

     27,154  

Reimbursable Expenses per EITF 01-14

     6,726  
        

Total Revenue

   $ 33,880  
        

Operating Income

  

Marketing Services

   $ 4,002  

Bode

     (961 )

EquiSearch

     651  
        

Operating Income before other expenses

     3,692  

Other expenses (a):

  

Stock option expense

     (300 )
        

Operating Income

   $ 3,392  
        

(a) The Company has presented analysis above with and without these items because they represent costs that management excludes in its assessments of operating results.

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ChoicePoint and the ChoicePoint logo are registered trademarks of ChoicePoint Asset Company.

 

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