EX-99.2 3 dex992.htm SUPPLEMENTAL INFORMATION Supplemental Information

Exhibit 99.2

ChoicePoint Inc.

Operating Results by Quarter

(dollars in thousands)

 

    Q1 2005     Q2 2005     Q3 2005     Q4 2005     Total
2005
    Q1 2006     Q2 2006     Q3 2006     Q4 2006     Total
2006
 

Insurance Services Revenue

  $ 98,560     $ 100,963     $ 104,775     $ 98,555     $ 402,853     $ 112,326     $ 112,298     $ 116,118     $ 113,716     $ 454,458  

Screening and Authentication Services Revenue

    55,552       61,346       63,687       61,469       242,054       61,845       64,955       66,832       63,456       257,088  

Business Services Revenue

    45,062       42,738       43,998       37,832       169,630       37,298       36,862       35,513       35,742       145,415  

Royalty Revenue

    797       526       954       121       2,398       —         —         —         —         —    
                                                                               

Total Revenue

  $ 199,971     $ 205,573     $ 213,414     $ 197,977     $ 816,935     $ 211,469     $ 214,115     $ 218,463     $ 212,914     $ 856,961  
                                                                               

Insurance Services Operating Income

  $ 54,204     $ 55,282     $ 57,906     $ 54,278     $ 221,670     $ 60,815     $ 60,039     $ 60,594     $ 58,395     $ 239,843  

Screening and Authentication Services Operating Income

    11,192       14,476       16,415       16,897       58,980       14,238       14,729       15,740       12,389       57,096  

Business Services Operating Income

    10,724       6,846       8,301       3,171       29,042       1,860       2,440       1,241       655       6,196  

Royalty Operating Income

    770       325       506       121       1,722       —         —         —         —         —    

Corporate & Shared Expenses

    (18,499 )     (16,736 )     (19,236 )     (16,162 )     (70,633 )     (14,941 )     (14,463 )     (15,358 )     (19,240 )     (64,002 )

Stock-based compensation

    (1,223 )     (1,447 )     (1,449 )     (1,471 )     (5,590 )     (4,716 )     (4,665 )     (5,653 )     (5,664 )     (20,698 )
                                                                               

Operating Income before other charges

  $ 57,168     $ 58,746     $ 62,443     $ 56,834     $ 235,191     $ 57,256     $ 58,080     $ 56,564     $ 46,535     $ 218,435  
                                                                               

Other charges (a):

                   

Accelerated depreciation

    —         —         —         —         —         (5,463 )     —         —         —         (5,463 )

Other operating charges (b)

    (5,412 )     (6,040 )     (4,006 )     (13,315 )     (28,773 )     (5,900 )     (2,740 )     (6,054 )     (3,391 )     (18,085 )
                                                                               

Operating Income (Loss) - Continuing Operations

  $ 51,756     $ 52,706     $ 58,437     $ 43,519     $ 206,418     $ 45,893     $ 55,340     $ 50,510     $ 43,144     $ 194,887  
                                                                               

Operating Income (Loss) - Discontinued Operations

  $ 9,332     $ 6,145     $ 6,540     $ 8,712     $ 30,729     $ 7,246     $ 5,144     $ 7,357     $ 10,913     $ 30,660  
                                                                               

Impairment Loss on Assets Held for Sale - Discontinued Operations

  $ —       $ —       $ —       $ —       $ —       $ (87 )   $ —       $ (168,000 )   $ 1,096     $ (166,991 )
                                                                               

Gain (Loss) on sale of Discontinued Operations

  $ —       $ —       $ —       $ —       $ —       $ —       $ —       $ (4,941 )   $ (85 )   $ (5,026 )
                                                                               

Operating Margins - Continuing Operations

                   

Insurance Services

    55.0 %     54.8 %     55.3 %     55.1 %     55.0 %     54.1 %     53.5 %     52.2 %     51.4 %     52.8 %

Screening and Authentication Services

    20.1 %     23.6 %     25.8 %     27.5 %     24.4 %     23.0 %     22.7 %     23.6 %     19.5 %     22.2 %

Business Services

    23.8 %     16.0 %     18.9 %     8.4 %     17.1 %     5.0 %     6.6 %     3.5 %     1.8 %     4.3 %

Operating income excluding other charges as a percentage of total revenue - continuing operations (a)

    28.6 %     28.6 %     29.3 %     28.7 %     28.8 %     27.1 %     27.1 %     25.9 %     21.9 %     25.5 %
                                                                               

Internal Growth Rates (c)

                   

Insurance Services

    11.8 %     12.7 %     12.4 %     13.1 %     12.6 %     12.8 %     10.1 %     8.2 %     11.6 %     10.6 %

Screening and Authentication Services

    12.2 %     11.5 %     12.5 %     9.1 %     11.3 %     11.1 %     5.0 %     3.8 %     2.3 %     5.4 %

Business Services

    3.1 %     -3.2 %     3.5 %     -10.6 %     -2.0 %     -17.2 %     -13.8 %     -19.3 %     -5.5 %     -14.3 %

Total ChoicePoint

    9.8 %     8.3 %     10.2 %     6.2 %     8.7 %     5.1 %     3.3 %     0.8 %     5.4 %     3.6 %
                                                                               

 

    Q1 2007     Q2 2007     Q3 2007     Q4 2007     Total
2007
    Q1 2008     Q2 2008  

Insurance Services Revenue

  $ 125,282     $ 125,185     $ 129,211     $ 125,909     $ 505,587     $ 142,686     $ 141,307  

Screening and Authentication Services Revenue

    61,438       65,881       64,556       60,974       252,849       62,319       65,940  

Business Services Revenue

    35,697       36,159       36,456       33,857       142,169       35,887       33,452  

Royalty Revenue

    —         —         —         —         —         —         —    
                                                       

Total Revenue

  $ 222,417     $ 227,225     $ 230,223     $ 220,740     $ 900,605     $ 240,892     $ 240,699  
                                                       

Insurance Services Operating Income

  $ 65,179     $ 62,726     $ 65,032     $ 65,239     $ 258,176     $ 72,024     $ 69,440  

Screening and Authentication Services Operating Income

    10,067       12,714       13,237       10,583       46,601       10,401       13,071  

Business Services Operating Income

    940       2,918       2,205       825       6,888       1,392       (419 )

Royalty Operating Income

    —         —         —         —         —         —         —    

Corporate & Shared Expenses

    (16,585 )     (15,277 )     (17,894 )     (19,598 )     (69,354 )     (21,740 )     (19,660 )

Stock-based compensation

    (5,073 )     (4,977 )     (4,997 )     (4,349 )     (19,396 )     (5,067 )     (4,543 )
                                                       

Operating Income before other charges

  $ 54,528     $ 58,104     $ 57,583     $ 52,700     $ 222,915     $ 57,010     $ 57,889  
                                                       

Other charges (a):

             

Accelerated depreciation

    —         —         —         —         —         —         —    

Other operating charges (b)

    (789 )     (163 )     (2,499 )     (1,781 )     (5,232 )     (3,757 )     (16,438 )
                                                       

Operating Income (Loss) - Continuing Operations

  $ 53,739     $ 57,941     $ 55,084     $ 50,919     $ 217,683     $ 53,253     $ 41,451  
                                                       

Operating Income (Loss) - Discontinued Operations

  $ 3,350     $ 2,476     $ 3,058     $ 306     $ 9,190     $ (6,035 )   $ (586 )
                                                       

Impairment Loss on Assets Held for Sale - Discontinued Operations

  $ (514 )   $ (803 )   $ (49,183 )   $ (94,884 )   $ (145,384 )   $ (1,417 )   $ (17,129 )
                                                       

Gain (Loss) on sale of Discontinued Operations

  $ (382 )   $ 138     $ (250 )   $ 1,287     $ 793     $ 60     $ 54,953  
                                                       

Operating Margins - Continuing Operations

             

Insurance Services

    52.0 %     50.1 %     50.3 %     51.8 %     51.1 %     50.5 %     49.1 %

Screening and Authentication Services

    16.4 %     19.3 %     20.5 %     17.4 %     18.4 %     16.7 %     19.8 %

Business Services

    2.6 %     8.1 %     6.0 %     2.4 %     4.8 %     3.9 %     -1.3 %

Operating income excluding other charges as a percentage of total revenue - continuing operations (a)

    24.5 %     25.6 %     25.0 %     23.9 %     24.8 %     23.7 %     24.1 %
                                                       

Internal Growth Rates (c)

             

Insurance Services

    8.0 %     9.3 %     11.0 %     10.7 %     9.7 %     12.2 %     10.5 %

Screening and Authentication Services

    -1.4 %     1.2 %     -3.4 %     -3.9 %     -1.9 %     1.4 %     0.1 %

Business Services

    -4.3 %     -1.9 %     -4.1 %     -11.0 %     -5.3 %     -5.8 %     -13.1 %

Total ChoicePoint

    3.1 %     4.9 %     4.1 %     2.7 %     3.7 %     6.3 %     3.7 %
                                                       

 

(a) Management excludes these charges in its assessments of operating results.
(b) Other operating charges include specific expenses related to the fraudulent data access, asset impairment, lease abandonment, merger-related costs, unusual items, realignment charges, gain (loss) on sale of business, and other charges.
(c) Internal revenue growth is the revenue growth from comparable business units for the same period in the prior year and excludes revenue from reimbursable expenses, acquisitions, divested and discontinued product lines and discontinued operations. This measure is used by management to analyze the performance of the business segments and as a criteria component for incentive compensation awards.


ChoicePoint Inc.

Operating Results by Quarter

(dollars in thousands except per share amounts)

 

     Q1 2006     Q2 2006     Q3 2006     Q4 2006     Fiscal Year
2006
    Q1 2007     Q2 2007     Q3 2007     Q4 2007     Fiscal Year
2007
    Q1 2008     Q2 2008  

Net income

   $ 30,610     $ 34,861     $ (72,216 )   $ 23,667     $ 16,922     $ 30,922     $ 32,570     $ 1,251     $ (32,321 )   $ 32,424     $ 22,985     $ 42,001  

EPS - Diluted

   $ 0.34     $ 0.40     $ (0.89 )   $ 0.30     $ 0.20     $ 0.40     $ 0.43     $ 0.02     $ (0.47 )   $ 0.44     $ 0.34     $ 0.60  

Less:

                        

Income (loss) from discontinued operations, net of tax

     4,304       3,674       4,461       (107 )     12,332       2,299       2,006       1,833       195       6,333       (3,576 )     (361 )

Impairment loss on assets held for sale, net of tax

     (51 )     —         (101,870 )     (11 )     (101,932 )     (353 )     (650 )     (29,461 )     (60,252 )     (90,716 )     (839 )     (10,551 )

Gain (loss) on sale of discontinued operations, net of tax

     —         —         (3,088 )     (53 )     (3,141 )     (365 )     129       (155 )     882       491       37       33,466  
                                                                                                

Income from continuing operations

   $ 26,357     $ 31,187     $ 28,281     $ 23,838     $ 109,663     $ 29,341     $ 31,085     $ 29,034     $ 26,854     $ 116,316     $ 27,363     $ 19,447  

EPS from continuing operations

   $ 0.30     $ 0.36     $ 0.35     $ 0.30     $ 1.29     $ 0.38     $ 0.41     $ 0.39     $ 0.39     $ 1.56     $ 0.40     $ 0.28  
                                                                                                

Add back other charges (a):

                        

Accelerated depreciation expense

     5,463       —         —         —         5,463       —         —         —         —         —         —         —    

Other operating charges (c)

     5,900       2,740       6,054       3,391       18,085       789       163       2,499       1,781       5,232       3,757       16,438  

Tax benefit related to other charges

     (4,508 )     (1,109 )     (2,317 )     (1,211 )     (9,145 )     (302 )     (62 )     (1,000 )     (697 )     (2,061 )     (1,271 )     (4,509 )
                                                                                                

Income from continuing operations excluding other charges (a)(c)

   $ 33,212     $ 32,818     $ 32,018     $ 26,018     $ 124,066     $ 29,828     $ 31,186     $ 30,533     $ 27,938     $ 119,487     $ 29,849     $ 31,376  

EPS from continuing operations excluding other charges (a)(c)

   $ 0.37     $ 0.37     $ 0.38 (b)   $ 0.33     $ 1.46     $ 0.39     $ 0.41     $ 0.41     $ 0.40 (b)   $ 1.61     $ 0.44     $ 0.45  
                                                                                                

Weighted Avg Shares - diluted

     88,804       87,736       81,551       79,782       84,986       77,362       75,852       73,829       68,825       74,423       68,200       69,648  

 

(a) The Company has presented this information with and without these items because they represent costs that management excludes in its assessment of operating results of the business.
(b) EPS from continuing operations excluding other charges for the fourth quarter of 2007 and the third quarter of 2006 is calculated based upon weighted average diluted shares of 70,263 and 83,533 respectively. The dilutive effect of stock options and other share-based awards is included in the calculation of EPS from continuing operations excluding other charges because such effect is dilutive.
(c) Other operating charges include specific expenses related to the fraudulent data access, lease abandonments, merger-related costs, unusual items, realignment charges, and other charges as follows:

 

     Q1 2006    Q2 2006     Q3 2006    Q4 2006    Fiscal Year
2006
   Q1 2007    Q2 2007     Q3 2007     Q4 2007    Fiscal Year
2007
    Q1 2008    Q2 2008

Asset impairments

     3,940      1,497       4,721      562      10,720      —        —         199       353      552       486      1,584

Transaction-related expenses

     —        —         —        —        —        —        —         —         —        —         2,001      11,785

Nonmerger severance

     1,028      658       410      —        2,096      85      1,525       1,512       1,170      4,292       1,070      798

Lease abandonments

     150      (386 )     —        1,996      1,760      137      139       957       144      1,377       —        2,230

Expenses related to fraudulent data access

     782      971       923      833      3,509      567      (1,501 )     112       110      (712 )     99      10

Other, net

     —        —         —        —        —        —        —         (281 )     4      (277 )     101      31
                                                                                       

Total other operating charges

   $ 5,900    $ 2,740     $ 6,054    $ 3,391    $ 18,085    $ 789    $ 163     $ 2,499     $ 1,781    $ 5,232     $ 3,757    $ 16,438
                                                                                       


ChoicePoint Inc.

Cash Flow and Balance Sheet Highlights

(dollars in thousands)

 

Reconciliation of net cash provided by operating activities to net free cash flow  
                                  Q1 2007     Q2 2007     Q3 2007     Q4 2007     Fiscal Year
2007
    Q1 2008     Q2 2008  

Net cash provided by operating activities - continuing operations

            $ 32,791     $ 72,238     $ 60,755     $ 39,940     $ 205,724     $ 46,628     $ 64,263  

Additions to property and equipment

              3,753       3,217       5,094       3,630       15,694       4,392       6,380  

Additions to other assets, net

              6,163       8,052       6,694       8,676       29,585       9,536       9,434  
                                                                 

Total capital expenditures

              9,916       11,269       11,788       12,306       45,279       13,928       15,814  

Net free cash flow - continuing operations

            $ 22,875     $ 60,969     $ 48,967     $ 27,634     $ 160,445     $ 32,700     $ 48,449  
Depreciation and Amortization  
     Q1 2006     Q2 2006     Q3 2006     Q4 2006     Fiscal Year
2006
    Q1 2007     Q2 2007     Q3 2007     Q4 2007     Fiscal Year
2007
    Q1 2008     Q2 2008  

Insurance Services

  $ 2,990     $ 3,072     $ 4,023     $ 4,203     $ 14,288     $ 4,154     $ 4,658     $ 4,502     $ 4,545     $ 17,859     $ 4,652     $ 5,105  

Screening and Authentication Services

    3,106       3,231       3,373       3,592       13,302       3,730       3,979       3,938       3,819       15,466       3,947       3,953  

Business Services

    5,168       4,580       4,592       4,903       19,243       4,533       4,328       4,223       3,596       16,680       3,150       3,174  

Unallocated & Other

    2,508       2,454       2,401       2,293       9,656       2,343       2,126       2,218       1,926       8,613       1,997       2,117  

Accelerated Depreciation

    5,463       —         —         —         5,463       —         —         —         —         —         —         —    
                                                                                               

Total Continuing Operations

  $ 19,235     $ 13,337     $ 14,389     $ 14,991     $ 61,952     $ 14,760     $ 15,091     $ 14,881     $ 13,886     $ 58,618     $ 13,746     $ 14,349  
                                                                                               
Calculation of Net Debt and Net Debt to Total Book Capital Ratio  
    March 31,
2006
    June 30,
2006
    September 30,
2006
    December 31,
2006
          March 31,
2007
    June 30,
2007
    September 30,
2007
    December 31,
2007
          March 31,
2008
    June 30,
2008
 

Short-term
debt and current maturities of long-term debt

  $ 100,010     $ 101,810     $ 75,011     $ 100,011       $ 110,011     $ 90,011     $ —       $ 80,000       $ 11,342     $ —    

Long-term
debt, less current maturities

    105,032       95,031       315,030       315,028         350,025       335,019       515,000       530,000         562,500       485,000  
                                                                                   

Total Debt

    205,042       196,841       390,041       415,039         460,036       425,030       515,000       610,000         573,842       485,000  

Cash and cash equivalents

    (8,499 )     (5,337 )     (37,229 )     (26,612 )       (39,242 )     (27,544 )     (37,487 )     (20,189 )       (31,956 )     (174,752 )
                                                                                   

Net Debt

    196,543       191,504       352,812       388,427         420,794       397,486       477,513       589,811         541,886       310,248  

Net Debt

    196,543       191,504       352,812       388,427         420,794       397,486       477,513       589,811         541,886       310,248  

Book Value of Shareholders’ Equity

    968,875       1,015,991       721,944       663,647         614,409       618,884       490,320       309,922         351,235       417,845  
                                                                                   

Total Capitalization

    1,165,418       1,207,495       1,074,756       1,052,074         1,035,203       1,016,370       967,833       899,733         893,121       728,093  

Net debt to total book capital ratio

    16.9 %     15.9 %     32.8 %     36.9 %       40.6 %     39.1 %     49.3 %     65.6 %       60.7 %     42.6 %
Calculation of EBITDA and Ratio of Net Debt to EBITDA Ratio (d)  
    Q1 2006     Q2 2006     Q3 2006     Q4 2006     Fiscal Year
2006
    Q1 2007     Q2 2007     Q3 2007     Q4 2007     Fiscal Year
2007
    Q1 2008     Q2 2008  

Net Income - as reported

  $ 30,610     $ 34,861     $ (72,216 )   $ 23,667     $ 16,922     $ 30,922     $ 32,570     $ 1,251     $ (32,321 )   $ 32,424     $ 22,985     $ 42,001  

Income (loss) from discontinued operations, net of taxes

    4,253       3,674       (100,497 )     (171 )     (92,741 )     1,581       1,485       (27,783 )     (59,175 )     (83,892 )     (4,378 )     22,554  
                                                                                               

Income from Continuing Operations

    26,357       31,187       28,281       23,838       109,663       29,341       31,085       29,034       26,854       116,316       27,363       19,447  

Provision for income taxes

    17,332       21,193       17,535       13,244       69,304       18,083       20,495       19,357       16,400       74,335       18,221       15,585  

Interest expense

    2,205       2,960       4,693       6,062       15,920       6,316       6,361       6,690       7,665       27,032       7,669       6,419  
                                                                                               

Operating
Income (Loss) - Continuing Operations

    45,894       55,340       50,509       43,144       194,887       53,740       57,941       55,081       50,919       217,683       53,253       41,451  

Add back: Other charges (a):

                       

Other operating charges (b)

    5,900       2,740       6,054       3,391       18,085       789       163       2,499       1,781       5,232       3,757       16,438  
                                                                                               

Operating
Income (Loss) - Continuing Operations - As Adjusted

    51,794       58,080       56,563       46,535       212,972       54,529       58,104       57,580       52,700       222,915       57,010       57,889  

Depreciation and amortization

    19,235       13,337       14,389       14,991       61,952       14,760       15,091       14,881       13,886       58,618       13,746       14,349  

Stock-based
compensation

    4,716       4,665       5,653       5,664       20,698       5,073       4,977       4,997       4,349       19,396       5,067       4,543  
                                                                                               

Earnings
before Interest, Taxes, Depreciation & Amortization (EBITDA)

  $ 75,745     $ 76,082     $ 76,605     $ 67,190     $ 295,622     $ 74,362     $ 78,172     $ 77,458     $ 70,935     $ 300,929     $ 75,823     $ 76,781  
                                                                                               

EBITDA - Trailing 12 Months

        $ 295,622       $ 294,239     $ 296,330     $ 297,183     $ 300,929       $ 302,389     $ 300,998  
                                                                 

Net Debt to EBITDA Ratio (c)

          1.31         1.43       1.34       1.61       1.96         1.79       1.03  
                                                                 

 

(a) Management excludes these charges in its assessments of operating results.
(b) Other operating charges include specific expenses related to the fraudulent data access, asset impairment, lease abandonment, merger-related costs, unusual items, realignment charges, gain (loss) on sale of business, and other charges.
(c) 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.