424B3 1 d424b3.htm PROSPECTUS Prospectus
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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-172549

Prospectus

LOGO

Trans Union LLC

TransUnion Financing Corporation

Exchange Offer for

11 3/8% Senior Notes due 2018

We are offering to exchange, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal (the “exchange offer”), up to $645,000,000 in aggregate principal amount of our new 11 3/8% Senior Notes due 2018, Series B (the “exchange notes”). Each exchange note has been registered under the Securities Act of 1933, as amended (the “Securities Act”). We are offering to exchange the exchange notes for any and all of our outstanding 11 3/8% Senior Notes due 2018, Series A (the “outstanding notes”), which we previously issued in a private transaction that was not subject to the registration requirements of the Securities Act (the “initial offering”). We refer to the exchange notes and the outstanding notes collectively as the “notes.”

We are conducting the exchange offer in order to provide you with an opportunity to exchange your outstanding notes for freely tradable notes that have been registered under the Securities Act.

The principal features of the exchange offer are as follows:

 

   

The terms of the exchange notes to be issued in the exchange offer are substantially identical to the outstanding notes, except that the transfer restrictions and registration rights relating to the outstanding notes will not apply to the exchange notes.

 

   

You may withdraw your tender of outstanding notes at any time before the expiration of the exchange offer. We will exchange all of the outstanding notes that are validly tendered and not withdrawn.

 

   

Based upon interpretations by the staff of the Securities and Exchange Commission (the “SEC”), we believe that subject to some exceptions, the exchange notes may be offered for resale, resold and otherwise transferred by you without compliance with the registration and prospectus delivery provisions of the Securities Act, provided you are not an affiliate of ours.

 

   

The exchange offer will expire at 5:00 p.m., New York City time, on April 18, 2011, unless extended.

 

   

The exchange of notes will not be a taxable event for U.S. federal income tax purposes.

 

   

We will not receive any proceeds from the exchange offer.

 

   

There is no existing public market for the outstanding notes or the exchange notes. We do not intend to list the exchange notes on any securities exchange.

Except in very limited circumstances, current and future holders of outstanding notes who do not participate in the exchange offer will not be entitled to any future registration rights, and will not be permitted to transfer their outstanding notes absent an available exemption from registration. Except in very limited circumstances, upon completion of the exchange offer, we will have no further obligation to register and currently do not anticipate that we will register outstanding notes under the Securities Act.

 

 

For a discussion of certain factors that you should consider before participating in the exchange offer, see “Risk factors” beginning on page 18 of this prospectus.

Neither the SEC nor any state securities commission has approved the exchange notes to be distributed in the exchange offer, nor have any of these organizations determined that this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

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You should rely only on the information contained in this prospectus. The prospectus may be used only for the purposes for which it has been published. We have not authorized any other person to provide any information not contained herein. If you receive any other information, you should not rely on it. We are not making an offer of these securities in any state where the offer is not permitted.

You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

 

 

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This prospectus contains summaries of the terms of several material documents. These summaries include the terms we believe to be material, but we urge you to review these documents in their entirety. We will provide you without charge, upon written or oral request, a copy of any and all of these documents. We must receive your request no later than five days before the expiration date of the exchange offer so you can obtain timely delivery. Requests for copies should be directed to: TransUnion Corp., 555 West Adams Street, Chicago, Illinois 60661; Attention: Investor Relations (telephone (312) 985-2860).

Until 90 days after the date of this prospectus, all dealers that effect transactions in the exchange notes, whether or not participating in the exchange offer, may be required to deliver a prospectus. This is in addition to any obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

Industry and market data

This prospectus includes industry and trade association data, forecasts and information that we have prepared based, in part, upon data, forecasts and information obtained from independent trade associations, industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management’s knowledge of the industry and independent sources. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of included information. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. Although we are not aware of any misstatements regarding the industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under “Risk factors” in this prospectus. Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources.

 

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Trademarks and trade names

This prospectus includes our trademarks such as “TransUnion,” which are protected under applicable intellectual property laws and are the property of TransUnion Corp. or its subsidiaries. This prospectus also contains trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names.

Financial information

Use of non-GAAP financial measures

This prospectus contains “non-GAAP financial measures.” Non-GAAP financial measures are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States (“GAAP”). Specifically, we use the non-GAAP financial measures Adjusted Operating Income and Adjusted EBITDA to assess our operating performance and believe they are useful metrics for investors, creditors and other users of our financial statements to do the same.

Adjusted Operating Income represents operating income plus:

 

   

for 2010, an adjustment for stock-based compensation accelerated as a result of the Change in Control Transaction (as defined in “Summary—The Change in Control Transaction”);

 

   

for 2010, an adjustment for a nonrecurring gain from the trade in of computer equipment; and

 

   

for 2008, an adjustment for expenses related to the settlement of the Privacy Litigation (as defined in “Business—Legal proceedings”).

Adjusted EBITDA represents net income plus:

 

   

net interest expense;

 

   

income taxes;

 

   

depreciation and amortization;

 

   

other income and expense excluding earnings from equity method investments and dividends from cost method investments;

 

   

stock-based compensation;

 

   

the adjustments to arrive at Adjusted Operating Income as discussed above; less

 

   

net income attributable to the noncontrolling interests; and

 

   

discontinued operations, net of tax.

We present Adjusted Operating Income and Adjusted EBITDA as supplemental measures of our operating performance because they eliminate the impact of certain items that are non-recurring or that we do not consider indicative of our ongoing operating performance. In addition, Adjusted EBITDA does not reflect our capital expenditures, interest expense, depreciation, amortization, stock-based compensation, income and expense from non-recurring events and certain cash charges that we do not consider to be indicative of our ongoing operating performance. Other companies in our industry may calculate Adjusted Operating Income and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures. Because of these limitations, Adjusted

 

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Operating Income and Adjusted EBITDA should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP.

We believe that the most directly comparable GAAP measure to Adjusted Operating Income is operating income and that the most directly comparable GAAP measure to Adjusted EBITDA is net income. Adjusted Operating Income and Adjusted EBITDA are not measures of financial condition or profitability under GAAP and should not be considered as alternatives to cash flow from operating activities, as measures of liquidity or as alternatives to operating income or net income as indicators of operating performance. See “Management’s discussion and analysis of financial condition and results of operations—Key performance indicators” for a reconciliation of Adjusted Operating Income to its most directly comparable GAAP measure, operating income, and a reconciliation of Adjusted EBITDA to its most directly comparable GAAP financial measure, net income.

Rounding

Items in tables or other presentations may not total due to rounding.

 

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Summary

This summary contains selected information about us and the exchange offer. This summary does not contain all the information you should consider before deciding whether to participate in the exchange offer. You should carefully read this entire prospectus, including the risk factors, description of our business, description of the notes, financial data, and financial statements and the related notes before deciding whether to participate in the exchange offer.

Unless we indicate otherwise or the context otherwise requires, and except in our capacity as co-issuer of the notes or borrower under our senior secured credit facilities, all references to “TransUnion,” “the Company,” “we,” “us” and “our” refer collectively to Trans Union LLC, the subsidiaries of Trans Union LLC and our Parent, TransUnion Corp. The Parent has no business operations separate from investments, including its investment in Trans Union LLC, and has provided a full and unconditional guarantee of Trans Union LLC’s obligations under the notes. All references to the “Issuers” of the notes refer collectively to Trans Union LLC and TransUnion Financing Corporation, and all references to “borrower” under our senior secured credit facilities refer to Trans Union LLC. References in this prospectus to years are to our fiscal years, which end on December 31.

Overview

We are a global leader in credit information and information management services, with operations in the United States, Africa, Canada, Asia, India and Latin America. We maintain credit data on millions of consumers and serve thousands of customers worldwide. We compile payment history, accounts receivable information and other information such as bankruptcies, liens and judgments for consumers and small businesses, and maintain reference databases of current consumer names, addresses and telephone numbers. We obtain this information from thousands of sources, including credit-granting institutions and public record depositories. We enhance our data and service offerings through access to other unique databases owned or maintained by third parties. We combine our credit and other source data with analytics and decisioning technology to deliver value-added solutions to our customers that assist with new account acquisitions, account management, risk management, collections, identity verification and fraud protection. Historically, our business has experienced attractive operating margins and modest capital expenditure and working capital needs, resulting in strong cash flow from operations.

We manage our business through three operating segments: U.S. Information Services (“USIS”), International and Interactive.

 

   

USIS, which represented approximately 67% of our revenue in 2010, provides consumer reports, credit scores, verification services, analytical services and decision technology to business customers in the United States. USIS offers these services to customers in the financial services, insurance, healthcare and other markets, and delivers them through both direct and indirect channels.

 

   

International, which represented approximately 20% of our revenue in 2010, provides services similar to our USIS and Interactive segments in multiple countries outside the United States. Our International segment also provides auto ownership information and commercial data to our customers in select geographies.

 

   

Interactive, which represented approximately 13% of our revenue in 2010, offers the tools, resources and education to help individuals understand and manage their credit. Interactive delivers these services primarily through our proprietary internet websites, transunion.com, truecredit.com and zendough.com.

We have built a strong and highly diversified base of customers globally. In 2010, our largest customer accounted for approximately 3.5% of our revenue and our top ten customers, in the aggregate, accounted for

 

 

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approximately 19.0% of our revenue. Given the strength of our relationships and the incremental value of our services, we have historically enjoyed long-standing relationships with our customers, including relationships of over ten years with each of our top ten USIS financial services customers.

We compete primarily with two other global credit reporting companies, Equifax, Inc. and Experian plc, both of which offer a range of consumer credit reporting services similar to our services. We also compete with a number of smaller, specialized companies, all of which offer a subset of the services we provide.

Our industry

Evolution to mission-critical role

Credit bureaus were formed in the nineteenth century to help provide better credit information to local and regional lenders so they could make more informed credit decisions. As populations became more mobile and financial services offerings became more prevalent, credit bureaus began to offer more data and services and expanded their geographic reach through strategic alliances and acquisitions. As consumer lending expanded, credit bureaus became an integral part of the lending process and now play a critical intermediator role between lenders and borrowers. Credit bureaus developed a variety of methods to collect, maintain and analyze information concerning the ability of consumers and businesses to meet their obligations. Consumers and commercial lenders have increasingly used these services to make more informed credit decisions. As a result, credit bureaus have positioned themselves as mission-critical partners to financial services institutions around the world.

Three major providers with sustainable competitive advantage

As financial services institutions grew in scale and geographic scope, credit bureaus extended their reach by coordinating and forming strategic alliances with other credit reporting providers to share data across large territories through a “hub and spoke” system. Three credit bureaus have since consolidated into large, international organizations that can provide a wide range of data services and analytical applications to their larger and increasingly demanding financial services customers. As a result of this consolidation, TransUnion, Equifax and Experian have emerged as the global leaders in the industry. The largest U.S. customers of these global credit bureaus typically use the services of all three providers to validate consistency and ensure reliability.

Expanding the scope of offerings

Over the past decade, credit bureaus have devoted significant resources to enhance the quality of their data sets by developing a variety of proprietary information databases. Credit bureaus have evolved from being collectors and sellers of credit information to being providers of more advanced information services. With more sophisticated analytical tools and decision technology, credit bureaus have expanded the scope of their offerings to the financial services industry, which has enabled the industry to process information and provide predictive and decisioning tools to prescreen and acquire new customers, cross-sell to existing customers, use rules-based decision making at the point of sale and monitor and manage risk in existing portfolios. In addition, credit bureaus have leveraged their data by developing advanced analytical tools and services to offer value-added solutions to customers in new markets, including insurance, healthcare, collections, retail and telecommunications. Given the increased consumer demand for credit and consumer data, the credit bureaus have also begun to market or sell these services directly to consumers. The development of these more advanced services has enabled credit bureaus to diversify their revenue base and accelerate growth.

 

 

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International market expansion

As consumer lending activities have grown in markets outside the United States, the major global credit bureaus have expanded internationally to increase market opportunities, accelerate growth and increase market share. The international market represents a significant opportunity for the global credit bureaus to offer established, proven services and solutions in new or emerging markets. To penetrate these markets, credit bureaus have formed joint ventures or other strategic alliances with local data providers, financial services institutions and key technology partners. Credit bureaus have also begun to expand in key regions through acquisitions, similar to the way that credit bureaus consolidated in the United States.

Economic and market trends

Credit bureaus have benefited from the dramatic expansion of consumer lending. Consumer lending is affected by a number of macroeconomic factors such as GDP growth, interest rates, unemployment, per capita disposable income and consumer spending. The United States and much of the world economy were impacted during the economic recession that began during the second half of 2007, which slowed consumer lending and adversely affected the credit bureau industry. However, during the same period, the credit bureaus benefited from the growing demand for value-added portfolio and risk management services due to the heightened focus on risk mitigation and protection. As the U.S. economy begins to stabilize and improve, we expect demand for credit bureau services to increase.

Our competitive strengths

Global leader in credit information and information management services

We are a leading credit bureau with a global reach as one of only three global credit bureaus. In the United States, we have agreements or relationships with 18 of the top 20 banks, all of the major credit card issuers, 15 of the top 20 collections companies, 9 of the top 10 property and casualty insurance carriers, thousands of healthcare providers and hundreds of healthcare payors. Outside the United States, we have established a variety of wholly-owned businesses and have entered into joint ventures with leading partners in local markets to create localized proprietary databases and offer a suite of comprehensive services that are tailor-made for each market. We leverage various sources of information and our proprietary technologies to provide data, analytical tools and decisioning solutions that enable our business services customers to grow their business and manage risk more effectively.

Attractive business model

We believe we have an attractive business model that has had strong and stable historical cash flow from operations, high revenue visibility and low capital intensity. The mission-critical importance of our services to our customers, the proprietary nature of our technologies and the integration of our systems into customer processes have historically driven high customer retention rates. We have enjoyed long-standing relationships with our customers, including relationships of over ten years with each of our top ten USIS financial services customers. Our vertical and geographic expansion has diversified our revenue streams. Our efficient operating structure and scale have enabled us to generate strong operating margins, while the low capital intensity of our business allows us to continue to invest in selected growth initiatives. We believe that, as a result of operating efficiencies and low capital intensity, we will continue to generate strong and consistent cash flow from operations.

 

 

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Strong global presence

We provide services in a number of countries outside the United States and are well positioned in the following geographies:

 

   

South Africa, where we host the largest credit database on the continent;

 

   

Asia, where we are the only global agency with a credit bureau in Hong Kong;

 

   

India, where we are the technology provider to and part owner of the largest operating credit bureau and provider of analytic and decisioning services;

 

   

Latin America, where we are a major credit bureau in the region and a technology partner to the largest credit bureau in Mexico; and

 

   

Canada, where we are a significant service provider in a market with one other competitor.

We believe our presence in these regions enables continued diversification and expansion and positions us for long-term growth in these markets.

Differentiated information services and capabilities

We maintain integrated relationships with our customers by providing mission-critical services and capabilities. We use high-quality consumer credit information collected from thousands of different sources augmented by additional information sources such as fraud, identity, criminal, health insurance, insurance claims and mortgage lending data. Using this data, we create proprietary databases and matching algorithms that enable us to deliver basic consumer credit data, such as standard data, characteristics and credit reports, and differentiated solutions, including:

 

   

enhanced consumer credit data, such as trend data and mortgage information;

 

   

value-added platforms, such as “triggers” and advanced decisioning; and

 

   

models and analytics, including generic and custom credit scores.

We enhance our offerings by leveraging our research and development and technology innovation.

Industry leading analytical tools

As global credit information services have grown and become more complex, the demand for more sophisticated and robust business decision-making tools has grown. In anticipation of this demand, we have made significant investments to develop next-generation analytical capabilities and services. For example, we have introduced two new platforms to our suite of services:

 

   

our “triggers” platform, which takes daily snapshots of our entire database and analyzes profile information changes, enabling us to identify unique patterns that may predict future consumer behavior and allowing our customers to assess portfolio risks and new customer candidates more effectively; and

 

   

our advanced “decisioning” platform, which leverages multiple data sources to build decision-based rules technology that we offer to customers as a service platform.

Technology platform

To operate, deliver and support our solutions and services, we have developed and continuously invest in a range of proprietary systems and a global technology platform with a strong track record of reliability and scalability.

 

 

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We have built a technology platform with flexible architectures, secure software applications and processing capabilities to manage and deliver our solutions to a variety of customers in different markets. We use robust storage capabilities with large-scale and redundant hardware systems to support our technology infrastructure and continually monitor our systems to ensure that they operate consistently and cost-effectively.

Focus on cost control and operational efficiencies

In 2008, we launched our Operational Excellence Program, through which we were able to implement several cost-saving initiatives:

 

   

a strategic sourcing program, which drives increased control over spending on third-party vendors;

 

   

our labor management strategy, which includes the expanded use of lower-cost resources and allows us to continue to improve, align and integrate our enterprise workforce; and

 

   

our enterprise process improvement, which focuses on streamlining back office functions and improving overall processes.

These cost-control initiatives, which we implemented during the economic downturn, allowed us to achieve significant cost savings and maintain Adjusted EBITDA as a percentage of revenue of over 34% in 2010, consistent with historical Adjusted EBITDA margins, despite a challenging revenue environment.

Proven and experienced management team

We have an experienced senior management team with an average of 15 years of experience in the credit reporting, financial services and information technology industries. Our senior management team has a track record of strong performance and significant experience in the markets served by our USIS, International and Interactive segments. This team has expanded our global footprint, invested in new solutions in market verticals and managed the cost base effectively to maintain a strong operating margin and position us well for future growth.

Our business strategy

We create economic and competitive advantages for our customers. To promote sustainable growth, diversification and a strong global brand, each of our business segments focuses on aligning its resources and efforts with the following priorities:

Investment in innovation and service development

We continually seek to innovate by investing in new data sources and applications to provide our customers with integrated solutions that better meet their needs. Despite the economic downturn, we launched a number of new services and solutions in the past two years. We introduced enhanced analytics and decisioning services to deliver stronger account management, risk management and fraud protection services to our financial services customers. For example, we developed and introduced an adjustable rate mortgage indicator service that provides businesses with tools for risk management purposes and an income estimator solution that is used by credit card issuers to acquire and manage accounts in response to the U.S. Credit Card Accountability, Responsibility and Disclosure Act of 2009 (the “CARD Act”). In International, we have introduced credit sourcing, decisioning and asset monitoring solutions. In Interactive, beginning with the launch of zendough.com, we have targeted a consumer demographic that seeks a streamlined, user-friendly, more proactive credit and identity personal solution.

 

 

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Expand the fast-growing International segment

We believe our International segment represents a significant opportunity for growth as economies outside the United States continue to develop and mature. We seek to expand internationally by forming joint ventures and other strategic alliances with local data providers, financial services institutions and key technology partners. In developing markets, such as India, Latin America and Asia, we believe there are significant opportunities for growth as a substantial portion of the population in these economies who are not yet credit active will emerge as consumers of credit. In relatively mature markets, such as Canada and Hong Kong, we will continue to improve our core services and seek to expand into other industries or verticals. In addition, we continue to pursue start-up opportunities in markets we do not currently serve, as well as establish and expand our presence through acquisitions.

Focus on growth markets

We continue to focus on growth markets, such as insurance and healthcare. For example, in insurance, we continue to deliver new fraud detection solutions through improved accuracy and efficiency for the quoting and underwriting process. In the healthcare industry, our acquisition of MedData Health LLC (“MedData”), a leading provider of healthcare information and data solutions for hospitals, physician practices and insurance companies, enables us to deliver new solutions that connect providers and payors. We continue to seek to identify new opportunities in these and other vertical markets in which we can leverage our data assets and core competencies to improve customer performance and drive growth.

Proactive review of cost structure

We strategically manage our investments in people and technology for cost-effective growth. In 2008, we launched our Operational Excellence Program, which has enabled us to reduce costs through four key initiatives: a strategic sourcing program, our labor management strategy, our enterprise process improvement approach and our product cost management focus. We continue to focus on each of these initiatives to improve productivity and long-term cost competitiveness.

Investment in human and intellectual capital

We believe that highly skilled people with relevant subject matter expertise give us a competitive advantage. As a result, we identify areas of strategic need and proactively recruit individuals from our customers’ industries who provide insight and relevant expertise in our key markets. We also continue to invest in training and benefit programs to identify, attract, develop and retain key professionals in the industry.

Sponsor overview

Madison Dearborn Partners, LLC (“Madison Dearborn” or the “Sponsor”), based in Chicago, is an experienced and successful private equity investment firm. In June 2010, affiliates of the Sponsor acquired 51.0% of the outstanding common stock of the Parent, as described in “—The Change in Control Transaction.” The Sponsor has raised over $18 billion of capital since its formation in 1992 and has invested in more than 100 companies. Investment funds affiliated with the Sponsor invest in businesses across a broad spectrum of industries, including basic industries, communications, consumer, energy and power, financial services and health care. The Sponsor’s objective is to invest in companies with strong competitive characteristics that it believes have the potential for significant long-term equity appreciation. To achieve this objective, the Sponsor seeks to partner with outstanding management teams that have a solid understanding of their businesses and track records of building shareholder value.

 

 

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The Change in Control Transaction

On June 15, 2010, MDCPVI TU Holdings, LLC (the “Purchaser”) acquired 51.0% of the outstanding common stock of the Parent from certain existing stockholders of the Parent (the “Sellers”) and certain employee and director stockholders of the Parent. The Purchaser is a Delaware limited liability company beneficially owned by affiliates of the Sponsor. We refer to this transaction as the “Change in Control Transaction.”

The Change in Control Transaction consisted of the following principal components:

 

   

the following debt financing, the proceeds of which we used to repay certain of our outstanding debt and to fund the Merger described below, among other things:

 

   

borrowings of $965.0 million under our new $1,150.0 million senior secured credit facilities, which consisted of $950.0 million of borrowings under our senior secured term loan facility and $15.0 million of borrowings under our $200.0 million senior secured revolving line of credit facility;

 

   

borrowings of approximately $16.7 million on an interest-free basis (the “RFC loan”) from the Pritzker family business interests (as defined in “—Corporate information”); and

 

   

proceeds of approximately $619.2 million, after deducting the initial purchasers’ discounts and other fees and expenses, from the sale of the outstanding notes in the initial offering;

 

   

the merger of a newly formed Delaware corporation (“MergerCo”) with and into the Parent (the “Merger”), with the Parent continuing as the surviving corporation, whereby outstanding shares of common stock of the Parent (other than shares of common stock held by MergerCo and shares of common stock held by stockholders properly exercising appraisal rights) converted into the right to receive cash in an aggregate amount of approximately $1.18 billion and were cancelled pursuant to Delaware law;

 

   

the roll-over of approximately $6.1 million of equity held by certain members of senior management of the Parent into non-voting, non-redeemable shares of common stock of the Parent; and

 

   

the acquisition by the Purchaser of 51.0% of the outstanding common stock of the Parent from the Sellers and certain other stockholders of the Parent.

 

 

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Ownership structure and organizational chart

The following sets forth a simplified summary of our organizational structure

LOGO

The Issuers and the guarantors, after eliminating the impact of intercompany transactions, represent approximately 97% of our total consolidated liabilities, 71% of our total consolidated assets, 60% of our total consolidated operating income and 78% of our total consolidated revenue.

Corporate co-issuer

The corporate co-issuer is TransUnion Financing Corporation, a wholly-owned subsidiary of Trans Union LLC. TransUnion Financing Corporation was incorporated in Delaware for the sole purpose of serving as co-issuer of the notes in order to facilitate the offering of the notes. TransUnion Financing Corporation does not have any operations or assets of any kind and will not have any revenues.

 

 

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Corporate information

Our business was founded in 1968 as a Delaware corporation. In January 2005, all of the common stock of TransUnion Corp. was distributed to the Pritzker family business interests (as stockholders of our former parent company), and we became a stand-alone corporate group. For purposes of this prospectus, the term “Pritzker family business interests” refers to the following holders of our common stock: (1) various lineal descendants of Nicholas J. Pritzker (deceased) and spouses and adopted children of such descendants; (2) various trusts for the benefit of the individuals described in clause (1) and trustees thereof; and (3) various entities owned and/or controlled, directly and/or indirectly, by the individuals and trusts described in (1) and (2).

Our principal executive offices are located at 555 West Adams Street, Chicago, Illinois 60661. Our telephone number is (312) 985-2000. Our website address is www.transunion.com. The information on, or that may be accessed through, our website is not a part of this prospectus.

 

 

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Summary of the exchange offer

 

The initial offering

On June 15, 2010, the Issuers issued $645,000,000 aggregate principal amount of 11 3/8% Senior Notes due 2018, Series A under an indenture among the Issuers, the Parent, the subsidiary guarantors and Wells Fargo Bank, National Association, as trustee. The outstanding notes were issued in a private transaction that was not subject to the registration requirements of the Securities Act.

 

Registration rights agreement

In connection with the initial offering, we entered into a registration rights agreement (the “registration rights agreement”) with respect to the outstanding notes. In the registration rights agreement, we agreed, among other things, to use our commercially reasonable efforts to file with the SEC, and cause to become effective, a registration statement relating to an offer to exchange the outstanding notes for an issue of SEC-registered notes with terms identical to the outstanding notes. The exchange offer is intended to satisfy your rights under the registration rights agreement. Except in limited circumstances, after the exchange offer is complete, holders of outstanding notes will no longer be entitled to any exchange or registration rights with respect to their outstanding notes.

 

The exchange offer

We are offering to exchange up to $645,000,000 aggregate principal amount of our new 11 3/8% Senior Notes due 2018, Series B, which have been registered under the Securities Act (the “exchange notes”), for any and all of our outstanding 11 3/8% Senior Notes due 2018, Series A (the “outstanding notes”).

 

  In order to be exchanged, an outstanding note must be properly tendered and accepted. All outstanding notes that are validly tendered and not validly withdrawn will be exchanged. We will issue exchange notes promptly after the expiration of the exchange offer.

 

  Interest on the outstanding notes accepted for exchange in the exchange offer will cease to accrue upon the issuance of the exchange notes. The exchange notes will bear interest from the date of issuance, and such interest will be payable, together with accrued and unpaid interest on the outstanding notes accepted for exchange, on the first interest payment date following the closing of the exchange offer. Interest will continue to accrue on any outstanding notes that are not exchanged for exchange notes in the exchange offer.

 

Resales

Based on an interpretation by the staff of the SEC set forth in no-action letters issued to third parties, we believe that the exchange notes issued to you in the exchange offer may be offered for resale, resold and otherwise transferred by you without compliance with the registration and prospectus delivery requirements of the Securities Act provided that:

 

   

the exchange notes are being acquired by you in the ordinary course of your business;

 

 

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you are not participating, do not intend to participate, and have no arrangement or understanding with any person to participate, in the distribution of the exchange notes issued to you in the exchange offer; and

 

   

you are not an affiliate of ours.

 

  If any of these conditions is not satisfied and you transfer any exchange notes issued to you in the exchange offer without delivering a prospectus meeting the requirements of the Securities Act or without an exemption from registration of your exchange notes from these requirements, you may incur liability under the Securities Act. We will not assume, nor will we indemnify you against, any such liability.

 

  Each broker-dealer that is issued exchange notes in the exchange offer for its own account in exchange for outstanding notes that were acquired by that broker-dealer as a result of market-making or other trading activities must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the exchange notes. A broker-dealer may use this prospectus for an offer to resell, resale or other transfer of the exchange notes issued to it in the exchange offer.

 

Expiration date

The exchange offer will expire at 5:00 p.m., New York City time, on April 18, 2011, unless we decide to extend the expiration date.

 

Conditions to the exchange offer

The exchange offer is subject to customary conditions, which we may waive. See “Exchange offer—Conditions.”

 

Procedures for tendering outstanding notes

If you wish to tender your outstanding notes for exchange in the exchange offer, you must transmit to the exchange agent on or before the expiration date either:

 

   

an original or a facsimile of a properly completed and duly executed copy of the letter of transmittal, which accompanies this prospectus, together with your outstanding notes and any other documentation required by the letter of transmittal, at the address provided on the cover page of the letter of transmittal; or

 

   

if the outstanding notes you own are held of record by The Depository Trust Company (“DTC”) in book-entry form and you are making delivery by book-entry transfer, a computer-generated message transmitted by means of the Automated Tender Offer Program System of DTC (“ATOP”), in which you acknowledge and agree to be bound by the terms of the letter of transmittal and which, when received by the exchange agent, forms a part of a confirmation of book-entry transfer. As part of the book-entry transfer, DTC will facilitate the exchange of your outstanding notes and update your account to reflect the issuance of the exchange notes to you. ATOP allows you to electronically

 

 

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transmit your acceptance of the exchange offer to DTC instead of physically completing and delivering a letter of transmittal to the exchange agent.

 

  In addition, you must deliver to the exchange agent on or before the expiration date:

 

   

a timely confirmation of book-entry transfer of your outstanding notes into the account of the exchange agent at DTC if you are effecting delivery of book-entry transfer, or

 

   

if necessary, the documents required for compliance with the guaranteed delivery procedures.

 

Special procedures for beneficial owners

If you are the beneficial owner of book-entry interests and your name does not appear on a security position listing of DTC as the holder of the book-entry interests or if you are a beneficial owner of outstanding notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender the book-entry interest or outstanding notes in the exchange offer, you should contact the person in whose name your book-entry interests or outstanding notes are registered promptly and instruct that person to tender on your behalf.

 

Withdrawal rights

You may withdraw the tender of your outstanding notes at any time prior to 5:00 p.m., New York City time, on April 18, 2011.

 

Effect of not tendering in the exchange offer

Any notes now outstanding that are not tendered or that are tendered but not accepted will remain subject to the restrictions on transfer set forth in the outstanding notes and the indenture. Since the outstanding notes have not been registered under the federal securities laws, they may bear a legend restricting their transfer absent registration or the availability of a specific exemption from registration. Upon completion of the exchange offer, we will have no further obligation to register, and currently we do not anticipate that we will register, the outstanding notes under the Securities Act except in limited circumstances with respect to specific types of holders of outstanding notes.

 

Federal income tax considerations

The exchange of outstanding notes will not be a taxable event for United States federal income tax purposes. See “Material United States federal income tax considerations.”

 

Use of proceeds

We will not receive any proceeds from the issuance of exchange notes pursuant to the exchange offer. We will pay all of our expenses incident to the exchange offer.

 

Exchange agent

Wells Fargo Bank, National Association is serving as the exchange agent in connection with the exchange offer.

 

 

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Summary of terms of the exchange notes

 

Issuers

Trans Union LLC and TransUnion Financing Corporation.

 

Securities offered

$645.0 million aggregate principal amount of 11 3/8% Senior Notes due 2018, Series B.

 

Maturity

June 15, 2018.

 

Interest payment dates

June 15 and December 15, commencing on June 15, 2011.

 

Guarantees

The exchange notes will be guaranteed jointly and severally on a senior unsecured basis by the Parent and Trans Union LLC’s direct and indirect subsidiaries that guarantee our senior secured credit facilities. See “Description of the notes—Note guarantees.”

 

Ranking

The exchange notes and the guarantees will:

 

   

be the Issuers’ general unsecured obligations;

 

   

rank equally in right of payment with all of the Issuers’ and the guarantors’ existing and future senior indebtedness (including our obligations under our senior secured credit facilities);

 

   

be effectively subordinated to the Issuers’ and the guarantors’ secured indebtedness to the extent of the value of the collateral securing such indebtedness, including obligations outstanding under our senior secured credit facilities;

 

   

be structurally subordinated to all of the existing and future liabilities (including trade payables, but excluding intercompany liabilities) of any of Trans Union LLC’s subsidiaries that do not guarantee the notes; and

 

   

rank senior in right of payment to all of the Issuers’ and the guarantors’ future senior subordinated or subordinated indebtedness.

 

  As of and for the twelve months ended December 31, 2010:

 

   

the Issuers had approximately $1.6 billion of total indebtedness outstanding (including the notes), none of which was subordinated to the notes;

 

   

the Issuers had approximately $945.2 million of secured indebtedness, including borrowings under our senior secured credit facilities (not including additional availability of $200.0 million under our senior secured credit facilities, all of which would be secured if borrowed), to which the notes were effectively subordinated to the extent of the value of the collateral securing such indebtedness;

 

   

the Parent had approximately $14.2 million of indebtedness, all of which would have been structurally subordinated to the notes; and

 

 

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the Issuers and the guarantors, after eliminating the impact of intercompany transactions, represent approximately 97% of our total consolidated liabilities, 71% of our total consolidated assets, 60% of our total consolidated operating income and 78% of our total consolidated revenue.

 

  As of December 31, 2010, our liabilities reflected on our consolidated balance sheet, including indebtedness and other liabilities such as trade payables and accrued expenses, were approximately $1.8 billion.

 

Optional redemption

The Issuers may redeem any of the exchange notes beginning on June 15, 2014, at the redemption prices set forth in this prospectus plus accrued and unpaid interest.

 

  The Issuers may also redeem any of the exchange notes at any time before June 15, 2014 at a redemption price equal to 100% of the aggregate principal amount of the exchange notes to be redeemed plus a “make-whole” premium and accrued and unpaid interest, if any, to the redemption date.

 

  In addition, at any time before June 15, 2013, the Issuers may redeem up to 35% of the aggregate principal amount of the exchange notes with the net cash proceeds of an initial public offering at a redemption price equal to 111.375% of the principal amount of the exchange notes to be redeemed plus accrued and unpaid interest, if any, to the redemption date.

 

  See “Description of the notes—Optional redemption.”

 

Change of control; asset sales

Upon the occurrence of a change of control, as described in this prospectus, you will have the right to require the Issuers to repurchase all of your exchange notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the purchase date. See “Description of the notes—Repurchase at the option of holders—Change of control.”

 

  If the Issuers or any of their restricted subsidiaries sell assets under certain circumstances described in this prospectus, the Issuers will be required to make an offer to purchase the exchange notes at their face amount, plus accrued and unpaid interest, if any, to the purchase date. See “Description of the notes—Repurchase at the option of holders—Asset sales.”

 

Certain covenants

The indenture governing the exchange notes restricts the Issuers’ ability and the ability of their restricted subsidiaries to, among other things:

 

   

incur certain additional indebtedness and issue preferred stock;

 

   

make certain dividends, distributions, investments and other restricted payments;

 

 

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sell certain assets;

 

   

agree to any restrictions on the ability of restricted subsidiaries to make payments to the Issuers;

 

   

create certain liens;

 

   

merge, consolidate or sell substantially all of our assets; and

 

   

enter into certain transactions with affiliates.

 

  The indenture also restricts the activities that TransUnion Financing Corporation can engage in.

 

  These covenants are subject to a number of important exceptions and qualifications. See “Description of the notes.”

 

No prior market

The exchange notes will constitute a new issue of securities with no established trading market. We do not intend to list the exchange notes on any national securities exchange or automated quotation system. Accordingly, no assurance can be given that an active public or other market will develop for the exchange notes or as to the liquidity of the trading market for the exchange notes. If a trading market does not develop or is not maintained, holders of the exchange notes may experience difficulty in reselling the exchange notes or may be unable to sell them at all. If a market for the exchange notes develops, any such market may be discontinued at any time. Accordingly, you may have to bear the financial risks of investing in the exchange notes for an indefinite period of time. The Issuers do not intend to apply for a listing of the exchange notes on any securities exchange or automated dealer quotation system. See “Plan of distribution.”

 

Use of proceeds

We will not receive any proceeds from the issuance of the exchange notes pursuant to the exchange offer. We will pay all of our expenses incident to the exchange offer. See “Use of proceeds.”

 

Risk factors

You should carefully consider all of the information set forth in this prospectus and, in particular, evaluate the specific factors set forth under “Risk factors” for risks involved with participating in the exchange offer.

 

 

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Summary historical consolidated and other financial data

The following tables set forth summary historical consolidated financial data for TransUnion for the periods ended and as of the dates indicated below.

We have derived the summary historical consolidated financial data as of December 31, 2009 and 2010 and for each of the years in the three-year period ended December 31, 2010 from our audited consolidated financial statements appearing elsewhere in this prospectus. We have derived the summary historical consolidated balance sheet data as of December 31, 2008 from our audited consolidated financial statements as of such date, which are not included in this prospectus.

The summary historical financial data set forth below is only a summary and should be read in conjunction with “Unaudited pro forma consolidated financial data,” “Selected historical consolidated financial data,” “Risk factors,” “Use of proceeds,” “Capitalization,” “Management’s discussion and analysis of financial condition and results of operations” and our historical consolidated financial statements and related notes appearing elsewhere in this prospectus.

 

      Twelve months ended December 31,  
(in millions)    2010     2009     2008  

Income statement data:

      

Revenue

   $ 956.5      $ 924.8      $ 1,015.9   

Operating expenses:

      

Cost of services

     395.8        404.2        432.2   

Selling, general and administrative

     263.0        234.6        305.5   

Depreciation and amortization

     81.6        81.6        85.7   
                        

Total operating expenses

     740.4        720.4        823.4   

Operating income

     216.1        204.4        192.5   

Non-operating income and expense

     (133.1     1.3        17.4   
                        

Income from continuing operations before income tax

     83.0        205.7        209.9   

Provision for income tax

     (46.3     (73.4     (75.5
                        

Income from continuing operations

     36.7        132.3        134.4   

Discontinued operations, net of tax

     8.2        1.2        (15.9
                        

Net income

     44.9        133.5        118.5   

Less: net income attributable to noncontrolling interests

     (8.3     (8.1     (9.2
                        

Net income attributable to TransUnion Corp.

   $ 36.6      $ 125.4      $ 109.3   
                        

Balance sheet data:

      

Cash (including cash of discontinued operations)

   $ 131.2      $ 149.1      $ 372.8   

Total assets

     954.2        1,010.0        1,169.3   

Total debt

     1,606.0        591.3        6.7   

Total stockholders’ equity

     (862.0     249.4        1,003.2   

 

 

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Ratio of earnings to fixed charges

 

     2010      2009      2008      2007      2006  

Ratio of earnings to fixed charges

    
1.8:1
  
    
46.7:1
  
     221.6:1        
230.4:1
  
     164.1:1   

On a pro forma basis, assuming the Change in Control Transaction had occurred on January 1, 2010, and assuming that we had repaid the required $2.4 million quarterly principal payments throughout 2010 and not borrowed additional funds under our senior secured revolving line of credit, the ratio of earnings to fixed charges would have been 1.1:1. See “Unaudited pro forma consolidated financial data.”

 

 

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Risk factors

You should consider carefully the risks and uncertainties described below and the other information in this prospectus before deciding to participate in the exchange offer. Although these are the risks and uncertainties we believe are most important for you to consider, you should know that they are not the only risks or uncertainties facing us or which may adversely affect our business. The following risks and uncertainties could materially affect our business, financial condition or results of operations. Additional risks and uncertainties not presently known or currently believed to be significant may also adversely affect our business and your investment.

Risks related to the exchange offer and our indebtedness

Because there is no public market for the exchange notes, you may not be able to resell your exchange notes.

The offering of the exchange notes has been registered under the Securities Act, but the exchange notes will constitute a new issue of securities with no established trading market, and there can be no assurance as to:

 

   

the liquidity of any trading market that may develop;

 

   

your ability to sell your exchange notes; or

 

   

the price at which you would be able to sell your exchange notes.

If a trading market were to develop, the exchange notes might trade at higher or lower prices than their principal amount or purchase price, depending on many factors, including prevailing interest rates, the market for similar securities and our financial performance.

If you tender your outstanding notes in the exchange offer for the purpose of participating in a distribution of the exchange notes, you may be deemed to have received restricted securities, and if so, you will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction.

Your outstanding notes will not be accepted for exchange if you fail to follow the exchange offer procedures and, as a result, your outstanding notes will continue to be subject to existing transfer restrictions and you may not be able to sell them.

We will not accept your outstanding notes for exchange if you do not follow the proper exchange offer procedures. We will issue exchange notes as part of the exchange offer only after a timely receipt of your outstanding notes, a properly completed and duly executed letter of transmittal and all other required documents. Therefore, if you want to tender your outstanding notes, please allow sufficient time to ensure timely delivery. If we do not receive your outstanding notes, letter of transmittal and other required documents by the expiration date of the exchange offer, we will not accept your outstanding notes for exchange. We are under no duty to give notification of defects or irregularities with respect to the tenders of outstanding notes for exchange. If there are defects or irregularities with respect to your tender of outstanding notes, we may not accept your outstanding notes for exchange. For more information, see “Exchange offer—Procedures for tendering.”

If you do not exchange your outstanding notes, your outstanding notes will continue to be subject to the existing transfer restrictions and you may not be able to sell your outstanding notes.

We did not register the outstanding notes, nor do we intend to do so following the exchange offer. Outstanding notes that are not tendered will therefore continue to be subject to the existing transfer restrictions and may be transferred only in limited circumstances under the securities laws. If you do not exchange your outstanding notes, you will lose your right to have your outstanding notes exchanged for exchange notes registered under the federal securities laws. As a result, if you hold outstanding notes after the exchange offer, you may not be able to sell your outstanding notes.

 

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We have a substantial amount of indebtedness, which could adversely affect our financial position and prevent us from fulfilling our obligations under the exchange notes.

We have a substantial amount of indebtedness. As of December 31, 2010, we had total debt of approximately $1,606.0 million consisting of $645.0 million of outstanding notes, $945.2 million of borrowings under our senior secured credit facilities, and $15.8 million of other debt, of which $14.2 million was debt of the Parent. We may also incur significant additional indebtedness in the future. Our substantial indebtedness may:

 

   

make it difficult for us to satisfy our financial obligations, including making scheduled principal and interest payments on the exchange notes and our other indebtedness;

 

   

limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes;

 

   

limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general business purposes;

 

   

require us to use a substantial portion of our cash flow from operations to make debt service payments;

 

   

limit our flexibility to plan for, or react to, changes in our business and industry;

 

   

place us at a competitive disadvantage compared to our less leveraged competitors; and

 

   

increase our vulnerability to the impact of adverse economic and industry conditions.

Despite our current level of indebtedness, we may still be able to incur substantial additional indebtedness. This could exacerbate the risks associated with our substantial indebtedness.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of the indenture limit, but do not prohibit, us or our subsidiaries from incurring additional indebtedness. If we incur any additional indebtedness that ranks equally with the exchange notes and the guarantees, the holders of that indebtedness will be entitled to share ratably with the holders of the exchange notes and the guarantees in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding-up of our business. This may have the effect of reducing the amount of proceeds paid to you. If new indebtedness, including under our senior secured credit facilities, is added to our current debt levels, the related risks that we and our subsidiaries now face could intensify.

The exchange notes and the guarantees will be unsecured and effectively subordinated to the existing and future secured indebtedness of the Parent, the Issuers, and the guarantors.

The exchange notes and the guarantees will be general unsecured obligations ranking effectively junior in right of payment to all of our and the guarantors’ existing and future secured indebtedness, including indebtedness under our senior secured credit facilities. Additionally, the indenture governing the exchange notes permits us to incur additional secured indebtedness in the future. In the event that we or a guarantor is declared bankrupt, becomes insolvent or is liquidated or reorganized, any indebtedness that is effectively senior to the exchange notes and the guarantees will be entitled to be paid in full from our assets or the assets of the guarantor, as applicable, securing such indebtedness before any payment may be made with respect to the exchange notes or the affected guarantees. Holders of the exchange notes will participate ratably with all holders of our unsecured indebtedness that is deemed to be of the same class as the exchange notes, and potentially with all of our other general creditors, based upon the respective amounts owed to each holder or creditor, in our remaining assets.

As of December 31, 2010, the exchange notes and the guarantees were effectively subordinated to:

 

   

$945.2 million of senior secured indebtedness under our senior secured credit facilities; and

 

   

$200.0 million of additional availability under our senior secured credit facilities, which we would have been able to borrow on such date subject to compliance with financial covenants in our senior secured credit facilities.

 

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The senior secured credit facilities also contain an uncommitted accordion feature under which we may also incur additional secured indebtedness in an aggregate amount of:

 

   

up to approximately $300 million; plus

 

   

an additional amount of indebtedness under our senior secured credit facilities or separate facilities permitted by our senior secured credit facilities so long as certain financial conditions are met.

The exchange notes and the guarantees will be effectively subordinated to all of the indebtedness we incur under our senior secured credit facilities or separate secured facilities permitted by our senior secured credit facilities, including under the uncommitted accordion feature.

Claims of noteholders will be structurally subordinated to claims of creditors of our subsidiaries that do not guarantee the exchange notes.

Our non-U.S. subsidiaries and certain future subsidiaries that are designated as “unrestricted” in accordance with the terms of the indenture will not guarantee the exchange notes. Accordingly, claims of holders of the exchange notes will be structurally subordinated to the claims of creditors of these non-guarantor subsidiaries, including trade creditors. All obligations of our non-guarantor subsidiaries will have to be satisfied before any of the assets of these subsidiaries would be available for distribution, upon a liquidation or otherwise, to an issuer or a guarantor of the exchange notes. Although certain of our domestic subsidiaries will guarantee the exchange notes, the guarantees are subject to release under certain circumstances and we will have subsidiaries that are not guarantors. In the event of the liquidation, dissolution, reorganization, bankruptcy or similar proceeding of the business of a subsidiary that is not a guarantor, creditors of that subsidiary would generally have the right to be paid in full before any distribution is made to the Issuers or the holders of the exchange notes. In any of these events, the Issuers may not have sufficient assets to pay amounts due on the exchange notes with respect to the assets of that subsidiary.

The Issuers and the guarantors, after eliminating the impact of intercompany transactions, represent 97% of our total consolidated liabilities, 71% of our total consolidated assets, 60% of our total consolidated operating income and 78% of our total consolidated revenue, as of and for the twelve months ended December 31, 2010.

Your ability to transfer the exchange notes will be restricted and may be further limited by the absence of an active trading market.

The offering of the exchange notes has been registered under the Securities Act, but the exchange notes will constitute a new issue of securities with no established trading market. An active market for the exchange notes may not develop or, if developed, such a market may not continue. In addition, subsequent to their initial issuance, the exchange notes may trade at a discount from their initial offering price, depending upon prevailing interest rates, the market for similar notes, our performance and other factors. We do not intend to apply for listing or quotation of the exchange notes on any securities exchange or stock market. The liquidity of any market for the exchange notes will depend on a number of factors, including:

 

   

the number of holders of exchange notes;

 

   

our operating performance and financial condition;

 

   

the market for similar securities;

 

   

the interest of securities dealers in making a market in the exchange notes; and

 

   

prevailing interest rates.

Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of similar securities. We cannot assure you that the market for the exchange notes will be free from similar disruptions. Any such disruptions could have an adverse effect on holders of the exchange notes.

 

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Our corporate structure may impact your ability to receive payment on the exchange notes.

The Parent will unconditionally guarantee the exchange notes. However, the Parent is a holding company whose entire operating income and cash flow is derived from its subsidiaries and whose material assets are its equity interests in its subsidiaries. As a result, the Parent’s guarantee provides little, if any, additional credit support for the exchange notes, and investors should not place undue reliance on such guarantee in evaluating whether to participate in the exchange offer. Furthermore, TransUnion Financing Corporation, the Co-Issuer, does not have any operations or assets of any kind and will not have any revenues.

A guarantee of the exchange notes could be voided if it constitutes a fraudulent transfer under U.S. bankruptcy or similar state law, which would prevent the holders of the exchange notes from relying on that guarantor to satisfy claims.

Under U.S. bankruptcy law and comparable provisions of state fraudulent transfer laws, a guarantee can be voided, or claims under the guarantee may be subordinated to all other debts of that guarantor if, among other things, the guarantor, at the time it incurred the indebtedness evidenced by its guarantee or, in some states, when payments become due under the guarantee, received less than reasonably equivalent value or fair consideration for the incurrence of the guarantee and:

 

   

was insolvent or rendered insolvent by reason of such incurrence;

 

   

was engaged in a business or transaction for which the guarantor’s remaining assets constituted unreasonably small capital; or

 

   

intended to incur, or believed that it would incur, debts beyond its ability to pay those debts as they mature.

A guarantee may also be voided, without regard to these factors, if a court finds that the guarantor entered into the guarantee with the actual intent to hinder, delay or defraud its creditors. A court would likely find that a guarantor did not receive reasonably equivalent value or fair consideration for its guarantee if the guarantor did not substantially benefit directly or indirectly from the issuance of the guarantees. If a court were to void a guarantee, you would no longer have a claim against the guarantor. Sufficient funds to repay the exchange notes may not be available from other sources, including the remaining guarantors, if any. In addition, the court might direct you to repay any amounts that you already received from the subsidiary guarantor.

The measures of insolvency for purposes of fraudulent transfer laws vary depending upon the governing law. Generally, a guarantor would be considered insolvent if:

 

   

the sum of its debts, including contingent liabilities, were greater than the fair saleable value of all its assets;

 

   

the present fair saleable value of its assets is less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or

 

   

it could not pay its debts as they become due.

Each subsidiary guarantee will contain a provision intended to limit the guarantor’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its subsidiary guarantee to be a fraudulent transfer. This provision may not be effective to protect the subsidiary guarantees from being voided under fraudulent transfer law. In a recent Florida bankruptcy case that is currently under review by a federal district court in Florida, this kind of provision was found to be ineffective to protect the guarantees.

 

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Upon a change of control, we may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture governing the exchange notes, which would violate the terms of the exchange notes.

Upon the occurrence of a change of control, you will have the right to require us to purchase all or any part of your exchange notes at a price equal to 101% of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase. We may not have sufficient financial resources available to satisfy all of our obligations under the exchange notes in the event of a change in control. Further, our ability to repurchase the exchange notes will be contractually restricted under the terms of our senior secured credit facilities. Accordingly, we may be unable to satisfy our obligations to purchase the exchange notes unless we are able to refinance or obtain waivers under our senior secured credit facilities. Our failure to purchase the exchange notes as required under the indenture would result in a default under the indenture and a cross-default under our senior secured credit facilities, each of which could have material adverse consequences for us and the holders of the exchange notes. In addition, our senior secured credit facilities provide that a change of control is a default that permits lenders to accelerate the maturity of borrowings under it. See “Description of the notes—Repurchase at the option of holders—Change of control.”

Covenants in our debt agreements restrict our business in many ways.

The indenture governing the exchange notes and our senior secured credit facilities contain various covenants that limit our ability and/or our restricted subsidiaries’ ability to, among other things:

 

   

incur or assume liens or additional debt or provide guarantees in respect of obligations of other persons;

 

   

issue redeemable stock and preferred stock;

 

   

pay dividends or distributions or redeem or repurchase capital stock;

 

   

prepay, redeem or repurchase debt;

 

   

make loans, investments and capital expenditures;

 

   

enter into agreements that restrict distributions from our subsidiaries;

 

   

sell assets and capital stock of our subsidiaries;

 

   

enter into certain transactions with affiliates; and

 

   

consolidate or merge with or into, or sell substantially all of our assets to, another person.

A breach of any of these covenants could result in a default under the senior secured credit facilities and/or the exchange notes. Upon the occurrence of an event of default under the senior secured credit facilities, the lenders could elect to declare all amounts outstanding under the senior secured credit facilities to be immediately due and payable and terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders could proceed against the collateral granted to them to secure that indebtedness. We have pledged a significant portion of our assets as collateral under the senior secured credit facilities. If the lenders under the senior secured credit facilities accelerate the repayment of borrowings, we may not have sufficient assets to repay the senior secured credit facilities and our other indebtedness, including the exchange notes. See “Description of other indebtedness.” Our borrowings under our senior secured credit facilities are, and are expected to continue to be, at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable-rate indebtedness would increase even though the amount borrowed remained the same, and our net income would decrease.

 

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If a bankruptcy petition were filed by or against us, you may receive a lesser amount for your claim than you would have been entitled to receive under the indenture governing the exchange notes.

If a bankruptcy petition were filed by or against us under the U.S. Bankruptcy Code after the issuance of the exchange notes, your claim for the principal amount of your exchange notes may be limited to an amount equal to the sum of:

 

   

the original issue price for the exchange notes; and

 

   

any amount of interest that does not constitute “unmatured interest” for purposes of the U.S. Bankruptcy Code.

Accordingly, under these circumstances, you may receive a lesser amount than you would be entitled to under the terms of the indenture governing the exchange notes, even if sufficient funds are available.

Changes in interest rates or in credit ratings issued by statistical rating organizations could adversely affect our cost of financing and the market price of the exchange notes.

Credit rating agencies rate the exchange notes and our other indebtedness on factors that include our operating results, actions that we take, their view of the general outlook for our industry and their view of the general outlook for the economy. Actions taken by the rating agencies can include maintaining, upgrading or downgrading the current rating or placing us on a watch list for possible future downgrading. Downgrading the credit rating of the exchange notes or our other indebtedness or placing us on a watch list for possible future downgrading could limit our ability to access the capital markets to meet liquidity needs and refinance maturing liabilities, increase the interest rates and our cost of financing and lower the market price of the exchange notes.

Our principal stockholders’ interests may conflict with yours.

Affiliates of the Sponsor collectively beneficially own 51.0% of our outstanding common stock and Pritzker family business interests collectively beneficially own approximately 48.2% of our outstanding common stock. As a result, subject to the stockholders agreements described in this prospectus, the Sponsor will be in a position to control all matters affecting us, including decisions regarding extraordinary business transactions, fundamental corporate transactions, appointment of members to our management, election of directors and our corporate and management policies. The interests of the Sponsor could conflict with your interests. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of the Sponsor might conflict with your interests as a holder of the exchange notes. The Sponsor may also have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in its judgment, could enhance its equity investments, even though such transactions might involve risks to you as a holder of the exchange notes. See “Certain relationships and related-party transactions” and “Security ownership of certain beneficial owners.”

Risks related to our business

Our revenues are concentrated in the U.S. consumer credit and financial services industries. When these industries experience a downturn, it adversely affects our revenue and the collectability of receivables.

We derive significant revenues from customers in the U.S. consumer credit and financial services industries. Many of our principal customers in these industries are dependent on general macroeconomic conditions and are impacted by the availability of affordable credit and capital, interest rates, inflation, employment levels, consumer confidence and housing demand. Changes in the economy have resulted, and may continue to result, in fluctuations in demand, volumes, pricing and operating margins for our services. For example, the banking and financial market downturn that began in the second half of 2008 caused a greater focus on expense reduction by our customers and led to a decline in their account acquisition mailings, which resulted in reduced revenues from our credit marketing programs. In addition, financial institutions tightened lending standards and granted fewer mortgage loans, student loans, automobile loans and other consumer loans. As a result, we experienced a

 

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reduction in our credit report volumes. Further downturns in the residential real estate market could lead to a reduction in the number of mortgage applications and a decline in demand for our credit reports. If businesses in these industries experience economic hardship, there can be no assurance that we will be able to generate future revenue growth or collect our receivables.

There may be further consolidation in our end customer markets, which may adversely affect our revenues.

There has been, and we expect there will continue to be, merger, acquisition and consolidation activity in our customer markets. If our customers merge with, or are acquired by, other entities that are not our customers, or that use fewer of our services, our revenue may be adversely impacted. In addition, industry consolidation could affect the base of recurring transaction-based revenue if consolidated customers combine their operations under one contract, since most of our contracts provide volume discounts.

We are subject to significant competition in many of the markets in which we operate.

We may not be able to compete successfully against our competitors, which could impair our ability to sell our services. We compete on the basis of system availability, differentiated solutions, personalized customer service, breadth of services and price. Our regional and global competitors vary in size, financial and technical capability, and in the scope of the products and services they offer. Some of our competitors may be better positioned to develop, promote and sell their products. Larger competitors may benefit from greater cost efficiencies and may be able to win business simply based on pricing. Our competitors may also be able to respond to opportunities before we do, taking advantage of new technologies, changes in customer requirements, or market trends.

Although our consumer credit reporting business generally has significant barriers to entry, our Interactive segment experiences competition from emerging companies. For example, prior to January 2008, Equifax and Experian were our top competitors for direct-to-consumer credit services, such as credit reports and identity theft protection services. In the past few years there has been an influx of non-bureau companies offering similar services, some leveraging the free services that we must provide by law. These developments have resulted in increased competition.

Many of our competitors have extensive customer relationships, including relationships with our current and potential customers. New competitors, or alliances among competitors, may emerge and gain significant market share. Existing or new competitors may develop products and services that are superior to ours or that achieve greater market acceptance. If we are unable to respond to changes in customer requirements as quickly and effectively as our competition, our ability to expand our business and sell our services may be negatively affected.

Our competitors may be able to sell services at lower prices than us, individually or as part of integrated suites of several related services. This ability may cause our customers to purchase from our competitors rather than us. Price reductions by our competitors could also negatively impact our operating margins and harm our ability to obtain new long-term contracts or renewals of existing contracts on favorable terms.

No assurance can be given that we will be able to compete effectively against current and future competitors. If we fail to successfully compete, our business, financial position and results of operations may be adversely affected.

We depend, in part, on strategic alliances and joint ventures to grow our business. If we are unable to develop and maintain these strategic alliances and joint ventures, our growth may be adversely affected.

An important focus of our business is to identify business partners who can enhance our services and enable us to develop solutions that differentiate us from our competitors. A significant strategy for our international expansion is to establish operations through strategic alliances or joint ventures with local financial institutions and other technical partners. In the international markets we may own a minority equity position and receive

 

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royalties for providing the credit bureau software and technical advice. Alternatively, we may enter into revenue sharing arrangements for sales distribution channels and access to data or analytical services.

We often use strategic alliances, joint ventures and other distribution channels to develop new products and to expand into geographical markets where we identify opportunities for growth. We cannot provide assurance that these arrangements will be successful or that our relationships with our partners will continue to be mutually beneficial. If these relationships cannot be maintained it could negatively impact our business, financial condition and results of operations.

Data security and integrity are critically important to our business, and breaches of security, unauthorized disclosure of confidential information, or the perception that confidential information is not accurate or secure, could result in a material loss of business, substantial legal liability, or significant harm to our reputation.

Several of our services are accessed through secure transmissions over public networks, including the internet. The information accessed generally includes confidential consumer, financial and personal information. The disclosure, loss or corruption of this data could subject us to substantial liability or disrupt our operations. Although we take reasonable precautions to prevent the unauthorized access to, or disclosure of, this data through technical and contractual means, we cannot be certain that the networks that access our services and proprietary databases will not be compromised, whether by advances in criminal capabilities, new discoveries in the field of cryptography, or otherwise. Information security breaches in connection with the delivery of our services or other well-publicized security breaches could be detrimental to our reputation, business, financial condition and results of operations.

Concerns about data security and integrity have led to a growing number of regulatory bodies adopting, or considering the adoption of, consumer notification requirements in the event their information is accessed by unauthorized persons. Compliance with a large number of conflicting and complex consumer notification laws could prove to be expensive and difficult. A failure to comply with these regulations could subject us to regulatory scrutiny or liability.

Our customers and we are subject to various current governmental regulations, and could be affected by new laws or regulations, compliance with which may cause us to incur significant expenses, and if we fail to maintain satisfactory compliance with certain regulations, we could be subject to civil or criminal penalties.

Our businesses and the businesses of our customers are subject to various significant international, federal, state and local laws and regulations, including but not limited to privacy and consumer data protection, health and safety, tax, labor, financial and environmental regulations. These laws and regulations are complex, change frequently and have tended to become more stringent over time. We and our customers may be required to incur significant expenses to comply with, or to remedy, violations of these laws and regulations. Changes in laws or regulations, or the manner in which they are interpreted or enforced, could reduce demand for our services from affected customers including customers in the consumer credit and financial services industries, and any such reduced demand could reduce our revenues. Any failure by us to comply with applicable laws or regulations could also result in cessation of our operations or portions of our operations or impositions of fines and restrictions on our ability to carry on or expand our operations. In addition, because many of our services are regulated or sold into regulated industries, we must comply with additional regulations in marketing our services.

The United States Congress recently passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The Dodd-Frank Act established the Bureau of Consumer Financial Protection (the “CFPB”) and significant portions of the Dodd-Frank Act related to the CFPB become effective on July 21, 2011. The CFPB has broad powers to promulgate, administer and enforce consumer financial regulations. Final regulations could place significant restrictions on our business and the businesses of our customers, particularly customers in the lending industry. Compliance with the Dodd-Frank Act, CFPB regulations, or other new laws, regulations or interpretations could result in substantial compliance costs or otherwise adversely impact our business and our results of operations.

 

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If we experience system failures or capacity constraints, the delivery of our services to our customers could be delayed or interrupted, which could harm our business and reputation and result in the loss of customers.

Our ability to provide reliable service largely depends on the efficient and uninterrupted operation of our computer network, systems and data centers, some of which have been outsourced to third-party providers. Any significant interruptions could severely harm our business and reputation and result in a loss of revenue and customers. Our systems and operations could be exposed to damage or interruption from fire, natural disaster, power loss, war, terrorist act, telecommunications failure, unauthorized access and computer viruses. The online services we provide are dependent on links to telecommunications providers. In addition, we generate a significant amount of our revenues through telesales centers and websites that we utilize to acquire new customers, fulfill services and respond to customer inquiries. We may not have sufficient redundant operations to cover a loss or failure of these systems in a timely manner. Further, our property and business interruption insurance may not be adequate to compensate us for all losses that may occur.

We are subject to losses from risks for which we do not insure.

For certain risks, we do not maintain insurance coverage because of cost and/or availability. Because we retain some portion of insurable risks, and in some cases self-insure completely, unforeseen or catastrophic losses in excess of insured limits could materially adversely affect our financial performance, operating results and financial condition.

We could lose our access to data sources which could prevent us from providing our services.

We depend extensively upon data from external sources, including data received from customers, strategic partners and various government and public record depositories to create the services we provide to our customers. Our data providers could stop providing data, or increase our costs for their data, for a variety of reasons. We could also become subject to legislative, regulatory or judicial restrictions on the collection or use of such data, in particular if such data is not collected by our providers in a way that allows us to legally use the data. In some cases, we compete with our data providers. If we lost access to this external data or if our access was restricted or became less economical, our ability to provide services could be negatively impacted, which would adversely affect our reputation, business, financial condition and results of operations. We cannot provide assurance that we will be successful in maintaining our relationships with these external data source providers or that we will be able to continue to obtain data from them on acceptable terms. Furthermore, we cannot provide assurance that we will be able to obtain data from alternative sources if our current sources become unavailable.

If we are unable to develop successful new services in a timely manner, or if the market does not adopt our new services, our ability to increase our revenue could be adversely affected.

The growth of our business depends on our ability to sell new services that meet the changing needs of the marketplace. To increase our revenues, we must continue to introduce new services and develop new versions of existing services that keep pace with technological developments and satisfy increasingly sophisticated customer requirements. Services that we plan to market in the future are in various stages of development, and the process of developing new services is complex and uncertain. We must commit significant resources to this effort before knowing whether our investments will result in services the market will accept. We may not successfully execute on our new services because of errors in planning or timing, technical hurdles that we fail to overcome, misunderstandings about market demand, changes in regulation, or lack of appropriate resources. Failure in execution or marketplace acceptance of the new services could result in competitive advantages for our competitors, including better differentiated and more timely solutions, which could adversely affect our reputation, business, financial condition and results of operations.

If we fail to keep up with rapidly changing technologies, demand for our services could be adversely affected.

In our markets, there are continuous improvements in computer hardware, network operating systems, programming tools, programming languages, operating systems, database technology and the use of the internet.

 

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Changes in customer preferences or regulatory requirements may require changes in the technology used to deliver our services. Our future success will depend, in part, upon our ability to:

 

   

internally develop new and competitive technologies;

 

   

use leading third-party technologies effectively; and

 

   

respond to changing customer needs and regulatory requirements.

We cannot provide assurance that we will successfully implement new technologies or adapt our technology to customer, regulatory and competitive requirements. If we fail to respond to changes in technology, regulatory requirements or customer preferences, the demand for our services, or the delivery of our services, could be adversely affected.

Our ability to expand our operations in, and the portion of our revenue derived from, markets outside the United States is subject to economic, political and other inherent risks, which could adversely impact our growth rate and financial performance.

Over the last several years, we derived a growing portion of our revenues from customers outside the United States, and it is our intent to continue to expand our international operations. We have sales and technical support personnel in numerous countries worldwide. We expect to continue to add international personnel to expand our abilities to deliver differentiated services to our international customers. Expansion into international markets will require significant resources and management attention and will subject us to new regulatory, economic and political risks. Moreover, the services we offer in developing and emerging markets must match our customers’ demand for those services. Due to price, limited purchasing power and differences in the development of consumer credit markets, there can be no assurance that our services will be accepted in any particular developing or emerging markets. We cannot be sure that our international expansion efforts will be successful. The results of our operations and our growth rate could be negatively affected by a variety of factors arising out of international commerce, some of which are beyond our control. These factors include:

 

   

currency exchange rate fluctuations;

 

   

foreign exchange controls that might prevent us from repatriating cash to the United States;

 

   

difficulties in managing and staffing international offices;

 

   

increased travel, infrastructure, legal and compliance costs of multiple international locations;

 

   

foreign laws and regulatory requirements;

 

   

terrorist activity, natural disasters and other catastrophic events;

 

   

restrictions on the import and export of technologies;

 

   

difficulties in enforcing contracts and collecting accounts receivable;

 

   

longer payment cycles;

 

   

maintenance of quality standards for outsourced work;

 

   

potentially unfavorable tax rules;

 

   

political and economic conditions in foreign countries, particularly in emerging markets;

 

   

varying business practices in foreign countries; and

 

   

reduced protection for intellectual property rights.

As we continue to expand our business, our success will partially depend on our ability to anticipate and effectively manage these and other risks. Our failure to manage these risks could adversely affect our business, financial condition and results of operations.

 

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Our cost management strategy may not be effective, which may adversely affect our financial results.

Our cost management strategy includes strategic sourcing, labor management, streamlining back-office functions and improving overall processes. Although we have implemented such plans and continue to explore means by which we can control or reduce expenses, there can be no assurance that we will be able to realize all the projected benefits of our cost management strategies. If we are unable to realize these anticipated cost reductions, our financial results may be adversely affected. Moreover, our operations and performance may be disrupted by our cost-management and facilities-integration efforts.

We may be unable to protect our intellectual property adequately or cost-effectively, which may cause us to lose market share or force us to reduce our prices.

Our success depends, in part, on our ability to protect and preserve the proprietary aspects of our technology and services. If we are unable to protect our intellectual property, our competitors could use our intellectual property to market similar services, decreasing the demand for our services. We may be unable to prevent third parties from using our proprietary assets without our authorization. We rely on patents, copyrights, trademarks, and contractual and trade secret restrictions to protect and control access to our proprietary intellectual property. However, these measures afford limited protection and may be inadequate. Enforcing our rights could be costly, time-consuming, distracting and harmful to significant business relationships. Additionally, others may develop non-infringing technologies that are similar or superior to ours. Any significant failure or inability to adequately protect and control our proprietary assets may harm our business and reduce our ability to compete.

We may face claims for intellectual property infringement, which could subject us to monetary damages or limit us in using some of our technologies or providing certain services.

There has been substantial litigation in the United States regarding intellectual property rights in the information technology industry. There is a risk that we may infringe the intellectual property rights of third parties. As we expand our international operations, there is a risk that we could infringe the intellectual property rights of third parties in other countries, which could result in liability to us. In the event that claims are asserted against us, we may be required to obtain licenses from third parties. Intellectual property infringement claims against us could subject us to liability for damages and restrict us from providing services or require changes to certain services. Although our policy is to obtain licenses or other rights where necessary, we cannot provide assurance that we have obtained all required licenses or rights. If a successful claim of infringement is brought against us and we fail to develop non-infringing services, or to obtain licenses on a timely and cost-effective basis, our reputation, business, financial condition and results of operations could be adversely affected.

The outcome of litigation or regulatory proceedings in which we are involved, or in which we may become involved, could subject us to significant monetary damages or restrictions on our ability to do business.

Various legal proceedings arise during the normal course of our business. These include individual consumer cases, class action lawsuits and actions brought by federal or state regulators. The outcome of these proceedings is difficult to assess or quantify. Plaintiffs in these lawsuits may seek recovery of large amounts and the cost to defend this litigation may be significant. There may also be adverse publicity associated with litigation that could decrease customer acceptance of our services. In addition, a court-ordered injunction or an administrative cease-and-desist order may require us to modify our business practices or may prohibit conduct that would otherwise be legal and in which our competitors may engage. As a consumer reporting agency, we are subject to a wide variety of technical and complex statutes, including state and federal credit reporting, medical privacy, and financial privacy requirements, which may provide for civil and criminal penalties and may permit consumers to maintain individual or class actions and obtain statutorily prescribed damages. While we do not believe that the outcome of any pending or threatened litigation or regulatory enforcement action will have a material adverse effect on our financial position, litigation is inherently uncertain and adverse outcomes could result in significant monetary damages, penalties or injunctive relief against us. For example, in 2008, pursuant to

 

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the terms of a settlement agreement with respect to certain class action proceedings known as the Privacy Litigation (as defined in “Business—Legal proceedings”), we paid $75.0 million into a fund for the benefit of class members and provided approximately 600,000 individuals with up to 9 months of free credit monitoring services. In addition, our insurance coverage may be insufficient to cover adverse judgments. See “Business—Legal proceedings” for further information regarding the Privacy Litigation and other material pending litigation.

When we engage in acquisitions, investments in new businesses or divestitures of existing businesses, we will face risks that may adversely affect our business.

We acquire or make investments in businesses that offer complementary services and technologies. Future acquisitions may not be completed on favorable terms and acquired assets, data or businesses may not be successfully integrated into our operations. Any acquisitions or investments will include risks commonly encountered in acquisitions of businesses, including:

 

   

failing to achieve the financial and strategic goals for the acquired business;

 

   

paying more than fair market value for an acquired company or assets;

 

   

failing to integrate the operations and personnel of the acquired businesses in an efficient and timely manner;

 

   

disrupting our ongoing businesses;

 

   

distracting management focus from our ongoing businesses;

 

   

acquiring unanticipated liabilities;

 

   

failing to retain key personnel;

 

   

incurring the expense of an impairment of assets due to the failure to realize expected benefits;

 

   

damaging relationships with employees, customers or strategic partners; and

 

   

diluting the share value of existing stockholders.

Any divestitures will be accompanied by the risks commonly encountered in the sale of businesses, which may include:

 

   

disrupting our ongoing businesses;

 

   

reducing our revenues;

 

   

losing key personnel;

 

   

distracting management focus from our ongoing businesses;

 

   

damaging relationships with employees and customers as a result of transferring a business to new owners; and

 

   

failure to close a transaction due to conditions such as financing or regulatory approvals not being satisfied.

These risks could harm our business, financial condition or results of operations, particularly if they occur in the context of a significant acquisition. Acquisitions of businesses having a significant presence outside the United States will increase our exposure to the risks of conducting operations in international markets.

If our outside service providers and key vendors are not able to fulfill their service obligations, our operations could be disrupted and our operating results could be harmed.

We depend on a number of service providers and key vendors such as telephone companies, software engineers, data processors and software and hardware vendors who are critical to our operations. These service providers

 

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and vendors are involved with our service offerings, communications and networking equipment, computer hardware and software and related support and maintenance. Although we have implemented service-level agreements and have established monitoring controls, our operations could be disrupted if we do not successfully manage relationships with our service providers or if they do not perform to service level agreements. If our service providers and vendors do not perform their service obligations, it could adversely affect our reputation, business, financial condition and results of operations.

Our access to the capital and credit markets could be adversely affected by economic conditions.

Historically, we have relied on cash from operations to fund our working capital and business growth. We may require additional capital from equity or debt financing in the future. The capital and credit markets have become more volatile as a result of recent adverse economic conditions. Our access to funds under short-term credit facilities is dependent on the ability of the participating banks to meet their funding commitments. Those banks may not be able to meet their funding commitments if they experience shortages of capital and liquidity, or due to changing or increased regulations.

Our relationships with key long-term customers may not continue.

We have long-standing relationships with a number of our large customers. Market competition, customer requirements and customer consolidation through mergers or acquisitions could adversely affect our ability to continue these relationships. There is no guarantee that we will be able to retain or renew existing agreements with these customers on acceptable terms. At the end of the contract term, customers have the opportunity to renegotiate their contracts with us and to consider whether to engage one of our competitors to provide services. The loss of one or more of our major customers could adversely affect our business, financial condition and results of operations.

To the extent the availability of free or relatively inexpensive consumer information increases, the demand for some of our services may decrease.

Public sources of free or relatively inexpensive consumer information have become increasingly available, particularly through the internet, and this trend is expected to continue. Governmental agencies in particular have increased the amount of information to which they provide free public access. Public sources of free or relatively inexpensive consumer information may reduce demand for our services. To the extent that our customers choose not to obtain services from us and instead rely on information obtained at little or no cost from these public sources, our business, financial condition and results of operations may be adversely affected.

If we experience changes in tax laws or adverse outcomes resulting from examination of our income tax returns, it could adversely affect our results of operations.

We are subject to federal, state and local income taxes in the United States and in foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes. Our future effective tax rates and the value of our deferred tax assets could be adversely affected by changes in tax laws. In addition, we are subject to the examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from such examinations to determine the adequacy of our provision for income taxes. Although we believe we have made appropriate provisions for taxes in the jurisdictions in which we operate, changes in the tax laws or challenges from tax authorities under existing tax laws could adversely affect our financial condition and results of operations.

We may not be able to attract and retain the skilled employees that we need to support our business.

Our success depends on our ability to attract and retain experienced management, sales, research and development, marketing and technical support personnel. If any of our key personnel were unable or unwilling to continue in their present positions, it may be difficult to replace them and our business could be seriously

 

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harmed. The complexity of our services requires trained customer service and technical support personnel. We may not be able to hire and retain such personnel at compensation levels consistent with our compensation structure. Some of our competitors may be able to offer more attractive terms of employment. In addition, we invest significant time and expense in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to retain our employees, we could incur significant expense replacing employees, and our ability to provide quality services could diminish, resulting in a material adverse effect on our business.

Risks related to our industry

Economic, political and market forces beyond our control could reduce demand for our services and harm our business.

Since mid-2007, global credit and other financial markets have suffered substantial volatility, illiquidity and disruption. These forces reached unprecedented levels during 2008 and 2009, resulting in some financial institutions filing for bankruptcy, being acquired or being provided with government assistance through intervention programs. These recent market developments and the potential for increased and continuing disruptions present considerable risks to our businesses and operations. These types of disruptions could lead to a decline in the volumes of services we provide our customers and negatively impact our revenue and results of operations.

Changes in legislation or regulations governing consumer privacy may affect our ability to collect, manage and use personal information.

The credit reporting industry is subject to substantial government regulation. Because personal information is stored in our databases, we are vulnerable to changes in government regulations and adverse publicity concerning the use of our data. We provide data and services that are subject to various federal, state and local laws and regulations. See “Business—Regulatory matters” for further discussion. These laws and regulations are designed to protect the privacy of the public and to prevent the misuse of personal information in the marketplace. There has been an increasing public concern about the use of personal information, particularly Social Security numbers, department of motor vehicle data, dates of birth, financial information and medical information. As a result, there may be legislative or regulatory efforts to further restrict the use of this personal information. In addition, we provide credit reports and scores to consumers for a fee, and this income stream may be reduced or interrupted by legislation. For example, in 2003, the United States Congress passed a law requiring us to provide consumers with one credit report per year free of charge. Recently, legislation was introduced requiring us to provide credit scores to consumers without charge. Changes in applicable legislation or regulations that restrict our ability to collect and disseminate information, or that require us to provide services to customers or a segment of customers without charge, could result in decreased demand for our services or increase our compliance costs and adversely affect our business, financial position and results of operations.

 

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Forward-looking statements

Any statements made in this prospectus that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plans and strategies. These statements often include words such as “anticipate,” “expect,” “suggests,” “plan,” “believe,” “intend,” “estimates,” “targets,” “projects,” “should,” “could,” “would,” “may,” “will,” “forecast” and other similar expressions. We base these forward-looking statements on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at the time such statements were made. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements. Factors that may materially affect such forward-looking statements include:

 

   

our ability to provide our services at competitive prices;

 

   

our ability to manage and expand our operations;

 

   

economic trends and adverse developments in the debt, consumer credit and financial services markets;

 

   

further consolidation in our end customer markets;

 

   

our ability to effectively develop and maintain strategic alliances and joint ventures;

 

   

our ability to maintain the security and integrity of our data;

 

   

government regulation and changes in the regulatory environment;

 

   

our ability to deliver services timely without interruption;

 

   

our ability to maintain our access to data sources;

 

   

our ability to timely develop new services;

 

   

our ability to manage expansion of our businesses into international markets;

 

   

our ability to effectively manage our costs;

 

   

economic stability in international markets where we operate;

 

   

our ability to make acquisitions and integrate the operations of other businesses;

 

   

our ability to access the capital markets;

 

   

our ability to retain or renew existing agreements with long-term customers;

 

   

reliance on key management personnel; and

 

   

other factors described under “Risk factors.”

Many of these factors are beyond our control. The forward-looking statements contained in this prospectus speak only as of the date of this prospectus. We undertake no obligation to publicly release the result of any revisions to these forward-looking statements, to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events. For further information or other factors which could affect our financial results and such forward-looking statements, see “Risk factors.”

 

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Exchange offer

Purpose and effect of the exchange offer

Under the registration rights agreement, we have agreed that we will:

 

   

use our commercially reasonable efforts to file with the SEC and cause to become effective a registration statement relating to offers to exchange the outstanding notes for an issue of SEC-registered notes with terms identical to the outstanding notes (except that the exchange notes will not be subject to restrictions on transfer or to any increase in annual interest rate as described below);

 

   

keep the exchange offer open for at least 20 business days after the date we mail notice of such exchange offer to holders; and

 

   

file and use our reasonable best efforts to cause to become effective a shelf registration statement for the resale of outstanding notes in certain circumstances.

We will pay additional interest on the outstanding notes for the periods described below if the exchange offer with respect to the outstanding notes is not completed on or before the date that is 485 days after the issue date of the outstanding notes. If a registration default occurs, the interest rate on the notes will increase by 0.25% per annum for the first 90-day period after such date, and by an additional 0.25% per annum for each subsequent 90-day period until all registration defaults are cured, subject to a maximum additional interest rate of 1.00% per year over the interest rate shown on the cover of this prospectus.

Terms of the exchange offer

Upon the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal, we will accept any and all outstanding notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on the expiration date of the exchange offer. We will issue $1,000 principal amount of exchange notes in exchange for each $1,000 principal amount of outstanding notes accepted in the exchange offer. You may tender some or all of your outstanding notes pursuant to the exchange offer. However, the outstanding notes tendered must be equal to $2,000 or an integral multiple of $1,000 in excess thereof.

The form and terms of the exchange notes are the same as the form and terms of the outstanding notes except that:

 

   

the exchange notes bear a Series B designation and a different CUSIP number from the outstanding notes;

 

   

the exchange notes have been registered under the Securities Act and hence will not bear legends restricting the transfer thereof; and

 

   

the holders of the exchange notes will not be entitled to certain rights under the registration rights agreement, including the provisions providing for an increase in the interest rate on the outstanding notes in certain circumstances relating to the timing of the exchange offer, all of which rights will terminate when the exchange offer to which this prospectus relates are terminated.

The exchange notes will evidence the same debt as the outstanding notes and will be entitled to the benefits of the indenture relating to the outstanding notes.

As of the date of this prospectus, $645.0 million aggregate principal amount of outstanding notes are outstanding. This prospectus and the letter of transmittal are being sent to all registered holders of outstanding notes. There will be no fixed record date for determining registered holders of outstanding notes entitled to participate in the exchange offer.

 

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Holders of outstanding notes do not have any appraisal or dissenters’ rights under the General Corporation Law of the State of Delaware or the indenture in connection with the exchange offer. We intend to conduct the exchange offer in accordance with the applicable requirements of the the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules and regulations of the SEC promulgated thereunder.

We will be deemed to have accepted validly tendered outstanding notes when, as and if we have given oral or written notice thereof to the exchange agent. The exchange agent will act as agent for the tendering holders for the purpose of receiving the exchange notes from us.

If any tendered outstanding notes are not accepted for exchange because of an invalid tender, the occurrence of specified other events set forth in this prospectus or otherwise, the certificates for any unaccepted outstanding notes will be returned, without expense, to the tendering holder thereof promptly following the expiration date of the exchange offer.

Holders who tender outstanding notes in the exchange offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of outstanding notes pursuant to the exchange offer. We will pay all charges and expenses, other than transfer taxes in certain circumstances, in connection with the exchange offer. See “—Fees and expenses.”

Expiration date; extensions; amendments

The term “expiration date” means 5:00 p.m., New York City time, on April 18, 2011, unless we, in our sole discretion, extend the exchange offer, in which case the term “expiration date” will mean the latest date and time to which the exchange offer is extended.

In order to extend the exchange offer, we will make a press release or other public announcement and notify the exchange agent of any extension by oral or written notice, prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date.

We reserve the right, in our sole discretion, (1) to delay accepting any outstanding notes, to extend the exchange offer or to terminate the exchange offer if any of the conditions set forth below under “—Conditions” have not been satisfied, by giving oral or written notice of any delay, extension or termination to the exchange agent or (2) to amend the terms of the exchange offer in any manner. Such decision will also be communicated in a press release or other public announcement prior to 9:00 a.m., New York City time, on the next business day following such decision. Any announcement of delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice thereof to the registered holders.

Interest on the exchange notes

The exchange notes will bear interest from their date of issuance. Holders of outstanding notes that are accepted for exchange will receive accrued interest thereon to, but not including, the date of issuance of the exchange notes. Such interest will be paid with the first interest payment on the exchange notes on June 15, 2011. Interest on the outstanding notes accepted for exchange will cease to accrue upon issuance of the exchange notes.

Interest on the exchange notes is payable semi-annually on June 15 and December 15.

Procedures for tendering

Only a holder of outstanding notes may tender outstanding notes in the exchange offer. To tender in the exchange offer, you must complete, sign and date the letter of transmittal, or a facsimile thereof, have the signatures thereon guaranteed if required by the letter of transmittal or transmit an agent’s message in connection with a

 

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book-entry transfer, and mail or otherwise deliver the letter of transmittal or the facsimile, together with the outstanding notes and any other required documents, to the exchange agent prior to 5:00 p.m., New York City time, on the expiration date. To be tendered effectively, the outstanding notes, letter of transmittal or an agent’s message and other required documents must be completed and received by the exchange agent at the address set forth below under “—Exchange agent” prior to 5:00 p.m., New York City time, on the expiration date. Delivery of the outstanding notes may be made by book-entry transfer in accordance with the procedures described below. Confirmation of the book-entry transfer must be received by the exchange agent prior to the expiration date.

The term “agent’s message” means a message, transmitted by a book-entry transfer facility to, and received by, the exchange agent forming a part of a confirmation of a book-entry, which states that the book-entry transfer facility has received an express acknowledgment from the participant in the book-entry transfer facility tendering the outstanding notes that the participant has received and agrees: (1) to participate in ATOP; (2) to be bound by the terms of the letter of transmittal; and (3) that we may enforce the agreement against the participant.

To participate in the exchange offer, you will be required to make the following representations to us:

 

   

Any exchange notes to be received by you will be acquired in the ordinary course of your business.

 

   

At the time of the commencement of the exchange offer, you are not engaging in and do not intend to engage in a distribution, within the meaning of the Securities Act, of the exchange notes in violation of the Securities Act.

 

   

At the time of the commencement of the exchange offer, you have no arrangement or understanding with any person to participate in a distribution, within the meaning of the Securities Act, of the exchange notes in violation of the Securities Act.

 

   

You are not our affiliate as defined in Rule 405 promulgated under the Securities Act.

 

   

If you are a broker-dealer that will receive exchange notes for your own account in exchange for outstanding notes that were acquired as a result of market-making or other trading activities, you will deliver a prospectus in connection with any resale of the exchange notes. We refer to these broker-dealers as participating broker-dealers.

 

   

You are not a broker-dealer tendering outstanding notes directly acquired from us for your own account.

 

   

You are is not acting on behalf of any person or entity that could not truthfully make these representations.

Your tender and our acceptance thereof will constitute an agreement between you and us in accordance with the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal or agent’s message.

The method of delivery of outstanding notes and the letter of transmittal or agent’s message and all other required documents to the exchange agent is at your election and sole risk. As an alternative to delivery by mail, you may wish to consider overnight or hand delivery service. In all cases, sufficient time should be allowed to assure delivery to the exchange agent before the expiration date. No letter of transmittal or outstanding notes should be sent to us. You may request your respective brokers, dealers, commercial banks, trust companies or nominees to effect the above transactions for you.

Any beneficial owner whose outstanding notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct the registered holder to tender on the beneficial owner’s behalf. See “Letter to Beneficial Owners” included with the letter of transmittal.

Signatures on a letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an eligible guarantor institution (as defined in the letter of transmittal) unless the outstanding notes tendered

 

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pursuant to the letter of transmittal are tendered (1) by a registered holder who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal or (2) for the account of an eligible guarantor institution. In the event that signatures on a letter of transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, the guarantee must be by an eligible guarantor institution.

If the letter of transmittal is signed by a person other than the registered holder of any outstanding notes listed in this prospectus, the outstanding notes must be endorsed or accompanied by a properly completed bond power, signed by the registered holder as the registered holder’s name appears on the outstanding notes with the signature thereon guaranteed by an eligible guarantor institution.

If the letter of transmittal or any outstanding notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, the person signing should so indicate when signing, and evidence satisfactory to us of its authority to so act must be submitted with the letter of transmittal.

We understand that the exchange agent will make a request promptly after the date of this prospectus to establish accounts with respect to the outstanding notes at DTC for the purpose of facilitating the exchange offer, and subject to the establishment thereof, any financial institution that is a participant in DTC’s system may make book-entry delivery of outstanding notes by causing DTC to transfer the outstanding notes into the exchange agent’s account with respect to the outstanding notes in accordance with DTC’s procedures for the transfer. Although delivery of the outstanding notes may be effected through book-entry transfer into the exchange agent’s account at DTC, unless an agent’s message is received by the exchange agent in compliance with ATOP, an appropriate letter of transmittal properly completed and duly executed with any required signature guarantee and all other required documents must in each case be transmitted to and received or confirmed by the exchange agent at its address set forth in this prospectus on or prior to the expiration date, or, if the guaranteed delivery procedures described below are complied with, within the time period provided under the procedures. Delivery of documents to DTC does not constitute delivery to the exchange agent.

All questions as to the validity, form, eligibility, including time of receipt, acceptance of tendered outstanding notes and withdrawal of tendered outstanding notes will be determined by us in our sole discretion, which determination will be final and binding. We reserve the absolute right to reject any and all outstanding notes not properly tendered or any outstanding notes our acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right in our sole discretion to waive any defects, irregularities or conditions of tender as to particular outstanding notes; provided, however, that to the extent such waiver includes any condition to tender, we will waive such condition as to all tendering holders. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of outstanding notes must be cured within the time we determine. Although we intend to notify holders of defects or irregularities with respect to tenders of outstanding notes, neither we, the exchange agent nor any other person will incur any liability for failure to give the notification. Tenders of outstanding notes will not be deemed to have been made until the defects or irregularities have been cured or waived. Any outstanding notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the exchange agent to the tendering holders, unless otherwise provided in the letter of transmittal, promptly following the expiration date.

Guaranteed delivery procedures

If you wish to tender your outstanding notes and (1) your outstanding notes are not immediately available, (2) you cannot deliver their outstanding notes, the letter of transmittal or any other required documents to the exchange agent or (3) you cannot complete the procedures for book-entry transfer, prior to the expiration date, you may effect a tender if:

 

1. the tender is made through an eligible guarantor institution;

 

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2. prior to the expiration date, the exchange agent receives from an eligible guarantor institution a properly completed and duly executed Notice of Guaranteed Delivery by facsimile transmission, mail or hand delivery setting forth your name and address, the certificate number(s) of the outstanding notes and the principal amount of outstanding notes tendered, stating that the tender is being made thereby and guaranteeing that, within three New York Stock Exchange trading days after the expiration date, the letter of transmittal or facsimile thereof together with the certificate(s) representing the outstanding notes or a confirmation of book-entry transfer of the outstanding notes into the exchange agent’s account at DTC, and any other documents required by the letter of transmittal will be deposited by an eligible guarantor institution with the exchange agent; and

 

3. the properly completed and executed letter of transmittal or facsimile thereof, as well as the certificate(s) representing all tendered outstanding notes in proper form for transfer or a confirmation of book-entry transfer of the outstanding notes into the exchange agent’s account at DTC, and all other documents required by the letter of transmittal are received by the exchange agent within three New York Stock Exchange trading days after the expiration date.

Upon request to the exchange agent, a “Notice of Guaranteed Delivery” will be sent you if you wish to tender your outstanding notes according to the guaranteed delivery procedures set forth above.

Withdrawal of tenders

Except as otherwise provided in this prospectus, tenders of outstanding notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the expiration date.

To withdraw a tender of outstanding notes in the exchange offer, you must send either a notice of withdrawal to the exchange agent at its address set forth in this prospectus or you must comply with the appropriate withdrawal procedures of DTC’s ATOP. Any notice of withdrawal must be in writing and:

 

1. specify the name of the person having deposited the outstanding notes to be withdrawn;

 

2. identify the outstanding notes to be withdrawn, including the certificate number(s) and principal amount of the outstanding notes, or, in the case of outstanding notes transferred by book-entry transfer, the name and number of the account at DTC to be credited;

 

3. be signed by you in the same manner as the original signature on the letter of transmittal by which the outstanding notes were tendered, including any required signature guarantees, or be accompanied by documents of transfer sufficient to have the trustee with respect to the outstanding notes register the transfer of the outstanding notes into the name of the person withdrawing the tender; and

 

4. specify the name in which any outstanding notes are to be registered, if different from that of the person depositing the outstanding notes to be withdrawn.

All questions as to the validity, form and eligibility, including time of receipt, of the notices will be determined by us, which determination will be final and binding on all parties. Any outstanding notes so withdrawn will be deemed not to have been validly tendered for purposes of the exchange offer and no exchange notes will be issued with respect thereto unless the outstanding notes so withdrawn are validly retendered. Any outstanding notes that have been tendered but that are not accepted for exchange will be returned to you without cost to you promptly after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn outstanding notes may be retendered by following one of the procedures described above under “—Procedures for tendering” at any time prior to the expiration date.

 

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Conditions

Notwithstanding any other term of the exchange offer, we will not be required to accept for exchange, or exchange notes for, any outstanding notes, and may, prior to the expiration of the exchange offer, terminate or amend the exchange offer as provided in this prospectus before the acceptance of the outstanding notes, if:

 

1. any action or proceeding is instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer which, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer; or

 

2. any material adverse development has occurred with respect to us or any of our subsidiaries that, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer; or

 

3. any law, statute, rule, regulation or interpretation by the staff of the SEC is proposed, adopted or enacted that, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer or impair the contemplated benefits of the exchange offer to us; or

 

4. any governmental approval has not been obtained, which failure to obtain, in our judgment, would reasonably be expected to impair consummation of the exchange offer as contemplated by this prospectus.

If we determine, in our reasonable discretion, that any of the conditions are not satisfied, we may (1) refuse to accept any outstanding notes and return all tendered outstanding notes to the tendering holders, (2) extend the exchange offer and retain all outstanding notes tendered prior to the expiration of the exchange offer, subject, however, to the rights of holders to withdraw the outstanding notes (see “—Withdrawal of tenders”) or (3) waive the unsatisfied conditions with respect to the exchange offer and accept all properly tendered outstanding notes that have not been withdrawn.

Exchange agent

Wells Fargo Bank, National Association has been appointed as exchange agent for the exchange offer. Questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for Notice of Guaranteed Delivery should be directed to the exchange agent addressed as follows:

By registered mail or certified mail:

Wells Fargo Bank, National Association

MAC – N9303-121

Corporate Trust Operations

P.O. Box 1517

Minneapolis, Minnesota 55480-1517

By regular mail or overnight courier:

Wells Fargo Bank, National Association

MAC – N9303-121

Corporate Trust Operations

Sixth Street & Marquette Avenue

Minneapolis, Minnesota 55479

By hand:

Wells Fargo Bank, National Association

Northstar East Building – 12th floor

Corporate Trust Services

608 Second Avenue South

Minneapolis, Minnesota 55402

 

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Facsimile transmission (eligible institutions only):

(612) 667-6282

For information or to confirm receipt of facsimile by telephone (call toll-free):

(800) 344-5128

Delivery of the letter of transmittal to an address other than as set forth above or transmission of the letter of transmittal via a facsimile transmission to a number other than as set forth above will not constitute a valid delivery of the letter of transmittal. Delivery of documents to DTC does not constitute delivery to the exchange agent.

Fees and expenses

We will bear the expenses of soliciting tenders. The principal solicitation is being made by mail; however, additional solicitation may be made by telephone, in person or by other means by our and our affiliates’ officers and regular employees.

We have not retained any dealer-manager in connection with the exchange offer and will not make any payments to brokers, dealers or others soliciting acceptances of the exchange offer. We will, however, pay the exchange agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses incurred in connection with these services.

We will pay the cash expenses to be incurred by us in connection with the exchange offer. Such expenses include fees and expenses of the exchange agent and trustee, accounting and legal fees and printing costs, among others.

Accounting treatment

The exchange notes will be recorded at the same carrying value as the outstanding notes, which is face value, as reflected in our accounting records on the date of exchange. Accordingly, we will not recognize any gain or loss for accounting purposes as a result of the exchange offer.

Consequences of failure to exchange

The outstanding notes that are not exchanged for exchange notes pursuant to the exchange offer will remain restricted securities. Accordingly, the outstanding notes may be resold only:

 

1. to us upon redemption thereof or otherwise;

 

2. so long as the outstanding notes are eligible for resale pursuant to Rule 144A, to a person inside the United States whom the seller reasonably believes is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act in a transaction meeting the requirements of Rule 144A, in accordance with Rule 144 under the Securities Act, or pursuant to another exemption from the registration requirements of the Securities Act, which other exemption is based upon an opinion of counsel reasonably acceptable to us;

 

3. outside the United States to a foreign person in a transaction meeting the requirements of Regulation S under the Securities Act; or

 

4. pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States.

After completion of the exchange offer, we will have no further obligation to provide for the registration under the Securities Act of any outstanding notes except in limited circumstances with respect to specific types of holders of outstanding notes and we do not intend to register any remaining outstanding notes under the Securities Act.

 

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Resale of the exchange notes

With respect to resales of exchange notes, based on interpretations by the staff of the SEC set forth in no-action letters issued to third parties, we believe that a holder or other person who receives exchange notes, other than a person that is our affiliate within the meaning of Rule 405 under the Securities Act, in exchange for outstanding notes in the ordinary course of business and who is not participating, does not intend to participate, and has no arrangement or understanding with any person to participate, in the distribution of the exchange notes, will be allowed to resell the exchange notes to the public without further registration under the Securities Act and without delivering to the purchasers of the exchange notes a prospectus that satisfies the requirements of Section 10 of the Securities Act. However, if any holder of outstanding notes acquires exchange notes in the exchange offer for the purpose of distributing or participating in a distribution of the exchange notes, the holder cannot rely on the position of the staff of the SEC expressed in the no-action letters or any similar interpretive letters, and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction, unless an exemption from registration is otherwise available. Further, each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes, where the outstanding notes were acquired by the broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes.

 

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Use of proceeds

This exchange offer is intended to satisfy certain of our obligations under the registration rights agreement. We will not receive any cash proceeds from the issuance of the exchange notes. In consideration for issuing the exchange notes contemplated by this prospectus, we will receive outstanding notes in like principal amount, the form and terms of which are the same as the form and terms of the exchange notes, except as otherwise described in this prospectus. We will retire or cancel all of the outstanding notes tendered in the exchange offer. The outstanding notes were issued on June 15, 2010 to fund a portion of the Change in Control Transaction.

 

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Capitalization

The following table sets forth, as of December 31, 2010, our consolidated cash and cash equivalents and capitalization. This information should be read in conjunction with “Unaudited pro forma consolidated financial data,” “Use of proceeds,” “Selected historical consolidated financial data,” “Management’s discussion and analysis of financial condition and results of operations” and our audited consolidated financial statements and related notes appearing elsewhere in this prospectus.

 

(in millions)

   As of December 31,
2010
 

Cash and cash equivalents

   $ 131.2   

ADSR note payable(1)

     1.6   

Senior secured credit facilities

     945.2   

Outstanding notes

     645.0   

RFC loan

     14.2   
        

Total debt

   $ 1,606.0   

Total stockholders’ equity

     (862.0
        

Total capitalization

   $ 744.0   
        

 

(1)

Represents an unsecured non-interest bearing note payable to the sellers of ADSR, a software solutions company we acquired in 2007.

In connection with the Change in Control Transaction, we incurred $1,626.7 million of debt, consisting of our senior secured credit facilities, the outstanding notes and the RFC loan. The proceeds from this debt were used to finance a portion of the Change in Control Transaction and to repay existing debt. See Note 13, “Debt,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

Total stockholders’ equity is negative at December 31, 2010 because the Change in Control Transaction was accounted for as a recapitalization of the Company in accordance with Accounting Standards Codification (“ASC”) 805 “Business Combinations,” with the necessary adjustments reflected in the equity section of our balance sheet. See Note 2, “Change in Control,” of our audited consolidated financial statements appearing elsewhere in this prospectus for additional information regarding the Change in Control Transaction.

 

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Unaudited pro forma consolidated financial data

On June 15, 2010, the Purchaser, an affiliate of the Sponsor, acquired 51.0% of the outstanding common stock of the Parent from the Sellers. In connection with this Change in Control Transaction, we incurred $1,626.7 million of debt as discussed in Note 2, “Change in Control,” and Note 13, “Debt,” of our audited consolidated financial statements appearing elsewhere in this prospectus and “Summary—The Change in Control Transation.” Net income for the year ended December 31, 2010 includes interest expense on this debt from June 15, 2010, the date of the Change in Control Transaction.

Had the Change in Control Transaction (including the incurrence of the related debt financing) occurred on January 1, 2010 and assuming we had paid the required $2.4 million quarterly principal payments throughout 2010 and not borrowed additional funds under our senior secured revolving line of credit, total 2010 interest expense on all debt would have been approximately $58 million higher, $37 million net of tax, including approximately $55 million of additional cash interest expense and $3 million of additional amortization of deferred financing fees

The preceding unaudited pro forma consolidated financial data is for informational purposes only and does not purport to represent what our results of operations would have been had the Change in Control Transaction occurred on January 1, 2010. We cannot assure you that the assumptions used by our management, which they believe are reasonable, for the preparation of this pro forma consolidated financial data would have proven to be correct.

You should read this “Unaudited pro forma consolidated financial data” section together with “Selected historical consolidated financial data,” “Risk factors,” “Use of proceeds,” “Capitalization,” “Management’s discussion and analysis of financial condition and results of operations” and our audited consolidated financial statements and related notes appearing elsewhere in this prospectus.

On February 10, 2011, we amended the agreement governing our senior secured credit facilities at terms that are more favorable to us. This amendment resulted in a reduction in the interest rate, payment of additional financing fees that will be amortized over the life of the senior secured term loan facility, and the write-off of previously unamortized financing fees associated with the original senior secured term loan facility. See “Description of other indebtedness” and Note 26, “Subsequent Events,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

 

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Selected historical consolidated financial data

The following tables set forth selected historical consolidated financial data for TransUnion for the periods ended and as of the dates indicated below.

We have derived the selected historical consolidated financial data as of December 31, 2009 and 2010 and for each of the years in the three-year period ended December 31, 2010 from our audited consolidated financial statements appearing elsewhere in this prospectus. We have derived the selected historical consolidated balance sheet data as of December 31, 2006, 2007 and 2008 from our audited consolidated financial statements as of such dates, which are not included in this prospectus. We have derived the selected historical consolidated income statement data for each of the years ended December 31, 2006 and 2007 from our audited consolidated financial statements for such periods, which are not included in this prospectus.

You should read the following financial data together with “Unaudited pro forma consolidated financial data,” “Risk factors,” “Use of proceeds,” “Capitalization,” “Management’s discussion and analysis of financial condition and results of operations” and our audited consolidated financial statements and related notes appearing elsewhere in this prospectus.

 

     Twelve months ended or at December 31,  

(in millions)

   2010      2009      2008      2007      2006  

Income statement data:

              

Revenue(1)

   $ 956.5       $ 924.8       $ 1,015.9       $ 1,060.0       $ 1,003.4   

Operating income(1)(2)

     216.1         204.4         192.5         251.1         262.6   

Income from continuing operations(1)(2)(4)

     36.7         132.3         134.4         190.2         195.0   

Net income(4)

     44.9         133.5         118.5         155.5         193.0   

Balance sheet data:

              

Total assets(3)

   $ 954.2       $ 1,010.0       $ 1,169.3       $ 1,535.6       $ 1,370.7   

Long-term debt

   $ 1,590.9       $ 451.6       $ 6.2       $ 5.6       $ 2.4   

 

(1)

All years exclude amounts from discontinued operations. See Note 20, “Discontinued Operations,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

(2)

Operating income for 2010 includes $20.7 million of additional stock-based compensation expense due to the accelerated vesting of outstanding restricted stock as a result of the Change in Control Transaction and a nonrecurring gain of $3.9 million on the trade in of mainframe computers. Operating income for 2008 includes $47.3 million of expense related to the Privacy Litigation. See “Business—Legal proceedings.”

(3)

The decrease in total assets at December 31, 2010 reflects cash used to partially fund the Change in Control Transaction. The decrease in total assets at December 31, 2009 reflects cash paid for the stock repurchase of approximately $900 million in December 2009, partially offset by loan proceeds of approximately $600 million received throughout 2009. The decrease in total assets at December 31, 2008 reflects the cash paid for the stock repurchase of approximately $400 million in November 2008. See Note 2, “Change in Control,” Note 13, “Debt,” and Note 14, “Stock Repurchases,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

(4)

Beginning January 1, 2009, net income attributable to noncontrolling interests is no longer subtracted from income from continuing operations or net income as codified in ASC 810, “Consolidation.” Accordingly, the figures reported in the table above include net income attributable to the noncontrolling interest of $8.3 million, $8.1 million, $9.2 million, $7.5 million and $6.9 million in each respective year.

 

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Management’s discussion and analysis

of financial condition and results of operations

The following discussion of our financial condition and results of operations is provided as a supplement to, and should be read in conjunction with, “Unaudited pro forma consolidated financial data,” “Selected historical consolidated financial data,” “Risk factors,” “Use of proceeds,” “Capitalization” and our audited consolidated financial statements and the related notes appearing elsewhere in this prospectus. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to those discussed in “Forward-looking statements” and “Risk factors.”

Overview

TransUnion is a global leader in credit and information management services, with operations in the United States, Africa, Canada, Asia, India and Latin America. We develop, maintain and enhance a number of secured proprietary information databases to support our operations. We compile payment history, accounts receivable information, and other information such as bankruptcies, liens and judgments, for consumers and businesses. We maintain reference databases of current consumer names, addresses and telephone numbers, which are used for identity verification and fraud management solutions. We obtain this information from a variety of sources, including credit-granting institutions and public records. We build and maintain these databases and, using our proprietary information management systems, make the resulting products available to our customers through a variety of services.

Our business customers rely on us to help them improve efficiency, manage risk, increase revenue and reduce costs by delivering comprehensive and accurate data and advanced analytics and decisioning. Through credit reports, credit scores, analytical services and decision technology, we help businesses acquire new customers, identify cross-selling opportunities, measure and manage debt portfolio risk, collect debt and manage fraud. We use credit-related financial data, coupled with technology and analytical capabilities, to provide services to business customers across a variety of industries.

For our individual consumer customers, we provide the tools, resources and education to help them manage their credit. Services include credit reports, credit scores and other credit monitoring services, which we provide to individuals primarily through our websites transunion.com, truecredit.com and zendough.com.

We primarily compete with two other global credit reporting companies, Equifax, Inc. and Experian plc, both of which offer a range of consumer credit reporting services similar to the services we offer. We also compete with a number of smaller, specialized companies, which collectively offer a variety of competing niche services.

Segment information

We manage our business and report our financial results in three operating segments:

 

   

USIS;

 

   

International; and

 

   

Interactive.

We also report expenses for Corporate, which provides support services to each operating segment. See Note 21, “Operating Segments,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

In 2007, we decided to exit the businesses comprising our Real Estate Services segment. We completed the sale of the primary real estate business in April 2008 and sold the remaining business of the segment in 2010. The

 

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assets, liabilities and operating activity of the Real Estate Services segment are reported as discontinued operations in our financial statements. See Note 20, “Discontinued Operations,” of our audited consolidated financial appearing elsewhere in this prospectus.

Business environment and outlook

During the course of 2010, we saw increased signs of market stabilization driven in part due to lower interest rates that helped improve results in our core USIS and International businesses. In addition, recent acquisitions and favorable exchange rates have contributed to increases in revenue.

These improvements were tempered by continuing consumer uncertainty as consumer spending remained far below the levels prior to the 2008 global financial crises. During 2010, concerns remained over continuing high unemployment, tightness in the consumer credit market and a housing market that saw a continuing decline. These concerns have negatively impacted all of our segments and will likely continue to have a negative impact until markets further improve and the uncertainty subsides.

New financial regulations and laws have introduced challenges and opportunities for us and our customers. A recent Federal Trade Commission (the “FTC”) ruling has limited the way we are able to market our direct-to-consumer products online, which has reduced revenue in our Interactive segment. We have reacted to this new ruling by directing these customers to our zendough.com website. During the third quarter of 2010, the Dodd-Frank Act became law. We continue to assess this situation to determine the best way to mitigate any negative impact of the eventual regulations and to determine how we can take advantage of any new market opportunities these regulations may create.

We have also begun to see an increase in demand for our credit marketing services as the uncertainties of recent credit card regulations have eased and our customers have increased their credit marketing programs and have begun to engage in new lending activities.

Company strategy

We have identified growth and diversification as a key strategic corporate objective. We believe that we have growth potential in multiple markets, both domestically and internationally. Consistent with this objective, we completed the following initiatives since the end of 2009:

 

   

On December 31, 2009, we acquired MedData, a leading provider of healthcare information and data solutions for hospitals, physician practices and insurance companies and integrated it into our USIS segment during 2010. We completed this acquisition to expand our healthcare product line and customer base and further leverage our existing operating model.

 

   

During the first quarter of 2010 we launched our consumer website, zendough.com, in part to take advantage of opportunities created by the FTC ruling on marketing products to individuals seeking their free annual credit report by directing these customers to zendough.com.

 

   

During the third quarter of 2010, we acquired a 51% ownership interest in Databusiness S.A. (“Chile”), the second largest credit bureau in Chile, which we believe to be a country with a stable economy and potential for growth.

We continue to look at a number of strategic acquisitions and partnerships in the healthcare, insurance, international and other markets consistent with this growth objective. We also continue to focus on organic growth opportunities, including new products and services as well as startup operations in specific international markets.

During 2010, we incurred a significant amount of additional debt to fund a portion of the Change in Control Transaction and will incur additional interest expense that will impact our net income for 2010 and beyond. We anticipate that our cash flows from operations will be sufficient to cover the additional interest expense and required principal payments on the loans. See “Unaudited pro forma consolidated financial data.”

 

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Key performance indicators

Management, including our chief operating decision maker, evaluates the financial performance of our businesses based on a variety of key indicators. These indicators include revenue, Adjusted Operating Income, Adjusted EBITDA, cash provided by operating activities and capital expenditures. For the years ended December 31, 2010, 2009 and 2008 these indicators were as follows:

 

                       Change  
     Year ended December 31,     2010 vs. 2009     2009 vs. 2008  

(dollars in millions)

   2010     2009     2008     $     %     $     %  

Revenue

   $ 956.5      $ 924.8      $ 1,015.9      $ 31.7        3.4   $ (91.1     (9.0 )% 

Reconciliation of operating income to Adjusted Operating Income and Adjusted EBITDA:

              

Operating income

   $ 216.1      $ 204.4      $ 192.5      $ 11.7        5.7   $ 11.9        6.2

Adjustments(1)

     17.5        —          47.3        17.5        nm        (47.3     nm   
                                            

Adjusted Operating Income(2)

   $ 233.6      $ 204.4      $ 239.8      $ 29.2        14.3   $ (35.4     (14.8 )% 

Depreciation and amortization

     81.6        81.6        85.7        —          —          (4.1     (4.8 )% 

Stock-based compensation(4)

     10.8        16.1        20.1        (5.3     (32.9 )%      (4.0     (19.9 )% 

Earnings from equity method investments

     8.4        5.3        6.6        3.1        58.5     (1.3     (19.7 )% 

Dividends received from cost method subsidiaries

     0.5        0.5        0.7        —          —          (0.2     (28.6 )% 

Net income attributable to non-controlling interests

     (8.3     (8.1     (9.2     (0.2     (2.5 )%      1.1        12.0
                                            

Adjusted EBITDA(5)

   $ 326.6      $ 299.8      $ 343.7      $ 26.8        8.9   $ (43.9     (12.8 )% 
                                            

Reconciliation of net income to Adjusted EBITDA:

              

Net income

   $ 44.9      $ 133.5      $ 118.5      $ (88.6     (66.4 )%    $ 15.0        12.7

Net interest expense (income)

     89.1        —          (20.6     89.1        nm        20.6        nm   

Income taxes

     46.3        73.4        75.5        (27.1     (36.9 )%      (2.1     (2.8 )% 

Depreciation and amortization

     81.6        81.6        85.7        —          —          (4.1     (4.8 )% 

Discontinued operations

     (8.2     (1.2     15.9        (7.0     nm        (17.1     nm   

Net income attributable to noncontrolling interests

     (8.3     (8.1     (9.2     (0.2     (2.5 )%      1.1        12.0

Other income and expense(3)

     52.9        4.5        10.5        48.4        nm        (6.0     (57.1 )% 

Stock-based compensation(4)

     10.8        16.1        20.1        (5.3     (32.9 )%      (4.0     (19.9 )% 

Adjustments(1)

     17.5        —          47.3        17.5        nm        (47.3     nm   
                                            

Adjusted EBITDA(5)

   $ 326.6      $ 299.8      $ 343.7      $ 26.8        8.9   $ (43.9     (12.8 )% 
                                            

Other Cash Metrics:

              

Cash provided by operating activities of continuing operations

   $ 204.6      $ 251.8      $ 230.4      $ (47.2     (18.7 )%    $ 21.4        9.3

Cash paid for capital expenditures of continuing operations

     46.8        56.3        93.5        (9.5     (16.9 )%      (37.2     (39.8 )% 

nm: not meaningful

(1)

For 2010, operating expenses included $20.7 million of additional stock-based compensation and $0.5 million of related payroll taxes due to the accelerated vesting of outstanding restricted stock awards, and $0.2 of other related expenses as a result of the Change in Control Transaction. See Note 16, “Stock-Based Compensation,” of our audited consolidated financial statements appearing elsewhere in this prospectus. Also included in 2010 is a nonrecurring gain of $3.9 million on the trade in of mainframe computers. For 2008, operating expenses included $47.3 million related to the settlement of the Privacy Litigation. See “Business—Privacy litigation.”

 

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(2)

Adjusted Operating Income is a non-GAAP measure. The reconciliation of Adjusted Operating Income to its most directly comparable GAAP measure, operating income, is included in the table above. For a further discussion of our definition of Adjusted Operating Income, how we use it, why we present it, and material limitations on its usefulness, see “Financial information—Use of non-GAAP financial measures.”

(3)

Includes all other income and expense except for earnings from equity method investments and dividends received from cost method investments.

(4)

The adjustment for stock-based compensation includes our stock-based compensation except for the additional stock-based compensation related to the accelerated vesting of restricted stock excluded from operating income as discussed in footnote 1 above.

(5)

Adjusted EBITDA is a non-GAAP measure. The reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, net income, is included in the table above. For a further discussion on our definition of Adjusted EBITDA, how we use it, why we present it and material limitations on its usefulness, see “Financial information—Use of non-GAAP financial measures.”

Results of operations

2010 financial highlights

 

   

On June 15, 2010, the Purchaser, an affiliate of the Sponsor, acquired 51.0% of the outstanding common stock of the Parent from the Sellers. The Change in Control Transaction was accounted for as a recapitalization of the Company in accordance with ASC 805, “Business Combinations,” with the necessary adjustments reflected in the equity section and the retention of the historical book values of assets and liabilities on the balance sheet as of June 15, 2010.

 

   

Total revenue increased 3.4% compared to 2009. USIS revenue increased 1.4%, primarily due to the inclusion of MedData revenue in 2010 and increased market stabilization in the second half of 2010. International revenue increased 15.1% due to an increase in local currency revenue in both developed and emerging markets, the impact of strengthening foreign currencies and the inclusion of the Chile revenue beginning in August 2010. On an organic constant currency basis, excluding Chile, international revenue increased 4.6%. Interactive revenue decreased 2.0%, but the number of direct and indirect subscribers both increased.

 

   

Operating expenses increased 2.8% compared to 2009. This increase was primarily due to additional stock-based compensation expense relating to the Change in Control Transaction, costs related to the acquisition of MedData and the impact of strengthening foreign currencies, partially offset by cost reductions from process improvements, strategic sourcing and cost management initiatives and other nonrecurring cost reductions. See “Summary—The Change in Control Transaction” and Note 16, “Stock-Based Compensation,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

 

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Revenue

For 2010, total revenue increased $31.7 million compared to 2009, due to an increase in our customers’ credit marketing programs, revenue from our recent acquisitions, organic growth and strengthening foreign currencies in our International segment. For 2009, total revenue decreased $91.1 million compared to 2008, due to the decline in economic conditions and the global financial crisis that began in late 2008. Revenue by segment and a more detailed explanation of revenue within each segment follows:

 

                          Change  
     Twelve months ended
December 31,
     2010 vs. 2009     2009 vs. 2008  

(dollars in millions)

   2010      2009      2008      $     %     $     %  

U.S. Information Services:

                 

Online Data Services

   $ 439.7       $ 458.6       $ 513.5       $ (18.9     (4.1 )%    $ (54.9     (10.7 )% 

Credit Marketing Services

     120.4         115.4         139.3         5.0        4.3     (23.9     (17.2 )% 

Decision Services

     75.9         53.5         55.5         22.4        41.9     (2.0     (3.6 )% 
                                               

Total U.S. Information Services

   $ 636.0       $ 627.5       $ 708.3       $ 8.5        1.4   $ (80.8     (11.4 )% 

International:

                 

Developed Markets

   $ 86.6       $ 79.4       $ 85.6       $ 7.2        9.1   $ (6.2     (7.2 )% 

Emerging Markets

     109.2         90.7         90.4         18.5        20.4     0.3        0.3
                                               

Total International

   $ 195.8       $ 170.1       $ 176.0       $ 25.7        15.1   $ (5.9     (3.4 )% 

Interactive

   $ 124.7       $ 127.2       $ 131.6       $ (2.5     (2.0 )%    $ (4.4     (3.3 )% 
                                               

Total revenue

   $ 956.5       $ 924.8       $ 1,015.9       $ 31.7        3.4   $ (91.1     (9.0 )% 
                                               

U.S. Information Services Segment

For 2010, USIS revenue increased $8.5 million compared to 2009, due to an increase in our customers’ credit marketing programs and the inclusion of revenue from the MedData acquisition, partially offset by unfavorable conditions in the consumer credit markets. For 2009, USIS revenue decreased $80.8 million compared to 2008, due to the downturn in economic conditions and credit markets that affected all service lines.

Online Data Services. Revenue in Online Data Services is driven primarily by the volume of credit reports that our customers purchase. Online credit report unit volume decreased 1.7% in 2010 and 13.2% in 2009. For 2010 and 2009, decreases in volume in the financial services market, driven by unfavorable conditions in the consumer credit markets, were partially offset by increases in volume in the insurance market, resulting in a revenue decrease of $18.9 million in 2010 and $54.9 million in 2009.

Credit Marketing Services. Revenue in Credit Marketing Services is driven primarily by demand for customer acquisition and portfolio review services. For 2010, overall requests for Credit Marketing Services increased due to an increase in our customers’ credit marketing programs, with an increase in demand for custom data sets and archive information for both customer acquisition and portfolio review services, resulting in an increase in revenue of $5.0 million. For 2009, overall requests for Credit Marketing Services decreased due to the declining credit markets, with a decrease in demand for acquisition services partially offset by an increase in demand for portfolio review services, resulting in a decrease in revenue of $23.9 million.

Decision Services. Revenue in Decision Services is driven primarily by demand for services that provide our customers with online, real-time decisions at the point of interaction between a consumer and business customer. For 2010, $19.8 million of revenue from MedData and an increase in demand for other Decision Services resulted in an increase in revenue of $22.4 million. For 2009, demand for Decision Services decreased due to the declining consumer credit markets, resulting in a decrease in revenue of $2.0 million.

 

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International Segment

For 2010, International revenue increased $25.7 million, or 15.1%, compared to 2009, due to an increase in local currency revenue in both developed and emerging markets, the impact of strengthening foreign currencies and the inclusion of the Chile revenue beginning in August 2010. On a constant currency basis, revenue increased 6.2% in 2010 compared to 2009. On an organic constant currency basis, which excludes Chile, revenue increased 4.6%. For 2009, International revenue decreased $5.9 million, or 3.4%, compared to 2008, primarily due to the impact of the strengthening U.S. dollar. On a constant currency basis, revenue was relatively flat compared to 2008.

Developed Markets. For 2010, developed markets revenue increased $7.2 million, or 9.1%, compared to 2009. On a constant currency basis revenue increased 3.0%, with increases in all countries. The impact of a stronger Canadian dollar contributed the remaining 6.1% of the 2010 increase. For 2009, developed markets revenue decreased $6.2 million, or 7.2%, compared to 2008. On a constant currency basis, revenue decreased 2.0%, with decreases in Canada and Puerto Rico partially offset by an increase in Hong Kong. The impact of a weaker Canadian dollar contributed the remaining 5.2% of the 2009 decrease.

Emerging Markets. For 2010, emerging markets revenue increased $18.5 million, or 20.4%, compared to 2009. On a constant currency basis revenue increased 9.4%, with increases in most countries. On an organic constant currency basis, which excludes Chile, revenue increased 6.5%. The impact of a stronger South African rand contributed the remaining 11.0% of the 2010 increase. South Africa revenue comprised approximately 76% of the emerging markets revenue in 2010. For 2009, emerging markets revenue increased $0.3 million, or 0.3%, compared to 2008. On a constant currency basis revenue increased 2.3%, with increases in African and East Asian countries and India partially offset by decreases in Latin American countries. This increase was partially offset by the impact of weaker South African rand, which decreased revenue 2.0%.

Interactive Segment

For 2010, Interactive revenue decreased $2.5 million compared to 2009, due to a decrease in the volume of transactions through our indirect channel, partially offset by an increase in the average number of subscribers. For 2009, Interactive revenue decreased $4.4 million compared to 2008, due to a decrease in the average number of subscribers.

Revenue in the Interactive segment is derived through our direct and indirect channels from subscription and transaction-based sales. For 2010, revenue in our direct channel decreased $2.1 million compared to 2009, due to a $6.4 million decrease in transaction-based revenue, including a $5.7 million decrease resulting from an FTC ruling that limits the way we market our products to individuals visiting annualcreditreport.com for their federally-mandated free credit report. This decrease was partially offset by a $4.3 million increase in subscription-based revenue resulting from the launch of zendough.com, which helped drive a 3.1% increase in the average number of direct subscribers. Revenue in our indirect channel decreased $0.4 million compared to 2009, due to a $3.5 million decrease in transaction-based revenue, partially offset by a $3.1 million increase in subscription-based revenue resulting from a 23.5% increase in the average number of indirect subscribers. For 2009, revenue in our direct channel decreased $1.9 million compared to 2008, primarily due to a decrease in transaction-based revenue. Revenue in our indirect channel decreased $2.5 million compared to 2008, due to a $4.7 million decrease resulting from the loss of a large indirect client, which drove a 46.0% decrease in the average number of indirect subscribers, partially offset by a $2.2 million increase in transaction-based revenue.

Operating expenses

For 2010, total operating expenses increased $20.0 million compared to 2009, due to $20.7 million of stock-based compensation expense resulting from the Change in Control Transaction, $18.9 million of costs related to the MedData acquisition, and $9.8 million from the impact of strengthening foreign currencies, partially offset by

 

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cost reductions from process improvements, strategic sourcing, cost management initiatives and other nonrecurring cost reductions. For 2009, total operating expenses decreased $103.0 million compared to 2008, due to the $47.3 million litigation expense related to the Privacy Litigation that we settled in 2008, a decrease in product costs in our Interactive segment and other cost management initiatives that reduced operating expenses during 2009. Operating expenses for each year were as follows:

 

                     Change  
     Twelve months ended
December 31,
     2010 vs. 2009     2009 vs. 2008  

(dollars in millions)

   2010      2009      2008      $     %     $     %  

Cost of services

   $ 395.8       $ 404.2       $ 432.2       $ (8.4     (2.1 )%    $ (28.0     (6.5 )% 

Selling, general and administrative

     263.0         234.6         305.5         28.4        12.1     (70.9     (23.2 )% 

Depreciation and amortization

     81.6         81.6         85.7         —          —          (4.1     (4.8 )% 
                                               

Total operating expenses

   $ 740.4       $ 720.4       $ 823.4       $ 20.0        2.8   $ (103.0     (12.5 )% 
                                               

Cost of services

For 2010, cost of services decreased $8.4 million compared to 2009, due to a reduction in data center maintenance costs in our USIS segment resulting from the renegotiation of our data center maintenance agreement, a reduction in royalty costs due to the resolution of a contract dispute and a nonrecurring gain on the trade in of computer hardware, partially offset by the inclusion of $6.4 million of MedData costs, $7.9 million of additional stock-based compensation expense resulting from the Change in Control Transaction and the impact of strengthening foreign currencies. For 2009, cost of services decreased $28.0 million compared to 2008 due to a decrease in product costs of $18.1 million in the Interactive segment as a result of feature changes in our core product, along with savings from process improvements, strategic sourcing and labor cost management and a decrease in product costs due to lower sales volume.

Selling, general and administrative

For 2010, selling, general and administrative costs increased $28.4 million compared to 2009, due to $12.8 million of additional stock-based compensation expense resulting from the Change in Control Transaction, the inclusion of $8.1 million of MedData costs, the impact of strengthening foreign currencies and an increase in advertising expense, partially offset by reductions from other cost management initiatives. For 2009, selling, general and administrative costs decreased $70.9 million compared to 2008, due to $47.3 million of litigation expense in 2008 related to the Privacy Litigation and a decrease in compensation costs in our USIS segment and Corporate as a result of various cost saving initiatives. These decreases were partially offset by an increase in advertising costs in the Interactive segment.

Depreciation and amortization

For 2010, depreciation and amortization were flat compared to 2009 as the increase in MedData-related depreciation and amortization was offset by a decrease in other depreciation and amortization resulting from lower capital expenditures in 2010 and 2009 compared to 2008. For 2009, depreciation and amortization decreased $4.1 million compared to 2008, due to a lower level of capital expenditures for the year.

 

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Operating income and operating margins

 

                       Change  
     Twelve months ended
December 31,
    2010 vs. 2009     2009 vs. 2008  

(dollars in millions)

   2010     2009     2008     $     %     $     %  

Operating income:

              

U.S. Information Services

   $ 177.1      $ 164.2      $ 213.0      $ 12.9        7.9   $ (48.8     (22.9 )% 

International

     62.7        55.8        61.7        6.9        12.4     (5.9     (9.6 )% 

Interactive

     37.7        46.4        33.1        (8.7     (18.8 )%      13.3        40.2

Corporate

     (61.4     (62.0     (115.3     0.6        1.0     53.3        46.2
                                            

Total operating income

   $ 216.1      $ 204.4      $ 192.5      $ 11.7        5.7   $ 11.9        6.2
                                            

Operating margin(1):

              

U.S. Information Services

     27.8     26.2     30.1       1.6       (3.9 )% 

International

     32.0     32.8     35.1       (0.8 )%        (2.3 )% 

Interactive

     30.2     36.5     25.2       (6.3 )%        11.3

Total operating margin

     22.6     22.1     18.9       0.5       3.2

 

(1)

When comparing changes for margins, variance changes are based on a “basis point” change.

For 2010, consolidated operating income increased $11.7 million and operating margin increased by 50 basis points compared to 2009, due to the increase in revenue, partially offset by the increased stock-based compensation expense resulting from the Change in Control Transaction. For 2009, consolidated operating income increased $11.9 million and operating margin increased by 320 basis points compared to 2008, due to a $47.3 million decrease in Privacy Litigation expense in Corporate and a decrease in product and labor costs, partially offset by the decrease in revenue.

For 2010, operating margin for the USIS segment increased due to the increase in revenue and decrease in royalty and data center maintenance costs and the nonrecurring gain on the trade in of computer hardware. Operating margin for the International segment decreased due to an increase in labor costs, partially offset by the increase in revenue. Operating margin for the Interactive segment decreased due to the decrease in revenue and increase in advertising expense.

For 2009, operating margin for the USIS segment decreased because a substantial portion of the expenses were fixed while revenue for the segment decreased. Operating margin for the International segment also decreased due to the decrease in revenue. Operating margin for the Interactive segment increased due to product feature changes that significantly reduced our product costs and a decrease in mail and call center costs, partially offset by the decrease in revenue and an increase in advertising expense.

Non-operating income and expense

 

                       Change  
     Twelve months ended
December 31,
    2010 vs. 2009     2009 vs. 2008  

(dollars in millions)

   2010     2009     2008     $     %     $     %  

Interest expense

   $ (90.1   $ (4.0   $ (0.9   $ (86.1     nm      $ (3.1     nm   

Interest income

     1.0        4.0        21.5        (3.0     (75.0 )%      (17.5     (81.4 )% 

Other income and (expense), net

     (44.0     1.3        (3.2     (45.3     nm        4.5        nm   
                                            

Total non-operating income and expense

   $ (133.1   $ 1.3      $ 17.4      $ (134.4     nm      $ (16.1     nm   

nm: not meaningful

 

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Interest expense increased $86.1 million for 2010 due to the new debt incurred in connection with the Change in Control Transaction. See “Summary—The Change in Control Transaction” and Note 13 “Debt,” to our audited consolidated financial statements appearing elsewhere in this prospectus. See Note 26, “Subsequent Event,” to our audited consolidated financial statements appearing elsewhere in this prospectus for changes to our senior secured credit facilities subsequent to December 31, 2010. Interest expense increased $3.1 million for 2009 due to new debt incurred in connection with the November 2009 stock repurchase. See Note 14, “Stock Repurchases,” to our audited consolidated financial statements appearing elsewhere in this prospectus.

Interest income decreased $3.0 million for 2010 and $17.5 million for 2009, due to falling interest rates and a lower balance of investable funds. The decrease in investable funds was due to cash used for the stock repurchases made during the fourth quarter of 2008 and 2009 as discussed in Note 14, “Stock Repurchases,” of our audited consolidated financial statements appearing elsewhere in this prospective, and cash used to fund the Change in Control Transaction.

For 2010, other income and expense resulted in a net increase in expense of $45.3 million compared to 2009. For 2010, other income and expense includes $28.7 million of acquisition fees and $20.5 million of loan fees primarily due to the new debt used to fund a portion of the Change in Control Transaction. Loan fees included a $10.0 million fee for the lender’s commitment to provide a bridge loan for the Change in Control Transaction that we did not utilize, and $8.9 million of previously unamortized deferred financing fees related to our old senior unsecured credit facility that was repaid as part of the Change in Control Transaction. The loan fees also included $2.7 million of commitment fees and amortization of deferred financing fees related to the undrawn portion of the senior secured revolving line of credit that was outstanding in 2010. Other income and expense also included a $2.1 million loss realized on the settlement of the swap instruments we held as an interest rate hedge on our old senior unsecured credit facility that was repaid in connection with the Change in Control Transaction. See Note 13, “Debt,” of our audited consolidated financial statements appearing elsewhere in this prospectus. For 2010, other income and expense also includes a $3.1 million increase in income from unconsolidated affiliates.

For 2009, other income and expense resulted in a net increase in income of $4.5 compared to 2008. For 2009, other income and expense includes $3.4 million of acquisition expenses, primarily related to the MedData acquisition as discussed in Note 19, “Business Acquisitions,” of our audited consolidated financial statements appearing elsewhere in this prospectus. For 2009, other income and expense also included $5.3 million of income from unconsolidated affiliates. For 2008, other income and expense included a $7.7 million impairment charge taken on marketable securities and $2.9 million of realized foreign exchange losses, partially offset by $6.6 million of income from unconsolidated affiliates.

Provision for income taxes

 

                       Change  
     Twelve months ended
December 31,
    2010 vs. 2009     2010 vs. 2009  

(dollars in millions)

   2010     2009     2008     $     %     $     %  

Provision for income taxes

   $ 46.3      $ 73.4      $ 75.5      $ (27.1     (36.9 )%    $ (2.1     (2.8 )% 

Effective income tax rate

     55.8     35.7     36.0        

For 2010, the decrease in the provision for income taxes was due to the costs incurred for the Change in Control Transaction and the increase in interest expense resulting from the new debt. The increase in the 2010 effective tax rate was primarily due to the nondeductible expenses related to the Change in Control Transaction and the limitation on our foreign tax credit resulting from the increased interest expense. For 2009, the provision and effective tax rate were relatively flat compared to 2008.

 

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Discontinued operations, net of tax

 

                         Change  
     Twelve months ended
December 31,
    2010 vs. 2009      2009 vs. 2008  

(dollars in millions)

   2010      2009      2008     $      %      $      %  

Discontinued operations, net of tax

   $ 8.2       $ 1.2       $ (15.9   $ 7.0         nm       $ 17.1         nm   

nm: not meaningful

During the first quarter of 2010, we completed the sale of the remaining business comprising our Real Estate Services segment and will have no significant ongoing relationship with this business in the future. Revenue for the Real Estate Services segment was $3.7 million in 2010, $18.8 million in 2009 and $44.8 million in 2008. Net income from the real estate discontinued operations for 2010 included an operating loss of $2.7 million and a gain on the final disposal of the business of $5.2 million. Net income from these discontinued operations included income of $1.5 million in 2009 and a loss of $15.9 million in 2008. The 2008 loss included $13.1 million of tax expense resulting from the recognition of a valuation allowance against the deferred tax asset recognized for the impairment and sale of the segment.

During the second quarter of 2010, we completed the sale of our third-party collection business in South Africa (the “collection business”) to the existing minority stockholders and will have no significant ongoing relationship with this business in the future. Revenue for the collection business was $1.3 million in 2010, $4.2 million in 2009 and $5.9 million in 2008. Net income from the collection business discontinued operations included income of $5.7 million in 2010 and losses of $0.3 million in 2009 and less than $0.1 million in 2008. The 2010 gain included an operating loss of less than $0.1 million and a gain of $3.7 million, $5.7 million after tax benefit, on the final disposal of this business.

See Note 20, “Discontinued Operations,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

Significant changes in assets and liabilities

Our balance sheet at December 31, 2010, as compared to December 31, 2009, was impacted by the following:

 

   

The balance of current and long-term debt increased $1,014.7 million from December 31, 2009, primarily to fund the Change in Control Transaction. We incurred $1,626.7 million of new debt to partially fund the Change in Control Transaction and repay our old $500.0 million senior unsecured credit facility. We also exercised our right to sell our auction rate securities to UBS Bank USA and UBS Financial Services, Inc. (together, “UBS”) under a line of credit agreement we entered into with UBS in the first quarter of 2009, and used the proceeds from the sale and redemption of these securities to repay the $89.1 million line of credit. See Note 2, “Change in Control,” Note 4, “Marketable Securities,” and Note 13, “Debt,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

 

   

The balance of retained earnings and treasury stock decreased from December 31, 2009, primarily due to the Change in Control Transactions and the retirement of all treasury stock. The Change in Control Transaction was accounted for as a recapitalization of the Company in accordance with ASC 805, “Business Combinations,” with the necessary adjustments reflected in the equity section and the retention of the historical book values of assets and liabilities on the balance sheet as of June 15, 2010. See Note 2, “Change in Control,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

 

   

The balance in other assets increased $58.4 million from December 31, 2009, primarily due to a net increase of $49.2 million in deferred financing fees related to the Change in Control Transaction and

 

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from the purchase of an additional equity interest in an unconsolidated subsidiary in India. See Note 8, “Other Assets,” and Note 13, “Debt,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

 

   

The balance of short-term and other marketable securities decreased $116.8 million from December 31, 2009, primarily due to the sale and redemption of our auction rate securities held at UBS. In addition to the proceeds from the sale of these securities, we sold $25.0 million of auction rate securities at par to an entity owned by Pritzker family business interests and used the proceeds to partially fund the Change in Control Transaction. See Note 2, “Change in Control,” Note 4, “Marketable Securities,” and Note 13, “Debt,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

 

   

The balances of total current assets and liabilities of discontinued operations as of December 31, 2010, decreased from December 31, 2009, due to the sale of our title insurance business and the third-party collection business in South Africa. See Note 20, “Discontinued Operations,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

Our balance sheet at December 31, 2009, as compared to December 31, 2008, was impacted by the following:

 

   

The balance of current and long-term debt increased $590.0 million from December 31, 2008. The proceeds from the additional 2009 debt were used to redeem shares of our outstanding common stock. See Note 13, “Debt,” and Note 14, “Stock Repurchases,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

 

   

The balance of treasury stock increased $907.2 million from December 31, 2008. We used $500 million of new debt proceeds and $400 million of cash on hand to redeem $900 million of our outstanding common stock in December 2009. See Note 13, “Debt,” and Note 14, “Stock Repurchases,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

 

   

On December 31, 2009, we acquired all of the outstanding units and voting interests of MedData for $96.5 million in cash. Of this amount, we allocated $53.9 million to goodwill. See Note 19, “Business Acquisitions,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

Liquidity and capital resources

 

           Change  
     Twelve months ended
December 31,
    2010 vs. 2009     2009 vs. 2008  

(dollars in millions)

   2010     2009     2008     $     %     $     %  

Cash provided by operating activities of continuing operations

   $ 204.6      $ 251.8      $ 230.4      $ (47.2     (18.7 )%    $ 21.4        9.3

Cash used in operating activities of discontinued operations

     (4.2     (7.5     (10.0     3.3        44.0     2.5        25.0

Cash provided by (used in) investing activities

     70.4        (134.7     169.4        205.1        nm        (304.1     nm   

Cash used in financing activities

     (290.5     (337.3     (424.3     46.8        13.9     87.0        20.5

Effect of exchange rate changes on cash and cash equivalents

     1.8        4.0        (7.6     (2.2     nm        11.6        nm   
                                            

Net change in cash and cash equivalents

   $ (17.9   $ (223.7   $ (42.1   $ 205.8        nm      $ (181.6     nm   
                                            

nm: not meaningful

 

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Sources and uses of cash

Operating activities

Cash provided by operating activities decreased $47.2 million in 2010, from $251.8 million in 2009 to $204.6 million in 2010. The decrease was primarily due to an increase in cash interest expense and accounts receivable, partially offset by a decrease in cash taxes paid.

Investing activities

Cash provided by investing activities increased $205.1 million in 2010, from a use of cash of $134.7 million in 2009 to a source of cash of $70.4 million in 2010. The increase was due an increase in the proceeds from the sale of available-for-sale securities, a decrease in acquisitions and purchases of noncontrolling interests, proceeds from the sale of the assets of discontinued operations and a decrease in capital expenditures.

Financing activities

Cash used in financing activities decreased $46.8 million in 2010, from $337.3 million in 2009 to $290.5 million in 2010. The decrease was primarily because we used more cash on hand to fund the 2009 stock repurchase than we did to finance the recapitalization of the Company in connection with the Change in Control Transaction.

Capital expenditures

We make capital expenditures to grow our business by developing new and enhanced capabilities, increase our effectiveness and efficiency and reduce risks. Our capital expenditures include product development, disaster recovery, security enhancements, regulatory compliance and the replacement and upgrade of existing equipment at the end of its useful life. Cash paid for capital expenditures decreased $9.5 million from $56.3 million in 2009 to $46.8 million in 2010. On an accrual basis, our capital expenditures were $65.2 million in 2010 compared to $71.2 million in 2009. In 2009, we incurred higher capital expenditures to upgrade infrastructure and ensure high system availability by enhancing system redundancy. In 2010, these initiatives continued, but at a slower pace. For 2011, on an accrual basis, we expect our capital expenditures to be approximately the same as 2010.

Change in Control Transaction

On June 15, 2010, the Purchaser, an affiliate of the Sponsor, acquired 51.0% of the outstanding common stock of the Parent from the Sellers. The remaining common stock was retained by certain existing stockholders of the Parent, including 48.15% by Pritzker family business interests and 0.85% by certain members of senior management who rolled their equity over into non-voting common stock of the Parent. The Change in Control Transaction included the Merger of MergerCo with and into the Parent, with the Parent continuing as the surviving corporation. As part of the Merger, outstanding common stock of the Parent, other than common stock held by MergerCo, converted into the right to receive cash in an aggregate amount of $1,175.2 million. See “Summary—The Change in Control Transaction.”

As part of the Change in Control Transaction, we incurred $1,626.7 million of debt, consisting of a seven-year $950.0 million senior secured term loan and $15.0 million of a five-year $200.0 million senior secured revolving line of credit under our senior secured credit facilities, $645.0 million of outstanding notes, and $16.7 million under the RFC loan. The proceeds of these financing transactions were used to finance a portion of the Change in Control Transaction. See “Summary—The Change in Control Transaction,” Note 2 “Change in Control,” and Note 13, “Debt,” of our audited consolidated financial statements appearing elsewhere in this prospectus. See Note 26, “Subsequent Event,” of our audited consolidated financial statements appearing elsewhere in this prospectus for changes to our senior secured credit facilities subsequent to December 31, 2010.

 

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2010 acquisitions

On August 1, 2010, we acquired a 51% ownership interest in our Chile subsidiary for $6.7 million. The fair value of 100% of the net assets of the entity acquired was $13.2 million, including $4.9 million allocated to goodwill. The results of operations of Chile have been included as part of the International segment in our consolidated statements of income since the acquisition. Pro forma financial information is not presented because the acquisition was not material to our 2010 consolidated financial statements.

2009 acquisitions

On December 31, 2009, we acquired all of the outstanding units and voting interests of MedData for $96.5 million in cash. MedData is a leading provider of healthcare information and data solutions for hospitals, physician practices and insurance companies. We completed this acquisition to expand our healthcare product line and customer base and further leverage our existing operating model. We have integrated MedData into our USIS segment. We financed this acquisition with cash on hand. As this acquisition was completed on December 31, there was no impact on our consolidated statement of income for 2009. Pro forma financial information is not presented because the acquisition was not material to our 2009 consolidated financial statements.

See Note 19, “Business Acquisitions,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

Debt

Senior secured credit facilties

In connection with the Change in Control Transaction, on June 15, 2010, we entered into the credit agreement governing our senior secured credit facilities with various lenders. The senior secured credit facilities consist of a seven-year $950.0 million senior secured term loan and a five-year $200.0 million senior secured revolving line of credit. Interest rates on the borrowings under the senior secured credit facilities are based on the London Interbank Offered Rate (“LIBOR”) unless otherwise elected, subject to a floor, plus an applicable margin of between 3.5% and 5.0% based on our net leverage ratio and the type of rate elected. There is a 0.5% commitment fee due each quarter based on the undrawn portion of the senior secured revolving line of credit. To secure the financing, we incurred $55.2 million of fees that were deferred and allocated between the senior secured term loan and the senior secured revolving line of credit, and were scheduled to be amortized over the term of the loans.

Under the senior secured term loan, we are required to make principal payments of 0.25% of the original principal balance at the end of each quarter with the remaining principal balance due June 15, 2017. During 2010, we repaid $4.8 million of principal on the senior secured term loan. We will also be required to begin making principal payments on the senior secured term loan in 2012 based on excess cash flows of the prior year. Under the senior secured revolving line of credit, the entire principal is due June 15, 2015. During 2010, we repaid the entire $15.0 million previously drawn on the senior secured revolving line of credit.

See Note 26, “Subsequent Event,” of our audited consolidated financial statements for changes to our senior secured credit facilities subsequent to December 31, 2010, including payments of $20.8 million in the first quarter of 2011 associated with the refinancing of the senior secured credit facilities.

Outstanding notes

In connection with the Change in Control Transaction, on June 15, 2010, the Issuers issued $645.0 million of outstanding notes to certain qualified investors. The notes mature on June 15, 2018. Interest on the notes is payable semi-annually at a fixed rate of 11.375% per annum. To secure the financing, we incurred $20.3 million

 

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of fees, including commissions paid to the initial purchasers of the notes, which were deferred and are being amortized as additional interest expense over the term of the notes using the effective interest rate method. We are offering to exchange the outstanding notes for the exchange notes in connection with the exchange offer described in this prospectus.

RFC loan

On June 15, 2010, we borrowed $16.7 million under the RFC loan to finance a portion of the Change in Control Transaction. See “Summary—The Change in Control Transaction.” The loan is an unsecured, non-interest bearing note, discounted by $2.5 million for imputed interest, due December 15, 2018, with prepayments of principal due annually based on excess foreign cash flows. Interest expense is calculated under the effective interest method using an imputed interest rate of 11.625%.

Secured line of credit

In the first quarter of 2009, we entered into a line of credit agreement with UBS and borrowed $106.4 million equal to the full par value of the auction rate securities held by us at UBS at that time. During 2009, payments totaling $17.3 million were made towards this loan. During 2010, the balance of this loan was repaid in full.

Old senior unsecured credit facility

On November 16, 2009, we entered into our old senior unsecured credit facility with JPMorgan Chase Bank, N.A and various lenders and borrowed $500.0 million to fund the purchase of our common stock. On November 19, 2009, we entered into swap agreements with financial institutions that effectively fixed the interest payments on a portion of our old senior unsecured credit facility at 1.53%, plus the applicable margin on the loan. In connection with the Change in Control Transaction, on June 15, 2010, we repaid the remaining balance of our old senior unsecured credit facility and cash settled the swap instruments, realizing a $2.1 million loss that was included in other expense.

See Note 13, “Debt,” and Note 26, “Subsequent Event,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

Stock repurchases

On November 3, 2009, our Board of Directors approved an offer to purchase up to $900.0 million of stock for cash from the stockholders of record of the Parent as of November 17, 2009. On December 17, 2009, we purchased $900.0 million of common stock of the Parent from the stockholders of record at a purchase price of $26.24 per share, which was based on a valuation of all outstanding common stock as of November 16, 2009.

On October 20, 2008, our Board of Directors approved an offer to purchase up to $400.0 million of stock for cash from the stockholders of record of the Parent as of October 27, 2008. We purchased 15.4 million shares in November 2008 and approximately an additional 43,000 restricted shares in January 2009 for a total of $400.0 million from the stockholders of record of the Parent at a purchase price of $25.85 per share, which was based on a valuation of all outstanding common stock of the Parent as of October 24, 2008.

Liquidity and cash management

Cash and cash equivalents of continuing operations totaled $131.2 million at December 31, 2010 and $137.5 million at December 31, 2009. We generate positive cash flow from our operations and expect to continue to do so. Our principal sources of liquidity are cash flows provided by operating activities, cash and cash equivalents on hand, and our senior secured revolving line of credit. As of December 31, 2010, we had no outstanding borrowings under our senior secured revolving line of credit, and could borrow up to the full amount. Beginning in 2012, under the senior secured term loan, we will be required to make additional principal payments based on the previous year’s excess cash flows. See Note 13, “Debt,” and Note 26, “Subsequent Event,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

 

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As of December 31, 2010 we were in compliance with all financial covenants under the credit agreement governing our senior secured credit facilities, which required us to maintain a senior secured net leverage ratio below a maximum of 4.00 to 1, and an interest coverage ratio above a minimum of 1.50 to 1. The senior secured net leverage ratio and interest coverage ratio at December 31, 2010 were as follows:

 

     At December 31,
2010
 

Senior secured net leverage ratio(1)

     2.40   

Interest coverage ratio(1)

     2.48   

 

(1)

The senior secured net leverage ratio is the ratio of consolidated total net debt to consolidated EBITDA (“Covenant EBITDA”) for the trailing twelve months as defined in the credit agreement governing our senior secured credit facilities. The interest coverage ratio is the ratio of Covenant EBITDA for the trailing twelve months to consolidated interest expense on an annualized basis as defined in the credit agreement governing our senior secured credit facilities. Covenant EBITDA for the twelve months ended December 31, 2010, totaled $339.8 million. The difference between Covenant EBITDA, as defined in the credit agreement governing our senior secured credit facilities, and Adjusted EBITDA, totaled $13.2 million for the twelve months ended December 31, 2010, and consists of adjustments for noncontrolling interests, equity investments and other adjustments as defined in the credit agreement governing our senior secured credit facilities.

See Note 26, “Subsequent Event,” for changes to the credit agreement governing our senior secured credit facilities subsequent to December 31, 2010. Under the terms of the amendment to the credit agreement governing our senior secured credit facilities as discussed in Note 26, “Subsequent Event,” the interest coverage covenant was removed for the senior secured term loan and senior secured revolving line of credit, and the net leverage covenant was removed for the senior secured term loan and modified for the senior secured revolving line of credit.

The balance retained in cash and cash equivalents is consistent with our short-term cash needs and investment objectives. We believe our cash on hand, cash generated from operations, and funds available under our senior secured revolving line of credit are sufficient to fund our planned capital expenditures, debt service obligations and operating needs for the foreseeable future.

Contractual obligations

Future minimum payments for noncancelable operating leases, purchase obligations and debt repayments as of December 31, 2010 are payable as follows:

 

(in millions)

   Operating
leases
     Purchase
obligations
     Debt
repayments
     Loan fees
and interest
payments
     Total  

2011

   $ 10.3       $ 118.0       $ 15.1       $ 138.3       $ 281.7   

2012

     8.2         37.8         10.4         137.2         193.6   

2013

     6.2         10.6         9.5         135.3         161.6   

2014

     5.1         7.7         9.5         134.9         157.2   

2015

     3.6         7.3         9.5         133.9         154.3   

Thereafter

     12.2         0.3         1,552.0         269.5         1,834.0   
                                            

Totals

   $ 45.6       $ 181.7       $ 1,606.0       $ 949.1       $ 2,782.4   
                                            

Purchase obligations to be repaid in 2011 include $65.8 million of trade accounts payable that were included on the balance sheet as of December 31, 2010. We had no significant capital leases as of December 31, 2010. Loan fees and interest payments are estimates based on the interest rates in effect at December 31, 2010 and the

 

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contractual principal paydown schedule, excluding any excess cash flow paydowns that may be required. See Note 13, “Debt,” and Note 26, “Subsequent Event,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

Off-balance sheet arrangements

As of December 31, 2010 and 2009 we had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

Application of critical accounting estimates

We prepare our consolidated financial statements in conformity with GAAP. The notes to our consolidated financial statements include disclosures about our significant accounting policies. These accounting policies require us to make certain judgments and estimates in reporting our operating results and our assets and liabilities. The following paragraphs describe the accounting policies that require significant judgment and estimates due to inherent uncertainty or complexity.

Goodwill and indefinite-lived intangibles

As of December 31, 2010, our consolidated balance sheet included goodwill of $223.7 million. As of December 31, 2010, we had no other indefinite-lived intangible assets. We test goodwill and indefinite-lived intangible assets, if any, for impairment on an annual basis, in the fourth quarter, or on an interim basis if an indicator of impairment is present. For goodwill, we compare the fair value of each reporting unit to its carrying amount to determine if there is potential goodwill impairment. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the goodwill within the reporting unit is less than the carrying value of its goodwill. For other indefinite-lived intangibles, we compare the fair value of the asset to its carrying value to determine if there is an impairment. If the fair value of the asset is less than its carrying value, an impairment loss is recorded. We use discounted cash flow techniques to determine the fair value of our reporting units, goodwill and other indefinite-lived intangibles. The discounted cash flow calculation requires a number of significant assumptions, including projections of future cash flows and an estimate of our discount rate.

We believe our estimates of fair value are based on assumptions that are reasonable and consistent with assumptions that would be used by other marketplace participants. Such estimates are, however, inherently uncertain, and estimates using different assumptions could result in significantly different results. A 10% increase in our discount rate and a 10% decrease in our terminal value would still not result in an impairment of goodwill. During 2010, 2009 and 2008 there was no impairment of goodwill or other indefinite-lived intangible assets.

Long-lived assets

As of December 31, 2010, our consolidated balance sheet included fixed assets of $615.1 million, $186.1 million net of accumulated depreciation, and long-lived intangible assets of $327.4 million, $117.9 million net of accumulated amortization. We review long-lived assets subject to amortization for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized equal to the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are separately presented in the consolidated balance sheet, and reported at the lower of the carrying amount or fair value, less costs to sell, and are no longer depreciated. When a long-lived asset group is tested for recoverability, we also review depreciation estimates and methods. Any revision to the remaining useful life of a long-lived asset resulting from that review

 

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is also considered in developing estimates of future cash flows used to test the asset for recoverability. We typically use a discounted cash flow model when assessing the fair value of our asset groups. The discounted cash flow calculation requires a number of significant assumptions, including projections of future cash flows and an estimate of our discount rate.

We believe our estimates of future cash flows used to determine recoverability and our estimates of fair value are based on assumptions that are reasonable and consistent with assumptions that would be used by other marketplace participants. However, such estimates are inherently uncertain and estimates using different assumptions, or different valuation techniques, could result in significantly different results. During 2010, 2009 and 2008 there were no significant impairment charges.

Legal contingencies

As of December 31, 2010, our consolidated balance sheet included accrued litigation costs of $5.6 million. We are involved in various legal proceedings resulting from our normal business operations. Our in-house legal counsel works with outside counsel to manage these cases and seek resolution. We regularly review all claims to determine whether a loss is probable and can be reasonably estimated. If a loss is probable and can be reasonably estimated, an appropriate reserve is accrued and included in other current liabilities. We make a number of significant judgments and estimates related to these contingencies, including the likelihood that a liability has been incurred, and an estimate of that liability. See Note 23, “Contingencies,” to our audited consolidated financial statements appearing elsewhere in this prospectus.

We believe the judgments and estimates used are reasonable, but events may arise that were not anticipated and the outcome of a contingency may differ significantly from what is expected.

Income taxes

As of December 31, 2010, our consolidated balance sheet included current deferred tax assets of $1.2 million, noncurrent deferred tax assets of $1.6 million, noncurrent deferred tax liabilities of $25.6 million and unrecognized tax benefits of $2.1 million. We are required to record current and deferred tax expense, deferred tax assets and liabilities resulting from temporary differences, and unrecognized tax benefits for uncertain tax positions. We make certain judgments and estimates to determine the amounts recorded, including future tax rates, future taxable income, whether it is more likely than not a tax position will be sustained, and the amount of the unrecognized tax benefit to record.

We believe the judgments and estimates used are reasonable, but events may arise that were not anticipated and the outcome of tax audits may differ significantly from what is expected.

Stock-based compensation

For the year ended December 31, 2010, we recorded $31.8 million of stock-based compensation expense, including $20.7 from the accelerated vesting of restricted stock in connection with the Change in Control Transaction. The fair value of each award was determined by various methods including independent valuations of the Parent’s common stock based on discounted cash flow and selected public company comparable analyses, a Black-Scholes valuation model, and a risk-neutral Monte Carlo valuation model. The various valuation models require a number of significant assumptions, including projections of future cash flows and an estimate of our cost of capital, volatility rates, expected life of awards and risk-free interest rates. We believe the determination of fair value was based on assumptions and estimates that are reasonable and consistent with what would be used by other marketplace participants to determine fair value. However, valuations are inherently uncertain and valuations using different assumptions and estimates, or different valuation techniques, could result in significantly different values.

 

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Recent accounting pronouncements

For information about recent accounting pronouncements and the potential impact on our consolidated financial statements, see Note 1, “Significant Accounting and Reporting Policies,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

Quantitative and qualitative disclosures about market risk

In the normal course of business we are exposed to market risk, primarily from changes in foreign currency exchange rates and variable interest rates, which could impact our results of operations and financial position. We manage the exposure to this market risk through our regular operating and financing activities and, when appropriate, through the use of derivative financial instruments, such as foreign currency and interest rate hedges. We use derivative financial instruments as a risk management tool only and not for speculative or trading purposes.

Interest rate risk

During the quarter ended June 30, 2010, we incurred a significant amount of new debt, including variable-rate debt, to fund a portion of the Change in Control Transaction, and to pay off existing debt. As a result, our exposure to market risk for changes in interest rates due to variable-rate debt increased. As of December 31, 2010, our variable-rate debt had a weighted-average interest rate of 6.75% and a weighted-average life of 6.50 years. As of December 31, 2010, 58.9% of our outstanding debt was variable. The variable-rate loans have interest rate floors. On December 31, 2010, the variable rate on our senior secured term loan was below the floor, and a 1% change in the interest rate on that loan would not have changed our interest expense for one month. On December 31, 2010, we had no outstanding balance on our senior secured revolving line of credit and a change in the interest rate on that loan would not have changed our interest expense for one month.

As part of the Change in Control Transaction, we settled the swap instruments we used to hedge a portion of our old senior unsecured credit facility that was repaid at that time. The settlement resulted in a loss of $2.1 million that was included in other income and expense. We have not hedged any of our current variable-rate debt.

Based on the amount of outstanding variable-rate debt, we have a material exposure to interest rate risk. In the future our exposure to interest rate risk may change due to changes in the amount borrowed, changes in interest rates, or changes in the amount we have hedged. The amount of our outstanding debt, and the ratio of fixed-rate debt to variable-rate debt, can be expected to vary as a result of future business requirements, market conditions or other factors.

See Note 13, “Debt,” and Note 26, “Subsequent Event,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

Foreign currency exchange rate risk

A substantial majority of our revenue, expense and capital expenditure activities are transacted in U.S. dollars. However, we do transact business in a number of foreign currencies, including the South African rand and Canadian dollar. In reporting the results of our foreign operations, we benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar relative to the foreign currencies.

We are required to translate the assets and liabilities of our foreign subsidiaries that are measured in foreign currencies at the applicable period-end exchange rate on our consolidated balance sheets. We are required to translate revenue and expenses at the average exchange rates prevailing during the year in our consolidated statements of income. The resulting translation adjustment is included in other comprehensive income, as a component of stockholders’ equity. We include transactional foreign currency gains and losses in other income and expense on our consolidated statements of income.

 

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In 2010, revenue from foreign operations was $195.8 million, and foreign pre-tax income was $70.6 million. A 10% change in the value of the U.S. dollar relative to a basket of the currencies for all foreign countries in which we had operations during 2010 would have changed our revenue by $19.6 million and our pre-tax income by $7.1 million.

A 10% change in the value of the U.S. dollar relative to a basket of currencies for all foreign countries in which we had operations would not have had a significant impact on our 2010 realized foreign currency transaction gains and losses.

 

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Business

Overview

We are a global leader in credit information and information management services, with operations in the United States, Africa, Canada, Asia, India and Latin America. We maintain credit data on millions of consumers and serve thousands of customers worldwide. We compile payment history, accounts receivable information and other information such as bankruptcies, liens and judgments for consumers and small businesses, and maintain reference databases of current consumer names, addresses and telephone numbers. We obtain this information from thousands of sources, including credit-granting institutions and public record depositories. We enhance our data and service offerings through access to other unique databases owned or maintained by third parties. We combine our credit and other source data with analytics and decisioning technology to deliver value-added solutions to our customers that assist with new account acquisitions, account management, risk management, collections, identity verification and fraud protection. Historically, our business has experienced attractive operating margins and modest capital expenditure and working capital needs, resulting in strong cash flow from operations.

We manage our business through three operating segments: USIS, International and Interactive.

 

   

USIS, which represented approximately 67% of our revenue in 2010, provides consumer reports, credit scores, verification services, analytical services and decision technology to business customers in the United States. USIS offers these services to customers in the financial services, insurance, healthcare and other markets, and delivers them through both direct and indirect channels.

 

   

International, which represented approximately 20% of our revenue in 2010, provides services similar to our USIS and Interactive segments in multiple countries outside the United States. Our International segment also provides auto ownership information and commercial data to our customers in select geographies.

 

   

Interactive, which represented approximately 13% of our revenue in 2010, offers the tools, resources and education to help individuals understand and manage their credit. Interactive delivers these services primarily through our proprietary internet websites, transunion.com, truecredit.com and zendough.com.

We have built a strong and highly diversified base of customers globally. In 2010, our largest customer accounted for approximately 3.5% of our revenue and our top ten customers, in the aggregate, accounted for approximately 19.0% of our revenue. Given the strength of our relationships and the incremental value of our services, we have historically enjoyed long-standing relationships with our customers, including relationships of over ten years with each of our top ten USIS financial services customers.

We compete primarily with two other global credit reporting companies, Equifax, Inc. and Experian plc, both of which offer a range of consumer credit reporting services similar to our services. We also compete with a number of smaller, specialized companies, all of which offer a subset of the services we provide.

Our industry

Evolution to mission-critical role

Credit bureaus were formed in the nineteenth century to help provide better credit information to local and regional lenders so they could make more informed credit decisions. As populations became more mobile and financial services offerings became more prevalent, credit bureaus began to offer more data and services and expanded their geographic reach through strategic alliances and acquisitions. As consumer lending expanded, credit bureaus became an integral part of the lending process and now play a critical intermediator role between lenders and borrowers. Credit bureaus developed a variety of methods to collect, maintain and analyze information concerning the ability of consumers and businesses to meet their obligations. Consumers and

 

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commercial lenders have increasingly used these services to make more informed credit decisions. As a result, credit bureaus have positioned themselves as mission-critical partners to financial services institutions around the world.

Three major providers with sustainable competitive advantage

As financial services institutions grew in scale and geographic scope, credit bureaus extended their reach by coordinating and forming strategic alliances with other credit reporting providers to share data across large territories through a “hub and spoke” system. Three credit bureaus have since consolidated into large, international organizations that can provide a wide range of data services and analytical applications to their larger and increasingly demanding financial services customers. As a result of this consolidation, TransUnion, Equifax and Experian have emerged as the global leaders in the industry. The largest U.S. customers of these global credit bureaus typically use the services of all three providers to validate consistency and ensure reliability.

Expanding the scope of offerings

Over the past decade, credit bureaus have devoted significant resources to enhance the quality of their data sets by developing a variety of proprietary information databases. Credit bureaus have evolved from being collectors and sellers of credit information to being providers of more advanced information services. With more sophisticated analytical tools and decision technology, credit bureaus have expanded the scope of their offerings to the financial services industry, which has enabled the industry to process information and provide predictive and decisioning tools to prescreen and acquire new customers, cross-sell to existing customers, use rules-based decision making at the point of sale and monitor and manage risk in existing portfolios. In addition, credit bureaus have leveraged their data by developing advanced analytical tools and services to offer value-added solutions to customers in new markets, including insurance, healthcare, collections, retail and telecommunications. Given the increased consumer demand for credit and consumer data, the credit bureaus have also begun to market or sell these services directly to consumers. The development of these more advanced services has enabled credit bureaus to diversify their revenue base and accelerate growth.

International market expansion

As consumer lending activities have grown in markets outside the United States, the major global credit bureaus have expanded internationally to increase market opportunities, accelerate growth and increase market share. The international market represents a significant opportunity for the global credit bureaus to offer established, proven services and solutions in new or emerging markets. To penetrate these markets, credit bureaus have formed joint ventures or other strategic alliances with local data providers, financial services institutions and key technology partners. Credit bureaus have also begun to expand in key regions through acquisitions, similar to the way that credit bureaus consolidated in the United States.

Economic and market trends

Credit bureaus have benefited from the dramatic expansion of consumer lending. Consumer lending is affected by a number of macroeconomic factors such as GDP growth, interest rates, unemployment, per capita disposable income and consumer spending. The United States and much of the world economy were impacted during the economic recession that began during the second half of 2007, which slowed consumer lending and adversely affected the credit bureau industry. However, during the same period, the credit bureaus benefited from the growing demand for value-added portfolio and risk management services due to the heightened focus on risk mitigation and protection. As the U.S. economy begins to stabilize and improve, we expect demand for credit bureau services to increase.

 

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Our competitive strengths

Global leader in credit information and information management services

We are a leading credit bureau with a global reach as one of only three global credit bureaus. In the United States, we have agreements or relationships with 18 of the top 20 banks, all of the major credit card issuers, 15 of the top 20 collections companies, 9 of the top 10 property and casualty insurance carriers, thousands of healthcare providers and hundreds of healthcare payors. Outside the United States, we have established a variety of wholly-owned businesses and have entered into joint ventures with leading partners in local markets to create localized proprietary databases and offer a suite of comprehensive services that are tailor-made for each market. We leverage various sources of information and our proprietary technologies to provide data, analytical tools and decisioning solutions that enable our business services customers to grow their business and manage risk more effectively.

Attractive business model

We believe we have an attractive business model that has had strong and stable historical cash flow from operations, high revenue visibility and low capital intensity. The mission-critical importance of our services to our customers, the proprietary nature of our technologies and the integration of our systems into customer processes have historically driven high customer retention rates. We have enjoyed long-standing relationships with our customers, including relationships of over ten years with each of our top ten USIS financial services customers. Our vertical and geographic expansion has diversified our revenue streams. Our efficient operating structure and scale have enabled us to generate strong operating margins, while the low capital intensity of our business allows us to continue to invest in selected growth initiatives. We believe that, as a result of operating efficiencies and low capital intensity, we will continue to generate strong and consistent cash flow from operations.

Strong global presence

We provide services in a number of countries outside the United States and are well positioned in the following geographies:

 

   

South Africa, where we host the largest credit database on the continent;

 

   

Asia, where we are the only global agency with a credit bureau in Hong Kong;

 

   

India, where we are the technology provider to and part owner of the largest operating credit bureau and provider of analytic and decisioning services;

 

   

Latin America, where we are a major credit bureau in the region and a technology partner to the largest credit bureau in Mexico; and

 

   

Canada, where we are a significant player in a market with one other competitor.

We believe our presence in these regions enables continued diversification and expansion and positions us for long-term growth in these markets.

Differentiated information services and capabilities

We maintain integrated relationships with our customers by providing mission-critical services and capabilities. We use high-quality consumer credit information collected from thousands of different sources augmented by additional information sources such as fraud, identity, criminal, health insurance, insurance claims and mortgage lending data. Using this data, we create proprietary databases and matching algorithms that enable us to deliver basic consumer credit data, such as standard data, characteristics and credit reports, and differentiated solutions, including:

 

   

enhanced consumer credit data, such as trend data and mortgage information;

 

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value-added platforms, such as “triggers” and advanced decisioning; and

 

   

models and analytics, including generic and custom credit scores.

We enhance our offerings by leveraging our research and development and technology innovation.

Industry leading analytical tools

As global credit information services have grown and become more complex, the demand for more sophisticated and robust business decision-making tools has grown. In anticipation of this demand, we have made significant investments to develop next-generation analytical capabilities and services. For example, we have introduced two new platforms to our suite of services:

 

   

our “triggers” platform, which takes daily snapshots of our entire database and analyzes profile information changes, enabling us to identify unique patterns that may predict future consumer behavior and allowing our customers to assess portfolio risks and new customer candidates more effectively; and

 

   

our advanced “decisioning” platform, which leverages multiple data sources to build decision-based rules technology that we offer to customers on a software as a service platform.

Technology platform

To operate, deliver and support our solutions and services, we have developed and continuously invest in a range of proprietary systems and a global technology platform with a strong track record of reliability and scalability. We have built a technology platform with flexible architectures, secure software applications and processing capabilities to manage and deliver our solutions to a variety of customers in different markets. We use robust storage capabilities with large-scale and redundant hardware systems to support our technology infrastructure and continually monitor our systems to ensure that they operate consistently and cost-effectively.

Focus on cost control and operational efficiencies

In 2008, we launched our Operational Excellence Program, through which we were able to implement several cost-saving initiatives:

 

   

a strategic sourcing program, which drives increased control over spending on third-party vendors;

 

   

our labor management strategy, which includes the expanded use of lower-cost resources and allows us to continue to improve, align and integrate our enterprise workforce; and

 

   

our enterprise process improvement, which focuses on streamlining back office functions and improving overall processes.

These cost-control initiatives, which we implemented during the economic downturn, allowed us to achieve significant cost savings and maintain Adjusted EBITDA as a percentage of revenue of over 34% in 2010, consistent with historical Adjusted EBITDA margins, despite a challenging revenue environment.

Proven and experienced management team

We have an experienced senior management team with an average of 15 years of experience in the credit reporting, financial services and information technology industries. Our senior management team has a track record of strong performance and significant experience in the markets served by our USIS, International and Interactive segments. This team has expanded our global footprint, invested in new solutions in market verticals and managed the cost base effectively to maintain a strong operating margin and position us well for future growth.

 

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Our business strategy

We create economic and competitive advantages for our customers. To promote sustainable growth, diversification and a strong global brand, each of our business segments focuses on aligning its resources and efforts with the following priorities:

Investment in innovation and service development

We continually seek to innovate by investing in new data sources and applications to provide our customers with integrated solutions that better meet their needs. Despite the economic downturn, we launched a number of new services and solutions in the past two years. We introduced enhanced analytics and decisioning services to deliver stronger account management, risk management and fraud protection services to our financial services customers. For example, we developed and introduced an adjustable rate mortgage indicator service that provides businesses with tools for risk management purposes and an income estimator solution that is used by credit card issuers to acquire and manage accounts in response to the CARD Act. In International, we have introduced credit sourcing, decisioning and asset monitoring solutions. In Interactive, beginning with the launch of zendough.com, we have targeted a consumer demographic that seeks a streamlined, user-friendly, more proactive credit and identity personal solution.

Expand the fast-growing International segment

We believe our International segment represents a significant opportunity for growth as economies outside the United States continue to develop and mature. We seek to expand internationally by forming joint ventures and other strategic alliances with local data providers, financial services institutions and key technology partners. In developing markets, such as India, Latin America and Asia, we believe there are significant opportunities for growth as a substantial portion of the population in these economies who are not yet credit active will emerge as consumers of credit. In relatively mature markets, such as Canada and Hong Kong, we will continue to improve our core services and seek to expand into other industries or verticals. In addition, we continue to pursue start-up opportunities in markets we do not currently serve, as well as establish and expand our presence through acquisitions.

Focus on growth markets

We continue to focus on growth markets, such as insurance and healthcare. For example, in insurance, we continue to deliver new fraud detection solutions through improved accuracy and efficiency for the quoting and underwriting process. In the healthcare industry, our acquisition of MedData, a leading provider of healthcare information and data solutions for hospitals, physician practices and insurance companies enables us to deliver new solutions that connect providers and payors. We continue to seek to identify new opportunities in these and other vertical markets in which we can leverage our data assets and core competencies to improve customer performance and drive growth.

Proactive review of cost structure

We strategically manage our investments in people and technology for cost-effective growth. In 2008, we launched our Operational Excellence Program, which has enabled us to reduce costs through four key initiatives: a strategic sourcing program, our labor management strategy, our enterprise process improvement approach and focus. We continue to focus on each of these initiatives to improve productivity and long-term cost competitiveness.

Investment in human and intellectual capital

We believe that highly skilled people with relevant subject matter expertise give us a competitive advantage. As a result, we identify areas of strategic need and proactively recruit individuals from our customers’ industries who provide insight and relevant expertise in our key markets. We also continue to invest in training and benefit programs to identify, attract, develop and retain key professionals in the industry.

 

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Segment overview

TransUnion offers a diverse suite of business and consumer services. These services include credit reports, credit scores, analytics, risk management, portfolio review, direct marketing, credit monitoring, identification management, fraud detection and various other credit-related services. We manage our business and report our financial results in three operating segments: USIS, International and Interactive. We also report expenses for Corporate, which provides shared services for us and conducts enterprise functions. See Note 21 “Operating Segments,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

Revenue for our segments was as follows:

LOGO

 

Segments

   2010        2009         

USIS

   Online Data Services

   Credit Marketing Services

   Decision Services

   $ 636.0         $ 627.5      

International

   Developed Markets

   Emerging Markets

    
195.8
  
       170.1      
Interactive      124.7           127.2      
                            
Total revenue    $ 956.5         $ 924.8      
                            

The following is a more detailed description of each segment, and Corporate, which provides support services to each operating segment.

 

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U.S. Information Services

USIS provides consumer credit and data reports, credit scores, analytical services and decision technology to business customers. We offer these services to customers in the financial services, insurance, healthcare and other markets, and deliver them through both direct and indirect channels. These business customers use our services to acquire new customers, identify cross-selling opportunities, measure and manage debt portfolio risk, collect debt and manage fraud. USIS also provides healthcare insurance-related information to medical care facilities and insurers, as well as mandated consumer services such as dispute investigations and free annual credit reports, as required by the United States Fair Credit Reporting Act (“FCRA”), the Fair and Accurate Credit Transactions Act of 2003 (“FACTA”), and other credit-related legislation. USIS provides solutions to its customers through the following three service lines:

Online Data Services

Online Data Services are delivered in real-time to qualified businesses to help them assess the financial viability and capacity, or risk, of prospective consumers seeking to access credit. The primary source for these services is our consumer credit database. This database contains the name and address of most U.S. adults, a listing of their existing credit relationships and their timeliness in repaying debt obligations. The information in our database is voluntarily provided by thousands of credit-granting institutions and other data furnishers, such as public utilities. We also actively collect, directly and through vendors, information from courts, government agencies and other public record sources. This data is updated, audited and monitored on a regular basis. Information such as credit reports, credit characteristics and predictive scores are created from the primary underlying data. Collectively, the reports, characteristics and scores, with variations tailored for specific industries, form the basis of Online Data Services.

Online Data Services revenue is driven by consumers initiating transactions with our business customers. Our customers most frequently use the information and scores to underwrite or otherwise manage risk in connection with the establishment of a new account for a consumer, such as a credit card, home loan, auto loan, or insurance policy. Our customers also use our services to evaluate risks and make risk-related decisions in connection with existing accounts.

TransUnion also provides online services to help businesses manage fraud and authenticate a consumer’s identity when they initiate a new business relationship. Our fraud database, which is updated daily, contains data elements from multiple sources that enable credit grantors to identify fraudulent activity. These data elements include address histories, social security numbers and names of individuals who have been victims of identity fraud. We provide services that alert customers to identities associated with known or suspected fraudulent activity, satisfy compliance requirements to “know your customer,” and confirm an individual’s identity.

Credit Marketing Services

Credit Marketing Services help our business customers proactively acquire new customers, cross-sell to existing customers and monitor and manage risk in their existing portfolios. We provide information extracted from the consumer credit database according to specific customer criteria and deliver it in the form of a batch dataset. These services are delivered on an ad hoc or regularly scheduled basis.

We have a variety of Credit Marketing Services to help customers market to prospects and manage risks of new and existing accounts as efficiently and effectively as possible. We provide portfolio review services, periodic reviews of our customers’ existing accounts, to help our customers develop cross-selling offers to their existing customers and monitor and manage risk in their existing consumer portfolios. Prescreen services are marketing lists our customers use on a one-time basis to extend firm offers of credit or insurance to consumers. Prospect databases are used by our customers to contact individuals multiple times to extend firm offers of credit or insurance. We also provide trigger services, daily notifications of credit data sent to our customers to notify them

 

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of changes in their customers’ credit and risk profiles. The information we provide also helps our business customers manage and assess various risks associated with their customers, such as the ability to repay debt, the likelihood of a credit or insurance loss and the potential for fraud.

Decision Services

Decision Services provides the analytics and technology to support rules-based decisions at the point of interaction between a consumer and a business customer. Decisions may be based on a generic logical formula or customized to fit specific customer business rules. The data used in the decisioning process is derived from our consumer credit database, other sources of data we own or external suppliers. Our customers use Decision Services to evaluate business risks and opportunities, including those associated with new consumer credit and checking accounts, insurance applications, account collection and apartment rental requests.

International

The International segment provides services similar to our USIS segment to business customers in select regions outside the United States. Depending on the maturity of the credit economy in each geographic location, services may include credit reports, analytical and decision services, and risk management services. These services are offered to customers in a number of industries including financial services, insurance, automotive, collections, communications and other markets, and are delivered through both direct and indirect channels. The International segment also provides consumer services similar to those offered in our Interactive segment, such as credit reports, credit scores and credit monitoring services. The two market groups in the International segment are as follows:

Developed Markets

Developed Markets, which includes Canada, Hong Kong and Puerto Rico, accounted for approximately 44% of our international revenue in 2010. We offer online data services, credit marketing services and decisioning services in all three of the developed markets. Canada, where we have operated a wholly-owned subsidiary since 1989, accounted for approximately 66% of our Developed Markets revenue in 2010. Hong Kong, where we have had a majority ownership interest in the only consumer credit bureau since 1998, accounted for approximately 25% of our Developed Markets revenue in 2010. Puerto Rico, where we have been active since 1985, accounted for approximately 9% of our Developed Markets revenue in 2010.

Emerging Markets

Emerging Markets, which includes South Africa, Mexico, Dominican Republic, Chile, India and other emerging countries, accounted for approximately 56% of our international revenue in 2010. We offer online data services, credit marketing services and decisioning services in most of these markets as well as auto information solutions, commercial credit information and check guarantee services in South Africa. South Africa, where we have operated a wholly-owned subsidiary since 1993, accounted for approximately 76% of our Emerging Markets revenue in 2010. In Latin America, we have been active since 1996 and have operations in several Central and South American countries, including a 25.69% ownership interest in TransUnion de México, S.A., the primary credit bureau in Mexico. In India, we have been active since 2004 and hold a 19.99% ownership interest in Credit Information Bureau (India) Limited (“CIBIL”), the largest operating credit bureau in India. We provide technological expertise and derive revenue from royalties paid by CIBIL for the use of our technology and credit scores.

Interactive

Interactive offers easy-to-use credit services and associated educational materials to help individual consumers understand, monitor and manage their credit. Services in this segment include credit reports, credit scores and credit monitoring services, provided primarily through the internet. The majority of revenue is derived from

 

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subscribers who pay a monthly fee for access to their credit report, credit score and for alerts of changes in their credit reports. We deliver these services to consumers primarily through our websites truecredit.com and transunion.com and, beginning in January 2010, our interactive website zendough.com. We also provide these services on a white-label basis on behalf of other financial services companies and direct-to-consumer marketers.

Corporate

Corporate provides support services to each operating segment, holds investments and conducts enterprise functions. Certain costs incurred in Corporate that are not directly attributable to one or more of the operating segments remain in Corporate. These costs are primarily enterprise-level costs and administrative in nature.

Markets and customers

We provide services to businesses and consumers in the United States and throughout the world. We provide services directly to business customers in a wide range of industries including financial services, insurance, healthcare and other markets, which we deliver through both direct and indirect channels. We also provide services directly to individual consumers.

We have a highly diversified customer base, with our largest customer accounting for approximately 3.5% of revenue, and our top ten customers accounting for approximately 19.0% of revenue. A substantial portion of our revenue is derived from companies in the financial services industry.

We have significant operations in the United States, South Africa, Canada, Hong Kong, Puerto Rico, Mexico, the Dominican Republic, India, Trinidad and Tobago, Guatemala, Chile, Costa Rica, Honduras, Nicaragua, El Salvador and Botswana. The following table summarizes our 2010 revenue based on the country where the revenue was earned:

 

     Approximate percent of
consolidated revenue
 

United States

     80

South Africa

     9

Canada

     6

Other

     5

We market our services primarily through our own sales force. We have dedicated sales team for our largest customers focused by industry and geography. These dedicated sales teams provide strategic account management and direct support to customers to develop comprehensive solutions in certain markets. We use shared sales teams to sell our services to mid-size customers. These sales teams are based in our headquarters office and in field offices strategically located in the United States and abroad. Smaller customers’ sales needs are serviced primarily through call centers. We also market our services through indirect channels such as resellers, who sell directly to businesses and consumers. Our direct-to-consumer services are sold through our websites transunion.com, truecredit.com and zendough.com. We also market our services through paid online searches, television commercials, direct mail and other marketing campaigns.

Seasonality

Seasonality in the USIS segment is strongly correlated to volumes of online credit data purchased by our financial services and mortgage customers, and our sales are generally higher during the second and third quarters. Our Interactive segment has historically had revenue peaks in March and August of each year, with slower sales between November and February. However, the recent downturn in the residential real estate, general credit and financial services markets has made it more difficult to determine if these seasonality trends will continue. Seasonality in our International segment is driven by local economic conditions and relevant macro-economic market trends.

 

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Competition

The market for our services is highly competitive. Our competitors vary in size and in the scope of the services they offer. We are one of three global credit reporting companies. The other two global credit reporting companies are Equifax Inc. and Experian plc, both of which offer a similar range of consumer credit reporting services. We also compete with a number of smaller, specialized companies, all of which offer a subset of the services we provide. At times, we partner with our competitors to offer combined consumer credit reporting information to our mutual customers.

We believe the services we provide our customers reflect our understanding of our customers’ businesses, the depth and breadth of our data, and the quality of our decisioning technologies and advanced analytics. By integrating our services into our customers’ business processes we ensure efficiencies, continuous improvement and long-lasting relationships.

Information technology

Technology

The continuing operation of our information systems is fundamental to our success. Our information systems access, process, deliver and store the data that is used to develop solutions for our customers. Customers connect to our systems using a number of different technologies, including secured internet connections, virtual private networks and dedicated network connections. We contract with various third-party providers to help us maintain and support our systems, as well as to modify existing and develop new applications to be used in our businesses.

Control of our technology is critical to our success, and knowledge transfer is a key component of our relationships with third-party providers and our implementation of emerging technologies. Therefore, when we contract for third-party support or incorporate new technology into our systems, we use dedicated employee teams to manage the ongoing development of the strategy in these areas.

Data centers and business continuity

As a global operation we have data centers located throughout the world. We generally employ similar technologies and infrastructures in each data center.

The accessibility and availability of our data is critical to our success. We maintain a framework for business continuity that includes policies and procedures that identify critical business functions and processes designed to maintain such functions, as well as specific disaster recovery plans should critical infrastructure or systems fail or become disabled.

As part of our operational requirements, each business unit must prepare and maintain an updated business continuity plan. These plans are stored in a centralized database and reviewed by our compliance team. We also have specific disaster recovery procedures that are designed to recover critical systems should an event occur at any of our data centers. We periodically test the state of preparedness of our most critical disaster recovery procedures. For our primary U.S. data center we maintain redundancy plans that allow for the transfer of capacity in the event there is a major failure of computer hardware, or a loss of our primary telecommunications line or power source. We also maintain a recovery site in Gaithersburg, Maryland to recover the majority of our operational capacity should our redundancy program fail.

Security

The security and protection of non-public consumer information is one of our highest priorities. We have written processes and procedures relating to information security and a wide range of physical and technical safeguards that are designed to provide security. These safeguards include firewalls, monitoring and forensic tools, encryption programs, data transmission standards and access and anomaly reports.

 

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Intellectual property and licensing agreements

Our intellectual property is a key strategic advantage and is critical to our success. Because of the importance of our intellectual property, we treat our brand, software, technology and database as proprietary. We attempt to protect our intellectual property rights through the use of trademarks, copyrights, patents, trade secret laws, licenses and contractual agreements. While we hold various patents, we do not rely on patents to protect our core intellectual property. We have certain registered trademarks, trade names, service marks, logos, internet URLs and other marks of distinction in the United States and foreign countries, the most important of which is the trademark “TransUnion.” This trademark is used in connection with most of our service lines and services we sell and we believe it is a known mark in the industry and is important to our ability to create a competitive advantage.

We license certain data and other intellectual property to other companies for a fee, on terms that are consistent with customary industry standards and that are designed to protect our rights to our intellectual property. We generally use standard licensing agreements and do not provide our intellectual property without a nondisclosure and license agreement in place.

We own proprietary software that we use to maintain our databases and to develop and deliver our services. We develop and maintain business critical software that transforms data furnished by various sources into databases upon which our services are built. We also develop and maintain software for our consumer relations personnel to manage any consumer disclosures and help resolve disputes. In all business segments we develop and maintain software applications that we use to deliver services to our customers, through an Application Service Provider (“ASP”) model. In particular, we develop and maintain decision technology platforms that we host and integrate into our customers’ workflow systems to improve the efficiency of their operations.

We also license certain key intellectual property from third parties that we use in our business. For example, we license credit-scoring algorithms and the right to sell credit scores derived from those algorithms from Fair Isaac Corporation (“FICO”). This license requires us to pay a usage-based fee and expires in 2015.

Employees

As of December 31, 2010, we employed approximately 3,200 employees throughout the world, 18 of whom are subject to collective bargaining agreements. We consider our relationships with our employees to be good and have not experienced any work stoppages.

Properties

Our corporate headquarters and main data center are located in Chicago, Illinois, in an office building that we own. We also own a data center building in Hamilton, Ontario, Canada, which is free of any encumbrances. We lease space in approximately 70 other locations, including office space and additional data centers. These locations are geographically dispersed to meet our sales and operating needs. We anticipate that suitable additional or alternative space will be available at commercially reasonably terms for future expansion.

See Note 22, “Commitments,” of our audited consolidated financial statements appearing elsewhere in this prospectus.

Regulatory matters

Compliance with regulatory requirements is a top priority. Numerous laws govern the collection, protection, dissemination and use of the consumer information we collect. These laws are enforced by federal, state and local regulatory agencies, and also through private civil litigation. We identify these laws and regulations and put in place technical, physical and administrative safeguards reasonably designed to protect the privacy of consumers and the access to, and accuracy of, the personal information in our database.

 

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U.S. data and privacy protection

Our U.S. operations are subject to numerous laws that regulate the use of consumer credit information and provide for civil and criminal penalties for the unauthorized release of, or access to, this protected information. The laws and regulations that affect our U.S. business include, but are not limited to, the following:

 

   

Fair Credit Reporting Act—The FCRA, as amended by FACTA and the CARD Act, applies to consumer credit reporting agencies, including TransUnion, as well as data furnishers and users of consumer reports. The FCRA promotes the accuracy, fairness and privacy of information in the files of consumer reporting agencies that engage in the practice of assembling or evaluating certain information relating to consumers. The FCRA limits what information may be reported by consumer reporting agencies, limits the distribution and use of consumer reports, establishes consumer rights to access and dispute their own credit files, requires consumer reporting agencies to make available to consumers a free annual credit report and imposes many other requirements on consumer reporting agencies, data furnishers and users of consumer report information. Violation of the FCRA, as amended by the FACT Act, can result in civil and criminal penalties. The law also allows consumers to bring individual or class action lawsuits against a consumer reporting agency for violations of the FCRA.

 

   

State FCRAs—Many states have enacted laws with requirements similar to the federal FCRA. Some of these state laws impose additional, or more stringent, requirements than the federal FCRA. Some of these state laws impose additional requirements in connection with the investigation and response to reported inaccuracies in consumer reports. The FCRA preempts some of these state laws but the scope of preemption continues to be defined by the courts.

 

   

The Financial Services Modernization Act of 1999, or Gramm-Leach-Bliley Act (“GLB Act”)—The GLB Act regulates the receipt, use and disclosure of non-public personal financial information of consumers that is held by financial institutions, including TransUnion. Several of our data sets are subject to GLB Act provisions, including limitations on the use or disclosure of the underlying data and rules relating to the technological, physical and administrative safeguarding of non-public personal financial information. Breach of the GLB Act can result in civil and criminal liability.

 

   

Data security breach laws—A majority of states have adopted data security breach laws that require notice be given to affected consumers under certain circumstances. Some of these laws require additional data protection measures over and above the GLB Act data safeguarding requirements. These state laws vary, but generally require that notification be sent to affected consumers in the event of a breach of personal information under certain circumstances. If data within our system is compromised by a breach, we may be subject to provisions of various state security breach laws.

 

   

Identity theft laws—In order to help reduce the incidence of identity theft, most states and the District of Columbia have passed laws that give consumers the right to place a security freeze on their credit reports to prevent others from opening new accounts or obtaining new credit in their name. Generally, these state laws require us to respond to requests for a freeze within a certain period of time, to send certain notices or confirmations to consumers in connection with a security freeze, and to unfreeze files upon request within a specified time period.

 

   

The Federal Trade Commission Act (“FTC Act”)—The FTC Act prohibits unfair methods of competition, and unfair or deceptive acts or practices. We must comply with the FTC Act when we market our services, such as consumer credit monitoring services. The security measures we employ to safeguard the personal data of consumers could also be subject to the FTC Act, and failure to safeguard data adequately may subject us to regulatory scrutiny or enforcement action. There is no private right of action under the FTC Act.

 

   

The Credit Repair Organizations Act (“CROA”)—The CROA regulates companies that claim to be able to assist consumers in improving their credit standing. There have been efforts to apply the CROA to credit monitoring services offered by consumer reporting agencies and others. CROA is a very technical statute that allows for a private right of action, and permits consumers to recover all money paid for

 

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alleged “credit repair” services in the event of violation. We, and others in our industry, have settled purported consumer class actions alleging violations of CROA without admitting or denying liability.

 

   

The Health Insurance Portability and Accountability Act of 1996, as amended by the American Recovery and Reinvestment ACT of 2009 (“HIPAA”)—HIPAA requires companies to implement reasonable safeguards to prevent intentional or unintentional use or disclosure of protected health information. In connection with receiving data from and providing services to health care providers, we may handle data subject to the HIPAA requirements. We obtain protected health information from healthcare providers and payors that are subject to the privacy, security and transactional requirements imposed by HIPAA. We are frequently required to secure HIPAA-compliant “business associate” agreements with the providers and payors who supply data to us. As a business associate, we are obligated to limit our use and disclosure of health-related data to certain statutorily permitted purposes, as outlined in our business associate agreements and the HIPAA regulations, and to preserve the confidentiality, integrity and availability of this data. HIPAA also requires, in certain circumstances, the reporting of breaches of protected health information to affiliated individuals and to the United States Department of Health and Human Services. A violation of any of the terms of a business associate agreement or noncompliance with the HIPAA data security requirements could result in administrative enforcement action and/or imposition of statutory penalties by the United States Department of Health and Human Services or a state attorney general. HIPAA’s requirements supplement but do not preempt state laws regulating the use and disclosure of health-related information; state law remedies (which can include a private right of action) remain available to individuals affected by an impermissible use or disclosure of health-related data.

We are also subject to federal and state laws typically applicable to global businesses, such as antitrust laws, the Foreign Corrupt Practices Act, the Americans with Disabilities Act and employment laws. We continuously monitor federal and state legislative and regulatory activities that involve data privacy and protection to identify issues in order to remain in compliance with all applicable laws and regulations.

International data and privacy protection

We are subject to data protection, privacy and consumer credit laws and regulations in the foreign countries where we conduct business. These laws and regulations include, but are not limited to, the following:

 

   

South Africa: National Credit Act of 2005 (the “Act”)—The Act and its implementing regulations govern credit bureaus and consumer credit information. The Act sets standards for filing, retaining and reporting consumer credit information. The Act also defines consumers’ rights with respect to accessing their own information and addresses the process for disputing information in a credit file.

 

   

Canada: Personal Information Protection and Electronic Documents Act of 2000 (“PIPEDA”)—The PIPEDA and provincial credit reporting laws govern how private sector organizations collect, use or disclose personal information in the course of commercial activities. The PIPEDA gives individuals the right to access and request correction of their personal information collected by such organizations. The PIPEDA requires compliance with the Model Code for the Protection of Personal Information. Most Canadian provinces also have laws dealing with consumer reporting. These laws typically impose an obligation on credit reporting agencies to ensure the accuracy of the information, place limits on the disclosure of the information and give consumers the right to have access to, and challenge the accuracy of, the information.

 

   

India: Credit Information Companies Regulation Act of 2005 (“CICRA”)—The CICRA requires entities that collect and maintain personal credit information ensure that it is complete, accurate and protected. Entities must adopt certain privacy principles in relation to collecting, processing, preserving, sharing and using credit information. The Indian parliament recently passed legislation that would allow individuals to sue for damages in the case of a data breach, if the entity negligently failed to implement “reasonable security practices and procedures” to protect personal data.

 

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Mexico: Law on Credit Reporting Societies of 2002 (“LCRS”)—The LCRS regulates the operations of credit information companies that gather, manage, and release credit history information of individuals and businesses. The LCRS requires credit information companies to provide consumer reports to individuals upon request, and addresses individuals’ right to challenge information in the report. The LCRS requires that credit reporting companies have adequate technology and internal controls for the security and validation of credit information. The Mexican congress is currently drafting comprehensive data protection legislation, which could impose additional obligations regarding information security and fair information practices.

 

   

Hong Kong: Personal Data (Privacy) Ordinance (“PO”) and The Code of Practice on Consumer Credit Data (“COPCCD”) – The PO and the COPCCD regulate the operation of consumer credit reference agencies. They prescribe the methods and security controls under which credit providers and credit reference agencies may collect, access and manage credit data. Changes to the COPCCD are being considered that would permit credit providers to share additional mortgage payment data.

We are also subject to various laws and regulations in the other countries where we operate.

Legal proceedings

General

We are involved in various legal proceedings resulting from our current and former business operations. Some of these proceedings seek business practice changes or large damage awards. These actions generally assert claims for violations of federal or state credit reporting or consumer protection laws, or common law claims related to privacy, libel, slander or the unfair treatment of consumers. We believe that most of these claims are either without merit or we have valid defenses to the claims, and it is our position to vigorously defend these matters. However, due to the uncertainties inherent in litigation we cannot predict the outcome in each instance. We could incur costs or suffer an adverse result that may have a material adverse effect on our business or financial condition.

To reduce our exposure to a significant monetary award resulting from an adverse judicial decision we maintain insurance that we believe is appropriate and adequate based on our historical experience. We regularly advise our insurance carriers of the claims (threatened or pending) against us and generally receive a reservation of rights letter from the carriers when such claims exceed applicable deductibles. Other than the Privacy Litigation, we are not aware of any significant monetary claim that has been asserted against us that would not be covered to some extent by insurance.

Privacy Litigation

We were the defendant in sixteen purported class actions that arose from our Performance Data Division that was discontinued over 10 years ago. All of these purported class actions, except for Andrews v. Trans Union, LLC, Case No. 02-18553, filed in 2002 in the Civil District Court, Parish of Orleans, Louisiana (the “Louisiana Action”) were consolidated for pre-trial purposes in the United States District Court for the Northern District of Illinois (Eastern Division) and are known as In Re TransUnion Corp. Privacy Litigation, MDL Docket No. 1350. We refer to these matters as the “Privacy Litigation”

The Privacy Litigation, which began in 2000, was the result of our sale of target marketing information, including names and addresses of individuals to businesses for marketing purposes. The FTC challenged our target marketing practice in 1992 and a final decision was rendered in 1999 holding that the target marketing lists being sold were consumer reports as defined in the FCRA.

A settlement of this matter was approved by the court on September 17, 2008. Pursuant to the terms of settlement we paid $75.0 million into a fund for the benefit of class members and we provided approximately 600,000 individuals with free credit monitoring services. All class members, including those in the Louisiana Action,

 

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released their procedural rights to pursue the claims alleged in these matters through a class action. However, all class members (other than the named plaintiffs in the Privacy Litigation and the Louisiana Action) did retain their right to bring a separate, individual action against us for the claims alleged in these matters provided these post-settlement claims were asserted on or before September 16, 2010. The settlement agreement provides that any money remaining in the fund after payment of notice costs, class counsel fees and administrative expenses will be used to satisfy any post-settlement claims with remaining funds distributed on a pro-rata basis to class members who elected to receive a potential cash payment as part of the consideration to release their procedural rights.

We have been advised that there are approximately 100,000 post-settlement claimants seeking payment from the settlement fund. We are currently in mediation with counsel representing the class members and the post-settlement claimants to bring this matter to conclusion. We believe the remaining amount of the fund will be sufficient to meet all demands asserted by post-settlement claimants and class members against us and that any future costs and expenses that we incur with respect to this matter will not have a material adverse effect on our financial condition.

Bankruptcy tradeline litigation

In a matter captioned White, et al v. Experian Information Solutions, Inc. (No. 05-cv-01070-DOC/MLG, filed in 2005 in the United States District Court for the Central District of California), plaintiffs sought class action status against Equifax, Experian and TransUnion in connection with the reporting of delinquent or charged-off consumer debt obligations on a consumer report after the consumer was discharged in a bankruptcy proceeding. The claims allege that each national consumer reporting company did not automatically update a consumer’s file after their discharge from bankruptcy and such non-action was a failure to employ reasonable procedures to assure maximum file accuracy, a requirement of the FCRA.

Without admitting any wrongdoing, we have agreed to a settlement of this matter. On August 19, 2008, the Court approved an agreement whereby we and the other industry defendants voluntarily changed certain operational practices. These changes require us to update certain delinquent records when we learn, through the collection of public records, that the consumer has received an order of discharge in a bankruptcy proceeding. These business practice changes did not have a material adverse impact on our operations or those of our customers.

In 2009, we also agreed, with the other two defendants, to settle the monetary claims associated with this matter and to deposit $17.0 million ($51 million in total) into a settlement fund that will be used to pay the class counsel’s attorney fees, all administration and notice costs of the fund to the purported class, and a variable damage amount to consumers within the class based on the level of harm the consumer is able to confirm. Our share of this settlement was fully covered by insurance. This settlement has been preliminarily approved by the Court. The settlement approval is being opposed by certain plaintiff class members who assert, among other things, that the settlement payment is inadequate in the face of allegations that the industry willfully violated the FCRA. Objectors have asserted that if a willful violation can be proven, the damages payable by the three credit reporting companies would be in excess of $1.0 billion. If the monetary settlement is not finally approved by the Court we expect to vigorously litigate this matter and assert valid defenses we have to the claims made by the plaintiffs. Although we believe we have defenses and have not violated any law, as well as additional insurance coverage, due to the uncertainties of litigation the ultimate outcome of this matter is not certain. However, we do not believe the final resolution of this matter will have a material adverse effect on our financial condition.

 

 

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Management

Directors and executive officers

The directors and principal officers of the Parent, and their positions and years of birth, are set forth below:

 

Name

   Year
of birth
    

Position

John A. Canning, Jr

     1944       Director

Timothy M. Hurd

     1969       Director

Vahe A. Dombalagian

     1973       Director

Edward M. Magnus

     1975       Director

Nigel W. Morris

     1958       Director

Penny Pritzker

     1959       Director, Non-Executive Chairman of the Board of Directors

Matthew A. Carey

     1964       Director

Renu S. Karnad

     1952       Director

Siddharth N. (Bobby) Mehta

     1958       Director, President & Chief Executive Officer

Samuel A. Hamood

     1968       Executive Vice President & Chief Financial Officer

John W. Blenke

     1955       Executive Vice President & General Counsel

Ian M. Drury

     1965       Executive Vice President & Chief Information Officer—U.S. Information Services

Paul E. Fritz

     1963       Executive Vice President—Technical and Business Operations

Jeffrey J. Hellinga

     1958       Executive Vice President—U.S. Information Services

Andrew Knight

     1957       Executive Vice President—International

Mary K. Krupka

     1955       Executive Vice President—Human Resources

Mark W. Marinko

     1962       Executive Vice President—Interactive

Wilbert P. Noronha

     1959       Executive Vice President—Global Analytics Decision Services

The present and principal occupations and recent employment history of each of the directors and executive officers of the Parent listed above is as follows:

John A. Canning, Jr. is the Chairman and co-founder of the Sponsor. Prior to co-founding the Sponsor, Mr. Canning spent 24 years with First Chicago Corporation, most recently as Executive Vice President of The First National Bank of Chicago and President of First Chicago Venture Capital. Mr. Canning currently serves on the board of directors of Exelon Corporation, Milwaukee Brewers Baseball Club, Northwestern Memorial Hospital, and Children’s Inner City Educational Fund and on the board of trustees of the Big Shoulders Fund, The Museum of Science and Industry, and Northwestern University. Mr. Canning is also a commissioner of the Irish Pension Reserve Fund, a trustee and chairman of The Chicago Community Trust, a trustee and chairman of The Field Museum, chairman of the Chicago News Cooperative, and former director and chairman of the Federal Reserve Bank of Chicago.

Timothy M. Hurd is a Managing Director of the Sponsor and joined that firm in 1996. Prior to joining the Sponsor, Mr. Hurd was with Goldman, Sachs & Co. Mr. Hurd currently serves on the board of directors of CapitalSource Inc., Nuveen Investments, Inc., the CFA Society of Chicago, Children’s Memorial Foundation, and the Endowment & Investment Committee of the Chicago Symphony Orchestra.

Vahe A. Dombalagian is a Managing Director of the Sponsor and joined that firm in 2001. Prior to joining the Sponsor, Mr. Dombalagian was with Texas Pacific Group, a private equity firm, and Bear Stearns & Co., Inc. Mr. Dombalagian currently serves on the board of directors of Cinemark Holdings, Inc., L.A. Fitness International, LLC, and Nuveen Investments, Inc.

 

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Edward M. Magnus is a Director of the Sponsor and joined that firm in 2004. Prior to joining the Sponsor, Mr. Magnus was with Donaldson, Lufkin, & Jenrette in the financial institutions group and with the Sponsor as an Associate for two years. Mr. Magnus currently serves on the board of directors of Nuveen Investments, Inc.

Nigel W. Morris is the managing partner of QED Investors LLC, a direct investment fund focused on high-growth companies that leverage the power of data strategies. In addition, he works in an advisory capacity with General Atlantic Partners and Oliver Wyman Consulting. He serves on the board of numerous for-profit companies, including Network Solutions, Prosper, Clearspring Technologies, Media Math, and Mobile Posse. He is also on the board of the London Business School and Venture Philanthropy Partners, and is a member of the Global Leadership Council at the Brookings Institution. Previously, he co-founded Capital One Financial Services in 1994, where he served as President and Chief Operating Officer.

Penny Pritzker has been the Non-Executive Chairman of the Board of Directors since 2005. Ms. Pritzker is the Chairman of CC-Development Group, Inc., which operates Vi (formerly known as Classic Residence by Hyatt), an owner and operator of upscale retirement communities throughout the United States; serves as President and Chief Executive Officer of Pritzker Realty Group, a real estate investment and advisory firm; is co-founder and Chairman of The Parking Spot, a near-airport parking company; is a Director and Vice President of The Pritzker Foundation, a charitable foundation; a member of the President’s Economic Recovery Advisory Board; and served as National Finance Chair of Barack Obama’s presidential campaign. Ms. Pritzker is also a director of Hyatt Hotels Corporation. Ms. Pritzker served as a director of the Marmon Group, Inc. until March 2008. Ms. Pritzker served as director of the William Wrigley Jr. Company from 1994 to 2005, and as director for LaSalle Bank Corporation, N.A. from 2004 to 2007.

Matthew A. Carey has been a member of our board of directors since 2009. Mr. Carey is executive vice president and chief information officer for The Home Depot, where he is responsible for all aspects of Home Depot’s information technology and communication systems and services. Before joining The Home Depot in 2008, Mr. Carey served as senior vice president and chief technology officer at eBay. Prior to joining eBay in 2006, Mr. Carey spent more than 20 years with Wal-Mart, where he was senior vice president and chief technology officer.

Renu S. Karnad has been a member of our board of directors since 2008. Ms. Karnad serves in numerous leadership roles, including serving as a director for ICI India, Limited, Credit Information Bureau (India) Limited, Motor Industries Co. Limited, Mother Dairy Fruits and Vegetables Private Limited, HDFC ERGO General Insurance Company Limited, Gruh Finance Limited and Sparsh BPO Services Limited. Ms. Karnad is a member of the Managing Committee of Indian Cancer Society and Vice Chairperson of the Governing Council of Indraprastha Cancer Society & Research Centre.

Siddharth N. (Bobby) Mehta joined TransUnion in August 2007. Since he joined he has served as the President & Chief Executive Officer. From May 2007 through July 2007, he was a consultant to our board of directors. From 1998 through February 2007, he held a variety of positions with HSBC Finance Corporation and HSBC North America Holdings, Inc. From May 2005 through February 2007 he was the Chairman and Chief Executive Officer of HSBC Finance Corporation. From March 2005 through February 2007 he was also the Chief Executive Officer of HSBC North American Holdings, Inc. From 1998 through February 2005 he was the Group Executive, Credit Card Services, of HSBC Finance Corporation. Prior to HSBC, he served as a Senior Vice President at the Boston Consulting Group in Los Angeles and co-leader of Boston Consulting Group Financial Services Practice where he developed retail, insurance and investment strategies for a variety of financial service clients. He also serves on the Board of Directors of DataCard Group, The Chicago Public Education Fund and The Field Museum.

Samuel A. Hamood joined TransUnion in February 2008. Since he joined he has served as Executive Vice President & Chief Financial Officer. From 2002 through January 2008, he held a variety of positions at Electronic Data Systems. From January 2007 to January 2008, he was the Chief Financial Officer for the U.S. Region. From April 2004 to December 2006 he was the Vice President of Investor Relations. From 2002 through

 

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March 2004 he was the Senior Director of Corporate Strategy and Planning. Prior to that, he spent six years with the Walt Disney Company in a variety of finance and strategy roles with increasing levels of responsibility. He also spent five years in the audit practice of Deloitte and Touche, LLP.

John W. Blenke joined TransUnion in May 2003. Since he joined he has served as the Executive Vice President & General Counsel. From 1989 through April 2003, he held a variety of positions with HSBC North America, including most recently the Vice President of Corporate Law, where he managed the corporate legal functions responsible for mergers and acquisitions, corporate finance, and consumer finance branch-based and wholesale lending.

Ian M. Drury joined TransUnion in November 2007. Since he joined he has served as the Chief Information Officer of the U.S. Information Services segment. From July 2004 through October 2007, he was the Chief Information Officer of United Automobile Insurance Group.

Paul E. Fritz joined TransUnion in December 2005. Since November 2009, he has served as the Executive Vice President of Technical and Business Operations. Prior to that, he held a variety of management positions with increasing levels of responsibility since he joined TransUnion.

Jeffrey J. Hellinga joined TransUnion in 1998. Since January 2005, he has served as the Executive Vice President of the U.S. Information Services segment. Prior to that, he held a variety of management positions with increasing levels of responsibility since he joined TransUnion.

Andrew Knight joined TransUnion in 1993. Since June 2008, he has served as the Executive Vice President of the International segment. From February 2004 through May 2008 he was the Chief Executive Officer of TransUnion Africa. From 1993 through January 2004, he was the Managing Director of TransUnion Africa.

Mary K. Krupka joined TransUnion in 1977. Since January 2003, she has served as the Executive Vice President of Human Resources. Prior to that, she held a variety of human resource management positions with increasing levels of responsibility since she joined TransUnion.

Mark W. Marinko joined TransUnion in 1996. Since September 2004, he has served as the Executive Vice President of the Interactive segment. Prior to that, he held a variety of finance management positions with increasing levels of responsibility since he joined TransUnion.

Wilbert P. Noronha joined TransUnion in April 2008. Since he joined, he has served as the Executive Vice President of Analytics and Decision Services. From June 1998 through March 2008 he held a variety of finance and operating management positions at HSBC Finance Corporation.

There is no family relationship among any of our directors and executive officers.

Board of Directors of the Parent

The Board of Directors of the Parent is currently composed of nine directors. Because affiliates of the Sponsor own approximately 51.0% of the common stock of the Parent, we would be a “controlled company” under the rules of the New York Stock Exchange, which would qualify us for exemptions from certain corporate governance rules of the New York Stock Exchange, including the requirement that the Board of Directors of the Parent be composed of a majority of independent directors.

Audit committee

The audit committee currently consists of Messrs. Dombalagian and Carey and Ms. Karnad. The audit committee has responsibility for, among other things, the quality of our financial reporting and internal control processes, our independent auditor’s performance and qualification and the performance or our internal audit function.

 

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Compensation committee

The compensation committee currently consists of Mses. Pritzker and Karnad, and Mr. Dombalagian. The compensation committee has responsibility for, among other things, review and approval of executive compensation, review and approval of equity compensation and review and approval of TransUnion’s compensation philosophy, strategy and principles.

Corporate governance and nominating committee

The corporate governance committee currently consists of Mr. Canning and Mses. Karnad and Pritzker. The corporate governance committee has responsibility for, among other things, review of corporate governance guidelines and oversight of the evaluation of the effectiveness of the Board of Directors of the Parent and its committees.

Acquisitions and strategy committee

The acquisitions and strategy committee currently consists of Messrs. Hurd, Magnus, Mehta and Morris, and Ms. Pritzker. The acquisitions and strategy committee has responsibility for, among other things, review of the development and implementation of the strategic business plans of TransUnion and review of potential acquisitions, investments or material dispositions.

Compensation committee interlocks and insider participation

None of the executive officers of the Parent has served as a member of the board of directors or compensation committee of another entity that had one or more of its executive officers serving as a member of the Board of Directors of the Parent.

Director compensation

See “Compensation discussion and analysis—Director compensation.”

 

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Compensation discussion and analysis

The information contained in “Compensation discussion and analysis” describes the material elements of compensation paid or awarded to the principal executive officer, principal financial officer, and the other three most highly compensated executive officers of the Parent (collectively, our “named executive officers” or “NEOs”) and to the members of the Board of Directors of the Parent.

For 2010, our named executive officers are:

 

   

Mr. Siddharth N. (Bobby) Mehta—President & Chief Executive Officer (the “CEO”)

 

   

Mr. Samuel A. Hamood—Executive Vice President & Chief Financial Officer

 

   

Mr. Jeffrey J. Hellinga—Executive Vice President—U.S. Information Services

 

   

Mr. Andrew Knight— Executive Vice President—International

 

   

Mr. John W. Blenke—Executive Vice President & General Counsel

The specific amounts and material terms of such compensation paid, payable or awarded for 2010 to the named executive officers are disclosed under “—Executive compensation—Summary compensation table—2010” and the subsequent tables and narrative. The Compensation Committee of our Board of Directors (the “Compensation Committee”) oversees the compensation program for our named executive officers.

Executive summary

Our compensation program is intended to align the interests of our executives and stockholders by rewarding executives for the achievement of strategic goals that successfully drive our operations and, thereby, enhance stockholder value. The primary components of our executive compensation program are base salary, annual cash incentives and long-term equity awards.

We provide named executive officers and other employees with a base salary to compensate them for services rendered during the fiscal year. The Compensation Committee annually evaluates the performance of the CEO and determines his base salary and other compensation in light of the goals and objectives of TransUnion and the executive compensation program. The Committee annually reviews and adjusts executive officers’ base salaries based on a recommendation from the CEO.

Our annual cash incentives are designed to reward executive officers based on individual performance (as measured against individual goals) and our overall financial results (as measured against financial targets). The incentive targets, which are set annually with the review and approval of the Compensation Committee, are intended to highlight key strategic priorities and financial metrics.

Equity grants are intended to create a strong alignment between management’s interests and those of the stockholders. From 2005 until the Change in Control Transaction, we used restricted stock as the sole vehicle for equity compensation. In connection with the Change in Control Transaction and consistent with the terms of the awards, all outstanding restricted stock awards were accelerated and cashed-out. Following and as negotiated as part of the Change in Control Transaction, we provided executives equity compensation opportunities through a stock option grant, intended to provide the amount of equity compensation the executives would have received over the next five years. Additionally, as part of the Change in Control Transaction, each of our named executive officers was required to roll over a portion of their pre-Change in Control Transaction holdings of Parent common stock into non-voting common stock of the Parent. The option grants and the rollover equity are intended to incentivize management to remain focused on increasing the long-term value of the Company and create alignment between the executives’ interests and those of the stockholders.

 

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The Compensation Committee uses various tools, such as benchmarking reports and tally sheets, to confirm that the level of pay of each named executive officer is appropriate. However, base salary, annual bonus goals, and long-term equity awards are each specifically designed to meet the compensation objectives set forth above.

Despite continued weakness in our domestic markets, we reported net operating income of $216.1 million on revenue of $956.5 million for 2010, compared to net operating income of $204.4 million on revenue of $924.8 million for 2009, an increase of 5.7% in net operating income and 3.4% in revenue. Our continued international growth and our ongoing focus on our cost structure have enabled us to generate strong operating margins in 2010 compared to 2009 despite the soft economic conditions. Revenue and net income were higher in the second half of 2010 compared to the first half of 2010, as each of our business segments trended favorably.

Compensation philosophy and objectives

The following statements identify key components of our compensation philosophy. These statements are used to guide the Compensation Committee in making compensation decisions.

 

   

Attract, motivate, and retain highly experienced executives who are vital to our short- and long-term success, profitability and growth.

 

   

Create alignment with executives and stockholders by rewarding executives for the achievement of strategic goals that successfully drive our operations and, thereby, enhance shareholder value.

 

   

Differentiate executive rewards based on actual individual performance while also rewarding for our overall results.

These objectives have provided a basis for our compensation program since 2005. The Compensation Committee, which is responsible for establishing and reviewing our overall compensation philosophy, evaluates these objectives on an annual basis to confirm the appropriateness of each objective in light of the overall corporate strategy and typical market practices.

Role of Compensation Committee, management and compensation consultant in compensation decisions

The Compensation Committee was created to provide stewardship over our compensation and benefit programs, including executive compensation and equity plans. Pursuant to its charter, the Compensation Committee is responsible for overseeing our executive compensation program, developing and reviewing our executive compensation philosophy and approving decisions regarding executive compensation. As part of this responsibility, the Compensation Committee evaluates the performance of the CEO and determines his compensation in light of our goals and objectives and the executive compensation program. The Compensation Committee also reviews and approves annually all compensation decisions affecting our executive officers, including our named executive officers.

Additionally, the Compensation Committee performs the following functions in carrying out its responsibilities:

 

   

Reviews annually the components of our executive compensation programs to determine whether they are consistent with our compensation philosophy;

 

   

Reviews and approves corporate goals and objectives relevant to the CEO’s compensation, including annual performance objectives;

 

   

Recommends to the Board of Directors the creation or amendment of any compensation program that permits participation of the executive officers or any other executive whose compensation is determined by the Compensation Committee; and

 

   

Reviews, approves and monitors any employment, separation or change-in-control severance agreements.

 

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The Compensation Committee’s responsibilities are defined in its charter. The Compensation Committee reviews the charter annually and recommends to the Board of Directors any changes to the charter that it deems necessary or appropriate.

The Compensation Committee is ultimately responsible for making the compensation decisions, including approval of equity grant recommendations, relative to executive officers. However, in making its decisions, the Compensation Committee seeks and considers input from senior management and Meridian Compensation Partners, LLC (“Meridian”), an independent compensation consultant.

The executive officers play an important role in the compensation decision-making process because management has direct involvement with and in-depth knowledge of our business strategy, goals, and performance. Executive management regularly participates in the compensation decision making process in the following specific respects:

 

   

The CEO reports to the Compensation Committee with respect to his evaluation of the performance of our executives, including the other named executive officers. Together with the Executive Vice President of Human Resources, the CEO makes recommendations as to compensation decisions for these individuals, including base salary levels and the amount and mix of incentive awards;

 

   

The CEO develops recommended performance objectives and targets for our incentive compensation programs; and

 

   

The CEO and the Executive Vice President of Human Resources recommend long-term equity grants for executive officers, other than the CEO, for approval by the Compensation Committee.

Meridian’s engagement includes reviewing and advising on executive compensation matters principally related to the CEO, the executive officers, and outside directors. For 2010, Meridian assisted the Compensation Committee by (a) recommending a peer group for benchmarking purposes and (b) providing peer group data, including an analysis of total direct compensation (base salary, annual cash incentives and long-term equities). Meridian also assists the Compensation Committee in review of general market practices and management compensation proposals.

Market analysis and benchmarking

The Compensation Committee uses various tools and methods, such as benchmarking reports and tally sheets, to evaluate whether each named executive officer’s level of pay is appropriate. Base salary, annual bonus goals and long-term equity awards are each specifically designed to meet our compensation objectives.

Benchmarking

Percentile Goals

The Compensation Committee has approved the following target percentile for each pay component to support our compensation objectives.

 

Pay component

   Target percentile of customer peer group

Base salary

   50th Percentile

Target annual bonus

   50th Percentile

Long-term equity

   65th Percentile

Historically, the Compensation Committee has consistently determined that targeting the 65th percentile for long-term equity grants was appropriate to attract and retain the desired level of management talent as well as incentivizing management to focus on our long-term objectives by having a greater percentage of pay at risk over the longer term.

 

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Peer Group

The following peer group was approved by the Compensation Committee in 2009 (the “Custom Peer Group”) and used in 2010 in reviewing and benchmarking the various pay elements against the targeted percentiles above.

 

Acxiom Corporation

   Equifax Inc.    Merrill Corporation

Alliance Data Systems Corporation

   Experian Services Corporation    Moody’s Corporation

Ceridian Corporation

   Fair Isaac Corporation    Paychex, Inc.

ChoicePoint, Inc.

   First Data Corporation    Synovus Financial Corporation

Convergys Corporation

   Fiserv, Inc.    TeleTech Holdings, Inc.

Deluxe Corporation

   Global Payments, Inc.    Total System Services

Discover Financial Services

   Harte Hanks, Inc.    Unisys Corporation

DST Systems, Inc.

   Marshall & Ilsley Corporation    Valassis Communications, Inc

The Dun & Bradstreet Corporation

     

The Customer Peer Group was selected to be representative of the financial sector in which we compete for executive talent. Additional criteria were considered in order to properly select component companies for the Custom Peer Group:

 

   

operating/industry competitors;

 

   

labor market competitors;

 

   

competitors for capital;

 

   

revenue size; and

 

   

data availability.

Use of tally sheets

In February 2010, the Compensation Committee reviewed individual worksheets and corresponding tally sheets for each executive officer, including the named executive officers. These worksheets, which are prepared by management, provide a summary of the current and historical amounts of each component of pay, including a historical review of prior long-term equity grants and the value received. In 2010, the Compensation Committee did not recommend or approve changes to our named executive officers’ compensation based on its review of this information. Rather, the Compensation Committee reviewed the tally sheets as a tool to confirm that pay objectives continue to be aligned with the long-term interests of the stockholders.

2010 Compensation

Base Salary

As described above, we provide each of the named executive officers with a base salary to compensate them for services rendered during the fiscal year. Each year, the Compensation Committee evaluates the performance of the CEO and determines his base salary and other compensation in light of our goals and objectives and the executive compensation program. The Compensation Committee also reviews and adjusts each other named executive officer’s base salary annually based on a recommendation from the CEO. The CEO generally recommends a base salary increase for the other named executive officers when supported by strong individual performance, and/or executive promotion, or when supported by the external market data. For 2010, the CEO did not recommend any base pay increases for any of the other named executive officers, and the Compensation Committee did not increase the CEO’s base salary because the base pay of each named executive officer fell within a reasonable range of the targeted percentile of the median for the Custom Peer Group.

2010 Annual Bonus Plan

Annual bonus compensation is designed to reward executive officers based on actual individual performance and our overall financial results. Our overall financial performance is measured by our achievement of financial

 

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targets established under the Annual Bonus Plan. Additionally, individual and other qualitative goals are set to successfully drive our operations to achieve the overall corporate strategy. All of the named executive officers participate in the Annual Bonus Plan. Under the plan, the named executive officers are paid cash incentive awards to the extent we meet or exceed financial and non-financial performance goals set by the Compensation Committee at the beginning of the year. Individual awards may be adjusted by the Compensation Committee, based on a recommendation from the CEO.

Target bonus levels

Each executive is assigned a target bonus expressed as a percentage of their base pay at the beginning of the year. The target is determined by the Compensation Committee after consideration of several factors, including the individual executive’s duties and responsibilities, market data, and individual executive capabilities. The bonus targets for 2010 were set within a reasonable range of the targeted percentile of the median for the Custom Peer Group. The following table illustrates the target bonus as a percentage of base pay for each executive for the 2010 performance period.

 

Executive

   2010 target bonus as a % of base pay

Mr. Mehta

   100%

Mr. Hamood

   75%

Mr. Hellinga

   60%

Mr. Knight

   60%

Mr. Blenke

   50%

Objectives, weighting and potential payouts

Each executive’s individual goals and objectives vary based on their individual roles within TransUnion. The following table defines the various financial and non-financial objectives that the Compensation Committee approved for the 2010 performance period.

 

Objective

  

Definition

Corporate revenue growth

   The amount of growth in overall TransUnion revenues

Corporate expense management

   The ability to meet corporate budget or realize sustainable savings

Corporate operating income

   Income after expenses and other adjustments for bonus plan purposes

Business unit revenue growth

   The amount of growth in revenues for the specific business unit for which the named executive officer is responsible

Business unit operating income

   Income after expenses for the specific business unit for which the named executive officer is responsible

Business unit operating budget

   The ability of the specific business unit for which the named executive officer is responsible to meet its budget

Strategic projects

   Ability to deliver specific tangible projects within a performance period

Talent management

   Focus on specific initiatives designed to enhance the retention of key talent

The objectives for revenue growth and operating income were selected by the Compensation Committee to appropriately provide incentive rewards to executives based on achievement of corporate goals in consideration of the overall corporate strategy.

 

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Corporate expense management has been a focus over the past few years. The purpose of the expense management objective was to create sustainable reductions in expenses by reviewing current strategies and locating areas of savings. Each business unit was expected to contribute to our overall cost management goal through improved efficiencies and productivity gains, while maintaining quality. At the CEO’s recommendation, the Compensation Committee agreed that this goal was directly aligned with the overall corporate strategy.

The CEO recommended the use of non-financial objectives related to strategic projects and talent management as new goals for the 2010 performance period. The Compensation Committee approved these goals because they were aligned to our corporate strategy and achievement of these goals would create shareholder value. The goals were set in a manner that would ensure that, if delivered, they would significantly advance strategic objectives. Each executive had a set of goals specifically tied to his or her ability to affect our corporate strategy. Additionally, stretch goals were designed to provide the executive the opportunity to achieve payouts for performance that exceeded 100% of these non-financial goals. The stretch goals were set to be attainable only with superior performance.

The following table is a summary of how each of the above objectives was weighted for each named executive officer for the 2010 performance period. Each individual executive’s objective weightings are determined based on their specific roles, duties and responsibilities. The various weightings are meant to reflect the influence that the executive’s performance may actually have on the metric. The Compensation Committee believes this strengthens the direct link between pay and performance.

 

Executive

  

Objective

   Weighting  

Mr. Mehta, President & Chief Executive Officer

   Corporate Revenue Growth      25
   Corporate Operating Income      50
   Key Projects—Talent Management      5
   Key Projects—Cost Management      15
   Key Projects—Strategic Projects      5

Mr. Hamood, Executive Vice President & Chief Financial Officer

   Corporate Operating Income      25
   Corporate Operating Expense      25
   Key Projects—Talent Management      5
   Key Projects—Cost Management      22.5
   Key Projects—Strategic Projects      22.5

Mr. Hellinga, Executive Vice President—U.S. Information Services

   Business Unit Revenue Growth      35
   Corporate Operating Income      25
   Business Unit Operating Income      25
   Key Projects—Talent Management      5.25
   Key Projects—Cost Management      9.75

Mr. Knight, Executive Vice President—International

   Business Unit Revenue Growth      35
   Corporate Operating Income      25
   Business Unit Operating Income      25
   Key Projects—Talent Management      5.25
   Key Projects—Cost Management      9.75

Mr. Blenke, Executive Vice President & General Counsel

   Corporate Revenue Growth      15
   Corporate Operating Income      25
   Business Unit Operating Budget      25
   Key Projects—Talent Management      22.75
   Key Projects—Cost Management      12.25

Based upon the weightings above, each named executive officer had the ability to achieve 100% of their target bonus if target performance is achieved. However, a named executive officer’s actual bonus payout increased or

 

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decreased based on individual and company financial performance. The minimum bonus payout is zero percent and the maximum bonus payout was 200% of target bonus.

The following tables represent what the payout, as a percentage of target, would be if our financial performance was achieved at threshold, target, or maximum levels (as shown below) for two objectives: corporate revenue growth and operating income. No payout would result if performance was below threshold levels. The table includes the specific growth percentage or dollar amount that was required for achievement at each level in 2010.

Corporate revenue growth

 

Threshold

    Target     Maximum  

Revenue growth

   Performance
as a
percentage of
plan
     Payout     Revenue
growth
     Performance
as a
percentage of
plan
    Payout     Revenue
growth
     Performance
as a
percentage of
plan
    Payout  

<$49,450,000

     N/A         0   $ 49,450,000         100     100   $ 70,900,000         143.4     200

Operating income—Incentive plan basis

 

Threshold

    Target     Maximum  

Operating income

   Performance
as a
percentage of
plan
    Payout     Operating
income
     Performance
as a
percentage of
plan
    Payout     Operating
income
     Performance
as a
percentage of
plan
    Payout  

$173,601,600

     80     25   $ 217,002,000         100     100   $ 238,702,200         110     200

The Compensation Committee’s intent with establishing both the financial and non-financial goals and target percentages is to provide a comparable level of difficulty in achieving the goals and receiving annual incentive awards for each named executive officer annually. However, payment of annual incentives will vary from year to year and may or may not be consistent with historical payment trends.

The financial objectives tied to business unit performance were designed to require strong performance to achieve the target bonus. In 2008 and 2009, the named executives with operating income objectives attained between 80% and 98% of those objectives. Only one named executive officer attained the revenue objectives in 2009 and none of the revenue objectives was attained in 2008.

The expense management goal was to attain sustainable, incremental cost savings of 1.3% of our operating plan budget through supportable run-rate reductions and improved efficiencies. If we obtained 1.6% cost savings, that portion of the bonus paid out at maximum. Each named executive officer will be rewarded based upon that officer’s contribution toward the cost management initiative as assessed by the CEO. The named executives each achieved maximum payouts for their 2008 and 2009 expense management goals (or the expense management component of other goals). The Compensation Committee believed that the 2010 targets for incremental improvement were appropriately challenging in view of the cost reductions already achieved in prior years.

The talent management objectives for each of the NEOs included establishing and cascading goals throughout the organization, conducting mid-year talent reviews, implementing career development, succession and compensation planning initiatives and achieving an objective for retaining identified key talent. In addition, the CEO was responsible for connecting with the top leaders identified through the review process. We believe that these objectives will aid in the grooming and retention of key personnel, the mitigation of staffing risks and the delivery of value to shareholders through increased management continuity and effectiveness. These objectives are largely within the control of the named executive officers and, as such, were expected to be earned and paid in full.

 

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Mr. Mehta had a strategic objective of driving the development of a detailed enterprise architecture blueprint for implementation in 2011. The Compensation Committee recognized that implementation would be a challenging goal, but expected that the blueprint would be developed.

Mr. Hamood was charged with leading and facilitating our preparation for and execution of the Change in Control Transaction. This objective was achieved.

Actual payouts

The following narrative summarizes the performance of the 2010 financial and non-financial goals under the 2010 Annual Bonus Plan.

Results of financial goals

The corporate financial results for the 2010 performance period are described in the narrative accompanying “—Grants of plan-based awards—2010.”

Results of non-financial goals

At the end of the performance period, the CEO evaluated each of the named executive officers in conjunction with the individual’s own self evaluation. Based on the CEO’s evaluation, with input from others including the named executive officer, the CEO rated the executive’s qualitative objectives against the executive’s performance goals.

 

   

Based on this assessment, the CEO recommended to the Compensation Committee a performance evaluation rating, as a percentage of total qualified goal bonus opportunity, for each executive. Additionally, the Compensation Committee reviewed the CEO’s performance and determined a level of performance against his qualitative performance goals.

 

   

The CEO was able to recommend an increase or decrease for each executive’s total bonus for Compensation Committee approval. The Compensation Committee did exercise this discretion when approving the annual bonus awards. While not achieving his revenue targets, Mr. Hellinga received a discretionary payment in recognition of achieving favorable income objectives in a very challenging environment and improved performance in the second half of the year.

 

   

Additionally, the Compensation Committee applied discretion and determined to pay the CEO’s bonus at 130% of target in order to align the CEO’s bonuses (as a percentage of target) more closely with the levels achieved the executive management team and to recognize the CEO’s contributions to those achievements.

Taking into account the financial performance results and the CEO’s evaluation and recommendation, the Compensation Committee met in February 2011 to set and approve annual bonus payments to each of the named executive officers and evaluate the CEO’s performance. In February 2011, the Compensation Committee approved annual bonus payments to the named executive officers ranging from 87 to 180 percent of the named executive officers’ target opportunity based upon 2010 performance. The annual bonus payments will subsequently be paid in March of 2011. For more detailed information regarding individual executive annual bonus awards, see the narrative following “—Grants of plan-based awards—2010.”

Long-term equity plan

In 2005, all of the common stock of the Parent was distributed to the stockholders of our former parent company for the important business reason of providing management ownership to create a strong alignment between the management team and our stakeholders. We have made significant equity grants in previous years to further this important purpose. Historically, restricted stock had been used as the sole equity vehicle for executive officers, as restricted stock was considered the most appropriate vehicle to create an immediate and actual shareholder interest and perspective for key executives.

 

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Restricted stock grants

As noted above, 100% of the total award value has been granted in the form of restricted stock. Awards generally vested ratably over three years such that they are fully vested on the January 1 following the second anniversary of the grant (i.e., grants made in 2010 are fully vested on January 1, 2013). Emphasizing retention, these awards require continued service with TransUnion during the vesting period. Restricted stock has value tied to share price at the time of vesting aligning the interests of the executive officers with those of stockholders. Restricted stock also facilitates stock ownership and consists of issued and outstanding shares of common stock, with dividend and voting rights from the date of grant.

As consistent with prior practice, in February 2010, the Compensation Committee awarded restricted stock to Mr. Mehta, Mr. Hamood, Mr. Hellinga, Mr. Blenke and Mr. Knight with a total award value at the time of grant, as follows:

 

Executive

   Total award value  

Mr. Mehta

   $ 1,725,000   

Mr. Hamood

   $ 470,800   

Mr. Hellinga

   $ 546,100   

Mr. Blenke

   $ 352,000   

Mr. Knight

   $ 242,000   

Initially, the Compensation Committee reviewed a market pay study of the Custom Peer Group, provided by Meridian, which targeted the 65th percentile of external market practices for long-term equity grants. The market amounts were subsequently adjusted upwards or downwards as necessary based on our performance and individual performance as well as the sizes of previous awards granted to the executive. These adjustments help to ensure consistent linkage to paying for performance over the years. All of the grants were within the range of the targeted percentile, except the grants for Mr. Mehta and Mr. Blenke, which were adjusted upward by approximately 15% for Mr. Mehta and 20% for Mr. Blenke, to reflect their individual performance and to maintain consistency with Mr. Blenke’s historical compensation levels.

Stock option grants

In connection with the Change in Control Transaction, on July 20, 2010, all named executive officers received stock options. These grants were the results of negotiations between management, the Sponsor and the Compensation Committee and are designed to reward executives to increase shareholder value by providing them an incentive to keep focused on the long-term value of the Company. This one-time grant was designed to replace our traditional annual grants. The exercise price of the options is equal to the per share price at which the Sponsor purchased the common stock of the Parent, which reflected the fair market value of the shares of our Parent’s common stock at such time. The options vest based on time and the Sponsor’s return on investment. Accordingly, 50% of the options vest ratably over five years with the first 20% vesting on June 15, 2011 and thereafter, 5% on the last day of each subsequent full calendar quarter, and 50% vest on the same five-year time-based vesting, but also are subject to the Sponsor having both (i) a cash-on-cash return equal to 20% and (ii) a multiple of money return equal to 2.25.

Management’s stock ownership requirements

In connection with the Change in Control Transaction, each of our named executive officers was required by the Sponsor to roll over a portion of his holdings of Parent common stock, which would otherwise have been cashed out, into non-voting shares common stock of the Parent. The CEO rolled-over shares of Parent common stock with a value equal to approximately 50% of after-tax proceeds received by him in the Change in Control Transaction, and all other named executive officers rolled-over shares of Parent common stock with a value equal to approximately 30% of their after-tax proceeds received in the Change in Control Transaction. As our equity compensation program was switching from actual stock ownership to stock options, as described above, this required equity roll over was intended to further align management with shareholder interests.

 

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Executive benefits and perquisites

The named executive officers do not receive any additional benefits or perquisites beyond what is provided on a broad basis. Providing additional benefits or perquisites would not support our compensation policy.

Retirement plan

We maintain a broad-based 401(k) savings and retirement plan (the “401(k) Plan”) in which all associates, including the named executive officers, may participate. The Internal Revenue Code of 1986, as amended (the “Code”), places certain limits on the amount of contributions that may be made by and on behalf of the named executive officers to the 401(k) Plan. To extend the named executive officers’ retirement benefit beyond the contribution limits set under the Code, we created the Nonqualified Retirement and 401(k) Supplemental Plan (the “Supplemental Plan”). Under the Supplemental Plan, each named executive officer may defer all or some portion of their cash compensation that the executive officer was not otherwise permitted to defer under the 401(k) Plan to provide additional retirement savings. We make a matching contribution to the Supplemental Plan that mirrors the employer contribution to the 401(k) Plan. Additionally, similar to the 401(k) Plan, the Compensation Committee may authorize us to make a discretionary contribution on behalf of the named executive officers to the Supplemental Plan at the end of the year.

Employment agreement with Mr. Mehta

Mr. Mehta has been employed under an employment agreement he entered into at the time he became employed by us on August 22, 2007. The initial term of the agreement expired on August 22, 2010, but renews automatically for twelve months, unless one party to the agreement provides notice of non-renewal at least 180 days before the day that would be the last day of the agreement.

Mr. Mehta’s agreement provides a minimum base salary and the eligibility to participate in our annual incentive plan for executive officers. With the exception of severance provisions, the agreement does not provide Mr. Mehta any additional benefits beyond what is provided to the other named executive officers. The severance provisions are discussed under “—2010 Compensation—Severance and change-in-control compensation.”

The agreement includes confidentiality and nonsolicitation provisions to protect our interests. The specifics of the compensation provided under Mr. Mehta’s employment agreement are detailed in the narrative accompanying “—Payments upon termination or change in control—2010.”

Severance and change-in-control compensation

In connection with the Change in Control Transaction, and as required by and negotiated with the Sponsor, each named executive officer, except Mr. Mehta, entered into Severance and Restrictive Covenant Agreements (the “Severance Agreements”). These Severance Agreements are designed to maximize retention of the named executive offers. The terms of the Severance Agreements are summarized under “—Payments upon termination or change in control—2010” and the accompanying narrative.

Federal income tax considerations

As a private company, we are not subject to the federal income tax provisions of the Code, including Code Section 162(m). Therefore, we have not made compensation decisions based on the deductibility limitations of the compensation, under section of the Code. Although the Compensation Committee will strive to have all compensation be deemed deductible, deductibility does not drive the compensation decisions for our executive team.

 

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Risk assessment in compensation programs

We have designed our compensation programs, including our incentive compensation plans, with specific features to address potential risks while rewarding employees for achieving long-term financial and strategic objectives through appropriate risk taking. The following elements have been incorporated in our programs available for our named executive officers:

 

   

A balanced mix of compensation components—The target compensation mix for our executive officers is composed of salary, annual cash incentives and long-term equity awards, representing a mix that is not overly weighted toward short-term cash incentives.

 

   

Multiple performance factors—Our incentive compensation plans use both company-wide metrics and individual performance, which encourage focus on the achievement of objectives for our overall benefit:

 

   

The annual cash incentive is dependent on multiple performance metrics including corporate revenue growth, corporate expense management and corporate operating income, as well as individual goals related to specific strategic or operational objectives.

The option grants vest over a five-year period of time, complementing our annual cash-based incentives.

 

   

Capped incentive awards—Annual incentive awards are capped at 200% of target.

 

   

Stock ownership—Each named executive officer purchased a significant amount of common stock of the Parent in connection with the Change in Control Transaction. We believe this ownership aligns the interests of our executive officers with the long-term interests of stockholders.

Based on these factors, management in consultation with Meridian concluded that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on us.

Executive compensation

Summary compensation table—2010

The following table presents information regarding the annual compensation for services to us, in all capacities, of our named executive officers. The amounts in the “Stock awards,” “Option awards” and “Non-equity incentive compensation” columns are further explained in the narrative following “—Grants of plan-based awards—2010.”

 

Name and principal

position

  Year     Salary(1)
($)
    Bonus(2)
($)
    Stock
awards(3)
($)
    Option
awards(4)
($)
    Non-equity
incentive plan
compensation(5)

($)
    All other
compensation(6)
($)
    Total
($)
 

Siddharth N. (Bobby) Mehta

President & Chief Executive Officer

    2010        900,000        —          1,725,042        2,019,878        1,170,000        125,761        5,940,681   

Samuel A. Hamood

Executive Vice President & Chief Financial Officer

    2010        450,000        —          470,798        807,946        612,170        67,449        2,408,363   

Jeffrey J. Hellinga

Executive Vice President—U.S. Information Services

    2010        422,300        —          546,087        1,009,933        343,661        50,042        2,372,022   

Andrew Knight

Executive Vice President—International

    2010        335,018        41,751        241,971        706,953        285,672        90,991        1,702,357   

John W. Blenke

Executive Vice President & General Counsel

    2010        464,600        —          352,014        504,967        292,814        57,608        1,672,003   

 

(1)

The amounts shown in this column represent annual base salary. These amounts are not reduced to reflect the NEOs’ elections, if any, to defer receipt of salary under the TransUnion 401(k) & Savings Plan and/or the Trans Union LLC 401(k) and Supplemental Retirement Plan.

(2)

While Mr. Knight was employed by us in South Africa, he received a cash-based retention award in 2007. The award vested equally on January 1, 2008, January 1, 2009 and January 1, 2010. The payment made in 2010 was

 

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the final payment related to this award. No additional cash-based retention awards have been made to Mr. Knight since 2007.

(3)

The amounts shown in this column represent the aggregate grant date “fair value” of stock awards granted to the NEO during 2010 as computed in accordance with ASC Topic 718, “Compensation—Stock Compensation.” Further details regarding these grants and the assumptions used to determine their “fair value” can be found in the narrative disclosure following “—Grants of Plan-Based Awards—2010.”

(4)

The amounts shown in this column represent the aggregate grant date “fair value” of option awards granted to the NEO during 2010 as computed in accordance with ASC Topic 718, “Compensation—Stock Compensation.” Further details regarding these grants and the assumptions used to determine their “fair value” can be found in the narrative disclosure following “—Grants of plan-based awards—2010.”

(5)

The amounts shown in this column represent amounts paid under the Annual Incentive Plan during 2011 for services performed in 2010. Amounts shown are not reduced to reflect the NEOs’ elections, if any, to defer receipt of salary under the TransUnion 401(k) & Savings Plan and/or the Trans Union LLC 401(k) and Supplemental Retirement Plan.

(6)

Information regarding the amounts shown in this column can be found under “—Detailed analysis of ‘all other compensation’ column” and the accompanying narrative.

Detailed analysis of “all other compensation” column

 

Name

  Company match
and retirement
contribution to
qualified 401(k)
savings plan(1)
$
    Company match
and retirement
contribution to
non-qualified
retirement plan(2)
$
    Cost of  living
payment(3)
$
    Group term
life imputed
income(4)
$
    Payment &
gross-up on
Medicare tax
related to
contributions
into non-
qualified
retirement
plan(5)
$
    Total
$
 

Siddharth N. (Bobby) Mehta

    17,150        106,200        —          552        1,859        125,761   

Samuel A. Hamood

    17,150        49,050        —          240        1,009        67,449   

Jeffrey J. Hellinga

    17,150        31,707        —          552        633        50,042   

Andrew Knight

    17,150        26,051        46,800        552        438        90,991   

John W. Blenke

    17,150        38,580        —          1,032        846        57,608   

 

(1)

For 2010, we matched 50% of the first 6% of recognizable compensation (subject to the 2010 Code limit of $245,000) contributed on a pre-tax basis to the tax-qualified TransUnion 401(k) & Savings Plan. Additionally, in 2010, we made a discretionary 4% retirement contribution of recognizable compensation, as defined above, to the TransUnion 401(k) & Savings Plan.

(2)

For recognized compensation above the Code limit of $245,000, we matched 50% of the first 6% contributed on a pre-tax basis to the TransUnion Retirement and 401(k) Supplemental Plan. Additionally, in 2010 for the 2009 plan year, we made a discretionary 6% retirement contribution of recognizable compensation to the TransUnion Retirement and 401(k) Supplemental Plan.

(3)

At the time of Mr. Knight’s transfer to the United States in 2008, we addressed a greater cost-of-living in the U.S. versus Johannesburg, South Africa. To offset this additional expense, Mr. Knight receives a bi-weekly payment to assist in offsetting the higher cost of living.

(4)

We provide life insurance to all full-time employees in an amount equal to one times their annual salary, to a maximum of $250,000. Code Section 79 provides an exclusion for the first $50,000 of group-term life insurance coverage provided under a policy carried directly or indirectly by an employer. The table notes the imputed cost of coverage in excess of $50,000, which is based on the named executive officer’s age and coverage he receives.

(5)

Executive contributions made into the non-qualified deferred compensation plan are subject to Medicare tax at a rate of 1.45%. We provide this payment on behalf of the NEO and since the amount paid on behalf of the NEO is taxable to the executive, we provide for a “gross up” on that payment.

 

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Grants of plan-based awards—2010

 

Name

  Grant
Date
    Estimated frame payouts under
non-equity incentive plan
awards(1)
    Estimated future payouts
under equity incentive plan
awards
    All other
stock
awards:
number
of shares
of stock
or
units(2)
(#)
    All other
option
awards:
number of
securities
underlying
options(3)
(#)
    Exercise or
base price
of option
awards
($/sh)
    Grant date
fair value of
stock and
option
awards(4)
($)
 
    Threshold
($)
    Target
($)
    Maximum
($)
    Threshold
(#)
    Target
(#)
    Maximum
(#)
         

Siddharth II. (Bobby) Mehta

      337,500        900,000        1,800,000        —          —          —             
   

 

 

2/4/2010

2/22/2010

7/20/2010

  

  

  

               

 

 

65,388

9,810

—  

  

  

  

   

 

 

—  

—  

332,962

  

  

  

   

 

 

—  

—  

24.37

  

  

  

   

 

 

1,500,001

225,041

2,019,878

  

  

  

Samuel A. Hamood

      127,500        340,000        680,000        —          —          —             
   

 

2/4/2010

7/20/2010

  

  

               

 

20,523

—  

  

  

   

 

—  

133,184

  

  

   

 

—  

24.37

  

  

   

 

470,798

807,946

  

  

                     

Jeffrey J. Hellinga

      95,025        253,400        506,800        —          —          —             
   

 

2/4/2010

7/20/2010

  

  

               

 

23,805

—  

  

  

   

 

—  

166,480

  

  

   

 

—  

24.37

  

  

   

 

546,087

1,009,933

  

  

Andrew Knight

      75,375        201,000