易速傳真 (EFX) 2002 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. And welcome to the Equifax fourth quarter earnings release. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. The instruction will be given at that time. If you should require any assistance during today's call, please press the zero followed by the star key on your touch-tone phone. As a reminder, today's conference call is being recorded. I would now like to turn the conference over to Jeff Dodds, Senior Vice President of Investor Relations. Please go ahead, sir.

Good morning. Welcome to today's conference call. I'm Jeff Dodds, Senior Vice President of Investor Relations. With me on the call today is Tom Chapman, our Chairman and CEO; Mark Miller, President and COO; Don Heroman, our Chief Financial Officer; and Dennis Story, Corporate Controller. We'll be making certain predictive and forward-looking statements to assist you in understanding Equifax and its business environment. These statements including any comments regarding our expectations for '03 are forward-looking under the Securities Act and subject to certain risks.

Please review our 10 k for '01, our third quarter '02, 10-Q report, and any other SEC filings that describe our company in more detail. Today's call is also being recorded in addition to being webcast live over the internent. The replay will be available on our website at www.equifax.com. Now I'd like to turn the call over to Tom Chapman.

Thanks, Jeff. And good morning, ladies and gentlemen. And a blade Happy New Year to all of you. Belated Happy New Year to all of you. Before he would start, I'd like to welcome Don Heroman, first of all to the call and the company. He is our new Chief Financial Officer and he 30 assists [INAUDIBLE] a wealth of experience, strong financial discipline and a great sense of strategic insight not only about the company but the industry but financial matters which are so key. So welcome to Don. If you haven't met him, you all shall meet him soon.

Today I'll cover overall company results and key highlights for last year. Don will drill down a bit more on the fourth quarter and the full year. And then provide our outlook for '03 and then we'll go to Q & A. We had a very strong fourth quarter. Driven principally by a record revenue in North America. And as you know, that's our largest business segment. Equifax had an outstanding year, achieving good results in what we all know is a most chaotic -economic environment that we have seen in 50 years. We've got great momentum as we move into this year. Our core strategy of geographic expansion, product innovation, market development, and technology-centered solution continues to guide Equifax's dedication and our commitment to optimizing shareholder value.

Last year, revenue was 1.1 billion in line with our outlook. Earnings from continuing operations were 191 million, up 8 percent. Earnings per share hit our target of $1.38, up 8 percent. And as the S&P 500 was down over 23 percent, Equifax stock was down 4 percent. Outperforming all major stock indices. And the S&P 500, our company ranks sixth in return on equity and delivers margins that are three times the average for the S&P 500. We executed well in '02, and I'm confident we'll do the same in '03.

Now, here's some of our more significant accomplishments of last year which position us extremely well not only for this but going forward. The quality of our people and leadership. Mark Miller our President and COO joined us about midyear. Don Heroman has been on board as our CFO for a month or so and throughout the organization, we continue to bring in every talent set, game breakers, industry setters, leaders, because we believe that despite the economic times and market trends, we never stop searching for talent because at Equifax, we believe that our people are our key differentiaters over time. We constantly strengthen our core business with new growth initiatives such as our safety and security business, small business exchange, direct-to-consumer and the acquisition of our second largest affiliate and the acquisition of Naviant, the leading eMarketing company in the space. We significantly improved our margins in Europe from 4 percent to 10 percent and many of you will remember we made that commitment to you last year and we far exceeded the commitment for the total year.

In margin. We produced margins of 26 percent in Latin America, more on that later. And we rebuilt and repositioned our marketing services business combining our old direct marketing business with Naviant into Equifax marketing services delivering the premiere multichannel marketing company in this space. As the world continues to change every day, so does Equifax. I remind you what Equifax is all about. We have evolved this company over time from a data-centric company to an information/technology enterprise which provides realtime answers to increasingly complex questions for a much broader range of customers. First let's look at our direct-to-consumer business. Remember our launch of this business, many of you discussed it with me several years ago when I told you that we would create a business and we were the first in our industry to do so with a goal to better enlighten, enable and empower consumers by placing their own credit or financial information at their very fingertips. We've done that. And as a result, a whole new industry followed our lead. We had an absolutely outstanding year in direct-to-consumer, almost doubling revenue to 39 million. Floutsing new products, and -- introducing new products and providing new distribution partners, in fact about 140 of them, the most notable being cap 1, MSN and Motley Fool.

We now have six products on this portfolio menu, but I would point out those of you who know us very well, we did not sacrifice profitability as we built this business for growth. We have had 10 consecutive quarters of profitability in this brand-new -- that's a bad term now, but dot-com-driven business. We have three new products that are important to continue to enhance the consumer franchise. We introduced a tribureau report which right now is taking off as our most successful product for this year as well as more recently, a owners and auto insurance score, further enlightening consumers for additional needs [ home owners ] We continue to enhance existing consumer products to deliver more growth and, thus, shareholder value. A score analyzer feature was added to score power. It's a simulator tool that allows you as consumers to play what if scenarios on your score components and how that might alter outcomes.

We also added insurance coverage to credit watch. [INAUDIBLE] D theft prevention product, which covers up to the first $2500 for consumers out of pocket costs should they be a victim [ ID theft ] And as you all know, the absolute key to subscription marketing is renewal rates. Equifax improved our credit watch renewal rates from 37 percent to today's run rate of over 50. We expect our consumer best to continue its growth and deliver revenues in the 60 to $70 million range this year, and I'll tell you, we're off to a robust start in volume and activity in January.

Now let's shift for just a moment to Equifax's safety and security business. We're actively engaged in pursuing significant opportunities to help Government, Government agencies, financial institutions, and other industries solve those complex challenges that literally threaten our lives. Some things are about credit, some things are about marketing. These solutions are about saving lives and making the world a safer place. There's two things that wobble are certain. The USA Patriot Act will be one of the most significant weapons in the war against terrorism because Equifax has a technology and products in place today to follow the money trail, which most experts including the head of the CIA, believes is the most critical issue in the pursuit of terrorists. You have to follow the money from which all terrorist activity emanates. We're in place to help solve that problem.

Now let me update you quickly thus on our global regulatory information database. You all know we call it grid. And the UK pass poured initiative. For GRID we implemented way ahead of schedule all of the technology. We have five clients already purchasing alerts from this database including Goldman, Morgan Stanley, Credit Suisse, First Boston, and 12 other clients online this quarter. And we're selling these services not only to that selective bunch of investors for RDC; but all of our prospects and customers throughout our franchise. The UK passport solution is a five-year contract to screen new passport applications in the UK. We've blown past the pilot very successfully. The project is ahead of schedule with three offices currently using the system. And I'm going to... our relationship with the UK government because of this new application simply could not be stronger. And just recently Equifax was selected as a data source because of the quality and content of our data for the Transportation Security Administration caps 2 pilot. That is designed to identify, quote, high risk passengers in all of the 429 US airports. We'll deliver over $10 million in revenue in '03 from our safety and security business.

Let me give you a brief update on the fine progress we are making in our small business exchange. With 54 data providers on board who, by the way, are also the purchasers of this data turned into products, we're really getting traction now in this US commercial services. About 25 million or so small businesses in our country, now we have financial information on 14 million of those companies. They reside in our database today and we now have the critical mass required to deliver comprehensive reports which we're doing and portfolio reviews much like we do on our consumer business. Our information scientists have developed new risk scores for the commercial market to be introduced this quarter. These products will generate in our small business arena in the five to ten million dollar range in revenue. Now let me talk about our core business. We continue to drive revenue growth in our traditional business by bundling data and technology around differentiated applications and solutions. For these complex needs.

For example, we sell a multi-million dollar three-year project to the major telco including application processing, utilization of our Decision Power platform, also accessing our small business database that I first referenced. This agreement includes significant share gain in additional long term opportunities for the future. Also signed a five-year agreement with a major cataloger retailer for Decision Power, as well as interactive ID authentication and database management services. At Equifax optimizing productivity is key to our performance. Here are a couple of examples of last year. This is something we don't talk very much about. But our customers talk about it constantly. And that's up time. System up time is their access to our products and services. We understanded last year with the best in class up time of 99.99 percent.

This regularly surpasses our competition and exceeds our customers' expectation levels and their requirements on their score cards. This is very important as we move forward with the introduction of products and enhancing our service levels. We reduced head count in '02 by 5 percent. But I must point out again, not at the expense of investing in new growth initiatives or serving existing customers. And we made two strategic acquisitions. We acquired key assets from our second largest affiliate, CBC, broadening our geographic coverage, allowing us to control our own destiny in a broader part of the country, and better serve customers in that region. And our second acquisition brought Equifax the number one email marketing company in the nation, Naviant, which is now a part, as he said, of Equifax Marketing Services. Equifax now has a database in this space of over 100 million unique... email addresses, two times the size of our nearest competitor. The acquisition of Naviant continues to meet our objectives and will be a key growth engine in '03. We expect revenue there to be delivered between the 80 and $90 million range. That's a quick recatch of the quarter. And of our year. And now I'll turn it over to Don to drill down on the financials. Don?

Tom, thank you very much. And good morning. As you all know, this is my First Call, and first what I'd like to say is that I am really proud to be a part of the Equifax family in this great company -- and this great company. Our solid performance in the fourth quarter enabled to us build a strong base as we enter '03. Let me begin with the financial summaries. For the quarter, revenues were 293 million, up 4 percent. Earnings from continuing operations were 52 million, up 5 percent. And earnings per share were 38 cents, up 7 percent. Our business units achieved very impressive results, some of the highlights from the quarter are strong revenue growth in North America, up 12 percent; our US credit reporting revenue was up 5 percent. Our US credit reporting volume was up 6 percent. And we continued to share with our -- to increase share with our larger customers. Of particular note our direct-to-consumer revenues doubled to $12 million in this very successful venture.

Let me summarize Latin America. In Brazil, our largest market, local currency revenue growth for the quarter was up 21 percent, a very strong number. We are also winning business against our number one competitor for consumer information in '02. We won 12 of 15 competitive bids. Argentina appears to have bottomed. Indications suggest that we will likely see late '03 or early '04 before any significant improvement is in place in those two economies. In Europe, we improved our operating margins to 14 percent versus 8 percent in '01 and had several significant wins in the market.

For the year, revenue was 1.1 billion in line with our previous outlook. Earnings were 191 million, up 8 percent. Earnings per share from continuing operations were $1.38, a gain up 8 percent. Here's more about our business in '02. North American revenue, which is 81 percent of the total, was up 6 percent. Full-year North American margins were a very healthy 40 percent. Credit marketing revenues were 164 million, down only 1 percent, where the market was down significantly. Our combined Equifax marketing services revenue as Tom pointed out previously direct marketing was up a healthy 19 percent. Direct-to-consumer revenues nearly doubled to $39 million. Mortgage services was up 24 percent.

On our Latin-American revenues, $77 million was the total and was down 28 percent driven primarily by the problems in Argentina and foreign exchange, but margins remain strong in 26 percent. Overall in '02, Brazil had 8 percent revenue growth in local currency. And as we pointed out the fourth quarter was particularly strong, giving us a good platform as we head into '03. Europe's margins were up significantly from 4 percent in '01 to over 10 percent in '02, driven by solid growth in UK consumer information services business and relentless focus on cost control.

Shifting to corporate financials, a few important facts. In October, our $250 million five-year debt offering came at a very attractive rate of 4.95 percent. Free cash flow was $195 million. Capital expenditures were $57 million. Day sales outstanding decreased from 63 days to a very positive 55 days. Our priorities from cash continue to be, one, product development; two, acquisitions; three, strong stock buy-back; and, four, debt repayment. As many of you know, pension plan account something a very topical issue. So I would like to address it.

Our management of the pension fund has been exemplary. Over -- our 15 year historical performance of this portfolio has exceeded 11 percent. We have actually won an award for this. While our assumed actuarial rate of return we mind at 9.5 percent. Under IRS and ERISA regulations, our pension plan is fully funded for '03. For '03, we have reduced the assumed actuarial return on our pension plan from 9.5 percent to 8.75, which impacts '03 earnings slightly in the area of 1 1/2 cents. We have elected not to fund the deficiency as defined by FASB 87. The accounting for this will be a reduction in our reported net worth through a comprehensive income adjustment.

Now, looking forward. We had exceptional execution in '02 and are well positioned with momentum for our opportunities in '03 despite the continuing economic uncertainty both here and abroad. Our current outlook for EPS growth in '03 is between 6 and 9 percent, or $1.46 to $1.52 a share. Revenue growth we expect to be in the 4 to 7 percent range. And free cash flow will be around $200 million. Capital expenditures will be in the 45 to $50 million range.

In summary, you can expect that we will continue to make gains in productivity. It's part of the culture and mindset here's quickly learned when I walked in the door. We will critically evaluate all of our capital investments. This is a part of the project that I'll particularly take personal interest in to ensure strong returns to our shareholders. That concludes our financial report. Now I'll turn the meeting back over to Tom.

Well, thanks, Don. We certainly had solid operating performance '02 and we are looking forward to the exciting things in place for '03. I think it's a great tribute to the 5,000 people of Equifax around the globe and to their leadership. I couldn't be more proud of how we performed and I'm truly excited about the opportunities ahead and as usual now we love to entertain your questions. So operator, I'll turn it over to you.

Thank you. Ladies and gentlemen, at this time, if you would like to ask a question, please press the one on your touch-tone phone. You will hear a tone indicating that you have been placed in queue. If you have pressed the 1 prior to this announcement, please do so again at this time. You may remove yourself from the queue at any time by pressing the pound key. And if you are using a speaker phone, we ask that you please pick up your handset before pressing the numbers. Again, if you would like to ask a question, please press 1. Our first question comes from the line of David Togut with Morgan Stanley. Please go ahead.

Hi, this is Charlie Murphy calling for David. Tom and Don, for 2003, could you please outline your key revenue assumptions for NAIS and if possible by any sub segments, as well? And for also for NAIS, could you please detail any cost-cutting assumptions for 2003?

Operator, he is breaking up completely. I can't -- cannot discern the question. So maybe we can try again? We got part of it -- bits and pieces of it.

Can you hear me now, Tom?

Yeah.

Okay. Sorry about that.

Thank you

Sorry about that. This is Charlie Murphy calling for David. My question was, for 2003, for NASI-- NAIS, could you please outline your key outline assumptions for nais as a whole and if possible by any sub segments and in addition could you outline any cost-cutting opportunities for NAIS in 2003? Thanks.

First of all, I'm going to let Mark jump on here. First, the major revenue assumptions are not only the activities we have within the core with new products and services but the new initiatives that we have talked about which are combinations of the core because they literally use the same data. Most of the same technology, delivering different type of solutions to the the evolving customer base. And before I give it to Mark, I mean, the way we continue to look at cost reduction is to ensure that we are allocating our resources toward investable customers, that not only are important in size but over the long term create strategic relationships and partnerships upon which we can invest with an expected and defined return. And that's one of the ways that we have continued to manage the margin up, not at the sacrifice of new investment. So I'll kick it back to Mark and let him cover some of the things that we see from a growth standpoint that... make a difference.

We think that in the core business we are going to be flat up to slightly. We will see unit growth across the board based on a mix of -- a slight change in mix to larger customers. We are going to see pricing stable to slightly down. So on the core business, we're going to be flat to slightly up. Now, let me try to break that down for you a little bit. We're making great progress in the number of key sectors. Brokerage was up almost 71 percent in December. Specialty was up 25 percent over prior year. SBS was up over 12 percent. We're expecting mortgage to be flat. Let me tell what you we base that on. We expect the industry to see a downturn in the second quarter to the second half, but we have picked up market share and we've introduced new product that we think are going to keep us flat in what would be a slightly down to even a little north of slightly down mortgage sector. We expect robust growth as Tom mentioned in the 60 to $70 million total revenue range in our direct-to-consumer business. We expect our Homeland Security, safety and security initiatives, to contribute in the $10 million range. We expect the combined Equifax marketing services business to grow 20 percent. And we expect our small business exchange to contribute nicely and gain more traction. .

Thank you, guys.

Our next question comes from the line of Kevin Gruneich with Bear Stearns. Please go ahead.

Hi, guys.

Hey, good morning.

Wondering about the November acquisition of CBC and if you could provide the revenues and profit that you saw from that in the Q4 and expectations for '03 and do you expect that to be acretetive in '03 and was it accretive in '02.

I'll let Denis Story handle that Kevin. And good morning to you.

Hey, Kevin. How are you?

I'm doing fine, thanks.

The incremental revenues on the CBC acquisition in Q4 were 2.6 million. And the profit margins on that business, profit contribution is extremely good at 65 percent. We're looking in terms of incremental contribution in '03, $18 million in those -- and those margins will be in that range.

Kevin, strategically, I now you asked financial questions, but with our second largest affiliate now other than csc, we've really got control of the franchise to introduce new products and to go after the products and services in some of those big customers and, yes, it is accretive going forward.

Terrific. Could you provide just what the organic revenue growth was for Q4?

Q4 was 3 percent, Kevin.

Thank you.

Thank you, sir.

Our next question comes from the line of Scott Kessler with Standard & Poor's. Please go ahead.

Hi, thanks very much. Can you talk a little bit about what's next for your Internet marketing business, particularly in terms of cross-selling and areas of interest for future acquisition? Also, if you could talk about the competitive landscape in this area, uhm, given that there's been a lot of consolidation over the past year? Thanks very much.

Yeah, this is Mark Miller. We do expect potentially further consolidation in the space. The competitive landscape, there's really four players. There are probably a lot more but the major for would be e universe, yes mel, choice point is in the space, somewhat. And traffics. As Tom mentioned earlier, we think our database is about twice as large as the second the -- second competitor in the space. What's really next for our Equifax marketing services business is to go to the marketplace and continue to gain the traction we're getting with a multichannel approach. We believe and we're bearing it out in the marketplace, that we have the industry's broadest toolkit. One example of a product that will be announced just this week is a bid for clicks program. Naviant introduced a streaming video concept where if you just think for a moment, not only can we approach prospects on behalf of one of our customers in a traditional email environment, we could even in a broadband situation produce a streaming video. And I could talk a lot more about that but I won't belabor it but there are some creative new products that are really changing that medium entirely and making it much more compelling. So we'll continue to combine the business, we'll continue to drive synergy, we'll continue to introduce new product, and we'll continue to satisfy our customers. The one thing that we see consistently that we're very proud of is Naviant and our Equifax marketing services business has a very happy group of customers who like these results in this space because we can do a better, cheaper and faster than our competition.

Thank you.

Our next question comes from the line of Frederick Sear buy with J.P. Morgan.

Good morning, gentlemen.

Good morning.

Had a couple of questions for you. First, can you tell us, can you break out Naviant in the direct marketing and tell us what the trends are? I mean, when we are going to see Polk or that direct marketing business start to come back? Are there any signs in the fourth quarter or in January that things are starting to improve a little bit there? And if you could just break it out so we can figure out what the organic growth or decline was in the direct marketing business in the fourth quarter?

And then just a question, you know, free cash flow in 2001 was about 200 million. It was about 200 million again in 2002. And it sounds like you are guiding for about 200 million and you have had some earnings growth. I mean, why isn't free cash flow tracking with the earnings growth and when are we going to see growth in that number, as well? And I just -- I wonder now just finally, can you help us with the assumption? A lot of us are wondering about the refi market and mortgage market and how sustainable that is and can you tell us what you're baking into your guidance on the mortgage side?

Yes, we can. Those are a lot of things to answer so we'll bounce around the table. We'll start with Mark and we'll go over to did Denis on some of the free cash flow. So Mark will kick us off and we'll try to cover every one of those.

I'll talk about the industry and the direct marketing and overall e-Marketing space. We had a pretty good December in the yellow direct marketing pulp business. We began to see a recovery. Obviously, it's been a tough environment since September of '01. We are beginning to see a little bit of clawback in the industry. We are not making any major growth assumptions about the core direct marketing business. If you will, for lack of a better way to put it the old line direct marketing business. I think most industry experts will tell you that space will grow at a 3 to 5 percent range over the next 12 to 18 months. On the other hand, with our broadened toolkit and our competitive advantage, we are going to pick up market share gains. We also think that the e-Marketing space in most -- and most experts are predicting this, will grow in the 20 percent range over the next 12 to 18 months. We think we're extremely well positioned and so we're expecting overall robust growth from our combined direct marketing business in '03. But those would be the core assumptions in terms of industry growth in the 3 to 5 percent range in the core and in the 20 percent range for the email marketing business.

Core pulp business, on an organic business, if we take out Naviant, was that still cycling down year on year in the fourth quarter?

It was. We have began to see some clawback in December. But overall, in the fourth quarter, we saw about an 8 percent decline for the year, about a 13 percent decline. And Denis can break out some of those numbers if need be. I'm turn -- I'll turn the floor over to him now to answer the second part of your question.

Frederick, on the direct marketing business, to answer your question on the organic gross -- growth, we generated 21.2 million of revenues in q 46 '01, and 19.5 million in Q4 of '02. So we were down 8 percent in that business in the fourth quarter. On the free cash flow, the reason we're down is two primary drivers. The pension funding of 20 -- we had a funding to our pension plan during the year of 20 million. And we've made significant payments associated with our restructuring that we took at the end of year 2001.

Okay.

I think the last part of your question was in the mortgage origination business. Our plan for '03 anticipates mortgage origination about a 20 to 25 percent decline in the overall market. As I said earlier, we've picked up some market share gains. We have new product and services that we think overall our market -- pardon me, our mortgage business is going to be about flat for the year when we mix all those things into the fray. Now, frankly, there have been a couple of -- there's been a lot of movement in the predictions in the industry about mortgage. Freddie and Fannie initially steered their predictions down for '03 quite a bit. They have recently steered those back up a bit. Housing starts were obviously very good in December. So we have not seen a downturn but we're still being very conservative in our planning for '03.

Thanks, Mark.

Thank you.

Our next question comes from the line of Brad Eichler with Stephens, Incorporated. Good morning, guys.

Good morning, Brad.

A couple of questions for you. While we're on the Naviant subject, 20 percent growth rate you are talking about for the marketing Services Division. What does that equate to on an absolute dollar basis? What is the implied amount of Naviant revenue in '03?

Let me get that number. It's about 80 to 90 is what the assumption would be at this point. And we think we're on a good run rate to achieve that.

No change in that number?

No, sir.

We talked about mortgages. What about auto sales? Are you seeing any trends there?

We had a good fourth quarter with some of these special interest rate deals. We haven't seen a downturn there. But fourth quarter was very good as a result of zero percent interest rate deals. GM is still moving ahead. We are getting some new opportunities with G.M. We're engaged in a number of different discussions with prospects that we're doing more with us in the auto space. And it looks as though for at least for now, that zero percent financing will continue for a while. So we don't expect any real downturn there, Brad.

Okay. On the pension fund for a second, the $20 million you just mentioned, that was 20 million that was in the '02 numbers?

Yes, sir.

Okay. And are you in the free cash flow at $200 million for '03 or are you assuming any pension contribution in that?

We are. What I would tell you is two things. One is we think the 200 million is probably going to be a conservative number. [ pause in captioning ] All of the industry is battling together for is to retain preemption [partial transcript, 6 Minutes of caption missing] Anybody in any industry, you can't have 50 states telling you what to do and how you price and how you report and that's a real thing that concerns us about it. We've all as an industry and a company adopted SCRA since 1971. That's since it was crafted. But the preemption issue is the main thing that that wasn't to make sure this we battle but we really don't see it affecting our products. Okay?

Okay.

All right.

Then second question I had had to do with earnings growth. Over the last 10 years you all have compounded about 10 percent. Last year was 8 percent this year is going to be about midrange 7.5 percent. Could you speak to, you know, what seems to be slowing earnings growth and your outlook over the next couple years as to what the core earnings growth for Equifax can really be?

Yes. I think I'd like to speak to that and that is one is I think we think the core business on and on going basis in a healthy economy is going to be a solid number. What you have seen in '0-- starting in '01 and '02 was the most significant slug-on we've seen in over ten years. So we believe, too, that once the economy retreads and gets back in shape, we think we're in good shape. We have been investing in the future. We've been adding new product lines. So we feel very good about where we are going forward beyond this immediate economy.

I think -- just to hitchhike on that not that -- this is Tom.Not that it's necessary.I mean, that's the reason I mentioned that we've transitioned the company from a credit bureau company to accompany that has broad coverage of products and services that diversify against some of that risk but you know, it's a failed economy.And no matter what your share is, and ours is predominant in that credit reporting space, et cetera, when the consumer attitudes and activities decrease, that's not a marketing fix.You just have to continue to invest in, you know, in things like Consumer Direct and GRID, which is yet a totally different solution in the Small Business Exchange.We want the economy to get better because activity will get better

Would you feel comfortable putting some parameters around core business at a solid number, parameters around solid?As far as a range that might be reasonable to expect once we get back to a more normalized economic environment?

Well, I think, uhm, yeah, I don't know what a more reasonable economic environment is going to be. But I think that we used to look at the core growing in the four to six to seven range over the past few years, we amplified that with new acquisitions and new initiatives.I would pretty much expect that we get back to that general parameters as we redefine what the economy is and I think the thing we'll just work on in order to be ready for that occur something to continue to lower our cost base. Better utilize our technology, stay after our productivity, manage our new initiatives and keep that margin performing. And, you know, I think those are the things that every well-run business is trying to do.And those are really our guiding principles.

Absolutely. Thank you very much.

One more question Operator.

Our final question comes from the line of Craig Peckham with Jefferies & Company.Please go ahead.

Good morning.And congratulations, Don, on your first Equifax call.

Thank You.

I had two questions, first, if you could help give me a better understanding as we look out to 2003. $200 million in free cash flow, help identify what you see as the priority uses of that free cash flow. And secondly, you spent a lot of time in this call or particular relaying the new revenue sources in 2003. And perhaps a bit of a mix shift as the mortgage components may see a a bit of change in grow. What are the implications in the margins for the North American segment?

Take that latter one, Mark

The -- we are very proud of our world class margins.Tom talked about that earlier in the call.We -- and I just want to hitchhike on what was said earlier.We are very proud of our performance in not to be labor the point but a tough economy.While we have done that we have self-funded these new growth initiatives so we believe that the new growth initiatives are seeing quite a bit of traction early in January, so we think we can maintain our margins.Tom mentioned earlier again, that we introduced our direct-to-consumer business and we never had to trade off margin for top-line growth like many of our competitors did so we think we can hold, continue to drive productivity,continue to build margin, but we are not going to foresake growth opportunities when they come our way.

This is Tom.A couple other points to that relative to cash.We're not only going to invest in those growth initiatives and Cap Ex around 45, like GRID and marketing platforms and decision platforms, but what the use of that cash is going to be acquisitions followed by-product development.We are going to always product development.But acquisitions becomes the number one focus for us going forward as the industry changes to try to find compelling combinations that a long-term value, then following acquisitions and product development, stock buy-back and then debt repayment.

Okay, Thank you.

Well, look, uhm, thank you all very much for your interest and attention to our company as always.There will be some side bar conversations, but we thank you for being on the call.We thank you for your interest and position in our company.And hope you have a good day, and look forward to seeing you soon.Bye-bye.

Ladies and gentlemen, today's conference will be available for replay beginning dade, January 23, at 4 p.m.Eastern time and will run through January 30 at midnight.You may access the AT&T executive play back system by dialing 1-800-475-6701.For international participants dial 320-365-3844.With the access code 665742.That does conclude our conference for today.Thank you for your participation and also for using AT&T'sExecutive Teleconference.You may now disconnect.