易速傳真 (EFX) 2004 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Equifax Third Quarter Earnings Release Investor Relations Conference Call. (Operator Instructions ) At this time it's my pleasure to turn the conference over to Jeff Dodge of Investor Relations.

Please go ahead, sir.

Good morning and welcome to today's conference call.

I'm Jeff Dodge and with me are Tom Chapman, Chairman and CEO, Don Heroman our Chief Financial Officer, Dave Gunter from Corporate Finance and Nullah (ph) King our Corporate Controller.

The financial information that will discussed during this call and reconciling information relating to certain nonGAAP financial measures is included in a press release that we issued this morning and filed in a form 8K.

The press release and the GAAP reconciliation information may also be found on the investor center in our web site at www.Equifax.com.

We'll also be making certain forward-looking statements to help you understand Equifax and its business environment.

These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from our expectations.

Certain risk factors inherent in our business are set forth in filings with the SEC including our '03 form 10K and subsequent filings.

Today's call is being recorded in addition to being webcast live over the internet.

The replay will be available on our website at www.Equifax.com.

Now I'd like to turn it over to Tom.

Thanks, Jeff.

And good morning, everybody.

In 2004 Equifax delivered record financial performance and continued to add significant value for our shareholders.

Let me give you the highlights for the quarter and the year, then I'll ask Don to provide more detail as usual.

For the fourth quarter, revenue was 328 million, up 12 percent.

Earnings from continuing operations were a record 55 million, and EPS, also a record, was $0.42.

For the whole year of '04, revenues were 1.3 billion, up five percent.

Earnings from continuing operations were 237 million, up 31 percent and EPS was $1.78, up 35 percent.

By any financial measure, '04 was a very successful year for Equifax and our shareholders.

During '04, we continued to strengthen our management team.

Rudy Ploder joined us early in 2004 as the Group Executive for Latin America taking over for Bill Phinney who retired after 18 years of great service to our company.

Rudy, an Argentinian has over 20 years of Latin American experience.

And his hands on expertise and passion for our business is already making a difference.

Vince Corica, who has been with us for over three years as Head of Sales for North America was promoted to Group Exec. for Personal Solution.

And Vince's Marketing and Sales expertise will bring new ideas, product, and distribution channels to this growing business.

Owen Flynn, a 20 year Equifax veteran, who is our Chief Technology Officer for the last five years, assumes the helm as Group Executive of Marketing Services.

And Rob Webb, our new Chief Technology Officer brings invaluable International and Consumer Finance IT expertise to our Global Technology Organization.

Rob comes to us from GE where he led various international technology organizations in Japan and Canada and elsewhere.

Now, let's talk for just a moment about the Equifax franchise.

When we look at our company, we really look at it on three pillars of growth.

Those three pillars are number one, the Rich Information we possess and manage.

Secondly, the Analytics and Insight that we provide to that information.

And thirdly, the Enabling Technology that we deploy that provides answers and solutions to our customers.

While we're not organized necessarily in this way, these are the types of capabilities that our customers expect from Equifax.

In our Rich Information, of course, we have a Vast Data Inventory of Credit, Demographic Information, Lifestyle Data, and Individual and Commercial Information.

In our Analytics and Insight area, all of our modeling activities really focus around three real strong customer needs.

The acquisition of customers, the growth of those customers, and the management of risk of their portfolios.

As part of that, we continue to provide not only macro, but microportfolio analytics in all of those categories of acquisition, growth and risk management.

And additionally, on an increasing basis for our customer, we're using all of the dynamics from our Rich Information and our Analytics to provide economic forecasting.

And the final part of that is Enabling Technology.

This is where we take the data enrich it, make it smart, and then provide it at the customer's point of impulse to provide answers.

This is where you'll find our products like Decision Power and our new platform InterConnect Residing.

This is where our unique and proprietary exchanges reside, providing answers and solutions to our customers.

This is where we deploy products and services to businesses and consumers, via the internet.

And also in our Enabling Technologies category you'll find Excel(ph) our newest product delivery and platform for our marketing services customers.

All three of those serve a broad range of customer needs, from acquisition to relationship management, to risk.

And they provide Equifax for vital growth components that are: number one, critical to our customers, two, drives each of our businesses, and, three, differentiates Equifax from our competitors.

Now let me review the key highlights for our five businesses during last year.

Let's begin with North American Information Services.

This 106-year-old business delivered a record year in 2004 with over $700 million in revenues and $300 million in operating profit.

While as you know, generating most of our free cash flow.

During the year, we continued to grow our core business.

We made impressive progress in our fast-growing small business initiatives.

We successfully met and overcame the challenges of onerous FACTA legislation, and we continue to develop new enabling technologies to drive future revenue growth.

And in an industry that some characterize as mature, and I guess if you've been doing something for 106 years, you can call it mature, we still have a highly profitable growth engine for Equifax in this business.

U.S. reporting on-line volume was up 20 percent last year, driven primarily by growth in Financial Services in Telco.

Our suite of Enabling Technology Solutions was enhanced with InterConnect our newest Decisioning platform.

Market demand for InterConnect is very encouraging.

And our pipeline currently includes 16 projects under development.

Today our Decisioning and Application Processing Solutions include over 700 customers from Financial Services, Credit Card, Telco, Brokerage, Healthcare and Small Business.

Including the likes of SBC and JP Morgan's brokerage operation.

Let me say this another way, last year over 20 percent of all U.S. on-line transactions were processed through one of our Decisioning Technology platforms.

That's doubled in less than four years.

These platforms delivered 151 million transactions last year, up over 30 percent from '03.

Our Small Business Initiative is well positioned for growth this year.

During the quarter, revenues were two million dollars and in the year at eight million, up three times from the levels of '03.

Of the Small Business reports delivered in 2004, 80 percent had two or more trade accounts.

An important measure of file content and, most importantly, predictability.

There was significant sequential growth in transaction volume.

In other words, Q4 transaction volume more than doubled the transaction volume in Q3.

And our suite of Small Business Scores has had exceptional market acceptance. 100 percent of our financial institution customers utilize and Equifax score in their on-line decisioning, while 60 percent of our nonfinancial customers incorporate an Equifax score in their decisioning.

Our Predictive Sciences Group continues to make great progress.

In 2004, 30 percent of our modeling projects were competitive takeaways. 50 percent were new installations, and 20 percent were replacements for customers own internal models.

We implemented the industry's first data quality score card, with an individualized index on 50 of our largest customers.

This gives Equifax yet another leadership role in setting the standards supporting better data quality, better customer decisions, and enhanced file accuracy.

We call that the Equifax difference.

And finally, we committed ourselves to craft a unique strategy to successfully address the Fact Act.

You already know the background.

There were some benefits to this legislation.

For instance, state preemption for regulations.

There was a stage rollout that we accomplished through hard work and leadership in Washington.

There was burden that was shared with our customers.

We were well prepared and we've told you throughout the year that we were.

We refined systems and improved them.

There was extensive customer partnership, including training, education.

This was an incredible collaborative effort with our customers.

They understood the burden that was being placed not only on us, but on them through this legislation.

And we implemented a Regulatory Recovery Fee after input and dialogue with those customers.

Although a bit preliminarily, we want to say up front that we're deeply gratified to these customers for a partnership and an attitude of mutual team effort to try to, quote, fix this problem.

And let me tell you that all of the early experience so far is well within the estimated ranges that we predicted.

In Marketing Services during the fourth quarter we launched our newest and most innovative Enabling Technology, Excel.

With a signing of one of the country's largest publishing companies.

The new super computing platform delivers custom complex marketing solutions in realtime.

And for example the time needed to complete a major project of marketing can be reduced by as much as 50 percent.

An important factor, too, to our marketers is a term called "drift", which Excel dramatically reduces.

Drift is defined as the time it takes when you begin a solicitation until you hit the mail.

The shorter that time, the better the response, and the less risk that occurs.

And Excel attacks that feature of direct marketers head on.

And our margins in this business continue to improve as we convert customers to the new platform, which we began last year.

Turning to Personal Solutions, this business, once again, continues to make a significant contribution to our overall results and will do so in '05.

During '04, we grew revenues in this business 38 percent to 96 million.

We continued to add approximately 150,000 new customers a month.

Our now total membership now surpasses 8.3 million members.

We also signed some very important business partners recently, including eBay, Earthlink, ADT, and Lending Tree, which will provide very high visibility and added distribution for our products.

Marketing initiatives continue to pay off as 44 percent of our Q4 Personal Solution customers were repeat buyers, up from 40 percent in Q3.

New products were introduced, including Score Watch, a service that provides consumers with alerts when their credit score changes.

And our advertising campaign, which we launched last year continues.

It has been very successful and very well received.

And enhancing our brand recognition and our product distribution in the marketplace.

Our International Operations delivered a very impressive performance throughout 2004.

Europe completed its best year ever with a record 23 percent growth in revenue and a 21 percent operating margin.

In the U.K., which, as you know, is most of our European business, consumer reporting volume was up ten percent, compared to Q4 of '03, driven by growth in Telco and the Government sector.

We scored another victory for ID authentific -- authentication in the UK signing a three-year contract with a large assurance company.

And U.K.'s Personal Solutions business completed its first full year gaining over 250,000 members.

Latin America continues to perform.

And Latin America a 12 percent growth in on-line volume continues to drive strong local currency revenue growth. 21percent of our Latin American revenue is generated from our Predictive Sciences in Enabling Technology Solutions.

And with 129 installations of Experto, throughout the region, our on-line decisioning solutions have established Equifax as the premier provider of enabling technologies in the region.

In summary, we believe a solid quarter and an outstanding year.

A year marked by strong, broad-based financial performance and growth.

A year where continued investment in people, products, and technology positions Equifax for continued success not only this year but for years to come.

And a year where we delivered that performance while complying not only with the Fact Act but also with Sarbanes Oxley, both of which were a drain on valuable resources and required extensive management and personnel experience.

Yet we still lived up to our performance commitments.

Now let me turn it over to Don for some more details.

Don.

Thanks, Tom, and good morning.

Let me start with the quarter, and then I'll talk about the full year results.

While Tom talked about our earnings and discussed EPS on a GAAP basis, for comparative purposes I will be presenting earnings and EPS excluding nonrecurring items in both 2004 and 2003.

The attachments to our earnings release contain a detailed reconciliation to these numbers to their appropriate GAAP counter-parts.

For the quarter, Consolidated revenue was 328 million up 12 percent, and consolidated earnings from continuing operations were 55 million.

Earnings per share were $0.42, up two percent.

In North America, US Consumer and Commercial Information Services revenue was $134 million up 12 percent compared to last year.

Mortgage Reporting Services performed very well, with revenue of $19 million up 24 percent, which compares very favorably to a four percent decline in the mortgage application index for the market as a whole.

Refinancing as a percent of total applications industry wide was below 50 percent while home purchase activity continued to grow and was up 15 percent as the quarter ended.

For the quarter, mortgage rev -- mortgage related revenue was approximately four percent of consolidated revenue.

The lowest percentage in over three years.

In Canada, revenues grew ten percent to $27 million for the quarter.

Marketing Services total revenue of 61 million was up one percent.

Personal Solutions is poised for continued growth in 2005.

Revenue of 23 million for the quarter was up 25 percent compared to the fourth quarter of last year.

Operating margin was four percent for the quarter.

Adjusting for the incremental advertising which we spoke about in the third quarter, operating margins were 18 percent.

Overall, North American margins were 38 percent in the fourth quarter.

Europe delivered record fourth quarter revenue of $38 million, up 17 percent in dollars or seven percent in local currency, while Latin America's revenue of 25 million was up 11 percent in U.S. dollars and seven percent in local currency.

For the corporation, free cash flow is $87 million for the quarter up from 81 million in -- in 2003.

We repurchased 1.3 million shares of our stock for a total of $35 million and have $239 million remaining under the current authorization.

Day Sales outstanding were 53 dol -- 53 days consistent with 53 days from last year.

Total debt outstanding is down $169 million to $654 million compared to the fourth quarter of '03, and that's the lowest level the debt has been since June of 1998.

For the entire year of 2004, consolidated revenues was $1.3 billion up a five percent.

Excluding mortgage related revenue and E-Marketing, Consolidated revenue grew ten percent.

Earnings from Continuing Operations were $216 million.

EPS was $1.62 up nine percent.

We sold our Italian Operations and reported in discontinued operations.

In North American Information Services US Consumer and Commercial Information Services revenue was $533 million, up three percent compared to last year.

Mortgage Reporting Services reported performed exceedingly well.

Revenue of $75 million was up five percent comparing favorably to a 31 percent decline in the Mortgage Application Index for the market as a whole.

Canada revenues grew nine percent to $99 million.

And in Marketing Services total revenue of $236 million was down 11 percent driven primarily by the decline in E-Marketing revenue.

For the year revenue from Direct Mail Products was up four percent and our credit marketing services revenue was $140 million down seven percent, but we are encouraged by the stabilization we saw in the third and fourth quarters for this area.

Personal Solutions delivered a solid performance, revenue of $96 million were up 38 percent while the operating margin was 18 percent, up from 13 percent in 2003.

Again excluding the incremental advertising done in the fir -- fourth quarter, the operating margin for 2004 was an impressive 22 percent.

For the year North American margins were 37 percent.

Europe's revenue of $142 million was up 23 percent in U.S. dollars or ten percent in local currency.

And in Latin America, revenue up $92 million was up 14 percent in U.S. dollars and eight percent in local currency.

For the corporation, free cash flow was $262 million for the year, up from $241 million in '03.

Excluding the sale of our Investment and Intersections, which generated an additional $37 million in cash.

We repurchased 5.4 million shares of our stock for a total of $138 million.

As a result we reduced average shares outstanding by 2 1/2 percent from 2003.

Two new credit facilities were established with the maximum of $625 million in borrowing capacity.

As of year end, we had no borrowings outstanding in either of these facilities.

Our outlook for 2005 reflects the momentum and great progress we made in 2004.

For 2005 we expect earnings per share to be between $1.69 and $1.76.

This would exclude the affect of adopting the new stock option expensing rules.

Revenue growth is expected to range from six to nine percent excluding the regulatory recovery fee.

And free cash flow is expected to be approximately 255 million to $275 million.

The capital expenditures are targeted at 60 to $70 million for the quarter.

Again, we're very proud of the quarter, we're very proud of the year and I'll now turn it back over to Tom.

Thanks, Don.

Now we'll be glad to take any questions you have.

( Operator Instructions ) David Togut, Morgan Stanley.

Thank you.

Good morning, Tom.

Good morning, David.

How are you doing?

Very well, thanks.

Just a couple of questions for you.

First could you talk about the financial impact of FACTA, specifically what impact the surcharge might have had on revenue in the quarter.

And was that a margin neutral event?

David, this is Don.

For the quarter, we haven't disclosed any specifics because it was only for one month for one quarter of the country.

As Tom mentioned in his notes, it's well within the ranges we expected.

For the year we're still in a deficit on FACTA because we only had the revenue for one month and we've had expense accumulating for a couple of quarters now.

We will probably start giving more disclosure on that next year.

I see.

And is there any specific component in your '05 revenue guidance from the FACTA surcharge?

Well that's what I said, we're -- for discussion purposes here we're excluding the FACTA surcharge.

Okay.

Great.

Just a follow-up.

Tom, strong turn in Europe, particularly the U.K..

Can you drill down a little bit on trends in the UK?

You mentioned Telco and Government were strong any other factors driving your growth there?

Yes, Dave.

I think -- I think one of the things that's happened of course Personal Solution is beginning to come along.

And at 250,000 members it's pretty impressive.

And we've only got one product launched right now, so there will be a couple more products coming this quarter and the next quarter.

Our -- our basic credit reporting business is just doing very well there.

You know, our volumes are up.

Our new ID authentication product it's really taking off over in the UK and -- and our decision platforms.

Over there we call it Decision Navigator.

But that platform, now that all the governmental regulation that required conversions under their legislation now allows that platform to drive a lot more volume force.

I mean, we've been dealing with the Privacy Act completion over there for the last couple of years.

And now those platforms that we put in place are beginning to generate revenue.

So Michael Shannon and his crew have just done a real good job in that core U.K. business.

I'm really pleased with it.

You and I have been talking it for a long time.

For two solid years now the European operations have exceeded our expectations.

And that's -- we feel pretty good about it.

Just a quick final question on pricing in the U.K..

Any trends and how do they compare to pricing of the U.S. on core credit reporting units?

Pricing, we won't make much of a distinction between the North American segment and the European segment.

We'll report to you -- by the way, this is Dave.

We'll let you know, pricing, we have low single digit declines, really nothing much to report there.

So we have good stability.

Even though it's a tough marketplace we've been able to hold our own.

Thank you very much.

Have a good day.

Brad Eichler, Stephens Inc.

Good morning Tom and Don.

Hey, Brad.

How are you doing?

Hey Brad.

Three questions.

First on the marketing business, if you exclude E-Marketing just through marketing alone, what was the -- what were the trends in the quarter?

Yeah, trends for the quarter for marketing were solid for DMS mid single digit kinds of numbers.

For CMS we actually saw sequentially stabilization in those numbers.

So from third to fourth quarter we had seen stabilization.

It would appear to us CMS seems to have stabilized at this point in time, Brad, and we're looking forward to it improving next year.

Don, Direct Marketing, that's actually better than what you saw last quarter.

It's about the same.

About the same.

Tom, you mentioned volume trends for the year up 20 percent, which is a real strong number.

What was that in the fourth quarter?

On just North America?

Up in the mid teens.

Okay.

And then just a follow-up to that first set of questions.

Is next year with your guidance of six to nine percent top line without FACTA recovery fee, on a quarterly basis, then, will you break out what the fee was so we can go back and calculate the -- kind of core revenue growth, if you will?

Brad, this is Don.

We haven't determined exactly how we're going to do it, but you can start expecting us to report on FACTA next year.

Remember, Brad, and everybody else, one of the things we committed to our partners and our customers was that it was going to take us six months to -- to really have this thing ferret itself out.

And we promised that we would review the whole matter in toto by midyear.

But -- but I really expect it to be bottom line neutral and that's the important thing.

That's -- that's what we had managed to have happen and we believe that's going to happen.

Okay.

Then maybe one numbers question for Don.

In your guidance for next year, what is your assumed level of interest expense for the year?

Our assumed level of interest expense?

I don't have the absolute number off the top of my head.

But it's just -- it's about five percent effective rate -- just under a fiv --.

Just under five percent, yes.

You just annualized maybe what we saw in the fourth quarter?

For right now.

But you would expect that some of our cash flow would still continue to go there.

Okay.

Thank you.

Brad, this would refer back to David as well, back on the Fact Act, David, you asked a question about impact on margin.

Fact Act impact on margin is going to be detrimental, because revenue will offset expense.

And so we're adding equal amounts of revenue and expense to the line.

So it will have -- it will artificially deflate margin.

Thank you.

Okay.

See you later.

Michael Meltz, Bear Stearns.

Hi there.

How are you?

Are you in Jacksonville?

No, no, not yet, but this is the golden age for Boston sports.

Couple of quick questions for you.

First with Fact, can you talk about -- I was hoping you were going to quantify some things you've seen in the past few months, for instance, maybe request rates ar dispute rates, things of that nature.

And secondly, can you -- can you talk about, in your guidance of six to nine percent revenue growth for '05, what your thinking as to what mortgage and e-marketing will do, and as opposed to the other revenue streams.

Thank you.

Well, I think we said about all we can say about the Fact Act.

We have managed this beautifully.

It is not a negative issue.

We are not concerned with it at all.

Our systems, our procedure, our customers, the way we put this thing in place is as good a success as I've seen in 17 years with onerous legislation.

We've made it a nonevent for our shareholders.

And we'll -- as we've said, when we -- when we have more than one and a half months worth of experience, we'll deal with it.

We use this opportunity to drive efficiencies throughout Equifax.

And related to consumers, our systems have been up.

They have performed beautifully compared to the rest of the market that has been noted by the FTC, by the national media.

It's enhanced our brand awareness.

I think it will help our Personal Solutions business.

We've just handled this very, very well.

We told you we would, we have.

We're moving on to serve the paying customers, you know, quite frankly, and that's -- that's very important to us.

That's about all I can tell you with the Fact Act.

Don, I don't know if you want to deal -- we're not looking for anything specifically from E-Marketing.

Our marketing business is going to be driven in the credit marketing field and in our postal area leveraged by our Excel technology and our new management team there, but, you know, E-Marketing is just not an issue for us, it's not a business of any importance.

So that's where you see -- when we talk about marketing, we'll really be talking about what you would know as Credit Marketing and Direct Marketing as we look to the future.

I mean -- thank you for that, I mean, you gave guidance for '04 and split out Mortgage and (inaudible), and I'm wondering what are you, in the six to nine percent in '05, what are you anticipating a Mortgage revenue -- you're mortgage revenues to do?

What we didn't specifically in '04 because it was such a big number coming off of '03, Michael.

But as I mentioned in my script, our Mortgage is a percent of total revenue has now actually dipped down under 15 percent, it's just over 14 percent.

That's at the lowest end of the range it's been in over three years.

So we don't think Mortgage becomes a significant factor for us next year in terms of exposure.

One other point -- this is Tom again, that I might make there, one of the things we've done in that Mortgage business, which we've been in a long time is, we have -- we've taken that back room and made it about as variable as you can make a back room operating facility.

So we're able to move expense with volume fluctuations literally in days.

And so it's not nearly as sensitive to the fluctuation the way we built the servicing part of that business and that's why we're not as concerned with it as perhaps we were in the past.

Okay.

Thank you.

Yes, sir.

Good luck.

Thanks.

Fred Searby, JP Morgan.

Hey, Tom, Don, and Jeff.

Congratulations, you guys are doing a good job.

Thank you, sir.

There's been a fair amount of saber-rattling on the sell side about FACTA and looks like you're getting through it pretty well, given, considering the environment.

So I have a gazillion questions, I'll probably just ask one and follow up with you later.

Can you give us some update on the IBM outsourcing deal and just give us an update on margins of Personal Solutions that dropped even though you still had nice growth there, and I just wondered if that's still the increased promotionals spent you talked about before?

Thank you.

Sure.

Hi, it's Dave, I'll take that one.

First of all if we can talk about the IBM outsourcing deal.

We continue to expect we're going to have several million dollars -- I won't quantify it for you -- we do expect that we will continue to make the savings that were predicated in the original agreement.

So far we are on track.

We're achieving the technical goals that we wanted with this outsourcing and we are achieving the numbers in the back office.

It's given us good efficiencies and it has allowed us to focus on Excel, InterConnect and other platforms, which, in turn, are driving our revenue.

As to Personal Solutions, I might note for you that we did have a very good quarter and a very good year.

We have chosen to make an investment in advertising.

That investment, we believe, gives us a higher profile and will give us return in the future.

If I can separate out for you -- if I ignore that investment in advertising, then for the quarter we are reporting an 18 percent margin in this business.

That's very solid and healthy.

It's the same as the same quarter in the year 2003.

For the entire year 2004, again, if we take out that investment in advertising, we'd have a very strong number of 22 percent margin for Personal Solutions.

That 22 percent is nine points better than the 13 percent that we reported a year ago.

So again, a very healthy business, and we are doing our best to look for ways to continue that growth.

I'd like to point out, this is Tom, on the IBM deal which we've reported is -- is a heck of a deal, very efficient.

Getting better every day.

That is a year-over-year long-term improvement.

It's just not one year.

This contract runs through 2013, I believe.

I'm getting old, it's hard to remember.

But the improvements are multi year improvements, and they go up.

So I think, long-term as we reported when we did the deal, this is highly accretive to us in not only financially but in the way we run our business, it's far more efficient.

If I could jump in on that, Tom, we also have benchmarking built into the contract, which means that, within every two years we go back and look at the cost of operations are and if the market has come down, we get -- we get to reset those costs.

So we've got some built-in advantages on a go-forward basis as well, Fred.

All right.

Thank you very much.

I'll circle back later.

Craig Peckham , Jefferies.

Good morning, everybody.

Good morning.

I wanted to ask you a question about the free cash flow guidance for next year, if I take about the mid point of the range you gave, looks roughly flat with 2004, that's opposed to high single digit growth for earnings per share.

Maybe you could delineate the differences between the two.

I think CapEx is up year-on-year, if that's a fact I wondered if you could give us sort of the reasons for -- or I guess, targets for that increased CapEx.

Yeah.

You know what, Craig, the biggest driver is what -- exactly what you said.

It's CapEx.

And so we were -- we gave a conservative forecast, because CapEx could be as much as $70 million next year.

We --we underspent on CapEx this past year, because between nine and ten million of it was in Fact Act.

So if you look at that, we spent really about $37 million.

Historically we spend in the low 50s to 55, that's been the guidance we've given.

We needed to make sure we did a good job on Fact Act, so we're looking to do a little bit of catchup this year.

That's why the free cash flow might be what it is.

We gave a range of 60 to 70, because it -- it -- we'd have to just run really fast to do 70 million in CapEx spending.

Okay.

And 50 clear, then.

The guidance does not include any additional share repurchases from here?

We did --we don't -- we don't -- we didn't give any guidance in terms of what shares are.

We know -- you know we authorized share repurchases and we've got a program going to continue share buybacks.

Turning over to the Personal Solutions business, the sequential revenue trends there have been basically flat, just slightly down over the four quarters of 2004.

I guess I'm a little surprised by that, given the pretty impressive increases in numbers of subscribers that you referenced in the prepared remarks.

Can you discuss the reasons for the flat sequential comparisons then?

Also as it relates to the advertising spend in the fourth quarter, when do you expect to see the payoff from that on the revenue line?

Well let me -- this is Tom, -- first of all, let me say that probably the biggest differential for the -- for the volume was one of the huge sellers we have is tied directly to Mortgage.

When Mortgage volume is down as it was, the three and one credit report that we sell a gillion of was directly tied to that.

That was one of the -- one of the reasons for the revenue.

And there was a lot of attention and consumers sitting on the sideline with the Fact Act.

They were paying nine, nine and a half bucks for a credit report.

With all the media attention undoubtedly they sat and waited until they could exercise their ability to get their free report.

So I think those were the major things that were affecting what was going on in the marketplace.

As far as advertising, I mean, any of us that have been in business know that you cannot quantify traditional advertising.

Part of our advertising expense, however, is on-line advertising.

There's a quantifiable, in our viewpoint, for every dollar we spend, we get two dollars back.

We're going to continue to spend on an on-line basis there the traditional media advertising supports the total Equifax brand.

It supports the role that we play in customers, it also supports the specific products.

And brand awareness is very important to our company.

So while we charge Personal Solutions, if you will, for all of that, a good bit of that, really, is brand for the entire company around the world.

It's just what you do when you're a marketing company.

That's our view going forward.

We will continue the advertising intermittently.

Research is showing that our brand continues to grow as a provider of personal products and solutions for consumer goods and our research indicates that that brand and that knowledge of our company and our products is increasing.

And that will really be the -- the most concise barometer as we go forward and continue to advertise and research as we go.

Okay, thanks for that Tom.

And I wounder if the 2005 guidance includes revenue from Credit Scores you may be able to sell in to the free credit report base?

I know there's no regulatory fee included in that but I wondered about the Score revenue.

Not a lot.

We hope there will be some but not significant.

Just my last question and I'll yield the floor here.

With regard to stock option expensing, I believe in 2003 there was about $0.09 of dilution from stock-based compensation.

Is that about a similar level that you expect to see in the 2005 as well as the 2004 year ended?

Craig, this is Don.

The answer is no.

We've cut back on the options that we've granted, and I think we talked about this maybe once or twice this year.

But based on what we did last year, we would expect the expense to be about a penny a share.

Now, we haven't done our option granting this year, but that's -- that's what it would have been.

Yeah, it's a quarter, a penny a quarter a share.

Okay.

One cent per quarter.

Thanks very much for the answers.

Okay.

Have a good one.

Mike's Vinciquerra, Raymond James

Thank you.

Just a little follow up, Tom if I could, on the Consumer side.

The question that was asked -- I mean, I guess you guys continue to grow your customer base.

Do we need to look at the customer numbers that you're putting out a little bit differently in such that it doesn't necessarily mean you have that many customers active each quarter, it's simply how many have bought a product from you over time.

Those are the -- those are the customers -- I guess we could -- we could look at segmented different.

Those are real, live on-line customers who have brought products.

And 150,000 new customers buy a product a month.

So, we've talked about that the repeat level is significant.

You've got, for instance, when I think -- I think the step that we've used in the past and I didn't mention it, but 40 percent are repeat buyers.

If you take our bell weather product, which is Credit Watch, I mean, you've got a huge percentage that will evolve into that second year of payments.

So it's a bit of an annuity line in some of those products over 50 percent continue to renew, and some of them are buying one product, one drink at a time, if you will.

So I think that's the best way we could look at the -- at the customer numbers and what they are buying.

Okay.

The only reason I focus on that is because your average revenue per reported customers come down the last couple of quarters, we're now at I guess about $2.80 a quarter per customer.

I'm just trying to get a sense for whether or not I'm giving you the proper credit because a lot of customers aren't buying products on a quarterly basis and therefore it's -- we're counting customers that really aren't active.

But at any rate, one other question on the balance sheet, Goodwill was up $30 million sequentially.

Was there a small acquisition made during the period?

This is Nullah.

Yes, there were some small affiliate acquisitions but the major driver of the Goodwill related to some currency movements coming from the Goodwill in our International business.

Okay, so really no impact on the income statement from some -- an acquisition or anything like that?

Right.

There's no -- there are no big acquisitions in that number.

Okay.

And just one thing, Don, can you provide any guidance on what the expected tax rate would be for the full year '05?

Mike, we're currently evaluating the impact of the '04 Tax Act on our 2005 tax rate, particularly our option for taking advantage of prevision of repatriation of foreign earnings.

So we're in the process of looking at that.

So from our perceptive best guess would just be to assume the average rate for '05 and you'll provide more guidance down the road?

I think you could do that.

Okay.

Thank you guys.

Wayne Johnson, SunTrust Robinson-Humphrey

Good morning.

Good morning.

I was wondering, excuse me, are there any economic considerations or forecast that you guys -- assumptions that you guys have made in your forecast for earnings this year?

There's nothing implisive, we've seen what you've seen, and that is it appears the economy has stabilized to slightly improving, you saw in the fed -- increased rates again.

So we don't have a dramatic improvement in the economy built into our plan.

Can you talk a little about acquisition pipeline, if there is any, and the types of functionality that you guys might be looking for in to -- adding to your platforms in 2005?

Yes, I think there's really three categories that we look, new sources of data or content.

Secondly, analytical type of companies.

And third, which is a real focus, enabling technologies where we continue to grow the transactions and the imbedded base of decision tools we have in our customers.

You'll see us really sort of look enabling technologies, and analytics, and data sort of in that order as we move to the future.

And could you talk a little bit about the size of --of potential acquisitions in -- in any of those areas?

I think it just depends on what's available, and what it's fit is, and what the price is.

I don't have anything I can say other than that.

Okay, terrific.

Thanks very much.

Okay.

We're going to take -- we have time for one more question, and then what we'll do is -- is cut it off.

Then Don and I will make ourselves available for the rest of the day.

Brandon Dobell, CSFB.

Great, thanks for sneaking me in here at the end.

Just a quick one.

I wonder if you could give a little more color on how to think about the non U.S. business in terms of '05 performance, both top and -- top line and margin on a constant currency basis.

Should we expect kind of a continuation on what we saw in Q4 or is there anything going on in some of those markets, perhaps, that you could -- that would change that to a faster or a slower growth rate going forward for our -- for our guidance.

Yes, Brandon, this is Don.

We don't break out our guidance down to the segment level.

But as Tom said, we're very pleased with our performance in '04 and our European operations in particular.

We would -- we see nothing to say any reason why it doesn't continue in the next year.

Okay, thanks a lot.

Thank you, everybody.

Have a good day and thanks for being with us.

Bye-bye.

Thank you very much.

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