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Equifax Inc. (which may be referred to as Equifax, the Company, we, us or our) is a leading global provider of information solutions for businesses and consumers. Our products and services are based on comprehensive databases of consumer and business information derived from numerous types of credit, financial, public record, demographic and marketing data. We use proprietary analytical tools to analyze this data to create customized insights, decision-making solutions and processing services for businesses. We help consumers understand, manage and protect their personal information and to make more informed financial decisions. Upon our acquisition of TALX Corporation, or TALX, on May 15, 2007, we became a leading provider of payroll-related and human resources business process outsourcing services in the United States of America, or U.S.
We currently operate in three global regions: North America (U.S., Canada and Costa Rica), Europe (the United Kingdom, or U.K., the Republic of Ireland, Spain and Portugal) and Latin America (Brazil, Argentina, Chile, El Salvador, Honduras, Peru and Uruguay). Of the countries in which we operate, 73% of our revenue was generated in the U.S. during 2007.
We are organized and report our business results in five operating segments, as follows:
U.S. Consumer Information Solutions (USCIS)â€” provides consumer information solutions to businesses in the U.S. including online credit data and credit decision technology solutions, mortgage reporting and settlement solutions, consumer credit-based marketing services and direct marketing services based on demographic and other consumer information.
TALXâ€” provides services enabling clients to outsource and automate the performance of certain payroll and human resources business processes, including employment and income verification, tax management and talent management services.
North America Personal Solutionsâ€” provides products to consumers enabling them to monitor and protect their credit information and make more informed financial decisions.
North America Commercial Solutionsâ€” provides credit, financial, marketing and other information regarding businesses in the U.S. and Canada.
Internationalâ€” includes our Canada Consumer, Europe and Latin America business units. Products and services offered are similar to those available in the USCIS, North America Commercial Solutions and North America Personal Solutions operating segments but vary by geographic region.
Our revenue base and business mix are diversified among our five segments as depicted in the following chart. We have further diversified the mix of products and services we offer during 2007. As depicted in the chart below regarding our business mix, our core credit reporting operating segment, USCIS, represented 53% of consolidated revenue in 2007 compared to 63% in 2006. Revenue from our newest operating segment, TALX, was generated from the date of its acquisition on May 15, 2007 through the end of the fiscal year. TALX represented 12% of our revenue growth in 2007, while the traditional Equifax operating segments contributed 7%.
For More Information About Us
We were founded in Atlanta, Georgia, in 1899, incorporated in Georgia in 1913, and have been known as Equifax Inc. since 1975. We have been publicly owned since 1965, have been listed on the New York Stock Exchange since 1971 and are a member of the S&P 500 and certain other stock indices.
On our Internet web site, www.equifax.com , we post the following filings as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission, or SEC. These reports are required by the Securities Exchange Act of 1934 and include annual reports on Form 10-K; quarterly reports on Form 10-Q; current reports on Form 8-K; proxy statements on Schedule 14A; and any amendments to these reports or statements. The SEC also maintains a web site, www.sec.gov , that contains reports, proxy and information statements regarding issuers that file electronically with the SEC. The content on any web site referred to in this Form 10-K is not incorporated by reference into this Form 10-K unless expressly noted.
Our product and service offerings are highly diversified and include consumer and business credit information, information database management, marketing information, decisioning and analytical tools, and identity verification services that enable businesses to increase the speed and quality of their decision making regarding credit offers and other services, mitigate fraud, manage portfolio risk and customer relationships and develop marketing strategies. We offer a portfolio of products marketed to individual consumers that enable them to better understand, manage and protect their financial affairs. We provide employment and income verification and human resources business process outsourcing services.
USCIS provides consumer information solutions to businesses in the U.S. through four product lines, as follows:
Online Consumer Information Solutions (OCIS). OCIS products are derived from large databases of credit information that we maintain about individual consumers, including credit history, current credit status and consumer address information. Our customers utilize the credit report information we provide to make decisions for a wide range of credit and business purposes, such as whether, and on what terms, to approve auto loans or credit card applications, whether to allow a consumer to open a new utility or telephone account and similar business uses. We offer other analytical and predictive services based on the information in the consumer credit information databases to help further mitigate risk of granting credit by verifying the identity of a consumer seeking credit, predicting the risk of consumer bankruptcy, or indicating the credit applicant's risk potential for account delinquency, for example. These risk management services, as well as fraud detection and prevention services, enable our customers to monitor default rates and proactively manage their existing credit card or other consumer loan accounts.
OCIS customers access products through a full range of electronic distribution mechanisms, including direct real-time access, which facilitates instant decisions, e.g., for the immediate granting of credit. We also create and host customized decisioning technology for customers to obtain custom scores and analytical results along with consumer credit information to enhance the timeliness and quality of their decision-making process. These enabling technology applications facilitate pre-approved offers of credit and automate a variety of credit decisions through our Interconnect and Decision Power online technology platforms as well as automate loan underwriting processes with our LoanCenter platform.
Mortgage Reporting Solutions (Mortgage Services). Our Mortgage Services products, offered in the U.S., consist of specialized credit reports that combine the reports of the three major consumer credit reporting agencies (Equifax, Experian and TransUnion) into one credit report provided in an online format, commonly referred to as a tri-merge credit report. Mortgage lenders use these tri-merge reports in making their mortgage underwriting decisions. We also offer, through our settlement services joint venture with ATM Corporation, certain mortgage settlement services, such as appraisal, title and closing services, with our traditional mortgage service offerings.
Credit Marketing Services (CMS). Our CMS products enable customers to manage their customer marketing efforts for efficiency and effectiveness; identify and acquire new customers for credit relationships; and realize additional revenue from existing customers. These products utilize information derived from the credit-based consumer data that also underlies our OCIS products, provided in a batch output formatted to meet our customers needs. Customers use this detailed information to make decisions about which consumers to target for their credit-based marketing campaigns. We also provide account review services which assist our customers in managing their customers and prescreen services that help our clients identify potential new customers.
Direct Marketing Services (DMS). Our DMS products enable customers to target specifically defined market segments and individuals based on individual consumer demographic characteristics; design more effective and economically-efficient marketing campaigns; facilitate improved direct mail response; and increase customer loyalty. We offer this information in the form of a list of consumers having specific attributes for ease of use by our customers. These lists categorize consumers based on meeting certain characteristics, interests or demographic attributes (e.g., those having recently acquired a new home). The information used in these products is acquired from third-party data compilers or is gathered from consumers directly through voluntary data submissions to us, an example of which is product registration cards. This permission-based information is generally less regulated and restricted than the credit information that we maintain; see the "Information Security and Government Regulation" section below. We also offer database management services which facilitate our customers' use of demographic and credit data for marketing purposes.
TALX operates in the U.S. through two business units, as follows:
The Work NumberÂ® (TWN Services). TWN Services include employment and income verification services; W-2 management services (which include initial distribution, reissue and correction of W-2 forms); paperless pay services that enable employees to electronically receive pay statement information as well as review and change direct deposit account or W-4 information; integrated electronic time capture and reporting services; paperless new-hire services to bring new workers on board using electronic forms; and I-9 management services designed to help clients electronically comply with the immigration laws that require employers to complete an I-9 form for each new hire.
TWN Services enable employers to direct third-party verifiers to our website or to a toll-free telephone number to verify the employee's employment status and income data. During 2007, we launched a new TWN service, Find It, which expands employment verification services to locate data which is not included in our existing TWN database.
We rely on payroll data from over 1,600 organizations, including over half of the Fortune 500, to regularly update the TWN database. The database contained over 165.9 million employment records at December 31, 2007.
Tax and Talent Management Services. These services are aimed at reducing the cost to the human resources function of businesses by assisting with employment tax matters and planning and improving the cost-effectiveness of talent management. We offer a broad suite of services designed to reduce the cost of unemployment claims through effective claims representation and management and efficient processing and to better manage the tax rate that employers are assessed for unemployment taxes. We also offer our customers comprehensive services designed to research the opportunity for obtaining employer-based tax credits, for example the federal work opportunity and welfare to work tax credits as well as employment-based state tax credits, process the necessary filings and assist the customer in obtaining the tax credit. In talent management, we also offer secure, electronic-based psychometric testing and assessments, as well as onboarding services using online forms to complete the new hire process for employees of corporate and government agencies.
North America Personal Solutions
Our Personal Solutions products give consumers information to make financial decisions and monitor and protect credit and credit score information through our Credit Watch and Score Watch monitoring products. Consumers can obtain a copy of credit file information about them and their credit score. We offer monitoring products for consumers who are concerned about identity theft and data breaches. In November 2007, we launched the Credit Report Control service that allows consumers subscribing to our credit monitoring products to restrict access to their credit report to mitigate unauthorized use of Equifax credit file information by third parties. Our products are available to consumers directly and through relationships with business partners who distribute our products or provide these services to their employees or customers.
North America Commercial Solutions
Our Commercial Solutions products are derived from databases of credit, financial and marketing information regarding businesses in the U.S. and Canada. The business records included in the U.S. credit database have been developed primarily as a part of the Small Business Financial Exchange, Inc., or SBFE. We exclusively manage the SBFE database under contract with the owners of the data which include a number of commercial lending financial institutions. This contract was renewed in 2007 and expires in 2012. Our company's database includes loan, credit card, public records and leasing history data, as well as trade accounts receivable performance. In 2007, we further enhanced the depth of the database by adding Secretary of State and SEC registration information. We also offer scoring and analytical services, provided in an online format to customers obtaining a commercial credit report, that provide additional information to help mitigate the credit risk assumed by our customers. We also have a database which links approximately 35 million commercial demographic data records from around the world to build corporate family structures for enterprise visibility of customers and suppliers.
The International operating segment includes our Canada Consumer, Europe and Latin America business units. These business units offer products that are similar to those available in the USCIS operating segment, although data sources tend to rely more heavily on government agencies than in the U.S. These products generate revenue in Argentina, Brazil, Canada, Chile, El Salvador, Honduras, Peru, Portugal, Spain, the U.K. and Uruguay, with support operations located in the Republic of Ireland and Costa Rica.
Canada Consumer. Similar to our OCIS, Mortgage Services and CMS business units, Canada Consumer offers products derived from the credit information that we maintain about individual consumers. We offer many products in Canada, including credit reporting and scoring, consumer marketing, risk management, fraud detection and modeling services, together with certain of our decisioning products that facilitate pre-approved offers of credit and automate a variety of credit decisions.
Europe. Our European operation provides information solutions, marketing and personal solutions products. Information solutions and personal solutions products are generated from credit records that we maintain and include credit reporting and scoring, risk management, fraud detection and modeling services. They are sold in the U.K., Portugal and Spain. Our commercial products, such as business credit reporting and commercial risk management services, are only available in the U.K. Marketing products, which are similar to those offered in our CMS and DMS business units, are primarily available in the U.K., though we offer some products in Spain as well. We maintain support operations in the Republic of Ireland.
Latin America. Our Latin American operation provides consumer and commercial information solutions products and marketing products. We offer a full range of consumer products, generated from credit records that we maintain, including credit reporting and scoring, risk management, identity verification and fraud detection services. Our consumer products are the primary source of revenue in each of the countries in which we operate, with the exception of Brazil where we are a market leader in commercial products. We offer our commercial products, which include credit reporting, decisioning tools and risk management services, in varying degrees to the countries we serve. We also provide a variety of consumer and commercial marketing products generated from our credit information databases, including account profitability and business profile analysis, business prospect lists and database management, in varying degrees to the countries we serve. The other countries in which we operate include Argentina, Chile, El Salvador, Honduras, Peru and Uruguay.
OUR BUSINESS STRATEGY
Our strategic objective is to be the trusted provider of information solutions that empower our customers to make critical decisions with greater confidence. Data is at the core of our value proposition to our customers. Through our people and technology, we create differentiated value for our customers by focusing on unique data for credit risk evaluation and high value, information-based decisions. Our long-term corporate growth strategy is driven by the following initiatives:
Increase penetration of our customers' information solutions needs. We continue to increase our share of our customers' spending on information-related services through the development and introduction of new products, pricing our services in accordance with the value they create for customers, increasing the range of current services utilized by customers, and improving the quality of sales and customer support interactions with consumers.
Deploy enabling technology systems and analytics globally. We continue to invest in new technology to enhance the cost-effectiveness, security and functionality of the services we offer and differentiate our products from those offered by our competitors. In addition to custom products for large customers, we seek to develop off-the-shelf enabling technology platforms that are more cost-effective for medium- and smaller-sized customers.
Invest in unique data sources. We continue to invest in unique sources of credit and non-credit information to enhance the variety and quality of our services and improve our customers' confidence in data-based business decisions. Our North America Personal Solutions business is investing in data to enable consumers to more effectively manage their identity using online tools. Our TALX business will continue to add employee files in the TWN Services database. Areas of focus for investment in new sources of data include, among others, positive payment data, real estate data and new commercial business data.
Pursue new vertical markets and expand into emerging markets. We see numerous opportunities to expand in related or emerging markets both in the U.S. and internationally. As an example, we acquired TALX, which has employment data that expands on the types of services we can offer our customers. Internationally, we intend to add to our business growth through expansion into new developing and emerging markets such as India, Russia, Mexico and China.
The market for our products and services is highly competitive and is subject to constant change. Our competitors vary widely in size and the nature of the products and services they offer. Sources of competition are numerous and include the following:
Competition for our consumer information solutions and personal solutions products varies by both application and industry, but generally includes two global consumer credit reporting companies, Experian Group Limited, or Experian, and TransUnion LLC, or TransUnion, both of which offer a range of consumer credit reporting products that are similar to products we offer, as well as a large number of smaller competitors who offer competing products in specialized areas such as fraud prevention, data vendors, providers of automated data processing services, and software companies offering credit modeling rules or analytical development tools. We believe that our products offer our customers an advantage over those of our competitors because of the quality of our data files, which we believe to be superior in terms of depth and accuracy and the differentiated information solutions services and decisioning technology that provides customers greater value. Our competitive strategy is to emphasize product features and quality while remaining competitive on price. Our marketing services products also compete with the foregoing companies and others who offer demographic information products, including Acxiom Corporation, or Acxiom, Harte-Hanks, Inc. and infoUSA, Inc. We also compete with Fair Isaac Corporation with respect to our analytical tools.
Competition for our commercial solutions products primarily includes Experian and The Dun & Bradstreet Corporation. We believe our small business loan information from financial institutions creates a unique database and product for the small business segment of that market.
Competition for our employment and income verification services includes large employers who serve their own needs through in-house systems to manage verification as well as outsourcers who manage verification services through a call center. Competition for complementary TWN Services includes payroll processors such as Automatic Data Processing, Inc., or ADP, Paychex, Inc. and Ceridian Corporation. Competitors of our Tax Management Services include in-house management of this function primarily by large employers; ADP; and a number of smaller regional firms that offer tax management services (Barnett Associates, Thomas & Thorngren, UC Advantage). Talent Management Services competitors include assessment service providers that offer proprietary content (Previsor, Inc., Development Dimensions International, Brainbench, Inc.), human resources consulting firms (AON Corporation, Watson Wyatt Worldwide, Inc., Right Management Consulting) and assessment or test publishers that have proprietary delivery platforms (Devine Group, Inc., Hogan Assessments Systems, Inc., SHL Group plc).
We believe that none of our competitors offers the same mix of products and services as we do. Certain competitors may have larger shares of particular geographic or product markets or operate in geographic areas where we do not currently have a presence.
We assess the principal competitive factors affecting our markets to include: technical performance; access to unique proprietary databases; availability in application service provider (ASP) format; product attributes such as quality, adaptability, scalability, interoperability, functionality and ease-of-use; product price; quickness of response, flexibility and customer services and support; the effectiveness of sales and marketing efforts; existing market penetration; new product innovation; and our reputation as a trusted steward of information.
There are no family relationships among our executive officers, nor are there any arrangements or understandings between any of the officers and any other persons pursuant to which they were selected as officers, except that Mr. Canfield was appointed to the Board at the effective time of the merger of TALX with and into a subsidiary of Equifax pursuant to the terms of that certain Agreement and Plan of Merger dated February 14, 2007, among TALX Corporation, Equifax and Chipper Corporation.
Mr. Smith has been Chairman and Chief Executive Officer since December 15, 2005. He was named Chairman-Elect and Chief Executive Officer effective September 19, 2005 and was elected as a Director on September 22, 2005. Prior to that, Mr. Smith served as Chief Operating Officer, GE Insurance Solutions, from 2004 to September 2005; as President and Chief Executive Officer of GE Property and Casualty Reinsurance from 2003 to 2004; as President and Chief Executive Officer of GE Property and Casualty Reinsuranceâ€”Americas of GE Global Insurance Holdings Corp. from 2001 to 2003; and as President and Chief Executive Officer, GE Capital Fleet Services from 1995 to 2000.
Mr. Adrean joined Equifax as Corporate Vice President and Chief Financial Officer in October 2006. Prior to joining Equifax, he served as Executive Vice President and Chief Financial Officer of NDCHealth Corporation since 2004. Prior thereto, he served as Executive Vice President and Chief Financial Officer of EarthLink, Inc. where he was employed from 2000 until 2004.
Mr. Mast has served as Chief Legal Officer since he joined Equifax in 2000. His responsibilities include legal services, global sourcing, security and compliance, government and legislative relations, corporate governance and privacy functions.
Ms. Rushing joined Equifax in May 2006 as Corporate Vice President and Chief Administrative Officer. Prior to joining Equifax, Ms. Rushing served as an executive coach and HR Consultant with Atlanta-based Cameron Wesley LLC. Prior thereto, she was Senior Vice President of Human Resources at The Coca-Cola Company, where she was employed from 1996 until 2004.
Mr. Springman has served as Chief Marketing Officer since February 2004. He joined Equifax in 1990 and has held various executive positions, most recently serving as the head of the Predictive Sciences unit from August 2002 until February 2004. Prior thereto, Mr. Springman served as Group Executive, North America Information Solutions from September 2001 until August 2002.
Mr. Webb joined Equifax in November 2004 as the Chief Technology Officer. Prior to joining Equifax, Mr. Webb was employed by General Electric Corporation from 1996 to 2004, where he held Chief Information Officer positions for GE Commercial Finance, GE Global Consumer Finance and GE Energy Services. Prior thereto, he worked as an information technology and management consultant with EDS and Andersen Consulting.
Mr. Adams assumed his current position in January 2007. He joined Equifax in 1999 and has served as Group Executive, North America Information Services from November 2003 until December 2006; Senior Vice President, Equifax North America Sales from October 2001 until October 2003; and Senior Vice President, Financial Services from February 1999 until October 2001.
Mr. Canfield joined Equifax in May 2007 upon Equifax's acquisition of TALX Corporation, for which he served as President and Chief Executive Officer from 1987 and Chairman since 1988.
Mr. Ely joined Equifax in February 2004 and was appointed President, North American Personal Solutions in January 2007. He served as Group Executive, Personal Solutions from August 2005 until December 2006 when he assumed his current position. From February 2004 until August 2005, Mr. Ely was Senior Vice President of Product Management and Marketing. Prior to joining Equifax, he was Senior Vice President, Worldwide Marketing of S1 Corporation from June 2001 until September 2003, and held senior marketing and software development management positions with NetVendor, Per-Se Technologies, Dun & Bradstreet Software, Sybase and NCR Corporation prior to that.
Mr. Ploder joined Equifax in February 2004 and is President, International. Prior to that position, he was Group Executive, Latin America. Before joining Equifax, he was employed by MCI where he had been Vice President, International since 1999. Prior thereto, Mr. Ploder spent 13 years in the telecommunications industry, primarily in international management positions.
Mr. Shannon assumed his current position in January 2007. Since joining Equifax in 1992, he has held various executive positions including, most recently, Group Executive, Europe from February 2002 until December 2006, and Managing Director, U.K. from July 2001 until February 2002.
Ms. King joined Equifax in March 2004 as Vice President and Corporate Controller. Prior to joining Equifax, Ms. King served as Corporate Controller for UPS Capital from March 2001 until March 2004 and, prior thereto, held various executive positions with The Coca-Cola Company.
MANAGEMENT DISCUSSION FROM LATEST 10K
As used herein, the terms Equifax, the Company, we, our and us refer to Equifax Inc., a Georgia corporation, and its consolidated subsidiaries as a combined entity, except where it is clear that the terms mean only Equifax Inc.
All references to earnings per share data in Management's Discussion and Analysis, or MD&A, are to diluted earnings per share, or EPS, unless otherwise noted. Diluted EPS is calculated to reflect the potential dilution that would occur if stock options or other contracts to issue common stock were exercised and resulted in additional common shares outstanding.
We are a leading global provider of information solutions, employment and income verification and human resources business process outsourcing services. We leverage one of the largest sources of consumer and commercial data, along with advanced analytics and proprietary technology, to create customized insights which enable our business customers to grow faster and more efficiently and inform and empower consumers.
Businesses rely on us for consumer and business credit intelligence, portfolio management, fraud detection, decisioning technology, marketing tools, and human resources and payroll services. We also offer a portfolio of products that enable individual consumers to manage their financial affairs and protect their identity. Our revenue stream is diversified among individual consumers and businesses across a wide range of industries and international geographies.
Segment and Geographic Information
Segments. The U.S. Consumer Information Solutions, or USCIS, segment, the largest of our five segments, consists of four product and service lines: Online Consumer Information Solutions, Mortgage Reporting Solutions, Credit Marketing Services and Direct Marketing Services. Online Consumer Information Services and Mortgage Reporting Solutions revenue is principally transaction-based and is derived from our sales of products such as consumer credit reporting and scoring, mortgage reporting, identity verification, fraud detection and modeling services, and certain of our decisioning products that facilitate and automate a variety of credit-oriented decisions, a significant majority of which are delivered electronically. Credit Marketing Services and Direct Marketing Services revenue is principally transaction- and subscription-based and is derived from our sales of the products such as those that assist clients in acquiring new customers, cross-selling to existing customers and managing portfolio risk.
The TALX segment consists of The Work Number and Tax and Talent Management business units. The Work Number revenue is transaction-based and derived primarily from verification of employment data reported to us by employers. Tax and Talent Management revenues derive from our provision of certain human resources business process outsourcing services that are transaction- and subscription-based product offerings.
North America Personal Solutions revenue is both transaction- and subscription-based and is derived from the sale of credit monitoring and identity theft protection products, which we deliver to consumers through the mail and electronically via the Internet.
North America Commercial Solutions revenue is principally transaction-based and is derived from the sale of business information, credit scores and portfolio analytics (decisioning tools) that enable customers to utilize our reports to make financial, marketing and purchasing decisions related to businesses.
The International segment consists of Canada Consumer, Europe and Latin America. Canada Consumer's products and services are similar to our USCIS offerings, while Europe and Latin America are made up of varying mixes of product lines that are in our USCIS, North America Commercial Solutions and North America Personal Solutions reportable segments.
Geographic Information. We currently operate in 14 countries: Argentina, Brazil, Canada, Chile, Costa Rica, El Salvador, Honduras, Peru, Portugal, the Republic of Ireland, Spain, the U.K., Uruguay, and the U.S. Our operations in Costa Rica and the Republic of Ireland focus on data processing and customer support activities. Of the countries we operate in, 73% of our revenue was generated in the U.S. during the twelve months ended December 31, 2007.
Key Performance Indicators. Management focuses on a variety of key indicators to monitor operating and financial performance. These performance indicators include measurements of operating revenue, operating revenue growth, operating income, operating margin, net income, diluted earnings per share, cash provided by operating activities and capital expenditures.
On May 15, 2007, we completed the acquisition of all of the outstanding shares of TALX, a leading provider of employment and income verification and human resources business process outsourcing services. The acquisition aligns with our long-term growth strategy of expanding into new markets with unique data.
We achieved double digit revenue growth in our International, North America Personal Solutions and North America Commercial Solutions operating segments when compared with 2006.
We repurchased 17.9 million shares of our common stock on the open market for $718.7 million during 2007.
On June 28, 2007, we issued $300.0 million principal amount of 6.3%, ten-year senior notes and $250.0 million principal amount of 7.0%, thirty-year senior notes in underwritten public offerings.
Business Environment, Company Outlook and Strategy
Our financial condition and operating performance are affected by the rate at which the economies of the U.S. and the other countries in which we operate grow, as well as levels of consumer spending and confidence regarding jobs, the health of the economy and the unemployment rate. Changes in overall economic conditions in the U.S. and other countries in which we operate generally impact the demand for consumer credit and accordingly for our credit information, marketing services, employment and income information, as well as other products and services. We do not expect meaningful improvement in revenue from our USCIS business in 2008. We do, however, expect our other operating segments to grow revenues when compared to 2007 due to new product innovation, attracting new customers and growing volumes with our existing customers.
The demand for our services is influenced by price and service competition among a limited number of providers; investment in proprietary credit information databases; changes in customer requirements; continued consolidation in the lending, credit card and telecommunications industries; emerging new market segments; and technological innovation. To improve our competitive position requires that we continue to focus on developing applications to differentiate our products and services from those of our competitors; efficient operational processing to offset price compression; competitive pricing; technological competence; and protection of sensitive data. Other significant factors include brand recognition, customer responsiveness and service quality, ability to successfully integrate acquisitions and regulatory compliance.
We expect to be able to respond to these challenges by focusing on these strategic objectives:
Increase penetration of our customers' information solutions needs through new products, value-based pricing, expanded services and improved sales and customer support;
Deploy enabling technology systems and analytics globally;
Invest in unique data sources; and
Pursue new vertical markets and expand into emerging markets.
RESULTS OF OPERATIONSâ€”TWELVE MONTHS ENDED DECEMBER 31, 2007, 2006 AND 2005
The 2007 increase in revenue is due to double-digit growth in our International, North America Personal Solutions and North America Commercial Solutions segments, as discussed in greater detail in "Segment Financial Results" below, as well as the acquisition of TALX. We recorded $179.4 million in revenue from TALX since our acquisition of the company on May 15, 2007. Revenues from our USCIS segment were essentially flat due to weakness in mortgage, credit marketing and direct marketing markets. The 2006 increase in revenue was due to broad-based growth across all of our segments. Foreign currency had a favorable impact of $32.5 million or 2% and $18.5 million or 1%, on 2007 and 2006 revenue growth, respectively
The 2007 increase in cost of services was significantly affected by our acquisition of TALX, which contributed $60.1 million of this increase. The remainder of the increase is primarily due to (1) higher production and related costs due to revenue growth, including costs related to converting a major customer to our enabling technologies; (2) the impact of foreign currency translation; (3) expenditures to enhance the efficiency, effectiveness and reliability of our information technology platforms, processes, and development capabilities in support of our long-term growth strategy; and (4) higher salary and contractor staffing costs, partly due to increased call volume and a second outsourced call center related to North America Personal Solutions. The 2006 increases in cost of services were primarily due to operating revenue growth and increased salary expenses due to higher headcount and our annual incentive program.
The 2007 increase in selling, general and administrative expenses was mainly due to our acquisition of TALX, which contributed $51.8 million of this increase. The remainder of the increase is primarily due to (1) salary costs related to increased headcount for the expansion of corporate capabilities in key support areas, including marketing and technology; (2) the impact of foreign currency translation; and (3) expenses related to Austin-Tetra (which was acquired in October 2006). This increase was partially offset by lower litigation costs. Our 2006 results included a $5.0 million provision for litigation related to our North America Personal Solutions operating segment and a $4.0 million provision for litigation related to our USCIS operating segment accrued in 2006 that did not recur in 2007. The increase was also partially offset by lower advertising expenses related to North America Personal Solutions operating segment due to the elimination of less effective advertising channels.
The 2006 increase in selling, general and administrative expenses was mainly due to (1) a $7.6 million incremental negative impact of adopting Statement of Financial Accounting Standards, or SFAS, No. 123R, "Share-Based Payment," or SFAS 123R, on January 1, 2006; (2) $9.0 million in loss contingencies related to certain pending legal matters noted above; (3) a $6.4 million severance charge recognized during the fourth quarter of 2006 related to our organizational realignment; (4) a $3.2 million negative impact of the retirement of several executive officers in 2006; (5) higher salary expenses due to increased headcount; and (6) increased professional fees.
The 2007 increase in depreciation and amortization expense was mainly due to $38.3 million in incremental depreciation and amortization expense related to our acquisition of TALX. The remainder of the increase is primarily due to depreciation expense related to increased 2007 capital expenditures, including the purchase of the facility that houses our Atlanta, Georgia data center on July 26, 2007, and intangible amortization expense related to our acquisitions of Austin-Tetra in October 2006 and of three mortgage affiliates in the first quarter of 2007. Depreciation and amortization expense in 2006 remained consistent with the previous year.
Jeff Dodge - Senior Vice President of Investor Relations
Good morning, and welcome to today's conference call. I am Jeff Dodge, Investor Relations; and with me today are Rick Smith, our Chairman and CEO; Lee Adrean, our Chief Financial Officer. Today's call is being recorded. An archive of the recording will be available later today in the Investor Center of our website at www.equifax.com.
During this call, we will 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 the filings with the SEC, including our 2007 Form 10-K and subsequent filings.
In this call, we will refer to several non-GAAP financial measures for Equifax's consolidated in the first quarter 2008. These measures include adjusted net income, adjusted diluted EPS, adjusted operating margin, and adjusted operating income. These measures exclude acquisition-related amortization expense. We also refer to EBITDA defined as operating income before depreciation and amortization.
TALX's adjusted operating margin excludes the incremental impact of amortization from our acquisition of TALX. Please see the section of our earnings release entitled Reconciliations of Non-GAAP Financial Measures to the Comparable GAAP Financial Measures for further details and the GAAP to non-GAAP reconciliations posted in the Investor Center on our website.
Now I would like to turn it over to Rick Smith.
Richard F. Smith - Chairman and Chief Executive Officer
Thanks, Jeff. Good morning, everyone. With double-digit organic growth in our International, North American Personal Solutions, and North American Commercial Solutions businesses, and the performance of TALX, we continue to demonstrate a diversity and resiliency of our business model. We anticipate a challenging quarter and each one of our business leaders stepped up and delivered the strength in their franchise, the relationships with customers, leveraging our data assets and our solution engineering capabilities.
We made significant improvement with margins in our core U.S. Consumer Information Solutions business. This is something I committed to do when we had our earnings call for the total year back in February and I'm fully aware the team stepped up and delivered as I promised and weâ€™ll give more details when we... later on.
TALX, North American Personal Solutions, and North American Commercial all delivered strong growth and operated while International sustained its outstanding growth and operating margins. At the same time, our new product revenue is accelerating and the revenue synergies between TALX and U.S. Consumer Information Services business are gaining significant traction. Given this tough environment in the U.S., I'm very proud of what we accomplished in the first quarter.
Total revenue was $503.1 million, up 24%. TALX contributed 19 points to that growth. Equifax, excluding TALX, grew 5%. Operating income was $126.2 million, up 8%, and adjusted operating income increased 19%. EBITDA grew to $164.1 million, up 19%. Diluted EPS was $0.50, down 7%, while adjusted EPS was $0.60, up 3%.
I'll now get into some business highlights for each of the five business units. First, U.S. Consumer Information Solutions, aggressive cost management delivered significant benefits. Operating margin improved 200 basis points to 38.6% when compared to the fourth quarter of 2007. They accomplished this while investing in the business for future growth. Equifax Settlement Services revenue continues to accelerate. First quarter gains made in Settlement Services offset the declines in our traditional tri-merge mortgage reporting products.
Enabling Technologies continues to grow and customers intensity continues to rise. For the quarter, 31% of our online transactions were delivered through one of our Enabling Technology platforms, up from 29% in the first quarter of 2007. Most of the gains occurred in our telco and regional sectors. We now have every major telco carrier using or implementing an InterConnect platform and 19% of our U.S. online transaction going for the first quarter included scores from models built by Equifax.
In credit marketing, over 45% of names listed including a scoreâ€¦ included a score from an Equifax model. Credit Marketing Services revenue declined 12% in the first quarter as customers continue to minimize their account acquisition activities and focus more on their existing portfolios, where we canâ€¦ where we again experienced double-digit growth with Portfolio Management Services. Direct Marketing Services revenue was down 14% in the first quarter reflecting the general slowdown in customers marketing activities.
Finally, two new products were launched during the quarter while the first quarter revenue contributed from previously released products approached $6 million. TALX continue to deliver on its objectives and is making significant progress in delivering revenue synergies. In fact we are now estimating that the revenue synergies between TALX and USCIS will be two to three times and close the deal last May.
The Work Number continues to build its franchise and deliver double-digit growth. While the Work Number is not immune to the overall economic environment it delivered 10% revenue growth in the quarter as the database grew to 174 million, up 19% when compared to the first quarter of 2007. Also during the quarter, a large Equifax partner has agreed to add over 300,000 employees and retirees to the Work Number database.
Our U.S. Consumer Information Solutions customers are very interested and how the Work Number products can assist them in assistingâ€¦ in assessing the risk. At present, some of the largest credit card issuers have entered into agreements to test various products for enhanced risk assessment. We've also conducted test for customers across multiple industry sectors, including auto, mortgage, consumer lending, and collections. These are large revenue sources that we had not even thought of six months ago. Today, we have 24 cross-sell deals closed with a robust pipeline that includes many of our strategic accounts. In many cases we are running multiple projects for a single client. The interest level is high and our customer reaction to the Work Number has been very positive.
North American Personal Solutions continued to deliver outstanding performance with 14% revenue growth and 25.7% operating margins. Subscription customers grew to 1.4 million in the first quarter of 2008, up from 1.2 million in the first quarter of 2007. In the first quarter, we provided services for over a 127 data bridges with sensitive information about consumers were exposed. Approximately 68% of the revenue was subscription based, up from 62% in the first quarter of 2007. The newest product offering, Credit Report Control, which enables customers to lock and unlock their credit card online continues its strong performance with over 50% of new subscription customers often for this feature.
North American Commercial Solutions revenue grew 20% for the quarter while improving their operating margins. During the quarter, we signed a multi-million dollar contract with a major financial institution who is now fully integrated our solutions into their small business credit approval process. We also secured a long-term commitment with a large telco who is facing a competitor as their primary credit risk solutions provider. We continue to add trade lines to the database, which were up 2% from year-end. As of the end of March, 57% of our business folders have five or more trade lines. Six new products were launched during the quarter.
Our latest announcement was for the Business Fraud Advisor. The Business Fraud Advisor helps vendors fight what has become a rapidly growing $60 billion firm leveraging our analytics, expertise, knowledge of industry and third-party data, we have developed a solution that features ID authentication, verification of application data, and fraud prediction. Finally, significant progress has been made on providing a broader way of decisioning capabilities to our clients.
Our existing data asset now includes credit information on over 25 million small businesses and marketing information on 16 million businesses. Financial institutions are already using our InterConnect and APPRO enabling technology platforms. Through the partnership, we expect to shortly provide mid-markets and smaller customers with a robust decisioning engine.
Last on International. International had an outstanding quarter delivering double-digit revenue growth in every geography. Revenue was $129.9 million, up 23% while maintaining margins above 30%. Value-added solutions continue to drive growth and market penetration. Marketing Services revenue grew almost 8% in local currency and Predictive Sciences local currency revenue grew over 15% in the quarter.
Europe's revenue... revenues were up 13%, $47.7 million as our UK operations delivered strong growth for the quarter. Our growth in the UK has been driven by several factors. We addressed unique anti-money laundering products, which have resulted in strong revenue growth from existing and new clients. Our market-leading Predictive Sciences has enabled us to secure long-term partnerships... relationships with new and existing clients and providing high-value decisioning... high-value decision capabilities and a flexibility in adjusting to customers needs has enabled us to build long-term relationships with some of our largest customers.
Latin America's revenues were $53.2 million, up 34% with broad-based growth in each geography. Brazil continues to penetrate new markets with double-digit growth from banks, telcos, and insurance companies. In addition to our partnership with ACSP in Brazil, we are turning the corner making significant progress in restoring our competitive position and revenue growth in Brazil. Canada Consumer was up 22% to $29 million as it continues to build market share and increase share wallet with our large customers.
We are currently converting a large global credit card bank on to the Interconnects platform. This effort will be supported by the Global Enabling Technology Center of Excellence, example of how we globalize our value-added solutions. With the market interest high and active discussions underway with many customers, Interconnect will become the standard of enabling technologies in Canada. 15 new products were launched during the quarter and the new product revenue for the quarter exceeded $4 million.
Now we continue to make good progress on our global expansion initiatives. Last week we announced our investments in Global Payments Credit Services LLC, a leading credit information company in Russia. Once we receive regulatory approval, we will re-brand the company and assume responsibility for its operations in India. We have begun hiring key individuals, who we will have... who will have critical leadership responsibilities once we received approval for our credit bureau license application.
And we are working very closely with our partners who have very strong reputations with financial institutions across India. I'll now turn over to Lee for some details on the financials.
Lee Adrean - Corporate Vice President, Chief Financial Officer
Thanks, Rick. Good morning, everyone. This morning all financial information I'll be discussing will be presented on a GAAP basis except as otherwise noted. You should also refer to the Q&A and non-GAAP reconciliations attached to our earnings press release for additional financial information.
For the quarter, consolidated revenue was $503 million, up 24% and was positively impacted by the acquisition of TALX, which will anniversary in mid-way into the second quarter. EBITDA, a non-GAAP measure was $164 million, up 19% for the quarter. Operating income was $126 million, up 8% from 2007. Adjusted operating income, adjusted for acquisition-related amortization, increased 19%. Operating margin was 25.1% in the quarter, up from 24.5% in the fourth quarter of 2007. On a non-GAAP basis, adjusted for acquisition-related amortization, operating margin was 29.4% in the first quarter compared to 30.8% in the first quarter a year ago.
Net income was $65.7 million, down 5% from 2007. On a non-GAAP basis, adjusted net income increased 7%. Diluted earnings per share were $0.50, down from $0.54 in 2007, reflecting the lower GAAP net income and an increase in average shares outstanding as a result of the TALX acquisition. Adjusted earnings per share was $0.60, up 3% from $0.58 in the first quarter of 2007. We repurchased 1.1 million shares during the quarter for $37 million and outstanding debt ended the quarter at $1.4 billion, flat when compared to year-end 2007. In U.S. Consumer Information Solutions, Online Consumer Information Solutions revenue was a $156.9 million, down 3% when compared to same quarter last year. For our core product, online transaction volume was flat compared to last year with all sectors either slightly up or down for the quarter.
Mortgage Reporting Solutions revenue of $17.5 million was unchanged when compared to Q1 2007. Growth in our Settlement Services business enabled us to offset reduced tri-merge mortgage credit reporting revenue, a reflection of declining mortgage application volumes. Credit Marketing Services revenue of $35.4 million was down 12% for the quarter. Our prescreening revenue, which is primarily directed towards new account acquisition, was down 24% as financial institutions reduced new account marketing in this uncertain period.
Revenue from our portfolio of review products, which are used to manage and sustain existing customer accounts, was up 16%. Direct Marketing Services revenue was $23.4 million, down 14% compared to the first quarter 2007. The operating margin for our U.S. Consumer Information Solutions business was 38.6%, up 2 points from 36.6% in the fourth quarter of 2007, but down from 41.2% in the first quarter of 2007. The activities we undertook to improve the operating margin in the first quarter will continue to benefit us for the remainder of the year. TALX delivered $79.6 million in revenue, up 8% compared to the same period in 2007 when they were not part of Equifax. The Work Number delivered revenue of $36.3 million, up 10% for the quarter from its results a year ago. We added 8.3 million records to the database during the quarter. We now have 174 million records in the database, which is up 19% from the first quarter of 2007.
We currently have 7.6 million total records in backlog, down 15% from the fourth quarter of 2007, and closer to a level that we would like to maintain respectively. The Tax and Talent Management services unit delivered $43.3 million in revenue during the quarter and TALX operating margin was 16% on a GAAP basis. The adjusted operating margin would be approximately 30%.
In North America Personal Solutions, revenue grew 14% to $43.1 million. Operating margin was 25.7% for the quarter compared to 16.5% for the same period in 2007. North America Commercial Solutions revenue was $17.3 million, up 20% from the first quarter of 2007. U.S. Commercial transaction volume was 1.3 million, up 13% in Q1 of 2007 and transaction-based revenue in the U.S. Commercial business now represents 59% of total Commercial revenue in the U.S. Our International business grew revenue by 23% in the quarter to a $129.9 million. In local currency, revenue grew 11%. Canada Consumer revenue was $29 million, up 22% in U.S. dollars and 4% in local currency. We're starting to benefit from our strategic pricing initiatives as the online volume was up 3% in the quarter.
Europe delivered revenue of $47.7 million, up 13% in U.S. dollars and 10% in local currency. The UK's core consumer volume was up 8%, driven primarily by growth of financial services, retail and government sectors And Latin America grew revenue 34% in U.S. dollars to $53.2 million, in local currency, revenue growth was a strong 18%. Six of the seven geographies delivered double-digit growth in local currency and transaction volume growth in Brazil is beginning to accelerate. During the quarter online volume in Brazil was up 11%. Operating margin for international business, 30.5% essentially flat with 30.7% in 2007.
In summary, we made great progress in the first quarter and it is a good start to the year. While the strength and diversity of our business continues to support our performance across different economic conditions, we'll continue to challenge ourselves and find ways to control expenses while investing in critical growth opportunities. Now let me turn it back to Rick.
Richard F. Smith - Chairman and Chief Executive Officer
Thanks, Lee. We are currently obviously in a period of lot of economic uncertainties especially in the U.S. However we continue to believe that our full year guidance for 2008 for revenue growth of 9% to 12% and adjusted EPS of $2.48 to $2.58 is achievable. And now operator if we could open it up a questions? Operator?