EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

FOR IMMEDIATE RELEASE

 

Contact:   Carey Skinner      Chuck Jones
  Investor Relations      Media Calls
  (770) 752-3369      (770) 752-3594
  Carey.Skinner@choicepoint.com      Chuck.Jones@choicepoint.com

ChoicePoint® Announces Intention to

Retain ChoicePoint Precision Marketing

ALPHARETTA, GA – November 28, 2006 – ChoicePoint (NYSE: CPS) announced today its Board of Directors’ decision to retain the marketing services business. The company had announced in July 2006 its intention to divest this business as part of the company-wide strategic review. ChoicePoint Precision Marketing, a leading provider of direct marketing technologies and services, has approximately 670 employees in offices around the country.

“Despite our previously stated desire to divest this business, we have been unable to obtain a fair market price, particularly given the recent downturn in one of our leading customer segments, the mortgage market,” said company chairman and chief executive officer Derek V. Smith. “After considering our options it became clear to the Board that the best interests of our shareholders and customers were served by running this business as part of our continuing operations, rather than seeking to sell in the face of current market conditions.”

“Precision Marketing has long served its customers with superior direct marketing solutions and technologies,” said ChoicePoint Precision Marketing general manager Scott Hudson. “Based on recent discussions with our customers, I am convinced our clients fully support this decision.”

ChoicePoint continues to make significant progress overall in executing its strategic transformation as outlined in the various public filings of the company. ChoicePoint remains engaged in an active sales process regarding the other businesses that it previously announced its intention to divest.

As a result of this decision the company will begin reporting the results of its marketing services segment in continuing operations, beginning with its fourth quarter results. Restated quarterly segment results for 2005 and 2006 are included in this release and will be available on the company’s website, www.choicepoint.com.


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ChoicePoint is modifying its prior full year guidance for 2006 due solely to the reporting change and the previously announced reclassification of other businesses as discontinued operations beginning in the fourth quarter. The Company now expects 2006 full year internal revenue growth from continuing operations to be in the range of 3 to 4 percent, including mid single digit growth in the fourth quarter. Including the impact of acquisitions, total revenue growth is expected to be in the range of 4 to 5 percent for the full year 2006.

Additionally, the Company expects operating profit margins from continuing operations to be approximately 25 to 26 percent for the full year, including operating margins in the 24 to 25 percent range in the fourth quarter. These estimates exclude the impact of impairment charges, stock option expense, on-going legal expenses related to the previously-disclosed fraudulent data access, and operating charges related to the Company’s centralization of functions and consolidation of certain technology platforms. Operating profit margins from continuing operations including these expenses are projected to be approximately 12 to 13 percent for the full year.

About ChoicePoint

ChoicePoint Inc. (NYSE: CPS) is the leading provider of identification and credential verification services for making smarter decisions in a world challenged by increased risks. Serving the needs of business, government, non-profit organizations and individuals, ChoicePoint works to create a safer and more secure society through the responsible use of information while working diligently to protect personal privacy. For more information about ChoicePoint, visit the Company’s Web site at www.choicepoint.com.

Forward-Looking Statements

Certain written statements in this release and oral statements made by or on behalf of the Company may constitute “forward-looking statements” as defined under the Private Securities Litigation Reform Act of 1995. Words or phrases such as “should result,” “are expected to,” “we anticipate,” “we estimate,” “we project,” or similar expressions are intended to identify forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statements. These risks and uncertainties include, but are not limited to, the following important factors: the results of our ongoing review of fraudulent data access and other events, the impact of the Company’s decision to reclassify its Precision Marketing business as continuing operations, the impact of our decision to discontinue certain services, the results of our re-credentialing of customer accounts, the results of any litigation or government proceedings, the implementation of plans to divest various businesses resulting from our company-wide strategic review including unanticipated losses realized in connection with any such sales, demand for the Company’s services, product development, maintaining acceptable margins, maintaining our data supply, maintaining secure systems including personal privacy systems, ability to minimize system


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interruptions, ability to control costs, the impact of federal, state and local regulatory requirements on the Company’s business, specifically the direct marketing and public filings markets, privacy matters and any federal or state legislative responses to identify theft concerns, the impact of competition and customer consolidations, ability to continue our long-term business strategy including growth through acquisition, ability to attract and retain qualified personnel, and the uncertainty of economic conditions in general. Additional information concerning these and other risks and uncertainties is contained in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10–K for the year ended December 31, 2005 and Quarterly Reports on Form 10–Q for the quarters ended March 31, 2006, June 30, 2006, and September 30, 2006 (the “SEC Filings”). Readers are cautioned not to place undue reliance on forward-looking statements, since the statements speak only as of the date that they are made, and the Company undertakes no obligation to publicly update these statements based on events that may occur after the date of this press release.


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ChoicePoint Inc.

Summary of Projections for the Fourth Quarter Ended December 31, 2006*

   

Internal Revenue Growth

 

Operating Margins Excluding Other Operating Charges

   

Previous Projection

 

Current Projection

 

Previous Projection

 

Current Projection

Insurance Services   Low double digits   Low double digits   Low 50% range   Low 50% range
Screening and Authentication Services   Mid to high single digits   Mid to high single digits   Low to mid 20% range   Low to mid 20% range
Financial and Professional Services   Negative low to mid single digits   Negative low single digits   Low to mid single digits   Mid single digits
Government Services   Mid single digits   Mid single digits   Low double digits   Low double digits
Marketing Services   N/A   Negative low double digits   N/A   Low to mid double digits
ChoicePoint Consolidated   Mid to high single digits   Mid single digits   26% range   24% - 25% range

 

Other Projections for the Year Ended December 31, 2006

 

   

Previous Projection

 

Current Projection

Total revenue growth   5% - 7%   4% - 5%
Internal revenue growth   4% - 6%   3% - 4%
Operating margins excluding other operating charges   26% - 27% range   25% - 26% range
Corporate expenses for continuing operations   7% - 8% of total revenue   7% - 8% of total revenue
Tax rate   Approximately 38%   Approximately 38%
Stock option expense   $11 - $12 million, net of tax   $11 - $12 million, net of tax
Expenses related to the fraudulent data access   $3 - $4 million   $3 - $4 million
Re-platforming expense and centralization of functions   $14 - $15 million   $15 - $16 million
Net free cash flow from continuing operations, excluding costs associated with the fraudulent data access **   $140 - $160 million   $150 - $170 million
Capital expenditures   $70 - $80 million   $65 - $75 million
Cash flow from operating activities - continuing operations   $210 - $240 million   $215 - $245 million

* For a discussion of risks that may cause actual results to differ materially from these projections, please see the discussion under “Forward-Looking Statements” above, as well as the risk factors set forth in the SEC Filings.
** Net free cash flow from continuing operations, excluding costs associated with the fraudulent data access is calculated as cash from continuing operations less capital expenditures.


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ChoicePoint Inc.

2005 Segment Results - Continuing Operations

 

(Dollars in thousands)    Q1 2005     Q2 2005     Q3 2005     Q4 2005     Total 2005  

Revenue

          

Insurance Services

   $ 98,560     $ 100,963     $ 104,775     $ 98,555     $ 402,853  

Screening and Authentication Services

     55,552       61,346       63,687       61,469       242,054  

Financial and Professional Services

     33,064       30,267       28,962       25,218       117,511  

Government Services

     31,080       29,981       35,326       32,971       129,358  

Marketing Services

     23,099       23,018       23,138       22,274       91,529  

Royalty

     797       526       954       121       2,398  
                                        

Service Revenue

     242,152       246,101       256,842       240,608       985,703  

Reimbursable Expenses per EITF 01-14

     6,543       6,623       7,480       7,411       28,057  
                                        

Total Revenue

   $ 248,695     $ 252,724     $ 264,322     $ 248,019     $ 1,013,760  
                                        

Operating Income

          

Insurance Services

   $ 54,204     $ 55,282     $ 57,906     $ 54,278     $ 221,670  

Screening and Authentication Services

     11,192       14,476       16,415       16,897       58,980  

Financial and Professional Services

     9,314       5,849       5,138       2,440       22,741  

Government Services

     5,363       2,208       6,487       5,268       19,326  

Marketing Services

     4,257       3,661       3,840       4,141       15,899  

Royalty

     770       325       506       121       1,722  

Corporate & Shared Expenses (a)

     (19,722 )     (18,183 )     (20,685 )     (17,633 )     (76,223 )
                                        

Operating Income before other charges

     65,378       63,618       69,607       65,512       264,115  

Other operating charges (b)

     (5,412 )     (6,040 )     (4,006 )     (13,315 )     (28,773 )
                                        

Operating Income

   $ 59,966     $ 57,578     $ 65,601     $ 52,197     $ 235,342  
                                        

Total Service Revenue Growth Rates

          

Insurance Services

     13.6 %     14.6 %     15.3 %     13.8 %     14.3 %

Screening and Authentication Services

     19.7 %     15.0 %     12.5 %     9.1 %     13.8 %

Financial and Professional Services

     35.6 %     4.0 %     -5.1 %     -15.3 %     3.3 %

Government Services

     121.8 %     52.4 %     89.2 %     81.5 %     83.4 %

Marketing Services

     1.3 %     -0.9 %     -1.9 %     -6.3 %     -2.0 %
                                        

Total operations

     23.8 %     14.6 %     15.9 %     11.7 %     16.3 %
                                        

Internal Revenue Growth Rates

          

Insurance Services

     11.8 %     12.7 %     12.4 %     13.1 %     12.6 %

Screening and Authentication Services

     12.2 %     11.5 %     12.5 %     9.1 %     11.3 %

Financial and Professional Services

     1.3 %     -6.7 %     -5.1 %     -15.3 %     -6.8 %

Government Services

     0.4 %     -7.4 %     12.5 %     3.3 %     2.2 %

Marketing Services

     1.3 %     -0.9 %     -1.9 %     -6.3 %     -2.0 %
                                        

Total operations

     8.3 %     6.1 %     8.3 %     4.9 %     6.9 %
                                        

Operating Profit Margins

          

Insurance Services

     55.0 %     54.8 %     55.3 %     55.1 %     55.0 %

Screening and Authentication Services

     20.1 %     23.6 %     25.8 %     27.5 %     24.4 %

Financial and Professional Services

     28.2 %     19.3 %     17.7 %     9.7 %     19.4 %

Government Services

     17.3 %     7.4 %     18.4 %     16.0 %     14.9 %

Marketing Services (c)

     18.4 %     15.9 %     16.6 %     18.6 %     17.4 %
                                        

Operating income before other operating charges as a percentage of service revenue (b)

     27.0 %     25.9 %     27.1 %     27.2 %     26.8 %
                                        
Operating income as a percentage of total revenue      24.1 %     22.8 %     24.8 %     21.0 %     23.2 %
                                        


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ChoicePoint Inc.

2006 Segment Results - Continuing Operations

 

(Dollars in thousands)    Q1 2006     Q2 2006     Q3 2006  

Revenue

      

Insurance Services

   $ 112,326     $ 112,298     $ 116,118  

Screening and Authentication Services

     61,845       64,955       66,832  

Financial and Professional Services

     25,962       26,833       25,529  

Government Services

     31,375       32,324       35,123  

Marketing Services

     21,875       19,140       19,089  
                        

Service Revenue

     253,383       255,550       262,691  

Reimbursable Expenses per EITF 01-14

     6,726       5,084       4,935  
                        

Total Revenue

   $ 260,109     $ 260,634     $ 267,626  
                        

Operating Income

      

Insurance Services

   $ 60,815     $ 60,039     $ 60,594  

Screening and Authentication Services

     14,238       14,729       15,740  

Financial and Professional Services

     2,451       3,923       3,044  

Government Services

     3,834       2,851       4,859  

Marketing Services

     4,002       2,135       2,834  

Corporate & Shared Expenses (a)

     (16,521 )     (16,142 )     (17,291 )
                        

Operating Income before other expenses

     68,819       67,535       69,780  

Other expenses (b):

      

Accelerated depreciation

     (5,463 )     —         —    

Stock option expense

     (3,537 )     (3,424 )     (4,284 )

Other operating charges

     (5,987 )     (2,740 )     (116,054 )
                        

Operating Income

   $ 53,832     $ 61,371     $ (50,558 )
                        

Total Service Revenue Growth Rates

      

Insurance Services

     14.0 %     11.2 %     10.8 %

Screening and Authentication Services

     11.3 %     5.9 %     4.9 %

Financial and Professional Services

     -21.5 %     -11.3 %     -11.9 %

Government Services

     0.9 %     7.8 %     -0.6 %

Marketing Services

     -5.3 %     -16.8 %     -17.5 %
                        

Total operations

     4.6 %     3.8 %     2.3 %
                        

Internal Revenue Growth Rates

      

Insurance Services

     12.8 %     10.1 %     8.2 %

Screening and Authentication Services

     11.1 %     5.0 %     3.8 %

Financial and Professional Services

     -21.5 %     -11.3 %     -11.9 %

Government Services

     -2.4 %     7.1 %     -0.6 %

Marketing Services

     -5.3 %     -16.8 %     -17.5 %
                        

Total operations

     3.7 %     3.1 %     0.9 %
                        

Operating Profit Margins

      

Insurance Services

     54.1 %     53.5 %     52.2 %

Screening and Authentication Services

     23.0 %     22.7 %     23.6 %

Financial and Professional Services

     9.4 %     14.6 %     11.9 %

Government Services

     12.2 %     8.8 %     13.8 %

Marketing Services

     18.3 %     11.2 %     14.8 %
                        

Operating income before other operating charges as a percentage of service revenue (b)

     27.2 %     26.4 %     26.6 %
                        

Operating income as a percentage of total revenue

     20.7 %     23.5 %     -18.9 %
                        

 


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(a) Corporate and shared expenses represent costs of support functions, research and development initiatives, incentives and profit sharing that benefit all segments.

 

(b) The Company has presented analysis above with and without these items because they represent costs that management excludes in its assessments of operating results.

 

(c) Represents operating income as a percentage of service revenue. Operating profit margin as a percentage of total revenue was 14.4%, 12.4%, 12.5%, and 13.9% for the first, second, third, and fourth quarters of 2005, respectively, 13.3% for the total year 2005, and 14.0%, 8.8%, and 11.8% for the first, second, and third quarters of 2006.

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