Ladies and gentlemen, thank you for standing by. And welcome to the Equifax First Quarter Earnings Release Conference Call. At this time all participant lines are in a listen-only mode. Later there will be an opportunity for your questions and instructions will be given at that time. As a reminder today's conference call is being recorded. And I would now like to turn the conference over to Jeff Dodge with Investor Relations. Please go ahead, sir.

Good morning and welcome to today's conference call. I am Jeff Dodge, Investor Relations. And with me today are Rick Smith, our Chief Executive Officer. Lee Adrean, Chief Financial Officer. And Nuala King, Corporate Controller. The financial information that will be discussed during this call and reconciling information relating to certain non-GAAP financial measures is included in a press release that we issued yesterday and filed in the Form 8-K. The press release may also be found in the Investor Center on 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 filings with the SEC, including our 2006 Form 10-K 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 would like to turn it over to Rick.

Great, thanks Jeff and good morning everyone. The Equifax team delivered outstanding first quarter performance. This performance underscores the breadth and diversity of our businesses. Revenue was $405 million, up 8%. In the US, Online Consumer Information Solutions accelerated their growth in fourth quarter 2006, while International North America Personal Solutions and North America Commercial, all delivered double-digit revenue growth. Net income was $69 million, up 10% and diluted EPS was $0.54 a share, up 13%. Revenue growth for the quarter was accomplished in the face of challenges created by an eroding credit quality of sub-prime and also in mortgage lending here in the US. We have been observing this increase in risk in sub-prime mortgage lending since early 2006. Based upon analysis from our database, past two sub-prime loans, 30 plus delinquency rates are up 648 basis points since the first quarter of 2006 and 90 plus delinquency rates are up over 400 basis points for the same period. However, for Equifax, the revenue risk is limited, as consumers take advantage of more products offerings and liquidity in the market. With increased competition providing consumers with more alternatives, we have experienced an increase in the average number of credit reports sold for every closed loan, growing from approximately 4.15 in 2003 to almost 7.9 in 2006. Demand for our portfolio products has also increased. Something we've talked to you about routinely. Also the growth in the private label securitization market which represented 34% of originations for the first nine months of 2006, versus only 10% of the market in 2003. The current environment being all different is not new to the US. Since 1998, there have been five years where the volume of closed mortgage loans declined versus the previous year. In three of those years, mortgage reporting solutions…

Thanks Rick, and good morning everyone. All financial information I'll be discussing is presented on a GAAP basis, except or otherwise noted. You should also refer to the Q&A, which is attached to our press release for additional financial information. As you are aware, effective January 1st this year, we completed our organizational realignment, which changed our operating segments. Therefore, the results for the first quarter of 2006 have been recast to align with our current organizational structure. We have provided you with quarterly history for 2005 and 2006 in our 8-K filing for our year end 2006 earnings release on February 1st. For the first quarter this year, consolidated revenue was $405 million, up 8% over last year. Net income was $69 million, up 10% and diluted earnings per share was $0.54, up 13%. Adjusted earnings per share, a non-GAAP measure defined as diluted earnings per share adjusted for acquisition-related amortization expense was $0.58, up 12% from $0.52 in the first quarter of 2006. In our US Consumers Information Solutions business, Online Consumer Information Solutions revenue was $162 million, up 5% when compared to the same quarter last year. Online volume was up 10% driven primarily by Telco, regional banks and channel partners or resellers. Mortgage Reporting Solutions revenue of $18 million was down 13%. As we noted earlier Ameriquest represented seven points of that decline. In early May of 2006, Ameriquest closed all of their storefront origination points and our revenue from that significant customer dropped by 80%, hurting year-to-year revenue comparisons since then. As we anniversary this event in mid-May, the Q2 effect on revenue growth will drop by half compared to Q1 and in the third quarter the year-over-year revenue drag from that decline will disappear. It's important to note that when we include all sources…

Great, thanks Lee. As I said in the opening comments, the breadth and diversity of our business units enables us to deal more effectively with challenges in the economy and different business environments around the world. Subject to the approval of TALX’s shareholder and completion of the acquisition, which is expected to occur, as I said earlier, May 16th, we will further diversify our business. And we are excited about the opportunity that these two great companies will have in the coming years. And look forward to reporting to you, our progress in the coming months. So, thanks for your support and your time. And now we would like to open up for any questions you might have.

(Operator Instructions). And our first question is from the line of Mark Bacurin from Robert W. Baird. Please go ahead.

Good morning everyone.

Hi Mark.

Couple of questions. Rick, you made an interesting comment about in Consumer Information Services certainly you've seen nice acceleration in growth over last few quarters, which is surprising given the kind of sub-prime issues. And I think, you said something about, one of the drivers has been an increase in the number of credit reports that have been issued for loan. Can you just comment on what is driving that trend exactly? And where you are going?

Yeah. Sure. What’s happening is the consumers when they are in the marketplace now, have so many more options, than they had a few years ago. So, every time they are exploring a different option be a different lender or a different product, as you know there are multiple products out there now. Every time that happens, the credit grant is looking for a different piece of information from us. So, the exact stat I recall was 4.1 apps for closed loan in 2003 and Mark that grew to 7.89 or 7.9 in 2006. So, that's a nice positive trend for us, this enabled us to get a different bite to the apple.

And that is growth coming from the actual resellers or the institutions pulling them not from the consumer themselves pulling their report because of the detail?

Correct

Perfect. And then, could you also comment on, I don’t know, if there is a way if you actually measure this, but presumably this loan growth slowing you would have also seen an increase related to just overall risk management and I don't know if there is a way that you can specifically measure what volume growth was related to risk management versus loan origination?

Yes, sure. I think Lee had mentioned in his comments. We are always seeing a shift from acquisition-related products. So, products we help credit grant were fine and source new loans to a more of a portfolio, you call it risk which is a portfolio review. We saw a lot of products there. We are starting to see and have seen now for few quarters, a shift towards more portfolio growth products, portfolio review products.

Okay. And then, I know we are still few weeks away from the TALX acquisition closing. But I am sure you've had lots of discussions about new product opportunities, revenue growth opportunities. Can you share with us any of the stuff you can learn, that you are excited about kind of hitting the ground running here?

Yeah. I stand firm on what I said before, that I think the assumptions we have contemplated in our initial discussion. We announced TALX are conservative, as it relates to revenue growth. We have got some of the best and brightest minds locked in a offside meeting, yesterday and today about, I guess 100 miles south of Atlanta. So, Atlanta can't be much. But they are locked into a facility for two days just putting pen to paper and bringing these plans alive, how we can drive much faster revenue growth? So stay tuned. At the time of close, Mark we will give you a lot more clarity.

Okay, great. And then you mentioned several good stats about VantageScore. Are those relationships ones that Equifax specifically has signed with those institutions, or is that VantageScore the JV? They would be together two partners off, so having --?

That's a great question. The ones I specifically cited, I mean 60 to 5 and the 4 whatever the numbers were, are specific to Equifax relationships not the LLC, but ours.

And those are in place and currently generating revenue for Equifax?

We're driving revenue at the rate we had contemplated when we launched this thing. It's meeting all of our expectations.

Great, thanks. Great quarter.

Great, thanks Mark.

Next question is from the line of Kyle Evans from Stevens Incorporated. Please go ahead.

Hi, good morning guys. Nice quarter.

Thanks Kyle.

If I look at the accelerated closing process on talks and a close date of the 16th, when do you guys think the earliest you could be in the market buying-back stock?

Kyle, I would say a couple of days or a week after the close.

Okay. Have you done any more thinking in terms of accelerated stock repurchase program that's tender, thought any more on that?

Yes. There is one important issue here because of the deal structure it would be a tax free deal as to the extent of the stock compensation in the deal. There are limits on how much stock we can buy in bulk as opposed in typical open market transactions. We are seeking clarity from the IRS on that point. But we are evaluating both the open market as well as accelerated share repurchase approaches.

The point Kyle is, I think you know as we plan on being as aggressive as we can, within the guidelines of the tax restructure for TALX, but as aggressive as we can in buying back their shares.

Okay. On the general corporate expense in the quarter up about 27%, is there some impact of the TALX deal in those numbers?

No, there isn't. I think what that really reflects is that over the last year, we have done a number of things to build a stronger platform for growth across the entire company. In fact, Rick referenced a couple of them. We have significantly enhanced our strategic marketing capability in support of new product innovation. We've built up our global sourcing capability. We've added some human resource programs. And importantly, we are adding certain activities within our IT area to expand our capabilities in development as well as our platforms and processes for managing the size of IT spend we have across the company, which you look at last year's first quarter was the lowest quarter last year by a fairly wide margin and we fairly quickly jumped up into the mid-20 range, starting in the second quarter and we kind of operated that level, since then. And I would anticipate that through this year, we would continue to operate at that rate, so the year-over-year when comparing to the last quarter before we added some of these programs that we think are important to the growth strategy we have and are starting to see the results in the revenue line.

I think Kyle I remained committed to the point we made at the Analyst Meeting in September of '06 and I reiterated here. And that is to build the model that is driving growth at a faster rate than expenses. We had to make some investments to get us to that point and the least points have been relatively flat for four quarters now. You should start to expect to see us bring more leverage to the bottom line.

Great. Last question dig a little bit deeper on the mortgage side. It sounds like, if mortgage reporting solutions on the standalone basis was down 13%. Could you say that as the company as a whole including the online piece where you sell direct, you are only down 2%?

That is correct. I do want to point out that because our products find their way into the mortgage market through multiple customers and channels. The Mortgage Reporting Solutions is a very firm number. We do work fairly hard to understand what other sales to our US CIS unit, online CIS unit also find their way to the same place, but that is an estimate, but it should be reasonably close and is certainly reflective. We did see volume in our reseller market increased nicely this quarter and a fair portion of reseller volume does go into the market.

And is that. I am sorry. Go ahead.

I said, we're very confident directionally that we're more in the 2% range than the 10% plus range in terms of what we experienced in the mortgage market.

And is that lower decline, that 2% number, is that a function of what Rick was talking earlier about more apps per loan event?

Yes. And it's a function of the diversity of mortgage lenders, the larger lenders we tend to reach directly, but there are a lot of smaller lenders, particularly as you get into some of them are more arcane product offerings, where our primary revenue is coming through the reseller channel.

And when I look at the mid-teen decline that you have in '06 in mortgage reporting, how much of that was the Ameriquest shutting down job?

You are saying from '07 versus '06.

'06 versus '05, that full year '06.

I don't recall off the top on my head, but if we can't get it to you here, Kyle, we can get it to you through Jeff offline.

The ballpark number, I think at the time we are seeing about half of that decline is due to Ameriquest shutting down their retail origination.

Again, if you want follow-up with Jeff, he will give you the exact number, I think you sounds definitely correct.

Great. I will do that. Thanks guys.

Thanks.

And our next question is from Andrew Jeffrey from Robinson Humphrey. Please go ahead.

Hi. Good morning guys.

Hi, Andrew.

Question, Rick, along the lines of market share in your US consumer business, you had mentioned a couple of notable wins, it sounds like. Could you just characterize those for us as being based on price or functionality or a function of both [since I] noticed that the revenue per transaction was down a little bit this quarter. And I'm wondering how much of that has to do with market share gains, and how much of that has to do with mix or anything else in the market. So, a couple of questions, one, characterize the market share and two, what's going on in pricing?

Sure. First the two market share wins, we clearly view is based upon functionality. We think Interconnect offers significant advantages for the marketplace that others do not have before the stock about or some of the rewards and the commissions we’ve gotten over the past years. So, in areas of technology and that’s coming to bear some fruit for us. So, two very-very large names and hopefully shortly, we will actually release those names, when you see the marquee nature of those companies. It will impress you I promise. So, clearly, based upon functionality, as always, North America pricing decline, the volume versus price decline is a battle we expect, we talk about price decline that 2%, 4% a year offset by Predictive Science, is offset by Enabling Technologies that’s what you saw in the first quarter in North America. Still, when you pull out you get a very-very healthy margins are online US Information Services margin, for the quarter of over 47% still a very-very strong healthy business. So, no surprises at all there, Andrew.

Okay, I appreciate that. In the Personal Solutions business, its seems like you are finding your stride here a little bit, from a revenue growth standpoint and some of the big data breach incidence probably doesn’t hurt since you are getting your fair share. Can you talk a little bit about the channel growth there and customer acquisition cost. It looks like the margin came down quite a bit over where you were in the second half, and again just a volume versus cost tradeoff question in that business and what we might expect perspectively here?

Yeah. Good, good question. First of all, the growth is broad-based, as you've mentioned it's across the lot of different channels. And we invested heavily last year in this call center. So, it helps us save more clients and attract more clients. So, that grew at a phenomenal rate in the first quarter. Indirect channel, is growing at a very strong rate. Our online advertising 22% so broad-based growth as you had mentioned. Specific to the margin, a margin year-over-year is actually up quite significantly from like 2% last year, 3% last year to 16%, 17% in the first quarter here. As far as this margin and the first quarter versus the latter half of last year. Our advertising spend is bumpy throughout the year. So, I wouldn't really compare quarter-over-quarter trends. What I have always talked about is PSOL being a strong double-digit growth business and a 20% margin business, and I am still as committed to that vision today, as I was back in September of 2006.

So, can we think about maybe pushing toward 20% on a full year basis then in '07?

Yes.

Yes. I think, so Andrew, the key point on last year’s fourth quarter margin was 26% or 27% and that's a function of in the December quarter where you've got a lot of competition from holiday advertisers, for advertising space, which both pushes up the cost of that ad space, as well as, makes it hard to get the prime space. We tend to cut back on advertising in the fourth quarter. So, you'll typically see a strong quarter in the fourth quarter. But the average in the first quarter will typically tend to be a little below average because it is a good advertising quarter. So, we have higher advertising spend. So, a little bit of seasonality in the way the margins play out due to the timing of our advertising spend.

So, yes you should take 20% when you think about PSOL, that has been our goal.

Thank you very much.

Thank you.

Next question is from line of Chitra Sundaram from Cardinal Capital. Please go ahead.

Thank you. My question is on the Commercial Solutions business. Can you comment on the drivers of the operating margin decline 12.2% to 9.4% and what that indicates for the range going forward, both '07 and beyond that?

Yes. The margin is down a little bit year-to-year, and it predominantly represents as we added Austin-Tetra, right now including the amortization of acquisition intangibles. Austin-Tetra is around a break-even, when you add that in, that pulls the margin of that business down. As Austin-Tetra grows, you are going to see very good leverage there. You would actually see that each of Canada and our US commercial product areas showed some margin improvement year-to-year, just when you add in Austin-Tetra at this early stage of its development with the burden of acquisition, amortization that pulls the total down. But the individual progressions are all good and we would expect those margins to be expanding over the course of the year.

So pretty much we could, just based on the footnotes to the press release, the net of tax $5 million amortization expense a good chunk of that would be Austin-Tetra. So, just if you look at the core operating margins for the business it had a growth better?

Yeah, actually Austin-Tetra was a fairly smaller acquisition. Its amortization in the quarter is into the ballpark of $0.5 million.

Okay.

That by itself on a small business is several points of margin.

Yeah

The $5 million after tax which is about $8 million pre-tax represents the sum total of acquisition-related amortization that Equifax as a company has.

Got you. Thank you so much.

Sure.

Our next question is from Nat Otis from KBW. Please go ahead.

Good morning gentlemen. Nice quarter.

Thanks Nat.

A lot of my questions have been answered, but just the one question I had is more on the international front. Any comment on the talks between Experian and Serasa? And then just also going in can you talk about a possible acquisition in the near future in maybe China, Mexico, India or Russia? Where a focus might be because in the past I think last quarter you talked a little less about Russia, but now they seem to be back in the mix if you could just have any additional comments, that would be great?

Yes, great, Nat. First on Serasa it's obviously public information that they are talking. My view is it's a very complex transaction. I think it's far from done. So, it's hard to predict what the outcome might be. If there would be a deal consummated Serasa and Experian, I don't think the landscape for us or [our] strategy changes. Serasa is a very formidable competitor today and Experian would be a very formidable competitor tomorrow. So, we've got a clear strategy in all Latin America including Brazil and I don't think that changes one bit with or without Experian entering into Brazil. As it relates to other markets, I am really excited. We have had teams since we've last talked as a group traveling, studying, doing a lot of work specifically in China, I'll come back to that Russia and Mexico. So, I am excited with what I see in those three, India will be the fourth in sequential timing for us. Russia is exciting, it's a maturing market. It has got mainly the same characteristics that China and India have, which is a growing middle-class population, again growing use of consumer credit. So, as I said in my talks there, I am bullish about all four of those and I remain bullish that in the coming quarters, you are going to see us, you refer to it, Nat as an acquisition, it may be an acquisition, it may be a partnership with somebody or multiple partners. But you should expect us to make some sort of investment in one, two or three of those countries over the coming quarters.

That's very helpful. Thank you.

Sure.

The next question is from Andrew Ripper from Merrill Lynch. Please go ahead.

Hi good morning chaps. I've got question on, I'm going to question on Personal Solutions. Just on Brazil, I understand the Congress is looking at various forms of legislation including the use of positive data for their credit bureau. How do you think that could impact the market? And is there any other precedent in other credit markets, where that has happened? So, give us a sense of the potential or positive impact it could have upon you?

Sure. The answer to your second question is there a precedent where countries will start off with negative data, only and eventually use positive data? The answer is yes. And the benefit is profound. The credit grant towards ability to truly underwrite and individual is improved when they have transparency into both negative and positive data. So, every country we're in, we are asking Andrew for the credit grant towards opening up their door, provide more data, look at both and regularly as well. Look at both positive and negative data. As you might guess every country has their own legislation, privacy issues that we have to navigate, but where countries and grant towards in general can provide both negative and positive data, their underwriting accuracies enhanced.

And do you think this is likely in Brazil and how bigger benefit could it be to your business there?

Too early to tell, we're hopeful but too early to tell.

Okay. And second question on Personal Solutions. I think you mentioned an increase in the subscribers and they are doubling from 550,000 to 1 million, which is a pretty massive jump. Was that a year-on-year figure? And if it was, why didn't your sales growth in the quarter grow faster?

The number I think I referred to it went from 550,000 at the beginning of '06 to 1 million at the end of '06 and then jump to 1.2 million in the first quarter of '07.

Yeah.

And which is a 19% increase in the revenue growth for the business I think it probably was 23%, 24% growth. So, it is in line with what we expect.

Okay. You basically, you're taking end of Q1 '07 versus January '06. The subscribers have more than doubled. So, why is the revenue per subscriber coming down, are they --?

There is an accounting treatment for selling the subscription versus transaction-based product that --.

Yeah. There is two effects in there, one, is as we have shifted our model from a transaction model, which was a substantial portion of our revenue last year to a subscription model. Thus the subscriber count is only relatively the subscription portion of our revenue with the transaction revenue going the other the direction. That's the primary factor.

Yes. Okay and just a quick one to finish off on VantageScore, I guess all these started to generate sales, you're not going to quantify the numbers for us. The rollout of VantageScore got us pace. Do you see us having an impact upon returns for the business? Do you think it will be margin enhancing, and the customers for the using here at the moment, presumably, they are using VantageScore alongside FICO rather than instead of FICO. Can you comment on that, please?

Yeah. I will expect. Again, we haven’t disclosed the financial as you had noted. I would definitely not expect VantageScore to be dilutive in any fashion to our margins. It would be either balance for the current margin, if not enhancing. But as I said, all along VantageScore is all about providing customers option. It's all about leveraging our analytical capabilities, and which is so important to us is not going to materially change the financial picture of Equifax over the coming years, either, from margin perspective or from a revenue perspective.

Okay. Thanks for your answers, guys.

Sure. Thank you.

And next we go to the line of Robert Riggs from Credit Suisse. Please go ahead.

Good morning. I just had one quick question. I was hoping you could kind of walk through, how you think about the trade-off between driving margin expansion but at the same time investing for growth over the coming quarters?

I think it has got to do both. And that's all about is, I’ve said, it sounds like a broken record, but if you go back to September. In New York, our long-term vision is to get the margins at 30% to 31% and have sustainable growth in the 7% to 10% plus range, and you can do that. I am a big believer investing in growth and NPI is our main vehicle for organic growth. There are other things we are doing, but we'll continue to invest in growth. But, if you think about things, I gave two examples today and I'll mention the third verbally here. In my opening comments, I talked about this creation of this global center of excellence in operations under own front kind of aggregating or carving together all of our operating activities under one leader, one COE will drive efficiency. There is no doubt about it, it would lower our operating cost. Secondly, we talked about the creation of global sourcing, having global sourcing standards that's all about lowering cost like an investment in growth. We are also as a company now deep into the flows of learning about the pros of lien that many of your six sigma and lien. But applying lien here as a vehicle to make a processes more efficient. So, I am always saying that things we can do in different areas, in different parts of the company take expense out, enabling us to grow top-line. So, I think we can get that path to 7% to 10% plus top-line and 30% to 31% margin over the coming years.

Great. Thanks.

Sure.

And our final question is from Megan Talbott from Lehman Brothers. Please go ahead.

Good morning.

Hi Megan.

Just a couple of quick ones, Rick I was wondering if you could just comment on your, that's another area where you seems to be gaining share really nicely. So, if you could just sort of talk about what you think its making you successful there in the market, especially, the UK where it seems to be growing too much organically. And also if you could just comment on what margins look like in the quarter and where we should think about those going forward?

Sure. As far as what's driving the growth is the same thing as driving growth everyone else in our company. We restructured the organization over there, buy the new sales talent; restructured the sales organization, new sales compensation scheme. And then lastly, we’ve been driving NPI aggressively, new product innovation, Megan in the UK, which is helping us gain share and grow the market itself. So, same things we are doing there, that we are doing in Iberia, we do in Latin America, we do in Canada and the US and Santa and her team have done a real nice job in the UK this quarter as well as you know few quarters last year. As it relates to margin, Lee you may want to address this if there is any doubt.

Yes, last year for the year the margins in the UK were in the 22% to 23% range for the full year. We would expect those to be comparable or actually a little bit up this year with good growth. We are making some investments to drive that growth, but net-net, we would expect some margin expansion.

Okay, great. And Lee, just a quick follow-up, on the gross margin for the quarter, did you see some compression there, I know you had a tough compare, could you talk a little bit about what drove that and is there any thing we need to be aware of going forward?

Yeah. There are couple of things, one we had noted last year in the UK that we had a vendor credit in the first quarter and also repeated in the second quarter that did not continue in the latter part of the year and it caused the decline in UK margins from the first half to the second half, that is an item that is in cost of services. So, it does affect this year's Q1 over Q1 compare that cost about little under a point of margin contraction. Second, with the changing mix of business in Personal Solutions with a greater level of subscription revenue and a greater amount of breach activity, those revenues streams tend to have a higher access on average, a slightly lower sales and marketing cost to acquire that business particularly on the breach side, about a higher cost of service because there is more service activity including call center activity. That contributed again probably between half a point and a point. The rest is predominantly something I mentioned it shows up and you think about the metrics of what business it shows up in and what line it shows up in. A lot of it we capture in our corporate expense but we have our spending in the IT area to enhance processes, increase the robustness of certain platforms, and expand the capability of our development group and capability. And those expenses while they show up incorporate are considered cost of service. And so that's contributing. Last year, interestingly cost of service grew notably less than revenue and SG&A grew faster. This year, you are seeing a little bit of a reverse. And really what focused people on the total margins rather than in one or the other of those components.

Okay. That's really helpful. Thanks a lot.

Thanks Megan.

I would like to thank everybody for their participation and support. And operator with that, we will conclude the call.

Thank you, ladies and gentlemen. This conference is available for replay after 11:30 am Eastern Time today for one month through May 24th at midnight. You may access the AT&T Executive Replay Service at any time by dialing 1-800-475-6701 and enter the access code of 871060. International participants may dial 320-365-3844. And ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. And you may now disconnect.