[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 2001
----------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
----------------- -----------------
Commission File Number: 1-13069
CHOICEPOINT INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-2309650
- ---------------------------------------------- ------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
1000 Alderman Drive, Alpharetta, Georgia 30005
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(770) 752-6000
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 31, 2001
----- -------------------------------
Common Stock, $.10 Par Value 62,871,927
CHOICEPOINT INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2001
INDEX
Part I. FINANCIAL INFORMATION Page No.
--------
Item 1. Financial Statements
Consolidated Statements of Income (unaudited) - Three Months Ended September 30, 2001 and 2000
and Nine Months Ended September 30, 2001 and 2000 .......................................................... 3
Consolidated Balance Sheets -
September 30, 2001 (unaudited) and December 31, 2000 ....................................................... 4
Consolidated Statement of Shareholders' Equity (unaudited) -
Nine months Ended September 30, 2001 ....................................................................... 5
Consolidated Statements of Cash Flows (unaudited) -
Nine months Ended September 30, 2001 and 2000 .............................................................. 6
Notes to Consolidated Financial Statements ...................................................................... 7
Item 2. Management's Discussion and Analysis
of Results of Operations and Financial Condition ........................................................... 12
Item 3. Quantitative and Qualitative Disclosures about Market Risk .............................................. 17
Part II. OTHER INFORMATION
Item 1. Legal Proceedings ....................................................................................... 18
Item 2. Changes in Securities and Use of Proceeds ............................................................... 18
Item 3. Defaults Upon Senior Securities ......................................................................... 18
Item 4. Submission of Matters to a Vote of Security Holders ..................................................... 18
Item 5. Other Information........................................................................................ 18
Item 6. Exhibits and Reports on Form 8-K ........................................................................ 18
Signatures ...................................................................................................... 19
Exhibit Index ................................................................................................... 20
2
CHOICEPOINT INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands, except per share data) 2001 2000 2001 2000
- --------------------------------------------------------------------------------------------------------------
Revenue $172,851 $151,504 $491,338 $446,710
Costs and expenses:
Cost of services 103,234 87,707 288,363 262,155
Selling, general and administrative 31,202 31,671 95,534 99,939
Loss on sale of business 10,853 -- 10,853 --
Merger-related costs & unusual items -- -- 18,009 28,949
-------- -------- -------- --------
Total costs and expenses 145,289 119,378 412,759 391,043
Operating income 27,562 32,126 78,579 55,667
Interest expense, net 2,920 2,938 8,019 9,143
-------- -------- -------- --------
Income before income taxes 24,642 29,188 70,560 46,524
Provision for income taxes 24,630 11,675 43,414 22,188
-------- -------- -------- --------
Net income $ 12 $ 17,513 $ 27,146 $ 24,336
======== ======== ======== ========
Earnings per share - basic (Notes 5 & 6) $ 0.00 $ 0.29 $ 0.44 $ 0.41
Weighted average shares - basic 61,960 59,940 61,572 59,687
Earnings per share - diluted (Notes 5 & 6) $ 0.00 $ 0.28 $ 0.42 $ 0.39
Weighted average shares - diluted 65,593 63,138 65,058 62,568
The accompanying notes are an integral part of these consolidated statements.
3
CHOICEPOINT INC.
CONSOLIDATED BALANCE SHEETS
September 30, 2001 December 31, 2000
(In thousands, except par values) (Unaudited)
- --------------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 60,294 $ 44,909
Accounts receivable, net of allowance for doubtful accounts
of $5,322 in 2001 and $5,787 in 2000 145,343 109,709
Deferred income tax assets 6,458 7,788
Other current assets 20,949 15,923
--------- ---------
Total current assets 233,044 178,329
Property and equipment, net 68,206 68,792
Goodwill, net 453,905 370,232
Deferred income tax assets 18,898 10,244
Other 93,037 76,842
--------- ---------
Total Assets $ 867,090 $ 704,439
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current maturities of long-term debt $ 216,651 $ 638
Accounts payable 36,259 31,123
Accrued salaries and bonuses 27,321 29,919
Other current liabilities 73,758 44,659
--------- ---------
Total current liabilities 353,989 106,339
Long-term debt, less current maturities 2,737 141,638
Postretirement benefit obligations 43,684 45,844
Other long-term liabilities 15,251 9,549
--------- ---------
Total liabilities 415,661 303,370
--------- ---------
Shareholders' equity:
Preferred stock, $.01 par value; 10,000 shares authorized, no
shares issued or outstanding -- --
Common stock, $.10 par value; shares authorized - 100,000;
issued and outstanding - 62,850 in 2001 and 61,566 in 2000 6,285 6,157
Accumulated other comprehensive loss 288,200 258,796
Paid-in-capital 174,772 147,626
Retained earnings (4,438) (92)
Accumulated other comprehensive loss
Stock held by employee benefit trusts, at cost, 741 shares in 2001
and 701 shares in 2000 (13,390) (11,418)
--------- ---------
Total shareholders' equity 451,429 401,069
--------- ---------
Total Liabilities and Shareholders' Equity $ 867,090 $ 704,439
========= =========
The accompanying notes are an integral part of these consolidated balance
sheets.
4
CHOICEPOINT INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
Accumulated
Other Stock Held By
(In thousands) Comprehensive Common Paid-in Retained Comprehensive Employee
Income Stock Capital Earnings Loss Benefit Trusts Total
------------- -------- -------- --------- ------------- -------------- -----
Balance, December 31, 2000 $ 6,157 $ 258,796 $ 147,626 $ (92) $(11,418) $ 401,069
Net Income $ 27,146 -- -- 27,146 -- -- 27,146
Translation adjustments (119) -- -- -- (119) -- (119)
Unrealized derivative losses
on cash flow hedges
(net of taxes of $2,817) (4,227) -- -- -- (4,227) -- (4,227)
--------
Comprehensive income $ 22,800
========
Restricted stock plans, net 13 1,740 -- -- -- 1,753
Stock purchased by employee benefit trusts 2 (2) (1,972) (1,972)
Stock options exercised 113 20,033 -- -- -- 20,146
Tax benefit of stock options exercised -- 7,633 -- -- -- 7,633
-------- --------- --------- -------- -------- ---------
Balance, September 30, 2001 $ 6,285 $ 288,200 $ 174,772 $ (4,438) $(13,390) $ 451,429
======== ========= ========= ======== ========= =========
The accompanying notes are an integral part of
this consolidated statement.
5
CHOICEPOINT INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Nine Months Ended September 30,
(In thousands) 2001 2000
- --------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 27,146 $ 24,336
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 44,625 39,731
Merger-related costs and unusual items 18,009 28,949
Loss on sale of business, including income taxes 21,387 --
Compensation recognized under employee stock plans 1,753 904
Tax benefit of stock options exercised 7,633 4,000
Changes in assets and liabilities,
excluding effects of acquisitions and divestiture:
Accounts receivable, net (24,719) (12,982)
Deferred income taxes (2,453) (3,661)
Other current assets (5,875) (50)
Current liabilities, excluding debt (11,046) (32,046)
Other long-term liabilities, excluding debt (6,055) (868)
--------- -------
Net cash provided by operating activities 70,405 48,313
Cash flows from investing activities:
Acquisitions, net of cash acquired (153,007) (97,276)
Cash proceeds from sale of businesses 49,000 1,500
Additions to short-term investments -- 16,198
Additions to property and equipment, net (16,230) (11,878)
Additions to other assets, net (27,428) (13,258)
--------- -------
Net cash used by investing activities (147,665) (104,714)
Cash flows from financing activities:
Proceeds from long-term debt 90,000 75,000
Payments on long-term debt (14,000) (80,368)
Net short-term borrowings (1,410) (13)
Purchases of stock held by employee benefit trust (1,972) --
Proceeds from exercise of stock options 20,146 13,899
--------- -------
Net cash provided by financing activities 92,764 8,518
--------- -------
Effect of foreign currency exchange rates on cash (119) (66)
--------- -------
Net increase (decrease) in cash and cash equivalents 15,385 (47,949)
Cash and cash equivalents, beginning of period 44,909 73,101
--------- -------
Cash and cash equivalents, end of period $ 60,294 $ 25,152
========= =======
The accompanying notes are an integral part of these
consolidated statements.
6
CHOICEPOINT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(UNAUDITED)
1. ORGANIZATION
ChoicePoint Inc., a Georgia corporation ("ChoicePoint" or the "Company"), is the
leading provider of identification and credential verification services.
ChoicePoint's businesses are focused on two primary markets - Insurance Services
and Business & Government Services.
The Insurance Services group provides information products and services
used in the underwriting, claims and marketing processes by property and
casualty insurers. Major offerings to the personal lines property and
casualty market include claims history data, motor vehicle records, credit
information, marketing services and modeling services. Additionally,
ChoicePoint provides customized policy rating and issuance software and
property inspections and audits to the commercial insurance market. Prior
to the divestiture in August 2001 (see Note 12), ChoicePoint also provided
laboratory testing services and related technology solutions to the life
and health insurance market.
The Business & Government Services group provides information products and
services and direct marketing to Fortune 1000 corporations, consumer
finance companies, asset-based lenders, legal and professional service
providers, health care service providers and federal, state and local
government agencies. Major offerings include pre-employment background
screenings and drug testing administration services, public record
searches, credential verification, due diligence information, Uniform
Commercial Code searches and filings, database marketing services and
people and shareholder locator information searches.
2. BASIS OF PRESENTATION
ChoicePoint Inc. was established through the combination of the businesses that
comprised the Insurance Services Group of Equifax Inc. ("Equifax") within a
separate company and the subsequent spinoff on August 8, 1997 (the "Spinoff") of
the Company's outstanding stock by Equifax as a stock dividend to the
shareholders of Equifax.
On May 16, 2000, ChoicePoint completed a merger (the "Merger") with DBT Online,
Inc. ("DBT") by exchanging approximately 15.9 million shares (adjusted for stock
split - see Note 6) of its common stock for all of the common stock of DBT. Each
share of DBT was exchanged for .525 shares of ChoicePoint common stock
(pre-split). In addition, outstanding DBT stock options were converted at the
same exchange ratio into options to purchase approximately 2.7 million shares of
ChoicePoint common stock. DBT was a leading nationwide provider of online public
records data and other publicly-available information. The Merger has been
accounted for as a pooling of interests, and accordingly, all prior period
consolidated financial statements have been restated to include the combined
results of operations, financial position and cash flows of DBT. There were no
material transactions between ChoicePoint and DBT prior to the Merger. No
material adjustments were required to conform the accounting policies of the two
companies.
The consolidated financial statements include the accounts of ChoicePoint and
its subsidiaries. All material transactions between entities included in the
consolidated financial statements have been eliminated. The consolidated
financial statements have been prepared on the historical cost basis, and
reflect all adjustments which are, in the opinion of management, necessary for a
fair statement of the financial position of ChoicePoint as of September 30, 2001
and the results of operations for the three months and nine months ended
September 30, 2001 and 2000, and the cash flows for the nine months
7
ended September 30, 2001 and 2000. The adjustments have been of a normal
recurring nature. Certain prior period amounts have been reclassified to conform
with the current period presentation. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States have been
condensed or omitted. These financial statements should be read in conjunction
with the notes to the financial statements included in ChoicePoint's
Consolidated Financial Statements for the year ended December 31, 2000 as filed
with the Securities and Exchange Commission in the Annual Report on Form 10-K
(File No. 1-13069). The current period's results are not necessarily indicative
of results to be expected for a full year.
The Company recorded merger-related costs and unusual items of $18.0 million
during the first quarter of 2001 and $28.9 million in the second quarter of
2000. The categories of costs incurred and the accrued balances at September 30,
2001 are summarized below:
Remaining
(In thousands) Accrual at
September 30, 2001 2000
2001 Expense Expense
------- ----------- ----------
Transaction costs $ -- $ -- $11,579
Personnel-related costs 313 1,832 3,780
Other merger integration costs 1,577 2,433 3,629
Asset impairments -- 12,693 6,954
Non-merger severance 445 982 2,353
Other one-time charges 81 69 654
------- ----------- ----------
$2,416 $18,009 $28,949
====== ======= =======
In the first quarter of 2001, the personnel-related costs of $1.8 million
consisted primarily of stay bonuses for services rendered through March 31, 2001
and severance and termination benefit costs primarily related to the integration
of the two public records platforms and related sales and marketing departments.
Other merger integration costs of $2.4 million consisted primarily of
duplicative data and lease exit costs. Asset impairments of $12.7 million
primarily reflected the write-down of equipment and other long-lived assets
deemed to be impaired based on the integration plan for the two public records
platforms which was finalized in the first quarter of 2001. In the second
quarter of 2000, transaction costs of approximately $11.6 million included
investment banking, legal and printing fees and other costs directly related to
the Merger. Personnel-related costs of approximately $3.8 million consisted of
benefit conversions and stay bonuses for services rendered through June 30, 2000
and severance. Other merger integration costs primarily include the elimination
of duplicative data costs. Asset impairments of approximately $7.0 million
represent the write-down of goodwill and other long-lived assets.
3. USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements as well as reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
4. REVENUE AND EXPENSE RECOGNITION
ChoicePoint recognizes revenue when an agreement exists, prices are
determinable, service and products are delivered and collectibility is
reasonably assured. Revenues from software license and maintenance agreements
are recognized in accordance with Statement of Position 97-2, "Software Revenue
Recognition." Motor vehicle records registry revenue (the fee charged by states
for motor vehicle records), material, shipping and postage charges in the
Company's direct marketing business and other costs that are passed on by
ChoicePoint to its customers ("pass-through revenue") are excluded from revenue
and recorded as a reduction to cost of services in the consolidated financial
statements. For the three months ended September 30, pass-through revenue was
$117.6 million in 2001 and $98.1 million in 2000 and for
8
the nine months ended September 30, pass-through revenue was $341.0 million in
2001 and $300.5 million in 2000.
5. EARNINGS PER SHARE
The income amount used in the numerator of the Company's earnings per share
calculations is the same for both basic and diluted earnings per share. The
average outstanding shares used in the denominator of the calculation for
diluted earnings per share includes the dilutive effect of stock options.
6. STOCK SPLIT
On March 7, 2001, ChoicePoint effected a three-for-two stock split in the form
of a stock dividend payable to shareholders of record as of February 16, 2001.
Unless otherwise stated, share and per share data for all periods presented have
been adjusted to reflect the split.
7. DEBT
In August 1997, ChoicePoint entered into a $250 million unsecured revolving
credit facility (the "Credit Facility") with a group of banks. The Credit
Facility bears interest at variable rates and is expandable to $300 million,
subject to approval of the lenders. The commitment termination date and final
maturity of the Credit Facility will occur in August 2002. We anticipate
entering into a new credit facility in the first half of 2002. Total borrowings
under the Credit Facility were $215 million at September 30, 2001. In addition,
there was $4.4 million of other long-term debt outstanding at September 30,
2001. There were no short-term borrowings at September 30, 2001.
In July 2001, the Company and certain of its subsidiaries entered into an
agreement (the "Receivables Facility") with a financial institution whereby it
may sell on a continuous basis, and without recourse, an undivided interest in
all eligible trade accounts receivable subject to limitations. The Company will
maintain the balance in the designated pool of accounts receivable sold by
selling undivided interests in new receivables as existing receivables are
collected. The Receivables Facility permits the advance of up to $100 million on
the sale of accounts receivable. There were no borrowings under the Receivables
Facility at September 30, 2001.
8. DERIVATIVE FINANCIAL INSTRUMENTS
Effective January 1, 2001, ChoicePoint adopted Financial Accounting Standards
("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities"
("SFAS 133"), and its corresponding amendments under SFAS No. 138. SFAS 133
requires the Company to measure all derivatives at fair value and to recognize
them in the Consolidated Balance Sheet as an asset or liability, depending on
ChoicePoint's rights or obligations under the applicable derivative contract.
ChoicePoint's derivative instruments include interest rate swap agreements which
have been designated as cash flow hedges and, as such, the effective portions of
changes in fair value are reported in other comprehensive income ("OCI") and are
subsequently reclassified into earnings when the hedged item affects earnings.
These interest rate swap agreements have been entered into to hedge the
variability of cash flows to be paid related to the Credit Facility and an
operating lease. Changes in the fair value of derivative instruments not
designated as hedging instruments and ineffective portions of hedges are
recognized in earnings in the current period. The adoption of SFAS 133 as of
January 1, 2001, resulted in a charge to OCI of $2.8 million, net of taxes. As
of September 30, 2001, the cumulative change in OCI related to these derivatives
is $4.2 million, net of taxes. For the three months and nine months ended
September 30, 2001, the Company recorded the ineffectiveness related to these
cash flow hedges to net interest expense. These amounts were not material.
9. STOCK OPTIONS
During the first nine months of 2001, stock options to purchase approximately
1.8 million shares of ChoicePoint common stock were granted under the
ChoicePoint Inc. 1997 Omnibus Stock Incentive Plan. Exercise prices of these
options are equal to the fair market value on the date of grant.
9
10. COMPREHENSIVE INCOME
Total comprehensive income for the three months and nine months ended September
30, 2001 and 2000 was as follows (in thousands):
Three Months Ended Nine months Ended
-------------------------- ---------------------------
September 30, September 30,
2001 2000 2001 2000
---- ---- ---- ----
Net income (loss) $ 12 $ 17,513 $ 27,146 $24,336
Translation adjustments (108) (29) (119) 128
Change in unrealized net loss on
investments -- -- -- 255
Unrealized derivative gain (loss) on
cash flow hedges (net of taxes) -- -- -- --
(1,791) -- (4,227) --
------- -------- -------- -------
Comprehensive income $(1,887) $ 17,484 $ 22,800 $24,719
======= ======== ======== =======
11. ACQUISITIONS
During the nine months ended September 30, 2001, the Company acquired BTi
Employee Screening Services, Inc., a pre-employment background screening
organization, ABI Consulting, Inc., a third-party administrator of employee drug
testing programs, Insurity Solutions Inc., a provider of Internet-based rating,
underwriting and policy-servicing tools, The Bode Technology Group, Inc., a
premier provider of DNA identification services, the pre-employment and drug
testing businesses of Pinkerton Services Corporation, a unit of Securitas AB of
Sweden, Marketing Information and Technology, Inc., a provider of large-scale
direct marketing systems for FORTUNE 500 clients and certain assets of National
Medical Review Offices, Inc., a large provider of Medical Review Office
services. The total purchase price of the acquisitions, which were accounted for
using the purchase method, was approximately $156.1 million in cash, with
approximately $136.9 million of that amount allocated to goodwill. The Company
is currently evaluating the allocation of intangible assets and goodwill in
accordance with SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS No.
142"), and other exit activities which may result in some reclassifications. As
of September 30, 2001, ChoicePoint has accrued approximately $6.3 million for
transaction-related costs including lease terminations and personnel-related
costs related to these acquisitions.
12. DIVESTITURE
In August 2001, the Company sold its laboratory services business to LabOne,
Inc. for $49 million and retained certain assets. The results of this business
historically have been included in the Insurance Services business segment.
Operating segment results have been restated for all periods to reflect the sale
of this line of business (see Note 14 to the Consolidated Financial Statements).
Operating income for the quarter ended September 30, 2001 includes a $10.8
million loss on the sale. Net income for the quarter ended September 30, 2001
includes a $21.4 million (including tax expense of $10.5 million) after-tax loss
on the sale of the laboratory services business.
13. NEW ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No.
141, "Business Combinations" ("SFAS No. 141") effective July 1, 2001 and SFAS
No. 142, effective for the Company on January 1, 2002. SFAS No. 141 prohibits
pooling of interests accounting for acquisitions initiated after June 30, 2001.
SFAS No. 142 requires companies to cease amortizing goodwill that existed at
June 30, 2001 on December 31, 2001. Any goodwill resulting from acquisitions
completed after June 30, 2001 will not be amortized. SFAS No. 142 also broadens
the criteria for recording intangible assets separate from goodwill and
establishes a new method of testing goodwill for impairment on an annual basis
or on an interim basis if an event occurs or circumstances change that would
reduce the fair value of a reporting unit
10
below its carrying value. The provisions of SFAS No. 142 which apply to goodwill
and intangible assets acquired prior to June 30, 2001 will be adopted by
ChoicePoint on January 1, 2002. We expect the adoption of these accounting
standards will result in certain of our intangibles being subsumed into goodwill
and will result in the discontinuation of amortization of these assets and
goodwill; however, impairment reviews may result in future periodic write-downs.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS No. 144"). SFAS No. 144 is effective for
fiscal years beginning after December 15, 2001, and interim periods within those
fiscal years. ChoicePoint will adopt this statement on January 1, 2002. This
statement addresses financial accounting and reporting for the impairment or
disposal of long-lived assets. It supersedes SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." We
are currently evaluating the impact of SFAS No. 144 on our Consolidated
Financial Statements.
14. SEGMENT DISCLOSURES
ChoicePoint operates primarily in two reportable segments: Insurance Services
("Insurance") and Business & Government Services ("B&G"). See Note 1 for a
description of each segment. Revenues and operating income for the three months
and nine months ended September 30, 2001 and 2000 for the two segments, laser
technology patents held by the Company ("Royalty") and the divested and
discontinued lines were as follows:
Three months ended Three months ended
September 30, 2001 September 30, 2000
------------------------------------------- --------------------------------------------
Operating Operating
Income Income
before Operating before Operating
(In thousands) Acquisition Income Acquisition Income
Revenue Amortization (Loss) Revenue Amortization (Loss)
--------- ------------ --------- --------- ------------ --------
Insurance $ 76,547 $ 36,011 $ 35,020 $ 64,291 $ 28,620 $ 27,858
B&G 88,959 19,833 15,245 73,285 16,997 13,119
Royalty 1,630 1,011 1,011 1,604 953 953
Divested & Discontinued 5,715 (48) (336) 12,324 2,208 1,776
Corporate and Shared Expenses
-- (12,525) (12,525) (11,580) (11,580)
Loss on sale of business -- (10,853) (10,853) -- -- --
--------- -------- -------- --------- -------- ---------
Total $ 172,851 $ 33,429 $ 27,562 $ 151,504 $ 37,198 $ 32,126
========= ======== ======== ========= ======== ========
Nine months ended Nine months ended
September 30, 2001 September 30, 2000
------------------------------------------- --------------------------------------------
Operating Operating
Income Income
before Operating before Operating
(In thousands) Acquisition Income Acquisition Income
Revenue Amortization (Loss) Revenue Amortization (Loss)
--------- ------------ --------- --------- ------------ --------
Insurance $ 222,461 $ 102,101 $ 99,143 $ 187,719 $ 81,000 $ 78,791
B&G 239,984 55,272 42,258 210,452 38,463 27,102
Royalty 5,094 3,253 3,253 4,795 2,855 2,855
Divested & Discontinued 23,799 1,234 84 43,744 9,067 7,565
Corporate and Shared Expenses
-- (37,297) (37,297) (31,697) (31,697)
Loss on sale of business -- (10,853) (10,853) -- -- --
Merger-related Costs and
Unusual Items (Note 2) -- -- (18,009) (18,009) (28,949) (28,949)
--------- --------- -------- --------- -------- --------
Total $ 491,338 $ 95,701 $ 78,579 $ 446,710 $ 70,739 $ 55,667
========= ========= ======== ========= ======== ========
11
Divested and discontinued product lines include the operating results from the
laboratory services business sold in August 2001 and certain other product lines
which were, as a result of the Merger and integration of the two public records
businesses, determined to be duplicative in nature or contrary to ChoicePoint's
strategic goals and, hence, discontinued.
Corporate and shared expenses represent costs of support functions, research and
development initiatives, incentives and profit sharing that benefit both
segments. Acquisition amortization includes goodwill and other intangible
amortization related to acquisitions.
Depreciation and amortization for the three months and nine months ended
September 30, 2001 and 2000 were as follows:
Three Months Ended Nine months Ended
September 30, September 30,
(In thousands) 2001 2000 2001 2000
------- -------- --------- --------
Insurance $3,402 $ 2,798 $ 9,403 $ 8,278
B&G 10,419 7,479 28,026 23,324
Royalty 425 426 1,275 1,278
Divested & Discontinued 754 1,533 3,078 4,766
Corporate 1,021 716 2,843 2,085
------- -------- --------- --------
Total $16,021 $12,952 $44,625 $39,731
======= ======= ======= =======
Substantially all of the Company's operations are located in the United States
and no customer represents more than 10% of total operating revenue.
15. SUBSEQUENT EVENTS
Subsequent to September 30, 2001, the Company paid down $50 million of its
Credit Facility.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
INTRODUCTION
ChoicePoint Inc., a Georgia corporation ("ChoicePoint" or the "Company"), is the
leading provider of identification and credential verification services for
making smarter decisions. ChoicePoint's businesses are focused on two primary
markets - Insurance Services and Business & Government Services. See Note 1 to
the Consolidated Financial Statements for a description of each market.
On May 16, 2000, ChoicePoint completed a merger (the "Merger") with DBT Online,
Inc. ("DBT"). The Merger has been accounted for as a pooling of interests and,
accordingly, all prior period consolidated financial statements have been
restated to include the combined results of operations, financial position and
cash flows of DBT. See Note 2 to the Consolidated Financial Statements for a
description of the Merger.
On March 7, 2001, ChoicePoint effected a three-for-two stock split in the form
of a stock dividend payable to shareholders of record as of February 16, 2001.
Unless otherwise stated, share and per share data for all periods presented have
been adjusted to reflect the stock split.
RESULTS OF OPERATIONS
REVENUE
The Company's total revenue for the third quarter of 2001 was $172.9 million, an
increase of 14% over the third quarter of 2000. For the first nine months of
2001, revenue was $491.3 million, an increase of 10% over the first nine months
of 2000. Consolidated internal revenue growth, which excludes the effect of
12
revenue from purchased acquisitions and divestitures, was approximately 6% for
the third quarter of 2001 and 8% for the nine months ended September 30, 2001.
Our revenue growth was driven primarily from continued strong unit performances
in all of the Insurance Services' product lines and the acquisitions in Business
& Government Services.
SEGMENT REVENUE
Insurance Services' major offerings include claims history data, motor vehicle
records, credit information and marketing and modeling services to the personal
lines property and casualty market; and customized policy rating and issuance
software and property inspections and audits to the commercial insurance market.
In August 2001, the Company sold its laboratory services business. The results
of this business historically have been included in the Insurance Services
business segment. Operating segment results have been restated for all periods
to reflect the sale of this line of business (see Notes 12 and 14 to the
Consolidated Financial Statements).
In the third quarter of 2001, Insurance Services revenue was $76.5 million, up
19%, or $12.2 million, from $64.3 million in 2000. For the first nine months of
2001, Insurance Services revenue grew 18%, or $34.8 million, to $222.5 million
from $187.7 million in the prior year. This growth was driven by strong unit
performance in personal lines products, our field-based commercial property
inspection, modeling and marketing, and customized rating and issuance software
businesses.
During the nine months ended September 30, 2001, the Company acquired Insurity
Solutions Inc. and, after September 30, 2000, the Company acquired RRS Police
Records Management, Inc. and the assets of VIS'N Service Corporation. Excluding
acquisitions and dispositions, internal revenue growth in Insurance Services was
17% from the three months ended September 30, 2000 to the three months ended
September 30, 2001.
Business & Government Services' major offerings include pre-employment
background screenings and drug testing administration services, public record
searches, credential verification, due diligence information, uniform commercial
code searches and filings, database marketing services and people and
shareholder locator information services.
Business & Government Services' revenue for the third quarter increased $15.7
million, or 21%, to $89.0 million from $73.3 million in the third quarter of
2000. For the nine months ended September 30, 2001, Business & Government
Services' revenue was $240.0 million up 14%, or $29.5 million, from $210.5
million in the prior year. This growth was driven primarily by the integration
of recent acquisitions in workplace solutions, offset by slower growth in public
records, direct marketing and existing workplace solutions businesses due to
economic conditions.
During the first nine months of 2001, the Company acquired the pre-employment
and drug testing businesses of Pinkerton Services Corporation, a unit of
Securitas AB of Sweden, Marketing Information and Technology, Inc., a provider
of large-scale direct marketing systems for FORTUNE 500 clients, BTi Employee
Screening Services, Inc., ABI Consulting, Inc., The Bode Technology Group, Inc.,
and certain assets of National Medical Review Offices, Inc., and after September
30, 2000, acquired certain assets of Cat Data Group, LLC and Drug Free
Consortium, Inc. Excluding acquisitions, internal revenue growth for Business &
Government Services was -a decrease of 4% for the third quarter of 2001
primarily driven by decreases in workplace solutions.
Third quarter royalty revenue from laser technology patents held by the Company
remained constant at $1.6 million. For the nine months ended September 30,
royalty revenue was $5.1 million in 2001 compared with $4.8 million in 2000. The
remaining patents underlying this revenue expire between November 2004 and May
2005.
Divested and discontinued product lines include the operating results from the
laboratory services business sold in August 2001 (see Note 12 to the
Consolidated Financial Statements) and certain other product lines
13
which were, as a result of the Merger and integration of the two public records
businesses, determined to be duplicative in nature or contrary to ChoicePoint's
strategic goals and, hence, discontinued.
MERGER-RELATED COSTS AND UNUSUAL ITEMS
Merger-related costs and unusual items of $18.0 million in the first quarter of
2001 and $28.9 million in the second quarter of 2000 primarily related to the
Merger in May 2000 and related integration of the Company's two public records
businesses in connection with this Merger, the plan for which was finalized in
the first quarter of 2001. Merger-related costs and unusual items include asset
impairments, stay bonuses, severance and termination benefits, and duplicate
data and lease exit costs (See Note 2 to the Consolidated Financial Statements).
LOSS ON SALE OF BUSINESS
In August 2001, the Company sold its laboratory services business to LabOne,
Inc. for $49 million and retained certain assets. The results of this business
historically have been included in the Insurance Services business segment.
Operating segment results have been restated for all periods to reflect the sale
of this line of business (see Notes 12 and 14 to the Consolidated Financial
Statements). Operating income for the quarter ended September 30, 2001 includes
a $10.8 million loss on the sale. Net income for the quarter ended September 30,
2001 includes a $21.4 million (including tax expense of $10.5 million) after-tax
loss on the sale of the laboratory services business.
OPERATING INCOME
The Company's operating income, excluding the loss on sale of business, was
$38.4 million or 22.2% as a percent of revenue in the third quarter of 2001, up
from $32.1 million or 21.2% as a percent of revenue in the third quarter of the
prior year. Including the $10.8 million loss on sale of business in the third
quarter of 2001, operating income was $27.6 million or 15.9% of revenue. For the
first nine months of 2001, operating income was $78.6 million, up from $55.7
million for the first nine months of 2000. Excluding the loss on sale of
business and merger-related costs and unusual items, for the first nine months
of 2001 operating income was $107.4 million or 21.9% as a percent of revenue, up
from $84.6 million or 18.9% of revenue in the prior year. The improvement in
operating margins from 2000 to 2001 was primarily as a result of the revenue
growth in Insurance Services discussed above, cost synergies realized in the
integration of DBT into the Company's public records business and our continued
focus on improving cost efficiencies. Acquisition amortization, which includes
goodwill and other intangible amortization related to acquisitions, was $5.9
million in the third quarter of 2001 and $5.1 million for the third quarter of
the prior year. For the first nine months of 2001, acquisition amortization was
$17.1 million, an increase of $2.0 million over the prior year due to
acquisitions in the last quarter of 2000 and the first nine months of 2001.
SEGMENT OPERATING INCOME
Insurance Services had third quarter 2001 operating income of $35.0 million,
resulting in an operating margin of 45.7%, compared with 43.3% in the third
quarter of 2000. The margin increase is primarily a result of the revenue growth
discussed above and continued focus on improving cost efficiencies. Excluding
acquisition amortization, third quarter operating margins were 47.0% in 2001 and
44.5% in 2000.
Business & Government Services had third quarter 2001 operating income of $15.2
million, resulting in an operating margin of 17.1% compared with 17.9% in the
third quarter of 2000. The slight margin decrease is primarily due to revenue
pressures in our workplace solutions business and lower than average margins
attributable to recent acquisitions. Excluding acquisition amortization, third
quarter operating margins were 22.3% in 2001 and 23.2% in 2000.
Corporate and shared expenses represent costs of support functions, research and
development initiatives, incentives and profit sharing that benefit both
Insurance Services and Business & Government Services. Corporate and shared
expenses were $12.5 million for the third quarter of 2001, up from $11.6 million
in 2000. For the nine months ended September 30, corporate and shared expenses
were $37.3 million in 2001, up from $31.7 million in 2000. The increase in
corporate and shared expenses is primarily due to the
14
increase in compensation expense recognized under employee stock plans and
incentives and additional resources to support the growth of the Company.
INTEREST EXPENSE, NET
Interest expense, net was $2.9 million for the third quarter of 2001 consistent
with the third quarter of 2000 as higher debt levels due to the acquisitions
made in July 2001 were offset by lower interest rates. For the nine months ended
September 30, 2001, interest expense, net was $8.0 million, a decrease of $1.1
million from the first nine months of 2000 due to lower average debt levels and
interest rates. Interest expense for 2000 is also net of interest income from
short-term investments of $419,000 for the third quarter and $882,000 for the
first nine months.
INCOME TAXES
ChoicePoint's overall effective tax rate was 39.7% for the third quarter of
2001, excluding the loss on sale of business, down from 40.0% for the three
months ended September 30, 2000. Excluding the loss on sale of business and
merger-related costs and unusual items, our effective tax rate for the first
nine months of 2001 was 39.7% compared with 40.5% for the first nine months of
the prior year. Including the tax expense related to the loss on sale of
business and merger-related costs and unusual items, our effective tax rate for
the nine months ended September 30, 2001 was 61.5%, up from 47.7% for the same
period of 2000. The decrease in effective tax rates excluding loss on sale of
business and merger-related costs and unusual items from 2000 to 2001 is
primarily due to implementation of state and local tax planning initiatives.
FINANCIAL CONDITION AND LIQUIDITY
Cash and cash equivalents totaled $60.3 million as of September 30, 2001. Cash
provided by operations was $70.4 million for the first nine months of 2001
compared to $48.3 million for the first nine months of 2000. The increase in
cash provided by operations was primarily attributable to increased net income
excluding the loss on sale of business as compared to September 30, 2000. During
the first nine months of 2001, ChoicePoint continued to invest in future growth.
Cash used by investing activities was $147.7 million, consisting of $153.0
million for acquisitions, $16.2 million for property and equipment and $27.4
million for other asset additions, primarily software developed for internal
use, purchased data files and software, and software developed for external use,
offset by $49.0 million of proceeds from the sale of the laboratory services
business in August 2001. In the first nine months of 2000, cash used by
investing activities was $104.7 million, including $97.3 million for
acquisitions, $11.9 million for additions to property and equipment and $13.3
million for additions to other assets, offset by additions to short-term
investments of $16.2 million. The Company anticipates full-year capital
expenditures of approximately $55 million for 2001, which will be used primarily
for the development of a new public records technology platform, system upgrades
and other assets, including capitalized software development, purchased data
files and software. Cash provided by financing activities of $92.8 million in
the first nine months of 2001 consisted of $76.0 million of net proceeds from
long-term debt and $20.1 million of proceeds from the exercise of stock options
offset by purchases of stock held by our employee benefit trust of $2.0 million.
Cash provided by financing activities of $8.5 million in the first nine months
of 2000 included $5.4 million of net payments of long-term debt offset by $13.9
million of proceeds from the exercise of stock options.
The Company's short-term and long-term liquidity depends primarily upon its
level of net income and working capital management (accounts receivable,
accounts payable and accrued expenses) and long-term debt. In August 1997,
ChoicePoint entered into a $250 million unsecured revolving credit facility (the
"Credit Facility") with a group of banks (See Note 7 to the Consolidated
Financial Statements) which expires in August 2002. Borrowings under the Credit
Facility were $215 million at September 30, 2001 and $139 million at December
31, 2000. In connection with the divestiture discussed in Note 12 to the
Consolidated Financial Statements, in August 2001, the Company received $49
million in sales proceeds all of which was used to pay down the Credit Facility
in October 2001. ChoicePoint may use additional borrowings under the Credit
Facility to finance acquisitions and for general corporate cash requirements. In
addition, there was $4.4 million of other long-term debt outstanding at
September 30, 2001. ChoicePoint may also utilize lines of credit with two banks
for overnight borrowings. As of September 30, 2001, there were no amounts
outstanding under a line of credit.
15
In July 2001, the Company and certain of its subsidiaries entered into an
agreement (the "Receivables Facility") with a financial institution whereby it
may sell on a continuous basis, and without recourse, an undivided interest in
all eligible trade accounts receivable subject to limitations. The Company will
maintain the balance in the designated pool of accounts receivable sold by
selling undivided interests in new receivables as existing receivables are
collected. The Receivables Facility permits the advance of up to $100 million on
the sale of accounts receivable. There were no borrowings under the Receivables
Facility at September 30, 2001.
We believe that our existing cash balance, available debt and cash flow from
operations will be sufficient to meet our working capital and capital
expenditure requirements for the next twelve months. We also anticipate entering
into a new credit facility in the first half of 2002. However, any material
variance of our operating results from our projections or the investments in or
acquisitions of businesses, products or technologies could require us to obtain
additional equity or debt financing.
Earnings before interest, taxes, depreciation and amortization ("EBITDA"),
excluding the loss on sale of business and merger-related costs and unusual
items, increased $9.4 million in the third quarter of 2001, or 20.8% from the
third quarter of 2000, to $54.4 million. For the first nine months ended
September 30, EBITDA increased $18.4 million, or 23.2%, to $97.6 million in
2001. EBITDA margins increased from 29.8% for the third quarter of 2000 to 31.5%
for the third quarter of 2001 due to ChoicePoint's strong operating performance.
The Company has included EBITDA data (which is not a measure of financial
performance under generally accepted accounting principles) because such data is
used by certain investors to analyze and compare companies on the basis of
operating performance, leverage and liquidity and to determine a company's
ability to service debt. EBITDA is not presented as a substitute for income from
operations, net income or cash flows from operating activities.
Economic Value Added ("EVA") measures the value created in excess of the cost of
capital used to run the business. The Company uses EVA as a performance measure
to make operational, capital and compensation decisions. Excluding the impact of
2001 acquisitions and dispositions, EVA increased $1.9 million in the third
quarter of 2001 and $12.0 million for the nine months ended September 30, 2001
due primarily to strong operating results. EVA for the quarter includes a charge
for "pooling goodwill" related to the Merger of approximately $8.1 million.
The Company uses cash generated to invest in growing the business and to fund
acquisitions and operations. Therefore, no cash dividends have been paid and the
Company does not anticipate paying any cash dividends on its common stock in the
near future.
NEW ACCOUNTING PRONOUNCEMENTS
In June 2000, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 138 that amends the accounting
and reporting of derivatives under SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," ("SFAS No. 133") to exclude, among other
things, contracts for normal purchases and sales (See Note 8 to the Consolidated
Financial Statements). Effective January 1, 2001, ChoicePoint adopted SFAS No.
133. The adoption of SFAS No. 133 as of January 1, 2001, resulted in a charge to
Other Comprehensive Income of $2.8 million, net of taxes. For the three months
and nine months ended September 30, 2001, the Company recorded the
ineffectiveness related to these cash flow hedges to net interest expense. These
amounts were not material.
In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" effective July 1, 2001 and SFAS No. 142, "Goodwill and
Other Intangible Assets" effective for the Company on January 1, 2002. SFAS No.
141 prohibits pooling of interests accounting for acquisitions initiated after
June 30, 2001. SFAS No. 142 requires companies to cease amortizing goodwill that
existed at June 30, 2001 on December 31, 2001. Any goodwill resulting from
acquisitions completed after June 30, 2001 will not be amortized. SFAS No. 142
also broadens the criteria for recording intangible assets separate from
goodwill and establishes a new method of testing goodwill for impairment on an
annual basis or on an interim basis if an event occurs or circumstances change
that would reduce the fair value of a reporting unit below its carrying value.
The provisions of SFAS No. 142 which apply to goodwill and intangible assets
acquired prior to June 30, 2001 will be adopted by ChoicePoint on January 1,
2002. We
16
expect the adoption of these accounting standards will result in certain of our
intangibles being subsumed into goodwill and will result in the discontinuation
of amortization of these assets and goodwill; however, impairment reviews may
result in future periodic write-downs.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS No. 144"). SFAS No. 144 is effective for
fiscal years beginning after December 15, 2001, and interim periods within those
fiscal years. ChoicePoint will adopt this statement on January 1, 2002. This
statement addresses financial accounting and reporting for the impairment or
disposal of long-lived assets. It supersedes SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." We
are currently evaluating the impact of SFAS No. 144 on our Consolidated
Financial Statements.
FORWARD-LOOKING STATEMENTS
Certain written 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: demand for the Company's services, product
development, maintaining acceptable margins, ability to control costs, the
impact of federal, state and local regulatory requirements on the Company's
business, specifically the public records market and privacy matters affecting
the Company, the impact of competition and the uncertainty of economic
conditions in general. Additional information concerning these 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, 2000. 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 report.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from changes in interest rates. The
information below summarizes the Company's market risk associated with its debt
obligations as of September 30, 2001. The information below should be read in
conjunction with Note 7 to the Consolidated Financial Statements.
As of September 30, 2001, $215 million was outstanding under the Credit
Facility. The Company has also entered into an interest rate swap agreement (the
"Swap Agreement") to reduce the impact of changes in interest rates on its
Credit Facility. The Swap Agreement had a notional amount of $125 million at
September 30, 2001 and matures in August 2002. The Swap Agreement involves the
exchange of variable rate for fixed rate payments and effectively changes the
Company's interest rate exposure to a weighted average fixed rate of
approximately 5.4%.
Based on the Company's overall interest rate exposure at September 30, 2001, a
near-term change in interest rates would not materially affect the consolidated
financial position, results of operations or cash flows of the Company. As noted
above, as of October 2001, $165 million is outstanding under the Credit
Facility, of which $125 million is hedged with interest rate swaps. A one
percent change in interest rates would result in a $400,000 change in annual
interest expense.
17
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ChoicePoint is involved in litigation from time to time in the ordinary course
of its business. The Company does not believe that the outcome of any pending or
threatened litigation will have a material adverse effect on the financial
position or results of operations of ChoicePoint. However, as is inherent in
legal proceedings where issues may be decided by finders of fact, there is a
risk that unpredictable decisions adverse to the Company could be reached.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Master Agreement, dated as of August 29, 2001, among ChoicePoint Inc.,
as Guarantor, ChoicePoint Inc. and certain subsidiaries of ChoicePoint
Inc. that may hereafter become party hereto, as Lessees, Atlantic
Financial Group, LTD., as Lessor, Certain Financial Institutions
Parties Hereto, as Lenders and SunTrust Bank, as Agent.
10.2 Master Lease Agreement, dated as of August 29, 2001, between Atlantic
Financial Group, LTD, as Lessor, and ChoicePoint Inc. and certain
subsidiaries of ChoicePoint Inc., as Lessees.
10.3 Guaranty Agreement from ChoicePoint Inc., dated as of August 29, 2001.
10.4 Construction Agency Agreement, dated as of August 29, 2001, among
Atlantic Financial Group, Ltd. and ChoicePoint Inc., as Construction
Agent.
10.5 Loan Agreement, dated as of August 29, 2001, among Atlantic Financial
Group, Ltd., as Lessor and Borrower, the financial institutions party
hereto, as Lenders, and SunTrust Bank, as Agent.
10.6 Stock Purchase Agreement, dated as of August 31, 2001, by and among
ChoicePoint Inc., ChoicePoint Services Inc., and LabOne, Inc.
(b) Reports on Form 8-K
Registrant did not file any reports on Form 8-K during the quarter for
which this report was filed.
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHOICEPOINT INC.
(Registrant)
November 12, 2001 /s/ Derek V. Smith
- ------------------------------ ----------------------------------
Date Derek V. Smith, Chairman and
Chief Executive Officer
November 12, 2001 /s/ Michael S. Wood
- ------------------------------ -------------------------------------------
Date Michael S. Wood, Chief Financial Officer
19
EXHIBIT INDEX
Exhibit Description of Exhibit
- ------- ----------------------
10.1 Master Agreement, dated as of August 29, 2001, among ChoicePoint Inc.,
as Guarantor, ChoicePoint Inc. and certain subsidiaries of ChoicePoint
Inc. that may hereafter become party hereto, as Lessees, Atlantic
Financial Group, LTD., as Lessor, Certain Financial Institutions
Parties Hereto, as Lenders and SunTrust Bank, as Agent.
10.2 Master Lease Agreement, dated as of August 29, 2001, between Atlantic
Financial Group, LTD, as Lessor, and ChoicePoint Inc. and certain
subsidiaries of ChoicePoint Inc., as Lessees.
10.3 Guaranty Agreement from ChoicePoint Inc., dated as of August 29, 2001.
10.4 Construction Agency Agreement, dated as of August 29, 2001, among
Atlantic Financial Group, Ltd. and ChoicePoint Inc., as Construction
Agent.
10.5 Loan Agreement, dated as of August 29, 2001, among Atlantic Financial
Group, Ltd., as Lessor and Borrower, the financial institutions party
hereto, as Lenders, and SunTrust Bank, as Agent.
10.6 Stock Purchase Agreement, dated as of August 31, 2001, by and among
ChoicePoint Inc., ChoicePoint Services Inc., and LabOne, Inc.
20