##### 



ChoicePoint 2005 Annual Report
 Managements Discussion and Analysis
    
    
    28Managements Report on Internal Control Over Financial Reporting
    
    
    42Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
    
    
    43Report of Independent Registered Public Accounting Firm
    
    
    44Consolidated Statements of Income
    
    
    45Consolidated Balance Sheets
    
    
    46Consolidated Statements of Shareholders Equity
    
    
    47Consolidated Statements of Cash Flows
    
    
    48Notes to Consolidated Financial Statements
    
    
    49Shareholder Information
    
    
    71
 ChoicePoint is committed to full disclosure of its accounting policies.
Shareholders who have any questions or concerns about corporate policies, governance
and/or disclosure are encouraged to contact the Companys Investor Relations office.
ChoicePoint has established a toll-free telephone number to receive complaints about
accounting, internal accounting controls, auditing or other legitimate concerns
anonymously. The whistleblower hotline number is 800-762-0056.
 27




---



##### 



Managements Discussion and Analysis
  
 
 Overview
   (In thousands)
    
    2005
    
    2004
    
    Change
    
    2003
    
    ChangeService revenue
    
    $
    1,029,857
    
    
    $
    884,433
    
    
    
    16
    %
    
    $
    750,351
    
    
    
    18
    %Reimbursable
expenses per EITF
01-14
    
    
    28,057
    
    
    
    34,280
    
    
    
    
    
    
    
    45,395Total revenue
    
    $
    1,057,914
    
    
    $
    918,713
    
    
    
    15
    %
    
    $
    795,746
    
    
    
    15
    %
 Comparison of 2005 with 2004 Consolidated Results
   28




---



##### 



Managements Discussion and Analysis continued
          Comparison of 2004 with 2003 Consolidated Results
   29




---



##### 



Managements Discussion and Analysis continued
          Financial Results by Segment
 December 31, 2005
    
    December 31, 2004
    
    December 31, 2003Operating
    
    
    
    
    
    Operating
    
    
    
    
    
    OperatingRevenue
    
    Income
    
    Revenue
    
    Income
    
    Revenue
    
    IncomeInsurance Services
    
    $
    407,489
    
    
    $
    221,632
    
    
    $
    352,725
    
    
    $
    195,715
    
    
    $
    309,124
    
    
    $
    172,518Business Services(1)
    
    
    380,192
    
    
    
    81,999
    
    
    
    349,881
    
    
    
    73,438
    
    
    
    276,148
    
    
    
    56,540Government Services
    
    
    148,249
    
    
    
    20,889
    
    
    
    83,934
    
    
    
    21,464
    
    
    
    63,335
    
    
    
    14,540Marketing ServicesMarketing Services service revenue
    
    
    91,529
    
    
    
    15,899
    
    
    
    93,389
    
    
    
    18,651
    
    
    
    96,642
    
    
    
    21,849Reimbursable expenses
    
    
    28,057
    
    
    
    
    
    
    
    34,280
    
    
    
    
    
    
    
    45,395
    
    
    
    Marketing Services total revenue
    
    
    119,586
    
    
    
    15,899
    
    
    
    127,669
    
    
    
    18,651
    
    
    
    142,037
    
    
    
    21,849Royalty
    
    
    2,398
    
    
    
    1,722
    
    
    
    4,504
    
    
    
    2,062
    
    
    
    5,102
    
    
    
    2,068Corporate and shared
    
    
    
    
    
    
    (76,223
    )
    
    
    
    
    
    
    (69,552
    )
    
    
    
    
    
    
    (58,013
    )Total before other operating charges
    
    
    1,057,914
    
    
    
    265,918
    
    
    
    918,713
    
    
    
    241,778
    
    
    
    795,746
    
    
    
    209,502Other operating charges
    
    
    
    
    
    
    (28,773
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,942
    )Totals from operations
    
    $
    1,057,914
    
    
    $
    237,145
    
    
    $
    918,713
    
    
    $
    241,778
    
    
    $
    795,746
    
    
    $
    178,560
 (1)
    
    As announced on March 4, 2005 and discussed in Note 9 to the
Consolidated Financial Statements, the Company has discontinued the sale of
certain information services offered by its
Business Services segment.
 
 30




---



##### 



Managements Discussion and Analysis continued
  
 ®
 
 Select SM ®
 31




---



##### 



Managements Discussion and Analysis continued
  
  
  Royalty
  Corporate Costs
  32




---



##### 



Managements Discussion and Analysis continued
  Discontinued Operations and Divested and Discontinued Product Lines
  
 
 
 Cash Flow and Liquidity Review
     33




---



##### 



Managements Discussion and Analysis continued
       Contractual Obligations and the Related Future Payments
 Payments Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    More than(In thousands)
    
    Total
    
    1 year
    
    1-3 years
    
    3-5 years
    
    5 yearsDebt*
    
    $
    130,000
    
    
    $
    50,000
    
    
    
    
    
    
    $
    80,000
    
    
    $
    Capital lease obligations
    
    
    57
    
    
    
    22
    
    
    
    22
    
    
    
    13
    
    
    
    Operating leases and other
commitments
    
    
    77,463
    
    
    
    24,116
    
    
    
    21,327
    
    
    
    14,744
    
    
    
    17,276Total contractual cash obligations
    
    $
    207,520
    
    
    $
    74,138
    
    
    $
    21,349
    
    
    $
    94,757
    
    
    $
    17,276
 *Excludes a nominal liability related to the fair market valuation of our
interest rate swaps discussed below.
  Off-Balance Sheet Items
   34




---



##### 



Managements Discussion and Analysis continued
   Derivatives
  Interest Rate Risk Management
  Foreign Currency Exchange Rate Risk
  Summary of Cash Activities
       35




---



##### 



Managements Discussion and Analysis continued
        New Accounting Pronouncements
    36




---



##### 



Managements Discussion and Analysis continued
   Critical Accounting Policies
  Purchase price allocation 
 Impairment charges 
   37




---



##### 



Managements Discussion and Analysis continued
   Software and databases developed for internal use 
 Postretirement benefit obligations 
 Revenue recognition 
 Fraudulent Data Access
     38




---



##### 



Managements Discussion and Analysis continued
      Harrington, et al. v. ChoicePoint,
 Wilson v. ChoicePoint
Inc.,
 In re ChoicePoint Inc. Securities Litigation,
 39




---



##### 



Managements Discussion and Analysis continued
   In re ChoicePoint Inc.
Derivative Litigation,
 Learch v. Smith, et al.,
     40




---



##### 



Managements Discussion and Analysis continued
  Other
  Forward-Looking Statements
  41




---



##### 



Managements Report on Internal Control Over Financial Reporting
      -s- Derek V. Smith
    
    -s- Doug C. CurlingDerek V. Smith
    
    Doug C. CurlingChief Executive Officer
    
    Chief Operating Officer-s- Steven W. Surbaugh
    
    -s- David E. TrineSteven W. Surbaugh
    
    David E. TrineChief Administrative Officer
    
    Chief Financial Officer
 42




---



##### 



Report of Independent Registered Public Accounting Firm on Internal Control Over Financial
Reporting
  To the Board of Directors and
Shareholders of ChoicePoint Inc.:
 Internal Control  Integrated Framework
      
 
 43




---



##### 



Report of Independent Registered Public Accounting Firm
  To the Board of Directors and
Shareholders of ChoicePoint Inc.:
     
 
 44




---



##### 



Consolidated Statements of Income
  (In thousands, except per share data)Year Ended December 31,
    
    2005
    
    
    2004
    
    
    2003Service revenue
    
    $
    1,029,857
    
    
    $
    884,433
    
    
    $
    750,351Reimbursable expenses (Note 3)
    
    
    28,057
    
    
    
    34,280
    
    
    
    45,395Total revenue
    
    
    1,057,914
    
    
    
    918,713
    
    
    
    795,746Costs and expenses:Cost of service revenue
    
    
    539,587
    
    
    
    457,842
    
    
    
    402,148Reimbursable expenses
    
    
    28,057
    
    
    
    34,280
    
    
    
    45,395Selling, general, and administrative
    
    
    224,352
    
    
    
    184,813
    
    
    
    138,701Other operating charges (Note 10)
    
    
    28,773
    
    
    
    
    
    
    
    30,942Total costs and expenses
    
    
    820,769
    
    
    
    676,935
    
    
    
    617,186Operating income
    
    
    237,145
    
    
    
    241,778
    
    
    
    178,560Interest expense, net
    
    
    4,513
    
    
    
    2,948
    
    
    
    3,061Income from continuing operations before income taxes
    
    
    232,632
    
    
    
    238,830
    
    
    
    175,499Provision for income taxes
    
    
    91,976
    
    
    
    90,875
    
    
    
    67,391Income from continuing operations
    
    
    140,656
    
    
    
    147,955
    
    
    
    108,108Income from discontinued operations, net of tax (Note 4)
    
    
    
    
    
    
    
    
    
    
    991Gain on sale of discontinued operations, net of tax (Note 4)
    
    
    
    
    
    
    
    
    
    
    32,893Net income
    
    $
    140,656
    
    
    $
    147,955
    
    
    $
    141,992Earnings per share (Notes 3 and 7)Basic:Income from continuing operations
    
    $
    1.59
    
    
    $
    1.69
    
    
    $
    1.26Income from discontinued operations, net
    
    
    
    
    
    
    
    
    
    
    0.01Gain on sale of discontinued operations, net
    
    
    
    
    
    
    
    
    
    
    0.38Net income
    
    $
    1.59
    
    
    $
    1.69
    
    
    $
    1.65Diluted:Income from continuing operations
    
    $
    1.53
    
    
    $
    1.62
    
    
    $
    1.21Income from discontinued operations, net
    
    
    
    
    
    
    
    
    
    
    0.01Gain on sale of discontinued operations, net
    
    
    
    
    
    
    
    
    
    
    0.37Net income
    
    $
    1.53
    
    
    $
    1.62
    
    
    $
    1.58Weighted average shares  basic
    
    
    88,727
    
    
    
    87,502
    
    
    
    85,957Dilutive effect of stock options
    
    
    2,968
    
    
    
    3,803
    
    
    
    3,729Weighted average shares  diluted
    
    
    91,695
    
    
    
    91,305
    
    
    
    89,686
 The accompanying notes are an integral part of these consolidated financial statements.
 45




---



##### 



Consolidated Balance Sheets
  (In thousands, except par values)December 31,
    
    2005
    
    
    2004AssetsCurrent assets:Cash and cash equivalents
    
    $
    21,337
    
    
    $
    1,577Accounts receivable, net of allowance for doubtful accounts
of $5,749 in 2005 and $5,128 in 2004
    
    
    203,289
    
    
    
    186,629Other current assets
    
    
    47,612
    
    
    
    30,171Total current assets
    
    
    272,238
    
    
    
    218,377Property and equipment, net
    
    
    73,518
    
    
    
    68,224Goodwill
    
    
    917,858
    
    
    
    824,904Other acquisition intangible assets, net
    
    
    102,283
    
    
    
    95,511Other assets, net
    
    
    97,079
    
    
    
    80,460Total assets
    
    $
    1,462,976
    
    
    $
    1,287,476Liabilities and Shareholders EquityCurrent liabilities:Short-term debt and current maturities of long-term debt
    
    $
    50,022
    
    
    $
    50,083Accounts payable
    
    
    45,212
    
    
    
    39,421Accrued salaries and bonuses
    
    
    31,349
    
    
    
    33,332Income taxes payable
    
    
    6,861
    
    
    
    Deferred income taxes
    
    
    1,723
    
    
    
    946Other current liabilities
    
    
    135,417
    
    
    
    99,886Total current liabilities
    
    
    270,584
    
    
    
    223,668Long-term debt, less current maturities
    
    
    80,035
    
    
    
    17Postretirement benefit obligations
    
    
    24,929
    
    
    
    28,850Deferred income taxes
    
    
    43,617
    
    
    
    26,115Other long-term liabilities
    
    
    22,937
    
    
    
    25,167Total liabilities
    
    
    442,102
    
    
    
    303,817Commitments and contingencies (Note 9)Shareholders equity:Preferred stock, $0.01 par value; 10,000 shares authorized,
no shares issued or outstanding
    
    
    
    
    
    
    Common stock, $0.10 par value; shares authorized  400,000;
issued  90,967 in 2005 and 89,426 in 2004
    
    
    9,097
    
    
    
    8,943Paid-in capital
    
    
    458,132
    
    
    
    418,773Retained earnings
    
    
    718,390
    
    
    
    577,734Accumulated other comprehensive loss, net
    
    
    (9,784
    )
    
    
    (1,317
    )Treasury stock, at cost, 4,340 shares in 2005 and
1,194 shares in 2004
    
    
    (154,961
    )
    
    
    (20,474
    )Total shareholders equity
    
    
    1,020,874
    
    
    
    983,659Total liabilities and shareholders equity
    
    $
    1,462,976
    
    
    $
    1,287,476
 The accompanying notes are an integral part of these consolidated financial statements.
 46




---



##### 



Consolidated Statements of Shareholders Equity
  AccumulatedOtherComprehensive
    
    
    Common
    
    
    Paid-in
    
    

    Retained
    
    
    Comprehensive
    
    
    Treasury(In thousands)
    
    Income
    
    
    Stock
    
    

    Capital
    
    

    Earnings
    
    
    Loss, Net
    
    
    Stock
    
    
    TotalBalance, December 31, 2002
    
    
    
    
    
    $
    8,655
    
    
    $
    345,426
    
    
    $
    287,787
    
    
    $
    (2,881
    )
    
    $
    (16,380
    )
    
    $
    622,607Net income
    
    $
    141,992
    
    
    
    
    
    
    
    
    
    
    
    141,992
    
    
    
    
    
    
    
    
    
    
    
    141,992Change in fair value of derivatives,
net of deferred taxes of $166
    
    
    249
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    249
    
    
    
    
    
    
    
    249Other
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43
    
    
    
    
    
    
    
    43Comprehensive income
    
    $
    142,284Restricted stock plans, net
    
    
    
    
    
    
    6
    
    
    
    3,659
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,665Stock options exercised
    
    
    
    
    
    
    114
    
    
    
    16,180
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,294Common stock redeemed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (99
    )
    
    
    (99
    )Stock purchased by employee
benefit trusts, net
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    (3,920
    )
    
    
    (3,898
    )Tax benefit of stock options exercised
    
    
    
    
    
    
    
    
    
    
    9,642
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,642Balance, December 31, 2003
    
    
    
    
    
    
    8,775
    
    
    
    374,929
    
    
    
    429,779
    
    
    
    (2,589
    )
    
    
    (20,399
    )
    
    
    790,495Net income
    
    $
    147,955
    
    
    
    
    
    
    
    
    
    
    
    147,955
    
    
    
    
    
    
    
    
    
    
    
    147,955Change in fair value of derivatives,
net of deferred taxes of $823
    
    
    1,235
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,235
    
    
    
    
    
    
    
    1,235Other
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37
    
    
    
    
    
    
    
    37Comprehensive income
    
    $
    149,227Restricted and other stock plans, net
    
    
    
    
    
    
    6
    
    
    
    4,891
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,897Stock options exercised
    
    
    
    
    
    
    162
    
    
    
    23,271
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,433Common stock redeemed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (151
    )
    
    
    (151
    )Stock distributed by employee
benefit trusts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76
    
    
    
    76Tax benefit of stock options exercised
    
    
    
    
    
    
    
    
    
    
    15,682
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,682Balance, December 31, 2004
    
    
    
    
    
    
    8,943
    
    
    
    418,773
    
    
    
    577,734
    
    
    
    (1,317
    )
    
    
    (20,474
    )
    
    
    983,659Net income
    
    $
    140,656
    
    
    
    
    
    
    
    
    
    
    
    140,656
    
    
    
    
    
    
    
    
    
    
    
    140,656Change in fair value of derivatives,
net of deferred taxes of $930
    
    
    1,396
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,396
    
    
    
    
    
    
    
    1,396Change in cumulative foreign
currency translation adjustment
    
    
    (9,863
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,863
    )
    
    
    
    
    
    
    (9,863
    )Comprehensive income
    
    $
    132,189Restricted and other stock plans, net
    
    
    
    
    
    
    9
    
    
    
    5,304
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,313Stock options exercised
    
    
    
    
    
    
    145
    
    
    
    18,093
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,238Common stock repurchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (125,592
    )
    
    
    (125,592
    )Stock purchased for employee
benefit trusts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,895
    )
    
    
    (8,895
    )Tax benefit of stock options exercised
    
    
    
    
    
    
    
    
    
    
    15,962
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,962Balance, December 31, 2005
    
    
    
    
    
    $
    9,097
    
    
    $
    458,132
    
    
    $
    718,390
    
    
    $
    (9,784
    )
    
    $
    (154,961
    )
    
    $
    1,020,874
 The accompanying notes are an integral part of these consolidated financial statements.
 47




---



##### 



Consolidated Statements of Cash Flows
  (In thousands)Year Ended December 31,
    
    2005
    
    2004
    
    2003Cash flows from operating activities:Net income
    
    $
    140,656
    
    
    $
    147,955
    
    
    $
    141,992Income from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (991
    )Gain on sale of discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (32,893
    )Income from continuing operations
    
    
    140,656
    
    
    
    147,955
    
    
    
    108,108Adjustments to reconcile income from continuing operations
to net cash provided by continuing operations:Depreciation and amortization
    
    
    76,671
    
    
    
    61,346
    
    
    
    53,120Non-cash components of other operating charges
    
    
    
    
    
    
    
    
    
    
    21,164Compensation recognized under employee stock plans, net
    
    
    5,314
    
    
    
    4,897
    
    
    
    3,665Tax benefit of stock options exercised
    
    
    15,962
    
    
    
    15,682
    
    
    
    9,642Gain on sale of minority investment
    
    
    
    
    
    
    (4,049
    )
    
    
    Changes in assets and liabilities, excluding effects
of acquisitions and divestitures:Accounts receivable, net
    
    
    (8,440
    )
    
    
    (22,841
    )
    
    
    (14,179
    )Other current assets, excluding income taxes
    
    
    (16,815
    )
    
    
    (9,453
    )
    
    
    4,703Deferred income taxes
    
    
    15,571
    
    
    
    30,730
    
    
    
    8,859Estimated income taxes
    
    
    8,640
    
    
    
    10,728
    
    
    
    (3,102
    )Current liabilities, excluding debt and income taxes
    
    
    18,567
    
    
    
    7,582
    
    
    
    9,109Other long-term liabilities, excluding debt
    
    
    (4,188
    )
    
    
    5,543
    
    
    
    (6,802
    )Net cash provided by continuing operations
    
    
    251,938
    
    
    
    248,120
    
    
    
    194,287Net cash provided by (used in) discontinued operations
    
    
    
    
    
    
    500
    
    
    
    (38,609
    )Total net cash provided by operating activities
    
    
    251,938
    
    
    
    248,620
    
    
    
    155,678Cash flows from investing activities:Acquisitions and investment, net of cash acquired
    
    
    (123,380
    )
    
    
    (229,314
    )
    
    
    (93,567
    )Cash proceeds from sale of businesses and minority investments
    
    
    
    
    
    
    3,549
    
    
    
    87,000Additions to property and equipment, net
    
    
    (28,682
    )
    
    
    (28,255
    )
    
    
    (20,645
    )Additions to other assets, net
    
    
    (43,026
    )
    
    
    (37,783
    )
    
    
    (21,286
    )Net cash used in investing activities
    
    
    (195,088
    )
    
    
    (291,803
    )
    
    
    (48,498
    )Cash flows from financing activities:Payments on Credit Facilities
    
    
    (95,000
    )
    
    
    (70,000
    )
    
    
    (153,000
    )Borrowings under Credit Facilities
    
    
    175,000
    
    
    
    70,000
    
    
    
    58,000Payments on Receivables Facility
    
    
    
    
    
    
    (70,000
    )
    
    
    (35,000
    )Borrowings under Receivables Facility
    
    
    
    
    
    
    70,000
    
    
    
    Payments on other debt
    
    
    (43
    )
    
    
    (2,008
    )
    
    
    (426
    )Changes in stock held by employee benefit trusts, net
    
    
    (8,895
    )
    
    
    76
    
    
    
    (3,898
    )Repurchase of common stock
    
    
    (125,592
    )
    
    
    
    
    
    
    Redemption of common stock
    
    
    (1
    )
    
    
    (151
    )
    
    
    (99
    )Proceeds from exercise of stock options
    
    
    18,238
    
    
    
    23,433
    
    
    
    16,294Net cash (used in) provided by financing activities
    
    
    (36,293
    )
    
    
    21,350
    
    
    
    (118,129
    )Effect of foreign currency exchange rates on cash and cash equivalents
    
    
    (797
    )
    
    
    
    
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    19,760
    
    
    
    (21,833
    )
    
    
    (10,949
    )Cash and cash equivalents, beginning of year
    
    
    1,577
    
    
    
    23,410
    
    
    
    34,359Cash and cash equivalents, end of year
    
    $
    21,337
    
    
    $
    1,577
    
    
    $
    23,410
 The accompanying notes are an integral part of these consolidated financial statements.
 48




---



##### 



Notes to Consolidated Financial Statements
  Nature of Operations
       Basis of Presentation
   Significant Accounting Policies
 Use of Estimates 
 Foreign Currency Translation 
 49




---



##### 



Notes
to Consolidated Financial Statements continued
  Earnings Per Share (EPS) 
 Revenue 
 Information Services 
 Marketing Services 
 Software Services 
  50




---



##### 



Notes to Consolidated Financial Statements continued
   Government Contracts 
 Pass-through Expense 
 Reimbursable Expenses 
 Other 
 Stock Options 
 51




---



##### 



Notes to Consolidated Financial Statements continued
   Year Ended December 31,
    
    2005
    
    2004
    
    2003Net income, as reported
    
    $
    140,656
    
    
    $
    147,955
    
    
    $
    141,992Add: Stock-based employee
compensation expense
included in reported
net income, net of
related tax effects
    
    
    3,455
    
    
    
    4,199
    
    
    
    3,311Deduct: Total stock-based
employee compensation
expense determined under
fair value based method for
all awards, net of related
tax effects
    
    
    (15,572
    )
    
    
    (12,655
    )
    
    
    (16,465
    )Pro forma net income
    
    $
    128,539
    
    
    $
    139,499
    
    
    $
    128,838Earnings per share:Basic  as reported
    
    $
    1.59
    
    
    $
    1.69
    
    
    $
    1.65Basic  pro forma
    
    
    1.45
    
    
    
    1.59
    
    
    
    1.50Diluted  as reported
    
    $
    1.53
    
    
    $
    1.62
    
    
    $
    1.58Diluted  pro forma
    
    
    1.40
    
    
    
    1.53
    
    
    
    1.45
  Year Ended December 31,
    
    2005
    
    2004
    
    2003Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    28
    %
    
    
    32
    %
    
    
    33
    %Risk-free interest rate
    
    
    3.7
    %
    
    
    2.8
    %
    
    
    2.8
    %Expected life in years
    
    
    4.85
    
    
    
    3.82
    
    
    
    4.23Weighted average fair value
of options granted
    
    $
    14.01
    
    
    $
    11.50
    
    
    $
    10.00
  Other Current Assets 
 December 31,
    
    2005
    
    2004Prepaid expenses
    
    $
    26,829
    
    
    $
    23,083Receivable from insurance carrier
on FTC Settlement
    
    
    11,000
    
    
    
    Other receivable from insurance carrier
    
    
    4,000
    
    
    
    Income tax receivable
    
    
    
    
    
    
    1,321Other
    
    
    5,783
    
    
    
    5,767$
    47,612
    
    
    $
    30,171
 Property and Equipment 
 December 31,
    
    2005
    
    2004Land, buildings, and improvements
    
    $
    27,106
    
    
    $
    25,218Data processing equipment
and furniture
    
    
    178,234
    
    
    
    162,407Less accumulated depreciation
    
    
    (131,822
    )
    
    
    (119,401
    )$
    73,518
    
    
    $
    68,224
  Goodwill 
 52




---



##### 



Notes to Consolidated Financial Statements continued
   Goodwill at
    
    Acquisitions
    
    Goodwill at(In thousands)
    
    December 31, 2004
    
    & Adjustments
    
    December 31, 2005Insurance Services
    
    $
    74,822
    
    
    $
    8,323
    
    
    $
    83,145Business Services
    
    
    478,572
    
    
    
    45
    
    
    
    478,617Government Services
    
    
    80,605
    
    
    
    76,471
    
    
    
    157,076Marketing Services
    
    
    190,905
    
    
    
    8,115
    
    
    
    199,020Total
    
    $
    824,904
    
    
    $
    92,954
    
    
    $
    917,858
 Goodwill at
    
    Acquisitions
    
    Goodwill at(In thousands)
    
    December 31, 2003
    
    & Adjustments
    
    December 31, 2004Insurance Services
    
    $
    48,036
    
    
    $
    26,786
    
    
    $
    74,822Business Services
    
    
    397,298
    
    
    
    81,274
    
    
    
    478,572Government Services
    
    
    9,084
    
    
    
    71,521
    
    
    
    80,605Marketing Services
    
    
    190,754
    
    
    
    151
    
    
    
    190,905Total
    
    $
    645,172
    
    
    $
    179,732
    
    
    $
    824,904
 Other Acquisition Intangible Assets 
 2005
    
    
    
    
    
    
    
    
    
    2004Accumulated
    
    
    
    
    
    
    
    
    
    Accumulated(In thousands)
    
    Gross
    
    Amortization
    
    Net
    
    Gross
    
    Amortization
    
    NetCustomer relationships
    
    $
    56,782
    
    
    $
    (24,809
    )
    
    $
    31,973
    
    
    $
    45,362
    
    
    $
    (14,906
    )
    
    $
    30,456Purchased data files
    
    
    35,499
    
    
    
    (6,250
    )
    
    
    29,249
    
    
    
    35,499
    
    
    
    (2,973
    )
    
    
    32,526Software
    
    
    31,188
    
    
    
    (15,581
    )
    
    
    15,607
    
    
    
    14,800
    
    
    
    (10,755
    )
    
    
    4,045Non-compete agreements
    
    
    15,007
    
    
    
    (6,691
    )
    
    
    8,316
    
    
    
    15,007
    
    
    
    (4,441
    )
    
    
    10,566Trademarks/trade names
    
    
    15,531
    
    
    
    
    
    
    
    15,531
    
    
    
    10,600
    
    
    
    
    
    
    
    10,600Other intangible assets
    
    
    10,913
    
    
    
    (9,306
    )
    
    
    1,607
    
    
    
    15,338
    
    
    
    (8,020
    )
    
    
    7,318Total
    
    $
    164,920
    
    
    $
    (62,637
    )
    
    $
    102,283
    
    
    $
    136,606
    
    
    $
    (41,095
    )
    
    $
    95,511
 Other Assets, Net 
 (In thousands)
 December 31,
    
    2005
    
    2004Software and databases developed
for internal use, net
    
    $
    67,089
    
    
    $
    56,705Purchased software, net
    
    
    21,807
    
    
    
    17,739Other
    
    
    8,183
    
    
    
    6,016$
    97,079
    
    
    $
    80,460
   53




---



##### 



Notes to Consolidated Financial Statements continued
   Other Current Liabilities 
 December 31,
    
    2005
    
    2004Unearned income and deferred revenue
    
    $
    43,980
    
    
    $
    31,952FTC settlement accrual and related costs
    
    
    19,000
    
    
    
    Acquisition earnout settlement accrual
    
    
    7,500
    
    
    
    Other
    
    
    64,937
    
    
    
    67,934$
    135,417
    
    
    $
    99,886
  Depreciation and Amortization Expense 
 (In thousands)
 Year Ended December 31,
    
    2005
    
    2004
    
    2003Property and equipment
    
    $
    25,674
    
    
    $
    21,174
    
    
    $
    21,205Other acquisition intangibles
    
    
    22,381
    
    
    
    14,824
    
    
    
    9,539Software and databases
developed for internal use
    
    
    17,354
    
    
    
    15,908
    
    
    
    13,680Purchased software
    
    
    10,966
    
    
    
    7,355
    
    
    
    6,349Other assets
    
    
    296
    
    
    
    2,085
    
    
    
    2,347Total
    
    $
    76,671
    
    
    $
    61,346
    
    
    $
    53,120
 Comprehensive Income 
 (In millions)
    
    2005
    
    2004Cumulative foreign currency
translation adjustment
    
    $
    (9,863
    )
    
    $
    Cash flow hedges
    
    
    (1
    )
    
    
    (1,397
    )Other
    
    
    80
    
    
    
    80Total
    
    $
    (9,784
    )
    
    $
    (1,317
    )
 Consolidated Statements of Cash Flows 
   (In thousands)
 Year Ended December 31,
    
    2005
    
    2004
    
    2003Fair value of assets acquired
    
    $
    166,310
    
    
    $
    274,034
    
    
    $
    102,779Less cash paid for acquisitions
and investment
    
    
    (138,675
    )
    
    
    (242,219
    )
    
    
    (94,644
    )Liabilities assumed
    
    $
    27,635
    
    
    $
    31,815
    
    
    $
    8,135
 Financial Instruments and Derivatives 
  54




---



##### 



Notes to Consolidated Financial Statements continued
   Allowance for Doubtful Accounts 
 Other New Accounting Pronouncements 
  Acquisitions, Investment and Divestiture
 Acquisitions 
 Business
    
    Date Acquired
    
    SegmentEzGov, Inc.
    
    May 2005
    
    Government ServicesMagnify, Inc.
    
    April 2005
    
    Insurance Servicesi2 Limited
    
    January 2005
    
    Government ServicesUSAHire, LLC
    
    December 2004
    
    Business ServicesPriority Data
Systems, Inc.
    
    December 2004
    
    Insurance ServicesInsurQuote, Inc.
    
    October 2004
    
    Insurance ServicesAIG Technologies, Inc.
    
    August 2004
    
    Insurance ServicesInvestigation
Technologies, LLC
d/b/a Rapsheets
    
    May 2004
    
    Business ServicesService Abstract Corp.
    
    April 2004
    
    Business ServicesADREM Profiles, Inc.,
Government Business
Services, LLC and
Advance Information
Resources Corporation
    
    April 2004
    
    Business ServicesCharles Jones, LLC and
Superior Information
Services, LLC
    
    April 2004
    
    Business ServicesiMapData.com, Inc.
    
    February 2004
    
    Government ServicesTemplar Corporation
    
    February 2004
    
    Government ServicesCITI NETWORK, Inc.
d/b/a Applicant
Screening and
Processing
    
    October 2003
    
    Business ServicesBridger Systems, Inc.
    
    September 2003
    
    Business ServicesinsuranceDecisions, Inc.
    
    September 2003
    
    Insurance ServicesTML Information
Services, Inc.
    
    August 2003
    
    Insurance ServicesIdentico Systems, LLC
    
    July 2003
    
    Business ServicesMortgage Asset Research
Institute, Inc.
    
    June 2003
    
    Business ServicesThe List Source, Inc.
d/b/a Kramer Lead
Marketing Group
    
    January 2003
    
    Marketing ServicesNational Data
Retrieval, Inc.
    
    January 2003
    
    Business Services
 55




---



##### 



Notes to Consolidated Financial Statements continued
     Current assets
    
    $
    13,459Property and equipment, net
    
    
    2,376Goodwill
    
    
    78,245Other acquisition intangible assets
    
    
    24,900Other assets
    
    
    216Total assets acquired
    
    
    119,196Current liabilities
    
    
    (15,144
    )Other long-term liabilities
    
    
    (590
    )Long-term deferred tax liability
    
    
    (7,470
    )Total liabilities assumed
    
    
    (23,204
    )Net assets acquired
    
    $
    95,992
   Weighted Average(In thousands)
    
    Amount
    
    Amortization PeriodSoftware
    
    $
    2,296
    
    
    five yearsTrademark/trade name
    
    
    1,000
    
    
    indefinite life assetTotal
    
    $
    3,296
  56




---



##### 



Notes to Consolidated Financial Statements continued
   Weighted Average(In thousands)
    
    Amount
    
    Amortization PeriodPurchased data files
    
    $
    33,390
    
    
    thirteen yearsCustomer relationships
    
    
    8,448
    
    
    five yearsSoftware
    
    
    2,750
    
    
    three yearsTechnology
    
    
    2,225
    
    
    two yearsTrademark/tradename
    
    
    7,100
    
    
    indefinite life assetNoncompete agreements
    
    
    4,916
    
    
    six yearsTotal
    
    $
    58,829
   Weighted Average(In thousands)
    
    Amount
    
    Amortization PeriodCustomer relationships
    
    $
    16,380
    
    
    five yearsPurchased data files
    
    
    1,529
    
    
    eight yearsSoftware
    
    
    1,018
    
    
    five yearsOther intangible assets
    
    
    688
    
    
    eleven yearsTrademark/tradename
    
    
    200
    
    
    indefinite life assetNoncompete agreements
    
    
    190
    
    
    five yearsTotal
    
    $
    20,005
    Investment 
 Divestitures 
 57




---



##### 



Notes to Consolidated Financial Statements continued
   Two Months Ended(In thousands)
    
    February 28, 2003Total revenue
    
    $
    11,234Income from operations before income taxes
    
    $
    1,609Provision for income taxes
    
    
    618Income from discontinued operations, net of tax
    
    $
    991Gain on sale of discontinued operations
    
    $
    61,201Provision for income taxes
    
    
    28,308Gain on sale of discontinued operations, net of tax
    
    $
    32,893
 Subsequent Event 
 Debt and Other Financing
  (In thousands)December 31,
    
    2005
    
    2004Credit Facility
    
    $
    80,000
    
    
    $
    Receivables Facility
    
    
    50,000
    
    
    
    50,000Capital leases
    
    
    57
    
    
    
    100130,057
    
    
    
    50,100Less current maturities
    
    
    (50,022
    )
    
    
    (50,083
    )$
    80,035
    
    
    $
    17
     58




---



##### 



Notes
to Consolidated Financial Statements continued
      6 Income Taxes
  (In thousands)Year Ended December 31,
    
    2005
    
    
    2004
    
    
    2003Current:Federal
    
    $
    67,089
    
    
    $
    53,085
    
    
    $
    78,029State
    
    
    8,779
    
    
    
    5,970
    
    
    
    9,792Total current
    
    
    75,868
    
    
    
    59,055
    
    
    
    87,821Deferred:Federal
    
    
    12,501
    
    
    
    27,485
    
    
    
    8,008State
    
    
    3,270
    
    
    
    4,335
    
    
    
    488Foreign
    
    
    337
    
    
    
    
    
    
    
    Total deferred
    
    
    16,108
    
    
    
    31,820
    
    
    
    8,496Total
    
    $
    91,976
    
    
    $
    90,875
    
    
    $
    96,317
  Year Ended December 31,
    
    
    2005
    
    
    2004
    
    
    2003Federal statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State and local taxes,
net of federal tax benefit
    
    
    3.4
    
    
    
    2.8
    
    
    
    2.3Other
    
    
    1.1
    
    
    
    0.3
    
    
    
    1.1Effective rate for
continuing operations
    
    
    39.5
    
    
    
    38.1
    
    
    
    38.4Effective rate impact from
discontinued operations
    
    
    
    
    
    
    
    
    
    
    2.0Overall effective rate
    
    
    39.5
    %
    
    
    38.1
    %
    
    
    40.4
    %
  59




---



##### 



Notes
to Consolidated Financial Statements continued
   (In thousands)December 31,
    
    2005
    
    2004Deferred income tax assets:Postretirement benefits
    
    $
    10,477
    
    
    $
    12,520Reserves and accrued expenses
    
    
    2,789
    
    
    
    2,733Employee compensation programs
    
    
    13,323
    
    
    
    11,405Other
    
    
    5,131
    
    
    
    6,754Total deferred income tax assets
    
    
    31,720
    
    
    
    33,412Deferred income tax liabilities:Purchased software, data files,
technology, and other assets
    
    
    (29,868
    )
    
    
    (25,519
    )Goodwill
    
    
    (25,867
    )
    
    
    (11,271
    )Depreciation
    
    
    (16,569
    )
    
    
    (19,597
    )Deferred expenses
    
    
    (4,431
    )
    
    
    (3,679
    )Other
    
    
    (325
    )
    
    
    (407
    )Total deferred income tax liabilities
    
    
    (77,060
    )
    
    
    (60,473
    )Net deferred income tax liabilities
    
    $
    (45,340
    )
    
    $
    (27,061
    )
   7
    
    Shareholders Equity
 Stock Options 
 December 31,
    
    2005
    
    2004
    
    2003Avg.
    
    
    
    
    
    Avg.
    
    
    
    
    
    Avg.Shares
    
    Price
    
    Shares
    
    Price
    
    Shares
    
    PriceBalance, beginning of year
    
    
    11,609
    
    
    
    $25.83
    
    
    
    12,121
    
    
    
    $23.17
    
    
    
    12,260
    
    
    
    $21.44Granted
    
    
    1,593
    
    
    
    45.86
    
    
    
    1,358
    
    
    
    38.84
    
    
    
    1,571
    
    
    
    33.56Canceled/forfeited
    
    
    (335
    )
    
    
    40.25
    
    
    
    (233
    )
    
    
    35.50
    
    
    
    (547
    )
    
    
    32.24Exercised
    
    
    (1,558
    )
    
    
    14.18
    
    
    
    (1,637
    )
    
    
    15.28
    
    
    
    (1,163
    )
    
    
    14.71Balance, end of year
    
    
    11,309
    
    
    
    $29.83
    
    
    
    11,609
    
    
    
    $25.83
    
    
    
    12,121
    
    
    
    $23.17Exercisable at end of year
    
    
    6,277
    
    
    
    $21.54
    
    
    
    6,728
    
    
    
    $17.29
    
    
    
    7,128
    
    
    
    $14.97
 60




---



##### 



Notes
to Consolidated Financial Statements continued
   Options Outstanding
    
    Options ExercisableWeighted Average
    
    
    Weighted
    
    
    
    
    
    
    WeightedRemaining
    
    
    Average
    
    
    
    
    
    
    AverageContractual Life
    
    
    Exercise
    
    
    
    
    
    
    ExerciseRange of Exercise Prices
    
    Shares
    
    
    in Years
    
    
    Price
    
    
    Shares
    
    
    Price$9.224  $13.836
    
    
    1,617
    
    
    
    1.9
    
    
    
    10.33
    
    
    
    1,617
    
    
    
    10.33$13.837  $18.448
    
    
    1,028
    
    
    
    3.0
    
    
    
    13.98
    
    
    
    1,028
    
    
    
    13.98$18.449  $23.060
    
    
    861
    
    
    
    4.0
    
    
    
    19.12
    
    
    
    861
    
    
    
    19.12$23.061  $27.672
    
    
    1,386
    
    
    
    4.9
    
    
    
    25.98
    
    
    
    1,386
    
    
    
    25.98$27.673  $32.284
    
    
    223
    
    
    
    4.1
    
    
    
    29.34
    
    
    
    177
    
    
    
    29.16$32.285  $36.896
    
    
    1,285
    
    
    
    7.1
    
    
    
    33.53
    
    
    
    192
    
    
    
    33.85$36.897  $41,724
    
    
    2,743
    
    
    
    6.9
    
    
    
    38.91
    
    
    
    934
    
    
    
    39.01$41,725  $46.120
    
    
    2,166
    
    
    
    8.2
    
    
    
    44.97
    
    
    
    82
    
    
    
    43.24
   Shareholder Rights Plan 
 Grantor Trusts 
 Share Repurchase 
 61




---



##### 



Notes
to Consolidated Financial Statements continued
   Treasury Stock 
 8 Employee Benefits
 401(k) Profit Sharing Plan 
  Deferred Compensation Plan 
 Postretirement Benefits 
  (In thousands)December 31,
    
    2005
    
    
    2004Change in benefit obligation:Obligation at beginning of year
    
    $
    31,215
    
    
    $
    40,347Service cost
    
    
    56
    
    
    
    100Interest cost
    
    
    1,682
    
    
    
    1,801Actuarial loss (gain)
    
    
    1,875
    
    
    
    (7,543
    )Anticipated future Medicare subsidies
    
    
    (3,504
    )
    
    
    Benefit payments, net of participant
contributions of $2,186 in 2005
and $1,791 in 2004
    
    
    (5,364
    )
    
    
    (3,490
    )Obligation at end of year
    
    
    25,960
    
    
    
    31,215Change in plan assets:Fair value of plan assets at beginning of year
    
    
    
    
    
    
    Employer contributions
    
    
    5,364
    
    
    
    3,490Benefit payments
    
    
    (5,364
    )
    
    
    (3,490
    )Fair value of plan assets at end of year
    
    
    
    
    
    
    Funded status:Funded status at end of year
and net amount recognized
    
    
    (25,960
    )
    
    
    (31,215
    )Unrecognized prior service cost
    
    
    (446
    )
    
    
    (741
    )Unrecognized gain
    
    
    (3,523
    )
    
    
    (1,894
    )Net amount recognized
    
    
    (29,929
    )
    
    
    (33,850
    )Less current portion
    
    
    (5,000
    )
    
    
    (5,000
    )Accrued benefit cost
    
    $
    (24,929
    )
    
    $
    (28,850
    )
 62




---



##### 



Notes to Consolidated Financial Statements continued
   (In thousands)Year Ended December 31,
    
    2005
    
    2004
    
    2003Service cost
    
    $
    56
    
    
    $
    100
    
    
    $
    51Interest cost on accumulated
benefit obligation
    
    
    1,682
    
    
    
    1,801
    
    
    
    2,108Amortization of prior
service cost
    
    
    (295
    )
    
    
    (375
    )
    
    
    (583
    )Amortization of gain
    
    
    
    
    
    
    
    
    
    
    (71
    )Curtailment gain
    
    
    
    
    
    
    
    
    
    
    (1,020
    )Net periodic postretirement
benefit expense
    
    $
    1,443
    
    
    $
    1,526
    
    
    $
    485
   Year Ended December 31,
    
    2005
    
    2004
    
    2003Discount rate used to
determine accumulated
postretirement benefit
obligation at December 31
    
    
    5.50
    %
    
    
    5.75
    %
    
    
    5.75
    %Discount rate used to
determine net periodic
postretirement benefit
expense
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    6.75
    %Initial health care cost
trend rate
    
    
    10.33
    %
    
    
    11.33
    %
    
    
    12.33
    %Ultimate health care cost
trend rate
    
    
    5.25
    %
    
    
    5.25
    %
    
    
    5.50
    %Year ultimate health care cost
trend rate reached
    
    
    2013
    
    
    
    2013
    
    
    
    2012
  1-Percentage
    
    1-Percentage(In thousands)
    
    Point Increase
    
    Point DecreaseEffect on total APBO
    
    $
    261
    
    
    $
    (242
    )Effect on total service cost
plus interest cost
    
    $
    22
    
    
    $
    (20
    )
  (In thousands)
    
    Before Medicare
    
    After MedicareProjected Benefit Payments
    
    Subsidy
    
    Subsidy2006
    
    $
    3,741
    
    
    $
    2,8652007
    
    
    3,486
    
    
    
    2,5122008
    
    
    3,240
    
    
    
    2,1802009
    
    
    3,034
    
    
    
    2,6792010
    
    
    2,825
    
    
    
    2,4742011  2015
    
    
    11,923
    
    
    
    11,582
  Commitments and Contingencies
 Leases 
  (In thousands)Year
    
    Amount2006
    
    $
    18,1262007
    
    
    12,3952008
    
    
    8,9322009
    
    
    8,0442010
    
    
    6,700Thereafter
    
    
    17,276$
    71,473
 Change in Control Provisions in Employment Agreements 
 63




---



##### 



Notes to Consolidated Financial Statements continued
  Litigation and Fraudulent Data Access  Fresco, et al. v. Automotive Directions Inc., et al.
     64




---



##### 



Notes to Consolidated Financial Statements continued
      Harrington, et al. v. ChoicePoint,
 Wilson v.
ChoicePoint Inc.,
 In re ChoicePoint Inc.
Securities Litigation,
 65




---



##### 



Notes to Consolidated Financial Statements continued
   In re ChoicePoint Inc. Derivative
Litigation,
 Learch v. Smith, et al.,
     Other Operating Charges
  66




---



##### 



Notes to Consolidated Financial Statements continued
    Insurance
    
    Business
    
    Marketing
    
    Government(In millions)
    
    Services
    
    Services
    
    Services
    
    Services
    
    Other
    
    Total2003Asset impairments
    
    $
    1.1
    
    
    $
    9.8
    
    
    $
    0.8
    
    
    
    
    
    
    $
    3.7
    
    
    $
    15.4Write-down of acquisition intangibles
    
    $
    0.3
    
    
    $
    0.6
    
    
    $
    5.1
    
    
    
    
    
    
    
    
    
    
    $
    6.0
 Segment Disclosures
  67




---



##### 



Notes to Consolidated Financial Statements continued
  December 31, 2005
    
    December 31, 2004
    
    December 31, 2003Operating
    
    
    
    
    
    Operating
    
    
    
    
    
    Operating(In thousands)
    
    Revenue
    
    Income
    
    Revenue
    
    Income
    
    Revenue
    
    IncomeInsurance Services
    
    $
    407,489
    
    
    $
    221,632
    
    
    $
    352,725
    
    
    $
    195,715
    
    
    $
    309,124
    
    
    $
    172,518Business Services(a)
    
    
    380,192
    
    
    
    81,999
    
    
    
    349,881
    
    
    
    73,438
    
    
    
    276,148
    
    
    
    56,540Government Services
    
    
    148,249
    
    
    
    20,889
    
    
    
    83,934
    
    
    
    21,464
    
    
    
    63,335
    
    
    
    14,540Marketing ServicesMarketing Services service revenue
    
    
    91,529
    
    
    
    15,899
    
    
    
    93,389
    
    
    
    18,651
    
    
    
    96,642
    
    
    
    21,849Reimbursable expenses
    
    
    28,057
    
    
    
    
    
    
    
    34,280
    
    
    
    
    
    
    
    45,395
    
    
    
    Marketing Services
    
    
    119,586
    
    
    
    15,899
    
    
    
    127,669
    
    
    
    18,651
    
    
    
    142,037
    
    
    
    21,849Royalty
    
    
    2,398
    
    
    
    1,722
    
    
    
    4,504
    
    
    
    2,062
    
    
    
    5,102
    
    
    
    2,068Corporate and shared(b)
    
    
    
    
    
    
    (76,223
    )
    
    
    
    
    
    
    (69,552
    )
    
    
    
    
    
    
    (58,013
    )Other operating charges (Note 10)
    
    
    
    
    
    
    (28,773
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,942
    )Total
    
    $
    1,057,914
    
    
    $
    237,145
    
    
    $
    918,713
    
    
    $
    241,778
    
    
    $
    795,746
    
    
    $
    178,560
 Assets
    
    Depreciation and AmortizationDecember 31,
    
    December 31,(In thousands)
    
    2005
    
    2004
    
    2003
    
    2005
    
    2004
    
    2003Insurance Services
    
    $
    243,124
    
    
    $
    214,033
    
    
    $
    174,909
    
    
    $
    11,343
    
    
    $
    8,305
    
    
    $
    9,583Business Services
    
    
    666,817
    
    
    
    669,773
    
    
    
    530,861
    
    
    
    30,090
    
    
    
    25,729
    
    
    
    19,775Government Services
    
    
    264,561
    
    
    
    140,775
    
    
    
    43,578
    
    
    
    18,777
    
    
    
    10,157
    
    
    
    8,306Marketing Services
    
    
    232,334
    
    
    
    228,057
    
    
    
    216,371
    
    
    
    6,441
    
    
    
    6,762
    
    
    
    8,049Royalty
    
    
    
    
    
    
    347
    
    
    
    4,317
    
    
    
    
    
    
    
    1,356
    
    
    
    1,697Unallocated and Other (c)
    
    
    56,140
    
    
    
    34,491
    
    
    
    51,248
    
    
    
    10,020
    
    
    
    9,037
    
    
    
    5,710Continuing Operations
    
    
    1,462,976
    
    
    
    1,287,476
    
    
    
    1,021,284
    
    
    
    76,671
    
    
    
    61,346
    
    
    
    53,120CPCS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    159Total
    
    $
    1,462,976
    
    
    $
    1,287,476
    
    
    $
    1,021,284
    
    
    $
    76,671
    
    
    $
    61,346
    
    
    $
    53,279
 (a)
    
    As announced on March 4, 2005, the Company discontinued the sale of certain information
services offered by its Business Services Segment (Note 9).(b)
    
    Corporate and shared expenses represent costs of support functions, research and development
initiatives, incentives and Profit sharing that benefit all segments.(c)
    
    Unallocated and Other includes certain corporate items that are not allocated to the segments.
  Related Party Transactions
    68




---



##### 



Notes to Consolidated Financial Statements continued
  Quarterly Financial Summary (Unaudited)
  (In thousands, except per share data)
    
    First
    
    Second
    
    Third
    
    FourthYear Ended December 31, 2005
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    TotalService revenue
    
    $
    252,739
    
    
    $
    259,418
    
    
    $
    267,261
    
    
    $
    250,439
    
    
    $
    1,029,857Reimbursable expenses
    
    
    6,543
    
    
    
    6,623
    
    
    
    7,480
    
    
    
    7,411
    
    
    
    28,057Total revenue
    
    
    259,282
    
    
    
    266,041
    
    
    
    274,741
    
    
    
    257,850
    
    
    
    1,057,914Cost of service revenue
    
    
    131,387
    
    
    
    139,533
    
    
    
    139,183
    
    
    
    129,484
    
    
    
    539,587Reimbursable expenses
    
    
    6,543
    
    
    
    6,623
    
    
    
    7,480
    
    
    
    7,411
    
    
    
    28,057Gross Profit
    
    
    121,352
    
    
    
    119,885
    
    
    
    128,078
    
    
    
    120,955
    
    
    
    490,270Operating income(a)
    
    
    61,088
    
    
    
    58,853
    
    
    
    64,977
    
    
    
    52,227
    
    
    
    237,145Net income
    
    
    36,970
    
    
    
    36,418
    
    
    
    39,584
    
    
    
    27,684
    
    
    
    140,656EPS, basic
    
    
    0.42
    
    
    
    0.41
    
    
    
    0.44
    
    
    
    0.31
    
    
    
    1.59EPS, diluted
    
    
    0.40
    
    
    
    0.40
    
    
    
    0.43
    
    
    
    0.30
    
    
    
    1.53
 (In thousands, except per share data)
    
    First
    
    Second
    
    Third
    
    FourthYear Ended December 31, 2004
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    TotalService revenue
    
    $
    204,385
    
    
    $
    223,700
    
    
    $
    231,466
    
    
    $
    224,882
    
    
    $
    884,433Reimbursable expenses
    
    
    12,860
    
    
    
    7,691
    
    
    
    6,149
    
    
    
    7,580
    
    
    
    34,280Total revenue
    
    
    217,245
    
    
    
    231,391
    
    
    
    237,615
    
    
    
    232,462
    
    
    
    918,713Cost of service revenue
    
    
    110,771
    
    
    
    116,528
    
    
    
    118,750
    
    
    
    111,793
    
    
    
    457,842Reimbursable expenses
    
    
    12,860
    
    
    
    7,691
    
    
    
    6,149
    
    
    
    7,580
    
    
    
    34,280Gross Profit
    
    
    93,614
    
    
    
    107,172
    
    
    
    112,716
    
    
    
    113,089
    
    
    
    426,591Operating income
    
    
    54,271
    
    
    
    59,491
    
    
    
    64,036
    
    
    
    63,980
    
    
    
    241,778Net income
    
    
    33,262
    
    
    
    36,323
    
    
    
    39,153
    
    
    
    39,217
    
    
    
    147,955EPS, basic
    
    
    0.38
    
    
    
    0.42
    
    
    
    0.45
    
    
    
    0.45
    
    
    
    1.69EPS, diluted
    
    
    0.37
    
    
    
    0.40
    
    
    
    0.43
    
    
    
    0.43
    
    
    
    1.62
  (a)
    
    The Company recorded other operating charges of $5.4 million, $6.0 million, $4.0 million and
$11.8 million in the first, second, third and fourth quarters of 2005 respectively related to
specific expenses of the fraudulent data access that is discussed in Note 10. Additionally, in the
fourth quarter of 2005, the Company recorded $1.5 million related to the abandonment of certain
leases related to the consolidation of facilities. The effect of these items on net income was $3.3
million or $0.04 per share in the first quarter of 2005, $3.7 million or $0.04 per share in the
second quarter of 2005, $2.5 million or $0.03 per share in the third quarter of 2005 and $12.1
million or $0.14 per share in the fourth quarter of 2005.
 69




---



##### 



Board of Directors and Elected Officers
   Board of Directors
 1*
 3
 2
 3*, 4, 5
 1, 5*
 2*, 4, 5
 1, 4*, 5
 3
 1, 2
 
  1.
    
    Executive Committee2.
    
    Audit Committee3.
    
    Privacy & Public Responsibility Committee4.
    
    Management Compensation & Benefits Committee5.
    
    Corporate Governance & Nominating Committee*
    
    Denotes Committee Chairperson
 Elected Officers
 
 
 
 
 
 
 
 
 
 
 *
    
    Also member of the ChoicePoint senior management team prior to the Spinoff in 1997.
 70




---



##### 



Shareholder Information
  Annual Meeting
 Market Information  www.choicepoint.com
  Managements Certifications
 Quarterly Stock Performance
 High
    
    LowFirst Quarter 2004
    
    $
    38.95
    
    
    $
    36.15Second Quarter 2004
    
    
    46.10
    
    
    
    37.87Third Quarter 2004
    
    
    45.65
    
    
    
    39.91Fourth Quarter 2004
    
    
    46.49
    
    
    
    40.72First Quarter 2005
    
    $
    47.95
    
    
    $
    36.35Second Quarter 2005
    
    
    41.75
    
    
    
    36.64Third Quarter 2005
    
    
    43.89
    
    
    
    39.42Fourth Quarter 2005
    
    
    44.65
    
    
    
    40.55
 Analyst Coverage  www.choicepoint.com.
 Dividend Policy
 Investor Information  www.choicepoint.com,
  
  Conference Calls  www.choicepoint.com.
 Transfer Agent and Registrar
 
 Independent Registered Public Accounting Firm
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