Back to GetFilings.com
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 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 (I.R.S. Employer
Incorporation or Organization) Identification No.)
1000 ALDERMAN DRIVE 30005
ALPHARETTA, GEORGIA (Zip Code)
(Address of Principal Executive Offices)
(770) 752-6000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED
------------------- ----------
Common Stock, par value $.10 per share New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K |_|
Aggregate market value of the voting stock held by non-affiliates of
the Registrant: $3,356,260,076 as of March 15, 2002.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. 63,714,722 shares of
Common Stock, par value $.10 per share, outstanding as of March 15, 2002.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of ChoicePoint Inc.'s Proxy Statement relating to the 2002
Annual Meeting of Shareholders are incorporated herein by reference in Part III,
Items 10 (as related to Directors), 11, 12 and 13.
Portions of ChoicePoint Inc.'s Annual Report to Shareholders for the
year ended December 31, 2001 are incorporated herein by reference in Parts II
and IV.
ChoicePoint Inc.'s Current Report on Form 8-K, filed on March 22, 2001,
is incorporated herein by reference in Part II, Item 9.
TABLE OF CONTENTS
PAGE
Part I................................................................................................ 1
Item 1. Business. .............................................................................. 1
Item 2. Properties.............................................................................. 6
Item 3. Legal Proceedings....................................................................... 6
Item 4. Submission of Matters to a Vote of Security Holders..................................... 7
Part II.............................................................................................. 9
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters .............. 9
Item 6. Selected Financial Data................................................................. 9
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations... 9
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.............................. 13
Item 8. Financial Statements and Supplementary Data............................................. 13
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.... 14
Part III.............................................................................................. 15
Item 10. Directors and Executive Officers of the Registrant..................................... 15
Item 11. Executive Compensation................................................................. 15
Item 12. Security Ownership of Certain Beneficial Owners and Management......................... 15
Item 13. Certain Relationships and Related Transactions......................................... 15
Part IV............................................................................................... 15
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K........................ 15
THIS FORM 10-K AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY
CHOICEPOINT INC. OR ITS MANAGEMENT CONTAIN STATEMENTS WHICH MAY CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED BY THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. THOSE STATEMENTS AND INFORMATION ARE
BASED ON MANAGEMENT'S BELIEFS, PLANS, EXPECTATIONS AND ASSUMPTIONS AND ON
INFORMATION CURRENTLY AVAILABLE TO CHOICEPOINT. THE WORDS "MAY," "SHOULD,"
"EXPECT," "ANTICIPATE," "INTEND," "PLAN," "CONTINUE," "BELIEVE," "SEEK,"
"ESTIMATE," AND SIMILAR EXPRESSIONS USED IN THIS REPORT THAT DO NOT RELATE TO
HISTORICAL FACTS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS.
THE FORWARD-LOOKING STATEMENTS IN THIS REPORT ARE NOT GUARANTEES OF
FUTURE PERFORMANCE AND INVOLVE CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS.
SUCH RISKS, UNCERTAINTIES AND ASSUMPTIONS INCLUDE, BUT ARE NOT LIMITED TO THOSE
DESCRIBED IN ITEM 7, "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS--RISK FACTORS." MANY OF SUCH FACTORS ARE
BEYOND CHOICEPOINT'S ABILITY TO CONTROL OR PREDICT. AS A RESULT, CHOICEPOINT'S
FUTURE ACTIONS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND THE MARKET PRICE
OF CHOICEPOINT'S COMMON STOCK COULD DIFFER MATERIALLY FROM THOSE EXPRESSED IN
ANY FORWARD-LOOKING STATEMENTS MADE BY CHOICEPOINT. DO NOT PUT UNDUE RELIANCE ON
FORWARD-LOOKING STATEMENTS. CHOICEPOINT DOES NOT INTEND TO PUBLICLY UPDATE ANY
FORWARD-LOOKING STATEMENTS THAT MAY BE MADE FROM TIME TO TIME BY, OR ON BEHALF
OF, CHOICEPOINT, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR
OTHERWISE.
i
PART I
ITEM 1. BUSINESS
GENERAL
ChoicePoint Inc., a Georgia corporation ("ChoicePoint" or the
"Company"), is the leading provider of identification and credential
verification services which transform data into Actionable Intelligence(TM).
ChoicePoint became an independent public company in August 1997 through the
combination of the businesses that had comprised the Insurance Services Group of
Equifax Inc. ("Equifax") within a separate company and the subsequent spinoff
(the "Spinoff") of the Company's outstanding stock by Equifax as a stock
dividend to the shareholders of Equifax. References to ChoicePoint or the
Company mean ChoicePoint Inc., its subsidiaries and divisions after the Spinoff
and the Insurance Services Group of Equifax prior to the Spinoff.
Based on market share, ChoicePoint is a leading provider of risk
management and fraud prevention information and related technology solutions to
the insurance industry. The Company also offers risk management and fraud
prevention solutions to organizations in other industries. The Company operates
its business through two primary service groups: 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. 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. The Business & Government Services group provides
information products and services and direct marketing services primarily 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,
people and shareholder locator information services, and DNA identification
services.
ChoicePoint's strategic goal is to be a leading provider of enhanced
information services to a broad range of industries. The Company is continuing
to expand its data distribution, data gathering and technological capabilities,
and believes that it is positioned to offer a variety of new products to a
diverse set of industries. The Company intends to accomplish its goals by
expanding its presence in business and government markets, pursuing acquisitions
and strategic alliances, developing and enhancing key technological capabilities
and maintaining solid financial performance.
STRATEGIC ACQUISITIONS, DIVESTITURES AND ALLIANCES
The Company's acquisition strategy is to purchase or partner with
organizations that add new data, markets and technology to ChoicePoint's
operations.
To add to its drug testing medical review officer offerings, in 1997
ChoicePoint acquired the assets of Drug Free, Inc., a drug testing information
services company. In April 1998, ChoicePoint acquired the assets of Attest
National Drug Testing, Inc., a drug testing information services company, and in
June 1998 Application Profiles, Inc., a full service background investigation
company. In October 1998, the Company acquired Informus Corporation ("Informus")
in order to leverage their Internet technology and expand its automated
offerings in the pre-employment screening market. The Informus acquisition
allows the Company to provide a complete range of Web-based solutions by
integrating its pre-employment background and drug testing services over the
Internet to its corporate customers, and the acquisition provides further growth
opportunities for the Company in the small to
1
mid-sized company market. Also in November 1998, the Company acquired
Tyler-McLennon, Inc., a provider of employment background screening services and
record searches.
In October 1998, the Company acquired ChoicePoint Direct Inc., formerly
known as Customer Development Corporation ("ChoicePoint Direct"). ChoicePoint
Direct is a full-service, fully integrated database marketing company providing
customized marketing programs primarily for clients in the insurance, consumer
finance, publishing and banking industries.
In November 1998, the Company acquired EquiSearch Services, Inc.
("EquiSearch"). The EquiSearch acquisition allowed the Company to expand its
value-added applications of Company data and to offer consumer-benefit services.
EquiSearch's primary function is to contract with companies or stock transfer
agents to locate lost stockholders of Fortune 1000 and other public
corporations.
In December 1998, in order to increase the Company's presence in the
personal automobile insurance market, ChoicePoint acquired DATEQ Information
Network, Inc. ("DATEQ"), a provider of underwriting services to that market. The
DATEQ acquisition allowed the Company to bring enhanced risk assessment products
and services to its core insurance customer base.
Also in December 1998, the Company sold its life and health insurance
field underwriting services and insurance claim investigation services to PMSI
Services, Inc. This transaction, when combined with the December 1997 sale of
the paramedical examination business to Pediatric Services of America, Inc.,
completed ChoicePoint's strategy of exiting the labor-intensive life and health
and investigative field businesses.
In May 1999, the Company purchased the assets of Washington Document
Service, Inc., a leading nationwide court document research and retrieval
company serving the legal market, which complements the Company's existing
public record service. In July 1999, the Company acquired Data Tracks
Technology, Inc., a public record information company based in Sarasota,
Florida. This acquisition strengthens the Company's online public record data in
the Florida market and brings a strong web-based solution that is leveragable
into certain markets and customers. In November 1999, the Company acquired the
assets of DataMart, Inc. which provides software database services for
ChoicePoint companies.
In January 2000, the Company completed the sale of its operations in
the United Kingdom to Experian Limited, including the CUE UK database, a
proprietary database containing home and motor insurance claims information.
Also in January 2000, the Company purchased Statewide Data Services, Inc.
("SDS"), the insurance industry's largest provider of prospecting leads and
related services to property and casualty agents. Management believes that this
acquisition, combined with the Company's underwriting information and direct
marketing services, provides the insurance industry with a complete and
integrated suite of direct marketing products and services.
Effective February 1, 2000, the Company acquired NSA Resources, Inc.
("NSA"), one of the largest independent drug testing administration companies in
the United States, to strengthen the Company's position as a leading
single-source provider of pre-employment solutions. NSA contracts with customers
as a third-party administrator of drug tests used for determining employment
eligibility.
On May 16, 2000, the Company completed a merger with DBT Online, Inc.,
a public record services provider ("DBT") and competitor of ChoicePoint Public
Records Group ("ChoicePoint PRG"), whereby DBT shareholders received .525 shares
(pre-split) of newly-issued shares of ChoicePoint common stock for each share of
DBT common stock owned. Headquartered in Boca Raton, Florida, DBT serves
corporations and the legal, insurance and investigative markets.
In October 2000, the Company acquired RRS Police Records Management,
Inc., a provider of police reports and related services to the property and
casualty industry. In November 2000 the Company acquired the policy processing
and interface management services assets of VIS'N Service Corporation and the
data collection assets of
2
Cat Data Group, LLC. In December 2000, the Company acquired the assets of Drug
Free Consortium, to provide additional drug testing services.
In January 2001, the Company acquired BTi Employee Screening Services,
Inc. ("BTi"), an employee pre-screening services company and ABI Consulting
Inc., a third-party administrator of workplace drug and alcohol testing
programs. In February 2001, the Company acquired Insurity Solutions, Inc., a
provider of Internet-based insurance rating, underwriting and policy servicing
technology.
In March 2001, the Company acquired certain assets of National Medical
Review Offices, Inc., a large provider of medical review office services. In
April 2001, the Company acquired The Bode Technology Group, Inc. ("Bode Labs"),
a premier provider of DNA identification services.
In July 2001, the Company acquired Marketing Information & Technology,
Inc. ("MITI"), a provider of large-scale direct marketing systems for Fortune
500 clients, and the pre-employment and drug testing businesses of Pinkerton's,
Inc., a unit of Securitas AB of Sweden.
In August 2001, the Company sold the Osborn Group Inc., its laboratory
services business, to LabOne, Inc., which completes the Company's strategy to
exit the life and health insurance market.
In January 2002, the Company acquired certain assets from Experian
Information Solutions, Inc. consisting of on-line consumer credit reporting,
marketing and pre-screen list extract services for the insurance market.
PRODUCTS AND CUSTOMERS
As indicated above, the Company operates through two primary service
groups: Insurance Services and Business & Government Services. ChoicePoint's
offices are located throughout the United States. The Company's business is not
materially seasonal. The following table reflects the revenue generated by each
of ChoicePoint's two primary service groups, and from the royalty and divested
and discontinued product lines, from 1999 through 2001 and the percentage
contribution by each group to ChoicePoint's revenue for each such year. The
royalty revenue is generated from laser technology patents held by the Company.
The remaining patents underlying this revenue expire between November 2004 and
May 2005.
3
HISTORICAL REVENUE BY SERVICE GROUP
2001 2000 1999
---------------------- ------------------ -------------------
AMOUNT % AMOUNT % AMOUNT %
----------- ------ ---------- ------ ----------- ------
(DOLLARS IN THOUSANDS)
Insurance Services...................... $ 297,640 47% $ 249,426 46% $ 206,659 47%
Business & Government Services.......... 327,720 52 283,130 53 230,945 52
Royalty ............................... 6,808 1 6,364 1 6,219 1
----------- ---- ---------- ---- ----------- ----
Subtotal ............................... 632,168 100% 538,920 100% 443,823 100%
Divested & Discontinued Product Lines... 23,799 54,613 64,035
----------- ---------- -----------
Total.......................... $ 655,967 $ 593,533 $ 507,858
=========== ========== ===========
Insurance Services. ChoicePoint provides underwriting information to
property and casualty insurance companies in the United States. Personal lines
property and casualty insurance services include automated direct marketing,
underwriting and claims information, such as motor vehicle reports, the
Company's Comprehensive Loss Underwriting Exchange ("C.L.U.E.(R)") database
services, vehicle registration services, credit reports, modeling services,
ChoicePointLink(R) (insurance agent software), and driver's license information.
C.L.U.E. is a proprietary database comprised of claims information contributed
by major insurance underwriters (and accessed by those same underwriters), which
enables them to assess underwriting risks and pending claims in the auto and
home insurance markets. ChoicePoint's proprietary ChoicePoint Rules(TM) systems
automate customer-specific decision making criteria to provide property and
casualty insurance underwriters with decision management tools that streamline
and reduce the cost of the underwriting process. This service group offers
information delivery services to its clients using mainframe, personal computer
and Internet Web-based communications.
In addition to personal lines underwriting information, ChoicePoint
provides services to the commercial property and casualty insurance market.
Those services include commercial inspections for underwriting purposes, workers
compensation audits of commercial properties, marketing and modeling services to
the personal lines property and casualty market and development of high-end
customized application rating and issuance software for commercial customers.
Until the sale of Osborn Group in August 2001, ChoicePoint also provided
laboratory information services and related technology offerings to major life
and health insurance companies in the United States.
Business & Government Services. In addition to serving the property and
casualty and life and health insurance markets, ChoicePoint provides risk
management and fraud prevention services and related technology solutions,
shareholder locator services and database marketing services to Fortune 1000
corporations, asset-based lenders, legal and professional service providers,
health care service providers and local, state and federal government agencies.
For instance, the Company provides information and services to customers in a
variety of industries for use in the hiring and employee regulatory compliance
process, including: (i) pre-employment background screenings, which include
credit and driving record checks, prior employment verification, education and
licensing verification and criminal record searches; and (ii) comprehensive drug
screening program management and administration and due diligence and credential
verification services to legal and professional service providers, and (iii) DNA
identification services.
The Company also provides enhanced information services to government
agencies, such as (i) uncovering ownership of hidden assets, locating
individuals and providing leads for criminal and civil investigations, (ii)
providing parent locator services, which locate for the public sector
individuals who are in violation of court mandates and (iii) screening of
certain Medicare and Medicaid providers and provider applicants to assist in
identifying and reducing health care fraud. In connection with its business and
government services, the Company
4
provides online and on-demand searches and filings of public business records,
including Uniform Commercial Code searches and filings, bankruptcy, lien and
judgment searches, searches of partnership and corporation filing records, and
criminal record searches to assist organizations and lending institutions in
managing potential risk exposure.
Customers. ChoicePoint's customer base includes substantially all
domestic insurance companies, many Fortune 1000 companies and certain local,
state and federal government agencies. The Company has more than 50,000
customers, none of which represented more than 10% of the Company's total
revenue in 2001.
Both of ChoicePoint's current service groups have the capability to
receive orders for and deliver products and services through electronic
communications. The Company supplies software to customers that wish to access
the Company using private networks.
COMPETITION
The Company operates in a number of geographic and product and service
markets, which are highly competitive. In the Insurance Services market,
ChoicePoint's competitors include TML Information Services, Inc., Trans Union
Corporation, American Insurance Services Group, a unit of Insurance Services
Office, Inc. and Insurance Information Exchange, L.L.C., a subsidiary of ISO
Claims Services, Inc. In the Business & Government Services market,
ChoicePoint's competitors in the automated public records market currently
include the Lexis-Nexis service of Reed Elsevier PLC, West Publishing Company,
DCS Information Systems, Inc. and infoUSA Inc., while its competitors in the
pre-employment screening and drug testing services market include various
security companies and clinical laboratories, including pre-screening services
of Automatic Data Processing, Inc., The First American Corporation, Total
Information Services, Inc., and Laboratory Corporation of America Holdings. Its
competitors in database marketing services offerings include Acxiom Corporation
and Harte-Hanks Communications, Inc. With respect to its offerings of consumer
benefit services such as those provided by its subsidiary, EquiSearch, the
Company competes with Keane Tracers, Inc. and Shareholder Communications
Corporation. For DNA identification services, the Company competes with Orchid
BioSciences, Inc. and Myriad Genetics Inc. In each of its markets, the Company
competes on the basis of responsiveness to customer needs, price and the quality
and range of products and services offered.
SOURCES OF SUPPLY
ChoicePoint's operations depend upon information derived from a wide
variety of automated and manual sources. External sources of data include public
records information companies, governmental authorities and on-line search
systems. ChoicePoint has no reason to anticipate the termination of any
significant relationships with data suppliers. However, if material changes in
state or federal laws regulating or prohibiting the distribution of public
records were to occur, the Company's business, financial condition and results
of operations could be materially affected. In the event that such a termination
occurred, the Company believes that it could acquire the data from other
sources; however, such termination could have a material adverse effect on the
Company's financial condition or results of operations.
ChoicePoint currently maintains databases that contain information
provided and used by insurance underwriters. The information comprising these
databases is not owned by ChoicePoint, and the participating organizations could
discontinue contributing information to the databases. If this were to occur,
the Company's financial condition and results of operations would be materially
affected. ChoicePoint believes, however, that such an event is unlikely because
contributors to the databases depend upon the aggregated information in such
databases to conduct their business operations.
EMPLOYEES
As of December 31, 2001, ChoicePoint employed approximately 5,000
persons, none of whom were unionized. All of the Company's workforce is employed
in the United States. As of December 31, 2001,
5
ChoicePoint employed approximately 290 individuals in Hartford, Connecticut in
its Insurity facilities, approximately 130 individuals in Santa Ana, California
at its ChoicePoint PRG location, approximately 350 individuals in Peoria,
Illinois in its ChoicePoint Direct location, approximately 130 employees at its
CP Commercial Specialists office in Overland Park, Kansas, approximately 130
individuals in the WorkPlace Solutions St. Petersburg, Florida office,
approximately 30 employees in White Plains, New York at its EquiSearch offices,
and approximately 40 individuals at the Boston, Massachusetts MITI office. The
Company has approximately 260 employees in Pensacola, Florida at the SDS office,
approximately 50 NSA employees in Nashville, Tennessee, approximately 60
employees at Bode Labs in Springfield, Virginia, approximately 60 BTi employees
in Dallas, Texas, approximately 90 employees in the WorkPlace Solutions Los
Angeles, California office, approximately 150 WorkPlace Solutions employees in
the Charlotte, North Carolina office and 300 DBT employees in Boca Raton,
Florida. Approximately 1,120 individuals are employed in the Atlanta area in the
Company's headquarters and three branch office locations. The balance of
ChoicePoint's employees is located in the Company's remaining offices.
ChoicePoint believes that its relations with its employees are good.
PROPRIETARY MATTERS
ChoicePoint owns a number of trademarks and trade names that
ChoicePoint believes are important to its business. Except for the ChoicePoint
trademark and logo, however, the Company is not dependent upon any single
trademark or trade name or group of trademarks or trade names. The current
duration for federal registrations range from seven to fifteen years, but each
trademark registration generally may be renewed an unlimited number of times as
long as the trademark is in use. Other trademarks and trade names used in the
Company's business are registered and maintained in the U.S. ChoicePoint,
AutoTrackXP(R) and C.L.U.E. are registered trademarks of ChoicePoint Asset
Company, a wholly owned subsidiary of the Company.
ChoicePoint owns a 62.5% interest in revenue relating to certain
patents involving laser technology, which expires between November 2004 and May
2005. Upon the expiration of the applicable patent, ChoicePoint loses its right
to exclude others from exploiting the inventions claimed therein, and
accordingly, the obligations of third parties to make royalty payments will
cease.
ITEM 2. PROPERTIES
ChoicePoint's principal executive offices are located in 206,000 square
feet of office space in Alpharetta, Georgia, a suburb of Atlanta. ChoicePoint
maintains approximately 73 other offices in the United States. These offices,
all of which are leased, contain a total of approximately 752,000 square feet of
space. Through ChoicePoint Health Systems Inc., ChoicePoint owns two laboratory
facilities in Olathe, Kansas with approximately 76,000 square feet of space.
Through ChoicePoint Direct, ChoicePoint owns four buildings in Peoria, Illinois
representing approximately 182,000 square feet of space. Through ChoicePoint
Services Inc., ChoicePoint owns a building in Norcross, Georgia representing
approximately 8,400 square feet. The Company ordinarily leases office space of
the general commercial type for conducting its business.
In 2002 ChoicePoint began construction on a 200,000 square foot data
center adjacent to its principal executive offices at the Alpharetta, Georgia
location.
ITEM 3. 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 condition 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 materially adverse to the Company
could be reached.
6
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders by the Company
during the quarter ended December 31, 2001.
7
EXECUTIVE OFFICERS OF REGISTRANT
Set forth below is certain biographical information with respect to
each executive officer of the Company, as of March 10, 2002:
NAME AND POSITION AGE EXECUTIVE OFFICER SINCE
Derek V. Smith, Chairman, President and Chief
Executive Officer.................................. 47 1997
Douglas C. Curling, Chief Operating Officer.......... 47 1997
David T. Lee, Executive Vice President............... 42 1997
J. Michael de Janes, General Counsel and Secretary... 44 1997
Michael S. Wood, Chief Financial Officer............. 47 2000
David E. Trine, Treasurer and Corporate Controller... 41 2000
DEREK V. SMITH, 47, has served as President, Chief Executive Officer
and a Director of the Company since May 1997 and as Chairman of the Board since
May 1999. Mr. Smith served as Executive Vice President of Equifax and Group
Executive of the Insurance Services Group of Equifax from 1993 until the
Spinoff. Mr. Smith also serves as a director of Metris Companies Inc., a direct
marketer of consumer-based services and The Stanley Works, a producer of tools
and door products.
DOUGLAS C. CURLING, 47, has served as Chief Operating Officer and a
Director of the Company since May 2000 and served as Chief Operating Officer and
Treasurer from May 1999 to May 2000. He served as Executive Vice President,
Chief Financial Officer and Treasurer of ChoicePoint from the Spinoff until May
1999. He served as Senior Vice President -- Finance and Administration of the
Insurance Services Group of Equifax from 1993 until the Spinoff.
DAVID T. LEE, 42, has served as Executive Vice President since May 1999
and prior to that served as Senior Vice President of ChoicePoint from the
Spinoff until May 1999. He served as Vice President -- Property & Casualty
Marketing and Sales of the Insurance Services Group of Equifax from 1991 until
the Spinoff.
J. MICHAEL DE JANES, 44, has served as General Counsel of ChoicePoint
since the Spinoff, and has been Secretary of the Company since April 1998. He
served as Vice President and Counsel of the Insurance Services Group of Equifax
from 1993 until the Spinoff.
MICHAEL S. WOOD, 47, has served as Chief Financial Officer of the
Company since February 2000. From 1997 until January 2000 he served as Chief
Financial Officer of Lane Bryant, Inc., a division of The Limited, Inc. and from
1995 to 1997 he served as Vice President -- Finance of Lane Bryant, Inc.
DAVID E. TRINE, 41, has served as Treasurer and Corporate Controller
since May 2000. He served as Vice President - Corporate Controller from May 1999
to May 2000 and Vice President - Finance and Accounting of the Company from the
Spinoff until May 1999.
There are no family relationships among the executive officers of the
Company, nor are there any arrangements or understandings between any of the
executive officers and any other persons pursuant to which they were selected as
executive officers. The Board of Directors may elect an executive officer or
officers at any meeting of the Board of Directors. Each executive officer is
elected to serve until his successor has been elected and has duly qualified.
Elections of executive officers generally occur each year at the Board of
Directors meeting held in conjunction with the Company's Annual Meeting of
Shareholders. In addition, the Chief Executive Officer is authorized to appoint
certain officers of the Company.
8
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is listed and traded on the New York Stock
Exchange under the symbol "CPS." Information regarding the high and low sales
prices and the number of holders of the common stock is set forth under the
captions "Market Information" and "Quarterly Stock Performance" on page 49 of
the 2001 Annual Report to Shareholders (the "Annual Report"), a copy of which
page is included in Exhibit 13 to this Form 10-K and is incorporated herein by
reference.
The Company does not pay cash dividends and does not anticipate paying
any cash dividends in the foreseeable future. The Company currently intends to
retain future earnings to finance its operations and the expansion of its
business. Any future determination to pay cash dividends will be at the
discretion of the Company's Board of Directors and will be dependent upon the
Company's financial condition, operating results, capital requirements and such
other factors as the Board of Directors deems relevant.
ITEM 6. SELECTED FINANCIAL DATA
The information included under the caption "Financial Highlights" on
the inside front cover page of the Annual Report, a copy of which page is
included in Exhibit 13 to this Form 10-K, is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The information included under the caption "Management's Discussion and
Analysis" on pages 24 through 30 of the Annual Report, a copy of which pages are
included in Exhibit 13 to this Form 10-K, is incorporated herein by reference.
RISK FACTORS
You should carefully consider each of the following risk
factors and all of the other information in this Annual Report on Form
10-K. These risks are not the only ones we face. Our business
operations could also be impaired by additional risks and uncertainties
that, at present, are not known to us or that, at present, we consider
immaterial.
If any of the following risks and uncertainties develops into
actual events, our business, financial condition and results of
operations could be materially and adversely affected. If that happens,
the trading prices of our common stock and any other securities we may
issue in the future could decline significantly.
The risk factors below contain forward-looking statements
regarding ChoicePoint. Actual results could differ materially from
those set forth in the forward-looking statements. See "Cautionary
Statements Regarding Forward-Looking Statements" on page i, following
the "Table of Contents."
CUSTOMERS
We have few long-term agreements with our customers. Although
our management believes that the quality of our products and services
should permit us to maintain relationships with our customers, there
can be no assurance that we will do so. Any loss of a significant
number of our major customers would have a material adverse effect on
our business, financial condition, and results of operations.
9
Our customers include federal, state, and local governments.
Government business is subject to many unique risks, such as delays in
funding, reduction or modification of contracts or subcontracts,
failure to exercise options, changes in government policies, and the
imposition of budgetary restraints. A loss of government contract
revenues also could have a material adverse effect on our business,
financial condition, and results of operations.
The acquisition or consolidation of our customers by another
company could decrease the demand for our products and services. After
consolidation, these companies may reorganize management
responsibilities or strategic and purchasing decisions that could
adversely affect demand for our products and services. We may lose
business relationships with key contacts within a customer's
organization due to budget cuts, layoffs, or other changes resulting
from an acquisition or consolidation. The consolidation of companies
also may alter the technological infrastructure of the combined entity,
and our products and services may not be compatible with the new
technological system.
ACQUISITIONS
Our long-term business strategy includes growth through
acquisitions. While we believe we have been successful in implementing
this strategy during prior years, we are not certain that we will
complete future acquisitions on acceptable terms or that we will
successfully integrate any acquired assets, data or businesses into our
operations. Any acquisitions or investments will be accompanied by the
risks commonly encountered in acquisitions of businesses. Such risks
include, among other things:
- paying more than fair market value for an acquired
company or assets;
- failing to integrate the operations and personnel of
the acquired businesses in an efficient, timely
manner;
- assuming potential liabilities arising from
the products of an acquired company;
- managing the potential disruption of our ongoing
business;
- distracting management focus from our core business;
- impairing relationships with employees, customers,
and strategic partners;
- incurring expenses associated with the amortization
of other intangibles;
- incurring expenses associated with a write-off of a
portion of goodwill and other intangible assets due
to changes in market conditions, weak economies in
certain competitive markets, or the failure of
certain acquisitions to realize expected benefits; or
- diluting the share value and voting power of existing
shareholders.
SUPPLIERS
We depend upon third-party information suppliers for
information used in our databases. The loss of some of our data supply
sources could have a material adverse effect on our business, financial
condition, and results of operations. We rely extensively upon data
from external sources to maintain our proprietary and non-proprietary
databases, and our operations depend upon information derived from a
wide variety of automated and manual sources. We obtain data from
public records, information companies, governmental authorities,
competitors, and customers. Our agreements with our data suppliers are
generally short-term agreements. Some of our suppliers are also our
competitors, which may make us vulnerable to unpredictable price
increases and may cause some suppliers not to renew certain agreements.
We have no reason to anticipate the termination of any significant
relationships with these data suppliers and believe that in most cases
substitute suppliers could be arranged if any termination occurred.
However, such a termination could have a material adverse effect on our
business, financial condition, and results of operations if we were
unable to arrange for substitute sources.
We currently maintain databases that contain information
provided and used by insurance
10
underwriters. We do not own the information in these databases, and the
participating organizations could discontinue contributing information
to the databases. If this information was withheld, our business,
financial condition, and results of operations would be materially
adversely affected.
We use social security numbers to generate certain reports.
Social security numbers could become unavailable to us in the future
because of changes in the law or because data suppliers decide not to
supply them to us. If we cannot obtain this information in the future,
we will be unable to generate reports as efficiently. Although we use
names, addresses, and dates of birth to generate our reports, without
the use of social security numbers, we believe that those reports would
not be as complete or as accurate as the reports generated with social
security numbers. We also would incur significant expense to revise the
software we use to generate reports. Less complete or less accurate
reports could adversely affect our business, financial condition, and
results of operations.
We obtain the credit header data in our databases from
consumer credit reporting agencies. The data consists of names,
addresses, social security numbers, and dates of birth. Any of these
suppliers could stop supplying this data to us or could substantially
increase their prices. Withholding this data could materially adversely
affect our business, financial condition, and results of operations.
COMPETITION
The business and consumer marketing information industry in
which we operate is highly competitive, and we expect it to remain
highly competitive. In each of our markets, we compete on the basis of
price, quality, customer service, product and service selection. Our
competitive position in various market segments depends upon the
relative strength of our competitors in the segment and the resources
devoted to competing in that segment. Due to their size, certain
competitors may be able to allocate greater resources to a particular
market segment than we can. As a result, they may be in a better
position to anticipate and respond to changing customer preferences,
emerging technologies and market trends. In addition, new competitors
and alliances may emerge to take market share away from us. We cannot
assure you that we will be able to maintain or strengthen our
competitive position in our market segments, especially against larger
competitors. If we fail to successfully compete, our business,
financial condition and results of operations may be adversely
affected.
GOVERNMENT REGULATION AND ADVERSE PUBLICITY
Because we use personal and public record information to
search our databases and access the databases of others, we are
vulnerable to government regulation and adverse publicity concerning
these uses. We provide many types of data and services which already
are subject to regulation under the Fair Credit Reporting Act,
Gramm-Leach-Bliley Act, Drivers' Privacy Protection Act, and to a
lesser extent, various other federal, state, and local laws and
regulations. These laws and regulations are designed to protect the
privacy of the public and to prevent the misuse of personal information
in the marketplace. However, many consumer advocates, privacy
advocates, and government regulators believe the existing laws and
regulations do not adequately protect privacy. They have become
increasingly concerned with the use of personal information,
particularly social security numbers, motor vehicle reports, and dates
of birth. As a result, they are lobbying for further restrictions on
the dissemination or commercial use of personal information. The
following legal and regulatory developments could have a material
adverse affect on our business, financial condition, and results of
operations:
- amendment, enactment, or interpretation of laws and
regulations which restrict the access and use of
personal information and reduce the supply of data
available to our customers;
- changes in cultural and consumer attitudes to favor
further restrictions on information collection and
sharing;
- failure of our products and services to help our
customers comply with current laws and regulations;
and
- failure of our products and services to adapt to
changes in the regulatory environment in an
efficient, cost-effective manner.
11
ATTRACTING AND RETAINING QUALIFIED PERSONNEL
We cannot be certain that we can continue to attract and
retain sufficient qualified management, technical, sales, or other
personnel necessary to conduct our business successfully. The
resignation, retirement, death or disability of our Chief Executive
Officer or Chief Operating Officer and the inability to sufficiently
replace either position could adversely affect our business.
SYSTEM INTERRUPTIONS
System interruptions could delay and disrupt our products and
services, cause harm to our business and reputation, and result in a
loss of customers. We depend heavily upon our computer systems, most of
which are located in Alpharetta, Georgia and Boca Raton, Florida, to
provide reliable, uninterrupted service. Certain events beyond our
control, such as fires, floods, earthquakes, hurricanes, power losses,
and telecommunications failures, could damage our computer networks and
temporarily or permanently interrupt services to our customers. Our
systems in Boca Raton, Florida are particularly susceptible to
hurricanes. These interruptions also may interfere with our suppliers'
ability to provide data and our employees' ability to attend work and
perform their responsibilities. We have attempted to shield our systems
from interruptions and failures, and we carry property and business
interruption insurance in case these events occur. However, our system
safeguards and our insurance still may not adequately protect us from
losses arising from system interruptions.
SECURITY BREACHES
Security breaches in our facilities, computer networks, and
databases may cause harm to our business and reputation and result in a
loss of customers. We have instituted many security measures to protect
our systems and to assure the marketplace that our systems are secure.
However, despite such security measures, our systems may be vulnerable
to physical break-ins, computer viruses, attacks by hackers, or similar
disruptive problems. Third-party contractors also may experience
security breaches involving the storage and transmission of proprietary
information. If unauthorized users gain access to our databases, they
may be able to steal, publish, delete or modify confidential
third-party information that is stored or transmitted on our networks.
A security or privacy breach may affect us in the following ways:
- deterring customers from using our products and
services;
- harming our reputation;
- exposing us to liability;
- increasing our operating expenses to correct problems
caused by the breach; or
- affecting our ability to meet our customers'
expectations;
- causing inquiry from governmental authorities.
ECONOMY
The current general economic downturn could continue to result in a
reduced demand for our products and services. Our revenues are
dependent to a certain extent upon general economic conditions and upon
conditions in the insurance industries. Certain of our revenues are
derived from pre-employment screening services. The revenue growth and
profitability of our business depends on the overall demand for our
existing and new products. A softening of demand for our information
services caused by a weakening of the economy generally may result in
decreased revenues or lower growth rates. We cannot be certain that
12
our future revenues, results of operations, cash flows and
profitability will not fluctuate on a quarterly or annual basis or that
we will be able to refinance our existing Credit Facility.
DIRECT MARKETING
Our direct marketing products and services could be vulnerable
to the following risks:
- development of other methods of sales and advertising
that are more effective than direct marketing;
- changes in laws and regulations relating to data
privacy; and
- increases in postal rates or disruption in the
availability of postal services that could increase
the cost of direct mail production and processing and
reduce demand for information among our direct mail
customers.
NEW PRODUCTS, SERVICES, AND TECHNOLOGIES
Our growth partially depends on our ability to develop and
market new products, services and technologies. We have focused on
developing growth opportunities in a number of potential markets. We
cannot assure you that we will be successful in developing new
products, services and technologies or that they will gain market
acceptance or generate significant revenue. Our initiatives are in
various stages of development and may be subject to delays in
implementation, customer dissatisfaction with product or service
performance or other significant undetected problems. If we fail to
successfully introduce new initiatives, our business, financial
condition and results of operations may be adversely affected.
ITEM 7A. 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 December 31, 2001. The information below should be read
in conjunction with Note 5 of the "Notes to Consolidated Financial Statements"
on pages 40 and 41 of the Annual Report, copies of which pages are included in
Exhibit 13 to this Form 10-K and are incorporated herein by reference.
In August 1997, ChoicePoint entered into a $250.0 million unsecured
revolving credit facility (the "Credit Facility") with a group of banks. As of
December 31, 2001, $155 million was outstanding under the Credit Facility. The
Company has entered into two interest rate swap agreements (the "Swap
Agreements") to reduce the impact of changes in interest rates on its floating
rate obligations. The interest rate swap agreement hedging the Credit Facility
has a notional amount of $125 million at December 31, 2001 and 2000 and matures
in August 2002. The other interest rate swap agreement hedges the synthetic
lease, has a notional amount of $25 million at December 31, 2001 and 2000 and
matures in August 2007. The Swap Agreements involve the exchange of variable
rate for fixed rate payments and effectively change the Company's interest rate
exposure to a weighted average fixed rate of 6.45%. 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 Receivables Facility permits the
advance of up to $100 million on the sale of accounts receivable. There were no
sales of accounts receivable under the Receivables Facility during 2001.
Based on the Company's overall interest rate exposure at December 31,
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.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
13
The information included under the captions "Consolidated Statements of
Income," "Consolidated Balance Sheets," "Consolidated Statements of
Shareholders' Equity," "Consolidated Statements of Cash Flows" and "Notes to
Consolidated Financial Statements" on pages 32 through 48 of the Annual Report,
copies of which pages are included in Exhibit 13 to this Form 10-K, is
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Upon the recommendation of the audit committee of the board of
directors, the board appointed Deloitte & Touche LLP as the Company's
independent public accountants for 2002. This appointment is subject to
ratification by the shareholders at the Company's 2002 annual meeting scheduled
for April 25, 2002. Arthur Andersen LLP served as the Company's independent
accountants from the Spinoff through 2001. The Company had no disagreements with
Arthur Andersen on accounting or financial disclosure issues. For additional
information see the Company's Current Report on Form 8-K filed March 22, 2002.
14
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item with respect to Directors of the
Company is included in the sections entitled "Election of ChoicePoint
Directors," and "Other Matters-ChoicePoint Section 16(a) Beneficial Ownership
Reporting Compliance" of the Proxy Statement for the 2002 Annual Meeting of
Shareholders and is incorporated herein by reference. Information regarding the
Company's executive officers is set forth in Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is included in the sections
entitled "ChoicePoint Executive Compensation," "Management Compensation and
Benefits Committee Report on Executive Compensation," "Election of ChoicePoint
Directors," "ChoicePoint Executive Compensation-Employment Agreements and
Change-in-Control Arrangements," "ChoicePoint Executive Compensation Committee
Interlocks and Insider Participation," and "ChoicePoint Stock Performance Graph"
of the Proxy Statement for the 2002 Annual Meeting of Shareholders and is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is included in the section
entitled "ChoicePoint Security Ownership of Certain Beneficial Owners and
Management" of the Proxy Statement for the 2002 Annual Meeting of Shareholders
and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is included in the section
entitled "Other Matters--Certain Relationships and Related Transactions" of the
Proxy Statement for the 2002 Annual meeting of Shareholders and is incorporated
herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
(a) Index to exhibits, financial statements and schedules.
(1) Financial Statements
Consolidated Balance Sheets as of December 31, 2001 and 2000
are incorporated by reference from the Annual Report, and are included
in Exhibit 13 hereto.
Consolidated Statements of Income for the Years Ended December
31, 2001, 2000 and 1999 are incorporated by reference from the Annual
Report, and are included in Exhibit 13 hereto.
Consolidated Statements of Shareholders' Equity for the Years
Ended December 31, 2001, 2000 and 1999 are incorporated by reference
from the Annual Report, and are included in Exhibit 13 hereto.
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2001, 2000 and 1999 are incorporated by reference from the
Annual Report, and are included in Exhibit 13 hereto.
15
Notes to Consolidated Financial Statements are incorporated by
reference from the Annual Report, and are included in Exhibit 13 hereto.
Report of Arthur Andersen LLP on the foregoing financial statements is
incorporated by reference from the Annual Report, and is included in Exhibit 13
hereto.
(2) Financial Statement Schedules
Schedule II - Consolidated Valuation and Qualifying Accounts is
included as a schedule herein.
Schedules not listed have been omitted because they are not applicable
or the required information is included in the consolidated financial statements
or notes thereto.
(3) Exhibits required by Item 601 of Regulation S-K:
The following exhibits are included in this Form 10-K:
EXHIBIT
NO. DESCRIPTION
- ------- -----------
2.1 -- Purchase Agreement, by and among ChoicePoint Inc., ChoicePoint Acquisition Corporation and
DBT Online, Inc. (incorporated by reference to Exhibit 2.1 of the Company's Current Report
on Form 8-K, filed February 15, 2000).
3.1 -- Articles of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1
of the Company's Registration Statement on Form S-1, as amended, File No. 333-30297).
3.2 -- Bylaws of the Company, as amended.
4.1 -- Rights Agreement, dated as of October 29, 1997, by and between ChoicePoint Inc. and SunTrust Bank,
Atlanta (incorporated by reference to Exhibit 4.2 of the Company's Form 8-A, filed November 5, 1997).
4.2 -- Amendment No. 1 to the Rights Agreement, dated as of June 21, 1999, between ChoicePoint Inc. and
SunTrust Bank, Atlanta (incorporated by reference to Exhibit 4.2 of the Company's Current Report
on Form 8-A, filed August 17, 1999).
4.3 -- Amendment No. 2 to the Rights Agreement between ChoicePoint Inc. and SunTrust Bank, Atlanta dated
February 14, 2000 (incorporated by reference to Exhibit 4.1 of the Company's Current Report on
Form 8-K, filed February 15, 2000).
4.4 -- Form of Common Stock certificate (incorporated by reference to Exhibit 4.1 of the Company's
Registration Statement on Form S-1, as amended, File No. 333-30297).
10.1 -- Form of Employment Agreement between the Company and each of Derek V. Smith, Douglas C. Curling,
David T. Lee and J. Michael de Janes (incorporated by reference to Exhibit 10 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1997).
16
EXHIBIT
NO. DESCRIPTION
- ------- -----------
10.2 -- Employment Agreement, dated April 1, 1997, by and between DBT Online, Inc. and Frank Borman
(incorporated by reference to Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2000).
10.3 -- ChoicePoint Inc. 1997 Omnibus Stock Incentive Plan (incorporated by reference to Exhibit 10.1
of the Company's Quarterly Report on Form 10-Q, for the quarter ended June 30, 1997).
10.4 -- DBT Online, Inc. Amended and Restated Stock Option Plan (incorporated by reference to Exhibit 10.5
of the Company's Annual Report on Form 10-K, for the year ended December 31, 2000).
10.5 -- Amendment 2000-1 to the DBT Online, Inc. Amended and Restated Stock Option Plan (incorporated
by reference to Exhibit 4.2 of the Company's Registration Statement on Form S-8, File No. 333-37498).
10.6 -- ChoicePoint Inc. Deferred Compensation Plan (incorporated by reference to Exhibit 10.7 of the
Company's Annual Report on Form 10-K, for the year ended December 31, 2000).
10.7 -- ChoicePoint Inc. 401(k) Profit Sharing Plan (incorporated by reference to Exhibit 10.2 of the
Company's Registration Statement on Form S-1, as amended, File No. 333-30297).
10.8 -- Employee Benefits Agreement, dated as of July 31, 1997, between Equifax Inc. and ChoicePoint Inc.
(incorporated by reference to Exhibit 10.4 of the Company's Quarterly Report on Form 10-Q, for
the quarter ended June 30, 1997).
10.9 -- Tax Sharing and Indemnification Agreement, dated as of July 31, 1997, by and between Equifax Inc.
and ChoicePoint Inc. (incorporated by reference to Exhibit 10.7 of the Company's Quarterly Report
on Form 10-Q, for the quarter ended June 30, 1997).
10.10 -- Revolving Credit Agreement, dated as of August 5, 1997, among ChoicePoint Inc., the Lenders Listed
Therein and Wachovia Bank, N.A. as Administrative Agent, and SunTrust Bank, Atlanta, as
Documentation Agent (incorporated by reference to Exhibit 10.10 of the Company's Quarterly
Report on Form 10-Q, for the quarter ended June 30, 1997).
10.11 -- Revolving Credit Agreement dated as of December 29, 1999 among ChoicePoint Inc., the Lenders
listed therein, Wachovia Bank, N.A. as Administrative Agent, SunTrust Bank, Atlanta, as
Documentation Agent, and First Union National Bank, as Managing Agent (incorporated by reference
to Exhibit 10.14 of the Company's Annual Report on Form 10-K, for the year ended December 31, 1999).
17
EXHIBIT
NO. DESCRIPTION
- ------- -----------
10.12 -- Master Agreement, dated as of July 31, 1997, among ChoicePoint Inc., SunTrust Banks, Inc. and
SunTrust Bank, Atlanta, as Agent (incorporated by reference to Exhibit 10.11(a) of the Company's
Quarterly Report on Form 10-Q, for the quarter ended June 30, 1997).
10.13 -- First Amendment to the Master Agreement, dated as of September 30, 1998, among ChoicePoint, Inc.,
as Lessee, SunTrust Banks, Inc., as Lessor, and SunTrust Bank, Atlanta, as Agent (incorporated by
reference to Exhibit 10.15 of the Company's Annual Report on Form 10-K, for the year ended
December 31, 1999).
10.14 Second Amendment to the Master Agreement, dated as of December 30, 1999, among ChoicePoint Inc.,
as Lessee, SunTrust Banks, Inc., as Lessor, and SunTrust Bank, Atlanta, as Agent (incorporated
by reference to Exhibit 10.16 of the Company's Annual Report on Form 10-K, for the year ended
December 31, 1999).
10.15 -- Lease agreement, dated as of July 31, 1997, between ChoicePoint Inc. and SunTrust Banks, Inc.
(incorporated by reference to Exhibit 10.11(b) of the Company's Quarterly Report on Form 10-Q,
for the quarter ended June 30, 1997).
10.16 -- Georgia Lease Supplement, dated as of July 31, 1997, between ChoicePoint Inc. and SunTrust Banks,
Inc. (incorporated by reference to Exhibit 10.11(c) of the Company's Quarterly Report on Form 10-Q,
for the quarter ended June 30, 1997) as Agent.
10.17 -- First Amendment to the Georgia Lease Supplement, dated September 30, 1998, between ChoicePoint
Inc. and SunTrust Banks, Inc. (incorporated by reference to Exhibit 10.17 of the Company's
Annual Report on Form 10-K, for the year ended December 31, 1999).
10.18 -- Second Amendment to the Georgia Lease Supplement, dated December 30, 1999, between ChoicePoint Inc.
and SunTrust Banks, Inc. (incorporated by reference to Exhibit 10.18 of the Company's Annual
Report on Form 10-K, for the year ended December 31, 1999).
10.19 -- Operative Guaranty, dated as of July 31, 1997, by ChoicePoint Inc. as Guarantor (incorporated by
reference to Exhibit 10.11(d) of the Company's Quarterly Report on Form 10-Q, for the quarter
ended June 30, 1997).
10.20 -- Construction Agency Agreement, dated as of July 31, 1997, between SunTrust Banks, Inc. and
ChoicePoint Inc. (incorporated by reference to Exhibit 10.11(e) of the Company's Quarterly Report
on Form 10-Q, for the quarter ended June 30, 1997).
18
EXHIBIT
NO. DESCRIPTION
- ------- -----------
10.21 -- 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 (incorporated by reference to Exhibit 10.1 of the Company's
Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
10.22 -- 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.
(incorporated by reference to Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q, for
the quarter ended September 30, 2001).
10.23 -- Guaranty Agreement from ChoicePoint Inc., dated as of August 29, 2001 (incorporated by reference
to Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q, for the quarter ended
September 30, 2001).
10.24 -- Construction Agency Agreement, dated as of August 29, 2001, among Atlantic Financial Group, Ltd.
and ChoicePoint Inc., as Construction Agent (incorporated by reference to Exhibit 10.4 of the
Company's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
10.25 -- Loan Agreement, dated as of July 2, 2001, among ChoicePoint Financial Inc., as Borrower,
ChoicePoint Inc., as Initial Servicer, Three Pillars Funding Corporation, as Lender, and
SunTrust Equitable Securities Corporation, as Administrator (incorporated by reference to
Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q, for the quarter ended June 30, 2001).
10.26 -- Receivables Sale and Contribution Agreement, dated as of July 2, 2001, among ChoicePoint
Services Inc., PRC Corporation, ChoicePoint Business and Government Services Inc., ChoicePoint
Direct Inc., Statewide Data Services, Inc., I.R.S.C., Inc., ChoicePoint Public Records Inc.,
Patlex Corporation, National Safety Alliance, Incorporation, BTi Employee Screening Services, Inc.
and each other subsidiary of ChoicePoint Inc. that hereafter becomes a party hereto, as Originators,
and ChoicePoint Capital Inc., as Buyer (incorporated by reference to Exhibit 10.2 of the Company's
Quarterly Report on Form 10-Q, for the quarter ended June 30, 2001).
10.27 -- Receivables Sale Agreement, dated as of July 2, 2001, among ChoicePoint Capital Inc., as Seller,
and ChoicePoint Financial Inc., as Purchaser (incorporated by reference to Exhibit 10.3 of the
Company's Quarterly Report on Form 10-Q, for the quarter ended June 30, 2001).
10.28 -- 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
(incorporated by reference to Exhibit 10.5 of the Company's Quarterly Report on Form 10-Q, for
the quarter ended September 30, 2001).
19
EXHIBIT
NO. DESCRIPTION
- ------- -----------
10.29 -- Sublease Agreement, dated as of July 31, 1997, between Equifax Inc. and Equifax Services Inc.
(for certain property and building located at 1525 Windward Concourse, Alpharetta, Georgia [J.V.
White Technology Center]) (incorporated by reference to Exhibit 10.13 of the Company's
Quarterly Report on Form 10-Q, for the quarter ended June 30, 1997).
13 -- The inside front cover and pages 24-49 of the Company's 2001 Annual Report To Shareholders.
21 -- Subsidiaries of the Company.
23.1 -- Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2 -- Consent of Deloitte & Touche LLP, Independent Public Accountants.
99.1 -- Independent Auditors' Report - Deloitte & Touche LLP.
99.2 -- Report of Independent Public Accountants on Financial Statement Schedule - Arthur Andersen LLP.
99.3 -- Letter from ChoicePoint Inc. to the Commission regarding Arthur Andersen LLP.
Copies of the Company's Form 10-K that are furnished pursuant to the
written request of the Company's shareholders do not include the exhibits listed
above. Any shareholder desiring copies of one or more of such exhibits should
write to the Company's Office of Corporate Secretary, specifying the exhibit or
exhibits requested.
(b) Reports on Form 8-K
The Company did not file any Current Reports on Form 8-K during the
fiscal quarter ending December 31, 2001.
20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in the City of
Alpharetta, State of Georgia, on March 27, 2002.
CHOICEPOINT INC.
By: /s/ DEREK V. SMITH
--------------------------------------------
Derek V. Smith
Chairman, President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DEREK V. SMITH Chairman, President, and Chief March 27, 2002
- -------------------------------------------- Executive Officer and Director
Derek V. Smith
/s/ MICHAEL S. WOOD Chief Financial Officer March 25, 2002
- --------------------------------------------
Michael S. Wood
/s/ RON D. BARBARO Director March 28, 2002
- --------------------------------------------
Ron D. Barbaro
/s/ CHARLES G. BETTY Director March 27, 2002
- --------------------------------------------
Charles G. Betty
/s/ THOMAS M. COUGHLIN Director March 26, 2002
- --------------------------------------------
Thomas M. Coughlin
/s/ DOUGLAS C. CURLING Chief Operating Officer March 27, 2002
- -------------------------------------------- and Director
Douglas C. Curling
/s/ JAMES M. DENNY Director March 26, 2002
- --------------------------------------------
James M. Denny
/s/ BONNIE G. HILL Director March 27, 2002
- --------------------------------------------
Bonnie G. Hill
/s/ KENNETH G. LANGONE Director March 27, 2002
- --------------------------------------------
Kenneth G. Langone
/s/ BERNARD MARCUS Director March 28, 2002
- --------------------------------------------
Bernard Marcus
/s/ CHARLES I. STORY Director March 29, 2002
- --------------------------------------------
Charles I. Story
21
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
BALANCE AT CHARGED TO COSTS CHARGED BALANCE AT END
BEGINNING OF & TO OTHER OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ----------- ------------ ---------------- -------- ---------- --------------
(In thousands)
Year ended December 31, 2001
Allowance for Doubtful Accounts ..................... 5,787 3,246 507(1) (4,906) 4,634
Merger & Exit Cost Reserves ......................... 4,270 5,316 9,363(1) (11,818) 7,131
Year ended December 31, 2000
Allowance for Doubtful Accounts ..................... 4,670 2,835 492(1) (2,210) 5,787
Merger & Exit Cost Reserves ......................... 4,556 11,263 1,224(1) (12,773) 4,270
Year ended December 31, 1999
Allowance for Doubtful Accounts ..................... 3,685 1,056 388(1) (459) 4,670
Merger & Exit Cost Reserves ......................... 6,997 3,748 -- (6,189) 4,556
- -----------------
(1) Represents allowances established in connection with acquisitions.
22