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EX-31.2 - EXHIBIT 31.2 - TransUniontransunion-20160930xex312.htm
EX-32 - EXHIBIT 32 - TransUniontransunion-20160930xex32.htm
EX-31.1 - EXHIBIT 31.1 - TransUniontransunion-20160930xex311.htm

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 10-Q
 
 
 
 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2016
- 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:
001-37470

 
 
TransUnion
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
 
61-1678417
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
 
555 West Adams, Chicago, IL
 
60661
(Address of principal executive offices)
 
(Zip code)
312-985-2000
(Registrants’ telephone number, including area code)
 
 
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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 
 
Yes  x    No  ¨
 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
 
 
Large accelerated filer
 
¨
 
Accelerated filer
 
¨
 
 
 
 
 
 
 
 
 
Non-accelerated filer
 
x  
 
Smaller reporting company
 
¨
 
 
 
 
 
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
 
Yes  ¨    No  x
 
 
The number of shares of registrants’ common stock outstanding as of September 30, 2016, was 182,957,826.





TRANSUNION
QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2016
TABLE OF CONTENTS
 

2


PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

TRANSUNION AND SUBSIDIARIES
Consolidated Balance Sheets
(in millions, except per share data)

 
September 30,
2016
 
December 31,
2015
 
Unaudited
 
 
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
137.9

 
$
133.2

Trade accounts receivable, net of allowance of $6.5 and $4.2
272.7

 
228.3

Other current assets
82.1

 
65.3

Total current assets
492.7

 
426.8

Property, plant and equipment, net of accumulated depreciation and amortization of $221.3 and $174.3
190.4

 
183.0

Goodwill, net
2,160.0

 
1,983.4

Other intangibles, net of accumulated amortization of $779.0 and $615.3
1,829.6

 
1,770.1

Other assets
103.2

 
79.5

Total assets
$
4,775.9

 
$
4,442.8

Liabilities and stockholders’ equity
 
 
 
Current liabilities:
 
 
 
Trade accounts payable
$
109.0

 
$
105.4

Short-term debt and current portion of long-term debt
49.5

 
43.9

Other current liabilities
186.0

 
146.7

Total current liabilities
344.5

 
296.0

Long-term debt
2,338.2

 
2,160.7

Deferred taxes
603.5

 
588.4

Other liabilities
58.2

 
27.8

Total liabilities
3,344.4

 
3,072.9

Redeemable noncontrolling interests

 
2.9

Stockholders’ equity:
 
 
 
Common stock, $0.01 par value; 1.0 billion shares authorized at September 30, 2016 and December 31, 2015, 183.6 million and 183.0 million shares issued at September 30, 2016 and December 31, 2015, respectively, and 183.0 million shares and 182.3 million shares outstanding as of September 30, 2016 and December 31, 2015, respectively
1.8

 
1.8

Additional paid-in capital
1,831.5

 
1,850.3

Treasury stock at cost; 0.7 million shares at September 30, 2016 and December 31, 2015
(4.6
)
 
(4.6
)
Accumulated deficit
(353.3
)
 
(424.3
)
Accumulated other comprehensive loss
(168.9
)
 
(191.8
)
Total TransUnion stockholders’ equity
1,306.5

 
1,231.4

Noncontrolling interests
125.0

 
135.6

Total stockholders’ equity
1,431.5

 
1,367.0

Total liabilities and stockholders’ equity
$
4,775.9

 
$
4,442.8


See accompanying notes to unaudited consolidated financial statements.

3


TRANSUNION AND SUBSIDIARIES
Consolidated Statements of Income (Loss) (Unaudited)
(in millions, except per share data)
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2016
 
2015
 
2016
 
2015
Revenue
$
437.6

 
$
389.1

 
$
1,269.0

 
$
1,120.7

Operating expenses
 
 
 
 
 
 
 
Cost of services (exclusive of depreciation and amortization below)
141.5

 
135.1

 
434.4

 
392.2

Selling, general and administrative
137.1

 
122.2

 
413.7

 
371.1

Depreciation and amortization
63.2

 
71.5

 
209.6

 
209.2

Total operating expenses
341.8

 
328.8

 
1,057.7

 
972.5

Operating income
95.8

 
60.3

 
211.3

 
148.2

Non-operating income and (expense)
 
 
 
 
 
 
 
Interest expense
(21.4
)
 
(24.8
)
 
(63.1
)
 
(114.4
)
Interest income
1.2

 
0.9

 
3.2

 
2.9

Earnings from equity method investments
2.3

 
2.0

 
6.2

 
6.5

Other income and (expense), net
(2.2
)
 
(37.3
)
 
(19.2
)
 
(44.7
)
Total non-operating income and (expense)
(20.1
)
 
(59.2
)
 
(72.9
)
 
(149.7
)
Income (loss) before income taxes
75.7

 
1.1

 
138.4

 
(1.5
)
Provision for income taxes
(31.2
)
 
(2.1
)
 
(59.6
)
 
(4.3
)
Net income (loss)
44.5

 
(1.0
)
 
78.8

 
(5.8
)
Less: net income attributable to the noncontrolling interests
(3.3
)
 
(3.0
)
 
(7.8
)
 
(7.5
)
Net income (loss) attributable to TransUnion
$
41.2

 
$
(4.0
)
 
$
71.0

 
$
(13.3
)
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.23

 
$
(0.02
)
 
$
0.39

 
$
(0.08
)
Diluted
$
0.22

 
$
(0.02
)
 
$
0.39

 
$
(0.08
)
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
182.7

 
182.1

 
182.5

 
159.6

Diluted
184.8

 
182.1

 
184.4

 
159.6

See accompanying notes to unaudited consolidated financial statements.


4


TRANSUNION AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(in millions)
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2016
 
2015
 
2016
 
2015
Net income (loss)
$
44.5

 
$
(1.0
)
 
$
78.8

 
$
(5.8
)
Other comprehensive income (loss):
 
 
 
 
 
 
 
         Foreign currency translation:
 
 
 
 
 
 
 
               Foreign currency translation adjustment
19.5

 
(45.9
)
 
49.6

 
(74.6
)
               (Expense) benefit for income taxes
(1.7
)
 
2.8

 
1.4

 
4.1

         Foreign currency translation, net
17.8

 
(43.1
)
 
51.0

 
(70.5
)
         Hedge instruments:
 
 
 
 
 
 
 
               Net unrealized loss
(0.1
)
 

 
(35.0
)
 

               Amortization of accumulated loss
0.1

 
0.1

 
0.3

 
0.3

               Benefit (expense) for income taxes
0.4

 

 
13.3

 
(0.1
)
         Hedge instruments, net
0.4

 
0.1

 
(21.4
)
 
0.2

Total other comprehensive income (loss), net of tax
18.2

 
(43.0
)
 
29.6

 
(70.3
)
Comprehensive income (loss)
62.7

 
(44.0
)
 
108.4

 
(76.1
)
Less: comprehensive (income) loss attributable to noncontrolling interests
(5.6
)
 
0.8

 
(14.5
)
 
(2.5
)
Comprehensive income (loss) attributable to TransUnion
$
57.1

 
$
(43.2
)
 
$
93.9

 
$
(78.6
)
See accompanying notes to unaudited consolidated financial statements.


5


TRANSUNION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(in millions)
 
Nine Months Ended 
 September 30,
 
2016
 
2015
Cash flows from operating activities:
 
 
 
Net income (loss)
$
78.8

 
$
(5.8
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation and amortization
209.6

 
209.2

Net loss on refinancing transactions

 
37.6

Amortization and loss on fair value of hedge instrument
1.2

 
1.5

Equity in net income of affiliates, net of dividends
(0.1
)
 
0.4

Deferred taxes
(13.3
)
 
(15.8
)
Amortization of discount and deferred financing fees
2.4

 
5.4

Stock-based compensation
14.6

 
6.7

Provision for losses on trade accounts receivable
3.3

 
2.2

Other
(1.4
)
 
0.9

Changes in assets and liabilities:
 
 
 
Trade accounts receivable
(34.2
)
 
(38.3
)
Other current and long-term assets
(5.8
)
 
15.8

Trade accounts payable
(1.5
)
 
(4.5
)
Other current and long-term liabilities
22.5

 
(9.1
)
Cash provided by operating activities
276.1

 
206.2

Cash flows from investing activities:
 
 
 
Capital expenditures
(85.5
)
 
(96.3
)
Proceeds from sale of trading securities
0.9

 
0.6

Purchases of trading securities
(1.3
)
 
(1.3
)
Proceeds from sale of other investments
31.0

 
10.9

Purchases of other investments
(31.7
)
 
(12.8
)
Acquisitions and purchases of noncontrolling interests, net of cash acquired
(345.5
)
 
(28.3
)
Acquisition-related deposits
(6.2
)
 
9.1

       Other
(3.5
)
 

Cash used in investing activities
(441.8
)
 
(118.1
)
Cash flows from financing activities:
 
 
 
Proceeds from senior secured term loan B
150.0

 
1,881.0

Extinguishment of senior secured term loan B

 
(1,881.0
)
Proceeds from senior secured term loan A
55.0

 
350.0

Extinguishment of 9.625% and 8.125% Senior Notes

 
(1,000.0
)
Proceeds from senior secured revolving line of credit
145.0

 
35.0

Payments of senior secured revolving line of credit
(145.0
)
 
(85.0
)
Repayments of debt
(38.0
)
 
(27.6
)
Proceeds from initial public offering

 
764.5

Underwriter fees and other costs on initial public offering

 
(49.7
)
Proceeds from issuance of common stock and exercise of stock options
4.7

 
2.2

Debt financing fees
(3.7
)
 
(18.2
)
Excess tax benefit
3.9

 

Distributions to noncontrolling interests
(3.3
)
 
(4.1
)
Payment of contingent obligation
(0.3
)
 

Cash provided by (used in) financing activities
168.3

 
(32.9
)
Effect of exchange rate changes on cash and cash equivalents
2.1

 
(4.4
)
Net change in cash and cash equivalents
4.7

 
50.8

Cash and cash equivalents, beginning of period
133.2

 
77.9

Cash and cash equivalents, end of period
$
137.9

 
$
128.7

See accompanying notes to unaudited consolidated financial statements.

6


TRANSUNION AND SUBSIDIARIES
Consolidated Statement of Stockholders’ Equity (Unaudited)
(in millions)
 
 
Common Stock
 
Paid-In Capital
 
Treasury Stock
 
Accumulated Deficit
 
Accumulated
Other Comprehensive Loss
 
Non-controlling Interests
 
Total
 
Redeemable
Non-
controlling
Interests
 
 
Shares
 
Amount
 
 
 
 
 
 
 
Balance December 31, 2015
 
182.3

 
$
1.8

 
$
1,850.3

 
$
(4.6
)
 
$
(424.3
)
 
$
(191.8
)
 
$
135.6

 
$
1,367.0

 
$
2.9

Net income
 

 

 

 

 
71.0

 

 
7.8

 
78.8

 

Other comprehensive income
 

 

 

 

 

 
22.9

 
2.1

 
25.0

 
4.6

Distributions to non-controlling interests
 

 

 

 

 

 

 
(3.3
)
 
(3.3
)
 

Adjustment of redeemable non-controlling interest
 

 

 
(10.0
)
 

 

 

 

 
(10.0
)
 
15.8

Establishment of non-controlling interests
 

 

 

 

 

 

 
10.2

 
10.2

 
43.7

Excess tax benefit
 

 

 
3.9

 

 

 

 

 
3.9

 

Stock-based compensation
 

 

 
14.1

 

 

 

 

 
14.1

 

Employee share purchase plan
 
0.1

 

 
1.4

 

 

 

 

 
1.4

 

Exercise of stock options
 
0.6

 

 
3.3

 

 

 

 

 
3.3

 

Purchase of non-controlling interest
 

 

 
(31.5
)
 

 

 

 
(27.4
)
 
(58.9
)
 
(67.0
)
Balance September 30, 2016
 
183.0

 
$
1.8

 
$
1,831.5

 
$
(4.6
)
 
$
(353.3
)
 
$
(168.9
)
 
$
125.0

 
$
1,431.5

 
$

See accompanying notes to unaudited consolidated financial statements.


7


TRANSUNION AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
1. Significant Accounting and Reporting Policies
Basis of Presentation
Any reference in this report to “the Company”, “we”, “our”, “us”, and “its’” are to TransUnion and its consolidated subsidiaries, collectively.
The accompanying unaudited consolidated financial statements of TransUnion and subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair presentation have been included. All significant intercompany transactions and balances have been eliminated. The operating results of TransUnion for the periods presented are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016. These unaudited consolidated financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2015, included in Exhibit 99.1 of our Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on June 1, 2016.
Principles of Consolidation
The consolidated financial statements of TransUnion include the accounts of TransUnion and all of its majority-owned or controlled subsidiaries. Investments in unconsolidated entities in which the Company is able to exercise significant influence are accounted for using the equity method. Nonmarketable investments in unconsolidated entities in which the Company is not able to exercise significant influence are accounted for using the cost method and periodically reviewed for impairment.
Subsequent Events
Events and transactions occurring through the date of issuance of the financial statements have been evaluated by management and, when appropriate, recognized or disclosed in the financial statements or notes to the consolidated financial statements.
Recently Adopted Accounting Pronouncements
On April 7, 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs. The amendments in this update require that unamortized debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the corresponding debt liability, consistent with debt discounts. The new guidance is required to be applied on a retrospective basis, wherein the balance sheet of each individual period presented is adjusted to reflect the period-specific effects of applying the new guidance. Accordingly, we have presented our debt as of September 30, 2016, and December 31, 2015, net of unamortized debt issue costs of $4.9 million and $3.9 million, respectively, on our balance sheet and in Note 8, “Debt.”

On August 18, 2015, the FASB issued ASU 2015-15, Interest—Imputation of Interest (Subtopic 835-30) - Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting). The ASU indicates the SEC staff would not object to presenting deferred debt issuance costs for a line of credit arrangement as an asset in the balance sheet. We continue to present our deferred line of credit fees as an asset in the consolidated balance sheet. See Note 3 “Other Current Assets” and Note 4 “Other Assets.”
Recent Accounting Pronouncements Not Yet Adopted
On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This comprehensive guidance will replace all existing revenue recognition guidance and is effective for annual reporting periods beginning after December 15, 2017, and interim periods therein. During 2016, the FASB issued additional guidance: ASU No. 2016-09 Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net); ASU No. 2016-10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; ASU No. 2016-11 Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update) and ASU No. 2016-12 Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. This additional guidance updates and clarifies the guidance in certain sub-sections of Topic 606. We are currently assessing the impact this revenue recognition guidance will have on our consolidated financial statements.
On January 5, 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This ASU is intended to improve the recognition and measurement of financial instruments. Among other things, the ASU requires equity investments (except those accounted for under the equity

8


method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. This guidance is effective for fiscal years beginning after December 15, 2017, and interim periods therein. We are currently assessing the impact this guidance will have on our consolidated financial statements.
On February 25, 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU, among other things, will require lessee’s to record a lease liability, which is an obligation to make lease payments arising from a lease, and right-of-use asset, which is an asset that represents the right to use, or control the use of, a specified asset for the lease term, for all long-term leases. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently assessing the impact this guidance will have on our consolidated financial statements.
On March 30, 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This ASU simplifies several aspects of the accounting for share-based payment award transactions, including income tax consequences, classification of awards, and classification on the statement of cash flows. This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods therein. We are currently assessing the impact this guidance will have on our consolidated financial statements.
On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In addition, these amendments require the measurement of all expected credit losses for financial assets, including trade accounts receivable, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This guidance is effective for annual reporting periods beginning after December 15, 2019, including interim period therein. We are currently assessing the impact this guidance will have on our consolidated financial statements.
On August 26, 2016 the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU addresses the diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim period therein. We are currently assessing the impact this guidance will have on our consolidated statements of cash flows.
2. Fair Value
The following table summarizes financial instruments measured at fair value, on a recurring basis, as of September 30, 2016:
(in millions)
 
Total
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
 
Trading securities
 
$
12.2

 
$
8.0

 
$
4.2

 
$

Available for sale securities
 
3.2

 

 
3.2

 

Total
 
$
15.4

 
$
8.0

 
$
7.4

 
$

 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
Interest rate caps
 
$
(32.2
)
 
$

 
$
(32.2
)
 
$

Contingent obligations
 
(19.2
)
 

 

 
(19.2
)
Total
 
$
(51.4
)
 
$

 
$
(32.2
)
 
$
(19.2
)
Level 1 instruments consist of exchange-traded mutual funds. Exchange-traded mutual funds are trading securities valued at their current market prices. These securities relate to the nonqualified deferred compensation plan held in trust for the benefit of plan participants.
Level 2 instruments consist of pooled separate accounts, foreign exchange-traded corporate bonds and interest rate caps. Pooled separate accounts are designated as trading securities valued at net asset values. These securities relate to the nonqualified deferred compensation plan held in trust for the benefit of plan participants. Foreign exchange-traded corporate bonds are available-for-sale securities valued at their current quoted prices. These securities mature between 2027 and 2033. The interest rate caps fair values are determined by discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps in conjunction with the cash payments related to financing the premium of the interest rate caps. The variable interest rates used in the calculation of projected receipts on the caps are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. See Note 8, “Debt” for additional information regarding interest rate caps.

9


Unrealized gains and losses on trading securities are included in net income, while unrealized gains and losses on available for sale securities are included in other comprehensive income. There were no significant realized or unrealized gains or losses on our securities for any of the periods presented.
Level 3 instruments consist of contingent obligations related to companies we have acquired with maximum payouts totaling $47.1 million. These obligations are contingent upon meeting certain performance requirements through 2018. The fair values of these obligations are recorded in other current liabilities and other liabilities and were determined based on an income approach, using our current expectations of the future earnings of the acquired entities. We assess the fair value of these obligations each reporting period with any changes reflected as gains or losses in selling, general and administrative expenses in the consolidated statements of income. During the three and nine months ended September 30, 2016, we recorded expenses of $0.9 million and $1.0 million, respectively, as a result of changes to the fair value of these obligations.
3. Other Current Assets
Other current assets consisted of the following:
(in millions)
 
September 30, 
 2016
 
December 31, 2015
Prepaid expenses
 
$
39.4

 
$
41.9

Other investments
 
22.1

 
12.5

Income taxes receivable
 
6.7

 
0.1

Marketable securities
 
3.2

 
2.9

Deferred financing fees
 
0.5

 
0.5

Other
 
10.2

 
7.4

Total other current assets
 
$
82.1

 
$
65.3

Other investments include non-negotiable certificates of deposit that are recorded at their carrying value.  The investments increased from year-end due to investments acquired with our purchase of Central de Informacion Financiera S.A. (“CIFIN”).
4. Other Assets
Other assets consisted of the following:
(in millions)
 
September 30, 
 2016
 
December 31, 2015
Investments in affiliated companies
 
$
66.5

 
$
50.5

Other investments
 
12.4

 
13.0

Marketable securities
 
12.2

 
11.2

Deposits
 
9.3

 
1.8

Deferred financing fees
 
1.3

 
1.7

Other
 
1.5

 
1.3

Total other assets
 
$
103.2

 
$
79.5

Other investments include non-negotiable certificates of deposit that are recorded at their carrying value.
5. Investments in Affiliated Companies
Investments in affiliated companies represent our investment in non-consolidated domestic and foreign entities. These entities are in businesses similar to ours, such as credit reporting, credit scoring and credit monitoring services. These investments are included in other assets in the consolidated balance sheets.
We use the equity method to account for investments in affiliates where we are able to exercise significant influence. For these investments, we adjust the carrying value for our proportionate share of the affiliates’ earnings, losses and distributions, as well as for purchases and sales of our ownership interest.
We use the cost method to account for nonmarketable investments in affiliates where we are not able to exercise significant influence. For these investments, we adjust the carrying value for purchases and sales of our ownership interests.

10


For all investments, we adjust the carrying value if we determine that an other-than-temporary impairment has occurred. There were no other-than-temporary impairments of investments in affiliated companies during the three and nine months ended September 30, 2016 or 2015.
Investments in affiliated companies consisted of the following:
(in millions)
 
September 30, 
 2016
 
December 31, 2015
Total equity method investments
 
$
41.3

 
$
45.5

Total cost method investments
 
25.2

 
5.0

Total investments in affiliated companies
 
$
66.5

 
$
50.5

The increase in cost method investments is due to additional acquisitions made in 2016.
Earnings from equity method investments, which are included in non-operating income and expense, and dividends received from equity method investments consisted of the following:
(in millions)
 
Three Months Ended 
 September 30, 2016
 
Three Months Ended 
 September 30, 2015
 
Nine Months Ended 
 September 30, 2016
 
Nine Months Ended 
 September 30, 2015
Earnings from equity method investments
 
$
2.3

 
$
2.0

 
$
6.2

 
$
6.5

Dividends received from equity method investments
 
$
0.5

 
$
5.3

 
$
6.1

 
$
6.9

There were no dividends on cost method investments received for the three months ended September 30, 2016. Dividends received from cost method investments for the three months ended September 30, 2015, was $0.3 million. Dividends received from cost method investments for the nine months ended September 30, 2016 and 2015, were $0.6 million and $0.6 million, respectively.
6. Other Current Liabilities
Other current liabilities consisted of the following:

(in millions)
 
September 30, 
 2016
 
December 31, 2015
Accrued payroll
 
$
85.4

 
$
74.5

Accrued employee benefits
 
29.2

 
24.2

Accrued legal and regulatory
 
16.4

 
16.3

Income taxes payable
 
15.1

 
2.6

Contingent obligation
 
10.8

 
2.0

Deferred revenue
 
9.7

 
10.6

Accrued interest
 
1.0

 
1.0

Other
 
18.4

 
15.5

Total other current liabilities
 
$
186.0

 
$
146.7


11


7. Other Liabilities
Other liabilities consisted of the following:
(in millions)
 
September 30, 
 2016
 
December 31, 2015
Interest rate caps
 
$
32.2

 
$

Retirement benefits
 
12.3

 
11.2

Contingent obligation
 
8.4

 
5.1

Unrecognized tax benefits
 
1.8

 
0.3

Other
 
3.5

 
11.2

Total other liabilities
 
$
58.2

 
$
27.8


See note 8, “Debt,” for additional information about the interest rate caps.
8. Debt
Debt outstanding consisted of the following:
(in millions)
 
September 30, 
 2016
 
December 31, 2015
Senior Secured Term Loan B, payable in quarterly installments through April 9, 2021, including variable interest (3.50% at September 30, 2016) at LIBOR or alternate base rate, plus applicable margin, including original issue discount and deferred financing fees of $8.0 million and $4.7 million, respectively, at September 30, 2016, and original issue discount and deferred financing fees of $7.3 million and $3.8 million, respectively, at December 31, 2015
 
$
1,989.1

 
$
1,855.6

Senior Secured Term Loan A, payable in quarterly installments through June 30, 2020, including variable interest (2.52% at September 30, 2016) at LIBOR or alternate base rate, plus applicable margin, including original issue discount and deferred financing fees of $0.8 million and $0.2 million, respectively, at September 30, 2016, and original issue discount and deferred financing fees of $0.7 million and $0.1 million, respectively, at December 31, 2015
 
380.7

 
340.4

Other notes payable
 
16.5

 
6.2

Capital lease obligations
 
1.4

 
2.4

Total debt
 
2,387.7

 
2,204.6

Less short-term debt and current portion of long-term debt
 
(49.5
)
 
(43.9
)
Total long-term debt
 
$
2,338.2

 
$
2,160.7

Excluding potential additional principal payments due on the senior secured credit facility based on excess cash flows of the prior year, scheduled future maturities of total debt at September 30, 2016, were as follows: 
(in millions)
 
September 30, 2016
2016
 
$
11.4

2017
 
51.0

2018
 
54.9

2019
 
54.7

2020
 
314.7

Thereafter
 
1,914.7

Unamortized original issue discounts and unamortized deferred financing fee
 
(13.7
)
Total debt
 
$
2,387.7


12


Senior Secured Credit Facility
On June 15, 2010, we entered into a senior secured credit facility with various lenders. This facility has been amended several times and currently consists of the Senior Secured Term Loan A, the Senior Secured Term Loan B and the senior secured revolving line of credit. On July 15, 2015, we used the net proceeds from our initial public offering (“IPO”), along with $350.0 million of borrowings from the Senior Secured Term Loan A, to redeem all of our then outstanding 9.625% and 8.125% Senior Notes, including a prepayment premium, accrued interest and certain transaction costs.

On March 31, 2016, we borrowed an additional $150.0 million of our Senior Secured Term Loan B, on the same terms as the original Senior Secured Term Loan B, to pay off the balance on our senior secured revolving line of credit that we had drawn on in February 2016 to fund the acquisition of CIFIN and for general corporate purposes. On May 31, 2016, we borrowed an additional $55.0 million of our Senior Secured Term Loan A, on the same terms as the original Senior Secured Term Loan A, to fund an additional investment in CIFIN and for general corporate purposes.

As of September 30, 2016, we had no amounts outstanding under the senior secured revolving line of credit and could have borrowed up to the $210.0 million available. As of September 30, 2016, TransUnion has the ability to borrow incremental term loans or increase the revolving credit commitments in one or more tranches, subject to certain additional conditions, so long as the Senior Secured Net Leverage ratio does not exceed 4.25-to-1. TransUnion also has the ability to borrow up to an additional $450.0 million under the senior secured credit facility, subject to certain additional conditions and commitments by existing or new lenders to fund any additional borrowings. 

With certain exceptions, the senior secured credit facility obligations are secured by a first-priority security interest in substantially all of the assets of Trans Union LLC, including its investment in subsidiaries. The senior secured credit facility contains various restrictions and nonfinancial covenants, along with a senior secured net leverage ratio test. The nonfinancial covenants include restrictions on dividends, investments, dispositions, future borrowings and other specified payments, as well as additional reporting and disclosure requirements. The senior secured net leverage test must be met as a condition to incur additional indebtedness and at the end of each fiscal quarter. As of September 30, 2016, this covenant required us to maintain a net leverage ratio on a pro forma basis equal to, or less than, 6.5-to-1. As of September 30, 2016, we were in compliance with all debt covenants.
On April 30, 2012, we entered into swap agreements to effectively fix the interest payments on a portion of the then existing senior secured term loan at 2.033%, plus the applicable margin, beginning March 28, 2013. As a result of the amendment to our senior secured credit facility dated April 9, 2014, the swaps no longer were expected to be highly effective and no longer qualified for hedge accounting. At that time, the total net of tax loss of $1.0 million was recorded in accumulated other comprehensive income and is being amortized to interest expense on a straight-line basis through December 29, 2017, the initial expiration date of the swaps. On December 18, 2015, we terminated the interest rate swaps by paying off the outstanding liability balance of $2.7 million. Prior to terminating the swaps, changes in the fair value of the swaps for the three and nine months ended September 30, 2015, resulted in a loss of $0.4 million and $1.2 million, respectively, recorded in other income and expense.
On December 18, 2015, we entered into interest rate cap agreements with various counter parties that effectively cap our LIBOR exposure on a portion of our existing senior secured term loans at 0.75% beginning June 30, 2016. We have designated these cap agreements as cash flow hedges. The initial aggregate notional amount under these agreements was $1,526.4 million and decreases each quarter beginning September 30, 2016, until the agreement terminates on June 30, 2020. In July 2016, we began to pay the various counter-parties a fixed rate on the outstanding notional amounts of between 0.98% and 0.994% and receive payments to the extent LIBOR exceeds 0.75%.
The interest rate caps are recorded on the balance sheet at fair value. The effective portion of changes in the fair value of the interest rate cap agreements is recorded in other comprehensive income (loss). The ineffective portion of changes in the fair value of the caps, which is due to, and will continue to result from, the cost of financing the cap premium, is recorded in other income and expense. The effective portion of the change in the fair value of the caps resulted in a loss of $0.2 million and $21.7 million, net of tax, recorded in other comprehensive income for the three and nine months ended September 30, 2016. respectively. The ineffective portion of the change in the fair value of the caps resulted in a gain of $0.1 million and a loss of $0.9 million recorded in other income and expense for the three- and nine-month periods, respectively.

In accordance with ASC 815, the fair value of the interest rate caps at inception is reclassified from other comprehensive income to interest expense in the same period the interest expense on the underlying hedged debt impacts earnings. Based on how the fair value of interest rate caps are determined, the earlier interest periods have lower fair values at inception than the later interest periods, resulting in less interest expense being recognized in the earlier periods compared with the later periods. Any payments we receive to the extent LIBOR exceeds 0.75% is also reclassified from other comprehensive income to interest expense in the period received. Interest expense reclassified from other comprehensive income to interest expense related to the fair value of the portion of the caps expiring in the three- and nine-month periods of 2016 was $0.5 million and $0.5 million. We expect to reclassify

13


approximately $7.1 million from other comprehensive income to interest expense related to the fair value of the portion of the caps expiring and payments received to the extent LIBOR exceeds 0.75% in the next twelve months.
Fair Value of Debt
As of September 30, 2016, the fair value of our variable-rate Senior Secured Term Loan A, excluding original issue discounts and deferred fees, approximates the carrying value. As of September 30, 2016 the fair value of our Senior Secured Term Loan B, excluding original issue discounts and deferred fees, was approximately $2,009.3 million. The fair values of our variable-rate term loans are determined using Level 2 inputs, quoted market prices for these publicly traded instruments.
9. Stockholders’ Equity
Stock Split
During 2015, we effected a 1.333 to 1 stock split of our common stock. All periods presented in these financial statements reflect this split. The impact of the split resulted in a reclassification of the beginning balance of additional paid-in capital to common stock to reflect the increase in par value.
Preferred Stock
We have 100.0 million shares of preferred stock authorized. No preferred stock had been issued or was outstanding as of September 30, 2016.
Redeemable Non-controlling Interest
During the first quarter of 2016, redeemable noncontrolling interest increased $59.5 million, due to our purchase of CIFIN and our exercise of our call rights on the Drivers History Information Sales, LLC (“DHI”) noncontrolling interest. During the second quarter of 2016, we redeemed all of our redeemable noncontrolling interest in CIFIN and DHI, resulting in no redeemable noncontrolling interest at September 30, 2016.
10. Earnings Per Share
Basic earnings per share represents income available to common stockholders divided by the weighted average number of common shares outstanding during the reported period. Diluted earnings per share reflects the effect of the increase in shares outstanding determined by using the treasury stock method for awards issued under our incentive stock plans.
For the three and nine months ended September 30, 2016, there were less than 0.1 million anti-dilutive stock-based awards outstanding. In addition, there were 5.9 million contingently issuable market-based stock awards outstanding that were excluded from the diluted earnings per share calculation because the contingencies had not been met. As of September 30, 2015, there were 4.0 million anti-dilutive stock-based awards outstanding. These awards were anti-dilutive because we reported a net loss in each period. In addition, there were 6.2 million contingently issuable market-based stock awards outstanding that were excluded from the diluted earnings per share calculation because the contingencies had not been met.

14


Basic and diluted weighted average shares outstanding and earnings per share were as follows:
(in millions, except per share data)
 
Three Months Ended September 30, 2016
 
Three Months Ended September 30, 2015
 
Nine Months Ended September 30, 2016
 
Nine Months Ended September 30, 2015
 
 
 
 
 
 
 
 
 
Earnings per share - basic
 
 
 
 
 
 
 
 
Earnings available to common shareholders
 
$
41.2

 
$
(4.0
)
 
$
71.0

 
$
(13.3
)
Weighted average basic shares outstanding
 
182.7

 
182.1

 
182.5

 
159.6

Earnings per share - basic
 
$
0.23

 
$
(0.02
)
 
$
0.39

 
$
(0.08
)
 
 
 
 
 
 
 
 
 
Earnings per share - diluted
 
 
 
 
 
 
 
 
Earnings available to common shareholders
 
$
41.2

 
$
(4.0
)
 
$
71.0

 
$
(13.3
)
 
 
 
 
 
 
 
 
 
Weighted average basic shares outstanding
 
182.7

 
182.1

 
182.5

 
159.6

Dilutive impact of stock based awards
 
2.1

 

 
1.9

 

Weighted average dilutive shares outstanding
 
184.8

 
182.1

 
184.4

 
159.6

Earnings per share - diluted
 
$
0.22

 
$
(0.02
)
 
$
0.39

 
$
(0.08
)

15


11. Income Taxes
For the three months ended September 30, 2016, we reported an effective tax rate of 41.3%, which was higher than the 35% U.S. federal statutory rate due primarily to the tax expense on unremitted foreign earnings not considered permanently reinvested, the impact of valuation allowances on the losses of certain foreign subsidiaries, and changes in state tax assumptions. For the nine months ended September 30, 2016, we reported an effective tax rate of 43.1%, which was higher than the 35% U.S. federal statutory rate due primarily to the tax expense on unremitted foreign earnings not considered permanently reinvested, the impact of valuation allowances on the losses of certain foreign subsidiaries, and changes in state tax assumptions.
We had two offsetting income tax adjustments that impacted the three- and nine-month periods in 2016. First, we changed our assertion on unremitted earnings for an equity method investment that is now owned by one of our international subsidiaries. Those earnings are now determined to be indefinitely reinvested outside the United States, which resulted in a decrease of deferred income tax expense of $14.3 million. Second, changes in state tax assumptions resulted in an increase in income tax expense of $12.8 million.
For the three months ended September 30, 2015, we reported an effective tax rate of 187.9%, which was higher than the 35% U.S. federal statutory rate due primarily to the expiration of the look-through rule, tax expenses on unremitted foreign earnings not considered permanently reinvested, and the impact of valuation allowances on the losses of certain foreign subsidiaries. For the nine months ended September 30, 2015, we reported a loss before income taxes and an effective tax rate benefit of (280.5)%, which was different than the 35% U.S. federal statutory rate due primarily to these same reasons.
Effective January 1, 2015, the look-through rule under Subpart F of the U.S. Internal Revenue Code noted above expired but was reinstated in December 2015 retroactive to January 1, 2015. Subpart F requires U.S. corporate shareholders to recognize current U.S. taxable income from passive income, including earnings of certain foreign subsidiaries, regardless of whether that income is remitted to the United States. The look-through rule of Subpart F grants an exception for any passive income of certain foreign subsidiaries that is attributable to an active business. When the look-through exception is not in effect, we are required to accrue a tax liability for those foreign earnings as if those earnings were distributed to the United States. Consequently, in the first quarter of 2015, we recorded the additional tax expense we would have incurred in the absence of the look-through rule.
The total amount of unrecognized tax benefits was $1.8 million as of September 30, 2016, and $1.9 million as of December 31, 2015. These same amounts would affect the effective tax rate, if recognized. The accrued interest payable for taxes was $0.1 million as of September 30, 2016 and December 31, 2015. There was no significant liability for tax penalties as of September 30, 2016 or December 31, 2015. We are regularly audited by federal, state and foreign taxing authorities. Given the uncertainties inherent in the audit process, it is reasonably possible that certain audits could result in a significant increase or decrease in the total amounts of unrecognized tax benefits. An estimate of the range of the increase or decrease in unrecognized tax benefits due to audit results cannot be made at this time. Tax years 2008 and forward remain open for examination in some state and foreign jurisdictions, and tax years 2012 and forward remain open for examination for U.S. federal purposes.

16


12. Operating Segments
Operating segments are businesses for which separate financial information is available and evaluated regularly by the chief operating decision maker in deciding how to allocate resources. This segment financial information is reported on the basis that is used for the internal evaluation of operating performance. The accounting policies of the segments are the same as described in Note 1, “Significant Accounting and Reporting Policies” included in our audited financial statements for the year ended December 31, 2015, included in Exhibit 99.1 of our Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on June 1, 2016.
In the first quarter of 2016, we moved our direct to consumer reseller business and reallocated certain other costs related to our consumer facing business in the U.S. from our USIS segment to our Consumer Interactive segment. These changes better reflect the evolution of our consumer facing business in the U.S. and how we manage that business. As a result, we modified our segment reporting effective the first quarter of 2016. In conjunction with this change we also reclassified $105.0 million of goodwill from our USIS segment to our Consumer Interactive segment. The segment results below have been recast to reflect these changes for all periods presented. These changes do not impact our consolidated results.
We evaluate the performance of segments based on revenue and operating income. The following is a more detailed description of the three operating segments and the Corporate unit, which provides support services to each operating segment:
U.S. Information Services
U.S. Information Services (“USIS”) provides consumer reports, risk scores, analytical and decisioning services to businesses. These businesses use our services to acquire new customers, assess consumer ability to pay for services, identify cross-selling opportunities, measure and manage debt portfolio risk, collect debt, verify consumer identities and investigate potential fraud. The core capabilities and delivery platforms in our USIS segment allow us to serve a broad set of customers and business issues. We offer our services to customers in financial services, insurance, healthcare and other industries.
International
The International segment provides services similar to our USIS segment to businesses in select regions outside the United States. Depending on the maturity of the credit economy in each country, services may include credit reports, analytics and decisioning services and other value-added risk management services. In addition, we have insurance, business and automotive databases in select geographies. These services are offered to customers in a number of industries including financial services, insurance, automotive, collections and communications, and are delivered through both direct and indirect channels. The International segment also provides consumer services similar to those offered by our Consumer Interactive segment that help consumers proactively manage their personal finances.
Consumer Interactive
Consumer Interactive offers solutions that help consumers manage their personal finances and take precautions against identity theft. Services in this segment include credit reports and scores, credit monitoring, fraud protection and resolution and financial management. Our products are provided through user friendly online and mobile interfaces and are supported by educational content and customer support. Our Consumer Interactive segment serves consumers through both direct and indirect channels.
Corporate
In addition, Corporate provides support services for each of the operating segments, holds investments, and conducts enterprise functions. Certain costs incurred in Corporate that are not directly attributable to one or more of the operating segments remain in Corporate. These costs are typically enterprise-level costs and are primarily administrative in nature.


17


Selected segment financial information consisted of the following:
(in millions)
 
Three Months Ended September 30, 2016
 
Three Months Ended September 30, 2015
 
Nine Months Ended September 30, 2016
 
Nine Months Ended September 30, 2015
Gross revenues:
 
 
 
 
 
 
 
 
U.S. Information Services
 
$
273.3

 
$
239.3

 
$
777.1

 
$
691.4

International
 
82.3

 
68.7

 
227.7

 
199.8

Consumer Interactive
 
97.4

 
95.5

 
310.0

 
272.3

Total revenues, gross
 
453.0

 
403.6

 
1,314.7

 
1,163.5

 
 
 
 
 
 
 
 
 
Intersegment revenue eliminations:
 
 
 
 
 
 
 
 
U.S. Information Services
 
(14.3
)
 
(13.6
)
 
(42.7
)
 
(40.4
)
International
 
(1.1
)
 
(0.8
)
 
(3.0
)
 
(2.3
)
Consumer Interactive
 

 

 

 

Corporate
 

 

 

 

Total intersegment eliminations
 
(15.4
)
 
(14.5
)
 
(45.7
)
 
(42.8
)
Total revenues, net
 
$
437.6

 
$
389.1

 
$
1,269.0

 
$
1,120.7

 
 
 
 
 
 
 
 
 
Operating income:
 
 
 
 
 
 
 
 
U.S. Information Services
 
$
63.9

 
$
42.8

 
$
135.5

 
$
108.9

International
 
14.4

 
7.9

 
27.5

 
12.5

Consumer Interactive
 
41.0

 
36.5

 
125.1

 
96.4

Corporate
 
(23.5
)
 
(26.9
)
 
(76.8
)
 
(69.6
)
Total operating income
 
$
95.8

 
$
60.3

 
$
211.3

 
$
148.2

 
 
 
 
 
 
 
 
 
Intersegment operating income eliminations:
 
 
 
 
 
 
 
 
U.S. Information Services
 
$
(13.9
)
 
$
(13.2
)
 
$
(41.6
)
 
$
(39.3
)
International
 
(0.8
)
 
(0.5
)
 
(2.2
)
 
(1.4
)
Consumer Interactive
 
14.7

 
13.7

 
43.8

 
40.7

Total intersegment eliminations
 
$

 
$

 
$

 
$


As a result of displaying amounts in millions, rounding differences may exist in the table above.
A reconciliation of operating income to income (loss) before income taxes for the periods presented is as follows:
(in millions)
 
Three Months Ended September 30, 2016
 
Three Months Ended September 30, 2015
 
Nine Months Ended September 30, 2016
 
Nine Months Ended September 30, 2015
Operating income from segments
 
$
95.8

 
$
60.3

 
$
211.3

 
$
148.2

Non-operating income and expense
 
(20.1
)
 
(59.2
)
 
(72.9
)
 
(149.7
)
Income (loss) before income taxes
 
$
75.7

 
$
1.1

 
$
138.4

 
$
(1.5
)




18


Earnings from equity method investments included in non-operating income and expense for the periods presented were as follows:
 
(in millions)
 
Three Months Ended September 30, 2016
 
Three Months Ended September 30, 2015
 
Nine Months Ended September 30, 2016
 
Nine Months Ended September 30, 2015
USIS
 
$
0.5

 
$
0.5

 
$
1.5

 
$
1.4

International
 
1.8

 
1.5

 
4.7

 
5.1

Total
 
$
2.3

 
$
2.0

 
$
6.2

 
$
6.5


19


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of TransUnion’s financial condition and results of operations is provided as a supplement to, and should be read in conjunction with, TransUnion’s audited consolidated financial statements, the accompanying notes, “Risk Factors”, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Exhibit 99.1 of our Current Report on Form 8-K filed with the SEC on June 1, 2016, as well as the unaudited consolidated financial statements and the related notes presented in Part I, Item 1 of this Quarterly Report on Form 10-Q.
References in this discussion and analysis to “the Company”, “we”, “our”, “us”, and “its’” are to TransUnion and its consolidated subsidiaries, collectively.
In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to those discussed below in “Cautionary Notice Regarding Forward-Looking Statements”, and Part II, Item 1A, “Risk Factors.”
Overview
TransUnion is a leading global risk and information solutions provider to businesses and consumers. We provide consumer reports, risk scores, analytical services and decisioning capabilities to businesses. Businesses embed our solutions into their process workflows to acquire new customers, assess consumer ability to pay for services, identify cross-selling opportunities, measure and manage debt portfolio risk, collect debt, verify consumer identities and investigate potential fraud. Consumers use our solutions to view their credit profiles and access analytical tools that help them understand and manage their personal information and take precautions against identity theft. We are differentiated by our comprehensive and unique datasets, our next-generation technology and our analytics and decisioning capabilities, which enable us to deliver insights across the entire consumer lifecycle. We believe we are the largest provider of risk and information solutions in the United States to possess both nationwide consumer credit data and comprehensive, diverse public records data, which allows us to better predict behaviors, assess risk and address a broader set of business issues for our customers. We have deep domain expertise across a number of attractive industries, sometimes referred to as verticals, including financial services, insurance and healthcare. We have a global presence in over 30 countries across North America, Africa, Latin America and Asia.
We believe that we have the capabilities and assets, including comprehensive and unique datasets, advanced technology and analytics, to provide differentiated solutions to our customers. We obtain financial, credit, alternative credit, identity, bankruptcy, lien, judgment, insurance claims, automotive and other relevant information from an average of 90,000 data sources, including financial institutions, private databases and public records repositories. We refine, standardize and enhance this data using sophisticated algorithms to create proprietary databases. Our next-generation technology allows us to quickly and efficiently integrate our data with our analytics and decisioning capabilities to create and deliver innovative solutions to our customers and to quickly adapt to changing customer needs. Our deep analytics expertise, which includes our people as well as tools such as predictive modeling and scoring, customer segmentation, benchmarking and forecasting, enables businesses and consumers to gain better insights into their risk and financial data. Our decisioning capabilities, which are generally delivered on a software-as-a-service platform, allow businesses to interpret data and apply their specific qualifying criteria to make decisions and take action with respect to their customers. Collectively, our data, analytics and decisioning capabilities allow businesses to authenticate the identity of consumers, effectively determine the most relevant products for consumers, retain and cross-sell to existing consumers, identify and acquire new consumers and reduce loss from fraud. Similarly, our capabilities allow consumers to see how their credit profiles have changed over time, understand the impact of financial decisions on their credit scores and manage their personal information as well as to take precautions against identity theft.
Segments
We manage our business and report our financial results in three operating segments: USIS, International and Consumer Interactive. In the first quarter of 2016, we moved our direct to consumer reseller business and reallocated certain other costs related to our consumer facing business in the U.S. from our USIS segment to our Consumer Interactive segment. These changes better reflect the evolution of our consumer facing business in the U.S. and how we manage that business. As a result, we modified our segment reporting effective the first quarter of 2016. In conjunction with this change we also reclassified $105.0 million of goodwill from our USIS segment to our Consumer Interactive segment. The segment results below have been recast to reflect these changes for all periods presented. These changes do not impact our consolidated results.
USIS provides consumer reports, risk scores, analytical and decisioning services to businesses. These businesses use our services to acquire new customers, assess consumer ability to pay for services, identify cross-selling opportunities, measure and manage debt portfolio risk, collect debt, verify consumer identities and investigate potential fraud. The core capabilities

20


and delivery platforms in our USIS segment allow us to serve a broad set of customers and business issues. We offer our services to customers in financial services, insurance, healthcare and other industries.
The International segment provides services similar to our USIS segment to businesses in select regions outside the United States. Depending on the maturity of the credit economy in each country, services may include credit reports, analytics and decisioning services and other value-added risk management services. In addition, we have insurance, business and automotive databases in select geographies. These services are offered to customers in a number of industries including financial services, insurance, automotive, collections and communications, and are delivered through both direct and indirect channels. The International segment also provides consumer services similar to those offered by our Consumer Interactive segment that help consumers proactively manage their personal finances.
Consumer Interactive offers solutions that help consumers manage their personal finances and take precautions against identity theft. Services in this segment include credit reports and scores, credit monitoring, fraud protection and resolution and financial management. Our products are provided through user friendly online and mobile interfaces and supported by educational content and customer support. Our Consumer Interactive segment serves consumers through both direct and indirect channels.
In addition, Corporate provides support services for each of the operating segments, holds investments, and conducts enterprise functions. Certain costs incurred in Corporate that are not directly attributable to one or more of the operating segments remain in Corporate. These costs are typically enterprise-level costs and are primarily administrative in nature.
Factors Affecting Our Results of Operations
The following are certain key factors that affect, or have recently affected, our results of operations:
Macroeconomic and Industry Trends
Our revenues are significantly influenced by general macroeconomic conditions, including the demand and availability of affordable credit and capital, interest rates, inflation, employment levels, consumer confidence and housing demand. Since the beginning of 2015, we have seen continuing signs of improved economic conditions and increased market stabilization. In the United States, we also saw improvement in the consumer lending market, including mortgage refinancings resulting from low long-term mortgage rates, an improving housing market, increased auto loans, improvements in the labor market, an increase in consumer confidence and an increase in demand for our marketing services. In our Consumer Interactive segment, we continue to see strong demand for our credit and identity theft solutions. The continuing strengthening of the U.S. dollar has diminished the operating results reported by our International segment compared with the prior year.
Our revenues are also significantly influenced by industry trends, including the demand for information services in financial services, insurance, healthcare and other industries we serve. Companies are increasingly relying on business analytics and big-data technologies to help process this data in a cost-efficient manner. As customers have gained the ability to rapidly aggregate and analyze data generated by their own activities, they are increasingly expecting access to real-time data and analytics from their information providers as well as solutions that fully integrate into their workflows. As economies in emerging markets continue to develop and mature, we believe there will continue to be favorable socio-economic trends, such as an increase in the size of the middle class and a significant increase in the use of financial services by under-served and under-banked customers. Demand for consumer solutions is rising with higher consumer awareness of the importance and usage of their credit information, increased risk of identity theft due to data breaches and more readily available free credit information. The increasing number and complexity of regulations, including new capital requirements and the Dodd-Frank Act, make operations for businesses more challenging.
Effects of Inflation
We do not believe that inflation has had a material effect on our business, results of operations or financial condition.
Recent Developments
On September 14, 2016, certain of our stockholders completed a secondary public offering of approximately 16.0 million shares of TransUnion common stock. On June 10, 2016, one of our stockholders completed a secondary public offering of approximately 18.0 million shares of TransUnion common stock. On March 14, 2016, certain of our stockholders completed a secondary public offering of approximately 17.9 million shares of TransUnion common stock. These secondary offerings had no impact on our financial statements, other than approximately $0.7 million and $2.5 million of transactions costs recorded in other income and expense for the three and nine months ended September 30, 2016, respectively. We were obligated to pay these costs in accordance with an agreement with these stockholders. We did not receive any proceeds from these offerings as all shares were sold by these stockholders.

21


On May 31, 2016, we borrowed an additional $55.0 million of our Senior Secured Term Loan A, on the same terms as the original Senior Secured Term Loan A, to fund an additional investment in Central de Informacion Financiera S.A. (“CIFIN”). On March 31, 2016, we borrowed an additional $150.0 million of our Senior Secured Term Loan B, on the same terms as the original Senior Secured Term Loan B, to pay off the balance on our senior secured revolving line of credit that we had drawn on in February 2016 to fund the initial acquisition of CIFIN and for general corporate purposes.
Recent Acquisitions and Partnerships
We selectively evaluate acquisitions and partnerships as a means to expand our business and international footprint, and to enter new markets. Since January 1, 2015, we completed the following acquisitions:
On September 30, 2016, we increased our equity interest in Credit Information Bureau (India) Limited (“CIBIL”) from 77.1% to 82.1% with an additional purchase of 5%. In June 2016, we increased our equity interest in CIBIL from 66.1% to 77.1% with additional purchases totaling 11%. During 2015, we increased our equity interest from 55% to 66.1%, with the purchase of 5% on September 24, 2015 and an additional 6.1% on November 5, 2015.
On September 21, 2016, we acquired 100% of the equity of Healthcare Revenue Technologies, Inc. (“RTech”). RTech uses innovative proprietary technology to help healthcare providers protect revenue and cash. The results of operations of RTech, which are not material to our consolidated financial statements, have been included as part of our USIS segment in our consolidated statements of income since the date of acquisition.
On August 30, 2016, we made a noncontrolling interest investment in SavvyMoney, Inc. (“SavvyMoney”). SavvyMoney is a provider of credit information services for bank and credit union users. We account for SavvyMoney on the cost method of accounting. Any future dividends will be recorded in other income and expense when received.
On August 3, 2016, we increased our equity interest in CIFIN S.A. (“CIFIN”) from 94.67% to 95.17% with an additional purchase of 0.5%. On May 31, 2016, we increased our interest from 71.0% to 94.67% with an additional purchase of 23.67%. On February 8, 2016, we acquired a 71.0% equity interest in CIFIN.  CIFIN is one of two primary credit bureaus in Colombia. The results of operations of CIFIN, which are not material to our consolidated financial statements, have been included as part of our International segment in our consolidated statements of income since the date of the acquisition.
On June 15, 2016, we acquired 100% of the equity of Auditz, LLC (“Auditz”). Auditz is a U.S. based healthcare services organization that uses sophisticated proprietary technology to help healthcare providers identify and recover payments. The results of operations of Auditz, which are not material to our consolidated financial statements, have been included as part of our USIS segment in our consolidated statements of income since the date of the acquisition.
On April 29, 2016, we acquired the remaining 12.5% ownership interest in Drivers History Information Sales, LLC ("DHI"). We no longer record net income attributable to the noncontrolling interests in our consolidated statements of income or redeemable noncontrolling interests on our consolidated balance sheets from the date we acquired the remaining interest.
On April 15, 2016, we made a noncontrolling interest investment in Dashlane, Inc. (“Dashlane”). Dashlane is a password management company that enables users to monitor their online identities across multiple sites and applications. We account for Dashlane on the cost method of accounting. Any future dividends will be recorded in other income and expense when received.
On December 9, 2015, we acquired 100% of the voting share capital in Trustev Limited (“Trustev”). Trustev is a registered company in the Republic of Ireland that provides digital verification technology to multiple industries. The results of operations of Trustev, which are not material to our consolidated financial statements, have been included as part of our USIS segment in our consolidated statements of income since the date of the acquisition.
On October 21, 2015, we acquired the remaining 49% equity interest in Databusiness S.A., our Chilean subsidiary. We no longer record net income attributable to the noncontrolling interests in our consolidated statements of income or redeemable noncontrolling interests on our consolidated balance sheets from the date we acquired the remaining interest.
During January 2015, we acquired the remaining equity interests in our two Brazilian subsidiaries, Data Solutions Serviços de Informática Ltda. (“ZipCode”) and Crivo Sistemas em Informática S.A. (“Crivo”). We no longer record net income attributable to the noncontrolling interests in our consolidated statements of income or redeemable noncontrolling interests in our consolidated balance sheet from the date we acquired the remaining interests.
Key Components of Our Results of Operations
Revenue
We derive our USIS segment revenue from three operating platforms: Online Data Services, Marketing Services and Decision Services. Online Data Services encompass services delivered in real-time using both credit and public record datasets. We also provide online reports that link public record datasets for qualified businesses seeking to locate consumers, specific assets or

22


investigate relationships among consumers, businesses and locations. Collectively, the reports, characteristics and scores, with variations tailored for specific industries, form the basis of Online Data Services. We also provide online services to help businesses manage fraud and authenticate a consumer’s identity when they initiate a new business relationship. Additionally, we provide data to businesses to help them satisfy “know your customer” compliance requirements and to confirm an individual’s identity. Marketing Services help our customers develop marketing lists of prospects via direct mail, web and mobile. Our databases are used by our customers to contact individuals to extend firm offers of credit or insurance. We provide portfolio review services, which are periodic reviews of our customers’ existing accounts, to help our customers develop cross-selling offers to their existing customers and monitor and manage risk in their existing consumer portfolios. We also provide trigger services, which are daily notifications of changes to a consumer profile. Decision Services, our software-as-a-service offerings, includes a number of platforms that help businesses interpret data and predictive model results and apply their customer-specific criteria to facilitate real-time automated decisions at the time of customer interaction. Our customers use Decision Services to evaluate business risks and opportunities, including those associated with new consumer credit and checking accounts, insurance applications, account collection, patient registrations and apartment rental requests.
We report our International segment revenue in two categories: developed markets and emerging markets. Our developed markets are Canada and Hong Kong. Our emerging markets include Africa, Latin America, Asia Pacific and India.
Consumer Interactive offers solutions that help consumers manage their personal finances and take precautions against identity theft. Services in this segment include credit reports and scores, credit monitoring, fraud protection and resolution and financial management. Our products are provided through user friendly online and mobile interfaces and supported by educational content and customer support.
Cost of Services
Costs of services include data acquisition and royalty fees, costs related to our databases and software applications, consumer and call center support costs, hardware and software maintenance costs, telecommunication expenses and occupancy costs associated with the facilities where these functions are performed.
Selling, General and Administrative
Selling, general and administrative expenses include personnel-related costs for sales, administrative and management employees, costs for professional and consulting services, advertising and occupancy and facilities expense of these functions.
Non-Operating Income and Expense
Non-operating income and expense includes interest expense, interest income, earnings from equity-method investments, dividends from cost-method investments, expenses related to successful and unsuccessful business acquisitions, loan fees, debt refinancing expenses, certain acquisition-related gains and losses and other non-operating income and expenses.
Results of Operations
Key Performance Measures
Management, including our chief operating decision maker, evaluates the financial performance of our businesses based on a variety of key indicators. These indicators include the non-GAAP measure Adjusted EBITDA and the GAAP measures revenue, cash provided by operating activities and cash paid for capital expenditures. For the three and nine months ended September 30, 2016 and 2015, these key indicators were as follows:

23


 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in millions)
 
2016
 
2015
 
$
Change
 
%
Change
 
2016
 
2015
 
$
Change
 
%
Change
Revenue
 
$
437.6

 
$
389.1

 
$
48.5

 
12.5
 %
 
$
1,269.0

 
$
1,120.7

 
$
148.3

 
13.2
 %
Reconciliation of net income (loss) attributable to TransUnion to Adjusted
    EBITDA(1):
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to TransUnion
 
$
41.2

 
$
(4.0
)
 
$
45.2

 
nm

 
$
71.0

 
$
(13.3
)
 
$
84.3

 
nm

Net interest expense
 
20.2

 
24.0

 
(3.8
)
 
(15.8
)%
 
59.9

 
111.5

 
(51.6
)
 
(46.3
)%
Provision (benefit) for income taxes
 
31.2

 
2.1

 
29.1

 
nm

 
59.6

 
4.3

 
55.3

 
nm

Depreciation and amortization
 
63.2

 
71.5

 
(8.4
)
 
(11.7
)%
 
209.6

 
209.2

 
0.4

 
0.2
 %
EBITDA
 
155.8

 
93.6

 
62.2

 
66.4
 %
 
400.2

 
311.7

 
88.5

 
28.4
 %
Adjustments to EBITDA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation(2)
 
7.5

 
2.5

 
5.0

 
201.4
 %
 
23.2

 
13.9

 
9.3

 
66.7
 %
Mergers and acquisitions, divestitures and business optimization(3)
 
4.2

 
1.3

 
3.0

 
nm

 
17.3

 
3.1

 
14.3

 
nm

Technology transformation(4)
 

 
6.8

 
(6.8
)
 
(100.0
)%
 
23.3

 
18.5

 
4.8

 
26.2
 %
Other(5)
 
(0.9
)
 
35.9

 
(36.8
)
 
(102.4
)%
 
3.5

 
42.6

 
(39.1
)
 
(91.9
)%
Total adjustments to EBITDA
 
10.9

 
46.5

 
(35.7
)
 
(76.7
)%
 
67.3

 
78.1

 
(10.8
)
 
(13.8
)%
Adjusted EBITDA(1)
 
$
166.6

 
$
140.1

 
$
26.5

 
18.9
 %
 
$
467.5

 
$
389.8

 
$
77.7

 
19.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other metrics:
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Cash provided by operating activities
 
$
126.6

 
$
89.7

 
$
36.9

 
41.1
 %
 
$
276.1

 
$
206.2

 
$
69.9

 
33.9
 %
Capital expenditures
 
30.6

 
28.0

 
2.6

 
9.3
 %
 
85.5

 
96.3

 
(10.8
)
 
(11.2
)%
nm: not meaningful
As a result of displaying amounts in millions, rounding differences may exist in the table above.
(1)
Adjusted EBITDA is defined as net income (loss) attributable to the Company before net interest expense, income tax provision (benefit), depreciation and amortization and other adjustments noted in the table above. We present Adjusted EBITDA as a supplemental measure of our operating performance because it eliminates the impact of certain items that we do not consider indicative of our cash operations and ongoing operating performance. Also, Adjusted EBITDA is a measure frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies similar to ours. In addition, our board of directors and executive management team use Adjusted EBITDA as a compensation measure under our incentive compensation plan. Furthermore, under the credit agreement governing our senior secured credit facility, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is tied to a ratio based on Adjusted EBITDA. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Debt.” Adjusted EBITDA does not reflect our capital expenditures, interest, income tax, depreciation, amortization, stock-based compensation and certain other income and expense. Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. Adjusted EBITDA is not a measure of financial condition or profitability under GAAP and should not be considered as an alternative to cash flows from operating activities, as a measure of liquidity or as an alternative to operating income or net income as indicators of operating performance. We believe that the most directly comparable GAAP measure to Adjusted EBITDA is net income attributable to TransUnion. The table above provides a reconciliation from our net income (loss) attributable to TransUnion to Adjusted EBITDA for the three and nine months ended September 30, 2016 and 2015.
(2)
Consisted of stock-based compensation and cash-settled stock-based compensation.

24


(3)
For the three months ended September 30, 2016, consisted of the following adjustments to operating income: a $0.9 million adjustment to contingent consideration expense from previous acquisitions; and a $0.7 million loss on the divestiture of a small international line of business. For the three months ended September 30, 2016, consisted of the following adjustments to non-operating income and expense: $2.3 million of acquisition expenses; and a $0.3 million loss on the divestiture of a small international line of business. For the nine months ended September 30, 2016, consisted of the following adjustments to operating income: a $1.0 million adjustment to contingent consideration expense from previous acquisitions; a $0.8 million loss on the divestiture of a small international line of business; and a $(0.5) million adjustment to business optimization expenses. For the nine months ended September 30, 2016, consisted of the following adjustments to non-operating income and expense: $15.8 million of acquisition expenses; and a $0.2 million loss on the divestiture of a small international line of business.
For the three months ended September 30, 2015, consisted of the following adjustments to operating income: a $0.3 million loss on the divestiture of a business operation. For the three months ended September 30, 2015, consisted of the following adjustments to non-operating income and expense: $1.0 million of acquisition expenses. For the nine months ended September 30, 2015, consisted of the following adjustments to operating income: a $0.6 million adjustment to contingent consideration expense from previous acquisitions; and a $0.3 million loss on divestiture of a business operation. For the nine months ended September 30, 2015, consisted of the following adjustments to non-operating income and expense: $2.2 million of acquisition expenses.
(4)
Represented costs associated with a project to transform our technology infrastructure.
(5)
For the three months ended September 30, 2016, consisted of the following adjustments to operating income: $(0.7) million of miscellaneous. For the three months ended September 30, 2016, consisted of the following adjustments to non-operating income and expense: $(0.9) million of currency remeasurement of our foreign operations; a $(0.1) million mark-to-market gain related to ineffectiveness of our interest rate hedge; $0.3 million of loan fees; $0.7 million of fees connected to the filing of secondary registration statements filed on behalf of certain stockholders; and $(0.2) million of miscellaneous. For the nine months ended September 30, 2016, consisted of the following adjustments to operating income: $(0.7) million of miscellaneous; and a $0.3 million charge for certain legal and regulatory matters. For the nine months ended September 30, 2016, consisted of the following adjustments to non-operating income and expense: $(0.6) million of currency remeasurement of our foreign operations; a $0.9 million mark-to-market loss related to ineffectiveness of our interest rate hedge; $1.1 million of loan fees; and $2.5 million of fees connected to the filing of secondary registration statements filed on behalf of certain stockholders.
For the three months ended September 30, 2015, consisted of the following adjustments to operating income: $(0.5) million of miscellaneous. For the three months ended September 30, 2015, consisted of the following adjustments to non-operating income and expense: $33.8 million of debt refinancing expenses; $1.9 million of currency remeasurement of our foreign operations; a $0.4 million mark-to-market loss related to ineffectiveness on our interest rate hedge; and $0.3 million of loan fees. For the nine months ended September 30, 2015, consisted of the following adjustments to operating income: $(0.5) million of miscellaneous. For the nine months ended September 30, 2016, consisted of the following adjustments to non-operating income and expense: $37.6 million of debt refinancing expenses; $2.9 million of currency remeasurement of our foreign operations; a $1.2 million mark-to-market loss related to ineffectiveness of our interest rate hedge; $1.1 million of loan fees; and $0.3 million of miscellaneous.

25


Revenue
Total revenue increased $48.5 million and $148.3 million for the three and nine months ended September 30, 2016, compared with the same period in 2015, due to strong organic growth in all of our segments, across all platforms and markets, and revenue from our recent acquisitions in our USIS and International segments, partially offset by the impact of weakening foreign currencies on the 2016 revenue of our International segment. Revenue for our recent acquisitions accounted for an increase in revenue of 2.3% and 1.8% in each respective period. The impact of weakening foreign currencies accounted for a decrease in revenue of 0.4% and 1.5% in each respective period. Revenue by segment in the three- and nine-month periods was as follows:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in millions)
 
2016
 
2015
 
$
Change
 
%
Change
 
2016
 
2015
 
$
Change
 
%
Change
U.S. Information Services:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Online Data Services
 
$
178.4

 
$
154.9

 
$
23.5

 
15.2
%
 
$
507.6

 
$
455.6

 
$
52.0

 
11.4
%
  Marketing Services
 
41.3

 
39.4

 
1.9

 
4.9
%
 
116.1

 
107.6

 
8.6

 
8.0
%
  Decision Services
 
53.6

 
45.0

 
8.6

 
19.1
%
 
153.4

 
128.2

 
25.1

 
19.6
%
Total U.S. Information Services
 
273.3

 
239.3

 
34.0

 
14.2
%
 
777.1

 
691.4

 
85.7

 
12.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Developed Markets
 
29.2

 
25.0

 
4.2

 
16.7
%
 
80.2

 
69.9

 
10.3

 
14.8
%
  Emerging Markets
 
53.1

 
43.7

 
9.4

 
21.4
%
 
147.5

 
129.9

 
17.5

 
13.5
%
Total International
 
82.3

 
68.7

 
13.5

 
19.7
%
 
227.7

 
199.8

 
27.9

 
14.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Consumer Interactive
 
97.4

 
95.5

 
1.8

 
1.9
%
 
310.0

 
272.3

 
37.7

 
13.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue, gross
 
453.0

 
403.6

 
49.4

 
12.2
%
 
1,314.7

 
1,163.5

 
151.3

 
13.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intersegment eliminations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   USIS Online
 
(14.3
)
 
(13.6
)
 
(0.7
)
 
 
 
(42.7
)
 
(40.4
)
 
(2.3
)
 
 
   International Developed Markets
 
(0.9
)
 
(0.7
)
 
(0.2
)
 
 
 
(2.5
)
 
(1.9
)
 
(0.6
)
 
 
   International Emerging Markets
 
(0.2
)
 
(0.1
)
 

 
 
 
(0.5
)
 
(0.4
)
 

 
 
   Consumer Interactive
 

 

 

 
 
 

 

 

 
 
Total intersegment eliminations
 
(15.4
)
 
(14.5
)
 
(0.9
)
 
 
 
(45.7
)
 
(42.8
)
 
(3.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue as reported
 
$
437.6

 
$
389.1

 
$
48.5

 
12.5
%
 
$
1,269.0

 
$
1,120.7

 
$
148.3

 
13.2
%
As a result of displaying amounts in millions, rounding differences may exist in the table above.
USIS Segment
USIS revenue increased $34.0 million and $85.7 million for the three and nine months ended September 30, 2016, compared with the same period in 2015, due to increases in revenue from all platforms.
Online Data Services
Online Data Services revenue increased $23.5 million and $52.0 million for the three- and nine-month periods, compared with the same periods in 2015, due to a 2.2% and 4.5% increase in credit report unit volume and a change in the mix of customer volumes, which resulted in an increase in average pricing for online credit reports compared to the same periods in 2015.

26


Marketing Services
Marketing Services revenue increased $1.9 million and $8.6 million for the three- and nine-month periods, compared with the same periods in 2015, due primarily to an increase in custom data sets and archive information.
Decision Services
Decision Services revenue increased $8.6 million and $25.1 million for the three- and nine-month periods, compared with the same periods in 2015, due primarily to an organic increase in revenue in healthcare and insurance markets.
International Segment
International revenue increased $13.5 million, or 19.7%, and $27.9 million, or 14.0%, for the three and nine months ended September 30, 2016, compared with the same periods in 2015. Higher local currency revenue from increased volumes in most regions and the inclusion of revenue from our recent acquisition were partially offset by a 2.2% and 8.7% decrease in revenue in each respective period from the impact of weakening foreign currencies. Incremental revenue from our acquisition accounted for a 10.9% and 8.9% increase in revenue in each respective period.
Developed Markets
Developed markets revenue increased $4.2 million, or 16.7%, and $10.3 million, or 14.8%, for the three- and nine-month periods, compared with the same periods in 2015, due to higher local currency revenue in both regions. Revenue increased 0.2% in the three-month period from the impact of a strengthening Canadian dollar and decreased 3.7% in the nine-month period from the impact of a weakening Canadian dollar.
Emerging Markets
Emerging markets revenue increased $9.4 million, or 21.4%, an