ChoicePoint Reports Revenue of $270 Million for the First Quarter

For the first quarter of 2006, ChoicePoint Inc. reported total revenue of $269.9 million, representing growth of 4 percent compared to $259.3 million for the first quarter of 2005. Earnings per share (“EPS”) for the first quarter was $0.34, which included the following: $10.7 million ($0.07 per share) of accelerated depreciation, asset impairment, severance and lease abandonment costs primarily associated with the consolidation of certain technology platforms, $3.5 million ($0.03 per share) of stock option expense under FAS 123®, and $0.8 million ($0.01 per share) for specific expenses related to the fraudulent data access. Excluding these charges, EPS would have been $0.46, a 4 percent increase over EPS excluding other operating charges for the comparable period of 2005.

“I am pleased with the operating results in our insurance and background screening businesses this quarter and the progress we are making against our key longer-term growth initiatives,” noted Chairman and Chief Executive Officer Derek V. Smith. “Given these trends and the expected improvement in our Business Services and Government Services segments, ChoicePoint is well positioned to have a strong year.”

Chief Administrative Officer Steven W. Surbaugh added, “Our first quarter operating results were basically consistent with our expectations, tempered by the impact of the business changes made last year and diminished results from our Government Services segment. The centralization of functions and consolidation of technology platforms is substantially complete. A solid and strengthening pipeline of new customer opportunities across our business lines, continuing strong cash flows, and a wealth of new product initiatives has us well positioned in 2006.”

Operational Highlights

Insurance Services

• Total revenue increased 14 percent to $113.4 million in the first quarter of 2006 compared to $99.7 million in the same period of the prior year. Internal revenue grew 13 percent during the first quarter of 2006 as compared to the same period of the prior year as a result of increased demands for our P&C personal lines products and continued strong market demand for our Insurity products.

• Operating income increased 12 percent in Insurance Services to $60.6 million for the first quarter of 2006 compared with $54.3 million for the first quarter of 2005. Operating margin remained strong at 53.5 percent for the quarter despite the investments being made in the new commercial and claims products.

Business Services

• Total revenue and internal revenue for the first quarter of 2006 were essentially flat in 2006 compared to the same period of the prior year primarily as growth in our background screenings, vital records and authentication services was offset by the revenue decline in our public filings group based on the business changes disclosed in our previously filed 2005 Form 10-Qs and Form 10-K.

• Operating income in Business Services was $17.0 million for the first quarter of 2006 compared to $21.2 million in the same period of the prior year, resulting in an operating profit margin of 18.2 percent. Margins were negatively impacted by the loss of incremental public filings group revenue.

Government Services

• Total revenue decreased 3 percent to $34.4 million in the first quarter of 2006 compared to $35.3 million in the first quarter of 2005, based on the timing of governmental contracts primarily at our Bode DNA lab and i2 operations in the U.K. and a competitive data environment. Internal revenue declined 5 percent for the first quarter of 2006 over the same period in 2005.

• Operating income in Government Services of $2.9 million for the first quarter of 2006 decreased from $5.7 million for the comparable period of 2005. Operating profit margin in Government Services for the first quarter was 8.5 percent compared to 16.2 percent in 2005 primarily due to the revenue declines discussed above and the mix of business.

Marketing Services

• Total first quarter revenue for Marketing Services (which includes all of the Company’s revenue from reimbursable expenses) declined 4 percent to $28.6 million in 2006 from $29.6 million in 2005. Marketing Services’ core revenue for the first quarter of 2006 was $21.9 million compared to $23.1 million in 2005 due to lower spending by larger clients in the mortgage industry which also caused internal revenue to decline 5 percent.

• Operating income in Marketing Services was $4.0 million for the first quarter of 2006 compared with $4.3 million for the same period of 2005. First quarter 2006 operating profit margin, as a percentage of revenue without reimbursable expenses, was 18.3 percent (14.0 percent of total revenue) compared to 18.4 percent in 2005 (14.4 percent of total revenue).

Corporate & Shared Expenses
For the first quarter of 2006, corporate and shared expenses were 6.3 percent of core revenues, down from 7.8 percent in the first quarter of 2005, due primarily to cost containment initiatives and a lower level of incentive compensation expenses.

Outlook
Based on recent business trends, ChoicePoint continues to expect 2006 full year internal revenue growth to be in the 7 to 9 percentage range. Additionally, the Company expects year-over-year operating margin expansion of 50 to 100 basis points, excluding the impact discussed below of stock option expense, on-going legal expenses related to the fraudulent data access, and operating charges related to the Company’s centralization of functions and consolidation of certain technology platforms. The Company recorded a pre-tax charge of $3.5 million ($2.7 million net of taxes) of stock option expense as a result of adoption of FAS 123® during the first quarter of 2006. The Company expects 2006 net income to be impacted by between $12 million and $14 million of stock option expense. On-going legal expenses related to the fraudulent data access of $0.8 million were incurred by the Company during the first quarter of 2006. The Company currently estimates a total expense of between $2 and $4 million for the full year 2006, exclusive of any potential settlements. As a result of changes to the business model, the Company began centralizing functions and consolidating certain technology platforms. The operating charges and the accelerated depreciation related to these efforts were $10.7 million in the first quarter of 2006. A total expense of between $12 and $13 million is expected for the full year of 2006, with the majority of the remaining expenses, primarily severance, expected to be recorded in the second quarter of 2006.