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The Rebel’s Way

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TIMES STAFF WRITER

Even after the big red “TRW” sign on the building comes down, Mitch the night guard still will be patrolling the parking lot on his bicycle and the same people will be telling him good night as they check out each evening.

But while it all looks the same, big changes are in the works at TRW Information Systems & Services.

Sometime this month, the company that helped create the credit information business will launch a $300-million bond sale, break away from its Cleveland-based parent, and strike out on its own under a new name--Experian.

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Leading the change--the most ambitious in the company’s 27-year history, will be a quiet, courtly, white-haired executive who, in the words of one admirer, looks like a buttoned-down corporate manager but thinks like a free-wheeling entrepreneur.

At 63, David van Diest Skilling --he prefers to be called Van--had two years to go before a forced retirement from TRW, after decades of hacking his way through the conglomerate’s management jungle. But Skilling, a 26-year veteran with parent TRW, was not about to go quietly.

A loyal company man to the outside world, he argued inside the corporation that the business unit he ran was a misunderstood and underutilized operation--a sales-and-marketing outfit awkwardly grafted onto a company run by engineers who were rooted in the manufacturing world.

He felt that his information unit, which last year earned $52 million on revenue of $540 million, was seen merely as a cash cow to be milked to fund projects in other parts of the TRW, which produces auto parts and aerospace and defense equipment.

Play me or trade me, Skilling urged, seeking a commitment from TRW to either let Information Systems use its cash to grow or sell the unit.

Skilling’s campaign paid off. Earlier this year, TRW sold an 80% stake in the information unit for $1 billion to an investment group that includes Skilling and most of the unit’s top managers. In a move industry analysts see as a vote of confidence on the new business, TRW will retain a 19.6% stake in Experian.

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Skilling, general manager of TRW Information Systems since 1989, will become president and chief executive of Experian. And he’ll be free of the corporate strictures and economies that he felt were holding him back.

“It’s the difference between buying a house and remodeling it, and building one from scratch,” he says--drawing a lesson from the two years he and his wife, Barbara have spent overseeing construction of their million-dollar custom home in Palm Desert.

“When you remodel, you are adding your touches to someone else’s plan, but when you build your own, you have the opportunity to incorporate all the ideas you’ve picked up over the years, all the things you’ve learned and all the things you want to do,” he said. “You put your stamp on it.

“I can’t imagine a more exciting opportunity for all of us,” he says.

The transformation of TRW Information Systems is likely to excite more than its employees, though. The company has ambitious plans to hit the worldwide marketplace with existing services and an array of new products.

Citing competitive reasons, Skilling declines to discuss new products his company is developing. But they most certainly will give customers faster access to detailed and accurate information about millions of people. They’ll make credit checks quicker and more accurate, the kind of service that already is enabling department stores to offer customers instant credit approval, for example. And they’ll provide refined marketing data so that mailing lists can be tailored to increasingly specific audiences.

This likely will loose a bonanza of data to be gobbled up by information-hungry businesses throughout the world. There’ll be more opportunities for prospective landlords, employers, lenders and marketers to obtain consumers’ personal assets and credit histories. And more catalogs, credit card applications and targeted advertising will be piling up in the daily mail.

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Industry insiders say Experian has a powerful new tool--a $70-million high-tech system that can pull data from its files on 190 million people and 12 million businesses, and produce customized packages of information with far more accuracy and speed than ever before. Want a mailing list of high-income Villa Park residents who own vacation homes, like boats and are likely to pay their debts? No problem.

The data-gathering blitz is likely to snowball as big rivals like Equifax Inc., Trans Union Corp. and Dun & Bradstreet introduce a barrage of new products to protect their territories. “We’re all a little bit wary,” admits Harry Gambill, president and chief executive of Chicago-based Trans Union. “This means the business can only become more competitive.”

That has one major consumer group one edge. The likelihood that there soon will be a flood of new information products on the market “definitely heightens our concerns” about personal privacy and accurate credit reports, says Pamela Pressley, a consumer advocate with the California Public Interest Research Group in Los Angeles.

Some observers expect Skilling and his financial backers, Boston investment funds Bain Capital Inc. and Thomas H. Lee Co. also will make an aggressive effort to snap up other companies to keep up with the competition.

“There’s a lot of consolidation going on in the information industry,” says John Kutler, president of Quarterdeck Investment Partners in Century City. “You get maximum leverage by finding new markets, and the quickest way is to buy up smaller companies that are serving those markets.”

Just this month, Atlanta-based Equifax acquired Santa Ana-based CDB Infotek, a major U.S. marketer of court and government agency records.

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TRW Information, the company the Bain and Lee group is buying, itself was the product of an acquisition. In 1969, Aerospace giant TRW bought Credit Data Corp. a Michigan-based credit reporting business that was one of the first in the industry to computerize. TRW co-founder Si Ramos believed that a cashless society was at hand and that businesses controlling the flow of credit information would prosper.

The unit, which joined TRW’s vast aerospace and defense-related data management operations in Southern California, grew rapidly. But it came at a price.

When Skilling took over seven years ago, the operation consisted of a batch of barely related business units with no focus, a top-heavy management structure and a payroll burdened by too many people doing the same jobs.

He got rid of half a dozen businesses--including a collection agency whose contracts included keeping tabs on gamblers’ IOUs for major Las Vegas casinos. He also has trimmed the information unit’s management staff to 30 from 180 and slashed the total payroll from more than 5,000 employees to 3,600. The layoffs were “very difficult, but necessary for the welfare of the whole business,” he says.

Almost as soon as he took over the information division, Skilling also faced a public relations nightmare--public outrage over widespread reports of erroneous information poisoning consumers’ credit files. There was a perception that credit reporting agencies like TRW were unwilling to help people correct the errors or even admit that there were problems.

Congress finally stepped in after a number of incidents, including a case in which almost half the 3,100 residents of a rural Vermont town were branded deadbeats in TRW credit reports because of faulty information the company got from a contractor hired to gather property tax data.

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The credit reporting industry has always contended that the companies are independent agents, reporting information provided by credit issuers. Consumers’ complaints, they say, are with the lenders that reported the wrong information.

But in testimony before a congressional committee in Washington in October 1991, Skilling called for federal legislation to regulate his industry.

Skilling says now that there “were a lot of quality control problems because we’d grown so fast.” But he also said he believes the media and politicians exaggerated the industry’s problems. Otherwise, he declines to talk about the experience, saying he would rather focus on the future.

Skilling says, though, that the industry has done a lot to improve the quality of its products. TRW, for example, offers a free yearly credit report to consumers so they can catch and correct errors.

Skilling says the company’s new database, called Copernicus, also has eliminated errors. It has enabled TRW to consolidate all information on an individual in a single master file tagged with a unique identification code. So, the company says, there should rarely be any more cases in TRW reports of John Jones on Smith Drive in Santa Ana being denied credit because John Jones on Smith Avenue in Anaheim forgot to pay his Discovery Card bill.

Copernicus, which cost Skilling and his division a lot of internal goodwill as it ran over budget and over deadline, was launched in June.

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“We were worried several times as it went over schedule that the corporate types would cancel it; they had canceled earlier programs that went over budget,” said one company insider. “But Van stood up and argued and said that the future of the business depended on this, and he won.”

All of this activity makes officials at Public Interest Research Group nervous, however. They’ve never been quite satisfied that the credit reporting industry had solved all its problems.

Now the technology age has created a new problem: theft-of-identity crimes in which savvy crooks electronically appropriate unwitting victims’ names and credit card numbers and run up large debts that wind up as delinquencies on the victims’ credit files.

In a report released earlier this month, the California branch of PIRG said credit reporting companies still don’t do enough to help consumers clean damaging false information out of their files.

Skilling declined comment, saying he hadn’t seen the report. As to general criticism that businesses like his still aren’t doing enough to help consumers, his response is terse and forceful: “I don’t agree.”

No surprise there. The company’s consumer credit products remain the chief source of revenue and Skilling, a premed student before turning to business, knows better than to cut up healthy tissue.

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Skilling figures the percentage of revenue from credit reports is likely to shrink below 50% in coming years, but that’s because he expects other products--business credit reports, consumer demographic data, direct marketing data and real estate information--to start bringing more money.

Indeed, he expects the consumer credit market to drive the foreign expansion that he began in 1993 with an investment in a fledgling credit reporting business in Japan. In 1995 the company launched Datacredit, a joint venture with a Mexican computer services firm that made Mexico only the third country in the world--after the United States and Canada--to have an online, automated credit reporting system. Now Europe, Asia and Latin America all await.

The man who could arguably be called one of the nation’s top snoops directs the information-gathering unit from a nondescript 10-story office building that sprouts from an asphalt parking lot at The City commercial center in Orange.

The son of a doctor and a nursery school operator, Skilling grew up in St. Louis, where he spent a lot of his summers watching the Cardinals baseball team and collecting autographs. He has a special display area in his Palm Desert estate to show off his autographed baseball collection.

Skilling’s sport these days, though, is golf. He keeps a leased condominium in Tustin for the days he is in his office in Orange, but drives home to the golf course-studded desert every Friday when he’s not traveling.

Skilling established a reputation as an outspoken industry leader with his 1991 congressional testimony. He polished it last year when, as chairman of the California Business Roundtable’s education committee, he led a drive to persuade Gov. Pete Wilson to abandon a plan to reject certain federal grant money earmarked for the state’s schools.

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“We were discussing the proposal . . . and Van stood up and said the governor’s stance was just ridiculous . . .,” recalls Mary Anderson, director of the business policy group. “In the end, we sent a letter to the governor urging him to accept the funds, and he did.”

He’s a take-charge person, friends and co-workers say, so it’s hardly surprising that Skilling is looking forward to running a company that will start life with almost $800 million in debt and a future dependent on new products.

“This is the opportunity to be in charge of our own destiny, and its exhilarating,” he says.

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TRW Takes a Turn

To consumers, the word TRW is synonymous with credit records. But the division that handles that aspect of TRW’s multifaceted operations will soon become Experian following completion of its purchase by an investor group. A look at the division and the man who will run it:

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Headquarters: Orange

Business units: Information Services (consumer credit data); Business Information Services (business credit analysis); TRW REDI Property Data (real estate information unit in Anaheim)

Employees: 3,600, including 1,500 in Orange County

1995 revenue: $540 million

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Profile: D. Van Skilling

Title: Executive vice president and general manager (becomes Experian president and chief executive)

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Age: 63

Education: Bachelor’s degree in chemistry, Colorado College, 1955; MBA in international business, Pepperdine University, 1977Background: Worked in Navy Intelligence and held a series of sales and management positions with chemical and aerospace firms. Joined TRW in 1970 and has served as general manager of Transportation Control Systems Division, held planning and management positions in several TRW divisions, and was head of strategic planning for the corporation. Became general manager of Information Systems & Services in 1989.

Residences: Palm Desert, Tustin

Personal: Married, two children

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Looking Back: TRW Information Systems & Services

Key dates in the evolution of the division:

1969: In addition to its automotive parts, defense and aerospace equipment operations, TRW Inc. begins applying computer technology to the management of huge databases as part of its government work. Acquires Michigan-based Credit Data Corp., one of the first computerized consumer credit information reporting firms in the country. This forms the basis of what subsequently becomes TRW Information Systems & Services.

1976: Expands into business credit reporting

1983: Launches real estate data operation

1985: Expands into real estate loan services

1987: Strengthens target marketing business by acquiring a Texas-based direct marketing firm

1989: Acquires Chilton Co., a rival credit reporting company based in Dallas

1993: Launches international expansion by investing in a Japanese credit reporting agency

1996: Announces its $1-billion sale to investor group that includes top managers.

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The Purchasers

Details on the two investment funds involved in the purchase of TRW’s Information Systems & Services:

Bain Capital Inc.

Headquarters: Boston

Founded: 1984

Business: Private equity investment firm currently focused on retail, information, consumer products, industrial products and health care businesses.

Previous investments: Staples Inc., Babbage’s Software, Brookstone Co. and Eastman Office Products

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Other information industry investments: Gartner Group, Dataware Technologies Inc., Strategic Mapping Inc. and OneSource

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Thomas H. Lee Co.

Headquarters: Boston

Founded: 1974

Business: Private equity investment firm focused on acquiring middle-market growth companies.

Previous investments: Snapple Beverage Corp., General Nutrition Companies (GNC), Ghirardelli Chocolate Co., Sun Pharmaceutical (producer of Banana Boat sun-care products and First Alert, which makes smoke detectors and home safety equipment)

Other information industry investments: Federal Communications Corp., Panache Broadcasting PLC and TPI Communications International

Sources: TRW Information Systems & Services, Times reports; Researched by JANICE L. JONES / Los Angeles Times

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