Attached files
file | filename |
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EXCEL - IDEA: XBRL DOCUMENT - EQUIFAX INC | Financial_Report.xls |
EX-31.1 - EQUIFAX INC | v199190_ex31-1.htm |
EX-32.1 - EQUIFAX INC | v199190_ex32-1.htm |
EX-31.2 - EQUIFAX INC | v199190_ex31-2.htm |
EX-32.2 - EQUIFAX INC | v199190_ex32-2.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, 2010
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: 001-06605
EQUIFAX INC.
(Exact
name of registrant as specified in its charter)
Georgia
(State
or other jurisdiction of
incorporation
or organization)
|
58-0401110
(I.R.S.
Employer
Identification
No.)
|
1550
Peachtree Street, N.W., Atlanta, Georgia
(Address
of principal executive offices)
|
30309
(Zip
Code)
|
404-885-8000
(Registrant’s
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 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
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
accelerated filer x
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
(Do
not check if a smaller
reporting
company)
|
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
On
October 15, 2010, there were 123,401,588 shares of the registrant’s common stock
outstanding.
EQUIFAX INC.
QUARTERLY
REPORT ON FORM 10-Q
QUARTER
ENDED SEPTEMBER 30, 2010
INDEX
Page
|
||
PART
I.
|
Financial
Information
|
4
|
Item 1.
|
Financial
Statements (Unaudited)
|
4
|
Consolidated
Statements of Income—Three Months Ended September 30, 2010 and
2009
|
4
|
|
Consolidated
Statements of Income—Nine Months Ended September 30, 2010 and
2009
|
5
|
|
Consolidated
Balance Sheets—September 30, 2010 and December 31,
2009
|
6
|
|
Consolidated
Statements of Cash Flows—Nine Months Ended September 30, 2010 and
2009
|
7
|
|
Consolidated
Statements of Equity and Other Comprehensive Income—Nine Months Ended
September 30, 2010
|
8
|
|
Notes
to Consolidated Financial Statements
|
10
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
21
|
Item 3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
37
|
Item 4.
|
Controls
and Procedures
|
37
|
PART
II.
|
Other
Information
|
38
|
Item
1.
|
Legal
Proceedings
|
38
|
Item 1A.
|
Risk
Factors
|
38
|
Item 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
38
|
Item
6.
|
Exhibits
|
39
|
Signatures
|
40
|
|
Index
to Exhibits
|
41
|
2
This
report contains information that may constitute “forward-looking statements.”
Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,”
“project,” “will,” “may” and similar expressions identify forward-looking
statements, which generally are not historical in nature. All statements that
address operating performance, events or developments that we expect or
anticipate will occur in the future, including statements relating to future
operating results, are forward-looking statements. Management believes that
these forward-looking statements are reasonable as and when made. However,
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from our Company’s historical
experience and our present expectations or projections. These risks and
uncertainties include, but are not limited to, those described in Part II,
“Item 1A. Risk Factors,” and elsewhere in this report and in our Annual
Report on Form 10-K for the year ended December 31, 2009, and those
described from time to time in our future reports filed with the Securities and
Exchange Commission. As a result of such risks and uncertainties, we urge you
not to place undue reliance on any such forward-looking statements.
Forward-looking statements speak only as of the date when made. We undertake no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except as required
by law.
3
ITEM
1. FINANCIAL STATEMENTS (UNAUDITED)
EQUIFAX INC.
CONSOLIDATED
STATEMENTS OF INCOME
Three Months Ended
|
||||||||
September 30
|
||||||||
2010
|
2009
|
|||||||
(In millions, except per share amounts)
|
(Unaudited)
|
|||||||
Operating
revenue
|
$ | 473.8 | $ | 425.0 | ||||
Operating
expenses:
|
||||||||
Cost
of services (exclusive of depreciation and amortization
below)
|
188.2 | 177.5 | ||||||
Selling,
general and administrative expenses
|
134.0 | 111.2 | ||||||
Depreciation
and amortization
|
41.4 | 36.3 | ||||||
Total
operating expenses
|
363.6 | 325.0 | ||||||
Operating
income
|
110.2 | 100.0 | ||||||
Interest
expense
|
(14.0 | ) | (14.1 | ) | ||||
Other
income, net
|
0.7 | 0.2 | ||||||
Consolidated
income from continuing operations before income taxes
|
96.9 | 86.1 | ||||||
Provision
for income taxes
|
(33.3 | ) | (28.7 | ) | ||||
Consolidated
income from continuing operations
|
63.6 | 57.4 | ||||||
Discontinued
operations, net of tax
|
15.2 | 4.0 | ||||||
Consolidated
net income
|
78.8 | 61.4 | ||||||
Less: Net
income attributable to noncontrolling interests
|
(2.3 | ) | (1.7 | ) | ||||
Net
income attributable to Equifax
|
$ | 76.5 | $ | 59.7 | ||||
Amounts
attributable to Equifax:
|
||||||||
Net
income from continuing operations attributable to Equifax
|
$ | 61.3 | $ | 55.7 | ||||
Discontinued
operations, net of tax
|
15.2 | 4.0 | ||||||
Net
income attributable to Equifax
|
$ | 76.5 | $ | 59.7 | ||||
Basic
earnings per common share:
|
||||||||
Net
income from continuing operations attributable to Equifax
|
$ | 0.50 | $ | 0.44 | ||||
Discontinued
operations attributable to Equifax
|
0.12 | 0.03 | ||||||
Net
income attributable to Equifax
|
$ | 0.62 | $ | 0.47 | ||||
Weighted-average
shares used in computing basic earnings per share
|
124.3 | 126.4 | ||||||
Diluted
earnings per common share:
|
||||||||
Net
income from continuing operations attributable to Equifax
|
$ | 0.49 | $ | 0.44 | ||||
Discontinued
operations attributable to Equifax
|
0.12 | 0.03 | ||||||
Net
income attributable to Equifax
|
$ | 0.61 | $ | 0.47 | ||||
Weighted-average
shares used in computing diluted earnings per share
|
125.8 | 128.0 | ||||||
Dividends
per common share
|
$ | 0.04 | $ | 0.04 |
See Notes
to Consolidated Financial Statements.
4
CONSOLIDATED
STATEMENTS OF INCOME
Nine Months Ended
|
||||||||
September 30
|
||||||||
2010
|
2009
|
|||||||
(In millions, except per share amounts)
|
(Unaudited)
|
|||||||
Operating
revenue
|
$ | 1,377.5 | $ | 1,280.6 | ||||
Operating
expenses:
|
||||||||
Cost
of services (exclusive of depreciation and amortization
below)
|
566.6 | 535.0 | ||||||
Selling,
general and administrative expenses
|
370.4 | 340.0 | ||||||
Depreciation
and amortization
|
120.2 | 106.7 | ||||||
Total
operating expenses
|
1,057.2 | 981.7 | ||||||
Operating
income
|
320.3 | 298.9 | ||||||
Interest
expense
|
(42.3 | ) | (42.9 | ) | ||||
Other
income, net
|
1.0 | 5.8 | ||||||
Consolidated
income from continuing operations before income taxes
|
279.0 | 261.8 | ||||||
Provision
for income taxes
|
(99.7 | ) | (94.0 | ) | ||||
Consolidated
income from continuing operations
|
179.3 | 167.8 | ||||||
Discontinued
operations, net of tax
|
31.5 | 10.8 | ||||||
Consolidated
net income
|
210.8 | 178.6 | ||||||
Less: Net
income attributable to noncontrolling interests
|
(6.3 | ) | (4.9 | ) | ||||
Net
income attributable to Equifax
|
$ | 204.5 | $ | 173.7 | ||||
Amounts
attributable to Equifax:
|
||||||||
Net
income from continuing operations attributable to Equifax
|
$ | 173.0 | $ | 162.9 | ||||
Discontinued
operations, net of tax
|
31.5 | 10.8 | ||||||
Net
income attributable to Equifax
|
$ | 204.5 | $ | 173.7 | ||||
Basic
earnings per common share:
|
||||||||
Net
income from continuing operations attributable to Equifax
|
$ | 1.38 | $ | 1.29 | ||||
Discontinued
operations attributable to Equifax
|
0.25 | 0.09 | ||||||
Net
income attributable to Equifax
|
$ | 1.63 | $ | 1.38 | ||||
Weighted-average
shares used in computing basic earnings per share
|
125.4 | 126.3 | ||||||
Diluted
earnings per common share:
|
||||||||
Net
income from continuing operations attributable to Equifax
|
$ | 1.36 | $ | 1.28 | ||||
Discontinued
operations attributable to Equifax
|
0.25 | 0.08 | ||||||
Net
income attributable to Equifax
|
$ | 1.61 | $ | 1.36 | ||||
Weighted-average
shares used in computing diluted earnings per share
|
127.1 | 127.8 | ||||||
Dividends
per common share
|
$ | 0.12 | $ | 0.12 |
See Notes
to Consolidated Financial Statements.
5
CONSOLIDATED
BALANCE SHEETS
September 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(In
millions, except par values)
|
(Unaudited)
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 115.6 | $ | 103.1 | ||||
Trade
accounts receivable, net of allowance for doubtful accounts of $9.9 and
$15.1 at September 30, 2010 and December 31, 2009,
respectively
|
266.2 | 258.7 | ||||||
Prepaid
expenses
|
32.7 | 27.6 | ||||||
Other
current assets
|
22.6 | 27.4 | ||||||
Total
current assets
|
437.1 | 416.8 | ||||||
Property
and equipment:
|
||||||||
Capitalized
internal-use software and system costs
|
306.2 | 316.6 | ||||||
Data
processing equipment and furniture
|
180.5 | 184.2 | ||||||
Land,
buildings and improvements
|
167.9 | 164.5 | ||||||
Total
property and equipment
|
654.6 | 665.3 | ||||||
Less
accumulated depreciation and amortization
|
(354.4 | ) | (346.0 | ) | ||||
Total
property and equipment, net
|
300.2 | 319.3 | ||||||
Goodwill
|
1,871.2 | 1,943.2 | ||||||
Indefinite-lived
intangible assets
|
95.6 | 95.5 | ||||||
Purchased
intangible assets, net
|
588.9 | 687.0 | ||||||
Other
assets, net
|
107.0 | 88.7 | ||||||
Total
assets
|
$ | 3,400.0 | $ | 3,550.5 | ||||
LIABILITIES
AND EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Short-term
debt and current maturities
|
$ | 21.0 | $ | 183.2 | ||||
Accounts
payable
|
19.7 | 35.9 | ||||||
Accrued
expenses
|
64.7 | 67.7 | ||||||
Accrued
salaries and bonuses
|
56.5 | 58.1 | ||||||
Deferred
revenue
|
56.5 | 69.8 | ||||||
Other
current liabilities
|
86.9 | 77.5 | ||||||
Total
current liabilities
|
305.3 | 492.2 | ||||||
Long-term
debt
|
986.4 | 990.9 | ||||||
Deferred
income tax liabilities, net
|
241.8 | 249.3 | ||||||
Long-term
pension and other postretirement benefit liabilities
|
84.6 | 142.5 | ||||||
Other
long-term liabilities
|
53.5 | 60.6 | ||||||
Total
liabilities
|
1,671.6 | 1,935.5 | ||||||
Commitments
and Contingencies (see Note 5)
|
||||||||
Equifax
shareholders' equity:
|
||||||||
Preferred
stock, $0.01 par value: Authorized shares - 10.0; Issued shares -
none
|
- | - | ||||||
Common
stock, $1.25 par value: Authorized shares - 300.0;
|
||||||||
Issued
shares - 189.3 at September 30, 2010 and December 31,
2009;
|
||||||||
Outstanding
shares - 123.4 and 126.2 at September 30, 2010 and December 31, 2009,
respectively
|
236.6 | 236.6 | ||||||
Paid-in
capital
|
1,103.9 | 1,102.0 | ||||||
Retained
earnings
|
2,683.5 | 2,494.2 | ||||||
Accumulated
other comprehensive loss
|
(309.7 | ) | (318.7 | ) | ||||
Treasury
stock, at cost, 63.8 shares and 61.0 shares at September 30, 2010 and
December 31, 2009, respectively
|
(1,961.6 | ) | (1,871.7 | ) | ||||
Stock
held by employee benefits trusts, at cost, 2.1 shares at both
September 30, 2010 and December 31, 2009
|
(41.2 | ) | (41.2 | ) | ||||
Total
Equifax shareholders' equity
|
1,711.5 | 1,601.2 | ||||||
Noncontrolling
interests
|
16.9 | 13.8 | ||||||
Total
equity
|
1,728.4 | 1,615.0 | ||||||
Total
liabilities and equity
|
$ | 3,400.0 | $ | 3,550.5 |
See Notes
to Consolidated Financial Statements.
6
EQUIFAX INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
Nine Months Ended
|
||||||||
September 30,
|
||||||||
2010
|
2009
|
|||||||
(In millions)
|
(Unaudited)
|
|||||||
Operating
activities:
|
||||||||
Consolidated
net income
|
$ | 210.8 | $ | 178.6 | ||||
Adjustments
to reconcile consolidated net income to net cash provided by operating
activities:
|
||||||||
Gain
on divestitures
|
(27.1 | ) | - | |||||
Depreciation
and amortization
|
125.7 | 116.9 | ||||||
Stock-based
compensation expense
|
15.0 | 13.5 | ||||||
Tax
effects of stock-based compensation plans
|
1.6 | 0.1 | ||||||
Excess
tax benefits from stock-based compensation plans
|
(1.6 | ) | (0.5 | ) | ||||
Deferred
income taxes
|
3.2 | 24.6 | ||||||
Changes
in assets and liabilities, excluding effects of
acquisitions:
|
||||||||
Accounts
receivable, net
|
(10.8 | ) | 11.8 | |||||
Prepaid
expenses and other current assets
|
(1.2 | ) | (13.0 | ) | ||||
Other
assets
|
(0.7 | ) | (4.3 | ) | ||||
Current
liabilities, excluding debt
|
(57.1 | ) | (46.4 | ) | ||||
Other
long-term liabilities, excluding debt
|
(50.4 | ) | (12.5 | ) | ||||
Cash
provided by operating activities
|
207.4 | 268.8 | ||||||
Investing
activities:
|
||||||||
Capital
expenditures
|
(82.4 | ) | (51.2 | ) | ||||
Acquisitions,
net of cash acquired
|
(15.3 | ) | (3.5 | ) | ||||
Cash
received from divestitures
|
181.7 | - | ||||||
Dividend
from unconsolidated affiliates
|
1.5 | 1.8 | ||||||
Cash
provided by (used in) investing activities
|
85.5 | (52.9 | ) | |||||
Financing
activities:
|
||||||||
Net
short-term (repayments) borrowings
|
(134.0 | ) | 247.5 | |||||
Net
repayments under long-term revolving credit facilities
|
(5.0 | ) | (420.0 | ) | ||||
Payments
on long-term debt
|
(19.6 | ) | (6.6 | ) | ||||
Treasury
stock purchases
|
(116.4 | ) | (9.1 | ) | ||||
Dividends
paid to Equifax shareholders
|
(14.9 | ) | (15.1 | ) | ||||
Dividends
paid to noncontrolling interests
|
(3.4 | ) | (3.3 | ) | ||||
Proceeds
from exercise of stock options
|
13.8 | 5.9 | ||||||
Excess
tax benefits from stock-based compensation plans
|
1.6 | 0.5 | ||||||
Other
|
(0.8 | ) | (0.9 | ) | ||||
Cash
used in financing activities
|
(278.7 | ) | (201.1 | ) | ||||
Effect
of foreign currency exchange rates on cash and cash
equivalents
|
(1.7 | ) | 4.7 | |||||
Increase
in cash and cash equivalents
|
12.5 | 19.5 | ||||||
Cash
and cash equivalents, beginning of period
|
103.1 | 58.2 | ||||||
Cash
and cash equivalents, end of period
|
$ | 115.6 | $ | 77.7 |
See Notes
to Consolidated Financial Statements.
7
CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY AND COMPREHENSIVE INCOME
For
the Nine Months Ended September 30, 2010
(Unaudited)
Equifax Shareholders
|
||||||||||||||||||||||||||||||||||||
Stock
|
||||||||||||||||||||||||||||||||||||
Accumulated
|
Held By
|
|||||||||||||||||||||||||||||||||||
Common Stock
|
Other
|
Employee
|
||||||||||||||||||||||||||||||||||
Shares
|
Paid-In
|
Retained
|
Comprehensive
|
Treasury
|
Benefits
|
Noncontrolling
|
Total
|
|||||||||||||||||||||||||||||
Outstanding
|
Amount
|
Capital
|
Earnings
|
Loss
|
Stock
|
Trusts
|
Interests
|
Equity
|
||||||||||||||||||||||||||||
(In millions, except per share amounts)
|
||||||||||||||||||||||||||||||||||||
Balance,
December 31, 2009
|
126.2 | $ | 236.6 | $ | 1,102.0 | $ | 2,494.2 | $ | (318.7 | ) | $ | (1,871.7 | ) | $ | (41.2 | ) | $ | 13.8 | $ | 1,615.0 | ||||||||||||||||
Net
income
|
- | - | - | 204.5 | - | - | - | 6.3 | 210.8 | |||||||||||||||||||||||||||
Other
comprehensive income
|
- | - | - | - | 9.0 | - | - | (0.1 | ) | 8.9 | ||||||||||||||||||||||||||
Shares
issued under stock and benefit plans, net of minimum tax
withholdings
|
0.9 | - | (15.0 | ) | - | 26.5 | - | - | 11.5 | |||||||||||||||||||||||||||
Treasury
stock purchased under share repurchase program ($31.34 per
share)*
|
(3.7 | ) | - | - | - | - | (116.4 | ) | - | - | (116.4 | ) | ||||||||||||||||||||||||
Cash
dividends ($0.12 per share)
|
- | - | - | (15.2 | ) | - | - | - | - | (15.2 | ) | |||||||||||||||||||||||||
Dividends
paid to employee benefits trusts
|
- | - | 0.3 | - | - | - | - | - | 0.3 | |||||||||||||||||||||||||||
Stock-based
compensation expense
|
- | - | 15.0 | - | - | - | - | - | 15.0 | |||||||||||||||||||||||||||
Tax
effects of stock-based compensation plans
|
- | - | 1.6 | - | - | - | - | - | 1.6 | |||||||||||||||||||||||||||
Dividends
paid to noncontrolling interests
|
- | - | - | - | - | - | - | (3.4 | ) | (3.4 | ) | |||||||||||||||||||||||||
Other
|
0.3 | 0.3 | ||||||||||||||||||||||||||||||||||
Balance,
September 30, 2010
|
123.4 | $ | 236.6 | $ | 1,103.9 | $ | 2,683.5 | $ | (309.7 | ) | $ | (1,961.6 | ) | $ | (41.2 | ) | $ | 16.9 | $ | 1,728.4 |
*
|
At September 30, 2010,
$155.5 million was authorized for future purchases of common stock
under our share repurchase
authorization.
|
September 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(In millions)
|
||||||||
Foreign
currency translation
|
$ | (96.2 | ) | $ | (99.9 | ) | ||
Unrecognized
actuarial losses and prior service cost related to our pension and other
postretirement benefit plans, net of accumulated tax of $121.9 and
$124.9 at September 30, 2010 and December 31, 2009,
respectively
|
(211.0 | ) | (216.2 | ) | ||||
Cash
flow hedging transactions, net of accumulated tax of $1.6 and $1.7 at
September 30, 2010 and December 31, 2009,
respectively
|
(2.5 | ) | (2.6 | ) | ||||
Accumulated
other comprehensive loss
|
$ | (309.7 | ) | $ | (318.7 | ) |
See Notes
to Consolidated Financial Statements.
8
CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY AND COMPREHENSIVE INCOME
For
the Nine Months Ended September 30, 2010
(Unaudited)
Comprehensive
Income is as follows:
Three Months Ended September 30,
|
||||||||||||||||||||||||
2010
|
2009
|
|||||||||||||||||||||||
Equifax
|
Noncontrolling
|
Equifax
|
Noncontrolling
|
|||||||||||||||||||||
Shareholders
|
Interests
|
Total
|
Shareholders
|
Interests
|
Total
|
|||||||||||||||||||
(In millions)
|
||||||||||||||||||||||||
Net
income
|
$ | 76.5 | $ | 2.3 | $ | 78.8 | $ | 59.7 | $ | 1.7 | $ | 61.4 | ||||||||||||
Other
comprehensive income:
|
||||||||||||||||||||||||
Foreign
currency translation adjustment
|
20.7 | 0.2 | 20.9 | 13.5 | 0.2 | 13.7 | ||||||||||||||||||
Change
in unrecognized prior service cost and actuarial losses related to our
pension and other postretirement benefit plans
|
1.8 | - | 1.8 | 1.7 | - | 1.7 | ||||||||||||||||||
Change
in cumulative loss from cash flow hedging transactions
|
- | - | - | 0.3 | - | 0.3 | ||||||||||||||||||
Comprehensive
income
|
$ | 99.0 | $ | 2.5 | $ | 101.5 | $ | 75.2 | $ | 1.9 | $ | 77.1 |
Nine Months Ended September 30,
|
||||||||||||||||||||||||
2010
|
2009
|
|||||||||||||||||||||||
Equifax
|
Noncontrolling
|
Equifax
|
Noncontrolling
|
|||||||||||||||||||||
Shareholders
|
Interests
|
Total
|
Shareholders
|
Interests
|
Total
|
|||||||||||||||||||
(In millions)
|
||||||||||||||||||||||||
Net
income
|
$ | 204.5 | $ | 6.3 | $ | 210.8 | $ | 173.7 | $ | 4.9 | $ | 178.6 | ||||||||||||
Other
comprehensive income:
|
||||||||||||||||||||||||
Foreign
currency translation adjustment
|
3.7 | (0.1 | ) | 3.6 | 67.3 | 0.1 | 67.4 | |||||||||||||||||
Change
in unrecognized prior service cost and actuarial losses related to our
pension and other postretirement benefit plans
|
5.2 | - | 5.2 | 4.9 | - | 4.9 | ||||||||||||||||||
Change
in cumulative loss from cash flow hedging transactions
|
0.1 | - | 0.1 | 0.7 | - | 0.7 | ||||||||||||||||||
Comprehensive
income
|
$ | 213.5 | $ | 6.2 | $ | 219.7 | $ | 246.6 | $ | 5.0 | $ | 251.6 |
See Notes
to Consolidated Financial Statements.
9
EQUIFAX INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September
30, 2010
As used
herein, the terms Equifax, the Company, we, our and us refer to
Equifax Inc., a Georgia corporation, and its consolidated subsidiaries as a
combined entity, except where it is clear that the terms mean only
Equifax Inc.
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of
Operations. We collect, organize and manage various types of
financial, demographic, employment and marketing information. Our products and
services enable businesses to make credit and service decisions, manage their
portfolio risk, automate or outsource certain human resources, employment tax
and payroll-related business processes, and develop marketing strategies
concerning consumers and commercial enterprises. We serve customers across a
wide range of industries, including the financial services, mortgage, retail,
telecommunications, utilities, automotive, brokerage, healthcare and insurance
industries, as well as government agencies. We also enable consumers to manage
and protect their financial health through a portfolio of products offered
directly to consumers. As of September 30, 2010, we operated in the following
countries: Argentina, Brazil, Canada, Chile, Ecuador, El Salvador, Honduras,
Paraguay, Peru, Portugal, Spain, the United Kingdom, or U.K., Uruguay, and the
United States of America, or U.S. We also maintain support operations in Costa
Rica and the Republic of Ireland. We offer credit services in Russia and India
through joint ventures.
We
develop, maintain and enhance secured proprietary information databases through
the compilation of actual consumer data, including credit, employment, asset,
liquidity, net worth and spending activity, and business data, including credit
and business demographics, that we obtain from a variety of sources, such as
credit granting institutions, public record information (including bankruptcies,
liens and judgments), income and tax information primarily from large to
mid-sized companies in the U.S., and marketing information. We
process this information utilizing our proprietary information management
systems.
Basis of
Presentation. The accompanying unaudited Consolidated
Financial Statements have been prepared in accordance with U.S. generally
accepted accounting principles, or GAAP, the instructions to Form 10-Q and
applicable sections of Regulation S-X. To understand our complete financial
position and results, as defined by GAAP, this Form 10-Q should be read in
conjunction with the Consolidated Financial Statements and the notes thereto
included in our annual report on Form 10-K for the fiscal year ended
December 31, 2009, or 2009 Form 10-K.
Our
unaudited Consolidated Financial Statements reflect all adjustments which are,
in the opinion of management, necessary for a fair presentation of the periods
presented. Certain prior year amounts have been reclassified to conform to
current year presentation including the results of businesses reclassified as
discontinued operations, which are more fully described in Note 2 of the Notes
to Consolidated Financial Statements.
Earnings Per
Share. Our basic earnings per share, or EPS, is calculated as
net income divided by the weighted-average number of common shares outstanding
during the period. Diluted EPS is calculated to reflect the potential dilution
that would occur if stock options or other contracts to issue common stock were
exercised and resulted in additional common shares outstanding. The net income
amounts used in both our basic and diluted EPS calculations are the same. A
reconciliation of the weighted-average outstanding shares used in the two
calculations is as follows:
10
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(In millions)
|
||||||||||||||||
Weighted-average
shares outstanding (basic)
|
124.3 | 126.4 | 125.4 | 126.3 | ||||||||||||
Effect
of dilutive securities:
|
||||||||||||||||
Stock
options and restricted stock units
|
1.3 | 1.4 | 1.5 | 1.3 | ||||||||||||
Long-term
incentive plans
|
0.2 | 0.2 | 0.2 | 0.2 | ||||||||||||
Weighted-average
shares outstanding (diluted)
|
125.8 | 128.0 | 127.1 | 127.8 |
For the
three and nine months ended September 30, 2010, 3.3 million and
3.1 million stock options, respectively, were anti-dilutive and therefore
excluded from this calculation. For the three and nine months ended
September 30, 2009, 3.5 million and 3.3 million stock options, respectively,
were anti-dilutive and therefore excluded from this calculation.
Financial
Instruments. Our financial instruments consist primarily of
cash and cash equivalents, accounts and notes receivable, accounts payable and
short-term and long-term debt. The carrying amounts of these items, other than
long-term debt, approximate their fair market values due to the short-term
nature of these instruments. The fair value of our fixed-rate debt is determined
using quoted market prices for publicly traded instruments, and for non-publicly
traded instruments through valuation techniques depending on the specific
characteristics of the debt instrument. As of September 30, 2010 and December
31, 2009, the fair value of our fixed-rate debt was $1.08 billion and $1.02
billion, respectively, compared to its carrying value of $0.98 billion and $1.00
billion, respectively.
Derivatives and
Hedging Activities. Although derivative financial instruments
are not utilized for speculative purposes, derivatives have been used as a risk
management tool to hedge the Company’s exposure to changes in interest rates and
foreign exchange rates. We have used interest rate swaps and interest rate lock
agreements to manage interest rate risk associated with our fixed and
floating-rate borrowings. Forward contracts on various foreign currencies have
been used to manage the foreign currency exchange rate risk of certain firm
commitments denominated in foreign currencies. We recognize all derivatives on
the balance sheet at fair value. Derivative valuations reflect the value of the
instrument including material amounts associated with counterparty
risk. As of September 30, 2010, we have one unsettled cash flow
hedge, with an aggregate notional amount of 0.3 million euros, to hedge the
exposure of certain 2010 firm commitments of our U.K. subsidiary that are
denominated in euros. The fair value of our unsettled foreign
currency cash flow hedges was not material at September 30, 2010 and December
31, 2009.
Fair Value Hedges.
In conjunction with our November 2009 sale of five-year Senior
Notes, we entered into five-year interest rate swaps, designated as fair value
hedges, which convert the debt’s fixed interest rate to a variable rate. These
swaps involve the receipt of fixed rate amounts for floating interest rate
payments over the life of the swaps without exchange of the underlying principal
amount. Changes in the fair value of the interest rate swaps offset changes in
the fair value of the fixed-rate Senior Notes they hedge due to changes in the
designated benchmark interest rate and are recorded in interest expense. The
fair value of these interest rate swaps was an asset of $16.0 million at
September 30, 2010 and was recorded in other long-term assets on our
Consolidated Balance Sheet. The fair value of these interest rate
swaps was a liability of $3.3 million at December 31, 2009 and was recorded in
other long-term liabilities on our Consolidated Balance Sheet.
Fair Value
Measurements. Fair value is determined based on the
assumptions marketplace participants use in pricing the asset or liability. We
use a three level fair value hierarchy to prioritize the inputs used in
valuation techniques between observable inputs that reflect quoted prices in
active markets, inputs other than quoted prices with observable market data and
unobservable data (e.g., a company’s own data).
The
following table presents items measured at fair value on a recurring
basis:
11
Fair Value Measurements at Reporting Date Using:
|
||||||||||||||||
Description
|
Fair Value of
Assets
(Liabilities) at
September 30,
2010
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
(In
millions)
|
||||||||||||||||
Fair
Value Interest Rate Swaps(2)
|
$ | 16.0 | $ | - | $ | 16.0 | $ | - | ||||||||
Notes,
due 2014
|
(291.0 | ) | - | (291.0 | ) | - | ||||||||||
Deferred
Compensation Plan(1)
|
(11.8 | ) | (11.8 | ) | - | - | ||||||||||
Total
|
$ | (286.8 | ) | $ | (11.8 | ) | $ | (275.0 | ) | $ | - |
(1)
We maintain a deferred compensation plan that allows for certain management
employees to defer the receipt of compensation (such as salary, incentive
compensation and commissions) until a later date based on the terms of the plan.
The liability representing benefits accrued for plan participants is valued at
the quoted market prices of the participants’ elections for investments.
Identical instruments are traded in active markets as of September 30, 2010. As
such, we have classified this liability as Level 1 within the fair value
hierarchy.
(2)
The fair value of our interest rate swaps, which are designated as fair value
hedges, and notes are based on the present value of expected future cash flows
using zero coupon rates and are classified within Level 2 of the fair value
hierarchy.
Variable Interest
Entities. We hold interests in certain entities, including
credit data and information solutions ventures, that are considered variable
interest entities, or VIEs. These variable interests relate to
ownership interests that require financial support for these
entities. Our investments related to these VIEs totaled $8.3 million
at September 30, 2010, representing our maximum exposure to loss. We
are not the primary beneficiary and are not required to consolidate any of these
VIEs.
Recent Accounting
Pronouncements. Fair Value
Disclosures. In January 2010, the Financial Accounting
Standards Board, or FASB, issued guidance requiring additional fair value
disclosures for significant transfers between levels of the fair value hierarchy
and gross presentation of items within the Level 3 reconciliation. This
guidance also clarifies that entities need to disclose fair value information
for each class of asset and liability measured at fair value and that valuation
techniques need to be provided for all non-market observable measurements. Our
adoption of this guidance on January 1, 2010, did not impact our
Consolidated Financial Statements as we have no items classified as Level
3.
Variable Interest
Entities. In June 2009, the FASB amended the consolidation
guidance for variable-interest entities and expanded disclosure requirements.
The new guidance requires an enterprise to perform an analysis to determine
whether the enterprise’s variable interests give it a controlling financial
interest in the variable interest entity. The adoption of this guidance as noted
above on January 1, 2010, did not have a material impact on our
Consolidated Financial Statements.
For
additional information about recent accounting pronouncements adopted or pending
adoption, see Note 1 of the Notes to Consolidated Financial Statements in
our 2009 Form 10-K.
12
On April
23, 2010, we sold our Equifax Enabling Technologies LLC legal entity, consisting
of our APPRO loan origination software (“APPRO”), for approximately $72
million. On July 1, 2010, we sold substantially all the assets of our
Direct Marketing Services division (“DMS”) for approximately $117
million. Both of these businesses were reported in our U.S. Consumer
Information Solutions segment. The historical results of these
operations for the three and nine month periods ended September 30, 2010 and
2009 are classified as discontinued operations in the Consolidated Statements of
Income. Revenue for these businesses for the three months ended
September 30, 2010 and 2009 was $0 and $26.9 million,
respectively. Revenue for the nine months ended September 30, 2010
and 2009 was $42.1 million and $79.6 million, respectively. Pretax
income, excluding the gains on the sales of APPRO and DMS, was $0 and $6.3
million for the three and nine months ended September 30, 2010. We
recorded a gain from the sale of APPRO in the second quarter of 2010 of $12.3
million, after tax, and a gain from the sale of DMS in the third quarter of 2010
of $14.9 million, after tax, both of which were classified as discontinued
operations in the Consolidated Statements of Income.
3.
GOODWILL AND INTANGIBLE ASSETS
Goodwill.
Goodwill represents the cost in excess of the fair value of the net
assets acquired in a business combination. Goodwill is tested for impairment at
the reporting unit level on an annual basis and on an interim basis if an event
occurs or circumstances change that would reduce the fair value of a reporting
unit below its carrying value. We perform our annual goodwill impairment tests
as of September 30.
Our 2010
annual goodwill impairment testing was completed as of the end of the third
quarter of 2010. The fair value estimates for our reporting units
were determined using a combination of the income and market approaches in
accordance with the Company’s methodology as discussed in the “Application of
Critical Accounting Policies” section in this Form 10-Q. The
estimated fair value for all reporting units exceeded the carrying value of
these units as of September 30, 2010. As a result, no goodwill
impairment was recorded. Changes in the amount of goodwill for the
nine months ended September 30, 2010, are as follows:
U.S. Consumer
|
North America
|
North America
|
||||||||||||||||||||||
Information
|
Personal
|
Commercial
|
||||||||||||||||||||||
Solutions
|
International
|
TALX
|
Solutions
|
Solutions
|
Total
|
|||||||||||||||||||
(In millions)
|
||||||||||||||||||||||||
Balance,
December 31, 2009
|
$ | 667.8 | $ | 335.7 | $ | 900.6 | $ | 1.8 | $ | 37.3 | $ | 1,943.2 | ||||||||||||
Acquisitions
|
- | 4.7 | - | - | - | 4.7 | ||||||||||||||||||
Adjustments
to initial purchase price allocation
|
(0.3 | ) | - | (0.6 | ) | - | - | (0.9 | ) | |||||||||||||||
Foreign
currency translation
|
- | 3.8 | - | - | 0.1 | 3.9 | ||||||||||||||||||
Tax
benefits of stock options exercised
|
- | - | - | - | - | - | ||||||||||||||||||
Businesses
sold
|
(79.7 | ) | - | - | - | - | (79.7 | ) | ||||||||||||||||
Balance,
September 30, 2010
|
$ | 587.8 | $ | 344.2 | $ | 900.0 | $ | 1.8 | $ | 37.4 | $ | 1,871.2 |
Indefinite-Lived
Intangible Assets. Indefinite-lived intangible assets consist
of contractual/territorial rights representing the estimated acquisition date
fair value of rights to operate in certain territories acquired through the
purchase of independent credit reporting agencies in the U.S. and Canada. Our
contractual/territorial rights are perpetual in nature and, therefore, the
useful lives are considered indefinite. Indefinite-lived intangible assets are
not amortized. We are required to test indefinite-lived intangible assets for
impairment annually and whenever events or circumstances indicate that there may
be an impairment of the asset value. We perform our annual indefinite-lived
intangible asset impairment test as of September 30. Our 2010 annual
impairment test completed as of the end of the third quarter of 2010 resulted in
no impairment of indefinite-lived intangible assets. Our contractual/territorial
rights carrying amounts did not change materially during the nine months ended
September 30, 2010.
13
Purchased
intangible assets at September 30, 2010 and December 31, 2009 consisted of
the following:
September 30, 2010
|
December 31, 2009
|
|||||||||||||||||||||||
Accumulated
|
Accumulated
|
|||||||||||||||||||||||
Gross
|
Amortization
|
Net
|
Gross
|
Amortization
|
Net
|
|||||||||||||||||||
Definite-lived intangible assets:
|
(In millions)
|
|||||||||||||||||||||||
Purchased
data files
|
$ | 335.6 | $ | (232.4 | ) | $ | 103.2 | $ | 373.8 | $ | (240.6 | ) | $ | 133.2 | ||||||||||
Acquired
software and technology
|
41.5 | (30.4 | ) | 11.1 | 70.3 | (37.1 | ) | 33.2 | ||||||||||||||||
Customer
relationships
|
480.4 | (89.2 | ) | 391.2 | 488.0 | (70.8 | ) | 417.2 | ||||||||||||||||
Proprietary
database
|
125.0 | (69.1 | ) | 55.9 | 125.0 | (52.2 | ) | 72.8 | ||||||||||||||||
Non-compete
agreements
|
3.5 | (0.9 | ) | 2.6 | 3.3 | (0.5 | ) | 2.8 | ||||||||||||||||
Trade
names and other intangible assets
|
36.1 | (11.2 | ) | 24.9 | 36.0 | (8.2 | ) | 27.8 | ||||||||||||||||
Total
definite-lived intangible assets
|
$ | 1,022.1 | $ | (433.2 | ) | $ | 588.9 | $ | 1,096.4 | $ | (409.4 | ) | $ | 687.0 |
Amortization
expense from continuing operations related to purchased intangible assets was
$22.3 million and $19.7 million during the three months ended
September 30, 2010 and 2009, respectively. Amortization expense from
continuing operations related to purchased intangible assets was $66.8 million
and $58.8 million during the nine months ended September 30, 2010 and 2009,
respectively.
14
Debt
outstanding at September 30, 2010 and December 31, 2009 was as
follows:
September 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(In millions)
|
||||||||
Commercial
paper, weighted-average rate of 0.4% in 2009
|
$ | - | $ | 135.0 | ||||
Notes,
4.25%, due in installments through March 2012
|
4.7 | 7.6 | ||||||
Notes,
7.34%, due in installments through May 2014
|
60.0 | 75.0 | ||||||
Notes,
4.45%, due December 2014
|
275.0 | 275.0 | ||||||
Notes,
6.30%, due July 2017
|
272.5 | 272.5 | ||||||
Debentures,
6.90%, due July 2028
|
125.0 | 125.0 | ||||||
Notes,
7.00%, due July 2037
|
250.0 | 250.0 | ||||||
Borrowings
under long-term revolving credit facilities, weighted-average rate of 0.9%
in 2009
|
- | 4.8 | ||||||
Capitalized
lease obligation
|
2.3 | 29.0 | ||||||
Other
|
2.1 | 3.1 | ||||||
Total
debt
|
991.6 | 1,177.0 | ||||||
Less
short-term debt and current maturities
|
(21.0 | ) | (183.2 | ) | ||||
Less
unamortized discounts
|
(2.2 | ) | (2.4 | ) | ||||
Plus
fair value adjustments
|
18.0 | (0.5 | ) | |||||
Total
long-term debt, net
|
$ | 986.4 | $ | 990.9 |
Senior Credit
Facility. We are party to an $850.0 million senior
unsecured revolving credit facility, which we refer to as the Senior Credit
Facility, with a group of financial institutions. Borrowings may be used for
general corporate purposes, including working capital, capital expenditures,
acquisitions and share repurchase programs. The Senior Credit Facility is
scheduled to expire in July 2011. Availability of the Senior Credit Facility for
borrowings is reduced by the outstanding face amount of any letters of credit
issued under the facility and, pursuant to our existing Board of Directors
authorization, by the outstanding principal amount of our commercial paper
notes. As of September 30, 2010, there were no outstanding borrowings under this
facility and $848.3 million was available for borrowings.
15
Commercial Paper
Program. Our $850.0 million commercial paper program has
been established through the private placement of commercial paper notes from
time-to-time. Maturities of commercial paper can range from overnight to
397 days. The commercial paper program is supported by our Senior Credit
Facility and, pursuant to our existing Board of Directors authorization, the
total amount of commercial paper which may be issued is reduced by the amount of
any outstanding borrowings under our Senior Credit Facility. At September 30,
2010, there were no outstanding borrowings under this program.
Canadian Credit
Facility. We are a party to a credit agreement with a
Canadian financial institution that provides for a C$10.0 million
(denominated in Canadian dollars), 364-day revolving credit agreement. This
agreement is scheduled to expire in June 2011. As of September 30, 2010, there
were no outstanding borrowings under this facility.
For
additional information about our debt agreements, see Note 4 of the Notes
to Consolidated Financial Statements in our 2009 Form 10-K.
5.
COMMITMENTS AND CONTINGENCIES
Headquarters
Building. On February 26, 2010, we purchased our
headquarters building in Atlanta, Georgia, for cash consideration of
$29.1 million, including fees. The building and related capital
lease obligations were recorded on our Consolidated Balance Sheets in February
2009 when we provided the lessor notification of our intent to purchase the
building.
Data Processing,
Outsourcing Services and Other Agreements. We have separate
agreements with IBM, Acxiom, Tata Consultancy Services and others to outsource
portions of our computer data processing operations, applications development,
maintenance and related functions and to provide certain other administrative
and operational services. The agreements expire between 2010 and 2014. The
estimated aggregate minimum contractual obligation remaining under these
agreements was approximately $175 million at December 31, 2009, with
no future year’s minimum contractual obligation expected to exceed approximately
$55 million. Annual payment obligations in regard to these agreements vary
due to factors such as the volume of data processed; changes in our servicing
needs as a result of new product offerings, acquisitions or divestitures; the
introduction of significant new technologies; foreign currency; or the general
rate of inflation. In certain circumstances (e.g., a change in control or
for our convenience), we may terminate these data processing and outsourcing
agreements, and, in doing so, certain of these agreements require us to pay a
significant penalty.
Agreement with
Computer Sciences Corporation. We have an agreement with
Computer Sciences Corporation, or CSC, and certain of its affiliates,
collectively CSC, under which CSC-owned credit reporting agencies utilize our
computerized credit database services. CSC retains ownership of its credit files
and the revenues generated by its credit reporting activities. We receive a
processing fee for maintaining the database and for each report supplied. The
agreement will expire on July 31, 2018, and is renewable at the option of
CSC for successive ten-year periods. The agreement provides us with an option to
purchase CSC’s credit reporting business if it does not elect to renew the
agreement or if there is a change in control of CSC while the agreement is in
effect. Under the agreement CSC also has an option, exercisable at any time, to
sell its credit reporting business to us. The option expires in 2013. The option
exercise price will be determined by a third-party appraisal process and would
be due in cash within 180 days after the exercise of the option. We
estimate that if the option were exercised at December 31, 2009, the price
range would be approximately $600 million to $675 million. This
estimate is based solely on our internal analysis of the value of the business,
current market conditions and other factors, all of which are subject to
constant change. Therefore, the actual option exercise price could be materially
higher or lower than our estimate.
Guarantees and
General Indemnifications. We may issue standby letters of
credit, performance bonds or other guarantees in the normal course of business.
The aggregate notional amount of all performance bonds and standby letters of
credit was not material at September 30, 2010, and all have a remaining maturity
of one year or less. The maximum potential future payments we could be required
to make under the guarantees is not material at September 30,
2010.
16
We have
agreed to standard indemnification clauses in many of our lease agreements for
office space, covering such things as tort, environmental and other liabilities
that arise out of or relate to our use or occupancy of the leased premises.
Certain of our credit agreements include provisions which require us to make
payments to preserve an expected economic return to the lenders if that economic
return is diminished due to certain changes in law or regulations. In
conjunction with certain transactions, such as sales or purchases of operating
assets or services in the ordinary course of business, or the disposition of
certain assets or businesses, we sometimes provide routine indemnifications, the
terms of which range in duration and sometimes are not limited. Additionally,
the Company has entered into indemnification agreements with its directors and
executive officers to indemnify such individuals to the fullest extent permitted
by applicable law against liabilities that arise by reason of their status as
directors or officers. The Company maintains directors and officers liability
insurance coverage to reduce its exposure to such obligations.
We cannot
reasonably estimate our potential future payments under the indemnities and
related provisions described above because we cannot predict when and under what
circumstances these provisions may be triggered. We had no accruals related to
indemnifications on our Consolidated Balance Sheets at September 30, 2010 or
December 31, 2009.
Contingencies.
We are involved in legal proceedings, claims and litigation arising
in the ordinary course of business. We periodically assess our exposure related
to these matters based on the information which is available. We have recorded
accruals in our Consolidated Financial Statements for those matters in which it
is probable that we have incurred a loss and the amount of the loss, or range of
loss, can be reasonably estimated.
For other
legal proceedings, claims and litigation, we have recorded loss contingencies
that are immaterial, or we cannot reasonably estimate the potential loss because
of uncertainties about the outcome of the matter and the amount of the loss or
range of loss. Although the final outcome of these other matters cannot be
predicted with certainty, any possible adverse outcome arising from these
matters is not expected to have a material impact on our Consolidated Financial
Statements, either individually or in the aggregate. However, our evaluation of
the likely impact of these matters may change in the future.
Tax
Matters. In 2003, the Canada Revenue Agency, or CRA, issued
Notices of Reassessment, asserting that Acrofax, Inc., a wholly-owned
Canadian subsidiary of Equifax, is liable for additional tax for the 1995
through 2000 tax years, related to certain intercompany capital contributions
and loans. The additional tax sought by the CRA for these periods ranges, based
on alternative theories, from $8.3 million (8.5 million in Canadian
dollars) to $18.5 million (19.0 million in Canadian dollars) plus
interest and penalties. Subsequently in 2003, we made a statutorily-required
deposit for a portion of the claim. We intend to vigorously contest these
reassessments and do not believe we have violated any statutory provision or
rule. While we believe our potential exposure is less than the asserted claims
and not material to our Consolidated Financial Statements, if the final outcome
of this matter was unfavorable to us, an additional claim may be filed by the
local province. The likelihood and potential amount of such claim is unknown at
this time. We cannot predict when this tax matter will be resolved.
For
additional information about these and other commitments and contingencies, see
Note 5 of the Notes to Consolidated Financial Statements in our 2009
Form 10-K.
6.
INCOME TAXES
We are
subject to U.S. federal, state and international income taxes. We are generally
no longer subject to federal, state, or international income tax examinations by
tax authorities for years ending prior to December 31, 2002, with few
exceptions. In Canada, we are under audit by the Canada Revenue Agency for the
1995 through 2000 tax years (see Note 5 of the Notes to Consolidated
Financial Statements). Due to the potential for resolution of state and foreign
examinations, and the expiration of various statutes of limitations, it is
reasonably possible that our gross unrecognized tax benefit balance may change
within the next twelve months by a range of $0 to
$3.3 million.
Effective Tax
Rate. Our
effective tax rate was 34.4% for the three months ended September 30, 2010 up
from 33.3% for the same period in 2009 due primarily to a higher foreign tax
rate during 2010, partially offset by a reduction due to a permanent federal tax
deduction. Our effective income tax rate was 35.7% for the nine
months ended September 30, 2010 down from 35.9% for the same period in
2009. Our ongoing effective foreign and consolidated income tax
rates in 2010 increased from 2009 due to certain changes in our foreign tax
position but this effect was more than offset by the permanent federal tax
deduction, a favorable U.K. audit settlement and the absence of an unfavorable
discrete item related to the effect of a change in California state income taxes
on our deferred tax liabilities recorded in 2009.
17
7.
BENEFIT PLANS
We
sponsor defined benefit pension plans and defined contribution plans. We also
maintain certain healthcare and life insurance benefit plans for eligible active
and retired employees. For additional information about our benefit plans, see
Note 9 of the Notes to Consolidated Financial Statements in our 2009
Form 10-K.
The
following table provides the components of net periodic benefit cost for the
three months and nine months ended September 30, 2010 and 2009:
Pension Benefits
|
Other Benefits
|
|||||||||||||||
Three Months Ended September
30,
|
||||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Service
cost
|
$ | 1.8 | $ | 1.4 | $ | 0.1 | $ | 0.1 | ||||||||
Interest
cost
|
8.7 | 8.8 | 0.4 | 0.5 | ||||||||||||
Expected
return on plan assets
|
(11.1 | ) | (11.3 | ) | (0.3 | ) | (0.4 | ) | ||||||||
Amortization
of prior service cost
|
0.2 | 0.2 | (0.1 | ) | (0.1 | ) | ||||||||||
Recognized
actuarial loss
|
2.3 | 2.2 | 0.3 | 0.3 | ||||||||||||
Total
net periodic benefit cost
|
$ | 1.9 | $ | 1.3 | $ | 0.4 | $ | 0.4 |
Pension Benefits
|
Other Benefits
|
|||||||||||||||
Nine Months Ended September
30,
|
||||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Service
cost
|
$ | 4.7 | $ | 4.2 | $ | 0.3 | $ | 0.3 | ||||||||
Interest
cost
|
26.1 | 26.4 | 1.3 | 1.5 | ||||||||||||
Expected
return on plan assets
|
(33.3 | ) | (33.9 | ) | (1.1 | ) | (1.2 | ) | ||||||||
Amortization
of prior service cost
|
0.6 | 0.6 | (0.2 | ) | (0.2 | ) | ||||||||||
Recognized
actuarial loss
|
6.8 | 6.6 | 0.9 | 0.9 | ||||||||||||
Total
net periodic benefit cost
|
$ | 4.9 | $ | 3.9 | $ | 1.2 | $ | 1.3 |
8.
RESTRUCTURING CHARGES
2009
Restructuring Charges. In the fourth quarter of 2009, we
recorded a $16.4 million restructuring charge ($10.4 million, net of
tax) in selling, general and administrative expenses on our Consolidated
Statements of Income primarily related to headcount reductions of approximately
400 positions. This charge resulted from our continuing efforts to align our
business to better support our strategic objectives. Generally, severance
benefits for our U.S. employees are paid through monthly payroll according to
the number of weeks of severance benefit provided to the employee, while our
international employees receive a lump sum severance payment for their benefit.
Accordingly, we expect the majority of the payments to be completed by December
2010. Payments related to this charge for the three and nine months ended
September 30, 2010, totaled $2.3 million and $8.8 million,
respectively. Total payments to date, through September 30, 2010,
related to the fourth quarter 2009 restructuring charge were $10.6
million.
During
the first quarter of 2009, we recorded in selling, general and administrative
expenses on our Consolidated Statements of Income an $8.4 million
restructuring charge ($5.4 million, net of tax) associated with headcount
reductions of approximately 300 positions. This charge resulted from our efforts
to reduce and manage our expenses and to maintain our financial results in the
face of a weak global economy and reduced revenues. The majority of the payments
were completed by the end of the first quarter of 2010. Payments related to this
charge were not material during the three and nine months ended September 30,
2010. Total payments to date, through September 30, 2010, related to
the first quarter 2009 restructuring charge were $7.9 million.
18
Reportable
Segments. We manage our business and report our financial
results through the following five reportable segments, which are the same as
our operating segments:
|
•
|
U.S. Consumer Information
Solutions
|
|
•
|
International
|
|
•
|
TALX
|
|
•
|
North America Personal
Solutions
|
|
•
|
North America Commercial
Solutions
|
The accounting policies of the reportable segments are the same as those
described in our summary of significant accounting policies in Note 1 of
the Notes to Consolidated Financial Statements in our 2009 Form 10-K. We
evaluate the performance of these reportable segments based on their operating
revenues, operating income and operating margins, excluding unusual or
infrequent items, if any. Inter-segment sales and transfers are not material for
all periods presented. The measurement criteria for segment profit or loss and
segment assets are substantially the same for each reportable segment. All
transactions between segments are accounted for at cost, and no timing
differences occur between segments.
A summary
of segment products and services is as follows:
U.S. Consumer
Information Solutions. This segment includes consumer
information services (such as credit information and credit scoring, credit
modeling services, locate services, fraud detection and prevention services,
identity verification services and other consulting services); mortgage loan
origination information, appraisal, title and closing services; and consumer
financial marketing services.
International.
This segment includes information services products, which includes
consumer and commercial services (such as credit and financial information,
credit scoring and credit modeling services), credit and other marketing
products and services, and products and services sold directly to consumers
similar to those sold by North America Personal Solutions.
TALX.
This segment includes employment, income and social security number
verification services (known as The Work Number ® ) and
employment tax and talent management services.
North America
Personal Solutions. This segment includes credit information,
credit monitoring and identity theft protection products sold directly to
consumers via the internet.
North America
Commercial Solutions. This segment includes commercial
products and services such as business credit and demographic information,
credit scores and portfolio analytics (decisioning tools), which are derived
from our databases of business credit and financial
information.
19
Operating
revenue and operating income by operating segment during the three and nine
months ended September 30, 2010 and 2009, are as follows:
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(In
millions)
|
September
30,
|
September
30,
|
||||||||||||||
Operating
revenue:
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
U.S.
Consumer Information Solutions
|
$ | 194.0 | $ | 173.8 | $ | 551.7 | $ | 542.1 | ||||||||
International
|
122.5 | 114.9 | 356.9 | 320.9 | ||||||||||||
TALX
|
99.1 | 83.1 | 293.4 | 257.0 | ||||||||||||
North
America Personal Solutions
|
39.9 | 37.1 | 119.9 | 113.0 | ||||||||||||
North
America Commercial Solutions
|
18.3 | 16.1 | 55.6 | 47.6 | ||||||||||||
Total
operating revenue
|
$ | 473.8 | $ | 425.0 | $ | 1,377.5 | $ | 1,280.6 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(In millions)
|
September 30,
|
September 30,
|
||||||||||||||
Operating
income:
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
U.S.
Consumer Information Solutions
|
$ | 72.2 | $ | 63.1 | $ | 200.5 | $ | 201.9 | ||||||||
International
|
30.8 | 31.1 | 89.6 | 86.6 | ||||||||||||
TALX
|
22.7 | 17.7 | 67.2 | 56.5 | ||||||||||||
North
America Personal Solutions
|
12.7 | 10.1 | 33.0 | 24.1 | ||||||||||||
North
America Commercial Solutions
|
3.3 | 2.9 | 11.4 | 7.6 | ||||||||||||
General
Corporate Expense
|
(31.5 | ) | (24.9 | ) | (81.4 | ) | (77.8 | ) | ||||||||
Total
operating income
|
$ | 110.2 | $ | 100.0 | $ | 320.3 | $ | 298.9 |
10. SUBSEQUENT
EVENT
On
October 1, 2010, we acquired Anakam, Inc., a provider of large-scale,
software-based, multi-factor authentication solutions for $64
million. Anakam will become part of our Technology and Analytical
Services organization which is reported as part of our U.S. Consumer Information
Solutions segment.
20
As used
herein, the terms Equifax, the Company, we, our and us refer to
Equifax Inc., a Georgia corporation, and its consolidated subsidiaries as a
combined entity, except where it is clear that the terms mean only
Equifax Inc.
All
references to earnings per share data in Management’s Discussion and Analysis,
or MD&A, are to diluted earnings per share, or EPS, unless otherwise noted.
Diluted EPS is calculated to reflect the potential dilution that would occur if
stock options or other contracts to issue common stock were exercised and
resulted in additional common shares outstanding.
BUSINESS
OVERVIEW
We are a
leading global provider of information solutions, employment and income
verifications and human resources business process outsourcing services. We
leverage some of the largest sources of consumer and commercial data, along with
advanced analytics and proprietary technology, to create customized insights
which enable our business customers to grow faster, more efficiently and more
profitably, and to inform and empower consumers.
Businesses
rely on us for consumer and business credit intelligence, credit portfolio
management, fraud detection, decisioning technology, marketing tools, and human
resources and payroll-related services. We also offer a portfolio of products
that enable individual consumers to manage their financial affairs and protect
their identity. Our revenue stream is diversified among individual consumers and
among businesses across a wide range of industries and international
geographies.
Segment
and Geographic Information
Segments.
The U.S. Consumer Information Solutions, or USCIS, segment, the
largest of our five segments, consists of three product and service lines:
Online Consumer Information Solutions, or OCIS; Mortgage Solutions; and Consumer
Financial Marketing Services. OCIS and Mortgage Solutions revenue is principally
transaction-based and is derived from our sales of products such as consumer
credit reporting and scoring, mortgage settlement services, identity
verification, fraud detection and modeling services. USCIS also markets certain
of our decisioning products which facilitate and automate a variety of consumer
credit-oriented decisions. Consumer Financial Marketing Services revenue is
principally project- and subscription-based and is derived from our sales of
batch credit and consumer wealth information such as those that assist clients
in acquiring new customers, cross-selling to existing customers and managing
portfolio risk.
The
International segment consists of Canada Consumer, Europe and Latin America.
Canada Consumer’s products and services are similar to our USCIS offerings,
while Europe and Latin America are made up of varying mixes of product lines
that are in our USCIS, North America Commercial Solutions and North America
Personal Solutions reportable segments.
The TALX
segment consists of The Work Number® and Tax and Talent Management business
units. The Work Number revenue is transaction-based and is derived primarily
from employment, income and social security number verifications. Tax and Talent
Management revenues are derived from our provision of certain human resources
business process outsourcing services that include both transaction- and
subscription-based product offerings. These services assist our customers with
the administration of unemployment claims and employer-based tax credits and the
assessment of new hires.
North
America Personal Solutions revenue is both transaction- and subscription-based
and is derived from the sale of credit monitoring, debt management and identity
theft protection products, which we deliver to consumers electronically via the
internet.
North
America Commercial Solutions revenue is principally transaction-based, with the
remainder project-based, and is derived from the sale of business information,
credit scores and portfolio analytics that enable customers to utilize our
reports to make financing, marketing and purchasing decisions related to
businesses.
21
Key Performance
Indicators. Management focuses on a variety of key indicators
to monitor operating and financial performance. These performance indicators
include operating revenue, change in operating revenue, operating income,
operating margin, net income attributable to Equifax, diluted earnings per
share, cash provided by operating activities and capital expenditures. The key
performance indicators for the three and nine months ended September 30, 2010
and 2009, were as follows:
Key Performance Indicators
|
||||||||||||||||
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(Dollars
in millions, except per share data)
|
||||||||||||||||
Operating
revenue
|
$ | 473.8 | $ | 425.0 | $ | 1,377.5 | $ | 1,280.6 | ||||||||
Operating
revenue change
|
11 | % | -6 | % | 8 | % | -8 | % | ||||||||
Operating
income
|
$ | 110.2 | $ | 100.0 | $ | 320.3 | $ | 298.9 | ||||||||
Operating
margin
|
23.3 | % | 23.5 | % | 23.3 | % | 23.3 | % | ||||||||
Net
income from continuing operations attributable to Equifax
|
$ | 61.3 | $ | 55.7 | $ | 173.0 | $ | 162.9 | ||||||||
Net
income attributable to Equifax
|
$ | 76.5 | $ | 59.7 | $ | 204.5 | $ | 173.7 | ||||||||
Diluted
earnings per share from continuing operations attributable to
Equifax
|
$ | 0.49 | $ | 0.44 | $ | 1.36 | $ | 1.28 | ||||||||
Diluted
earnings per share attributable to Equifax
|
$ | 0.61 | $ | 0.47 | $ | 1.61 | $ | 1.36 | ||||||||
Cash
provided by operating activities
|
$ | 68.5 | $ | 123.2 | $ | 207.4 | $ | 268.8 | ||||||||
Capital
expenditures
|
$ | 15.5 | $ | 17.2 | $ | 82.4 | $ | 51.2 |
Business
Environment and Company Strategy
Consumer
and small business lending activity, which is one of the drivers of demand for
our services, continues to be soft in markets around the world, and we expect
growth in consumer lending to lag the general economic recovery in the more
mature markets. In addition, new financial regulations are increasing
the compliance requirements for many of our customers, introducing new
challenges and opportunities in the marketing of our product and service
offerings to financial institutions. In an effort to respond to these
challenges, we have focused on the following initiatives and
activities:
|
o
|
We are further diversifying our
revenues by pursuing and investing in key strategic initiatives including
new product innovation, differentiated decisioning solutions and analytics
leveraging our diverse data assets and
technology.
|
|
o
|
We have reorganized our sales
force and have key customer teams dedicated to our largest
accounts.
|
|
o
|
We have divested two product
lines that were considered non-strategic, APPRO loan origination software
and Direct Marketing
Services.
|
|
o
|
We continue to acquire new data
assets and technologies and pursue international
expansion.
|
|
o
|
We continue to focus on managing
our expenses through the use of LEAN, Work Out and other process
improvement initiatives.
|
During
2010, we have begun to experience an increase in demand from financial
institutions in the U.S. following the actions they have taken to comply with
the new credit card regulations which became effective in February of this year
and as they began to engage in new lending activity. In addition, our major
corporate revenue initiatives, including new product innovation and
cross-selling of products across business units, are increasing their
contributions to revenue growth. As a result, we have seen year-over-year
revenue growth from continuing operations gradually improve over the course of
the year.
22
Consolidated
Financial Results
Operating
Revenue
Three
Months Ended September 30,
|
Change
|
Nine
Months Ended September 30,
|
Change
|
|||||||||||||||||||||||||||||
Consolidated
Operating Revenue
|
2010
|
2009
|
$
|
%
|
2010
|
2009
|
$
|
%
|
||||||||||||||||||||||||
(Dollars
in millions)
|
(Dollars
in millions)
|
|||||||||||||||||||||||||||||||
U.S.
Consumer Information Solutions
|
$ | 194.0 | $ | 173.8 | $ | 20.2 | 12 | % | $ | 551.7 | $ | 542.1 | $ | 9.6 | 2 | % | ||||||||||||||||
International
|
122.5 | 114.9 | 7.6 | 7 | % | 356.9 | 320.9 | 36.0 | 11 | % | ||||||||||||||||||||||
TALX
|
99.1 | 83.1 | 16.0 | 19 | % | 293.4 | 257.0 | 36.4 | 14 | % | ||||||||||||||||||||||
North
America Personal Solutions
|
39.9 | 37.1 | 2.8 | 7 | % | 119.9 | 113.0 | 6.9 | 6 | % | ||||||||||||||||||||||
North
America Commercial Solutions
|
18.3 | 16.1 | 2.2 | 14 | % | 55.6 | 47.6 | 8.0 | 17 | % | ||||||||||||||||||||||
Consolidated
operating revenue
|
$ | 473.8 | $ | 425.0 | $ | 48.8 | 11 | % | $ | 1,377.5 | $ | 1,280.6 | $ | 96.9 | 8 | % |
Revenue
from continuing operations increased by 11% in the third quarter and 8% in the
first nine months of 2010 compared to the same periods in 2009. The
favorable effect of foreign exchange rates increased revenue by $1.8 million, or
0.4%, in the third quarter and $23.0 million, or 1.8%, year to date compared to
the year ago periods. Revenue grew over the prior year in both the
third quarter and the first nine months of 2010 compared to the prior year in
each of our operating segments, primarily driven by strong execution of key
strategic initiatives as well as growth contributed by 2009 acquisitions in
USCIS and TALX.
Operating
Expenses
Three
Months Ended September 30,
|
Change
|
Nine
Months Ended September 30,
|
Change
|
|||||||||||||||||||||||||||||
Consolidated
Operating Expenses
|
2010
|
2009
|
$
|
%
|
2010
|
2009
|
$
|
%
|
||||||||||||||||||||||||
(Dollars
in millions)
|
(Dollars
in millions)
|
|||||||||||||||||||||||||||||||
Consolidated
cost of services
|
$ | 188.2 | $ | 177.5 | $ | 10.7 | 6 | % | $ | 566.6 | $ | 535.0 | $ | 31.6 | 6 | % | ||||||||||||||||
Consolidated
selling, general and administrative expenses
|
134.0 | 111.2 | 22.8 | 21 | % | 370.4 | 340.0 | 30.4 | 9 | % | ||||||||||||||||||||||
Consolidated
depreciation and amortization expense
|
41.4 | 36.3 | 5.1 | 14 | % | 120.2 | 106.7 | 13.5 | 13 | % | ||||||||||||||||||||||
Consolidated
operating expenses
|
$ | 363.6 | $ | 325.0 | $ | 38.6 | 12 | % | $ | 1,057.2 | $ | 981.7 | $ | 75.5 | 8 | % |
The increase in cost of services from
continuing operations, when compared to the third quarter and the first nine
months of 2009, was due primarily to the impact of increased salary and
incentives expense of $2.6 million and $4.1 million, respectively; the impact of
changes in foreign currency exchange rates which increased our cost of services
by $0.9 million and $11.0 million, respectively; and due to the impact of our
fourth quarter 2009 acquisitions of IXI Corporation and Rapid Reporting
Verification Company.
Selling,
general and administrative expense from continuing operations increased $22.8
million in the third quarter compared to the year ago
quarter. Increased salary, incentive and legal expense contributed
$14.5 million. The remaining increase was primarily due to the
inclusion of businesses which we acquired during the fourth quarter of
2009.
The
increase in selling, general and administrative expense from continuing
operations of $30.4 million, when compared to the first nine months in 2009, was
due to changes in foreign currency exchange rates, which increased 2010 expense
by $5.1 million, and increased salary, incentive and legal expenses of $18.7
million, offset by an $8.4 million restructuring charge that was incurred during
the first quarter of 2009 that did not recur in 2010. The remaining
increase was primarily due to the impact of the inclusion of businesses acquired
in the fourth quarter of 2009.
23
For
additional information about the charges and fees related to our restructuring
activity, see Note 8 of the Notes to the Consolidated Financial Statements
in this Form 10-Q.
Operating
Income and Operating Margin
Three
Months Ended September 30,
|
Change
|
Nine
Months Ended September 30,
|
Change
|
|||||||||||||||||||||||||||||
Consolidated
Operating Income
|
2010
|
2009
|
$
|
%
|
2010
|
2009
|
$
|
%
|
||||||||||||||||||||||||
(Dollars
in millions)
|
(Dollars
in millions)
|
|||||||||||||||||||||||||||||||
Consolidated
operating revenue
|
$ | 473.8 | $ | 425.0 | $ | 48.8 | 11 | % | $ | 1,377.5 | $ | 1,280.6 | $ | 96.9 | 8 | % | ||||||||||||||||
Consolidated
operating expenses
|
(363.6 | ) | (325.0 | ) | (38.6 | ) | 12 | % | (1,057.2 | ) | (981.7 | ) | (75.5 | ) | 8 | % | ||||||||||||||||
Consolidated
operating income
|
$ | 110.2 | $ | 100.0 | $ | 10.2 | 10 | % | $ | 320.3 | $ | 298.9 | $ | 21.4 | 7 | % | ||||||||||||||||
Consolidated
operating margin
|
23.3 | % | 23.5 | % | -0.2 | % pts | 23.3 | % | 23.3 | % | 0.0 | % pts |
The
increase in operating income from continuing operations for the third quarter
and first nine months of 2010, when compared to the same period in 2009,
primarily is attributed to the 11% and 8% increase in revenue,
respectively. Operating margin was relatively flat in both the three
and nine months ended September 30, 2010 compared to the prior
year.
Other
Expense, Net
Three
Months Ended September 30,
|
Change
|
Nine
Months Ended September 30,
|
Change
|
|||||||||||||||||||||||||||||
Consolidated
Other Expense, Net
|
2010
|
2009
|
$
|
%
|
2010
|
2009
|
$
|
%
|
||||||||||||||||||||||||
(Dollars
in millions)
|
(Dollars
in millions)
|
|||||||||||||||||||||||||||||||
Consolidated
interest expense
|
$ | 14.0 | $ | 14.1 | $ | (0.1 | ) | 0 | % | $ | 42.3 | $ | 42.9 | $ | (0.6 | ) | -1 | % | ||||||||||||||
Consolidated
other income, net
|
(0.7 | ) | (0.2 | ) | (0.5 | ) | 282 | % | (1.0 | ) | (5.8 | ) | 4.8 | -81 | % | |||||||||||||||||
Consolidated
other expense, net
|
$ | 13.3 | $ | 13.9 | $ | (0.6 | ) | -4 | % | $ | 41.3 | $ | 37.1 | $ | 4.2 | 11 | % | |||||||||||||||
Average
cost of debt
|
5.5 | % | 5.0 | % | 5.2 | % | 4.9 | % | ||||||||||||||||||||||||
Total
consolidated debt, net, at quarter end
|
$ | 1,007.4 | $ | 1,069.1 | $ | (61.7 | ) | -6 | % | $ | 1,007.4 | $ | 1,069.1 | $ | (61.7 | ) | -6 | % |
Other
expense, net, from continuing operations for the third quarter of 2010 remained
consistent with the same period in 2009. The increase in other
expense, net, from continuing operations for the first nine months of 2010, as
compared to 2009, was primarily due to a decline in other income,
net. Other income, net, for 2009 included a $2.7 million
mark-to-market adjustment on certain insurance policies, a $1.1 million
gain on our repurchase of $7.5 million principal amount of our ten-year
senior notes due 2017 and a $1.3 million gain related to a litigation
settlement. Interest expense decreased slightly for the first nine
months of 2010, when compared to the same period in 2009, as a decrease in our
average debt balance from $1.2 billion to $1.1 billion more than offset an
increase in the average cost of our total debt from 4.9% in 2009 to 5.2% in
2010.
24
Three
Months Ended September 30,
|
Change
|
Nine
Months Ended September 30,
|
Change
|
|||||||||||||||||||||||||||||
Consolidated
Provision for Income Taxes
|
2010
|
2009
|
$
|
%
|
2010
|
2009
|
$
|
%
|
||||||||||||||||||||||||
(Dollars
in millions)
|
(Dollars
in millions)
|
|||||||||||||||||||||||||||||||
Consolidated
provision for income taxes
|
$ | 33.3 | $ | 28.7 | $ | 4.6 | 16 | % | $ | 99.7 | $ | 94.0 | $ | 5.7 | 6 | % | ||||||||||||||||
Effective
income tax rate
|
34.4 | % | 33.3 | % | 35.7 | % | 35.9 | % |
Our
effective tax rate was 34.4% for the three months ended September 30, 2010 up
from 33.3% for the same period in 2009 due primarily to a higher foreign tax
rate during 2010, partially offset by a reduction due to a permanent federal tax
deduction. Our effective income tax rate was 35.7% for the nine
months ended September 30, 2010 down from 35.9% for the same period in
2009. Our ongoing effective foreign and consolidated income tax rates
in 2010 increased from 2009 due to certain changes in our foreign tax position
but this effect was more than offset by the permanent federal tax deduction, a
favorable U.K. audit settlement and the absence of an unfavorable discrete item
related to the effect of a change in California state income taxes on our
deferred tax liabilities recorded in 2009.
Net
Income
Three
Months Ended September 30,
|
Change
|
Nine
Months Ended September 30,
|
Change
|
|||||||||||||||||||||||||||||
Consolidated
Net Income
|
2010
|
2009
|
$
|
%
|
2010
|
2009
|
$
|
%
|
||||||||||||||||||||||||
(In
millions, except per share amounts)
|
(In
millions, except per share amounts)
|
|||||||||||||||||||||||||||||||
Consolidated
operating income
|
$ | 110.2 | $ | 100.0 | $ | 10.2 | 10 | % | $ | 320.3 | $ | 298.9 | $ | 21.4 | 7 | % | ||||||||||||||||
Consolidated
other expense, net
|
(13.3 | ) | (13.9 | ) | 0.6 | -4 | % | (41.3 | ) | (37.1 | ) | (4.2 | ) | 11 | % | |||||||||||||||||
Consolidated
provision for income taxes
|
(33.3 | ) | (28.7 | ) | (4.6 | ) | 16 | % | (99.7 | ) | (94.0 | ) | (5.7 | ) | 6 | % | ||||||||||||||||
Consolidated
income from continuing operations
|
63.6 | 57.4 | 6.2 | 11 | % | 179.3 | 167.8 | 11.5 | 7 | % | ||||||||||||||||||||||
Discontinued
operations, net of tax
|
15.2 | 4.0 | 11.2 | 278 | % | 31.5 | 10.8 | 20.7 | 188 | % | ||||||||||||||||||||||
Consolidated
net income
|
78.8 | 61.4 | 17.4 | 28 | % | 210.8 | 178.6 | 32.2 | 18 | % | ||||||||||||||||||||||
Net
income attributable to noncontrolling interests
|
(2.3 | ) | (1.7 | ) | (0.6 | ) | 31 | % | (6.3 | ) | (4.9 | ) | (1.4 | ) | 28 | % | ||||||||||||||||
Net
income attributable to Equifax
|
$ | 76.5 | $ | 59.7 | $ | 16.8 | 28 | % | $ | 204.5 | $ | 173.7 | $ | 30.8 | 18 | % | ||||||||||||||||
Diluted
earnings per common share attributable to Equifax
|
$ | 0.61 | $ | 0.47 | $ | 0.14 | 30 | % | $ | 1.61 | $ | 1.36 | $ | 0.25 | 18 | % | ||||||||||||||||
Diluted
earnings per common share from continuing operations
|
$ | 0.49 | $ | 0.44 | $ | 0.05 | 11 | % | $ | 1.36 | $ | 1.28 | $ | 0.08 | 6 | % | ||||||||||||||||
Weighted-average
shares used in computing diluted earnings per share
|
125.8 | 128.0 | 127.1 | 127.8 |
The
increase in net income attributable to Equifax for the third quarter of 2010 and
the first nine months of 2010, as compared to the same period in 2009, was
primarily due to increased income from discontinued operations, driven by a
$14.9 million gain, net of tax, on the sale of DMS recorded in the third quarter
of 2010 and a $12.3 million gain, net of tax, on the sale of the APPRO product
line recorded in the second quarter of 2010, partially offset by modestly lower
operating results from the discontinued operations. Both the three
and nine month periods of 2010 also benefited from higher operating income,
which grew generally in line with higher revenue.
25
USCIS
Three
Months Ended September 30,
|
Change
|
Nine
Months Ended September 30,
|
Change
|
|||||||||||||||||||||||||||||
U.S.
Consumer Information Solutions
|
2010
|
2009
|
$
|
%
|
2010
|
2009
|
$
|
%
|
||||||||||||||||||||||||
(Dollars
in millions)
|
(Dollars
in millions)
|
|||||||||||||||||||||||||||||||
Operating
revenue:
|
||||||||||||||||||||||||||||||||
Online
Consumer Information Solutions (OCIS)
|
$ | 128.3 | $ | 125.6 | $ | 2.7 | 2 | % | $ | 368.3 | $ | 385.2 | $ | (16.9 | ) | -4 | % | |||||||||||||||
Mortgage
Solutions
|
32.2 | 22.5 | 9.7 | 43 | % | 84.2 | 76.5 | 7.7 | 10 | % | ||||||||||||||||||||||
Consumer
Financial Marketing Services
|
33.5 | 25.7 | 7.8 | 30 | % | 99.2 | 80.4 | 18.8 | 23 | % | ||||||||||||||||||||||
Total
operating revenue
|
$ | 194.0 | $ | 173.8 | $ | 20.2 | 12 | % | $ | 551.7 | $ | 542.1 | $ | 9.6 | 2 | % | ||||||||||||||||
% of
consolidated revenue
|
41 | % | 41 | % | 40 | % | 42 | % | ||||||||||||||||||||||||
Total
operating income
|
$ | 72.2 | $ | 63.1 | $ | 9.1 | 15 | % | $ | 200.5 | $ | 201.9 | $ | (1.4 | ) | -1 | % | |||||||||||||||
Operating
margin
|
37.2 | % | 36.2 | % | 1.0 | % pts | 36.3 | % | 37.2 | % | -0.9 | % pts |
U.S.
Consumer Information Solutions revenue increased 12% in the third quarter as
compared to the prior year period due to growth in Mortgage Solutions and
Consumer Financial Marketing Services and our acquisition of IXI Corporation in
the fourth quarter of 2009. For the first nine months of 2010,
revenue increased 2% from the prior year as growth in Mortgage Solutions along
with growth due to our acquisition of IXI Corporation was partially offset by a
small decline in online credit reporting revenue.
OCIS
Revenue
for the third quarter of 2010 increased 2% compared to the prior year period,
representing the first quarter-over-quarter growth in our most profitable
product family since the fourth quarter of 2007. Growth was aided by
increased sales of credit reports to independent providers of mortgage tri-merge
reporting services as a result of higher mortgage refinancing activity during
the quarter. Revenue for the first nine months of 2010, as compared
to the same period in the prior year, declined primarily due to a reduction of
online credit decision transaction volume of 8% caused by weakness in the U.S.
consumer credit markets, partially offset by higher average revenue per
transaction due to a favorable shift in customer mix.
Mortgage
Solutions
Revenue
for the third quarter of 2010 and first nine months of 2010 has increased, as
compared to the prior year periods, due to favorable long-term interest rates
that have resulted in higher consumer refinancing activity. The nine
month period ended September 30, 2010, also benefitted from increased home sales
activity attributable to government tax incentives related to housing purchases
in the U.S. which expired on May 31, 2010.
Consumer
Financial Marketing Services
Revenue
increased for the third quarter of 2010 and first nine months of 2010, as
compared to the same periods in 2009, primarily due to our acquisition of IXI
Corporation during the fourth quarter of 2009.
USCIS
Operating Margin
Operating
margin increased 100 basis points in the third quarter of 2010, as compared to
the same period in 2009, due to expense leverage resulting from revenue growth
and the expense benefit of certain process streamlining activities, and
decreased in the first nine months of 2010 as compared to the same period in
2009, mainly due to the impact of amortization expense associated with the IXI
acquisition.
26
Three
Months Ended September 30,
|
Change
|
Nine
Months Ended September 30,
|
Change
|
|||||||||||||||||||||||||||||
International
|
2010
|
2009
|
$
|
%
|
2010
|
2009
|
$
|
%
|
||||||||||||||||||||||||
(Dollars
in millions)
|
(Dollars
in millions)
|
|||||||||||||||||||||||||||||||
Operating
revenue:
|
||||||||||||||||||||||||||||||||
Latin
America
|
$ | 59.1 | $ | 52.3 | $ | 6.8 | 13 | % | $ | 170.9 | $ | 145.3 | $ | 25.6 | 18 | % | ||||||||||||||||
Europe
|
35.0 | 36.5 | (1.5 | ) | -4 | % | 101.4 | 102.5 | (1.1 | ) | -1 | % | ||||||||||||||||||||
Canada
Consumer
|
28.4 | 26.1 | 2.3 | 9 | % | 84.6 | 73.1 | 11.5 | 16 | % | ||||||||||||||||||||||
Total
operating revenue
|
$ | 122.5 | $ | 114.9 | $ | 7.6 | 7 | % | $ | 356.9 | $ | 320.9 | $ | 36.0 | 11 | % | ||||||||||||||||
% of
consolidated revenue
|
26 | % | 27 | % | 26 | % | 25 | % | ||||||||||||||||||||||||
Total
operating income
|
$ | 30.8 | $ | 31.1 | $ | (0.3 | ) | -1 | % | $ | 89.6 | $ | 86.6 | $ | 3.0 | 4 | % | |||||||||||||||
Operating
margin
|
25.2 | % | 27.0 | % | -1.8 | % pts | 25.1 | % | 27.0 | % | -1.9 | % pts |
International
revenue increased in the three and nine month periods compared to the same
periods in 2009 primarily due to strong growth in Latin America and the
favorable impact of changes in foreign exchange rates. Local currency
fluctuations against the U.S. dollar favorably impacted our International
revenue by $1.5 million, or 2%, in the third quarter, and $21.0 million, or 6%,
in the first nine months, respectively. In local currency,
International revenue was up 5% from both the three and nine month periods in
2009.
Latin
America
Revenue
for the third quarter and first nine months of 2010 increased over the prior
year periods partially due to favorable foreign currency impacts of
$2.4 million, or 5%, and $13.1 million, or 9%, respectively. In local
currency, revenue increased 8% from the third quarter of 2009 and 9% from the
first nine months of 2009. Local currency revenue increased in most of our Latin
American geographies, resulting from broad-based growth across all product
segments, partially offset by a modest decline in
Brazil.
Europe
The
decrease in revenue for the third quarter and first nine months of 2010, as
compared to the prior year periods, was due to an unfavorable foreign currency
impact of $2.4 million, or 6%, and $1.5 million, or 1%, respectively. In
local currency, revenue increased 2% in the third quarter of 2010, when compared
to the same period in 2009, and remained flat in the nine month period ended
September 30, 2010 compared to the prior year period.
Canada
Consumer
The
increase in revenue for the third quarter and the first nine months of 2010, as
compared to the prior year periods, was primarily due to favorable foreign
currency impact of $1.5 million, or 6%, and $9.4 million, or 13%,
respectively. In local currency, revenue increased 3% when compared to the third
quarter and first nine months of 2009. The increase in local currency was due to
increased volumes for our technology and analytical services products primarily
due to growth in the customer base for a new fraud mitigation
product.
International
Operating Margin
27
Three
Months Ended September 30,
|
Change
|
Nine
Months Ended September 30,
|
Change
|
|||||||||||||||||||||||||||||
TALX
|
2010
|
2009
|
$
|
%
|
2010
|
2009
|
$
|
%
|
||||||||||||||||||||||||
(Dollars
in millions)
|
(Dollars
in millions)
|
|||||||||||||||||||||||||||||||
Operating
revenue:
|
||||||||||||||||||||||||||||||||
The
Work Number
|
$ | 55.2 | $ | 37.0 | $ | 18.2 | 49 | % | $ | 154.9 | $ | 116.6 | $ | 38.3 | 33 | % | ||||||||||||||||
Tax
and Talent Management Services
|
43.9 | 46.1 | (2.2 | ) | -5 | % | 138.5 | 140.4 | (1.9 | ) | -1 | % | ||||||||||||||||||||
Total
operating revenue
|
$ | 99.1 | $ | 83.1 | $ | 16.0 | 19 | % | $ | 293.4 | $ | 257.0 | $ | 36.4 | 14 | % | ||||||||||||||||
% of
consolidated revenue
|
21 | % | 19 | % | 21 | % | 20 | % | ||||||||||||||||||||||||
Total
operating income
|
$ | 22.7 | $ | 17.7 | $ | 5.0 | 28 | % | $ | 67.2 | $ | 56.5 | $ | 10.7 | 19 | % | ||||||||||||||||
Operating
margin
|
22.9 | % | 21.4 | % | 1.5 | % pts | 22.9 | % | 22.0 | % | 0.9 | % pts |
The
Work Number
Revenue
from The Work Number increased $18.2 million, or 49%, in the third quarter of
2010 compared to the third quarter of 2009 due to growth of over 20% from
traditional employment based verification and complementary services, with
strong demand across each of the mortgage, pre-employment screening, social
services and collections sectors; and due to the impact of our acquisition of
Rapid Reporting Verification Company in the fourth quarter of
2009. For the nine months year to date, The Work Number revenue
increased $38.3 million, or 33%, due to low to mid-double digit growth in
verifications revenue across each of the mortgage, collections, social services
and employment pre-screening customer segments, and due to the acquisition of
Rapid Reporting Verification Company.
Tax
and Talent Management Services
The
decrease in revenue during the third quarter of 2010 and in the first nine
months of 2010, as compared to the same periods in 2009, resulted primarily from
expected declines in our Tax Management Services business driven primarily by
decreases in unemployment compensation claims activity, partially offset by
revenue growth in our Talent Management Services business due to increased
government hiring activity at the U.S. Transportation and Security
Administration and other large government customers.
TALX
Operating Margin
Operating
margin increased 150 and 90 basis points for the third quarter and first
nine months of 2010, respectively, as compared to the prior year, due to
continued revenue growth, while operating expenses grew at a slower rate due to
the leveraging of certain fixed operational and overhead costs and certain
operating process efficiencies.
North
America Personal Solutions
Three
Months Ended September 30,
|
Change
|
Nine
Months Ended September 30,
|
Change
|
|||||||||||||||||||||||||||||
North
America Personal Solutions
|
2010
|
2009
|
$
|
%
|
2010
|
2009
|
$
|
%
|
||||||||||||||||||||||||
(Dollars
in millions)
|
(Dollars
in millions)
|
|||||||||||||||||||||||||||||||
Total
operating revenue
|
$ | 39.9 | $ | 37.1 | $ | 2.8 | 7 | % | $ | 119.9 | $ | 113.0 | $ | 6.9 | 6 | % | ||||||||||||||||
% of
consolidated revenue
|
8 | % | 9 | % | 9 | % | 9 | % | ||||||||||||||||||||||||
Total
operating income
|
$ | 12.7 | $ | 10.1 | $ | 2.6 | 25 | % | $ | 33.0 | $ | 24.1 | $ | 8.9 | 37 | % | ||||||||||||||||
Operating
margin
|
31.9 | % | 27.3 | % | 4.6 | % pts | 27.5 | % | 21.3 | % | 6.2 | % pts |
Revenue
increased $2.8 million, or 7%, from the prior year quarter, and $6.9 million, or
6%, from the first nine months of 2009, primarily due to increased direct to
consumer, Equifax-branded subscription service revenue, which was up 10% from
the prior year quarter and 12% from the first nine months of 2009, driven by
higher average revenue per subscriber due to new product offerings and better
market segmentation. The increase in subscription revenue was
partially offset by lower transaction sales for the nine month period, as a
result of lower levels of new consumer credit activity, and lower corporate
breach revenues in both the three and nine month periods. The
operating margin increase in the third quarter and first nine months of 2010, as
compared to the prior year period, was primarily due to the increase in revenue
discussed above, operating efficiencies, and for the third quarter, lower
marketing spending.
28
Three
Months Ended September 30,
|
Change
|
Nine
Months Ended September 30,
|
Change
|
|||||||||||||||||||||||||||||
North
America Commercial Solutions
|
2010
|
2009
|
$
|
%
|
2010
|
2009
|
$
|
%
|
||||||||||||||||||||||||
(Dollars
in millions)
|
(Dollars
in millions)
|
|||||||||||||||||||||||||||||||
Total
operating revenue
|
$ | 18.3 | $ | 16.1 | $ | 2.2 | 14 | % | $ | 55.6 | $ | 47.6 | $ | 8.0 | 17 | % | ||||||||||||||||
% of
consolidated revenue
|
4 | % | 4 | % | 4 | % | 4 | % | ||||||||||||||||||||||||
Total
operating income
|
$ | 3.3 | $ | 2.9 | $ | 0.4 | 14 | % | $ | 11.4 | $ | 7.6 | $ | 3.8 | 51 | % | ||||||||||||||||
Operating
margin
|
17.9 | % | 17.8 | % | 0.1 | % pts | 20.5 | % | 15.9 | % | 4.6 | % pts |
Revenue
increased for the three and nine months ended September 30, 2010, as compared to
the same period in the prior year, 14% and 17%, respectively. The
favorable impact of changes in the U.S.—Canadian foreign exchange rate impacted
revenue by $0.3 million, or 2%, as compared to the third quarter of 2009, and by
$2.1 million, or 5%, as compared to the first nine months of 2009. In
local currency, revenue increased 12% in both periods compared to the prior
year. The local currency increase was primarily due to increases in U.S. risk
and marketing service revenue and revenue from our data management
products. Online transaction volume for U.S. commercial credit
information products for the third quarter and first nine months of 2010
increased when compared to the prior year period. Operating margin also
increased for the third quarter and first nine months of 2010, as compared to
the same period in 2009, as the rapid rate of revenue growth exceeded growth in
operating expenses.
General
Corporate Expense
Three
Months Ended September 30,
|
Change
|
Nine
Months Ended September 30,
|
Change
|
|||||||||||||||||||||||||||||
General
Corporate Expense
|
2010
|
2009
|
$
|
%
|
2010
|
2009
|
$
|
%
|
||||||||||||||||||||||||
(Dollars
in millions)
|
(Dollars
in millions)
|
|||||||||||||||||||||||||||||||
General
corporate expense
|
$ | 31.5 | $ | 24.9 | $ | 6.6 | 27 | % | $ | 81.4 | $ | 77.8 | $ | 3.6 | 5 | % |
Our
general corporate expenses are costs that are incurred at the corporate level
and include those expenses impacted by corporate direction, such as shared
services, administrative, legal, restructuring and equity compensation costs.
General corporate expenses increased by $6.6 million for the third quarter of
2010, compared to the same period in 2009, primarily due to increased benefit
and incentive costs, upgrades in shared corporate technology and
acquisition-related expenses. For the nine months ended September 30,
2010, general corporate expense increased $3.6 million primarily as a result of
the same factors noted above plus higher project-driven professional fees,
partially offset by an $8.4 million restructuring charge recorded during the
first quarter of 2009 related to headcount reductions.
LIQUIDITY
AND FINANCIAL CONDITION
Management
assesses liquidity in terms of our ability to generate cash to fund operating,
investing and financing activities. We continue to generate substantial cash
from operating activities and remain in a strong financial position, with
resources available for reinvestment in existing businesses, strategic
acquisitions and managing our capital structure to meet short- and long-term
objectives.
Sources
and Uses of Cash
Funds
generated by operating activities and our credit facilities continue to be our
most significant sources of liquidity. We expect that funds generated from
expected results of operations will be sufficient to finance our anticipated
working capital and other cash requirements (such as capital expenditures,
interest payments, potential pension funding contributions, dividend payments
and stock repurchases, if any) for the foreseeable future. In the event that
credit market conditions were to deteriorate, we would rely more heavily on
borrowings from the Senior Credit Facility as described below. At September 30,
2010, $848.3 million was available to borrow under our Senior Credit Facility.
Our Senior Credit Facility does not include a provision under which lenders
could refuse to allow us to borrow under this facility in the event of a
material adverse change in our financial condition, as long as we are in
compliance with the covenants contained in the lending agreement. The
Senior Credit Facility will expire in July 2011 and we currently intend to renew
the facility prior to its maturity date.
29
The following table summarizes
our cash flows for the nine months ended September 30, 2010 and
2009:
Nine
Months Ended September 30,
|
Change
|
|||||||||||||||
2010
vs. 2009
|
||||||||||||||||
Net
cash provided by (used in):
|
2010
|
2009
|
$
|
%
|
||||||||||||
(Dollars
in millions)
|
||||||||||||||||
Operating
activities
|
$ | 207.4 | $ | 268.8 | $ | (61.4 | ) | -23 | % | |||||||
Investing
activities
|
$ | 85.5 | $ | (52.9 | ) | $ | 138.4 |
nm
|
||||||||
Financing
activities
|
$ | (278.7 | ) | $ | (201.1 | ) | $ | (77.6 | ) |
nm
|
nm - not
meaningful
Operating
Activities
The
decrease in operating cash flow was primarily driven by $35.0 million of
additional pension contributions, the
effect of changes in deferred income tax balances and other
changes in net working capital during 2010.
Fund Transfer Limitations.
The ability of certain of our subsidiaries and associated companies
to transfer funds to us is limited, in some cases, by certain restrictions
imposed by foreign governments; these restrictions do not, individually or in
the aggregate, materially limit our ability to service our indebtedness, meet
our current obligations or pay dividends.
Investing
Activities
Capital
Expenditures
Nine
Months Ended September 30,
|
Change
|
|||||||||||
Net
cash used in:
|
2010
|
2009
|
2010
vs. 2009
|
|||||||||
(In
millions)
|
||||||||||||
Capital
expenditures
|
$ | 82.4 | $ | 51.2 | $ | 31.2 |
Our
capital expenditures are used for developing, enhancing and deploying new and
existing software in support of our expanding product set, replacing or adding
facilities and equipment, updating systems for regulatory compliance, the
licensing of software applications and investing in system reliability, security
and disaster recovery enhancements. Capital expenditures in 2010 were higher
than 2009 primarily due to the purchase of our headquarters building in Atlanta,
Georgia, during the first quarter of 2010 for cash consideration of $29.1
million, including fees. We recorded the building as a fixed asset on
our Consolidated Balance Sheet and the capital lease obligation to pay for it as
a liability, beginning in the first quarter of 2009, when we gave notice of our
intent to buy out the lease.
30
Acquisitions,
Divestitures and Investments
Nine Months Ended September 30,
|
Change
|
|||||||||||
Net cash provided by (used in):
|
2010
|
2009
|
2010 vs. 2009
|
|||||||||
(In
millions)
|
||||||||||||
Acquisitions,
net of cash acquired
|
$ | (15.3 | ) | $ | (3.5 | ) | $ | (11.8 | ) | |||
Cash
received from divestiture
|
$ | 181.7 | $ | - | $ | 181.7 | ||||||
Dividend
from unconsolidated affiliates
|
$ | 1.5 | $ | 1.8 | $ | (0.3 | ) |
During
the first nine months of 2010, we invested $15.3 million in
acquisitions. We acquired three businesses in Latin America and
resolved a contingent earn-out associated with a 2008 acquisition included in
our TALX segment. The earn-out was measured on the completion of 2009
revenue targets and was accrued at December 31, 2009.
On July
1, 2010, we sold our Direct Marketing Services division generating cash proceeds
of approximately $115 million. During the second quarter of 2010, we
sold our Equifax Enabling Technologies LLC legal entity, consisting of our APPRO
loan origination software (“APPRO”), generating cash proceeds of approximately
$67 million. Approximately $5 million of the purchase price was paid
by the acquirer into an escrow account that will be released to us, upon the
satisfaction of certain conditions, over the two year period following the
sale.
Financing
Activities
Borrowings
and Credit Facility Availability
Nine Months Ended September 30,
|
Change
|
|||||||||||
Net cash provided by (used in):
|
2010
|
2009
|
2010 vs. 2009
|
|||||||||
(In millions)
|
||||||||||||
Net
short-term borrowings (repayments)
|
$ | (134.0 | ) | $ | 247.5 | $ | (381.5 | ) | ||||
Net
repayments under long-term revolving credit facilities
|
$ | (5.0 | ) | $ | (420.0 | ) | $ | 415.0 | ||||
Payments
on long-term debt
|
$ | (19.6 | ) | $ | (6.6 | ) | $ | (13.0 | ) |
31
Credit
Facility Availability
Our
principal unsecured revolving credit facility with a group of banks, which we
refer to as the Senior Credit Facility, permits us to borrow up to
$850.0 million through July 2011. The Senior Credit Facility may be used
for general corporate purposes. Availability of the Senior Credit Facility for
borrowings is reduced by the outstanding face amount of any letters of credit
issued under the facility and, pursuant to our existing Board of Directors
authorization, by the outstanding principal amount of our commercial paper
notes, or CP. We currently intend to renew the Senior Credit Facility prior to
its maturity date. Given current credit markets conditions, we expect to face
higher bank fees and increased borrowing spreads in connection with this
renewal.
Our
$850.0 million CP program has been established to allow for borrowing
through the private placement of CP with maturities ranging from overnight to
397 days. We may use the proceeds of CP for general corporate
purposes.
We have a
364-day revolving credit agreement with a Canadian bank (our Canadian Credit
Facility) which permits us to borrow up to C$10.0 million (denominated in
Canadian dollars). The Canadian Credit Facility terminates in June
2011. Borrowings may be used for general corporate purposes.
At
September 30, 2010, no amounts were outstanding under our Senior Credit
Facility, CP program or Canadian Credit Facility. At September 30, 2010, a total
of $858.0 million was available under our Senior and Canadian Credit
Facilities.
At
September 30, 2010, approximately 71% of our debt was fixed-rate debt and 29%
was effectively variable-rate debt. Our variable-rate debt, consisting of our
five-year senior notes due 2014 (against which we have executed interest rate
swaps to convert interest expense from fixed rates to floating rates), generally
bears interest based on a specified margin plus a base rate (LIBOR). The
interest rates reset periodically, depending on the terms of the respective
financing arrangements. At September 30, 2010, interest rates on our
variable-rate debt were 2.1%.
Borrowing
and Repayment Activity
Net
short-term borrowings (repayments) primarily represent activity under our CP
program, as well as activity under our Canadian Credit Facility. Net
(repayments) borrowings under long-term revolving credit facilities relates to
activity on our Senior Credit Facility. We primarily borrow under our CP
program, when available.
The
increase in net short-term (repayments) borrowings primarily reflects the net
repayment of $135.0 million of CP notes since December 31, 2009. The
decrease in net repayments under long-term revolving credit facilities
represents the 2009 repayment of borrowings outstanding at December 31,
2008, under our Senior Credit Facility as we decreased our use of CP to fund our
capital needs in 2009 and 2010.
The
increase in payments on long-term debt primarily reflects a $15 million payment
made in the second quarter of 2010 on our 7.34% Notes.
Debt Covenants. A
downgrade in our credit ratings would increase the cost of borrowings under our
CP program and credit facilities, and could limit or, in the case of a
significant downgrade, preclude our ability to issue CP. Our outstanding
indentures and comparable instruments also contain customary covenants
including, for example, limits on the incurrence of secured debt and
sale/leaseback transactions. In addition, our Senior Credit Facility and
Canadian Credit Facility each require us to maintain a maximum leverage ratio of
not more than 3.5. Our leverage ratio was 1.71 at September 30, 2010. None of
these covenants are considered restrictive to our operations and, as of
September 30, 2010, we were in compliance with all of our debt
covenants.
We do not
have any credit rating triggers that would accelerate the maturity of a material
amount of our outstanding debt; however, our 6.3% Senior Notes due 2017 and 7.0%
Senior Notes due 2037 (together, the “Senior Notes”) contain change of control
provisions. If we experience a change of control or publicly announce our
intention to effect a change of control and the rating on the Senior Notes is
lowered by each of Standard & Poor’s, or S&P, and Moody’s Investors
Service, or Moody’s, below an investment grade rating within 60 days of
such change of control or notice thereof, we will be required to offer to
repurchase the Senior Notes at a price equal to 101% of the aggregate principal
amount of the Senior Notes plus accrued and unpaid interest.
For
additional information about our debt, including the terms of our financing
arrangements, basis for variable interest rates and debt covenants, see
Note 4 of the Notes to Consolidated Financial Statements in our 2009
Form 10-K.
32
Equity
Transactions
Nine Months Ended September 30,
|
Change
|
|||||||||||
Net cash provided by (used in):
|
2010
|
2009
|
2010 vs. 2009
|
|||||||||
(In millions)
|
||||||||||||
Treasury
stock repurchases
|
$ | (116.4 | ) | $ | (9.1 | ) | $ | (107.3 | ) | |||
Dividends
paid to Equifax shareholders
|
$ | (14.9 | ) | $ | (15.1 | ) | $ | 0.2 | ||||
Dividends
paid to noncontrolling interests
|
$ | (3.4 | ) | $ | (3.3 | ) | $ | (0.1 | ) | |||
Proceeds
from exercise of stock options
|
$ | 13.8 | $ | 5.9 | $ | 7.9 | ||||||
Excess
tax benefits from stock-based compensation plans
|
$ | 1.6 | $ | 0.5 | $ | 1.1 |
Sources
and uses of cash related to equity during the nine months ended September 30,
2010 and 2009 were as follows:
•
|
Under share repurchase programs
authorized by our Board of Directors, we purchased 3.7 million and
0.4 million common shares on the open market during the nine months ended
September 30, 2010 and 2009, respectively, for $116.4 million and
$9.1 million, respectively, at an average price per common share of
$30.09 and $22.87, respectively. At September 30, 2010, the Company had
approximately $155.5 million remaining for stock repurchases under
the existing Board
authorization.
|
•
|
Our dividends per share were
$0.12 per share for both of the nine month periods presented. We paid cash
dividends to Equifax shareholders of $14.9 million and $15.1 million
during the nine months ended September 30, 2010 and 2009,
respectively.
|
•
|
We received cash of $13.8 million
and $5.9 million during the first nine months of 2010 and 2009,
respectively, from the exercise of stock
options.
|
Contractual
Obligations, Commercial Commitments and Other Contingencies
Our
contractual obligations have not changed materially from those reported in our
2009 Form 10-K. For additional information about certain
obligations and contingencies, including those related to Computer Sciences
Corporation, see Note 5 of the Notes to Consolidated Financial Statements
in this Form 10-Q.
Off-Balance
Sheet Arrangements
There
have been no material changes with respect to our off-balance sheet arrangements
from those presented in our 2009 Form 10-K.
Related
Party Transactions
We engage
in various transactions and arrangements with related parties. We believe the
terms of the transactions and arrangements do not differ from those that would
have been negotiated with an independent party. For additional information about
our related parties and associated transactions, see Note 11 of the Notes
to Consolidated Financial Statements in our 2009 Form 10-K.
Benefit
Plans
At
December 31, 2009, our U.S. Retirement Income Plan, or USRIP, met or
exceeded ERISA’s minimum funding requirements. In January 2010, we made a
contribution of $20.0 million to the USRIP and in September 2010, we made
an additional contribution of $30.0 million. In the future, we expect to make
minimum funding contributions as required and may make discretionary
contributions, depending on certain circumstances, including market conditions
and our liquidity needs. We believe additional funding contributions, if any,
would not prevent us from continuing to meet our liquidity needs, which are
primarily funded from cash flows generated by operating activities, available
cash and cash equivalents, and our committed credit facilities.
33
For our
non-U.S., tax-qualified retirement plans, we fund an amount sufficient to meet
minimum funding requirements but no more than allowed as a tax deduction
pursuant to applicable tax regulations. For our non-qualified supplementary
retirement plans, we fund the benefits as they are paid to retired participants,
but accrue the associated expense and liabilities in accordance with
GAAP.
For
additional information about our benefit plans, see Note 9 of the Notes to
Consolidated Financial Statements in our 2009 Form 10-K.
Seasonality
We
experience seasonality in certain of our revenue streams. Revenue generated from
The Work Number business unit within the TALX operating segment is generally
higher in the first quarter due primarily to the provision of Form W-2
preparation services which occur in the first quarter each year.
RECENT
ACCOUNTING PRONOUNCEMENTS
For
information about new accounting pronouncements and the potential impact on our
Consolidated Financial Statements, see Note 1 of the Notes to Consolidated
Financial Statements in this Form 10-Q and Note 1 of the Notes to
Consolidated Financial Statements in our 2009 Form 10-K.
APPLICATION
OF CRITICAL ACCOUNTING POLICIES
The
preparation of financial statements in conformity with GAAP requires our
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, revenues and expenses and related disclosures of
contingent assets and liabilities in our Consolidated Financial Statements and
the Notes to Consolidated Financial Statements. We believe the most complex and
sensitive judgments, because of their significance to the Consolidated Financial
Statements, result primarily from the need to make estimates and assumptions
about the effects of matters that are inherently uncertain. The “Application of
Critical Accounting Policies and Estimates” section in the MD&A and
Note 1 of the Notes to Consolidated Financial Statements in our 2009
Form 10-K describe the significant accounting estimates and policies used
in the preparation of our Consolidated Financial Statements. Although we believe
that our estimates, assumptions and judgments are reasonable, they are based
upon information available at the time. Actual results may differ significantly
from these estimates under different assumptions, judgments or
conditions.
Goodwill
We review goodwill and indefinite lived
intangible assets for impairment annually (as of September 30) and whenever
events or changes in circumstances indicate the carrying value of an asset may
not be recoverable. These events or circumstances could include a significant
change in the business climate, legal factors, operating performance or trends,
competition, or sale or disposition of a significant portion of a reporting
unit. We have nine reporting units comprised of Consumer Information Solutions
(which includes Mortgage Solutions and Consumer Financial Marketing Services),
Europe, Latin America, Canada Consumer, North America Personal Solutions, North
America Commercial Solutions, The Work Number, Tax Management Services and
Talent Management Services.
The goodwill balance at September 30,
2010, for our nine reporting units was as follows:
September 30,
|
||||
2010
|
||||
(In millions)
|
||||
Consumer
Information Solutions (including Mortgage Solutions and Consumer Financial
Marketing Services)
|
$ | 587.8 | ||
Europe
|
99.1 | |||
Latin
America
|
215.0 | |||
Canada
Consumer
|
30.1 | |||
North
America Personal Solutions
|
1.8 | |||
North
America Commercial Solutions
|
37.4 | |||
The
Work Number
|
752.3 | |||
Tax
Management Services
|
121.6 | |||
Talent
Management Services
|
26.1 | |||
Total
goodwill
|
$ | 1,871.2 |
34
As
permitted by applicable accounting rules, the fair values of Consumer
Information Solutions, Europe, Canada Consumer, North America Personal
Solutions, and North America Commercial Solutions were not calculated at
September 30, 2010 as a) the assets and liabilities that make up the reporting
unit have not changed significantly since their most recent fair value
determination b) the most recent fair value determination resulted in an amount
that exceeded the carrying amount of the reporting unit by a substantial margin
and c) based on an analysis of events that have occurred and circumstances that
have changed since the most recent fair value determination, the likelihood that
a current fair value determination would be less than the current carrying
amount of the reporting unit is remote.
Valuation
Techniques
In
determining the fair value of our reporting units, we used a combination of the
income and market approaches to estimate the reporting unit’s business
enterprise value.
Under the
income approach, we calculate the fair value of a reporting unit based on
estimated future discounted cash flows which require assumptions about short and
long-term revenue growth rates, operating margins for each reporting unit,
discount rates, foreign currency exchange rates and estimates of capital
charges. The assumptions we use are based on what we believe a hypothetical
marketplace participant would use in estimating fair value. Under the market
approach, we estimate the fair value based on market multiples of revenue or
earnings before income taxes, depreciation and amortization, for benchmark
companies. We believe the benchmark companies used for each of the reporting
units serve as an appropriate input for calculating a fair value for the
reporting unit as those benchmark companies have similar risks, participate in
similar markets, provide similar services for their customers and compete with
us directly. The companies we use as benchmarks are outlined in our discussion
of Competition in our 2009 Form 10-K. Data for the benchmark companies was
obtained from publicly available information. Latin America has benchmark
companies that conduct operations of businesses of a similar type and scope,
such as Experian Group Limited and The Dun & Bradstreet Corporation. The
Work Number, Tax Management Services and Talent Management Services share a
different set of benchmark companies, notably ADP and Paychex Inc., as the
markets they serve are different than those served by our other reporting units.
Valuation multiples were selected based on a financial benchmarking analysis
that compared the reporting unit’s operating result with the comparable
companies’ information. In addition to these financial considerations,
qualitative factors such as variations in growth opportunities and overall risk
among the benchmark companies were considered in the ultimate selection of the
multiple.
The
values separately derived from each of the income and market approach valuation
techniques were used to develop an overall estimate of a reporting unit’s fair
value. We use a consistent approach across all reporting units when considering
the weight of the income and market approaches for calculating the fair value of
each of our reporting units. This approach relies more heavily on the calculated
fair value derived from the income approach, with 70% of the value coming from
the income approach. We believe this approach is consistent with that of a
market participant in valuing prospective purchase business combinations. The
selection and weighting of the various fair value techniques may result in a
higher or lower fair value. Judgment is applied in determining the weightings
that are most representative of fair value.
We have
not made any material changes to the valuation methodology we use to assess
goodwill impairment since the date of the last annual impairment
test.
Growth
Assumptions
The
assumptions for our future cash flows begin with our historical operating
performance, the details of which are described in our Management’s Discussion
& Analysis of operating performance. Additionally, we consider the impact
that known economic, industry and market trends will have on our future
forecasts, as well as the impact that we expect from planned business
initiatives including new product initiatives, client service and retention
standards, and cost management programs. At the end of the forecast period, the
long-term growth rate we used to determine the terminal value of each reporting
unit was generally 3% to 5% based on management’s assessment of the minimum
expected terminal growth rate of each reporting unit, as well as broader
economic considerations such as GDP, inflation and the maturity of the markets
we serve.
As a
result of the economic downturn experienced in 2008 and 2009, and the resultant
decline in revenue experienced in certain of our business units, in completing
our 2010 impairment testing at September 30, 2010, we projected only modest
revenue growth in 2011 for our other reporting units based on planned business
initiatives and prevailing trends exhibited by these units, such as continued
demand for employment verification services and government hiring activity at
the U.S. Transportation and Security Administration in The Work Number and
Talent Management Services reporting units. The anticipated revenue growth,
however, is partially offset by assumed increases in expenses for a majority of
our reporting units which reflect the additional level of investment needed in
order to achieve the planned revenue growth. Our 2010 long-term forecast does
not anticipate meaningful recovery of the global economy until 2011. Although we
do not expect consolidated revenue or cash flow to improve meaningfully until
2011, we continue to take cost containment actions to help maintain operating
margins for our reporting units.
35
Discount
Rate Assumptions
We
utilize a weighted average cost of capital, or WACC, in our impairment analysis
that makes assumptions about the capital structure that we believe a market
participant would make and include a risk premium based on an assessment of
risks related to the projected cash flows of each reporting unit. We believe
this approach yields a discount rate that is consistent with an implied rate of
return that an independent investor or market participant would require for an
investment in a company having similar risks and business characteristics to the
reporting unit being assessed. To calculate the WACC, the cost of equity and
cost of debt are multiplied by the assumed capital structure of the reporting
unit as compared to industry trends and relevant benchmark company structures.
The cost of equity was computed using the Capital Asset Pricing Model which
considers the risk-free interest rate, beta, equity risk premium and specific
company risk premium related to a particular reporting unit. The cost of debt
was computed using a benchmark rate and the Company’s tax rate. For the 2010
annual goodwill impairment evaluation, the discount rates used to develop the
estimated fair value of the reporting units ranged from 10% to 16%. Because of
assigned market premiums, discount rates are lowest for reporting units, whose
cash flows are expected to be less volatile due to such factors as the maturity
of the market they serve, their position in that market or other macroeconomic
factors. Where there is the greatest volatility of cash flows due to
competition, or participation in less stable geographic markets than the United
States, such as our Latin America reporting unit, the discount rate selected is
in the higher portion of the range as there is more inherent risk in the
expected cash flows of that reporting unit.
Estimated
Fair Value and Sensitivities
The
estimated fair value of the reporting units whose fair value was calculated for
purposes of the 2010 impairment testing is derived from the valuation techniques
described above, incorporating the related projections and assumptions. An
indication of possible impairment occurs when the estimated fair value of the
reporting unit is below the carrying value of its equity. The estimated fair
value for all reporting units exceeded the carrying value of these units as of
September 30, 2010. As a result, no goodwill impairment was
recorded.
The
estimated fair value of the reporting unit is highly sensitive to changes in
these projections and assumptions; therefore, in some instances changes in these
assumptions could impact whether the fair value of a reporting unit is greater
than its carrying value. For example, an increase in the discount rate and
decline in the cumulative cash flow projections of a reporting unit could cause
the fair value of certain reporting units to be below its carrying value. We
perform sensitivity analyses around these assumptions in order to assess the
reasonableness of the assumptions and the resulting estimated fair values.
Ultimately, future potential changes in these assumptions may impact the
estimated fair value of a reporting unit and cause the fair value of the
reporting unit to be below its carrying value. The excess of fair value over
carrying value for the Company’s reporting units that were valued as of
September 30, 2010, ranged from approximately 15% to 76%.
The Work
Number revenues have been strong historically, having grown at a double digit
compound annual growth rate since our acquisition of the reporting unit on May
17, 2007, therefore revenue growth is expected to continue for each of the years
used in the preparation of the discounted cash flows. The actual growth rate for
The Work Number would have to decline to a compounded rate of 5% growth, with
all other factors held constant, for the reporting unit’s fair value to drop
below its carrying value. However, in the event that the revenue growth rate was
to decline, management would take action to preserve operating margins. If the
fair value dropped below carrying value, we would compare the carrying value of
the goodwill to the implied fair value of goodwill to determine if a goodwill
impairment charge would become necessary.
The
calculated percentage excess in the Latin America reporting unit, at
approximately 15%, reflects in part the effect of the uncertain economic and
competitive conditions in Latin America on our actual and projected financial
performance. The projections used in the calculation of fair value
reflect our assumption of moderate economic growth in most of these countries,
increases in revenue from new product and new customer segment initiatives, and
our planned spending on operating improvement initiatives in 2011 to drive
improving growth, followed by growth for all of Latin America in
2012. If our operating improvement initiatives are not successful,
there could be a change in the valuation of our goodwill in future periods and
may possibly result in the recognition of an impairment loss.
The
reporting unit having the lowest absolute dollar excess of fair value over
carrying value is our Talent Management Services business which has a goodwill
balance of $26.1 million as of September 30, 2010. This reporting unit has been
impacted by uncertainty in government hiring activity and, as a result, we have
lowered our revenue growth projections. While no impairment was noted in our
impairment test as of September 30, 2010, if customer hiring activity does not
increase in the near to medium term as forecast or if other events adversely
impact the business drivers and corresponding assumptions used to value this
reporting unit, there could be a change in the valuation of our goodwill in
future periods and may possibly result in the recognition of an impairment
loss.
36
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
For
information regarding our exposure to certain market risks, see “Quantitative
and Qualitative Disclosures about Market Risk,” in Part II, Item 7A of
our 2009 Form 10-K. There were no material changes to our market risk
exposure during the nine months ended September 30, 2010.
ITEM
4. CONTROLS AND PROCEDURES
As of the
end of the period covered by this report, an evaluation was carried out by the
Company’s management, with the participation of our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act
of 1934). Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that these disclosure controls and procedures were
effective as of the end of the period covered by this report. In addition, no
change in our internal control over financial reporting (as defined in
Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during
our most recent fiscal quarter that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.
37
PART
II. OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
Equifax,
certain of its subsidiaries, and other persons have been named as parties in
various legal actions and administrative proceedings arising in connection with
the operation of Equifax’s businesses. In most cases, plaintiffs seek
unspecified damages and other relief. These actions include the
following:
California
Bankruptcy Litigation. In consolidated actions filed in the
U.S. District Court for the Central District of California, captioned Terri N. White, et al. v. Equifax
Information Services LLC, Jose Hernandez v. Equifax Information
Services LLC, Kathryn L. Pike v. Equifax Information Services LLC, and
Jose L. Acosta, Jr., et al. v. Trans Union LLC, et al. , plaintiffs
asserted that Equifax violated federal and state law (the FCRA, the California
Credit Reporting Act and the California Unfair Competition Law) by failing to
follow reasonable procedures to determine whether credit accounts are discharged
in bankruptcy, including the method for updating the status of an account
following a bankruptcy discharge. On August 20, 2008, the District Court
approved a Settlement Agreement and Release providing for certain changes in the
procedures used by defendants to record discharges in bankruptcy on consumer
credit files. That settlement resolved claims for injunctive relief, but not
plaintiffs’ claims for damages. On May 7, 2009, the District Court issued
an order preliminarily approving an agreement to settle remaining class claims.
Certain plaintiffs filed a motion to reconsider the preliminary approval order,
which motion was denied by the District Court on June 9, 2009. Following a
hearing on May 20, 2010, the District Court deferred final approval of the
settlement and issued an order requiring the settling parties to send a
supplemental notice to all class members.
Other.
Equifax has been named as a defendant in various other legal
actions, including administrative claims, class actions and other litigation
arising in connection with our business. Some of the legal actions include
claims for substantial compensatory or punitive damages or claims for
indeterminate amounts of damages. We believe we have strong defenses to, and
where appropriate, will vigorously contest, many of these matters. Given the
number of these matters, some are likely to result in adverse judgments,
penalties, injunctions, fines or other relief. However, we do not believe that
these litigation matters will be individually material to our financial
condition or results of operations. We may explore potential settlements before
a case is taken through trial because of the uncertainty and risks inherent in
the litigation process.
For
information regarding contingent tax claims raised by the Canada Revenue Agency,
and our accounting for legal contingencies, see Note 5 of the Notes to
Consolidated Financial Statements in this Form 10-Q.
ITEM
1A. RISK FACTORS
The
following risk factor updates the disclosure of risk factors included in Item 1A
of our 2009 Form 10-K.
The
recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act could
require us to change certain of our business practices, reduce our revenue,
impose additional costs on us or otherwise adversely affect our business
operations and/or competitive position.
On July
21, 2010, the Dodd-Frank Act became law. The Dodd-Frank Act represents a
comprehensive overhaul of the financial services industry within the U.S.,
establishes the new Bureau of Consumer Financial Protection (the "BCFP") within
the Federal Reserve Board, and will require the BCFP and other federal agencies
to implement many new and significant rules and regulations. The BCFP will have
sweeping powers to administer and enforce a new federal regulatory framework of
consumer financial regulation. At this time, it is difficult to predict the
extent to which the Dodd-Frank Act or the resulting rules and regulations will
impact the U.S. economy or our business. Compliance with these new laws and
regulations may require changes in the way we conduct our business and may
result in additional compliance costs, which could be significant and could
adversely impact our results of operations, financial condition or
liquidity.
Other
than as set forth above, there have been no other material changes in the risk
factors applicable to us from those disclosed in our 2009 Form
10-K.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
The
following table contains information with respect to purchases made by or on
behalf of Equifax or any “affiliated purchaser” (as defined in
Rule 10b-18(a) (3) under the Securities Exchange Act of 1934), of our
common stock during our third quarter ended September 30, 2010:
38
Maximum Number
|
||||||||||||||||
(or Approximate
|
||||||||||||||||
Total Number
|
Dollar Value)
|
|||||||||||||||
Total
|
Average
|
of Shares Purchased
|
of Shares that May
|
|||||||||||||
Number
|
Price
|
as Part of
|
Yet Be Purchased
|
|||||||||||||
of Shares
|
Paid
|
Publicly-Announced
|
Under the Plans or
|
|||||||||||||
Period
|
Purchased (1)
|
Per Share (2)
|
Plans or Programs
|
Programs (3)
|
||||||||||||
June
1 - June 30, 2010
|
$ | 207,159,074 | ||||||||||||||
July
1 - July 31, 2010
|
1,349 | $ | - | - | $ | 207,159,074 | ||||||||||
August
1 - August 31, 2010
|
1,721,489 | $ | 30.09 | 1,717,269 | $ | 155,486,450 | ||||||||||
September
1 - September 30, 2010
|
569 | $ | - | - | $ | 155,486,450 | ||||||||||
Total
|
1,723,407 | $ | 30.09 | 1,717,269 | $ | 155,486,450 |
(1)
|
The total number of shares
purchased includes: (a) shares purchased pursuant to our
publicly-announced share repurchase program, or Program; and
(b) shares surrendered, or deemed surrendered, in satisfaction of the
exercise price and/or to satisfy tax withholding obligations in connection
with the exercise of employee stock options, totaling 1,349 shares for the
month of July 2010, 4,220 shares for the month of August 2010, and 569
shares for the month of September
2010.
|
(2)
|
Average price paid per share for
shares purchased as part of our Program (includes brokerage
commissions).
|
(3)
|
On May 7, 2010, our Board of
Directors increased the amounts authorized under the Program by an
additional $150 million, and we publicly announced this increase on May 7,
2010. At September 30, 2010, the amount authorized for future share
repurchases under the Program was $155.5 million. The Program does
not have a stated expiration
date.
|
Dividend
and Share Repurchase Restrictions
Our
Senior Credit Facility restricts our ability to pay cash dividends on our
capital stock or repurchase capital stock if a default or event of default
exists or would result, according to the terms of the credit
agreement.
ITEM
6. EXHIBITS
Exhibit No.
|
Description
|
|
31.1
|
Rule 13a-14(a)
Certification of Chief Executive Officer.
|
|
31.2
|
Rule 13a-14(a)
Certification of Chief Financial Officer.
|
|
32.1
|
Section 1350
Certification of Chief Executive Officer.
|
|
32.2
|
|
Section 1350
Certification of Chief Financial Officer.
|
101.INS
|
XBRL
Instance Document
|
|
101.SCH
|
XBRL
Taxonomy Extension Schema Document
|
|
101.CAL
|
XBRL
Taxonomy Extension Calculation Linkbase
|
|
101.LAB
|
XBRL
Taxonomy Extension Label Linkbase
|
|
101.PRE
|
XBRL
Taxonomy Extension Presentation Linkbase
|
|
101.DEF
|
XBRL
Taxonomy Extension Definition
Linkbase
|
39
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
Equifax Inc.
|
||
(Registrant)
|
||
Date:
October 28, 2010
|
By:
|
/s/ Richard F.
Smith
|
Richard
F. Smith
|
||
Chairman
and Chief Executive Officer
(Principal
Executive Officer)
|
||
Date:
October 28, 2010
|
/s/ Lee
Adrean
|
|
Lee
Adrean
|
||
Corporate
Vice President and
|
||
Chief
Financial Officer
|
||
(Principal
Financial Officer)
|
||
Date:
October 28, 2010
|
/s/ Nuala M.
King
|
|
Nuala
M. King
|
||
Senior
Vice President and Corporate Controller
|
||
(Principal
Accounting Officer)
|
40
INDEX
TO EXHIBITS
Exhibit No.
|
Description
|
|
31.1
|
Rule 13a-14(a)
Certification of Chief Executive Officer.
|
|
31.2
|
Rule 13a-14(a)
Certification of Chief Financial Officer.
|
|
32.1
|
Section 1350
Certification of Chief Executive Officer.
|
|
32.2
|
|
Section 1350
Certification of Chief Financial Officer.
|
101.INS
|
XBRL
Instance Document
|
|
101.SCH
|
XBRL
Taxonomy Extension Schema Document
|
|
101.CAL
|
XBRL
Taxonomy Extension Calculation Linkbase
|
|
101.LAB
|
XBRL
Taxonomy Extension Label Linkbase
|
|
101.PRE
|
XBRL
Taxonomy Extension Presentation Linkbase
|
|
101.DEF
|
XBRL
Taxonomy Extension Definition
Linkbase
|
41