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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2020
 
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) 

Georgia58-0401110
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
 
1550 Peachtree StreetN.W. AtlantaGeorgia30309
(Address of principal executive offices)(Zip Code)
 
404-885-8000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common stock, $1.25 par value per shareEFXNew York Stock Exchange
 
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       No   
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes       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 filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    No  

On October 9, 2020, there were 121,642,955 shares of the registrant’s common stock outstanding.



EQUIFAX INC.
 
QUARTERLY REPORT ON FORM 10-Q
 
QUARTER ENDED SEPTEMBER 30, 2020
 
INDEX
 
  Page
 
 
 
 
 
 
 
 
 
2


FORWARD-LOOKING STATEMENTS
 
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, the 2017 cybersecurity incident, improvements in our information technology and data security infrastructure, including as part of our EFX 2020 cloud technology, data and security transformation, our strategy, our ability to mitigate or manage disruptions posed by COVID-19, the impact of COVID-19 and changes in U.S. and worldwide economic conditions that materially impact consumer spending, consumer debt and employment and the demand for Equifax's products and services, our culture, our ability to innovate, the market acceptance of new products and services and similar statements about our business plans 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 the 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 our Annual Report on Form 10-K for the year ended December 31, 2019, as well as subsequent 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 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


PART I.  FINANCIAL INFORMATION
 
ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)
 
EQUIFAX INC.
 

CONSOLIDATED STATEMENTS OF INCOME
 
(Unaudited)

Three Months Ended 
September 30,
 20202019
(In millions, except per share amounts)
Operating revenue$1,068.3 $875.7 
Operating expenses:  
Cost of services (exclusive of depreciation and amortization below)433.2 374.5 
Selling, general and administrative expenses330.0 295.5 
Depreciation and amortization100.7 84.1 
Total operating expenses863.9 754.1 
Operating income204.4 121.6 
Interest expense(37.4)(28.0)
Other income, net133.4 2.9 
Consolidated income before income taxes300.4 96.5 
Provision for income taxes(75.4)(14.0)
Consolidated net income225.0 82.5 
Less: Net income attributable to noncontrolling interests including redeemable noncontrolling interests(0.8)(1.4)
Net income attributable to Equifax$224.2 $81.1 
Basic earnings per common share:  
Net income attributable to Equifax$1.84 $0.67 
Weighted-average shares used in computing basic earnings per share121.5 121.0 
Diluted earnings per common share:  
Net income attributable to Equifax$1.82 $0.66 
Weighted-average shares used in computing diluted earnings per share123.0 122.3 
Dividends per common share$0.39 $0.39 

See Notes to Consolidated Financial Statements.
4


EQUIFAX INC.


CONSOLIDATED STATEMENTS OF INCOME (LOSS)
 
(Unaudited)


Nine Months Ended September 30,
20202019
(In millions, except per share amounts)
Operating revenue$3,009.1 $2,601.8 
Operating expenses:
Cost of services (exclusive of depreciation and amortization below)1,256.5 1,138.9 
Selling, general and administrative expenses955.9 1,601.2 
Depreciation and amortization289.5 244.2 
Total operating expenses2,501.9 2,984.3 
Operating income (loss)507.2 (382.5)
Interest expense(104.7)(82.3)
Other income, net171.1 7.9 
Consolidated income (loss) before income taxes573.6 (456.9)
(Provision) benefit for income taxes(138.0)53.3 
Consolidated net income (loss)435.6 (403.6)
Less: Net income attributable to noncontrolling interests including redeemable noncontrolling interests(2.9)(4.4)
Net income (loss) attributable to Equifax$432.7 $(408.0)
Basic earnings per common share:
Net income (loss) attributable to Equifax$3.56 $(3.38)
Weighted-average shares used in computing basic earnings per share121.4 120.8 
Diluted earnings per common share:
Net income (loss) attributable to Equifax$3.53 $(3.35)
Weighted-average shares used in computing diluted earnings per share122.7 122.0 
Dividends per common share$1.17 $1.17 

See Notes to Consolidated Financial Statements.
5

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
(Unaudited)
 
 Three Months Ended September 30,
20202019
Equifax
Shareholders
Noncontrolling
Interests
TotalEquifax
Shareholders
Noncontrolling
Interests
Total
 (In millions)
Net income$224.2 $0.8 $225.0 $81.1 $1.4 $82.5 
Other comprehensive income (loss):      
Foreign currency translation adjustment49.4 0.2 49.6 (80.5)(1.4)(81.9)
Change in unrecognized prior service cost and actuarial losses related to our pension and other postretirement benefit plans, net3.8  3.8 3.0  3.0 
Comprehensive income$277.4 $1.0 $278.4 $3.6 $ $3.6 



Nine Months Ended September 30,
20202019
Equifax
Shareholders
Noncontrolling
Interests
TotalEquifax
Shareholders
Noncontrolling
Interests
Total
(In millions)
Net income (loss)$432.7 $2.9 $435.6 $(408.0)$4.4 $(403.6)
Other comprehensive income (loss):
Foreign currency translation adjustment(8.2)(1.5)(9.7)(100.3)(1.5)(101.8)
Change in unrecognized prior service cost and actuarial losses related to our pension and other postretirement benefit plans, net11.3  11.3 9.0  9.0 
Change in cumulative loss from cash flow hedging transactions, net   0.1  0.1 
Comprehensive income (loss)$435.8 $1.4 $437.2 $(499.2)$2.9 $(496.3)


See Notes to Consolidated Financial Statements.
6

EQUIFAX INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)
September 30, 2020December 31, 2019
(In millions, except par values) 
ASSETS  
Current assets:  
Cash and cash equivalents$1,535.6 $401.3 
Trade accounts receivable, net of allowance for doubtful accounts of $15.8 and $11.2 at September 30, 2020 and December 31, 2019, respectively
605.9 532.1 
Prepaid expenses123.3 88.1 
Other current assets46.8 187.9 
Total current assets2,311.6 1,209.4 
Property and equipment:  
Capitalized internal-use software and system costs1,254.3 979.4 
Data processing equipment and furniture329.5 325.1 
Land, buildings and improvements235.9 236.3 
Total property and equipment1,819.7 1,540.8 
Less accumulated depreciation and amortization(749.1)(593.2)
Total property and equipment, net1,070.6 947.6 
Goodwill4,366.0 4,308.3 
Indefinite-lived intangible assets94.8 94.9 
Purchased intangible assets, net1,001.4 1,044.6 
Other assets, net405.4 304.2 
Total assets$9,249.8 $7,909.0 
LIABILITIES AND EQUITY 
Current liabilities:  
Short-term debt and current maturities of long-term debt$1,102.1 $3.1 
Accounts payable159.5 148.3 
Accrued expenses186.4 163.5 
Accrued salaries and bonuses207.1 156.1 
Deferred revenue103.5 104.0 
Other current liabilities632.4 784.1 
Total current liabilities2,391.0 1,359.1 
Long-term debt3,275.3 3,379.5 
Deferred income tax liabilities, net339.9 248.0 
Long-term pension and other postretirement benefit liabilities106.1 118.9 
Other long-term liabilities170.7 180.6 
Total liabilities6,283.0 5,286.1 
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, 2020 and December 31, 2019;
Outstanding shares - 121.6 and 121.2 at September 30, 2020 and December 31, 2019, respectively
236.6 236.6 
Paid-in capital1,454.1 1,405.1 
Retained earnings4,423.1 4,131.8 
Accumulated other comprehensive loss(628.5)(631.6)
Treasury stock, at cost, 67.1 shares and 67.5 shares at September 30, 2020 and December 31, 2019, respectively
(2,550.4)(2,557.4)
Stock held by employee benefit trusts, at cost, 0.6 shares at September 30, 2020 and December 31, 2019
(5.9)(5.9)
Total Equifax shareholders’ equity2,929.0 2,578.6 
Noncontrolling interests including redeemable noncontrolling interests37.8 44.3 
Total equity2,966.8 2,622.9 
Total liabilities and equity$9,249.8 $7,909.0 

 See Notes to Consolidated Financial Statements.
7

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(Unaudited)

Nine Months Ended September 30,
 20202019
(In millions)
Operating activities:  
Consolidated net income (loss)$435.6 $(403.6)
Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities:  
Depreciation and amortization295.2 248.8 
Stock-based compensation expense43.9 40.6 
Deferred income taxes78.0 (81.7)
Gain on fair market value adjustment of equity investments(162.8) 
Changes in assets and liabilities, excluding effects of acquisitions: 
Accounts receivable, net(76.1)(49.9)
Other assets, current and long-term29.6 32.6 
Current and long term liabilities, excluding debt5.6 296.3 
Cash provided by operating activities649.0 83.1 
Investing activities: 
Capital expenditures(309.5)(305.7)
Acquisitions, net of cash acquired(61.4)(234.8)
Investment in unconsolidated affiliates, net(10.0)(25.0)
Cash used in investing activities(380.9)(565.5)
Financing activities: 
Net short-term borrowings0.3 367.0 
Payments on long-term debt(125.0)(50.0)
Borrowings on long-term debt1,123.3 250.0 
Dividends paid to Equifax shareholders(142.1)(141.4)
Dividends paid to noncontrolling interests(2.6)(4.8)
Proceeds from exercise of stock options and employee stock purchase plan29.9 15.3 
Payment of taxes related to settlement of equity awards (9.7)
Purchase of redeemable noncontrolling interests(9.0) 
Debt issuance costs(9.8) 
Other0.3  
Cash provided by financing activities865.3 426.4 
Effect of foreign currency exchange rates on cash and cash equivalents0.9 (0.1)
Increase (decrease) in cash and cash equivalents1,134.3 (56.1)
Cash and cash equivalents, beginning of period401.3 223.6 
Cash and cash equivalents, end of period$1,535.6 $167.5 
 
See Notes to Consolidated Financial Statements.
8

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND OTHER COMPREHENSIVE LOSS
 
(Unaudited)

For the Three Months Ended September 30, 2020
 
 Equifax Shareholders  
Accumulated Other Comprehensive LossStock
Held By Employee Benefits Trusts
 Common Stock     
Shares
Outstanding
AmountPaid-In
Capital
Retained
Earnings
Treasury
Stock
Noncontrolling
Interests
Total
Equity
 (In millions, except per share amounts)
Balance, June 30, 2020121.5 $236.6 $1,447.8 $4,248.0 $(681.7)$(2,550.7)$(5.9)$40.2 $2,734.3 
Net income   224.2    0.8 225.0 
Other comprehensive income    53.2   0.2 53.4 
Shares issued under stock and benefit plans, net of minimum tax withholdings0.1  (1.0)  0.3   (0.7)
Cash dividends ($0.39 per share)
   (47.6)    (47.6)
Dividends paid to employee benefits trusts  0.2      0.2 
Stock-based compensation expense  12.2      12.2 
Redeemable noncontrolling interest adjustment   (1.5)   1.5  
Dividends paid to noncontrolling interests       (1.0)(1.0)
Purchases of noncontrolling interests  (5.1)    (3.9)(9.0)
Balance, September 30, 2020121.6 $236.6 $1,454.1 $4,423.1 $(628.5)$(2,550.4)$(5.9)$37.8 $2,966.8 

At September 30, 2020, $590.1 million was available for future purchases of common stock under our share repurchase authorization.

For the Three Months Ended September 30, 2019

 Equifax Shareholders  
Accumulated Other Comprehensive LossStock
Held By Employee Benefits Trusts
 Common Stock     
Shares
Outstanding
AmountPaid-In
Capital
Retained
Earnings
Treasury
Stock
Noncontrolling
Interests
Total
Equity
 (In millions, except per share amounts)
Balance, June 30, 2019120.9 $236.6 $1,381.5 $4,135.5 $(640.0)$(2,564.3)$(5.9)$44.5 $2,587.9 
Net income— — — 81.1 — — — 1.4 82.5 
Other comprehensive loss— — — — (77.5)— — (1.4)(78.9)
Shares issued under stock and benefit plans, net of minimum tax withholdings0.2 — 0.1 — — 3.9 — — 4.0 
Cash dividends ($0.39 per share)
— — — (47.4)— — — — (47.4)
Dividends paid to employee benefits trusts— — 0.2 — — — — — 0.2 
Stock-based compensation expense— — 10.8 — — — — — 10.8 
Redeemable noncontrolling interest adjustment— — — 1.2 — — — (1.2) 
Balance, September 30, 2019121.1 $236.6 $1,392.6 $4,170.4 $(717.5)$(2,560.4)$(5.9)$43.3 $2,559.1 

9


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND OTHER COMPREHENSIVE LOSS
 
(Unaudited)

For the Nine Months Ended September 30, 2020
 
Equifax Shareholders
Accumulated Other Comprehensive LossStock
Held By Employee Benefits Trusts
Common Stock
Shares
Outstanding
AmountPaid-In
Capital
Retained
Earnings
Treasury
Stock
Noncontrolling
Interests
Total
Equity
(In millions, except per share amounts)
Balance, December 31, 2019121.2 $236.6 $1,405.1 $4,131.8 $(631.6)$(2,557.4)$(5.9)$44.3 $2,622.9 
Net income   432.7    2.9 435.6 
Other comprehensive income (loss)    3.1   (1.5)1.6 
Shares issued under stock and benefit plans, net of minimum tax withholdings0.4  9.5   7.0   16.5 
Cash dividends ($1.17 per share)
   (142.8)    (142.8)
Dividends paid to employee benefits trusts  0.7      0.7 
Stock-based compensation expense  43.9      43.9 
Redeemable noncontrolling interest adjustment   1.8    (1.8) 
Dividends paid to noncontrolling interests       (2.6)(2.6)
Purchases of noncontrolling interests  (5.1)    (3.9)(9.0)
Cumulative adjustment from change in accounting principle   (0.4)    (0.4)
Other       0.4 0.4 
Balance, September 30, 2020121.6 $236.6 $1,454.1 $4,423.1 $(628.5)$(2,550.4)$(5.9)$37.8