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, 2022

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	58-0401110
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

 

1550 Peachtree Street	N.W.	Atlanta	Georgia	30309
(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 class	Trading Symbol	Name of each exchange on which registered
Common stock, $1.25 par value per share	EFX	New 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 filer	Accelerated filer	Non-accelerated filer	Smaller reporting company	Emerging 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 7, 2022, there were 122,443,429 shares of the registrant’s common stock outstanding.

1

EQUIFAX INC.

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED SEPTEMBER 30, 2022

INDEX

 

		Page
PART I.	Financial Information	4
Item 1.	Financial Statements (Unaudited)	4
	Consolidated Statements of Income—Three Months Ended September 30, 2022 and 2021	4
	Consolidated Statements of Income—Nine Months Ended September 30, 2022 and 2021	5
	Consolidated Statements of Comprehensive Income (Loss)—Three and Nine Months Ended September 30, 2022 and 2021	6
	Consolidated Balance Sheets—September 30, 2022 and December 31, 2021	7
	Consolidated Statements of Cash Flows—Nine Months Ended September 30, 2022 and 2021	8
	Consolidated Statements of Shareholders' Equity—Three Months Ended September 30, 2022 and 2021	9
	Consolidated Statements of Shareholders' Equity and Accumulated Other Comprehensive Loss—Nine Months Ended September 30, 2022 and 2021	10
	Notes to Consolidated Financial Statements (Unaudited)	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	38
PART II.	Other Information	39
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 6.	Exhibits	42
Signatures		43

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 future operating performance and events or developments that we expect or anticipate will occur in the future, including statements relating to future operating results, improvements in our information technology and data security infrastructure, including as a part of our cloud data and technology transformation, our strategy, the expected financial and operational benefits, synergies and growth from our acquisitions, our ability to mitigate or manage disruptions posed by COVID-19, the extent of the impact of COVID-19, changes in the U.S. mortgage market environment, as well as changes more generally in U.S. and worldwide economic conditions, such as rising interest rates and inflation, 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, 2021, 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 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

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended  September 30,
	2022		2021
(In millions, except per share amounts)
Operating revenue	$	1,244.3	$	1,222.9
Operating expenses:
Cost of services (exclusive of depreciation and amortization below)	542.5		489.0
Selling, general and administrative expenses	318.0		344.2
Depreciation and amortization	140.9		116.5
Total operating expenses	1,001.4		949.7
Operating income	242.9		273.2
Interest expense	(47.1)		(35.0)
Other income, net	23.9		27.2
Consolidated income before income taxes	219.7		265.4
Provision for income taxes	(52.8)		(58.8)
Consolidated net income	166.9		206.6
Less: Net income attributable to noncontrolling interests including redeemable noncontrolling interests	(1.2)		(1.2)
Net income attributable to Equifax	$	165.7	$	205.4
Basic earnings per common share:
Net income attributable to Equifax	$	1.35	$	1.68
Weighted-average shares used in computing basic earnings per share	122.4		121.9
Diluted earnings per common share:
Net income attributable to Equifax	$	1.34	$	1.66
Weighted-average shares used in computing diluted earnings per share	123.3		123.7
Dividends per common share	$	0.39	$	0.39

See Notes to Consolidated Financial Statements.

4

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Nine Months Ended September 30,
	2022		2021
(In millions, except per share amounts)
Operating revenue	$	3,924.3	$	3,670.7
Operating expenses:
Cost of services (exclusive of depreciation and amortization below)	1,638.0		1,455.3
Selling, general and administrative expenses	988.5		981.4
Depreciation and amortization	417.8		348.2
Total operating expenses	3,044.3		2,784.9
Operating income	880.0		885.8
Interest expense	(128.5)		(107.1)
Other income, net	36.8		32.3
Consolidated income before income taxes	788.3		811.0
Provision for income taxes	(197.2)		(185.5)
Consolidated net income	591.1		625.5
Less: Net income attributable to noncontrolling interests including redeemable noncontrolling interests	(3.1)		(3.4)
Net income attributable to Equifax	$	588.0	$	622.1
Basic earnings per common share:
Net income attributable to Equifax	$	4.81	$	5.11
Weighted-average shares used in computing basic earnings per share	122.3		121.8
Diluted earnings per common share:
Net income attributable to Equifax	$	4.77	$	5.04
Weighted-average shares used in computing diluted earnings per share	123.3		123.5
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,
	2022						2021
	Equifax Shareholders		Noncontrolling Interests		Total		Equifax Shareholders		Noncontrolling Interests		Total
	(In millions)
Net income	$	165.7	$	1.2	$	166.9	$	205.4	$	1.2	$	206.6
Other comprehensive income (loss):
Foreign currency translation adjustment	(181.1)		(0.5)		(181.6)		(100.1)		(1.2)		(101.3)
Change in unrecognized prior service cost related to our pension and other postretirement benefit plans, net	(0.7)		—		(0.7)		1.2		—		1.2
Comprehensive (loss) income	$	(16.1)	$	0.7	$	(15.4)	$	106.5	$	—	$	106.5

	Nine Months Ended September 30,
	2022						2021
	Equifax Shareholders		Noncontrolling Interests		Total		Equifax Shareholders		Noncontrolling Interests		Total
	(In millions)
Net income	$	588.0	$	3.1	$	591.1	$	622.1	$	3.4	$	625.5
Other comprehensive income (loss):
Foreign currency translation adjustment	(299.3)		(0.8)		(300.1)		(84.9)		(0.7)		(85.6)
Change in unrecognized prior service cost related to our pension and other postretirement benefit plans, net	(1.5)		—		(1.5)		0.6		—		0.6
Comprehensive income	$	287.2	$	2.3	$	289.5	$	537.8	$	2.7	$	540.5

See Notes to Consolidated Financial Statements.

6

EQUIFAX INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions, except par values)	September 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	241.7	$	224.7
Trade accounts receivable, net of allowance for doubtful accounts of $15.5 and $13.9 at September 30, 2022 and December 31, 2021, respectively	845.0		727.6
Prepaid expenses	141.2		108.4
Other current assets	67.0		60.2
Total current assets	1,294.9		1,120.9
Property and equipment:
Capitalized internal-use software and system costs	1,985.3		1,727.3
Data processing equipment and furniture	306.3		299.6
Land, buildings and improvements	257.3		250.3
Total property and equipment	2,548.9		2,277.2
Less accumulated depreciation and amortization	(1,061.9)		(961.3)
Total property and equipment, net	1,487.0		1,315.9
Goodwill	6,304.3		6,258.1
Indefinite-lived intangible assets	94.8		94.9
Purchased intangible assets, net	1,857.4		1,898.0
Other assets, net	269.6		353.1
Total assets	$	11,308.0	$	11,040.9
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt and current maturities of long-term debt	$	1,062.9	$	824.8
Accounts payable	172.9		211.6
Accrued expenses	221.5		237.5
Accrued salaries and bonuses	159.5		257.9
Deferred revenue	107.2		121.3
Other current liabilities	294.7		638.2
Total current liabilities	2,018.7		2,291.3
Long-term debt	4,819.2		4,470.1
Deferred income tax liabilities, net	419.7		358.2
Long-term pension and other postretirement benefit liabilities	104.0		130.1
Other long-term liabilities	170.8		190.0
Total liabilities	7,532.4		7,439.7
Commitments and Contingencies (see Note 6)
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, 2022 and December 31, 2021; Outstanding shares - 122.4 and 122.1 at September 30, 2022 and December 31, 2021, respectively	236.6		236.6
Paid-in capital	1,580.1		1,536.7
Retained earnings	5,195.8		4,751.6
Accumulated other comprehensive loss	(596.2)		(295.4)
Treasury stock, at cost, 66.3 shares and 66.6 shares at September 30, 2022 and December 31, 2021, respectively	(2,651.4)		(2,639.2)
Stock held by employee benefit trusts, at cost, 0.6 shares at September 30, 2022 and December 31, 2021	(5.9)		(5.9)
Total Equifax shareholders’ equity	3,759.0		3,584.4
Noncontrolling interests including redeemable noncontrolling interests	16.6		16.8
Total equity	3,775.6		3,601.2
Total liabilities and equity	$	11,308.0	$	11,040.9

 See Notes to Consolidated Financial Statements.

7

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2022		2021
	(In millions)
Operating activities:
Consolidated net income	$	591.1	$	625.5
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization	424.1		354.9
Stock-based compensation expense	50.4		44.8
Deferred income taxes	47.9		12.6
(Gain) loss on fair market value adjustment and gain on sale of equity investment	(20.2)		0.1
Gain on divestiture	—		(0.2)
Changes in assets and liabilities, excluding effects of acquisitions:
Accounts receivable, net	(133.6)		(54.9)
Other assets, current and long-term	(32.0)		5.1
Current and long term liabilities, excluding debt	(496.0)		(38.4)
Cash provided by operating activities	431.7		949.5
Investing activities:
Capital expenditures	(468.4)		(332.9)
Acquisitions, net of cash acquired	(437.5)		(1,108.9)
Cash received from divestitures	98.8		1.5
Cash used in investing activities	(807.1)		(1,440.3)
Financing activities:
Net short-term (repayments) borrowings	(162.1)		499.2
Payments on long-term debt	—		(1,100.2)
Borrowings on long-term debt	749.3		1,697.3
Treasury stock purchases	—		(69.9)
Dividends paid to Equifax shareholders	(143.3)		(142.6)
Dividends paid to noncontrolling interests	(2.5)		(6.5)
Proceeds from exercise of stock options and employee stock purchase plan	13.5		33.4
Payment of taxes related to settlement of equity awards	(33.0)		(43.9)
Purchase of noncontrolling interests	—		(11.2)
Debt issuance costs	(5.4)		(13.2)
Cash provided by financing activities	416.5		842.4
Effect of foreign currency exchange rates on cash and cash equivalents	(24.1)		(10.7)
Decrease in cash and cash equivalents	17.0		340.9
Cash and cash equivalents, beginning of period	224.7		1,684.6
Cash and cash equivalents, end of period	$	241.7	$	2,025.5

See Notes to Consolidated Financial Statements.

8

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

For the Three Months Ended September 30, 2022

 

	Equifax Shareholders
								Accumulated Other Comprehensive Loss				Stock Held By Employee Benefits Trusts
	Common Stock
	Shares Outstanding	Amount		Paid-In Capital		Retained Earnings				Treasury Stock				Noncontrolling Interests		Total Equity
	(In millions, except per share amounts)
Balance, June 30, 2022	122.4	$	236.6	$	1,563.2	$	5,078.1	$	(414.4)	$	(2,652.6)	$	(5.9)	$	16.0	$	3,821.0
Net income	—	—		—		165.7		—		—		—		1.2		166.9
Other comprehensive loss	—	—		—		—		(181.8)		—		—		(0.5)		(182.3)
Shares issued under stock and benefit plans, net of minimum tax withholdings	—	—		3.0		—		—		1.2		—		—		4.2
Cash dividends ($0.39 per share)	—	—		—		(48.0)		—		—		—		—		(48.0)
Dividends paid to employee benefits trusts	—	—		0.2		—		—		—		—		—		0.2
Stock-based compensation expense	—	—		13.7		—		—		—		—		—		13.7
Dividends paid to noncontrolling interests	—	—		—		—		—		—		—		(0.1)		(0.1)
Balance, September 30, 2022	122.4	$	236.6	$	1,580.1	$	5,195.8	$	(596.2)	$	(2,651.4)	$	(5.9)	$	16.6	$	3,775.6

For the Three Months Ended September 30, 2021

	Equifax Shareholders
								Accumulated Other Comprehensive Loss				Stock Held By Employee Benefits Trusts
	Common Stock
	Shares Outstanding	Amount		Paid-In Capital		Retained Earnings				Treasury Stock				Noncontrolling Interests		Total Equity
	(In millions, except per share amounts)
Balance, June 30, 2021	121.8	$	236.6	$	1,506.8	$	4,505.7	$	(156.8)	$	(2,625.9)	$	(5.9)	$	38.1	$	3,498.6
Net income	—	—		—		205.4		—		—		—		1.2		206.6
Other comprehensive loss	—	—		—		—		(98.9)		—		—		(1.2)		(100.1)
Shares issued under stock and benefit plans, net of minimum tax withholdings	0.2	—		(0.3)		—		—		(4.9)		—		—		(5.2)
Cash dividends ($0.39 per share)	—	—		—		(47.8)		—		—		—		—		(47.8)
Dividends paid to employee benefits trusts	—	—		0.2		—		—		—		—		—		0.2
Stock-based compensation expense	—	—		10.9		—		—		—		—		—		10.9
Purchases of redeemable noncontrolling interests	—	—		—		—		—		—		—		(7.6)		(7.6)
Redeemable noncontrolling interest adjustment	—	—		—		14.0		—		—		—		(14.0)		—
Dividends paid to noncontrolling interests	—	—		—		—		—		—		—		(0.7)		(0.7)
Other	—	—		—		0.1		—		—		—		0.1		0.2
Balance, September 30, 2021	122.0	$	236.6	$	1,517.6	$	4,677.4	$	(255.7)	$	(2,630.8)	$	(5.9)	$	15.9	$	3,555.1

9

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND ACCUMULATED OTHER COMPREHENSIVE LOSS

(Unaudited)

For the Nine Months Ended September 30, 2022

 

	Equifax Shareholders
								Accumulated Other Comprehensive Loss				Stock Held By Employee Benefits Trusts
	Common Stock
	Shares Outstanding	Amount		Paid-In Capital		Retained Earnings				Treasury Stock				Noncontrolling Interests		Total Equity
	(In millions, except per share amounts)
Balance, December 31, 2021	122.1	$	236.6	$	1,536.7	$	4,751.6	$	(295.4)	$	(2,639.2)	$	(5.9)	$	16.8	$	3,601.2
Net income	—	—		—		588.0		—		—		—		3.1		591.1
Other comprehensive loss	—	—		—		—		(300.8)		—		—		(0.8)		(301.6)
Shares issued under stock and benefit plans, net of minimum tax withholdings	0.3	—		(7.5)		—		—		(12.2)		—		—		(19.7)
Cash dividends ($1.17 per share)	—	—		—		(143.8)		—		—		—		—		(143.8)
Dividends paid to employee benefits trusts	—	—		0.5		—		—		—		—		—		0.5
Stock-based compensation expense	—	—		50.4		—		—		—		—		—		50.4
Dividends paid to noncontrolling interests	—	—		—		—		—		—		—		(2.5)		(2.5)
Balance, September 30, 2022	122.4	$	236.6	$	1,580.1	$	5,195.8	$	(596.2)	$	(2,651.4)	$	(5.9)	$	16.6	$	3,775.6

*At September 30, 2022, $520.2 million was available for future purchases of common stock under our share repurchase authorization.

For the Nine Months Ended September 30, 2021

	Equifax Shareholders
								Accumulated Other Comprehensive Loss				Stock Held By Employee Benefits Trusts
	Common Stock
	Shares Outstanding	Amount		Paid-In Capital		Retained Earnings				Treasury Stock				Noncontrolling Interests		Total Equity
	(In millions, except per share amounts)
Balance, December 31, 2020	121.8	$	236.6	$	1,470.7	$	4,185.4	$	(171.4)	$	(2,547.0)	$	(5.9)	$	41.9	$	3,210.3
Net income	—	—		—		622.1		—		—		—		3.4		625.5
Other comprehensive loss	—	—		—		—		(84.3)		—		—		(0.7)		(85.0)
Shares issued under stock and benefit plans, net of minimum tax withholdings	0.6	—		3.4		—		—		(13.9)		—		—		(10.5)
Treasury stock purchased under share repurchase program	(0.4)	—		—		—		—		(69.9)		—		—		(69.9)
Cash dividends ($1.17 per share)	—	—		—		(143.3)		—		—		—		—		(143.3)
Dividends paid to employee benefits trusts	—	—		0.7		—		—		—		—		—		0.7
Stock-based compensation expense	—	—		44.8		—		—		—		—		—		44.8
Purchases of redeemable noncontrolling interests	—	—		—		—		—		—		—		(7.6)		(7.6)
Redeemable noncontrolling interest adjustment	—	—		—		13.2		—		—		—		(13.2)		—
Dividends paid to noncontrolling interests	—	—		—		—		—		—		—		(6.5)		(6.5)
Purchases of noncontrolling interests	—	—		(1.8)		—		—		—		—		(1.8)		(3.6)
Other	—	—		(0.2)		—		—		—		—		0.4		0.2
Balance, September 30, 2021	122.0	$	236.6	$	1,517.6	$	4,677.4	$	(255.7)	$	(2,630.8)	$	(5.9)	$	15.9	$	3,555.1

10

Accumulated Other Comprehensive Loss consists of the following components:

 

	September 30, 2022		December 31, 2021
	(In millions)
Foreign currency translation	$	(591.8)	$	(292.5)
Unrecognized prior service cost related to our pension and other postretirement benefit plans, net of accumulated tax of $1.0 and $0.4 at September 30, 2022 and December 31, 2021, respectively	(3.4)		(1.9)
Cash flow hedging transactions, net of accumulated tax of $0.6 at September 30, 2022 and December 31, 2021	(1.0)		(1.0)
Accumulated other comprehensive loss	$	(596.2)	$	(295.4)

See Notes to Consolidated Financial Statements.

11

EQUIFAX INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2022

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

Nature of Operations.  We collect, organize and manage various types of financial, demographic, employment, criminal history and marketing information. Our products and services enable businesses to make credit and service decisions, manage their portfolio risk, automate or outsource certain payroll-related, tax and human resources 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, 2022, we operated in the following countries: Argentina, Australia, Canada, Chile, Costa Rica, Dominican Republic, Ecuador, El Salvador, Honduras, India, Ireland, Mexico, New Zealand, Paraguay, Peru, Portugal, Spain, the United Kingdom, or U.K., Uruguay and the United States of America, or U.S. We also have investments in consumer and/or commercial credit information companies through joint ventures in Cambodia, Malaysia and Singapore and have an investment in a consumer and commercial credit information company in Brazil. We previously had a joint venture in Russia that offered consumer credit services; however, during the third quarter of 2022, we completed the sale of this equity method investment.

We develop, maintain and enhance secured proprietary information databases through the compilation of consumer specific data, including credit, income, employment, criminal history, 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, and income and tax information primarily from large to mid-sized companies in the U.S. We process this information utilizing our proprietary information management systems. We also provide information, technology and services to support debt collections and recovery management.

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 SEC Regulation S-X. 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 year ended December 31, 2021 (“2021 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 and are of a normal recurring nature.

Earnings Per Share.  Our basic earnings per share, or EPS, is calculated as net income attributable to Equifax divided by the weighted-average number of common shares outstanding during the reporting 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: 

	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
	(In millions)
Weighted-average shares outstanding (basic)	122.4	121.9	122.3	121.8
Effect of dilutive securities:
Stock options and restricted stock units	0.9	1.8	1.0	1.7
Weighted-average shares outstanding (diluted)	123.3	123.7	123.3	123.5

For the three and nine months ended September 30, 2022 and 2021, stock options that were anti-dilutive were not material.

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Financial Instruments.  Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and short 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 Level 2 inputs such as 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, taking into account credit risk. As of September 30, 2022 and December 31, 2021, the fair value of our long-term debt, including the current portion, was $5.3 billion and $5.2 billion compared to its carrying value of $5.8 billion and $5.0 billion, respectively.

Fair Value Measurements.  Fair value is determined based on the assumptions marketplace participants use in pricing an 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).

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis. We completed multiple acquisitions during the nine months ended September 30, 2022 and the year ended December 31, 2021. The values of certain assets acquired were recorded at fair value using Level 3 inputs. The majority of the related current assets acquired and liabilities assumed were recorded at their carrying values as of the date of acquisition, as their carrying values approximated their fair values due to their short-term nature. The fair values of definite-lived intangible assets acquired in these acquisitions were estimated primarily based on the income approach. The income approach estimates fair value based on the present value of the cash flows that the assets are expected to generate in the future. We developed internal estimates for the expected cash flows and discount rates in the present value calculations.

Trade Accounts Receivable and Allowance for Doubtful Accounts. Accounts receivable are stated at cost and are due in less than a year. Significant payment terms for customers are identified in the contract. We do not recognize interest income on our trade accounts receivable. Additionally, we generally do not require collateral from our customers related to our trade accounts receivable.

The allowance for doubtful accounts is based on management's estimate for expected credit losses for outstanding trade accounts receivables. We determine expected credit losses based on historical write-off experience, an analysis of the aging of outstanding receivables, customer payment patterns, the establishment of specific reserves for customers in an adverse financial condition and adjusted based upon our expectations of changes in macroeconomic conditions that may impact the collectability of outstanding receivables. We reassess the adequacy of the allowance for doubtful accounts each reporting period. Increases to the allowance for doubtful accounts are recorded as bad debt expense, which are included in selling, general and administrative expenses on the accompanying Consolidated Statements of Income. Below is a rollforward of our allowance for doubtful accounts for the three and nine months ended September 30, 2022 and 2021, respectively.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Allowance for doubtful accounts, beginning of period	$	15.6	$	11.2	$	13.9	$	12.9
Current period bad debt expense	1.4		1.2		4.4		1.2
Write-offs, net of recoveries	(1.5)		(1.1)		(2.8)		(2.8)
Allowance for doubtful accounts, end of period	$	15.5	$	11.3	$	15.5	$	11.3

Other Current Assets. Other current assets on our Consolidated Balance Sheets primarily include amounts receivable related to vendor rebates and from tax authorities. Other current assets also include amounts in specifically designated accounts that hold the funds that are due to customers from our debt collection and recovery management services. As of September 30, 2022, these assets were $24.9 million, with a corresponding balance in other current liabilities. These amounts are restricted as to their current use and will be released according to the specific customer agreements.

Other Assets.  Other assets on our Consolidated Balance Sheets primarily represent our investments in unconsolidated affiliates, the Company’s operating lease right-of-use assets, employee benefit trust assets, long-term deferred tax assets and assets related to life insurance policies covering certain officers of the Company.

Equity Investment. We record our equity investment in Brazil within Other Assets at fair value, using observable Level 1 inputs. The carrying value of the investment has been adjusted to $58.0 million as of September 30, 2022 based on

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quoted market prices, resulting in an unrealized gain of $5.7 million and unrealized loss of $0.7 million for the three and nine months ended September 30, 2022. The carrying value of the investment was $124.9 million as of September 30, 2021, resulting in an unrealized gain of $17.3 million and unrealized loss of $0.1 million for the three and nine months ended September 30, 2021. We previously had a joint venture in Russia that offered consumer credit services; however, during the third quarter of 2022, we completed the sale of this equity method investment. All unrealized gains or losses on these investments were recorded in Other income, net within the Consolidated Statements of Income.

Other Current Liabilities. Other current liabilities on our Consolidated Balance Sheets consist of the current portion of our operating lease liabilities and various accrued liabilities such as costs related to the 2017 cybersecurity incident as described more fully in Note 6, interest expense and accrued employee benefits. Other current liabilities also include the offset to other current assets related to amounts in specifically designated accounts that hold the funds that are due to customers from our debt collection and recovery management services. As of September 30, 2022, these funds were $24.9 million. These amounts are restricted as to their current use and will be released according to the specific customer agreements.

Benefit Plans. During the third quarter of 2022, we settled the liabilities under our Canadian Retirement Income Plan.

Recent Accounting Pronouncements. In October 2021, the FASB issued ASU No. 2021-08 “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” The update provides clarifying guidance to reduce diversity in practice stating that contract assets, contract liabilities and deferred revenue acquired in business combinations should be measured in accordance with Accounting Standards Topic 606, rather than the fair value principles of Accounting Standards Topic 805. ASU 2021-08 is effective for all public business entities for annual periods beginning after December 15, 2022, although early adoption is permitted. This guidance must be applied on a prospective basis. The adoption of this guidance is not expected to have a material impact on our financial position, results of operations or cash flows.

In March 2020, the FASB issued ASU No. 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The update provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) contract modifications on financial reporting, caused by reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. We are still evaluating the impact, but do not expect the adoption of the standard to have a material impact on our Consolidated Financial Statements.

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2. REVENUE

Revenue Recognition. Based on the information that management reviews internally for evaluating operating segment performance and nature, amount, timing, and uncertainty of revenue and cash flows affected by economic factors, we disaggregate revenue as follows:

	Three Months Ended September 30,				Change		Nine Months Ended September 30,		Change
Consolidated Operating Revenue	2022		2021		$	%	2022	2021	$	%
	(In millions)						(In millions)
Verification Services	$	454.5	$	402.7