10-K 1 v209688_10k.htm 10-K Unassociated Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 

 
FORM 10-K
 
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 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
58-0401110
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1550 Peachtree Street, N.W.
Atlanta, Georgia
30309
(Address of principal executive offices)
(Zip Code)
 
Registrant’s telephone number, including area code: 404-885-8000
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Name of each exchange on which registered
Common Stock, $1.25 par value per share
 
New York Stock Exchange
Common Stock Purchase Rights
 
New York Stock Exchange
 
Securities registered pursuant to Section 12(g) of the Act: None.
 

 
Indicate by check mark if Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Exchange Act (“Act”).  x YES  ¨ NO
 
Indicate by check mark if Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  ¨ YES  x NO
 
Indicate by check mark whether 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.        x YES  ¨ NO
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x
 
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):
 
x Large accelerated filer
¨ Accelerated filer
¨ Non-accelerated filer
¨ Smaller reporting company
 
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).¨ YES  x NO
 
As of June 30, 2010, the aggregate market value of Registrant’s common stock held by non-affiliates of Registrant was approximately $3,507,932,713 based on the closing sale price as reported on the New York Stock Exchange. At January 31, 2011, there were 122,739,885 shares of Registrant’s common stock outstanding.
 
DOCUMENTS INCORPORATED BY REFERENCE
 
Portions of Registrant’s definitive proxy statement for its 2011 annual meeting of shareholders are incorporated by reference in Part III of this 10-K.

 
 

 

PART I
 
ITEM 1.  BUSINESS
 
OVERVIEW
 
Equifax Inc. is a leading global provider of information solutions for businesses and consumers. We have a large and diversified group of clients and customers, including financial institutions, corporations, governments and individuals. Our products and services are based on comprehensive databases of consumer and business information derived from numerous types of credit, financial, employment and income, public record, demographic and marketing data. We use proprietary analytical tools to analyze this data to create customized insights, decision-making solutions and processing services for businesses. We help consumers understand, manage and protect their personal information and make more informed financial decisions. Additionally, we are a leading provider of payroll-related and human resources business process outsourcing services in the United States of America, or U.S.
 
We currently operate in three global regions: North America (U.S. and Canada), Europe (the United Kingdom, or U.K., Spain and Portugal) and Latin America (Argentina, Brazil, Chile, Ecuador, El Salvador, Honduras, Paraguay, Peru and Uruguay). We also maintain support operations in Costa Rica and the Republic of Ireland. We own an equity interest in a consumer credit information company in Russia. During 2009, we formed a joint venture to provide a broad range of credit data and information solutions in India. Of the countries in which we operate, 73% of our revenue was generated in the U.S. during 2010.
 
Equifax was originally incorporated under the laws of the State of Georgia in 1913, and its predecessor company dates back to 1899. 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.
 
We are organized and report our business results in five operating segments, as follows:
 
 
U.S. Consumer Information Solutions (USCIS)provides consumer information solutions to businesses in the U.S. including online credit data and credit decision technology solutions (OCIS), mortgage reporting and settlement solutions, and consumer financial marketing services (CFMS).
 
 
Internationalincludes our Canada Consumer, Europe and Latin America business units. Products and services offered are similar to those available in the USCIS, North America Commercial Solutions and North America Personal Solutions operating segments but vary by geographic region.
 
 
TALXprovides services enabling clients to outsource and automate the performance of certain payroll-related and human resources business processes, including employment, income and social security number verification, employment-related tax management and talent management services.
 
 
North America Personal Solutionsprovides products to consumers enabling them to monitor, manage and protect their credit, credit score and identity information and make more informed financial decisions.
 
 
North America Commercial Solutionsprovides credit, financial, marketing and other information regarding businesses in the U.S. and Canada.
 
 
2

 

Our revenue base and business mix are diversified among our five segments as depicted in the chart below.
 

 
3

 

PRODUCTS AND SERVICES
 
The following chart summarizes the key products and services offered by each of the business units within our segments:
 
   
USCIS
 
North
 
North
 
International
 
TALX
 
   
OCIS
 
CFMS
 
Mortgage 
Services
 
America
Personal
Solutions
 
America
Commercial
Solutions
 
Canada
Consumer
 
Europe
 
Latin
America
 
The Work
Number ®
 
Tax & Talent
Management
Services
 
Online consumer credit reports
 
X
     
X
 
X
     
X
 
X
 
X
         
Consumer alerts, scores and analytical services
 
X
 
X
 
X
 
X
     
X
 
X
 
X
 
X
     
Enabling technology services (i.e., credit decisioning platforms)
 
X
     
X
     
X
 
X
 
X
 
X
         
Identity authentication/fraud
 
X
             
X
 
X
 
X
 
X
 
X
     
Consumer financial marketing services
     
X
 
X
         
X
 
X
 
X
         
Business credit reports, scores and analytical services
                 
X
     
X
 
X
         
Business marketing services and database management
                 
X
     
X
 
X
         
Business demographic information
                 
X
     
X
             
Direct to consumer credit monitoring
             
X
         
X
             
Identity protection
             
X
                         
Debt Reduction Solutions
             
X
                         
Employment, income and identity verification services
                                 
X
     
Business Process Outsourcing (BPO)
  
 
  
 
  
X
  
 
  
 
  
 
  
 
  
 
  
X
  
X
 
 
Each of our operating segments is described more fully below.
 
USCIS
 
USCIS provides consumer information solutions to businesses in the U.S. through three product lines, as follows:
 
Online Consumer Information Solutions (OCIS). OCIS products are derived from large databases of credit information that we maintain about individual consumers, including credit history, current credit status and consumer address information. Our customers utilize the credit report information we provide to make decisions for a wide range of credit and business purposes, such as whether, and on what terms, to approve auto loans or credit card applications, whether to allow a consumer to open a new utility or telephone account and similar business uses. We offer other data, analytical and predictive services based on the information in the consumer credit information databases to help further mitigate the risk of granting credit by verifying the identity of a consumer seeking credit, predicting the risk of consumer bankruptcy, or indicating the credit applicant’s risk potential for account delinquency, for example. These risk management services, as well as fraud detection and prevention services, enable our customers to monitor default rates and proactively manage their existing credit card or other consumer loan accounts, and ensure a consumer’s identity.
 
 
4

 

OCIS customers access products through a full range of electronic distribution mechanisms, including direct real-time access, which facilitates instant decisions, such as the immediate granting of credit at the point of sale. We also develop and host customized applications that enhance the decision-making process for our customers. These decisioning technology applications assist with pre-approved offers of credit, cross-selling of various banking products, determining deposit amounts for telephone and utility companies, and verifying the identity of consumer customers.
 
Mortgage Solutions. Our Mortgage Solutions products, offered in the U.S., consist of specialized credit reports that combine the reports of the three major consumer credit reporting agencies (Equifax, Experian Group and TransUnion LLC) into a single credit report provided in an online format, commonly referred to as a tri-merge report. Mortgage lenders use these tri-merge reports in making their mortgage underwriting decisions. We also offer certain mortgage settlement services, such as appraisal, title and closing services, with our traditional mortgage service offerings, with certain of these services provided through agreements with third parties.
 
Consumer Financial Marketing Services (CFMS). Our CFMS products apply consumer financial information to enable our customers to manage their marketing efforts, including targeting and segmentation, for efficiency and effectiveness; identify and acquire new customers for their financial products and services; and realize additional revenue from existing customers. These products utilize information derived from actual consumer data, including credit, income, asset, liquidity, net worth and spending activity, which also support many of our OCIS products. These data assets broaden the understanding of customer financial potential and opportunity which can further drive breakthrough decisioning and targeting solutions for our customers. We also provide account review services which assist our customers in managing their existing customers and prescreen services that help our clients identify potential new customers. Customers for these products primarily include institutions in the banking, brokerage, insurance, and mortgage industries as well as companies primarily focused on digital and interactive marketing.
 
International
 
The International operating segment includes our Canada Consumer, Europe and Latin America business units. These business units offer products that are similar to those available in the USCIS operating segment, although data sources tend to rely more heavily on government agencies than in the U.S. These products generate revenue in Argentina, Brazil, Canada, Chile, Ecuador, El Salvador, Honduras, Paraguay, Peru, Portugal, Spain, the U.K. and Uruguay. We also maintain support operations in the Republic of Ireland and Costa Rica. We offer consumer credit services in Russia and India through joint ventures.
 
Canada Consumer. Similar to our OCIS, Mortgage Solutions and CFMS business units, Canada Consumer offers products derived from the credit information that we maintain about individual consumers. We offer many products in Canada, including credit reporting and scoring, consumer marketing, risk management, fraud detection and modeling services, together with certain of our decisioning products that facilitate pre-approved offers of credit and automate a variety of credit decisions.
 
Europe. Our European operation provides information solutions, marketing and personal solutions products. Information solutions and personal solutions products are generated from credit records that we maintain and include credit reporting and scoring, risk management, fraud detection and modeling services. Both of these products are sold in the U.K. and our information solutions products are sold in Portugal and Spain. Our commercial products, such as business credit reporting and commercial risk management services, are only available in the U.K. Marketing products, which are similar to those offered in our CFMS business unit, are primarily available in the U.K. and, to a lesser extent, in Spain.
 
Latin America. Our Latin American operation provides consumer and commercial information solutions products and marketing products. We offer a full range of consumer products, generated from credit records that we maintain, including credit reporting and scoring, risk management, identity verification and fraud detection services. Our consumer products are the primary source of revenue in each of the countries in which we operate, with the exception of Brazil where the majority of our revenue comes from commercial products. We offer our commercial products, which include credit reporting, decisioning tools and risk management services, in varying degrees to the countries we serve. We also provide a variety of consumer and commercial marketing products generated from our credit information databases, including business profile analysis, business prospect lists and database management, in varying degrees in the countries we serve. The other countries in which we operate include Argentina, Chile, Ecuador, El Salvador, Honduras, Paraguay, Peru and Uruguay.
 
 
5

 

TALX
 
TALX operates in the U.S. through two business units, as follows:
 
The Work Number® (TWN Services). TWN Services include employment, income and social security number verification services and complementary services which include W-2 management services (which include initial distribution, reissue and correction of W-2 forms); paperless pay services that enable employees to electronically receive pay statement information as well as review and change direct deposit account or W-4 information; integrated electronic time capture and reporting services; paperless new-hire services to bring new workers on board using electronic forms; and I-9 management services designed to help clients electronically comply with the immigration laws that require employers to complete an I-9 form for each new hire.
 
TWN Services enable employers to direct third-party verifiers to our website or to a toll-free telephone number to verify the employee’s employment status and income data. We also offer an offline research verification service which expands employment verification to locate data outside our existing TWN database. In 2009, we increased our services to provide IRS income verifications using the IncomeChek® product as well as identity verification through a secure, web-based portal using the DirectChek® product.
 
We rely on payroll data received from over 2,400 organizations, including over half of Fortune 500 companies, to regularly update the TWN database. This data is updated as employers transmit data electronically directly to us each payroll period. Employers contract to provide this data to us for specified periods under the terms of contracts which range from one to five years. We use this data to provide employment and income verifications to third-party verifiers; the fees we charge for these services are generally per transaction. After the expiration of the applicable contract, absent renewal by mutual agreement of the parties, we generally do not have any further right to use the employment data we obtained pursuant to the contract. We have not experienced significant turnover in the employer contributors to the TWN database because we generally do not charge them to add their employment data to the database and the verification service we offer relieves them of the administrative burden and expense of responding to third party employment verification requests. The database contained approximately 220 million current and historic employment records at December 31, 2010.
 
Tax and Talent Management Services. These services are aimed at reducing the cost to the human resources function of businesses by assisting with employment tax matters and planning and improving the cost-effectiveness of talent recruitment and management. We offer a broad suite of services designed to reduce the cost of unemployment claims through effective claims representation and management and efficient processing and to better manage the tax rate that employers are assessed for unemployment taxes. We also offer our customers comprehensive services designed to research the availability of employment-related tax credits (e.g., the federal work opportunity and welfare to work tax credits and state tax credits), process the necessary filings and assist the customer in obtaining the tax credit. In talent management, we also offer secure, electronic-based psychometric testing and assessments, as well as onboarding services using online forms to complete the new hire process for employees of corporate and government agencies.
 
North America Personal Solutions
 
Our Personal Solutions products give consumers information to make financial decisions and monitor and protect credit, credit score and identity information through our Equifax Complete, ID Patrol, Credit Watch and Score Watch monitoring products. Consumers can obtain a copy of credit file information about them and their credit score. We offer monitoring products for consumers who are concerned about identity theft and data breaches, including the Credit Report Control service that allows consumers subscribing to our credit monitoring products to restrict access to their credit report to mitigate unauthorized use of Equifax credit file information by third parties. Our Debt Wise product utilizes credit report information to assist consumers in creating a debt repayment plan. Our products are available to consumers directly and through relationships with business partners who distribute our products or provide these services to their employees or customers.
 
 
6

 

North America Commercial Solutions
 
Our Commercial Solutions products are derived from databases of credit, financial and marketing information regarding businesses in the U.S. and Canada. The business records included in the U.S. credit database have been developed in part from the Small Business Financial Exchange, Inc., or SBFE. SBFE members, including a number of commercial lending financial institutions, contribute their data to the member-owned SBFE database which we exclusively manage. Our contract with the SBFE to manage this database is scheduled to expire in 2012, unless renewed by mutual agreement of the parties. The information comprising the database is generally not owned by us, and the participating organizations could discontinue contributing information to the database or our management contract may not be renewed; however, we believe that such an event is unlikely because contributors to the database use the aggregated information in the database to conduct their business and we have a good working relationship with the SBFE members as one of the original founders of this database.
 
Other databases we have compiled include loan; credit card; public records and leasing history data; trade accounts receivable performance; and Secretary of State and Securities and Exchange Commission registration information. We also offer scoring and analytical services that provide additional information to help mitigate the credit risk assumed by our customers. We also have a marketing database which hosts approximately 47 million commercial demographic data records from around the world helping companies to identify corporate family structures for enterprise visibility of customers and suppliers.
 
OUR BUSINESS STRATEGY
 
Our strategic objective is to be the trusted provider of information driven solutions that empower our customers with the ability to make critical decisions with greater confidence. Data is at the core of our value proposition. Leveraging our extensive resources, we deliver differentiated decisions through advanced data, analytics and technology. Our comprehensive set of data assets can provide a complete, 360 degree view of the consumer’s financial potential and opportunity including their propensity, ability and capacity to pay. Our long-term corporate growth strategy is driven by the following initiatives:
 
 
Increase penetration of our customers’ information solutions needs. We seek to increase our share of customers’ spending on information-related services through the development and introduction of new products such as ID management, pricing our services in accordance with the value they create, increasing the range of current services utilized by our customers, and improving the quality of sales and customer support interactions with consumers. We are also helping customers address increasing compliance requirements through the development of new products.
 
 
Deploy decisioning technologies and analytics globally. We continue to invest in and develop new technology to enhance the functionality, cost-effectiveness and security of the services we offer and further differentiate our products from those offered by our competitors. In addition to custom products for large customers, we develop off-the-shelf, decisioning technology platforms that are more cost-effective for medium- and smaller-sized customers. We also develop predictive scores and analytics to help customers acquire new customers and manage their existing customer relationships. We develop a broad array of industry, risk management, cross-sell and account acquisition models to enhance the precision of our customers’ decisioning activities.
 
 
Invest in unique data sources. We continue to invest in and acquire unique sources of credit and non-credit information to enhance the variety and quality of our services while increasing customers’ confidence in information-based business decisions. Areas of focus for investment in new sources of data include, among others, positive payment data, real estate data and new commercial business data. As an example, we acquired IXI Corporation in 2009, which added valuable and unique U.S. consumer data related to employment and financial assets which broadens and enriches the types of services we can offer our customers.
 
 
Pursue new vertical markets and expand into emerging markets. We see numerous opportunities to expand into emerging markets both in the U.S. and internationally. In the U.S., our Capital Markets area offers unique products which enable investors and underwriters to have a more current and relevant understanding of the inherent risk in a portfolio of loans. Our Mortgage Services business continues to expand its presence in the mortgage value chain with a broader offering of mortgage underwriting services. During 2010, we acquired Anakam, Inc. which is a provider of large-scale, software-based, multi-factor authentication solutions. Internationally, we are investing in and building Russian and Indian ventures, as well as our existing served markets.
 
 
7

 

COMPETITION
 
The market for our products and services is highly competitive and is subject to constant change. Our competitors vary widely in size and the nature of the products and services they offer. Sources of competition are numerous and include the following:
 
 
Competition for our consumer information solutions and personal solutions products varies by both application and industry, but generally includes two global consumer credit reporting companies, Experian, and TransUnion, both of which offer a product suite similar to ours, and LifeLock, a national provider of personal identity theft protection products. There are also a large number of smaller competitors who offer competing products in specialized areas (such as fraud prevention, risk management and application processing and decisioning solutions) and software companies offering credit modeling services or analytical tools. We believe that our products offer our customers an advantage over those of our competitors because of the quality of our data files, which we believe to be superior in terms of depth, accuracy and availability. Other differentiators include our decisioning technology and the capabilities of our analytical services. Our competitive strategy is to emphasize customer solutions and quality while remaining competitive on price. Our marketing services products also compete with the foregoing companies and others who offer demographic information products, including Acxiom Corporation, Harte-Hanks, Inc. and infoGROUP, Inc. We also compete with Fair Isaac Corporation with respect to our analytical tools.
 
 
Competition for our commercial solutions products primarily includes Experian and The Dun & Bradstreet Corporation and providers of these services in the international markets we serve. We believe our U.S. small business loan information from financial institutions creates a unique database and product for the small business segment of that market.
 
 
Competition for our employment and income verification services includes large employers who serve their own needs through in-house systems to manage verification as well as regional online verification companies, such as Verify Jobs and First Advantage, who offer verification services along with other human resources and tax services. Competition for complementary TWN Services includes payroll processors such as Automatic Data Processing, Inc., or ADP, Paychex, Inc. and Ceridian Corporation. Competitors of our Tax Management Services include in-house management of this function primarily by large employers; ADP; and a number of smaller regional firms that offer tax management services (including Barnett Associates, Thomas & Thorngren, UC Advantage). Talent Management Services competitors include assessment service providers that offer proprietary content (Previsor, Inc., Development Dimensions International, Brainbench, Inc.), human resources consulting firms (AON Corporation, Towers Watson, Right Management Consulting) and assessment or test publishers that have proprietary delivery platforms (Devine Group, Inc., Hogan Assessments Systems, Inc., SHL Group plc).
 
While we believe that none of our competitors offers the same mix of products and services as we do, certain competitors may have larger shares of particular geographic or product markets or operate in geographic areas where we do not currently have a presence.
 
We assess the principal competitive factors affecting our markets to include: product attributes such as quality, adaptability, scalability, interoperability, functionality and ease-of-use; product price; technical performance; access to unique proprietary databases; availability in application service provider, or ASP, format; quickness of response, flexibility and customer services and support; effectiveness of sales and marketing efforts; existing market penetration; new product innovation; and our reputation as a trusted steward of information.
 
MARKETS AND CUSTOMERS
 
Our products and services serve clients across a wide range of industries, including financial services, mortgage, human resources, consumer, commercial, telecommunications, retail, automotive, utilities, brokerage, healthcare and insurance industries, as well as state and federal governments. We also serve consumers directly. Our revenue stream is highly diversified with our largest customer providing only 3% of total revenue. The following table summarizes the various end-user markets we serve:

 
8

 

   
Percentage of
Consolidated Revenue
 
   
2010
   
2009
 
Financial
    26 %     26 %
Mortgage
    15 %     14 %
Employers
    11 %     10 %
Consumer
    10 %     10 %
Commercial
    8 %     7 %
Telecommunications
    7 %     6 %
Retail
    5 %     5 %
Automotive
    4 %     4 %
Other (1)
    14 %     18 %
            100 %           100 %
 
(1)
Other includes revenue from marketing services, government, insurance and health care end-users.
 
We market our products and services primarily through our own direct sales organization that is organized around sales teams that focus on customer segments typically aligned by vertical markets and geography. Sales groups are based in our headquarters in Atlanta, Georgia, and field offices located in the U.S. and in the countries where we have operations. We also market our products and services through indirect channels, including alliance partners, joint ventures and other resellers. In addition, we sell through direct mail and various websites, such as www.equifax.com.
 
Our largest geographic market segments are North America (the U.S. and Canada); Europe (the U.K., Spain and Portugal); and Latin America (Argentina, Brazil, Chile, Ecuador, El Salvador, Honduras, Paraguay, Peru and Uruguay). We also maintain support operations in Costa Rica and the Republic of Ireland. We own an equity interest in a consumer credit information company in Russia. During 2009, we formed a joint venture to provide a broad range of credit data and information solutions in India.
 
 
9

 

Revenue from international customers, including end-users and resellers, amounted to 27% of our total revenue in 2010 and 2009 and 29% of our total revenue in 2008.
 
TECHNOLOGY AND INTELLECTUAL PROPERTY
 
We generally seek protection under federal, state and foreign laws for strategic or financially important intellectual property developed in connection with our business. Certain intellectual property, where appropriate, is protected by registration under applicable trademark laws or by prosecution of patent applications. We own several patents registered in the U.S. and certain foreign countries. We also have certain registered trademarks in the U.S. and in many foreign countries. The most important of these are “Equifax,” “TALX”, “The Work Number” and many variations thereof. These trademarks are used in connection with most of our product lines and services. Although these patents and trademarks are important and valuable assets in the aggregate, no single patent, group of patents or trademark, other than our Equifax trademark, is critical to the success of our business.
 
We license other companies to use certain data, technology and other intellectual property rights we own or control, primarily as core components of our products and services, on terms that are consistent with customary industry standards and that are designed to protect our interest in our intellectual property.
 
We are licensed by others to use certain data, technology and other intellectual property rights they own or control, none of which is material to our business except for a license from Fair Isaac Corporation, relating to certain credit-scoring algorithms and the right to sell credit scores derived from them. This license has a five-year term expiring in June 2013 and provides for usage-based fees. Additionally, the licenses do not contain early termination provisions except for standard provisions providing the right to terminate in the event of breach by the other party. We do not hold any franchises or concessions that are material to our business or results of operations.
 
INFORMATION SECURITY AND GOVERNMENT REGULATION
 
Safeguarding the privacy and security of consumer credit information, whether delivered online or in an offline format, is a top priority. We recognize the importance of secure online transactions and we maintain physical, administrative, and technical safeguards to protect personal and business identifiable information. We have security protocols and measures in place to protect information from unauthorized access or alteration. These measures include internal and external firewalls, physical security and technological security measures, and encryption of certain data.
 
Our databases are regularly updated by information provided by financial institutions, telecommunications companies, other trade credit providers, employers, public records vendors and government agencies. Various laws and regulations govern the collection and use of this information. These laws and regulations impact how we are able to provide information to our customers and have significantly increased our compliance costs. We are subject to differing laws and regulations depending on where we operate.
 
U.S. Data and Privacy Protection
 
Our U.S. operations are subject to various federal and state laws and regulations governing the collection, protection and use of consumer credit and other information, and imposing sanctions for the misuse of such information or unauthorized access to data. Many of these provisions also affect our customers’ use of consumer credit or other data we furnish. The information underlying our North America Commercial Services business is less regulated than the other portions of our business.
 
These laws and regulations that may apply to portions of our business include, but are not limited to, the following:
 
 
The Fair Credit Reporting Act, or FCRA, which governs among other things the reporting of information to consumer reporting agencies that engage in the practice of assembling or evaluating certain information relating to consumers, including our credit reporting business and employment verification; making prescreened offers of credit; the sharing of consumer report information among affiliated and unaffiliated third parties; access to credit scores; and requirements for data furnishers and users of consumer report information. Violation of the FCRA, or of similar state laws, can result in an award of actual damages, as well as statutory and/or punitive damages in the event of a willful violation.
 
 
10

 

 
The Fair and Accurate Credit Transactions Act of 2003, or FACT Act, which amended the FCRA and requires, among other things, nationwide consumer credit reporting agencies, such as us, upon the request of a consumer, to place a fraud alert in the consumer’s credit file stating that the consumer may be the victim of identity theft or other fraud, and furnish a free annual credit file disclosure to consumers through a centralized request facility we have established with the other nationwide credit reporting agencies. FACT Act regulations also require financial institutions to develop policies and procedures to identify potential identity theft, and consumer credit report notice requirements for lenders that use consumer report information in connection with risk-based credit pricing actions. Entities that furnish information to consumer reporting agencies are required to implement procedures and policies regarding the accuracy and integrity of the furnished information and regarding the correction of previously furnished information that is later determined to be inaccurate. Mortgage lenders are required to disclose credit scores to consumers. Additionally, the FACT Act prohibits a business that receives consumer information from an affiliate from using that information for marketing purposes unless the consumer is first provided a notice and an opportunity to direct the business not to use the information for such marketing purposes (“opt-out”), subject to certain exceptions.
 
 
The Financial Services Modernization Act of 1999, or Gramm-Leach-Bliley Act, or GLB, which, among other things, regulates the use of non-public personal financial information of consumers that is held by financial institutions. Equifax is subject to various GLB provisions, including rules relating to the physical, administrative and technological protection of non-public personal financial information. Breach of the GLB can result in civil and/or criminal liability and sanctions by regulatory authorities, such as fines of up to $100,000 per violation and up to five years imprisonment for individuals.
 
 
The Health Insurance Portability and Accountability Act of 1996, or HIPAA, which requires reasonable safeguards to prevent intentional or unintentional use or disclosure of protected health information.
 
 
Federal and state laws governing the use of the Internet and regulating telemarketing, including the federal Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, or CAN-SPAM, which regulates commercial email, prohibits false or misleading header information, requires that a commercial email be identified as an advertisement, and requires that commercial emails give recipients an opt-out method. Senate Bill 3386, signed into federal law on December 29, 2010, seeks to protect online consumers from unfair and deceptive sales tactics on the Internet. Other Internet privacy laws and regulations have been proposed from time to time to address digital marketing, i.e., how personal information is collected and distributed online, including behavioral advertising.
 
 
Fannie Mae and Freddie Mac regulations applicable to our credit reporting and mortgage solutions products, the Real Estate Settlement Procedures Act and HUD’s Regulation X, which requires the disclosure of certain basic information to borrowers concerning settlement costs and prohibits the charging of unearned fees and certain “kickbacks” or other fees for referrals in connection with a residential mortgage settlement service.
 
On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (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. The Dodd-Frank Act will allow consumers free access to their credit score if their score negatively affects them in a financial transaction or a hiring decision, and also gives consumers access to credit score disclosures as part of an adverse action and risk-based pricing notice. 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.
 
 
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A number of states in the U.S. have passed versions of security breach notification and credit file freeze legislation. A file freeze enables consumers to place and lift a freeze on access to their credit files. File freeze laws impose differing requirements on credit reporting agencies with respect to how and when to respond to such credit file freeze requests and in the fees, if any, the agencies may charge for freeze-related actions.
 
International Data and Privacy Protection
 
We are subject to data protection, privacy and consumer credit laws and regulations in the foreign countries where we do business.
 
 
In Canada, the Personal Information Protection and Electronic Documents Act (2000) applies to organizations with respect to personal information that they collect, use or disclose in the course of commercial activities. It requires compliance with the National Standard of Canada Model Code for the Protection of Personal Information, covering accountability and identifying purposes, consent, collection, use, disclosure, retention, accuracy, safeguards, individual access and compliance. The Federal Privacy Commissioner is invested with powers of investigation and intervention, and provisions of Canadian law regarding civil liability apply in the event of unlawful processing which is prejudicial to the persons concerned.
 
 
In Europe, Equifax is subject to the European Union, or EU, data protection laws, including the comprehensive EU Directive on Data Protection (1995), which imposes a number of obligations on Equifax with respect to use of personal data, and includes a prohibition on the transfer of personal information from the EU to other countries that do not provide consumers with an “adequate” level of privacy or security. The EU standard for adequacy is generally stricter and more comprehensive than that of the U.S. and most other countries. In the U.K., in addition to the EU Directive on Data Protection, the Data Protection Act of 1998 regulates the manner in which we can use third-party data. In addition, regulatory limitations affect our use of the Electoral Roll, one of our key data sources in the U.K. Generally, the data underlying the products offered by our U.K. Information Services and Personal Solutions product lines, excluding our Commercial Services products, are subject to these regulations. In Spain and Portugal, the privacy laws which are subject to the EU Directive on Data Protection regulate all credit bureau and personal solutions activities. Except for negative data, the laws in Spain and Portugal generally require consumer consent for all Equifax activities.
 
 
In Latin America, consumer data protection and privacy laws and regulations exist in Argentina, Chile, Peru and Uruguay. Uruguay generally follows the EU data protection model. There are also constitutional provisions in Argentina, Brazil, Chile, Peru and certain other countries which declare the right to seek judicial protection regarding the use of personal data, and in many of those countries grant individuals the right to access and correction of information in the possession of data controllers.
 
Tax Management Services
 
The Tax Management business within our TALX segment is potentially impacted by changes in U.S. tax laws or interpretations, for example, those pertaining to work opportunity tax credits and unemployment compensation claims. A subsidiary of TALX, Talent Management, provides employee testing, assessment and talent management services to the federal government through a number of primary contracts and subcontracts with federal agencies, including the Transportation Security Administration. These contracts may be adversely affected by changes in U.S. federal government programs or contractor requirements, including the adoption of new laws or regulations.
 
Environmental Regulation
 
We are subject to federal, state and local laws and regulations in the areas of safety, health and environmental protection. Compliance with these laws and regulations has not in the past had any material effect on our earnings, capital expenditures or competitive position. However, the effect of such compliance in the future cannot be predicted. We believe that we are in material compliance with applicable federal, state and local safety, health and environmental regulations.
 
 
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PERSONNEL
 
Equifax employed approximately 6,500 employees in 16 countries as of December 31, 2010. None of our U.S. employees are subject to a collective bargaining agreement and no work stoppages have been experienced. Pursuant to local laws, certain of our employees in Argentina, Brazil and Spain are covered under government-mandated collective bargaining regulations that govern general salary and compensation matters, basic benefits and hours of work.
 
EXECUTIVE OFFICERS OF EQUIFAX
 
The executive officers of Equifax and their ages and titles are set forth below. Business experience and other information is provided in accordance with SEC rules.
 
Richard F. Smith (51) has been Chairman and Chief Executive Officer since December 15, 2005. He was named Chairman-Elect and Chief Executive Officer effective September 19, 2005 and was elected as a Director on September 22, 2005. Prior to that, Mr. Smith served as Chief Operating Officer, GE Insurance Solutions, from 2004 to September 2005 and President and Chief Executive Officer of GE Property and Casualty Reinsurance from 2003 to 2004.
 
Lee Adrean (59) has been Corporate Vice President and Chief Financial Officer since October 2006. Prior to joining Equifax, he served as Executive Vice President and Chief Financial Officer of NDCHealth Corporation from 2004 to 2006. Prior thereto, he served as Executive Vice President and Chief Financial Officer of EarthLink, Inc. from 2000 until 2004.
 
Kent E. Mast (67) has served as Corporate Vice President and Chief Legal Officer since 2000. His responsibilities include legal services, global sourcing, security and compliance, government and legislative relations, corporate governance and privacy functions.
 
Coretha M. Rushing (54) has been Corporate Vice President and Chief Human Resources Officer since 2006. Prior to joining Equifax, she served as an executive coach and HR Consultant with Atlanta-based Cameron Wesley LLC. Prior thereto, she was Senior Vice President of Human Resources at The Coca-Cola Company, where she was employed from 1996 until 2004.
 
Paul J. Springman (65) has served as Corporate Vice President and Chief Marketing Officer since February 2004. Prior thereto, he was head of the Predictive Sciences unit from August 2002 until February 2004.
 
David C. Webb (55) became Chief Information Officer on January 19, 2010. Prior thereto, he served as Chief Operations Officer for SVB Financial Corp. from 2008, and from 2004 to 2008 was Chief Information Officer. Mr. Webb was Vice President, Investment Banking Division at Goldman Sachs, a leading global investment banking, securities and investment management firm, from 1999 to 2004. He was Chief Information Officer at Bank One from 1997 to 1999.
 
Rodolfo M. Ploder (50) has been President, U.S. Consumer Information Solutions since July 2010. Prior thereto, he served as President, International from January 2007 until June 2010. Prior thereto, he was Group Executive, Latin America from February 2004 to January 2007.
 
J. Dann Adams (53) has been President of Equifax’s TALX subsidiary since July 2010. Prior thereto, he served as President, U.S. Consumer Information Solutions from 2007 to June 2010. Prior thereto, he served as Group Executive, North America Information Services from November 2003 until December 2006.
 
Paulino R. Barros (54) has been President, International since July 2010. Prior thereto, he served as President of PB&C Global Investments, LLC, an international consulting and investment firm. Prior thereto, he was President of Global Operations for AT&T.
 
Joseph M. Loughran, III (43) has been President, North America Personal Solutions since January 4, 2010. Prior thereto, he was Senior Vice President — Corporate Development from April 2006 to December 2009. Prior to joining Equifax he held various executive roles at BellSouth Corporation from May 2001 to April 2006, including most recently Managing Director-Corporate Strategy and Planning from May 2005 to April 2006. Prior to joining BellSouth, Mr. Loughran held various roles with McKinsey & Company, King & Spalding, and Lazard Frères & Co.
 
 
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Alejandro (“Alex”) Gonzalez (41) has been President, North America Commercial Solutions since January 4, 2010. Prior thereto, he was Senior Vice President of Strategic Marketing from January 2006 to December 2009, and Customer Experience Leader for GE Insurance Solutions from January 2005 to December 2005.
 
Nuala M. King (57) has been Senior Vice President and Controller since May 2006. Prior thereto, she was Vice President and Corporate Controller from March 2004 to April 2006. Prior to joining Equifax, Ms. King served as Corporate Controller for UPS Capital from March 2001 until March 2004.
 
FORWARD-LOOKING STATEMENTS
 
This report contains information that may constitute “forward-looking statements.” Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” 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 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 below in Item 1A. Risk Factors, and elsewhere in this report and those described from time to time in our future reports filed with the United States Securities and Exchange Commission, or SEC. 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.
 
AVAILABLE INFORMATION
 
Detailed information about us is contained in our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other reports, and amendments to those reports, that we file with, or furnish to, the SEC. These reports are available free of charge at our website, www.equifax.com, as soon as reasonably practicable after we electronically file such reports with or furnish such reports to the SEC. However, our website and any contents thereof should not be considered to be incorporated by reference into this document. We will furnish copies of such reports free of charge upon written request to Corporate Secretary, Equifax Inc., P.O. Box 4081, Atlanta, Georgia, 30302.
 
ITEM 1A. RISK FACTORS
 
Our business faces a variety of risks and uncertainties, including those described below, and may include additional risks and uncertainties not presently known to us or that we currently deem immaterial. If any of the events or circumstances described below occurs, our business, financial results or results of operations may be adversely impacted. These risk factors should be read in conjunction with the other information in this Form 10-K.
 
Weakness in consumer lending activity could materially adversely affect us.
 
Business customers use our credit information and related analytical services and data to process applications for new credit cards, automobile loans, home and equity loans and other consumer loans, and to manage their existing credit relationships. Bank and other lenders’ willingness to extend credit is adversely affected by elevated consumer delinquency and loan losses in a weak economy. Consumer demand for credit (i.e., rates of spending and levels of indebtedness) also tends to grow more slowly or decline during periods of economic contraction or slow economic growth. High or rising rates of unemployment and interest, declines in income, home prices, or investment values, lower consumer confidence and reduced access to credit adversely affect demand for our products and services, and consequently our revenue, as consumers may continue to postpone or reduce their spending and use of credit, and lenders may reduce the amount of credit offered or available.
 
 
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The loss of access to credit and other data from external sources could harm our ability to provide our products and services.
 
We rely extensively upon data from external sources to maintain our proprietary and non-proprietary databases, including data received from customers, strategic partners and various government and public record sources. This includes the widespread and voluntary contribution of credit data from most lenders in the U.S and many other markets as well as the contribution of data under proprietary contractual agreements, such as employers contribution of employment and income data to The Work Number, financial institutions’ contribution of individual financial data to IXI, and financial institutions’ contribution of small business borrowing information to the Small Business Financial Exchange. Our data sources could withdraw their data from us for a variety of reasons, including legislatively or judicially imposed restrictions on use. We also compete with several of our third-party data suppliers. If a substantial number of data sources or certain key data sources were to withdraw or be unable to provide their data, if we were to lose access to data due to government regulation, or if the collection of data becomes uneconomical, our ability to provide products and services to our clients could be materially adversely impacted, which could result in decreased revenue, net income and earnings per share.
 
Our markets are highly competitive and new product introductions and pricing strategies being offered by our competitors could decrease our sales and market share or require us to reduce our prices in a manner that reduces our operating margins.
 
We operate in a number of geographic, product and service markets that are highly competitive. Competitors may develop products and services that are superior to or that achieve greater market acceptance than our products and services. The size of our competitors varies across market segments, as do the resources we have allocated to the segments we target. Therefore, some of our competitors may have significantly greater financial, technical, marketing or other resources than we do in one or more of our market segments, or overall, as is the case in Brazil and the U.K., markets where we face a larger competitor. As a result, our competitors may be in a position to respond more quickly than we can to new or emerging technologies and changes in customer requirements, or may devote greater resources than we can to the development, promotion, sale and support of products and services. Moreover, new competitors or alliances among our competitors may emerge and potentially reduce our market share, revenue or margins.
 
Some of our competitors may choose to sell products competitive to ours at lower prices by accepting lower margins and profitability, or may be able to sell products competitive to ours at lower prices given proprietary ownership of data, technological superiority or economies of scale. Price reductions by our competitors could negatively impact our margins and results of operations and could also harm our ability to obtain new customers on favorable terms. Historically, certain of our key products have experienced declines in per unit pricing due to competitive factors and customer demand. Since a significant portion of our operating expenses is relatively fixed in nature due to sales, information technology and development and other costs, if we were unable to respond quickly enough to changes in competition or customer demand, we could experience further reductions in our operating margins.
 
If we do not introduce successful new products and services in a timely manner, our products and services will become obsolete and our operating results will suffer.
 
We generally sell our products in industries that are characterized by rapid technological changes, frequent new product and service introductions and changing industry standards. In addition, certain of the markets in which we operate are seasonal and cyclical. Without the timely introduction of new products, services and enhancements, our products and services will become technologically or commercially obsolete over time, in which case our revenue and operating results would suffer. The success of our new products and services will depend on several factors, including our ability to properly identify customer needs; innovate and develop new technologies, services and applications; successfully commercialize new technologies in a timely manner; produce and deliver our products in sufficient volumes on time; differentiate our offerings from competitor offerings; price our products competitively; anticipate our competitors’ development of new products, services or technological innovations; and control product quality in our product development process.
 
 
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The impact of consolidation in the financial services, mortgage, retail, telecommunications and other markets is difficult to predict and may harm our business.
 
The financial services, mortgage, retail and telecommunications industries are intensely competitive and have been subject to increasing consolidation. Continuation of the consolidation trends in these and other industries could result in lower average prices for the larger combined entities, lower combined purchases of our services than were purchased cumulatively by separate entities prior to consolidation, or existing competitors increasing their market share in newly consolidated entities, which could have a material adverse effect on our business, financial condition and results of operations if we are not retained or chosen as a service provider. We may not be able to compete successfully in an increasingly consolidated industry and cannot predict with certainty how industry consolidation will affect our competitors or us.
 
If we are unable to protect our information systems against data corruption, cyber-based attacks or network security breaches, our operations could be disrupted.
 
We are highly dependent on information technology networks and systems, including the Internet, to process, transmit and store electronic information. In particular, we depend on our information technology infrastructure for business-to-business and business-to-consumer electronic commerce. Security breaches of this infrastructure can create system disruptions, shutdowns or unauthorized disclosure of confidential information. If we are unable to prevent such breaches, our operations could be disrupted, or we may suffer financial damage or loss because of lost or misappropriated information.
 
Many of our products are accessed through the Internet, including our consumer and commercial information services. Security breaches in connection with the delivery of our products and services via the Internet may affect us or our industry and could be detrimental to our reputation, business, operating results and financial condition. We cannot be certain that advances in criminal capabilities, new discoveries in the field of cryptography or other developments will not compromise or breach the technology protecting the networks that access our products and services.
 
Dependence on outsourcing certain portions of our supply and distribution chain may adversely affect our ability to bring products to market and damage our reputation. Dependence on outsourced information technology and other administrative functions may impair our ability to operate effectively.
 
As part of our efforts to streamline operations and to reduce operating costs, we have outsourced various components of our application development, information technology, operational support and administrative functions and will continue to evaluate additional outsourcing. Although we have implemented service level agreements and have established monitoring controls, if our outsourcing vendors fail to perform their obligations in a timely manner or at satisfactory quality levels, our ability to bring products to market and support our customers, and our reputation could suffer. Any failure to perform on the part of these third party providers could impair our ability to operate effectively and could result in lower future revenue, unexecuted efficiencies and adversely impact our results of operations and our stock price. Much of our outsourcing takes place in developing countries and, as a result, may be subject to geopolitical uncertainty.
 
If we experience system failures, the delivery of our products and services to our customers could be delayed or interrupted, which could harm our business and reputation and result in the loss of customers.
 
Our ability to provide reliable service largely depends on the efficient and uninterrupted operation of our computer network systems and data centers. Some of these systems have been outsourced to third-party providers. Any significant interruptions could severely harm our business and reputation and result in a loss of customers and large expenses to repair or replace the facility. Our systems and operations could be exposed to damage or interruption from power disruption, fire, flood, telecommunications failure, unauthorized entry and computer viruses, terrorism or other natural or man-made disasters. The steps we have taken and are taking to prevent a system failure, including backup disaster recovery systems, may not be effective. Our property and business interruption insurance may not be adequate to compensate us for all losses or failures that may occur. Also, our third party insurance coverage will vary from time to time in both type and amount depending on availability, cost and our decisions with respect to risk retention.
 
 
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Interest rates and credit ratings could adversely affect our cost of capital and net income.
 
Rising interest rates, credit market dislocations and decisions and actions by credit rating agencies can affect the availability and cost of our funding. Credit rating downgrades or negative changes to ratings outlooks can increase our cost of capital and hurt our competitive position. Guidance from rating agencies as to acceptable leverage can affect our returns as well.
 
We may suffer adverse financial consequences if Computer Sciences Corporation requires us to purchase its credit reporting business at a time when the public equity or debt markets or other financing conditions are unfavorable to us.
 
In 1988, we entered into an agreement with Computer Sciences Corporation, or CSC, and certain of its affiliates under which CSC’s credit reporting agencies utilize our computerized credit database services. Under this agreement, CSC has an option, exercisable at any time, to sell its credit reporting business to us. The option expires in August 2013. The option exercise price will be determined by an appraisal process and would be due in cash within 180 days after the exercise of the option. We estimate that if CSC were to exercise the option at December 31, 2010, the option price would have been approximately $625 million to $700 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 the estimated amount. If CSC were to exercise its option, we would have to obtain additional sources of funding. We believe that this funding would be available from sources such as additional bank lines of credit and the issuance of public debt and/or equity. However, the availability and terms of any such capital financing would be subject to a number of factors, including credit or equity market conditions, general economic conditions and our financial performance and condition. Because we do not control the timing of the exercise, if any, by CSC of its option, we could be required to seek such financing and increase our debt levels at a time when market or other conditions are unfavorable.
 
The acquisition, integration or divestiture of businesses by us may not produce the desired financial or operating results.

During 2010, we completed the acquisition of various businesses in separate transactions, including Anakam, Inc. and several international acquisitions, and divested our APPRO loan origination software and Direct Marketing Services businesses to align with our strategic focus. Expected benefits, synergies and growth from these initiatives may not materialize as planned. We may have difficulty assimilating new businesses and their products, services, technologies, and personnel into our operations. These difficulties could disrupt our ongoing business, distract our management and workforce, increase our expenses and materially adversely affect our operating results and financial condition. Also, we may not be able to retain key management and other critical employees after an acquisition.
 
Our customers and we are subject to various current governmental regulations, and could be affected by new laws or regulations, compliance with which may cause us to incur significant expenses, and if we fail to maintain satisfactory compliance with certain regulations, we could be subject to civil or criminal penalties.
 
Our businesses are subject to various significant international, federal, state and local regulations, including but not limited to privacy and consumer data protection, health and safety, tax, labor and environmental regulations. These regulations are complex, change frequently and have tended to become more stringent over time. We may be required to incur significant expenses to comply with these regulations or to remedy violations of these regulations. Any failure by us to comply with applicable government regulations could also result in cessation of our operations or portions of our operations or impositions of fines and restrictions on our ability to carry on or expand our operations. In addition, because many of our products are regulated or sold into regulated industries, we must comply with additional regulations in marketing our products.
 
Enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations that may be issued by U.S. regulators implementing such legislation (as well as actions that may be taken by legislatures and regulatory bodies in other countries) could limit our ability to pursue business opportunities we might otherwise consider engaging in, impose additional costs on us, result in significant loss of revenue, impact the value of assets we hold, or otherwise significantly adversely affect our businesses.

 
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We also have agreements relating to the sale of our products to government entities, including through the Performance Assessment Network subsidiary of our TALX business and, as a result, we are subject to various statutes and regulations that apply to companies doing business with the government. The laws governing government contracts differ from the laws governing private contracts. For example, many government contracts contain pricing terms and conditions that are not applicable to private contracts. We are also subject to investigation for compliance with the regulations governing government contracts. A failure to comply with these regulations might result in suspension of these contracts, or administrative penalties.
 
Third parties may claim that we are infringing their intellectual property and we could suffer significant litigation or licensing expenses or be prevented from selling products or services.
 
From time to time, third parties may claim that one or more of our products or services infringe their intellectual property rights. We analyze and take action in response to such claims on a case by case basis. Any dispute or litigation regarding patents or other intellectual property could be costly and time-consuming due to the complexity of our technology and the uncertainty of intellectual property litigation and could divert our management and key personnel from our business operations. A claim of intellectual property infringement could force us to enter into a costly or restrictive license agreement, which might not be available under acceptable terms or at all, or could subject us to significant damages or to an injunction against development and sale of certain of our products or services. Our intellectual property portfolio may not be useful in asserting a counterclaim, or negotiating a license, in response to a claim of intellectual property infringement. In certain of our businesses we rely on third party intellectual property licenses and we cannot ensure that these licenses will be available to us in the future on favorable terms or at all.
 
Third parties may infringe our intellectual property and we may suffer competitive injury or expend significant resources enforcing our rights.
 
Our success increasingly depends on our proprietary technology. We rely on various intellectual property rights, including patents, copyrights, database rights, trademarks and trade secrets, as well as confidentiality provisions and licensing arrangements, to establish our proprietary rights. The extent to which such rights can be protected varies in different jurisdictions. If we do not enforce our intellectual property rights successfully our competitive position may suffer which could harm our operating results. Our pending patent applications, and our pending copyright and trademark registration applications, may not be allowed or competitors may challenge the validity or scope of our patents, copyrights or trademarks. In addition, our patents, copyrights, trademarks and other intellectual property rights may not provide us a significant competitive advantage.
 
We may need to spend significant resources monitoring our intellectual property rights and we may or may not be able to detect infringement by third parties. Our competitive position may be harmed if we cannot detect infringement and enforce our intellectual property rights quickly or at all. In some circumstances, enforcement may not be available to us because an infringer has a dominant intellectual property position or for other business reasons. In addition, competitors might avoid infringement by designing around our intellectual property rights or by developing non-infringing competing technologies. Intellectual property rights and our ability to enforce them may be unavailable or limited in some countries which could make it easier for competitors to capture market share and could result in lost revenue.
 
Economic, political and other risks associated with international sales and operations could adversely affect our results of operations.
 
Sales outside the U.S. make up approximately 27% of our net operating revenue and, as a result, our business is subject to various risks associated with doing business internationally. We anticipate that revenue from international operations will continue to represent an increasing portion of our total revenue. In addition, many of our employees, suppliers, job functions and facilities are increasingly located outside the U.S. Accordingly, our future results could be harmed by a variety of factors including changes in specific country or region political, economic or other conditions; trade protection measures; data privacy and consumer protection regulations; difficulty in staffing and managing widespread operations; differing labor, intellectual property protection and technology standards and regulations; business licensing requirements or other requirements relating to making foreign direct investments, which could increase our cost of doing business in certain jurisdictions, prevent us from entering certain markets, increase our operating costs or lead to penalties or restrictions; difficulties associated with repatriating cash generated or held abroad in a tax-efficient manner; and geopolitical instability, including terrorism and war.
 
 
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We earn revenue, pay expenses, own assets and incur liabilities in countries using currencies other than the U.S. dollar, including among others the British pound, the Canadian dollar, the Brazilian real, the Chilean peso and the Euro. Because our consolidated financial statements are presented in U.S. dollars, we must translate revenue, income and expenses, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period. Therefore, increases or decreases in the value of the U.S. dollar against other major currencies will affect our net operating revenues, operating income and the value of balance sheet items denominated in foreign currencies. Because of the geographic diversity of our operations, weaknesses in some currencies might be offset by strengths in others over time. We generally do not mitigate the risks associated with fluctuating exchange rates, although we may from time to time through forward contracts or other derivative instruments hedge a portion of our translational foreign currency exposure or exchange rate risks associated with material transactions which are denominated in a foreign currency. The use of such hedging activities may not offset any or more than a portion of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place. Accordingly, fluctuations in foreign currency exchange rates, particularly the strengthening of the U.S. dollar against major currencies, may materially affect our consolidated financial results.
 
In many foreign countries, particularly those with developing economies, it is common to engage in business practices that are prohibited by laws and regulations applicable to us, such as the Foreign Corrupt Practices Act and the newly passed but not yet implemented U.K. Bribery Act. Although we implement policies and procedures designed to facilitate compliance with these laws, our employees, contractors and agents, as well as those companies to which we outsource certain of our business operations, may take actions in violation of our policies. Any such violation, even if prohibited by our policies, could have a material adverse effect on our business and reputation.
 
Our business will suffer if we are not able to retain and hire key personnel.
 
Our future success depends partly on the continued service of our key development, sales, marketing, executive and administrative personnel. Additionally, increased retention risk exists in certain key areas of our operations that require specialized skills, such as maintenance of legacy computer systems and analytical modelers. If we fail to retain and hire a sufficient number of these personnel, we will not be able to maintain or expand our business. We believe our pay levels are competitive within the regions that we operate. However, there is intense competition for certain highly technical specialties in geographic areas where we continue to recruit, and it may become more difficult to retain our key employees.
 
Unfavorable results of legal proceedings could materially affect us.
 
We are subject to legal proceedings and claims, including putative class action claims, that have arisen out of the ordinary conduct of our business and are not yet resolved and additional claims may arise in the future. Results of legal proceedings cannot be predicted with certainty. We may be faced with significant monetary damages or injunctive relief against us that would materially adversely affect a portion of our business and might materially affect our financial condition and operating results.
 
Changes in income tax laws can significantly impact our net income.

Federal and state governments in the U.S. as well as a number of other governments around the world are currently facing significant fiscal pressures and have considered or may consider changes to their tax laws for revenue raising or economic competiveness reasons. Changes to tax laws can have immediate impacts, either favorable or unfavorable, on our results of operations and cash flows, and may impact our competitive position versus certain competitors who are domiciled in other jurisdictions and subject to different tax laws.

We are subject to a variety of other general risks and uncertainties inherent in doing business.

In addition to the specific factors discussed above, we are subject to risks that are inherent to doing business. These include growth rates, general economic and political conditions, customer satisfaction with the quality of our services, costs of obtaining insurance, changes in unemployment, and other events that can impact revenue and the cost of doing business.

 
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ITEM 1B. UNRESOLVED STAFF COMMENTS
 
Not applicable.
 
ITEM 2. PROPERTIES
 
Our executive offices are located at 1550 Peachtree Street, N.W., Atlanta, Georgia. On February 27, 2009, we notified the lessor that we intended to exercise our purchase option in accordance with the lease terms. We purchased the building for $29.0 million on February 26, 2010.
 
Our other properties are geographically distributed to meet sales and operating requirements worldwide. We consider these properties to be both suitable and adequate to meet our current operating requirements, and most of the space is being utilized. We ordinarily lease office space for conducting our business and are obligated under approximately 110 leases and other rental arrangements for our field locations. We owned five office buildings at December 31, 2010, including our executive offices mentioned above, two buildings which house our Atlanta, Georgia data center, as well as buildings utilized by our Latin America operations located in Sao Paulo, Brazil and Santiago, Chile. We also own 23.5 acres adjacent to the Atlanta, Georgia data center.
 
For additional information regarding our obligations under leases, see Note 6 of the Notes to Consolidated Financial Statements in this report. We believe that suitable additional space will be available to accommodate our future needs.
 
ITEM 3. 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. On December 14, 2010, the District Court granted the settling plaintiffs’ motion for reconsideration and ruled that the defendants will only have to re-notice those class members who filed a claim and objected to the settlement or opted out, with the cost for the re-notice to be deducted from the plaintiffs’ counsel fee award.
 
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.

 
20

 

For information regarding contingent tax claims raised by the Canada Revenue Agency, and our accounting for legal contingencies, see Note 6 of the Notes to Consolidated Financial Statements in this report.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
No matters were submitted to a vote of our security holders during the fourth quarter of 2010.
 
 
21

 

PART II
 
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 
Equifax’s common stock is traded on the New York Stock Exchange under the symbol “EFX.” As of January 31, 2011, Equifax had approximately 5,745 holders of record; however, Equifax believes the number of beneficial owners of common stock exceeds this number.
 
The table below sets forth the high and low sales prices per share of Equifax common stock, as reported on the New York Stock Exchange, for each quarter in the last two fiscal years and dividends declared per share:
 
   
High Sales Price
   
Low Sales Price
   
Dividends (1)
 
   
(In dollars)
 
2010
                 
First Quarter
  $ 36.63     $ 30.93     $ 0.04  
Second Quarter
  $ 36.22     $ 27.98     $ 0.04  
Third Quarter
  $ 32.29     $ 27.64     $ 0.04  
Fourth Quarter
  $ 36.13     $ 30.53     $ 0.16  
                         
2009
                       
First Quarter
  $ 28.43     $ 19.63     $ 0.04  
Second Quarter
  $ 29.62     $ 24.00     $ 0.04  
Third Quarter
  $ 29.33     $ 24.39     $ 0.04  
Fourth Quarter
  $ 31.64     $ 27.21     $ 0.04  
 
(1)
Equifax’s Senior Credit Facility restricts our ability to pay cash dividends on our capital stock or repurchase capital stock if a default exists or would result according to the terms of the credit agreement.
 
Shareholder Return Performance Graph
 
The following graph compares Equifax’s five-year cumulative total shareholder return with that of the Standard & Poor’s Composite Stock Index (S&P 500) and two peer group indices, the Dow Jones U.S. General Financial Index, and the S&P 500 Commercial & Professional Services Index which is a subset of the S&P Stock Index that includes companies that provide business-to-business services. The graph assumes that value of the investment in our Common Stock and each index was $100 on the last trading day of 2005 and that all quarterly dividends were reinvested without commissions. Our past performance may not be indicative of future performance.
 
 
22

 

COMPARATIVE FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG EQUIFAX INC., S&P 500, DOW JONES U.S. GENERAL FINANCIAL, AND S&P 500 COMMERCIAL & PROFESSIONAL SERVICES INDICES
 
 
   
Fiscal Year Ended December 31,
 
   
Initial
   
2006
   
2007
   
2008
   
2009
   
2010
 
Equifax, Inc.
    100.00       107.26       96.45       70.73       82.88       96.34  
S&P 500 Index
    100.00       115.79       122.16       76.96       97.33       111.99  
DJ US General Financial Index
    100.00       124.40       105.32       40.33       61.09       63.28  
S&P 500 Commercial & Professional Services
    100.00       111.06       96.95       70.57       80.02       89.60  
 
The table below contains information with respect to purchases made by or on behalf of Equifax of its common stock during the fourth quarter ended December 31, 2010:
 
 
23

 

Issuer Purchases of Equity Securities
 
                     
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)
 
September 30, 2010
                    $ 155,486,450  
October 1 - October 31, 2010
    2,426     $ -       -     $ 155,486,450  
November 1 - November 30, 2010
    1,232,223     $ 34.49       1,230,873     $ 113,033,640  
December 1 - December 31, 2010
    255,193     $ 35.45       241,943     $ 104,456,761  
Total
    1,489,842     $ 34.65       1,472,816     $ 104,456,761  
 
(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 and vesting of restricted stock, totaling 2,426 shares for the month of October 2010, 1,350 shares for the month of November 2010, and 13,250 shares for the month of December 2010.
 
(2)
Average price paid per share for shares purchased as part of our publicly-announced plan (includes brokerage commissions).
 
(3)
Under the share repurchase program authorized by our Board of Directors, we purchased 5.2 million common shares on the open market during the twelve months ended December 31, 2010 for $167.5 million. At December 31, 2010, the amount authorized for future share repurchases under the Program was $104.5 million.
 
Information relating to compensation plans under which the Company’s equity securities are authorized for issuance is included in the section captioned “Equity Compensation Plan Information” in our 2011 Proxy Statement and is incorporated herein by reference.
 
 
24

 

ITEM 6. SELECTED FINANCIAL DATA
 
The table below summarizes our selected historical financial information for each of the last five years. The summary of operations data for the years ended December 31, 2010, 2009 and 2008, and the balance sheet data as of December 31, 2010 and 2009, have been derived from our audited Consolidated Financial Statements included in this report. The summary of operations data for the years ended December 31, 2007 and 2006, and the balance sheet data as of December 31, 2008, 2007 and 2006, have been derived from our audited Consolidated Financial Statements not included in this report. The historical selected financial information may not be indicative of our future performance and should be read in conjunction with the information contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the Consolidated Financial Statements and the accompanying Notes to the Consolidated Financial Statements in this report.
 
   
Twelve Months Ended
 
   
December 31,
 
   
2010
   
2009(1)(2)(4)
   
2008(2)(4)
   
2007(5)
   
2006(4)
 
   
(In millions, except per share data)
 
Summary of Operations:
                             
Operating revenue
  $ 1,859.5     $ 1,716.0     $ 1,813.6     $ 1,706.7     $ 1,409.3  
Operating expenses
  $ 1,429.5     $ 1,334.2     $ 1,374.6     $ 1,261.7     $ 1,004.1  
Operating income
  $ 430.0     $ 381.8     $ 439.0     $ 445.0     $ 405.2  
Consolidated income from continuing operations
  $ 243.3     $ 224.4     $ 254.9     $ 252.7     $ 259.5  
Discontinued operations, net of tax (6)
  $ 31.5     $ 16.1     $ 24.1     $ 26.1     $ 19.5  
Net income attributable to Equifax
  $ 266.7     $ 233.9     $ 272.8     $ 272.7     $ 274.5  
Dividends paid to Equifax shareholders
  $ 35.2     $ 20.2     $ 20.5     $ 20.7     $ 20.3  
Diluted earnings per common share
                                       
Net income from continuing operations attributable to Equifax
  $ 1.86     $ 1.70     $ 1.91     $ 1.83     $ 1.97  
Discontinued operations attributable to Equifax
  $ 0.25     $ 0.13     $ 0.18     $ 0.19     $ 0.15  
Net income attributable to Equifax
  $ 2.11     $ 1.83     $ 2.09     $ 2.02     $ 2.12  
Cash dividends declared per common share
  $ 0.28     $ 0.16     $ 0.16     $ 0.16     $ 0.16  
Weighted-average common shares outstanding (diluted) (5)
    126.5       127.9       130.4       135.1       129.4  

   
As of December 31,
 
   
2010
   
2009(1)
   
2008
   
2007(3)(5)
   
2006
 
   
(In millions)
 
Balance Sheet Data:
                             
Total assets
  $ 3,433.6     $ 3,550.5     $ 3,260.3     $ 3,523.9     $ 1,790.6  
Short-term debt and current maturities
  $ 20.7     $ 183.2     $ 31.9     $ 222.1     $ 330.0  
Long-term debt, net of current portion
  $ 978.9     $ 990.9     $ 1,187.4     $ 1,165.2     $ 173.9  
Total debt, net
  $ 999.6     $ 1,174.1     $ 1,219.3     $ 1,387.3     $ 503.9  
Shareholders' equity
  $ 1,708.4     $ 1,615.0     $ 1,323.5     $ 1,408.0     $ 844.2  
 
(1)
On October 27, 2009, we acquired IXI Corporation for $124.0 million. On November 2, 2009, we acquired Rapid Reporting Verification Company for $72.5 million. The results of these acquisitions are included in our Consolidated Financial Statements subsequent to the acquisition dates. For additional information about these acquisitions, see Note 3 of the Notes to Consolidated Financial Statements in this report.
 
(2)
During 2009 and 2008, we recorded restructuring and asset write-down charges of $24.8 million and $16.8 million, respectively ($15.8 million and $10.5 million, respectively, net of tax). For additional information about these charges, see Note 11 of the Notes to the Consolidated Financial Statements in this report.
 
(3)
During 2007, total debt increased as a result of our issuance of $550.0 million of ten- and thirty-year fixed rate senior notes during the second quarter, our assumption of $75.0 million in senior guaranteed notes of TALX due 2012, and the commencement of a commercial paper program for general corporate purposes.
 
(4)
During 2009, we recorded a $7.3 million income tax benefit related to our ability to utilize foreign tax credits beyond 2009. In 2008 and 2006, we recorded income tax benefits of $14.6 million and $9.5 million, respectively, related to uncertain tax positions for which the statute of limitations expired.
 
 
25

 

(5)
On May 15, 2007, we acquired all the outstanding shares of TALX. Under the terms of the transaction, we issued 20.6 million shares of Equifax common stock and 1.9 million fully-vested options to purchase Equifax common stock, and paid approximately $288.1 million in cash, net of cash acquired. We also assumed TALX’s outstanding debt, which had a fair value totaling $177.6 million at May 15, 2007. The results of TALX’s operations are included in our Consolidated Financial Statements beginning on the date of acquisition.
 
(6)
On April 23, 2010, we sold our APPRO loan origination software business (“APPRO”) for approximately $72 million. On July 1, 2010, we sold the assets of our Direct Marketing Services division (“DMS”) for approximately $117 million.  Both of these were previously reported in our U.S. Consumer Information Solutions segment.  We have presented the APPRO and DMS operations as discontinued operations for all periods presented. For additional information about these divestitures, see Note 2 of the Notes to Consolidated Financial Statements in this report.
 
 
26

 
 
ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
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, income and identity 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 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, consumer wealth or demographic 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 Latin America, Europe and Canada Consumer. 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 through the mail and 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 financial, marketing and purchasing decisions related to businesses.
 
 
27

 
 
Geographic Information.  We currently operate in the following countries: Argentina, Brazil, Canada, Chile, Costa Rica, Ecuador, El Salvador, Honduras, Paraguay, Peru, Portugal, the Republic of Ireland, Spain, the U.K., Uruguay, and the U.S. Our operations in Costa Rica and the Republic of Ireland focus on data handling and customer support activities. We own an equity interest in a consumer credit information company in Russia. During 2009, we formed a joint venture to provide a broad range of credit data and information solutions in India. Of the countries we operate in, 73% of our revenue was generated in the U.S. during the twelve months ended December 31, 2010.
 
Key Performance Indicators.  Management focuses on a variety of key indicators to monitor operating and financial performance. These performance indicators include measurements of operating revenue, change in operating revenue, operating income, operating margin, net income, diluted earnings per share, cash provided by operating activities and capital expenditures. The key performance indicators for the twelve months ended December 31, 2010, 2009 and 2008, include the following:
 
   
Key Performance Indicators
 
   
Twelve Months Ended
 
   
December 31,
 
   
2010
   
2009
   
2008
 
   
(Dollars in millions, except per share data)
 
Operating revenue
  $ 1,859.5     $ 1,716.0     $ 1,813.6  
Operating revenue change  
    8 %     -5 %     6 %
Operating income
  $ 430.0     $ 381.8     $ 439.0  
Operating margin  
    23.1 %     22.2 %     24.2 %
Net income attributable to Equifax
  $ 266.7     $ 233.9     $ 272.8  
Diluted earnings per share from continuing operations
  $ 1.86     $ 1.70     $ 1.91  
Cash provided by operating activities
  $ 352.6     $ 418.4     $ 448.1  
Capital expenditures  
  $ 99.8     $ 70.7     $ 110.5  
 
Operational and Financial Highlights.
 
 
On April 23, 2010, we sold our APPRO loan origination software business (“APPRO”) for approximately $72 million.  On July 1, 2010, we sold the assets of our Direct Marketing Services division (“DMS”) for approximately $117 million.
 
 
On October 1, 2010, we acquired Anakam, Inc., a provider of large-scale, software-based, multi-factor authentication solutions for $64.3 million.  Anakam is part of our U.S. Consumer Information Solutions segment.
 
 
We repurchased 5.2 million shares of our common stock on the open market for $167.5 million during 2010.
 
 
Total debt was $1.0 billion at December 31, 2010, a decrease of $174.5 million from December 31, 2009.
 
Business Environment, Company Outlook and Strategy
 
Consumer and small business lending activity, which is one of the drivers of demand for our services, has stabilized in most markets around the world, but in most cases is not yet showing significant growth.  We expect growth in consumer lending to continue to lag the general economic recovery, particularly 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:
 
 
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.
 
 
28

 
 
 
We have reorganized our sales force and have key customer teams dedicated to our largest accounts.
 
We have divested two product lines that were considered non-strategic, APPRO loan origination software and Direct Marketing Services.
 
We continue to acquire new data assets and technologies and pursue international expansion.
 
We continue to focus on managing our expenses through the use of LEAN, Work Out and other process improvement initiatives.
 
For 2011, the operating environment will continue to create challenges for the marketing and growth of our traditional products and services, but will also create new opportunities for our more recently developed products which leverage our diverse data assets, analytical capabilities and technology to improve customers' decisioning capabilities and risk management activities.  In 2011, we expect improvements in the credit economy to be modest and therefore not contribute measurably to organic growth. However, we do expect to derive organic growth through our new product offerings and from the momentum we achieved as a result of our performance in 2010.
 
RESULTS OF OPERATIONS —
TWELVE MONTHS ENDED DECEMBER 31, 2010, 2009 AND 2008
 
Consolidated Financial Results
 
Operating Revenue
 
   
Twelve Months Ended December 31,
   
Change
 
                     
2010 vs. 2009
   
2009 vs. 2008
 
Operating Revenue
 
2010
   
2009
   
2008
   
$
   
%
   
$
   
%
 
   
(Dollars in millions)
       
                                           
U.S. Consumer Information Solutions
  $ 743.0     $ 712.2     $ 768.7     $ 30.8       4 %   $ (56.5 )     -7 %
International
    482.8       438.6       505.7       44.2       10 %     (67.1 )     -13 %
TALX
    395.6       346.4       305.1       49.2       14 %     41.3       14 %
North America Personal Solutions
    157.6       149.0       162.6       8.6       6 %     (13.6 )     -8 %
North America Commercial Solutions
    80.5       69.8       71.5       10.7       15 %     (1.7 )     -2 %
Consolidated operating revenue
  $ 1,859.5     $ 1,716.0     $ 1,813.6     $ 143.5       8 %   $ (97.6 )     -5 %
 
Revenue from continuing operations increased by 8% compared to 2009.  The favorable effect of foreign exchange rates increased revenue by $24.1 million, or 1.4%, in 2010 compared to the prior year period.  Revenue grew over 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.  For additional information about revenue fluctuations and operating income by segment, see “Segment Financial Results” below.
 
The decrease in revenue from continuing operations for 2009, as compared to 2008, was primarily due to continued global economic weakness, which significantly impacted demand for our U.S. Consumer Information Solutions, International and North America Personal Solutions business units when compared to 2008, as well as the unfavorable effects of foreign exchange rates. Foreign currency negatively impacted 2009 revenue by $48.9 million, or 3%. This decrease was partially offset by strength in our TALX segment and Mortgage Solutions business within U.S. Consumer Information Solutions.
 
 
29

 
  
Operating Expenses
 
   
Twelve Months Ended December 31,
   
Change
 
                     
2010 vs. 2009
   
2009 vs. 2008
 
Operating Expenses
 
2010
   
2009
   
2008
   
$
   
%
   
$
   
%
 
   
(Dollars in millions)
       
                                           
Consolidated cost of services  
  $ 759.9     $ 718.8     $ 741.8     $ 41.1       6 %   $ (23.0 )     -3 %
Consolidated selling, general and administrative expenses
    507.4       470.2       490.6       37.2       8 %     (20.4 )     -4 %
Consolidated depreciation and amortization expense  
    162.2       145.2       142.2       17.0       12 %     3.0       2 %
Consolidated operating expenses
  $ 1,429.5     $ 1,334.2     $ 1,374.6     $ 95.3       7 %   $ (40.4 )     -3 %
 
Cost of Services.  The increase in cost of services from continuing operations, when compared to 2009, was due primarily to the impact of increased salary and incentives expense of $6.3 million; the impact of changes in foreign currency exchange rates which increased our cost of services by $11.4 million; and the impact of our fourth quarter 2009 acquisitions of IXI Corporation and Rapid Reporting Verification Company.
 
The decrease in cost of services from continuing operations for 2009, as compared to the prior year, was primarily due to the impact of foreign currency translation. The impact of foreign currency translation decreased our cost of services by $19.2 million during 2009. The remaining decrease was due to lower technology outsourcing costs resulting from a renegotiated contract with a large service provider and lower personnel costs resulting from our third quarter 2008 and 2009 headcount reductions. This decrease was partially offset by increased production costs related to growth in demand for our settlement services products within our Mortgage Solutions business and increased postretirement employee benefit costs. We reclassified $13.2 million of selling, general and administrative expense during the twelve months ended December 31, 2008 to cost of services to conform to the current period presentation.
 
 Selling, General and Administrative Expenses.  The increase in selling, general and administrative expenses from continuing operations of $37.2 million in 2010 when compared to 2009, was due to changes in foreign exchange rates, which increased 2010 expense by $5.2 million, and increased salary, incentive and benefits expenses of $32.3 million, offset by $24.8 million in restructuring charges that were incurred during 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.
 
Selling, general and administrative expenses from continuing operations for 2009 decreased $20.4 million when compared to 2008. Of this decline, $12.7 million resulted from foreign currency translation. The remaining decrease was primarily due to reduced legal expenses, lower technology and occupancy costs and reduced personnel and incentive costs due to the 2008 and 2009 headcount reductions, partially offset by a $10.4 million increase in restructuring charges in 2009, increased advertising and insurance costs and higher postretirement employee benefits cost.
 
Depreciation and Amortization.  Depreciation and amortization expense from continuing operations in 2010 increased $17.0 million as compared to 2009 primarily due to our fourth quarter 2009 acquisitions which contributed $9.0 million of incremental depreciation and amortization expense, as well as the effect of recent investments in new products and technology infrastructure.
 
 Depreciation and amortization expense from continuing operations increased $3.0 million in 2009 over 2008. Excluding the positive foreign currency translation impact of $2.6 million, depreciation and amortization expense increased $5.6 million over the prior year. The increase is primarily due to our fourth quarter 2009 acquisitions of IXI Corporation and Rapid Reporting Verification Company which contributed $1.8 million of incremental depreciation and amortization expense and the inclusion of a full year of depreciation and amortization expense for our 2008 acquisitions, partially offset by the absence of a $2.4 million software write-down charge recognized in 2008.
 
 For additional information about our restructuring charges, see Note 11 of the Notes to the Consolidated Financial Statements in this report.
 
 
30

 
 
Operating Income and Operating Margin
 
   
Twelve Months Ended December 31,
   
Change
 
                     
2010 vs. 2009
   
2009 vs. 2008
 
Operating Income and Operating Margin
 
2010
   
2009
   
2008
   
$
   
%
   
$
   
%
 
   
(Dollars in millions)
       
                                           
Consolidated operating revenue
  $ 1,859.5     $ 1,716.0     $ 1,813.6     $ 143.5       8 %   $ (97.6 )     -5 %
Consolidated operating expenses
    (1,429.5 )     (1,334.2 )     (1,374.6 )     (95.3 )     7 %     40.4       -3 %
Consolidated operating income
  $ 430.0     $ 381.8     $ 439.0     $ 48.2       13 %   $ (57.2 )     -13 %
Consolidated operating margin
    23.1 %     22.2 %     24.2 %             0.9
pts
 
      -2.0 pts
 
The increase in operating income from continuing operations and operating margin for 2010, as compared to 2009, is primarily attributed to the 8% increase in revenue and $24.8 million of restructuring charges in 2009 that did not recur in 2010.
 
The decline in operating margin for 2009, as compared to 2008, was primarily due to lower operating income in our USCIS, International and North America Personal Solutions segments and $8.0 million of additional restructuring charges in 2009, partially offset by growth in our TALX operating income. The operating income declines for the aforementioned segments are attributed to reductions in revenue resulting from global economic weakness, partially offset by lower operating expenses due to headcount reductions, reduced incentive costs and lower technology outsourcing costs.
 
Other Expense, Net
 
   
Twelve Months Ended December 31,
   
Change
 
                     
2010 vs. 2009
   
2009 vs. 2008
 
Other Expense, Net
 
2010
   
2009
   
2008
   
$
   
%
   
$
   
%
 
   
(Dollars in millions)
       
                                           
Consolidated interest expense  
  $ 56.1     $ 57.0     $ 71.3     $ (0.9 )     -2 %   $ (14.3 )     -20 %
Consolidated other income, net
    (1.3 )     (6.2 )     (6.2 )     4.9       -79 %     -       0 %
Consolidated other expense, net  
  $ 54.8     $ 50.8     $ 65.1     $ 4.0       8 %   $ (14.3 )     -22 %
Average cost of debt
    5.2 %     4.8 %     5.3 %                                
Total consolidated debt, net, at year end  
  $ 999.6     $ 1,174.1     $ 1,219.3     $ (174.5 )     -15 %   $ (45.2 )     -4 %
 
The increase in other expense, net, from continuing operations for 2010, as compared to 2009, was primarily due to a decline in other income, net.  Other income, net, for 2009 included a $2.2 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 2010, when compared to 2009, as a decrease in our average debt balance from $1.18 billion to $1.07 billion more than offset an increase in the average interest rate on our total debt from 4.8% in 2009 to 5.2% in 2010.   The increase in our average interest rate paid was caused by a reduction in short term, floating rate commercial paper, while longer term fixed rate debt outstanding remained essentially unchanged.
 
The decrease in other expense, net, for 2009, as compared to 2008, was primarily due to lower interest rates on our floating rate debt, which drove the average cost of our total debt from 5.3% in 2008 to 4.8% in 2009, as well as a reduced level of debt outstanding during 2009. Our average debt balance fell to $1.18 billion in 2009 from $1.34 billion in 2008. For additional information about our debt agreements, see Note 5 of the Notes to the Consolidated Financial Statements in this report. Other income, net, for 2009 primarily includes a $2.2 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.  Other income, net in 2008 includes a $5.5 million gain on our repurchase of $20 million principal amount of ten-year senior notes due 2017.
 
 
31

 
 
Income Taxes
 
   
Twelve Months Ended December 31,
   
Change
 
                     
2010 vs. 2009
   
2009 vs. 2008
 
Provision for Income Taxes
 
2010
   
2009
   
2008
   
$
   
%
   
$
   
%
 
   
(Dollars in millions)
       
                                           
Consolidated provision for income taxes  
  $ 131.9     $ 106.6     $ 119.0     $ 25.3       24 %   $ (12.4 )     -10 %
Effective income tax rate
    35.1 %     32.2 %     31.8 %                                
 
Our effective tax rate was 35.1% for 2010, up from 32.2% for the same period in 2009.  The 2010 rate was higher due primarily to the prior year recognition of a $7.3 million income tax benefit related to our ability to utilize foreign tax credits beyond 2009, more favorable discrete items in 2009 related to foreign and state taxes and a 2009 investment loss in subsidiary, partially offset by a permanent federal deduction realized in 2010.  We expect our effective tax rate in 2011 to increase to a range of 36% to 38%.
 
Our effective income tax rate for 2009 was up slightly compared to 2008. The 2009 rate reflects the recognition of a $7.3 million income tax benefit in the fourth quarter of 2009 related to our ability to utilize foreign tax credits beyond 2009. Additionally, we recorded favorable discrete items in 2009 related to foreign and state taxes and an investment loss in a subsidiary. With the fourth quarter 2009 adjustments, we have recognized the benefit of foreign tax credit carryforwards that would have reduced future tax expense.  The 2008 rate reflects $14.6 million in income tax benefits that we recorded related to uncertain tax positions for which the statute of limitations had expired which resulted in a lower effective income tax rate in 2008 as compared to 2009.
 
Net Income
 
   
Twelve Months Ended December 31,
   
Change
 
                     
2010 vs. 2009
   
2009 vs. 2008
 
Net Income
 
2010
   
2009
   
2008
   
$
   
%
   
$
   
%
 
   
(In millions, except per share amounts)
       
                                           
Consolidated operating income
  $ 430.0     $ 381.8     $ 439.0     $ 48.2       13 %   $ (57.2 )     -13 %
Consolidated other expense, net
    (54.8 )     (50.8 )     (65.1 )     (4.0 )     8 %     14.3       -22 %
Consolidated provision for income taxes
    (131.9 )     (106.6 )     (119.0 )     (25.3 )     24 %     12.4       -10 %
Consolidated net income from continuing operations
  $ 243.3     $ 224.4     $ 254.9     $ 18.9       8 %   $ (30.5 )     -12 %
Discontinued operations, net of tax
  $ 31.5     $ 16.1     $ 24.1     $ 15.4       94 %   $ (8.0 )     -33 %
Net income attributable to noncontrolling interests
    (8.1 )     (6.6 )     (6.2 )     (1.5 )     22 %     (0.4 )     6 %
Net income attributable to Equifax
  $ 266.7     $ 233.9     $ 272.8     $ 32.8       14 %   $ (38.9 )     -14 %
Diluted earnings per common share
                                                       
Net income from continuing operations attributable to Equifax
  $ 1.86     $ 1.70     $ 1.91     $ 0.16       9 %   $ (0.21 )     -11 %
Discontinued operations attributable to Equifax
    0.25       0.13       0.18     $ 0.12       92 %   $ (0.05 )     -28 %
Net income attributable to Equifax
  $ 2.11     $ 1.83     $ 2.09     $ 0.28       15 %   $ (0.26 )     -12 %
Weighted-average shares used in computing diluted earnings per share
    126.5       127.9       130.4                                  
 
The increase in net income attributable to Equifax for 2010, as compared to 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.  Net income attributed to Equifax for 2010 also benefited from higher operating income, which grew generally in line with higher revenue.
 
The decrease in net income for 2009, as compared to 2008, was a function of lower operating income in three of our five businesses and $8.0 million of additional restructuring charges in 2009, partially offset by increased income from our TALX and North America Commercial Solutions segments and lower interest expense.
 
 
32

 
 
Segment Financial Results
 
U.S. Consumer Information Solutions
 
   
Twelve Months Ended December 31,
   
Change
 
                     
2010 vs. 2009
   
2009 vs. 2008
 
U.S. Consumer Information Solutions
 
2010
   
2009
   
2008
   
$
   
%
   
$
   
%
 
   
(Dollars in millions)
       
Operating revenue:
                                         
Online Consumer Information Solutions
  $ 485.2     $ 501.4     $ 566.5     $ (16.2 )     -3 %   $ (65.1 )     -11 %
Mortgage Solutions
    113.5       99.5       70.2       14.0       14 %     29.3       42 %
Consumer Financial Marketing Services
    144.3       111.3       132.0       33.0       30 %     (20.7 )     -16 %
Total operating revenue
  $ 743.0     $ 712.2     $ 768.7     $ 30.8       4 %   $ (56.5 )     -7 %
% of consolidated revenue
    40 %     41 %     42 %                                
Total operating income
  $ 269.8     $ 259.4     $ 298.9     $ 10.4       4 %   $ (39.5 )     -13 %
Operating margin
    36.3 %     36.4 %     38.9 %             -0.1
pts
 
      -2.5
pts
 
U.S. Consumer Information Solutions revenue increased 4% in 2010 as compared to 2009 as growth in Mortgage Solutions along with growth due to our acquisition of IXI Corporation in the fourth quarter of 2009 was partially offset by a small decline in online credit reporting revenue.  The decrease in revenue for 2009, as compared to 2008, was mainly due to continued weakness in the U.S. credit and retail economy, offset by growth in the Mortgage Solutions business due to increased activity associated with our settlement services products and increased mortgage refinancing activity in 2009 and 2010.
 
OCIS.  Revenue for 2010, as compared to 2009, declined primarily due to a reduction of online credit decision transaction volume of 5% caused by weakness in the U.S. consumer credit markets while pricing remained relatively flat year over year.  Revenue for 2009, as compared to the prior year, declined primarily due to a reduction of online credit decision transaction volume as consumer lending activity was lower than in 2008. The 18% decline in volume for 2009, from the prior year, was partially offset by a 4% increase in average revenue per transaction. This increase was attributable to a disproportionate decline in volume from large national accounts which are generally billed at a lower average price per transaction.
 
Mortgage Solutions.  Revenue for 2010 has increased, as compared to the prior year, due to favorable long-term interest rates that have resulted in higher consumer refinancing activity and increased home sales activity attributable to U.S. government incentives for housing purchases which expired on May 31, 2010. The 2009 increase in revenue, as compared to 2008, is due to increased activity associated with growth in demand for our settlement services products which resulted in increased revenue of $16.5 million over 2008, higher volumes of mortgage credit reporting related to increased refinance activity and incremental revenue from our acquisition of certain assets of a small mortgage credit reporting reseller.
 
 Consumer Financial Marketing Services.  The increase in revenue in 2010, as compared to 2009, was primarily due to our acquisition of IXI Corporation during the fourth quarter of 2009. Revenue decreased in 2009 as compared to 2008 as banks and other market participants reduced prescreen marketing volumes and negotiated lower prices for portfolio management services at a time of significant uncertainty in the consumer credit market.  This decline was partially offset by approximately $6 million of incremental revenue from our acquisition of IXI Corporation in October 2009.
 
 U.S. Consumer Information Solutions Operating Margin.  Operating margin remained relatively consistent in 2010, as compared to 2009.   The margin impact of amortization expense associated with the IXI acquisition was offset by expense leveraging resulting from revenue growth and expense reductions due to certain process streamlining activities.
 
Operating margin decreased for 2009, as compared to 2008, mainly due to revenue declines described above in our OCIS and Consumer Financial Marketing Services businesses. Our operating expenses generally do not decline at the same rate as our revenue due to a high portion of costs that are fixed rather than variable in the short term. The overall decline in revenue was partially offset by lower personnel costs due to headcount reductions, process efficiencies and lower technology outsourcing costs. The increases in revenue from our core mortgage and settlement services products also contributed to the USCIS margin decline as these products have higher variable costs and lower margins than traditional online database products.
 
 
33

 
 
International
 
   
Twelve Months Ended December 31,
   
Change
 
                     
2010 vs. 2009
   
2009 vs. 2008
 
International
 
2010
   
2009
   
2008
   
$
   
%
   
$
   
%
 
   
(Dollars in millions)
       
Operating revenue:
                                         
Latin America
  $ 231.3     $ 200.4     $ 219.9     $ 30.9       15 %   $ (19.5 )     -9 %
Europe
    137.6       138.4       175.0       (0.8 )     -1 %     (36.6 )     -21 %
Canada Consumer
    113.9       99.8       110.8       14.1       14 %     (11.0 )     -10 %
Total operating revenue
  $ 482.8     $ 438.6     $ 505.7     $ 44.2       10 %   $ (67.1 )     -13 %
% of consolidated revenue
    26 %     26 %     28 %                                
Total operating income
  $ 119.4     $ 118.9     $ 149.9     $ 0.5       0 %   $ (31.0 )     -21 %
Operating margin
    24.7 %     27.1 %     29.6 %             -2.4
pts
 
      -2.5
pts
 
International revenue increased in 2010, as compared to 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 $21.8 million, or 5%.  In local currency, International revenue was up 5% in 2010.  For 2009, as compared to 2008, revenue decreased primarily due to the negative impact of foreign currency translation and secondarily due to global economic weakness affecting several of our larger international country operations. Local currency fluctuation against the U.S. dollar negatively impacted our 2009 International revenue by $47.2 million, or 9%. In local currency, 2009 revenue was down 4%, as compared to the same period a year ago.
 
Latin America.  Revenue increased for 2010, as compared to the prior year by $30.9 million, or 15%, partially due to the favorable foreign currency impact of $14.3 million, or 7%. In local currency, revenue increased 8% from 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.
 
Revenue declined for 2009, as compared to the prior year, due to an unfavorable foreign currency impact of $18.9 million, or 9%. In local currency, 2009 revenue was approximately flat when compared to 2008. Local currency revenue declines in Brazil and Chile were offset by increased revenue in our other Latin American geographies resulting from increased volumes for our collection services and decisioning technology products. The revenue declines in Brazil and Chile were mainly due to lower volumes related to our online solutions, marketing products and decisioning technologies, resulting primarily from competitive factors in these geographies.
 
Europe.  The slight decrease in revenue for 2010, as compared to 2009, was due to an unfavorable foreign currency impact of $3.2 million, or 3%.  In local currency, revenue increased 2%, as compared to the same period in 2009.  The increase was due to growth in online transactions and a higher volume of subscriptions in the U.K. as well as higher registries usage in Spain and Portugal offset by declines in some of our other product segments.  The decline in revenue for 2009, as compared to the prior year, was partially due to the unfavorable foreign currency impact of $21.3 million, or 12%. In local currency, revenue declined 9% for 2009, as compared to the same period in 2008. The local currency declines were due to decreased volume in the U.K. caused by weakness in the U.K. economy affecting customer demand, which was partially offset by higher volumes and new customers for our online services and new collections products in Spain and Portugal.
 
Canada Consumer.  The $14.1 million increase in revenue for 2010, as compared to the prior year, was primarily due to favorable foreign currency impact of $10.6 million, or 11%.  In local currency, revenue increased 3% when compared to 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.  The decline in revenue for 2009, as compared to the prior year, was partially due to an unfavorable foreign currency impact of $7.0 million, or 6%. In local currency, revenue declined 4% for 2009, as compared to 2008. The decline in local currency was due to lower volumes related to our online solutions and marketing products resulting from weakness in the economy, partially offset by increased volumes for our analytical and decisioning technology products.
 
 
34

 
 
International Operating Margin.  Operating margin decreased for 2010, as compared to 2009, primarily due to a shift in product mix and increased operating expenses. Operating expenses increased 8% for 2010, in local currency, when compared to 2009, due to increased revenue and expense investments in new product development and increased sales force, particularly in Brazil.  Operating margin decreased for 2009, as compared to 2008, due to the revenue declines discussed above. Operating expenses decreased 1% for 2009, in local currency, when compared to 2008, compared to a 4% decline in revenue in local currency.
 
TALX
 
   
Twelve Months Ended December 31,
   
Change
 
                     
2010 vs. 2009
   
2009 vs. 2008
 
TALX
 
2010
   
2009
   
2008
   
$
   
%
   
$
   
%
 
   
(Dollars in millions)
       
Operating Revenue:
                                         
The Work Number
  $ 209.1     $ 158.2     $ 131.9     $ 50.9       32 %   $ 26.3       20 %
Tax and Talent Management
    186.5       188.2       173.2       (1.7 )     -1 %     15.0       9 %
Total operating revenue
  $ 395.6     $ 346.4     $ 305.1     $ 49.2       14 %   $ 41.3       14 %
% of consolidated revenue
    21 %     20 %     16 %                                
Total operating income
  $ 92.1     $ 75.4     $ 53.1     $ 16.7       22 %   $ 22.3       42 %
Operating margin
    23.3 %     21.8 %     17.4 %             1.5
pts
 
      4.4 pts
 
The Work Number.  Revenue from The Work Number increased $50.9 million, or 32%, in 2010 compared to 2009 due to mid-double digit growth 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.  Revenue increased in 2009, as compared to 2008, due to the increased volumes of verifications of consumer employment from government service agencies, who use our services to approve benefits to consumers under certain government programs, and verifications of employment and income by financial institutions, who confirm consumer data for use in underwriting decisions. Our acquisition of Rapid Reporting Verification Company in November 2009 provided approximately $5 million of incremental revenue.
 
Tax and Talent Management Services.  The decrease in revenue during 2010, as compared to the prior year, 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.  The increase in revenue during 2009, as compared to 2008, resulted from growth in our Tax Management Services business driven primarily by increased unemployment compensation claims activity due to the high levels of unemployment in the U.S., partially offset by declines in volume from our Talent Management Services business during the first half of the year, as demand was negatively impacted by reduced hiring activity by employers, particularly governmental agencies who are key clients, caused by the weakened economy and budgetary pressures.
 
TALX Operating Margin.  Operating margin increased 150 basis points for 2010, as compared to 2009, and 440 basis points in 2009, as compared to 2008, 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 for both periods.
 
North America Personal Solutions
 
   
Twelve Months Ended December 31,
   
Change
 
                     
2010 vs. 2009
   
2009 vs. 2008
 
North America Personal Solutions
 
2010
   
2009
   
2008
   
$
   
%
   
$
   
%
 
   
(Dollars in millions)
       
                                           
Total operating revenue
  $ 157.6     $ 149.0     $ 162.6     $ 8.6       6 %   $ (13.6 )     -8 %
% of consolidated revenue
    9 %     9 %     9 %                                
Total operating income
  $ 44.6     $ 34.3     $ 46.3     $ 10.3       30 %   $ (12.0 )     -26 %
Operating margin
    28.3 %     23.0 %     28.4 %             5.3
pts
 
      -5.4
pts
 
 
35

 
 
The increase in revenue for 2010, as compared to 2009, was primarily due to increased direct to customer, Equifax-branded subscription service revenue, which was up 11% from 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 and lower corporate breach revenues.  The operating margin increase was primarily due to the revenue growth and operating efficiencies.
 
Revenue declined for 2009, as compared to 2008, primarily due to lower transaction sales, as a result of lower levels of new consumer credit activity, and lower corporate data breach revenues. These declines were partially offset by direct to consumer, Equifax-branded subscription service revenue, which was up 4% for 2009, as compared to the prior year, driven by higher new sales and higher average revenue per subscription, reflecting additional features in the Equifax offering. Total subscription customers, including direct to consumer Equifax-branded services and subscriptions related to data breach offers, were 1.0 million at December 31, 2009. The operating margin decline in 2009, as compared to the prior year, was primarily due to the revenue decline discussed above, as well as increased advertising expenses, as the Company introduced a 2009 television advertising program in order to increase direct subscription sales.
 
North America Commercial Solutions
 
   
Twelve Months Ended December 31,
   
Change
 
                     
2010 vs. 2009
   
2009 vs. 2008
 
North America Commercial Solutions
 
2010
   
2009
   
2008
   
$
   
%
   
$
   
%
 
   
(Dollars in millions)
       
                                           
Total operating revenue  
  $ 80.5     $ 69.8     $ 71.5     $ 10.7       15 %   $ (1.7 )     -2 %
% of consolidated revenue
    4 %     4 %     4 %                                
Total operating income  
  $ 19.5     $ 15.1     $ 13.6     $ 4.4       29 %   $ 1.5       11 %
Operating margin
    24.2 %     21.7 %     19.0 %             2.5
pts
 
      2.7
pts
 
Revenue increased for 2010, as compared to 2009, $10.7 million, or 15%.  The favorable impact of changes in the U.S. – Canadian foreign exchange rate increased revenue by $2.3 million, or 3%.  In local currency, revenue increased 12% in 2010 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 2010 increased when compared to the prior year.  Operating margin increased for 2010, as compared to 2009, as the rapid rate in revenue growth exceeded growth in operating expenses.
 
Revenue declined for 2009, as compared to the prior year, due to the unfavorable impact of changes in the U.S. — Canadian foreign exchange rate of $1.7 million, or 2%. In local currency, 2009 revenue was flat when compared to 2008. Revenue declines in the U.S. and Canadian risk and marketing service revenues attributed to weakness in the U.S. and Canadian economies were offset by increased revenue from our data management products. Online transaction volume for U.S. commercial credit information products decreased 21% for 2009, as compared to the prior year, due to a slowdown in loan origination to small businesses. Operating margin increased for 2009, as compared to 2008, mainly due to reduced operating expenses resulting from lower personnel costs and discretionary expenses.
 
General Corporate Expense
 
   
Twelve Months Ended December 31,
   
Change
 
                     
2010 vs. 2009
   
2009 vs. 2008
 
General Corporate Expense
 
2010
   
2009
   
2008
   
$
   
%
   
$
   
%
 
   
(Dollars in millions)
       
                                                         
General corporate expense
  $ 115.4     $ 121.3     $ 122.8     $