NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2020
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
As used herein, the terms Equifax, the Company, we, our and us refer to Equifax Inc., a Georgia corporation, and its consolidated subsidiaries as a combined entity, except where it is clear that the terms mean only Equifax Inc.
Nature of Operations. We collect, analyze and manage various types of financial, demographic, employment and marketing information. Our products and services enable businesses to make credit and service decisions, manage their portfolio risk, automate or outsource certain payroll-related, tax and human resources business processes, and develop marketing strategies concerning consumers and commercial enterprises. We serve customers across a wide range of industries, including the financial services, mortgage, retail, telecommunications, utilities, automotive, brokerage, healthcare and insurance industries, as well as government agencies. We also enable consumers to manage and protect their financial health through a portfolio of products offered directly to consumers. As of June 30, 2020, we operated in the following countries: Argentina, Australia, Canada, Chile, Costa Rica, Ecuador, El Salvador, Honduras, India, Ireland, Mexico, New Zealand, Paraguay, Peru, Portugal, Spain, the United Kingdom, or U.K., Uruguay and the United States of America, or U.S. We also offer Equifax branded credit services in Russia through a joint venture, have investments in consumer and/or commercial credit information companies through joint ventures in Cambodia, Malaysia, Singapore and the United Arab Emirates and have an investment in a consumer and commercial credit information company in Brazil.
We develop, maintain and enhance secured proprietary information databases through the compilation of consumer specific data, including credit, income, employment, asset, liquidity, net worth and spending activity, and business data, including credit and business demographics, that we obtain from a variety of sources, such as credit granting institutions, and income and tax information primarily from large to mid-sized companies in the U.S. We process this information utilizing our proprietary information management systems. We also provide information, technology and services to support debt collections and recovery management.
Basis of Presentation. The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, the instructions to Form 10-Q and applicable sections of SEC Regulation S-X. This Form 10-Q should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in our annual report on Form 10-K for the year ended December 31, 2019 (“2019 Form 10-K”).
Our unaudited Consolidated Financial Statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the periods presented and are of a normal recurring nature.
Earnings Per Share. Our basic earnings per share, or EPS, is calculated as net income attributable to Equifax divided by the weighted-average number of common shares outstanding during the period. Diluted EPS is calculated to reflect the potential dilution that would occur if stock options, restricted stock units, or other contracts to issue common stock were exercised and resulted in additional common shares outstanding. The net income (loss) amounts used in both our basic and diluted EPS calculations are the same. A reconciliation of the weighted-average outstanding shares used in the two calculations is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(In millions)
|
|
|
|
|
|
|
Weighted-average shares outstanding (basic)
|
|
121.4
|
|
|
120.8
|
|
|
121.4
|
|
|
120.8
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
Stock options and restricted stock units
|
|
1.3
|
|
|
1.2
|
|
|
1.3
|
|
|
1.0
|
|
Weighted-average shares outstanding (diluted)
|
|
122.7
|
|
|
122.0
|
|
|
122.7
|
|
|
121.8
|
|
For the three months ended June 30, 2020 and 2019, stock options that were anti-dilutive were 0.7 million and 1.2 million, respectively. For the six months ended June 30, 2020 and 2019, stock options that were anti-dilutive were 0.8 million and 1.3 million, respectively.
Financial Instruments. Our financial instruments consist of cash and cash equivalents, accounts and notes receivable, accounts payable and short- and long-term debt. The carrying amounts of these items, other than long-term debt, approximate their fair market values due to the short-term nature of these instruments. The fair value of our fixed-rate debt is determined using Level 2 inputs such as quoted market prices for similar publicly traded instruments, and for non-publicly traded instruments through valuation techniques involving observable inputs based on the specific characteristics of the debt instrument. As of June 30, 2020 and December 31, 2019, the fair value of our long-term debt, including the current portion, was $4.7 billion and $3.6 billion, respectively, compared to its carrying value of $4.4 billion and $3.4 billion, respectively.
Fair Value Measurements. Fair value is determined based on the assumptions marketplace participants use in pricing the asset or liability. We use a three level fair value hierarchy to prioritize the inputs used in valuation techniques between observable inputs that reflect quoted prices in active markets, inputs other than quoted prices with observable market data and unobservable data (e.g., a company’s own data).
The following table presents items measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using:
|
|
|
|
|
Description
|
|
Fair Value of Assets
(Liabilities) at
June 30, 2020
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
(In millions)
|
|
|
|
|
|
|
Deferred Compensation Plan Assets(1)
|
|
$
|
34.5
|
|
|
$
|
34.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Deferred Compensation Plan Liability(1)
|
|
(34.5)
|
|
|
—
|
|
|
(34.5)
|
|
|
—
|
|
Total
|
|
$
|
—
|
|
|
$
|
34.5
|
|
|
$
|
(34.5)
|
|
|
$
|
—
|
|
(1) We maintain deferred compensation plans that allow for certain management employees to defer the receipt of compensation (such as salary, incentive compensation and commissions) until a later date based on the terms of the plan. The liability representing benefits accrued for plan participants is valued at the quoted market prices of the participants’ investment elections. The asset consists of mutual funds reflective of the participants’ investment selections and is valued at daily quoted market prices.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis. We completed various acquisitions during the six months ended June 30, 2020 and the year ended December 31, 2019. The values of net assets acquired and the resulting goodwill were recorded at fair value using Level 3 inputs. The majority of the related current assets acquired and liabilities assumed were recorded at their carrying values as of the date of acquisition, as their carrying values approximated their fair values due to their short-term nature. The fair values of goodwill and definite-lived intangible assets acquired in these acquisitions were internally or externally estimated primarily based on the income approach. The income approach estimates fair value based on the present value of the cash flows that the assets are expected to generate in the future. We developed internal estimates for the expected cash flows and discount rates used in the present value calculations.
Trade Accounts Receivable and Allowance for Doubtful Accounts. Accounts receivable are stated at cost. Significant payment terms for customers are identified in the contract. We do not recognize interest income on our trade accounts receivable. Additionally, we generally do not require collateral from our customers related to our trade accounts receivable.
The allowance for doubtful accounts is based on management's estimate for expected credit losses for outstanding trade accounts receivables. We determine expected credit losses based on historical write-off experience, an analysis of the aging of outstanding receivables, customer payment patterns, the establishment of specific reserves for customers in an adverse financial condition and adjusted based upon our expectations of changes in macro-economic conditions that may impact the collectability of outstanding receivables. We reassess the adequacy of the allowance for doubtful accounts each reporting period. Increases to the allowance for doubtful accounts are recorded as bad debt expense, which are included in selling, general and administrative expenses on the accompanying Consolidated Statements of Income (Loss). Below is a rollforward of our allowance for doubtful accounts for the three and six months ended June 30, 2020 and 2019, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(In millions)
|
|
|
|
|
|
|
Allowance for doubtful accounts, beginning of period
|
$
|
13.4
|
|
|
$
|
12.5
|
|
|
$
|
11.2
|
|
|
$
|
10.9
|
|
Current period bad debt expense
|
4.4
|
|
|
1.7
|
|
|
6.9
|
|
|
3.7
|
|
Write-offs, net of recoveries
|
(0.9)
|
|
|
(0.9)
|
|
|
(1.2)
|
|
|
(1.3)
|
|
Allowance for doubtful accounts, end of period
|
$
|
16.9
|
|
|
$
|
13.3
|
|
|
$
|
16.9
|
|
|
$
|
13.3
|
|
Other Current Assets. Other current assets on our Consolidated Balance Sheets include amounts receivable from tax authorities and director and officers liability insurance receivable for costs incurred to date related to the 2017 cybersecurity incident that are reimbursable and probable for recovery under our insurance coverage. Other current assets also include amounts in specifically designated accounts that hold the funds that are due to customers from our debt collection and recovery management services. As of June 30, 2020, these assets were approximately $12.5 million, with a corresponding balance in other current liabilities. These amounts are restricted as to their current use, and will be released according to the specific customer agreements.
Other Assets. Other assets on our Consolidated Balance Sheets primarily represent the Company’s operating lease right-of-use assets, our investment in unconsolidated affiliates, employee benefit trust assets, and assets related to life insurance policies covering certain officers of the Company.
Other Current Liabilities. Other current liabilities on our Consolidated Balance Sheets consist of the current portion of operating lease liabilities and various accrued liabilities such as costs related to the 2017 cybersecurity incident as described more fully in Note 5. Other current liabilities also include corresponding amounts of other current assets related to amounts in specifically designated accounts that hold the funds that are due to customers from our debt collection and recovery management services. As of June 30, 2020, these funds were approximately $12.5 million. These amounts are restricted as to their current use and will be released according to the specific customer agreements.
Change in Accounting Principle. In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019. As of January 1, 2020, we adopted the standard. The adoption of the standard did not have a material impact on our consolidated financial statements with the most significant impact being the increase in allowance for doubtful accounts related to our trade accounts receivable. The adoption adjustment was recorded to Retained Earnings, as seen in the Consolidated Statements of Changes in Equity.
In January 2017, the FASB issued ASU 2017-04 “Simplifying the Test for Goodwill Impairment (Topic 350).” This standard eliminates Step 2 from the current goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the reporting unit's carrying amount exceeds the reporting unit’s fair value. This guidance is effective for interim and annual goodwill impairment tests in fiscal years beginning after December 15, 2019 with early adoption permitted. This guidance must be applied on a prospective basis. The adoption of this guidance did not have a material impact on our financial position, results of operations or cash flows.
In August 2018, the FASB issued ASU No. 2018-13 “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement” which eliminates, adds, and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. ASU 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019, and interim periods therein, but entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. The adoption of this standard did not materially impact our consolidated financial statements or disclosures.
In August 2018, the FASB issued ASU No. 2018-15 “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” ASU 2018-15 requires that issuers follow the internal-use software guidance in Accounting Standards Codification (ASC) 350-40 to determine which costs to capitalize as assets or expense as incurred. The ASC 350-40 guidance requires that certain costs incurred during the application development stage be capitalized and other costs incurred during the preliminary project and post-implementation stages be expensed as they are incurred. ASU 2018-15 is effective for fiscal years
beginning after December 15, 2019 and interim periods therein. The adoption of the standard did not have a material impact on our consolidated financial statements.
Recent Accounting Pronouncements. Retirement Benefits. In August 2018, the FASB issued ASU No. 2018-14 “Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans” which requires minor changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other postretirement benefit plans. ASU 2018-14 is effective for fiscal years ending after December 15, 2020 and early adoption is permitted. The adoption of this standard will have an impact on our disclosures and will not materially impact our consolidated financial statements.
Reference Rate Reform. In March 2020, the FASB issued ASU No. 2020-04“Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The update provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) contract modifications on financial reporting, caused by reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. We are still evaluating the impact, but do not expect the adoption of the standard to have a material impact on our Consolidated Financial Statements.
2. REVENUE
Revenue Recognition. Based on the information that management reviews internally for evaluating operating segment performance and nature, amount, timing, and uncertainty of revenue and cash flows affected by economic factors, we disaggregate revenue as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Change
|
|
|
|
Six Months Ended June 30,
|
|
|
|
Change
|
|
|
Consolidated Operating Revenue
|
|
2020
|
|
2019
|
|
$
|
|
%
|
|
2020
|
|
2019
|
|
$
|
|
%
|
|
|
(In millions)
|
|
|
|
|
|
|
|
(In millions)
|
|
|
|
|
|
|
Online Information Solutions
|
|
$
|
262.9
|
|
|
$
|
246.1
|
|
|
$
|
16.8
|
|
|
7
|
%
|
|
$
|
515.7
|
|
|
$
|
463.8
|
|
|
$
|
51.9
|
|
|
11
|
%
|
Mortgage Solutions
|
|
51.2
|
|
|
35.6
|
|
|
15.6
|
|
|
44
|
%
|
|
94.0
|
|
|
67.8
|
|
|
26.2
|
|
|
39
|
%
|
Financial Marketing Services
|
|
51.5
|
|
|
51.0
|
|
|
0.5
|
|
|
1
|
%
|
|
99.1
|
|
|
99.4
|
|
|
(0.3)
|
|
|
—
|
%
|
Total U.S. Information Solutions
|
|
365.6
|
|
|
332.7
|
|
|
32.9
|
|
|
10
|
%
|
|
708.8
|
|
|
631.0
|
|
|
77.8
|
|
|
12
|
%
|
Verification Services
|
|
251.9
|
|
|
172.3
|
|
|
79.6
|
|
|
46
|
%
|
|
472.1
|
|
|
321.2
|
|
|
150.9
|
|
|
47
|
%
|
Employer Services
|
|
101.0
|
|
|
57.8
|
|
|
43.2
|
|
|
75
|
%
|
|
182.5
|
|
|
137.4
|
|
|
45.1
|
|
|
33
|
%
|
Total Workforce Solutions
|
|
352.9
|
|
|
230.1
|
|
|
122.8
|
|
|
53
|
%
|
|
654.6
|
|
|
458.6
|
|
|
196.0
|
|
|
43
|
%
|
Asia Pacific
|
|
65.2
|
|
|
75.9
|
|
|
(10.7)
|
|
|
(14)
|
%
|
|
134.9
|
|
|
149.0
|
|
|
(14.1)
|
|
|
(9)
|
%
|
Europe
|
|
48.0
|
|
|
66.0
|
|
|
(18.0)
|
|
|
(27)
|
%
|
|
114.4
|
|
|
134.5
|
|
|
(20.1)
|
|
|
(15)
|
%
|
Latin America
|
|
34.2
|
|
|
47.6
|
|
|
(13.4)
|
|
|
(28)
|
%
|
|
77.4
|
|
|
94.8
|
|
|
(17.4)
|
|
|
(18)
|
%
|
Canada
|
|
33.1
|
|
|
39.5
|
|
|
(6.4)
|
|
|
(16)
|
%
|
|
69.8
|
|
|
75.8
|
|
|
(6.0)
|
|
|
(8)
|
%
|
Total International
|
|
180.5
|
|
|
229.0
|
|
|
(48.5)
|
|
|
(21)
|
%
|
|
396.5
|
|
|
454.1
|
|
|
(57.6)
|
|
|
(13)
|
%
|
Global Consumer Solutions
|
|
83.8
|
|
|
88.2
|
|
|
(4.4)
|
|
|
(5)
|
%
|
|
180.9
|
|
|
182.4
|
|
|
(1.5)
|
|
|
(1)
|
%
|
Total operating revenue
|
|
$
|
982.8
|
|
|
$
|
880.0
|
|
|
$
|
102.8
|
|
|
12
|
%
|
|
$
|
1,940.8
|
|
|
$
|
1,726.1
|
|
|
$
|
214.7
|
|
|
12
|
%
|
Remaining Performance Obligation – We have elected to disclose only the remaining performance obligations for those contracts with an expected duration of greater than one year and do not disclose the value of remaining performance obligations for contracts in which we recognize revenue at the amount to which we have the right to invoice. We expect to recognize as revenue the following amounts related to our remaining performance obligations as of June 30, 2020 inclusive of foreign exchange impact:
|
|
|
|
|
|
|
|
|
Performance Obligation
|
|
Amount
|
|
|
(In millions)
|
Less than 1 year
|
|
$
|
28.6
|
|
1 to 3 years
|
|
32.8
|
|
3 to 5 years
|
|
21.7
|
|
Thereafter
|
|
43.7
|
|
Total remaining performance obligation
|
|
$
|
126.8
|
|
3. GOODWILL AND INTANGIBLE ASSETS
Goodwill. Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. Goodwill is tested for impairment at the reporting unit level on an annual basis and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We perform our annual goodwill impairment tests as of September 30.
Changes in the amount of goodwill for the six months ended June 30, 2020, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Information
Solutions
|
|
Workforce Solutions
|
|
International
|
|
Global Consumer Solutions
|
|
Total
|
|
|
(In millions)
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019
|
|
$
|
1,280.7
|
|
|
$
|
1,010.4
|
|
|
$
|
1,829.2
|
|
|
$
|
188.0
|
|
|
$
|
4,308.3
|
|
Acquisitions
|
|
—
|
|
|
—
|
|
|
52.3
|
|
|
—
|
|
|
52.3
|
|
Adjustments to initial purchase price allocation
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
(34.7)
|
|
|
(3.3)
|
|
|
(38.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2020
|
|
$
|
1,280.7
|
|
|
$
|
1,010.7
|
|
|
$
|
1,846.8
|
|
|
$
|
184.7
|
|
|
$
|
4,322.9
|
|
Indefinite-Lived Intangible Assets. Indefinite-lived intangible assets consist of indefinite-lived reacquired rights representing the value of rights which we had granted to various affiliate credit reporting agencies that were reacquired in the U.S. and Canada. At the time we acquired these agreements, they were considered perpetual in nature under the accounting guidance in place at that time and, therefore, the useful lives are considered indefinite. Indefinite-lived intangible assets are not amortized. We are required to test indefinite-lived intangible assets for impairment annually and whenever events or circumstances indicate that there may be an impairment of the asset value. We perform our annual indefinite-lived intangible asset impairment test as of September 30. The estimated fair value of our indefinite-lived intangible assets exceeded the carrying value as of September 30, 2019. As a result, no impairment was recorded. Our indefinite-lived intangible asset carrying amounts did not change materially during the six months ended June 30, 2020.
Purchased Intangible Assets. Purchased intangible assets represent the estimated acquisition date fair value of acquired intangible assets used in our business. Purchased data files represent the estimated acquisition date fair value of consumer credit files acquired primarily through the purchase of independent credit reporting agencies in the U.S., Canada and Australia. We expense the cost of modifying and updating credit files in the period such costs are incurred. We amortize all of our purchased intangible assets on a straight-line basis. For additional information about the useful lives related to our purchased intangible assets, see Note 1 of the Notes to Consolidated Financial Statements in our 2019 Form 10-K.
Purchased intangible assets at June 30, 2020 and December 31, 2019 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020
|
|
|
|
|
|
December 31, 2019
|
|
|
|
|
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
Definite-lived intangible assets:
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
Purchased data files
|
|
$
|
883.8
|
|
|
$
|
(364.8)
|
|
|
$
|
519.0
|
|
|
$
|
904.0
|
|
|
$
|
(351.8)
|
|
|
$
|
552.2
|
|
Acquired software and technology
|
|
104.8
|
|
|
(88.0)
|
|
|
16.8
|
|
|
110.1
|
|
|
(84.0)
|
|
|
26.1
|
|
Customer relationships
|
|
664.3
|
|
|
(316.2)
|
|
|
348.1
|
|
|
673.0
|
|
|
(305.1)
|
|
|
367.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proprietary database
|
|
147.0
|
|
|
(27.0)
|
|
|
120.0
|
|
|
108.3
|
|
|
(20.9)
|
|
|
87.4
|
|
Non-compete agreements
|
|
7.0
|
|
|
(3.5)
|
|
|
3.5
|
|
|
7.8
|
|
|
(3.5)
|
|
|
4.3
|
|
Trade names and other intangible assets
|
|
14.9
|
|
|
(9.6)
|
|
|
5.3
|
|
|
17.3
|
|
|
(10.6)
|
|
|
6.7
|
|
Total definite-lived intangible assets
|
|
$
|
1,821.8
|
|
|
$
|
(809.1)
|
|
|
$
|
1,012.7
|
|
|
$
|
1,820.5
|
|
|
$
|
(775.9)
|
|
|
$
|
1,044.6
|
|
Amortization expense related to purchased intangible assets was $34.8 million and $35.7 million during the three months ended June 30, 2020 and 2019, respectively. Amortization expense related to purchased intangible assets was $69.8 million for the six months ended June 30, 2020 and 2019.
Estimated future amortization expense related to definite-lived purchased intangible assets at June 30, 2020 is as follows:
|
|
|
|
|
|
|
|
|
Years ending December 31,
|
|
Amount
|
|
|
(In millions)
|
2020
|
|
$
|
69.1
|
|
2021
|
|
123.5
|
|
2022
|
|
117.5
|
|
2023
|
|
116.4
|
|
2024
|
|
108.5
|
|
Thereafter
|
|
477.7
|
|
|
|
$
|
1,012.7
|
|
4. DEBT
Debt outstanding at June 30, 2020 and December 31, 2019 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020
|
|
December 31, 2019
|
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes, 2.30%, due June 2021
|
|
$
|
500.0
|
|
|
$
|
500.0
|
|
Notes, 3.60%, due August 2021
|
|
300.0
|
|
|
300.0
|
|
Notes, Floating Rate, due August 2021
|
|
300.0
|
|
|
300.0
|
|
Notes, 3.30%, due December 2022
|
|
500.0
|
|
|
500.0
|
|
Notes, 3.95%, due June 2023
|
|
400.0
|
|
|
400.0
|
|
Notes, 2.60%, due December 2024
|
|
750.0
|
|
|
750.0
|
|
Notes, 2.60%, due December 2025
|
|
400.0
|
|
|
—
|
|
Notes, 3.25%, due June 2026
|
|
275.0
|
|
|
275.0
|
|
Debentures, 6.90%, due July 2028
|
|
125.0
|
|
|
125.0
|
|
Notes, 3.1%, due May 2030
|
|
600.0
|
|
|
—
|
|
Notes, 7.00%, due July 2037
|
|
250.0
|
|
|
250.0
|
|
Other
|
|
3.7
|
|
|
3.1
|
|
Total debt
|
|
4,403.7
|
|
|
3,403.1
|
|
Less short-term debt and current maturities
|
|
(503.7)
|
|
|
(3.1)
|
|
Less unamortized discounts and debt issuance costs
|
|
(27.9)
|
|
|
(20.5)
|
|
Total long-term debt, net
|
|
$
|
3,872.1
|
|
|
$
|
3,379.5
|
|
2.6% and 3.1% Senior Notes. On April 22, 2020, we issued $400.0 million aggregate principal amount of 2.6% five-year Senior Notes due 2025 (the "2025 Notes") and $600.0 million aggregate principal amount of 3.1% ten-year Senior Notes due 2030 (the "2030 Notes") in an underwritten public offering. Interest on the 2025 Notes accrues at a rate of 2.6% per year and is payable semi-annually in arrears on June 15 and December 15, beginning on December 15, 2020. Interest on the 2030 Notes accrues at a rate of 3.1% per year and is payable semi-annually in arrears on May 15 and November 15, beginning on November 15, 2020. The net proceeds of the sale of the notes were used to repay borrowings under our Receivables Facility, while the remaining funds are intended for general corporate purposes, which may include the repayment of a portion of the 2021 debt maturities or borrowings under our Revolver. We must comply with various non-financial covenants, including certain limitations on mortgages, liens and sale-leaseback transactions, as well as mergers and sales of substantially all of our assets. The 2025 Notes and 2030 Notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness.
2.6% Senior Notes. On November 15, 2019, we issued $750.0 million aggregate principal amount of 2.6% five-year Senior Notes due 2024 (the “2024 Notes”) in an underwritten public offering. Interest on the 2024 Notes accrues at a rate of 2.6% per year and is payable semi-annually in arrears on June 1 and December 1 of each year. The net proceeds of the sale of the notes were used to repay borrowings under our Receivables Facility and our CP program and for general corporate purposes. We must comply with various non-financial covenants, including certain limitations on mortgages, liens and sale-leaseback transactions, as well as mergers and sales of substantially all of our assets. The 2024 Notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness.
Senior Credit Facility. In September 2018, the Company entered into a $1.1 billion five-year unsecured revolving credit facility with a group of financial institutions, which will mature in September 2023 (the “Revolver”). The Revolver replaced the Company’s previous $900.0 million unsecured revolving credit facility that was scheduled to mature in November 2020. Borrowings under the Revolver may be used for general corporate purposes, including working capital, capital expenditures, acquisitions and share repurchase programs. The Revolver has an accordion feature that allows us to request an increase in the total commitment to $1.6 billion. The Revolver includes an option to request a maximum of two one-year extensions of the maturity date, any time after the first anniversary of the Revolver closing. Availability of the Revolver is reduced by the outstanding principal balance of our commercial paper notes and by any letters of credit issued under the facility. As of June 30, 2020, there were $0.7 million of letters of credit outstanding, no principal drawn amounts under the Revolver, and no commercial paper borrowings. Availability under the Revolver was $1.1 billion at June 30, 2020.
Commercial Paper Program. In the second quarter of 2019, we increased our commercial paper program to $1.1 billion. Our commercial paper program has been established through the private placement of commercial paper notes from time-to-time, in which borrowings bear interest at either a floating rate (based on LIBOR or other benchmarks), or a fixed rate, plus the applicable margin. Maturities of commercial paper can range from overnight to 397 days. Because the CP is backstopped by our Revolver, the amount of CP which may be issued under the program is reduced by the outstanding face amount of any letters of credit issued and by the outstanding borrowings under our Revolver. At June 30, 2020, there were no outstanding commercial paper notes.
Receivables Funding Facility. In 2017, Equifax entered into a $225.0 million, two-year receivables funding facility (the “Receivables Facility”), which had an original maturity in November 2019. In November 2018, we amended the Receivables Facility to extend the maturity to November 2020. In December 2019, we amended the Receivables Facility to extend the maturity to December 2022. Under the Receivables Facility, Equifax and certain of its U.S. subsidiaries sell the eligible third-party receivables of its U.S. based business, to Equifax Receivables Funding LLC, a consolidated, wholly-owned, bankruptcy-remote subsidiary that may subsequently transfer, without recourse, an undivided interest in these accounts receivable to investors. The investors have no recourse to the Company’s other assets except for customary repurchase, warranty and indemnity claims. Creditors of Equifax do not have recourse to the assets of Equifax Receivables Funding LLC. The Receivables Facility contains standard representations, warranties and covenants made by Equifax and its U.S. subsidiaries in connection with the sale of the receivables, and any repurchase, warranty or indemnity obligations of the U.S. subsidiaries in connection with the sale of the receivables (but no obligations of Equifax Receivables Funding LLC) are guaranteed by Equifax.
There were no outstanding borrowings under the Receivables Facility at June 30, 2020. The Receivables Facility was supported by $308.2 million of accounts receivable as collateral at June 30, 2020 which, as a retained interest, is included in accounts receivable, net in our Consolidated Balance Sheets.
For additional information about our debt agreements, see Note 5 of the Notes to Consolidated Financial Statements in our 2019 Form 10-K.
5. COMMITMENTS AND CONTINGENCIES
Litigation, Claims and Government Investigations Related to the 2017 Cybersecurity Incident. In fiscal 2017, we experienced a cybersecurity incident following a criminal attack on our systems that involved the theft of certain personally identifiable information of U.S., Canadian and U.K. consumers. Following the 2017 cybersecurity incident, hundreds of class actions and other lawsuits were filed against us typically alleging harm from the incident and seeking various remedies, including monetary and injunctive relief. We were also subject to investigations and inquiries by federal, state and foreign governmental agencies and officials regarding the 2017 cybersecurity incident and related matters. Most of these lawsuits and government investigations have concluded or been resolved, including pursuant to the settlement agreements described below, while others remain ongoing. The Company’s participation in these settlements does not constitute an admission by the Company of any fault or liability, and the Company does not admit fault or liability.
We believe it is probable that we will incur losses associated with certain of the proceedings and investigations related to the 2017 cybersecurity incident. In 2019, we recorded expenses, net of insurance recoveries, of $800.9 million in other current liabilities and selling, general, and administrative expenses in our Consolidated Balance Sheets and Statements of Income (Loss), respectively, exclusive of our legal and professional services expenses. The amount accrued represents our best estimate of the liability related to these matters. The Company will continue to evaluate information as it becomes known and adjust accruals for new information and further developments in accordance with ASC 450-20-25. While it is reasonably possible that losses exceeding the amount accrued may be incurred, it is not possible at this time to estimate the additional possible loss in excess of the amount already accrued that might result from adverse judgments, settlements, penalties or other resolution of the proceedings and investigations described below based on a number of factors, such as the various stages of these proceedings and investigations, including matters on appeal, that alleged damages have not been specified or are uncertain, the uncertainty as to the certification of a class or classes and the size of any certified class, as applicable, and the lack of resolution on significant factual and legal issues. The ultimate amount paid on these actions, claims and investigations in excess of the amount already accrued could be material to the Company’s consolidated financial condition, results of operations, or cash flows in future periods.
Consumer Settlement. On July 19, 2019 and July 22, 2019, we entered into multiple agreements that resolve the U.S. consolidated consumer class action cases, captioned In re: Equifax, Inc. Customer Data Security Breach Litigation, MDL No. 2800 (the “U.S. Consumer MDL Litigation”), and the investigations of the FTC, the CFPB, the Attorneys General of 48 states, the District of Columbia and Puerto Rico (the "MSAG Group") and the NYDFS (collectively, the “Consumer Settlement”).
Under the terms of the Consumer Settlement, the Company will contribute $380.5 million to a non-reversionary settlement fund (the “Consumer Restitution Fund”) to provide restitution for U.S. consumers identified by the Company whose personal information was compromised as a result of the 2017 cybersecurity incident as well as to pay reasonable attorneys’ fees and reasonable costs and expenses for the plaintiffs’ counsel in the U.S. Consumer MDL Litigation (not to exceed $80.5 million), settlement administration costs and notice costs. The Company has agreed to contribute up to an additional $125.0 million to the Consumer Restitution Fund to cover certain unreimbursed costs and expenditures incurred by affected U.S. consumers in the event the $380.5 million in the Consumer Restitution Fund is exhausted. The Company also agreed to various business practice commitments related to consumer assistance and its information security program, including conducting third party assessments of its information security program.
On January 13, 2020, the Northern District of Georgia, the U.S. District Court overseeing centralized pre-trial proceedings for the U.S. Consumer MDL Litigation and numerous other federal court actions relating to the 2017 cybersecurity incident (the “MDL Court”), entered an order granting final approval of the settlement in connection with the U.S. Consumer MDL Litigation. The MDL Court entered an amended order granting final approval of the settlement on March 17, 2020. Several objectors have appealed the final approval order. Until the appeals are finally adjudicated or dismissed, we can provide no assurance that the U.S. Consumer MDL Litigation will be resolved as contemplated by the settlement agreement. If the MDL Court’s order approving the settlement is reversed by an appellate court, there is a risk that we would not be able to settle the U.S. Consumer MDL Litigation on acceptable terms or at all, which could have a material adverse effect on our financial condition.
Other Settlements.
Securities Class Action Litigation. On February 12, 2020, we entered into a settlement agreement to resolve a consolidated putative class action lawsuit pending in the U.S. District Court for the Northern District of Georgia alleging violations of certain federal securities laws in connection with statements and alleged omissions regarding our cybersecurity systems and controls. Under the settlement, the Company agreed to create a settlement fund for the benefit of a settlement class consisting of persons and entities who purchased or otherwise acquired publicly-traded Company stock from February 25, 2016 through September 15, 2017, subject to certain exclusions. On June 26, 2020, we received final court approval of the settlement.
Shareholder Derivative Litigation. On February 12, 2020, the Company, by and through a committee of independent directors, and individual defendants entered into a settlement agreement to resolve a consolidated putative shareholder derivative action pending in the U.S. District Court for the Northern District of Georgia alleging claims for breaches of fiduciary duties, unjust enrichment, corporate waste and insider selling by certain defendants, as well as certain claims under the federal securities laws. The settlement agreement provides for the Company’s adoption of certain governance changes and an insurance recovery for the Company. On June 22, 2020, we received final court approval for the settlement.
Financial Institutions MDL Class Action. On May 15, 2020, the Company entered into a settlement agreement to resolve the consolidated financial institutions class action cases pending before the MDL Court (the “Financial Institutions MDL Litigation”). Under the settlement, the Company agreed to pay for valid claims submitted by class members up to a maximum amount, reasonable settlement administration and notice costs, and reasonable attorneys’ fees and expenses. The Company also agreed to adopt and/or maintain certain business practices related to its information security program. On June 4, 2020, we received preliminary court approval of the settlement. The settlement is subject to a number of other conditions, including final court approval. We can provide no assurance that all conditions will be satisfied or that final court approval will be obtained.
Pennsylvania State Court Financial Institution Class Action. The Company entered into a settlement agreement to resolve the individual claims brought by one of the original named plaintiffs in the Financial Institutions MDL Litigation in the Court of Common Pleas of Lawrence County, Pennsylvania on behalf of itself and a class of financial institutions headquartered in Pennsylvania. The claims asserted in this matter were substantially similar to claims asserted by financial institutions that previously were dismissed in the MDL proceeding for lack of standing. The court granted approval of the settlement on July 13, 2020.
Other Matters. We face other lawsuits and government investigations related to the 2017 cybersecurity incident that have not yet been concluded or resolved. These ongoing matters may result in judgments, fines or penalties, settlements or other relief. We dispute the allegations in the remaining lawsuits and intend to defend against such claims. Set forth below are descriptions of the main categories of these matters.
Georgia State Court Consumer Class Actions. Four putative class actions arising from the 2017 cybersecurity incident were filed against us in Fulton County Superior Court and Fulton County State Court in Georgia based on similar allegations and theories as alleged in the U.S. Consumer MDL Litigation and seek monetary damages, injunctive relief and other related relief on behalf of Georgia citizens. These cases were transferred to a single judge in the Fulton County Business Court and three of the cases were consolidated into a single action. On July 27, 2018, the Fulton County Business Court granted the Company’s motion to stay the remaining single case, and on August 17, 2018, the Fulton County Business Court granted the Company’s motion to stay the consolidated case. These cases remain stayed pending final resolution of the U.S. Consumer MDL Litigation.
Canadian Class Actions. Eight Canadian class actions, six of which are on behalf of a national class of approximately 19,000 Canadian consumers, were filed against us in Ontario, Saskatchewan, Quebec, British Columbia and Alberta. Each of the proposed Canadian class actions asserts a number of common law and statutory claims seeking monetary damages and other related relief in connection with the 2017 cybersecurity incident. The plaintiffs in each of the remaining cases seek class certification/authorization on behalf of Canadian consumers whose personal information was allegedly impacted by the 2017 cybersecurity incident. In some cases, plaintiffs also seek class certification on behalf of a larger group of Canadian consumers who had contracts for subscription products with Equifax around the time of the incident or earlier and were not impacted by the incident.
On October 21, 2019, the court in the Quebec case dismissed the plaintiff’s motion for authorization to institute a class action, ending the matter. On December 13, 2019, the court in the active Ontario case granted certification of a nationwide class that includes impacted Canadians as well as Canadians who had subscription products with Equifax between March 7, 2017 and July 30, 2017. We have sought leave to appeal this decision. All remaining purported class actions are at preliminary stages. In addition, one of the cases in Ontario as well as the Saskatchewan case have been stayed. The appeal of the court’s order staying the Saskatchewan case was dismissed, and the case is permanently stayed.
Individual Consumer Litigation. We have over one hundred individual consumer actions pending against us in state (general jurisdiction and small claims) and federal courts, including the MDL Court, across the U.S. related to the 2017 cybersecurity incident. The plaintiffs/claimants in these cases have generally claimed to have been harmed by alleged actions and/or omissions by Equifax in connection with the 2017 cybersecurity incident and assert a variety of common law and statutory claims seeking primarily monetary damages. We believe that many of the remaining individual consumer actions will be subject to the settlement in the U.S. Consumer MDL Litigation discussed above, unless the individual consumers submitted a valid and timely request to be excluded from the settlement.
Government Investigations. We have cooperated with federal, state and foreign governmental agencies and officials investigating or otherwise seeking information, testimony and/or documents, regarding the 2017 cybersecurity incident and related matters and most of these investigations have been resolved as discussed in prior filings.
The U.K.’s Financial Conduct Authority (“FCA”) opened an enforcement investigation against our U.K. subsidiary, Equifax Limited, in October 2017. The investigation by the FCA has involved a number of information requirements and interviews. We continue to respond to the information requirements and are cooperating with the investigation.
The New York State Attorney General Investor Protection Bureau (“IPB”) issued a subpoena in September 2017 relating to its investigation of whether there has been a violation of the Martin Act. We have cooperated with the IPB in its investigation, and the IPB has not contacted us regarding the investigation since January 2019.
Although we continue to cooperate in the above investigations and inquiries, an adverse outcome to any such investigations and inquiries could subject us to fines or other obligations, which may have an adverse effect on how we operate our business or our results of operations.
Data Processing, Outsourcing Services and Other Agreements
We have separate agreements with Google, Amazon Web Services, IBM, Tata Consultancy Services and others to outsource portions of our network and security infrastructure, computer data processing operations, applications development, business continuity and recovery services, help desk service and desktop support functions, operation of our voice and data networks, maintenance and related functions and to provide certain other administrative and operational services. Annual payment obligations in regard to these agreements vary due to factors such as the volume of data processed; changes in our servicing needs as a result of new product offerings, acquisitions or divestitures; the introduction of significant new technologies; foreign currency; or the general rate of inflation. In certain circumstances (e.g., a change in control or for our
convenience), we may terminate these data processing and outsourcing agreements, and, in doing so, certain of these agreements require us to pay significant termination fees.
Guarantees and General Indemnifications
We may issue standby letters of credit and performance and surety bonds in the normal course of business. The aggregate notional amounts of all performance and surety bonds and standby letters of credit was not material at June 30, 2020 and generally have a remaining maturity of one year or less. We may issue other guarantees in the ordinary course of business. The maximum potential future payments we could be required to make under the guarantees in the ordinary course of business was not material at June 30, 2020. We have agreed to guarantee the liabilities and performance obligations (some of which have limitations) of a certain debt collections and recovery management variable interest entity under its commercial agreements.
We have agreed to standard indemnification clauses in many of our lease agreements for office space, covering such things as tort, environmental and other liabilities that arise out of or relate to our use or occupancy of the leased premises. Certain of our credit agreements include provisions which require us to make payments to preserve an expected economic return to the lenders if that economic return is diminished due to certain changes in law or regulations. In conjunction with certain transactions, such as sales or purchases of operating assets or services in the ordinary course of business, or the disposition of certain assets or businesses, we sometimes provide routine indemnifications, the terms of which range in duration and sometimes are not limited. Additionally, the Company has entered into indemnification agreements with its directors and executive officers to indemnify such individuals to the fullest extent permitted by applicable law against liabilities that arise by reason of their status as directors or officers. The Company maintains directors and officers liability insurance coverage to reduce its exposure to such obligations.
We cannot reasonably estimate our potential future payments under the guarantees and indemnities and related provisions described above because we cannot predict when and under what circumstances these provisions may be triggered.
Contingencies
In addition to the matters set forth above, we are involved in legal and regulatory matters, government investigations, claims and litigation arising in the ordinary course of business. We periodically assess our exposure related to these matters based on the information which is available. We have recorded accruals in our Consolidated Financial Statements for those matters in which it is probable that we have incurred a loss and the amount of the loss, or range of loss, can be reasonably estimated.
For additional information about these and other commitments and contingencies, see Note 6 of the Notes to Consolidated Financial Statements in our 2019 Form 10-K.
6. INCOME TAXES
We are subject to U.S. federal, state and international income taxes. We are generally no longer subject to federal, state, or international income tax examinations by tax authorities for years before 2016 with few exceptions. Due to the potential for resolution of state and foreign examinations, and the expiration of various statutes of limitations, it is reasonably possible that our gross unrecognized tax benefit balance may change within the next twelve months by a range of $0 to $5.9 million.
Effective Tax Rate
Our effective income tax rate was 21.7% for the three months ended June 30, 2020, compared to 23.3% for the three months ended June 30, 2019. Our second quarter effective 2020 tax rate was favorably impacted by a more favorable foreign rate differential.
Our effective income tax rate was 22.9% for the six months ended June 30, 2020, compared to a 12.2% benefit for the six months ended June 30, 2019. Our effective tax rate was higher year-to-date for 2020 as compared to 2019 due to permanent tax differences resulting from the accrual for losses associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident included in the 2019 effective tax rate. The 2020 year-to-date rate has been adversely impacted by valuation allowances against the deferred tax assets of certain international operations, however this impact was partially offset by favorable adjustments related to accruals for losses associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident. 2019 income taxes were calculated using the discrete method, applying the actual year-to-date effective tax rate to our pre-tax loss.
On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (The CARES Act), also known as the Third COVID-19 Supplemental Relief bill, and the President of the United States signed the legislation into law. The provisions of the legislation have not had a significant impact on the effective tax rate or the income tax payable and deferred income tax positions of the Company.
The adverse economic effects of the current COVID-19 pandemic have caused the Company to reassess the need for valuation allowances against deferred tax assets. As a result of this analysis the Company determined it was necessary to place valuation allowances against deferred tax assets of certain subsidiaries. The total amount of the valuation allowances recorded year-to-date is approximately $7.0 million.
7. ACCUMULATED OTHER COMPREHENSIVE LOSS
Changes in accumulated other comprehensive loss by component, after tax, for the six months ended June 30, 2020, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency
|
|
Pension and other
postretirement
benefit plans
|
|
Cash flow
hedging
transactions
|
|
Total
|
|
|
(In millions)
|
|
|
|
|
|
|
Balance, December 31, 2019
|
|
$
|
(352.4)
|
|
|
$
|
(278.1)
|
|
|
$
|
(1.1)
|
|
|
$
|
(631.6)
|
|
Other comprehensive loss before reclassifications
|
|
(57.6)
|
|
|
—
|
|
|
—
|
|
|
(57.6)
|
|
Amounts reclassified from accumulated other comprehensive loss
|
|
—
|
|
|
7.5
|
|
|
—
|
|
|
7.5
|
|
Net current-period other comprehensive (loss) income
|
|
(57.6)
|
|
|
7.5
|
|
|
—
|
|
|
(50.1)
|
|
Balance, June 30, 2020
|
|
$
|
(410.0)
|
|
|
$
|
(270.6)
|
|
|
$
|
(1.1)
|
|
|
$
|
(681.7)
|
|
Reclassifications out of accumulated other comprehensive loss for the six months ended June 30, 2020, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Details about accumulated other
comprehensive loss components
|
|
Amount reclassified
from accumulated other
comprehensive loss
|
|
Affected line item in
the statement where
net income is presented
|
|
|
(In millions)
|
|
|
Amortization of pension and other postretirement plan items:
|
|
|
|
|
Prior service cost
|
|
$
|
(0.2)
|
|
|
(1)
|
Recognized actuarial loss
|
|
10.2
|
|
|
(1)
|
|
|
10.0
|
|
|
Total before tax
|
|
|
(2.5)
|
|
|
Tax benefit
|
|
|
$
|
7.5
|
|
|
Net of tax
|
(1)These accumulated other comprehensive loss components are included in the computation of net periodic pension cost (See Note 8 Benefit Plans for additional details).
Changes in accumulated other comprehensive loss related to noncontrolling interests were not material as of June 30, 2020.
8. BENEFIT PLANS
We sponsor defined benefit pension plans and defined contribution plans. For additional information about our benefit plans, see Note 9 of the Notes to Consolidated Financial Statements in our 2019 Form 10-K.
The following table provides the components of net periodic benefit cost. The service cost component is included in selling, general and administrative expenses and the other components of net periodic benefit cost are included in other income, net in the Consolidated Statements of Income (Loss) for the three and six months ended June 30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
|
|
Other Benefits
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(In millions)
|
|
|
|
|
|
|
Service cost
|
|
$
|
0.4
|
|
|
$
|
0.7
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
Interest cost
|
|
5.9
|
|
|
7.1
|
|
|
0.1
|
|
|
0.2
|
|
Expected return on plan assets
|
|
(8.8)
|
|
|
(9.0)
|
|
|
(0.2)
|
|
|
(0.2)
|
|
Amortization of prior service cost
|
|
—
|
|
|
0.1
|
|
|
(0.1)
|
|
|
(0.3)
|
|
Recognized actuarial loss
|
|
4.9
|
|
|
3.7
|
|
|
0.2
|
|
|
0.3
|
|
Total net periodic benefit cost
|
|
$
|
2.4
|
|
|
$
|
2.6
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
|
|
Other Benefits
|
|
|
|
|
Six months ended June 30,
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(In millions)
|
|
|
|
|
|
|
Service cost
|
|
$
|
0.8
|
|
|
$
|
1.4
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
Interest cost
|
|
11.8
|
|
|
14.2
|
|
|
0.2
|
|
|
0.4
|
|
Expected return on plan assets
|
|
(17.6)
|
|
|
(18.0)
|
|
|
(0.4)
|
|
|
(0.4)
|
|
Amortization of prior service cost
|
|
—
|
|
|
0.2
|
|
|
(0.2)
|
|
|
(0.6)
|
|
Recognized actuarial loss
|
|
9.8
|
|
|
7.4
|
|
|
0.4
|
|
|
0.6
|
|
Total net periodic benefit cost
|
|
$
|
4.8
|
|
|
$
|
5.2
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
9. SEGMENT INFORMATION
Reportable Segments. We manage our business and report our financial results through the following four reportable segments, which are the same as our operating segments:
- U.S. Information Solutions (“USIS”)
- Workforce Solutions
- International
- Global Consumer Solutions
The accounting policies of the reportable segments are the same as those described in our summary of significant accounting policies in Note 1 of the Notes to Consolidated Financial Statements in our 2019 Form 10-K. We evaluate the performance of these reportable segments based on their operating revenues, operating income and operating margins, excluding unusual or infrequent items, if any. The measurement criteria for segment profit or loss and segment assets are substantially the same for each reportable segment. Inter-segment sales and transfers are not material for all periods presented. All transactions between segments are accounted for at fair market value or cost depending on the nature of the transaction, and no timing differences occur between segments.
A summary of segment products and services is as follows:
U.S. Information Solutions. This segment includes consumer and commercial information services (such as credit information and credit scoring, credit modeling services and portfolio analytics (decisioning tools), which are derived from our databases of business credit and financial information, locate services, fraud detection and prevention services, identity verification services and other consulting services); mortgage loan origination information; financial marketing services; and identity management.
Workforce Solutions. This segment includes employment, income and social security number verification services as well as complementary payroll-based transaction services and employment tax management services.
International. This segment includes information services products, which includes consumer and commercial services (such as credit and financial information, credit scoring and credit modeling services), credit and other marketing products and services. In Asia Pacific, Europe, Latin America and Canada, we also provide information, technology and services to support debt collections and recovery management.
Global Consumer Solutions. This segment includes credit information, credit monitoring and identity theft protection products sold directly and indirectly to consumers via the internet and in various hard-copy formats in the U.S., Canada, and the U.K. We also sell consumer and credit information to resellers who combine our information with other information to provide direct to consumer monitoring, reports and scores.
Operating revenue and operating income by operating segment during the three and six months ended June 30, 2020 and 2019 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
(In millions)
|
|
June 30,
|
|
|
|
June 30,
|
|
|
Operating revenue:
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
U.S. Information Solutions
|
|
$
|
365.6
|
|
|
$
|
332.7
|
|
|
$
|
708.8
|
|
|
$
|
631.0
|
|
Workforce Solutions
|
|
352.9
|
|
|
230.1
|
|
|
654.6
|
|
|
458.6
|
|
International
|
|
180.5
|
|
|
229.0
|
|
|
396.5
|
|
|
454.1
|
|
Global Consumer Solutions
|
|
83.8
|
|
|
88.2
|
|
|
180.9
|
|
|
182.4
|
|
Total operating revenue
|
|
$
|
982.8
|
|
|
$
|
880.0
|
|
|
$
|
1,940.8
|
|
|
$
|
1,726.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
(In millions)
|
|
June 30,
|
|
|
|
June 30,
|
|
|
Operating income (loss):
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
U.S. Information Solutions
|
|
$
|
113.1
|
|
|
$
|
117.9
|
|
|
$
|
220.7
|
|
|
$
|
214.0
|
|
Workforce Solutions
|
|
174.2
|
|
|
95.6
|
|
|
307.7
|
|
|
191.8
|
|
International
|
|
(6.2)
|
|
|
22.7
|
|
|
9.1
|
|
|
33.9
|
|
Global Consumer Solutions
|
|
7.8
|
|
|
12.8
|
|
|
20.9
|
|
|
24.3
|
|
General Corporate Expense
|
|
(122.1)
|
|
|
(135.2)
|
|
|
(255.7)
|
|
|
(968.0)
|
|
Total operating income (loss)
|
|
$
|
166.8
|
|
|
$
|
113.8
|
|
|
$
|
302.7
|
|
|
$
|
(504.0)
|
|
Total assets by operating segment at June 30, 2020 and December 31, 2019 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
(In millions)
|
|
2020
|
|
2019
|
Total assets:
|
|
|
|
|
U.S. Information Solutions
|
|
$
|
1,942.5
|
|
|
$
|
1,922.9
|
|
Workforce Solutions
|
|
1,340.4
|
|
|
1,338.6
|
|
International
|
|
2,988.9
|
|
|
2,977.0
|
|
Global Consumer Solutions
|
|
285.1
|
|
|
275.3
|
|
General Corporate
|
|
2,275.9
|
|
|
1,395.2
|
|
Total assets
|
|
$
|
8,832.8
|
|
|
$
|
7,909.0
|
|