NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
As used herein, the terms Equifax, the Company, we, our and us refer to Equifax Inc., a Georgia corporation, and its consolidated subsidiaries as a combined entity, except where it is clear that the terms mean only Equifax Inc.
Nature of Operations. We collect, organize and manage various types of financial, demographic, employment 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 December 31, 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 Consolidation. Our Consolidated Financial Statements and the accompanying notes, which are prepared in accordance with U.S. generally accepted accounting principles, or GAAP, include Equifax and all its subsidiaries. We consolidate all majority-owned and controlled subsidiaries as well as variable interest entities in which we are the primary beneficiary. Other parties’ interests in consolidated entities are reported as noncontrolling interests. We use the equity method of accounting for investments in which we are able to exercise significant influence. Non-consolidated equity investments are recorded at fair value when readily determinable or at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions when the fair value of the investment is not readily determinable. All intercompany transactions and balances are eliminated.
Our Consolidated Financial Statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the periods presented therein.
Segments. We manage our business and report our financial results through the following four reportable segments, which are our operating segments:
•U.S. Information Solutions, or USIS
•Workforce Solutions
•International
•Global Consumer Solutions
USIS is our largest reportable segment, with 36% of total operating revenue for 2020. Our most significant foreign operations are located in Australia, the U.K. and Canada.
Use of Estimates. The preparation of our Consolidated Financial Statements requires us to make estimates and assumptions in accordance with GAAP. Accordingly, we make these estimates and assumptions after exercising judgment. We believe that the estimates and assumptions inherent in our Consolidated Financial Statements are reasonable, based upon information available to us at the time they are made including the consideration of events that have occurred up until the point these Consolidated Financial Statements have been filed. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities at the date of the financial statements,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from these estimates.
Revenue Recognition and Deferred Revenue. In accordance with ASC 606, “Revenue from Contracts with Customers,” we recognize revenue when a performance obligation has been satisfied by transferring a promised good or service to a customer and the customer obtains control of the good or service. In order to recognize revenue, we note that the two parties must have an agreement that creates enforceable rights, the performance obligations must be distinct and the transaction price can be determined. Our revenue is derived from the provision of information services to our customers on a transactional basis, in which distinct services are delivered over time as the customer simultaneously receives and consumes the benefits of the services delivered. To measure our performance over time, the output method is utilized to measure the value to the customer based on the transfer to date of the services promised, with no rights of return once consumed. In these cases, revenue on transactional contracts with a defined price but an undefined quantity is recognized utilizing the right to invoice expedient resulting in revenue being recognized when the service is provided and billed. Additionally, multi-year contracts with defined pricing but an undefined quantity that utilize tier pricing would be defined as a series of distinct performance obligations satisfied over time utilizing the same method of measurement, the output method, with no rights of return once consumed. This measurement method is applied on a monthly basis resulting in revenue being recognized when the service is provided and billed.
Additionally, we recognize revenue from subscription-based contracts under which a customer pays a preset fee for a predetermined or unlimited number of transactions or services provided during the subscription period, generally one year. Revenue from subscription-based contracts having a preset number of transactions is recognized as the services are provided, using an effective transaction rate as the actual transactions are delivered. Any remaining revenue related to unfulfilled units is not recognized until the end of the related contract’s subscription period. Revenue from subscription-based contracts having an unlimited volume is recognized ratably during the contract term. Multi-year subscription contracts are analyzed to determine the full contract transaction price over the term of the contract and the subsequent price is ratably recognized over the full term of the contract.
Revenue is recorded net of sales taxes.
If at the outset of an arrangement, we determine that collectibility is not reasonably assured, revenue is deferred until the earlier of when collectibility becomes probable or the receipt of payment from the customer. If there is uncertainty as to the customer’s acceptance of the performance obligation, revenue is not recognized until the earlier of receipt of customer acceptance or expiration of the acceptance period.
We sell certain offerings that contain multiple performance obligations. These obligations may include consumer or commercial information, file updates for certain solutions, services provided by our decisioning technologies personnel, training services, statistical models and other services. In order to account for each of these obligations separately, the delivered promises within our contracts must meet the criterion to be considered distinct performance obligations to our customer. If we determine that the arrangement does not contain separate distinct obligations, the performance obligations are bundled together until a distinct obligation is achieved. This may lead to the arrangement consideration being recognized as the final contract obligation is delivered to our customer or ratably over the term of the contract.
Some of our arrangements with multiple performance obligations involve the delivery of services generated by a combination of services provided by one or more of our operating segments. No individual information service impacts the value or usage of other information services included in an arrangement and each service can be sold alone or, in most cases, purchased from another vendor without affecting the quality of use or value to the customer of the other information services included in the arrangement. Some of our products require the installation of interfaces or platforms by our technology personnel that allow our customers to interact with our proprietary information databases. These installation services do not meet the requirement for being distinct, thus any related installation fees are deferred when billed and are recognized over the expected period that the customer will benefit from the related services. Revenue from the delivery of one-time files and models is recognized as the service is provided and accepted, assuming all other revenue recognition criteria are met. The direct costs of installation of a customer are capitalized and amortized over the useful life of the identifiable asset.
We record revenue on a net basis for those sales in which we have in substance acted as an agent or broker in the transaction and therefore do not have control.
In certain instances within our debt collections and recovery management services in our International operating segment and certain tax management services within our Workforce Solutions operating segment, variable consideration is constrained due to the fact that the revenue is contingent on a particular outcome. Within our debt collections and recovery
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
management businesses, revenue is calculated as a percentage of debt collected on behalf of the customer and, as such, is primarily recognized when the debt is collected assuming all other revenue recognition criteria are met. Within our Workforce Solutions operating segment, the fees for certain of our tax credits and incentives revenue are based on a percentage of the credit delivered to our clients. Revenue for these arrangements is recognized based on the achievement of milestones, upon calculation of the credit, approval from a regulatory agency or when the credit is utilized by our client, depending on the provisions of the client contract.
Certain costs incurred prior to the satisfaction of a performance obligation are deferred as contract costs and are amortized on a systematic basis consistent with the pattern of transfer of the related goods and services. These costs generally consist of labor costs directly relating to the implementation and setup of the contract.
Judgments and Uncertainties – Each performance obligation within a contract must be considered separately to ensure that appropriate accounting is performed for these distinct goods or services. These considerations include assessing the price at which the element is sold compared to its standalone selling price; concluding when the element will be delivered; evaluating collectability; and determining whether any contingencies exist in the related customer contract that impact the prices paid to us for the services.
Contract Balances – The contract balances are generated when revenue recognized varies from billing in a given period. A contract asset is created when an entity transfers a good or service to a customer and recognizes more revenue than what has been billed. As of December 31, 2020, the contract asset balance was $11.0 million. A contract liability is created when an entity transfers a good or service to a customer and recognizes less than what has been billed. Deferred revenue is recognized when we have an obligation to transfer goods or services to a customer and have already received consideration from the customer. We generally expect to recognize our deferred revenue as revenue within twelve months of being recorded based on the terms of the contracts.
Remaining Performance Obligation – We have elected to disclose only the remaining performance obligations for those contracts with an expected duration of greater than 1 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 December 31, 2020, inclusive of the foreign exchange impact:
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Performance Obligation
|
|
Balance
|
|
|
(In millions)
|
Less than 1 year
|
|
$
|
33.9
|
|
1 to 3 years
|
|
31.6
|
|
3 to 5 years
|
|
21.2
|
|
Thereafter
|
|
43.9
|
|
Total remaining performance obligation
|
|
$
|
130.6
|
|
Cost of Services. Cost of services consist primarily of (1) data acquisition and royalty fees; (2) customer service costs, which include: personnel costs to collect, maintain and update our proprietary databases, to develop and maintain software application platforms and to provide consumer and customer call center support; (3) hardware and software expense associated with transaction processing systems; (4) telecommunication and computer network expense; and (5) occupancy costs associated with facilities where these functions are performed by Equifax employees.
Selling, General and Administrative Expenses. Selling, general and administrative expenses consist primarily of personnel-related costs, restructuring costs, corporate costs, fees for professional and consulting services, advertising costs, and other costs of administration.
Advertising. Advertising costs, which are expensed as incurred, totaled $59.0 million, $51.9 million and $43.1 million during 2020, 2019 and 2018, respectively.
Stock-Based Compensation. We recognize the cost of stock-based payment transactions in the financial statements over the period services are rendered according to the fair value of the stock-based awards issued. All of our stock-based awards, which are stock options and nonvested stock, are classified as equity instruments.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Income Taxes. We account for income taxes under the liability method. We record deferred income taxes using enacted tax laws and rates for the years in which the taxes are expected to be paid. Deferred income tax assets and liabilities are recorded based on the differences between the financial reporting and income tax bases of assets and liabilities. We assess whether it is more likely than not that we will generate sufficient taxable income to realize our deferred tax assets. We record a valuation allowance, as necessary, to reduce our deferred tax assets to the amount of future tax benefit that we estimate is more likely than not to be realized.
We record tax benefits for positions that we believe are more likely than not of being sustained under audit examinations. We assess the potential outcome of such examinations to determine the adequacy of our income tax accruals. We recognize interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes on our Consolidated Statements of Income (Loss). We adjust our income tax provision during the period in which we determine that the actual results of the examinations may differ from our estimates or when statutory terms expire. Changes in tax laws and rates are reflected in our income tax provision in the period in which they are enacted.
Earnings Per Share. Our basic earnings per share, or EPS, is calculated as net income divided by the weighted-average number of common shares outstanding during the reporting period. Diluted EPS is calculated to reflect the potential dilution that would occur if stock options or other contracts to issue common stock were exercised and resulted in additional common shares outstanding. The net income amounts used in both our basic and diluted EPS calculations are the same. A reconciliation of the weighted-average outstanding shares used in the two calculations is as follows:
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Twelve Months Ended
December 31,
|
|
2020
|
|
2019
|
|
2018
|
|
(In millions)
|
Weighted-average shares outstanding (basic)
|
121.5
|
|
|
120.9
|
|
|
120.4
|
|
Effect of dilutive securities:
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|
|
|
|
|
Stock options and restricted stock units
|
1.3
|
|
|
1.1
|
|
|
1.0
|
|
Weighted-average shares outstanding (diluted)
|
122.8
|
|
|
122.0
|
|
|
121.4
|
|
For the twelve months ended December 31, 2020, 2019 and 2018, 0.4 million, 1.1 million and 0.7 million stock options, respectively, were anti-dilutive and therefore excluded from this calculation.
Cash Equivalents. We consider all highly-liquid investments with an original maturity of three months or less to be cash equivalents.
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 macroeconomic conditions that may impact the collectability of outstanding receivables. We reassess the adequacy of the allowance for doubtful accounts each reporting period. Increases to the allowance for doubtful accounts are recorded as bad debt expense, which are included in selling, general and administrative expenses on the accompanying Consolidated Statements of Income (Loss). Below is a rollforward of our allowance for doubtful accounts for the twelve months ended December 31, 2020 and 2019:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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|
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|
|
|
|
Twelve Months Ended December 30,
|
|
|
2020
|
|
2019
|
|
|
(In millions)
|
Allowance for doubtful accounts, beginning of period
|
|
$11.2
|
|
$10.9
|
Current period bad debt expense
|
|
6.3
|
|
5.4
|
Write-offs, net of recoveries
|
|
(4.6)
|
|
(5.1)
|
Allowance for doubtful accounts, end of period
|
|
$12.9
|
|
$11.2
|
Other Current Assets. Other current assets on our Consolidated Balance Sheets included directors 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. As of December 31, 2019, the insurance receivable balance was approximately $112.4 million and we had accrued for the maximum remaining reimbursement amount allowed under the insurance policy. As of December 31, 2020 all amounts outstanding had been collected and the Company had no insurance receivables outstanding. Other current assets also include certain current tax receivable accounts. As of December 31, 2020 and 2019, these assets were approximately $21.3 million and $35.6 million, respectively. Additionally, other current assets 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 December 31, 2020 and 2019 these assets were approximately $25.1 million and $29.3 million, respectively, with fully offsetting balances in other current liabilities. These amounts are restricted as to their current use and will be released according to the specific customer agreements.
Long-Lived Assets. Property and equipment are stated at cost less accumulated depreciation and amortization. The cost of additions is capitalized. Property and equipment are depreciated on a straight-line basis over the assets’ estimated useful lives, which are generally three to ten years for data processing equipment and capitalized internal-use software and systems costs. Leasehold improvements are depreciated over the shorter of their estimated useful lives or lease terms that are reasonably assured. Buildings are depreciated over a forty-year period. Other fixed assets are depreciated over three to seven years. Upon sale or retirement of an asset, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is recognized and included in income from operations on the Consolidated Statements of Income (Loss), with the classification of any gain or loss dependent on the characteristics of the asset sold or retired.
Certain internal-use software and system development costs are capitalized. Accordingly, the specifically identified costs incurred to develop or obtain software, which is intended for internal use, are not capitalized until the preliminary project stage is completed and management, with the relevant authority, authorizes and commits to funding a software project and it is probable that the project will be completed and the software will be used to perform the function intended. Costs incurred during a software development project’s preliminary stage and post-implementation stage are expensed as incurred. Application development activities that are eligible for capitalization include software design and configuration, development of interfaces, coding, testing, and installation. Capitalized internal-use software and systems costs are subsequently amortized on a straight-line basis over a three- to ten-year period after project completion and when the related software or system is ready for its intended use.
Depreciation and amortization expense related to property and equipment was $249.3 million, $191.0 million and $157.6 million during the twelve months ended December 31, 2020, 2019, and 2018, respectively.
Industrial Revenue Bonds. Pursuant to the terms of certain industrial revenue bonds, we have transferred title to certain of our fixed assets with total costs of $156.4 million as of December 31, 2020 and 2019 to a local governmental authority in the U.S. to receive a property tax abatement related to economic development. The title to these assets will revert back to us upon retirement or cancellation of the applicable bonds. These fixed assets are still recognized in the Company’s Consolidated Balance Sheets as all risks and rewards remain with the Company.
Impairment of Long-Lived Assets. We monitor the status of our long-lived assets in order to determine if conditions exist or events and circumstances indicate that an asset group may be impaired in that its carrying amount may not be recoverable. Significant factors that are considered that could be indicative of impairment include: changes in business strategy, market conditions or the manner in which an asset group is used; underperformance relative to historical or expected future operating results; and negative industry or economic trends. If potential indicators of impairment exist, we estimate recoverability based on the asset group’s ability to generate cash flows greater than the carrying value of the asset group. We estimate the undiscounted future cash flows arising from the use and eventual disposition of the related long-lived asset group. If the carrying value of the long-lived asset group exceeds the estimated future undiscounted cash flows, an impairment loss is
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
recorded based on the amount by which the asset group’s carrying amount exceeds its fair value. We utilize estimates of discounted future cash flows to determine the asset group’s fair value. We did not record any material impairment losses of long-lived assets in any of the periods presented.
Goodwill and Indefinite-Lived Intangible Assets. Goodwill represents the cost in excess of the fair value of the net assets of acquired businesses. Goodwill is not amortized. We are required to test goodwill 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 test as of September 30 each year.
Under ASC 350, we have an option to perform a “qualitative” assessment of our reporting units to determine whether further impairment testing is necessary. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. For reporting units that we determine meet these criteria, we perform a qualitative assessment. In this qualitative assessment, we consider the following items for each of the reporting units: macroeconomic conditions, industry and market conditions, overall financial performance and other entity specific events. In addition, for each of these reporting units, we assess whether the most recent fair value determination results in an amount that exceeds the carrying amount of the reporting units. Based on these assessments, we determine whether the likelihood that a current fair value determination would be less than the current carrying amount of the reporting unit is not more likely than not. If it is determined it is not more likely than not, no further testing is required. If further testing is required, we continue with the quantitative impairment test.
In analyzing goodwill for potential impairment in the quantitative impairment test, we use a combination of the income and market approaches to estimate the reporting unit’s fair value. Under the income approach, we calculate the fair value of a reporting unit based on estimated future discounted cash flows. The assumptions we use are based on what we believe a hypothetical marketplace participant would use in estimating fair value. Under the market approach, we estimate the fair value based on market multiples of revenue or earnings before interest, income taxes, depreciation and amortization for benchmark companies. If the fair value of a reporting unit exceeds its carrying value, then no further testing is required. However, if a reporting unit’s fair value were to be less than its carrying value, we would then determine the amount of the impairment charge, if any, which would be the amount that the carrying value of the reporting unit’s goodwill exceeded its fair value.
Indefinite-lived reacquired rights represent the value of rights which we had granted to various affiliate credit reporting agencies that were reacquired in the U.S. and Canada. A portion of our reacquired rights are perpetual in nature and, therefore, the useful lives are considered indefinite in accordance with the accounting guidance in place at the time of the acquisitions. Indefinite-lived intangible assets are not amortized. We are required to test indefinite-lived intangible assets for impairment annually and whenever events and circumstances indicate that there may be an impairment of the asset value. Our annual impairment test date is September 30. We perform the impairment test for our indefinite-lived intangible assets by first assessing qualitative factors to determine whether it is necessary to perform a quantitative impairment test. If the qualitative assessment indicates that we need to perform a quantitative impairment test, we compare the asset’s fair value to its carrying value. We estimate the fair value based on projected discounted future cash flows. An impairment charge is recognized if the asset’s estimated fair value is less than its carrying value.
We completed our annual impairment testing for goodwill and indefinite-lived intangible assets during the twelve months ended December 31, 2020, 2019 and 2018, and we determined that there was no impairment in any of these years.
Purchased Intangible Assets. Purchased intangible assets represent the estimated fair value of acquired intangible assets used in our business. Purchased data files represent the estimated fair value of consumer and commercial data files acquired primarily through the purchase of independent credit reporting agencies in the U.S., Australia, and Canada. We expense the cost of modifying and updating credit files in the period such costs are incurred. We amortize purchased data files, which primarily consist of acquired credit files, on a straight-line basis. All of our other purchased intangible assets are also amortized on a straight-line basis.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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Asset
|
|
Useful Life
|
|
|
(In years)
|
Purchased data files
|
|
15
|
Acquired software and technology
|
|
1 to 10
|
Non-compete agreements
|
|
5
|
Proprietary database
|
|
6 to 13
|
Customer relationships
|
|
7 to 25
|
Trade names
|
|
2 to 15
|
Other Assets. Other assets on our Consolidated Balance Sheets primarily represents our investment in unconsolidated affiliates, the long-term portion of the Company’s operating lease right-of-use assets, assets related to life insurance policies covering certain officers of the Company, and employee benefit trust assets.
Equity Investment. We record our equity investment in Brazil within Other Assets using the measurement method of cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions. As the fair value of the investment has not historically been readily determinable, our investment has been recorded at cost, less impairment. On September 30, 2020, the company in which we are invested in Brazil underwent an initial public offering and began to trade publicly in Brazil. The carrying value of the investment has been adjusted to $127.7 million based on observable Level 1 inputs as of December 31, 2020, resulting in an unrealized gain of $116.6 million for the twelve months December 31, 2020. All unrealized gains or losses on the investment are recorded in Other Income (Expense), Net within the Consolidated Statements of Income (Loss).
Other Current Liabilities. Other current liabilities on our Consolidated Balance Sheets consist of the current portion of our operating lease liabilities and various accrued liabilities such as costs related to the 2017 cybersecurity incident as described more fully in Note 6, interest expense, and accrued employee benefits. Other current liabilities includes accrued legal expense of $379.7 million and $589.0 million as of December 31, 2020 and 2019, respectively. The accrued legal balance primarily consists of $355.2 million and $563.9 million accruals for losses associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident that have not been paid as of December 31, 2020 and 2019, respectively. Other current liabilities also include the offset to other current assets related to amounts in specifically designated accounts that hold the funds that are due to customers from our debt collection and recovery management services. These funds were approximately $25.1 million and $29.3 million as of December 31, 2020 and 2019, respectively. The associated assets are restricted as to their current use and will be released according to the specific customer agreements.
Benefit Plans. We sponsor various pension and defined contribution plans. We also maintain certain healthcare and life insurance benefit plans for eligible retired U.S. employees. Benefits under the pension and other postretirement benefit plans are generally based on age at retirement and years of service and for some pension plans, benefits are also based on the employee’s annual earnings. The net periodic cost of our pension and other postretirement plans is determined using several actuarial assumptions, the most significant of which are the discount rate and the expected return on plan assets. The expected rate of return on plan assets is based on both our historical returns and forecasted future investment returns by asset class, as provided by our external investment advisor. In the fourth quarter of 2020, we voluntarily changed our method of accounting for recognizing actuarial gains and losses and expected return on plan assets for our defined benefit pension and other postretirement benefit plans, as further described below. Our Consolidated Balance Sheets reflect the funded status of the pension and other postretirement plans.
Foreign Currency Translation. The functional currency of each of our foreign operating subsidiaries is that subsidiary’s local currency except for Argentina. Argentina has experienced multiple periods of increasing inflation rates, devaluation of the peso, and increasing borrowing rates. As such, Argentina was deemed a highly inflationary economy by accounting policymakers. Beginning in the third quarter of 2018, we accounted for Argentina as a highly inflationary economy by remeasuring the peso denominated monetary assets and liabilities which resulted in the recognition of $0.5 million, $1.0 million and $1.8 million of foreign currency losses that were recorded in other income, net in our Consolidated Statements of Income (Loss) for the twelve months ended December 31, 2020, 2019 and 2018, respectively.
Other than Argentina, we translate the assets and liabilities of foreign subsidiaries at the year-end rate of exchange and revenue and expenses at the monthly average rates during the year. We record the resulting translation adjustment in other comprehensive loss, included in accumulated other comprehensive loss, a component of shareholders’ equity. We also record gains and losses resulting from the translation of intercompany balances of a long-term investment nature in foreign currency
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
translation in other comprehensive loss and accumulated other comprehensive loss. In the years ended December 31, 2020, 2019 and 2018, we recorded $7.5 million, $3.0 million and $1.6 million of foreign currency transaction losses in our Consolidated Statements of Income (Loss), respectively.
Financial Instruments. Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and short and long-term debt. The carrying amounts of these items, other than long-term debt, approximate their fair market values due to the short-term nature of these instruments. The fair value of our fixed-rate debt is determined using Level 2 inputs such as quoted market prices for publicly traded instruments, and for non-publicly traded instruments, through valuation techniques depending on the specific characteristics of the debt instrument, taking into account credit risk. As of December 31, 2020 and 2019, the fair value of our long-term debt, including the current portion, based on observable inputs was $4.8 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 an asset or liability. We use a three level fair value hierarchy to prioritize the inputs used in valuation techniques between observable inputs that reflect quoted prices in active markets, inputs other than quoted prices with observable market data and unobservable data (e.g., a company’s own data).
The following table presents assets and liabilities measured at fair value on a recurring basis:
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Fair Value Measurements at Reporting Date Using:
|
Description
|
|
Fair Value at December 31, 2020
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
|
(In millions)
|
Assets and Liabilities:
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|
|
|
|
|
|
|
|
Deferred Compensation Plan Assets (1)
|
|
$
|
42.3
|
|
|
$
|
42.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Deferred Compensation Plan Liability (1)
|
|
(42.3)
|
|
|
—
|
|
|
(42.3)
|
|
|
—
|
|
Total assets and liabilities
|
|
$
|
—
|
|
|
$
|
42.3
|
|
|
$
|
(42.3)
|
|
|
$
|
—
|
|
(1) We maintain deferred compensation plans that allow for certain management employees to defer the receipt of compensation (such as salary and incentive compensation) until a later date based on the terms of the plans. 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. As disclosed in Note 3, we completed various acquisitions during the years ended December 31, 2020 and 2019. The values of net assets acquired were recorded at fair value using Level 3 inputs. The majority of the related current assets acquired and liabilities assumed were recorded at their carrying values as of the date of acquisition, as their carrying values approximated their fair values due to their short-term nature. The fair values of definite-lived intangible assets acquired in these acquisitions were estimated primarily based on the income approach. The income approach estimates fair value based on the present value of the cash flows that the assets are expected to generate in the future. We developed internal estimates for the expected cash flows and discount rates in the present value calculations.
Variable Interest Entities. We hold interests in certain entities, including credit data, information solutions, debt collections and recovery management ventures and an identity authentication company, that are considered variable interest entities, or VIEs. These variable interests relate to ownership interests that require financial support for these entities. Our investments related to these VIEs totaled $26.8 million at December 31, 2020, representing our maximum exposure to loss, with the exception of the guarantees referenced in Note 6. We are not the primary beneficiary and are not required to consolidate any of these VIEs, with the exception of a debt collections and recovery management venture, for which we meet the consolidation criteria under ASC 810. In regards to that consolidated VIE, we have a 75% equity ownership interest and control of the activities that most significantly impact the VIE’s economic performance. The assets and liabilities of the VIE for which we are the primary beneficiary were not significant to the Company’s consolidated financial statements.
In evaluating whether we have the power to direct the activities of a VIE that most significantly impact its economic performance, we consider the purpose for which the VIE was created, the importance of each of the activities in which it is
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
engaged and our decision-making role, if any, in those activities that significantly determine the entity’s economic performance as compared to other economic interest holders. This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the entity’s future performance and the exercise of professional judgment in deciding which decision-making rights are most important.
In determining whether we have the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, we evaluate all of our economic interests in the entity, regardless of form (debt, equity, management and servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity’s design, including: the entity’s capital structure, contractual rights to earnings (losses), subordination of our interests relative to those of other investors, contingent payments, as well as other contractual arrangements that have the potential to be economically significant. The evaluation of each of these factors in reaching a conclusion about the potential significance of our economic interests is a matter that requires the exercise of professional judgment.
Certain of our VIEs have redeemable noncontrolling interests that are subject to classification outside of permanent equity on the Company’s Consolidated Balance Sheet. The redeemable noncontrolling interests are reflected using the redemption method as of the balance sheet date. Redeemable noncontrolling interest adjustments to the redemption values are reflected in retained earnings. The adjustment of redemption value at the period end that reflects a redemption value in excess of fair value is included as an adjustment to net income attributable to Equifax stockholders for the purposes of the calculation of earnings per share. None of the current period adjustments reflect a redemption in excess of fair value. Additionally, due to the immaterial balance of the redeemable noncontrolling interest, we have elected to maintain the noncontrolling interest in permanent equity, rather than temporary equity, within our Consolidated Balance Sheet.
Adoption of New Accounting Standards. 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 standard did not materially impact our consolidated financial statements or disclosures.
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. 2018-14 “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. We have updated our disclosures in Note 9 to conform with the standard.
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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842).” This standard requires lessees to record most leases on their balance sheets and expenses on their income statements in a manner similar to current lease accounting. The guidance also eliminates current real estate-specific provisions for all entities. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. All entities will classify leases to determine how to recognize lease-related revenue and expense. The guidance became effective for fiscal years and interim reporting periods beginning after December 15, 2018.
In July 2018, the FASB approved an additional optional transition method by allowing entities to initially apply the new lease standard at the adoption date. As of January 1, 2019, we adopted the standard using this optional transition method. The adoption of the standard did not have a material impact on our consolidated financial statements with the most significant impact being the recognition of right-of-use assets and lease liabilities for operating leases in other assets, net and other current and long-term liabilities, respectively, in our Consolidated Balance Sheets. We have applied the available package of practical expedients, as well as the election not to apply recognition and measurement requirements to short-term leases. See Note 12 for further details.
In August 2017, the FASB issued ASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities (Topic 815).” The amendments in ASU 2017-12 provide targeted improvements to the accounting for hedging activities to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The adoption of ASU 2017-12 is effective for annual periods beginning after December 15, 2018, although early adoption is permitted. This guidance must be applied on a prospective basis. The adoption of this guidance did not have an impact on our financial position, results of operations or cash flows.
Recent Accounting Pronouncements. 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.
Change in Accounting Principle. In the fourth quarter of 2020, we voluntarily changed our method of accounting for recognizing actuarial gains and losses and expected return on plan assets for our defined benefit pension and other postretirement benefit plans. Under the accounting method change, remeasurement of projected benefit obligation and plan assets are immediately recognized in earnings through net periodic benefit cost within Other Income (Expense) on the Consolidated Statements of Income (Loss), with pension and postretirement plans to be remeasured annually in the fourth quarter or on an interim basis as triggering events require remeasurement. In addition, we changed our accounting for measuring the market-related value of plan assets from a calculated amount to fair value, no longer recognizing the difference between expected return on assets and actual return on assets over a five year period. Prior to this accounting method change, unrecognized actuarial gains and losses were included in Accumulated Other Comprehensive Loss on the Consolidated Balance Sheet and were amortized into earnings over the average remaining service period of active employees expected to receive benefits under the plan. We also determined the market-related value of plan assets based on a calculated market adjustment to reflect investment gains and losses during each of the last five years, with differences between expected and actual return on plan assets recognized at a rate of 20% per year. While the historical accounting principle was acceptable, we believe that the current accounting policies provide a better representation of the operating results of the Company and the economic performance of plan assets in relation to the measurement of its benefit obligations for the period. The changes in accounting will more clearly reflect the current period impact of the Company’s pension asset investment strategy to readers of the financial statements.
This change has been applied on a retrospective basis for all prior years presented. As of January 1, 2018, the cumulative effect of this change resulted in a $302.6 million decrease to retained earnings and a corresponding $302.6 million decrease to Accumulated Other Comprehensive Loss. The impact of the change in accounting principle on current and prior period financial information is detailed further in Notes 14 and 15.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. REVENUE
Revenue Recognition. Based on the information management reviews internally for evaluating operating segment performance and nature, amount, timing, and uncertainty of revenue and cash flows affected by economic factors, we disaggregate revenue as follows:
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Twelve Months Ended
December 31,
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Change
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Change
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|
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2020
|
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2019
|
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2019
|
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2018
|
Consolidated Operating Revenue
|
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2020
|
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2019
|
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2018
|
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$
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%
|
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$
|
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%
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|
(In millions)
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Online Information Solutions
|
|
$
|
1,067.7
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|
|
$
|
924.1
|
|
|
$
|
877.5
|
|
|
$
|
143.6
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|
16
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%
|
|
$
|
46.6
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|
|
5
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%
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Mortgage Solutions
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199.8
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|
$
|
136.9
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|
|
153.6
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|
|
62.9
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|
46
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%
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|
(16.7)
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|
(11)
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%
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Financial Marketing Services
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|
215.0
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|
|
$
|
216.4
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|
216.2
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(1.4)
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(1)
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%
|
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0.2
|
|
|
—
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%
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Total U.S. Information Solutions
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1,482.5
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|
1,277.4
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|
1,247.3
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|
205.1
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|
|
16
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%
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30.1
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|
|
2
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%
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Verification Services
|
|
1,103.2
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|
700.1
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|
|
567.0
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|
403.1
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|
|
58
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%
|
|
133.1
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|
|
23
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%
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Employer Services
|
|
334.7
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|
|
249.6
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|
|
259.8
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|
|
85.1
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|
34
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%
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(10.2)
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|
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(4)
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%
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Total Workforce Solutions
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1,437.9
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|
|
949.7
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|
|
826.8
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|
|
488.2
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|
|
51
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%
|
|
122.9
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|
|
15
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%
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Asia Pacific
|
|
296.5
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|
|
300.1
|
|
|
325.6
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|
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(3.6)
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|
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(1)
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%
|
|
(25.5)
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|
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(8)
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%
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Europe
|
|
255.7
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|
|
275.6
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|
|
287.3
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(19.9)
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(7)
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%
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(11.7)
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(4)
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%
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Latin America
|
|
160.3
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|
|
190.5
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|
|
206.6
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(30.2)
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(16)
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%
|
|
(16.1)
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|
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(8)
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%
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Canada
|
|
149.6
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|
|
154.4
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|
|
146.7
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|
|
(4.8)
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|
|
(3)
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%
|
|
7.7
|
|
|
5
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%
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Total International
|
|
862.1
|
|
|
920.6
|
|
|
966.2
|
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|
(58.5)
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|
|
(6)
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%
|
|
(45.6)
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|
|
(5)
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%
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Global Consumer Solutions
|
|
345.0
|
|
|
359.9
|
|
|
371.8
|
|
|
(14.9)
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|
|
(4)
|
%
|
|
(11.9)
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|
|
(3)
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%
|
Total operating revenue
|
|
$
|
4,127.5
|
|
|
$
|
3,507.6
|
|
|
$
|
3,412.1
|
|
|
$
|
619.9
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|
|
18
|
%
|
|
$
|
95.5
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|
|
3
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%
|
3. ACQUISITIONS AND INVESTMENTS
2020 Acquisitions and Investments. In February 2020, we acquired the remaining 40.6% interest in our India joint venture. In 2020, the Company also completed an acquisition in our USIS segment to expand the Company's product offerings. We have completed the allocation of the purchase prices for the 2020 acquisitions.
2019 Acquisitions and Investments. In April 2019, the Company completed the acquisition of 100% of Knowledge Works, Inc., d/b/a PayNet, Inc. (“PayNet”), a commercial data and analytics company, in our USIS and International segments to expand the Company’s product offerings. In 2019, the Company completed various acquisitions in our Workforce Solutions segment to expand the Company’s product offerings. We have completed the allocation of the purchase prices for the 2019 acquisitions.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Purchase Price Allocation. The following table summarizes the estimated fair value of the net assets acquired and the liabilities assumed at the acquisition dates during 2020 and 2019.
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|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020 (3)
|
|
2019
|
|
(In millions)
|
Cash
|
$
|
9.7
|
|
|
$
|
5.5
|
|
Accounts receivable and other current assets
|
2.5
|
|
|
5.5
|
|
Other assets
|
2.7
|
|
|
1.5
|
|
Identifiable intangible assets (1)
|
59.5
|
|
|
92.0
|
|
Goodwill (2)
|
58.3
|
|
|
197.4
|
|
Total assets acquired
|
132.7
|
|
|
301.9
|
|
|
|
|
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Other current liabilities
|
(6.4)
|
|
|
(5.1)
|
|
Other liabilities
|
(15.0)
|
|
|
(18.4)
|
|
Net assets acquired
|
$
|
111.3
|
|
|
$
|
278.4
|
|
(1)Identifiable intangible assets are further disaggregated in the following table.
(2)The goodwill related to the 2020 acquisitions were recognized in the International and USIS operating segments. The goodwill related to the International and USIS acquisitions in 2020 are not deductible for tax purposes. The goodwill related to PayNet is included in the USIS and International operating segments and the goodwill related to the other 2019 acquisitions is included in the Workforce Solutions operating segment. The goodwill related to PayNet and the Workforce Solutions acquisitions in 2019 are not deductible for tax purposes.
(3)The above reflects the total net assets recorded from the purchase of the remaining interest of the India joint venture, inclusive of the gain due to remeasurement of the prior equity interest.
The primary reasons the purchase price of these acquisitions exceeded the fair value of the net assets acquired, which resulted in the recognition of goodwill, were expanded growth opportunities from new or enhanced product offerings and geographies, cost savings from the elimination of duplicative activities, and the acquisition of an assembled workforce that are not recognized as assets apart from goodwill.
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|
|
|
|
|
|
December 31,
|
|
|
2020
|
|
2019
|
Intangible asset category
|
|
Fair value
|
|
Weighted-average useful life
|
|
Fair value
|
|
Weighted-average useful life
|
|
|
(in millions)
|
|
(in years)
|
|
(in millions)
|
|
(in years)
|
Customer relationships
|
|
$
|
10.6
|
|
|
10.0
|
|
$
|
17.1
|
|
|
9.9
|
Acquired software and technology
|
|
0.3
|
|
|
3.0
|
|
—
|
|
|
0.0
|
Proprietary database
|
|
48.2
|
|
|
12.3
|
|
68.6
|
|
|
6.9
|
Non-compete agreements
|
|
0.1
|
|
|
5.0
|
|
4.0
|
|
|
5.0
|
Trade names and other intangible assets
|
|
0.3
|
|
|
2.0
|
|
2.3
|
|
|
4.5
|
Total acquired intangibles
|
|
$
|
59.5
|
|
|
11.7
|
|
$
|
92.0
|
|
|
7.3
|
4. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill. Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. As discussed in Note 1, 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 each year. The fair value estimates for our reporting units were determined using a combination of the income and market approaches in accordance with the Company’s methodology. Our annual impairment tests as of September 30, 2020, 2019 and 2018 resulted in no impairment of goodwill.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During 2020, we acquired the remaining interest in our India joint venture whose goodwill was allocated to the International operating segment, and an acquisition for which the acquired goodwill was allocated to the USIS operating segment.
During 2019, we completed the acquisition of PayNet whose goodwill was allocated to the USIS and International operating segments, and various other acquisitions for which the acquired goodwill was allocated to the Workforce Solutions operating segment.
Changes in the amount of goodwill for the twelve months ended December 31, 2020 and 2019, are as follows:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Information
Solutions
|
|
International
|
|
Workforce Solutions
|
|
Global Consumer Solutions
|
|
Total
|
|
(In millions)
|
Balance, December 31, 2018
|
$
|
1,128.9
|
|
|
$
|
1,844.7
|
|
|
$
|
970.2
|
|
|
$
|
185.9
|
|
|
$
|
4,129.7
|
|
Acquisitions
|
153.7
|
|
|
2.1
|
|
|
40.1
|
|
|
—
|
|
|
195.9
|
|
Adjustments to initial purchase price allocation
|
(1.9)
|
|
|
3.1
|
|
|
0.1
|
|
|
—
|
|
|
1.3
|
|
Foreign currency translation
|
—
|
|
|
(20.7)
|
|
|
—
|
|
|
2.1
|
|
|
(18.6)
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019
|
1,280.7
|
|
|
1,829.2
|
|
|
1,010.4
|
|
|
188.0
|
|
|
4,308.3
|
|
Acquisitions
|
6.0
|
|
|
52.3
|
|
|
—
|
|
|
—
|
|
|
58.3
|
|
Adjustments to initial purchase price allocation
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
Foreign currency translation
|
—
|
|
|
126.4
|
|
|
—
|
|
|
2.5
|
|
|
128.9
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020
|
$
|
1,286.7
|
|
|
$
|
2,007.9
|
|
|
$
|
1,010.7
|
|
|
$
|
190.5
|
|
|
$
|
4,495.8
|
|
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. Our 2020 annual impairment test completed during the third quarter of 2020 resulted in no impairment of indefinite-lived intangible assets.
|
|
|
|
|
|
|
Amount
|
|
(In millions)
|
Balance, December 31, 2018
|
$
|
94.8
|
|
Foreign currency translation
|
0.1
|
|
Balance, December 31, 2019
|
$
|
94.9
|
|
Foreign currency translation
|
—
|
|
Balance, December 31, 2020
|
$
|
94.9
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Purchased Intangible Assets. Purchased intangible assets, net, recorded on our Consolidated Balance Sheets at December 31, 2020 and 2019, are as follows:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
December 31, 2019
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
Definite-lived intangible assets:
|
(In millions)
|
Purchased data files
|
$
|
913.7
|
|
|
$
|
(399.2)
|
|
|
$
|
514.5
|
|
|
$
|
904.0
|
|
|
$
|
(351.8)
|
|
|
$
|
552.2
|
|
Acquired software and technology
|
115.3
|
|
|
(106.6)
|
|
|
8.7
|
|
|
110.1
|
|
|
(84.0)
|
|
|
26.1
|
|
Customer relationships
|
680.1
|
|
|
(331.4)
|
|
|
348.7
|
|
|
673.0
|
|
|
(305.1)
|
|
|
367.9
|
|
Reacquired rights
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Proprietary database
|
148.6
|
|
|
(30.7)
|
|
|
117.9
|
|
|
108.3
|
|
|
(20.9)
|
|
|
87.4
|
|
Non-compete agreements
|
6.5
|
|
|
(3.5)
|
|
|
3.0
|
|
|
7.8
|
|
|
(3.5)
|
|
|
4.3
|
|
Trade names and other intangible assets
|
14.4
|
|
|
(9.4)
|
|
|
5.0
|
|
|
17.3
|
|
|
(10.6)
|
|
|
6.7
|
|
Total definite-lived intangible assets
|
$
|
1,878.6
|
|
|
$
|
(880.8)
|
|
|
$
|
997.8
|
|
|
$
|
1,820.5
|
|
|
$
|
(775.9)
|
|
|
$
|
1,044.6
|
|
Amortization expense related to purchased intangible assets was $141.8 million, $140.1 million, and $152.8 million during the twelve months ended December 31, 2020, 2019, and 2018, respectively.
Estimated future amortization expense related to definite-lived purchased intangible assets at December 31, 2020 is as follows:
|
|
|
|
|
|
|
|
|
Years ending December 31,
|
|
Amount
|
|
|
(In millions)
|
2021
|
|
$
|
130.9
|
|
2022
|
|
124.8
|
|
2023
|
|
123.2
|
|
2024
|
|
114.6
|
|
2025
|
|
114.1
|
|
Thereafter
|
|
390.2
|
|
|
|
$
|
997.8
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. DEBT
Debt outstanding at December 31, 2020 and 2019 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes, 2.30%, due June 2021
|
$
|
500.0
|
|
|
$
|
500.0
|
|
Notes, 3.60%, due Aug 2021
|
300.0
|
|
|
300.0
|
|
Notes, Floating Rate, due Aug 2021
|
300.0
|
|
|
300.0
|
|
Notes, 3.30%, due Dec 2022
|
500.0
|
|
|
500.0
|
|
Notes, 3.95%, due May 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
|
2.2
|
|
|
3.1
|
|
Total debt
|
4,402.2
|
|
|
3,403.1
|
|
Less short-term debt and current maturities
|
(1,101.1)
|
|
|
(3.1)
|
|
Less unamortized discounts and debt issuance costs
|
(23.8)
|
|
|
(20.5)
|
|
Total long-term debt, net of discount
|
$
|
3,277.3
|
|
|
$
|
3,379.5
|
|
Scheduled future maturities of debt at December 31, 2020, are as follows:
|
|
|
|
|
|
|
|
|
Years ending December 31,
|
|
Amount
|
|
|
(In millions)
|
2021
|
|
$
|
1,101.1
|
|
2022
|
|
500.0
|
|
2023
|
|
401.1
|
|
2024
|
|
750.0
|
|
2025
|
|
400.0
|
|
Thereafter
|
|
1,250.0
|
|
Total debt
|
|
$
|
4,402.2
|
|
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 of each year. 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 of each year. The net proceeds of the sale of the notes were used to repay borrowings under our Receivables Facility and Revolver, while the remaining funds are intended for general corporate purposes, which may include the repayment of a portion of the 2021 debt maturities. 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 accrue at a rate of 2.6% per year and will be payable semi-annually in arrears on June 1 and December 1 of each year of each year. The net proceeds of the sale of the notes were used to repay borrowings under our Receivables Facility and our Commercial Paper program and for general corporate purposes. We must comply with various non-financial covenants, including certain
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
3.6%, 3.95%, and Floating Rate Senior Notes. In May 2018, we issued $300.0 million aggregate principal amount of 3.6% Senior Notes due 2021 (the “2021 Notes”), $400.0 million aggregate principal amount of 3.95% Senior Notes due 2023 (the “2023 Notes”), and $300.0 million aggregate principal amount Floating Rate Notes due 2021 (the “Floating Rate Notes”) in an underwritten public offering. Interest on the 2021 Notes accrues from their date of issuance at a rate of 3.6% per year and is payable in cash semi-annually in arrears on February 15 and August 15 of each year and began on February 15, 2019. Interest on the 2023 Notes accrues from their date of issuance at a rate of 3.95% per year and is payable in cash semi-annually in arrears on June 15 and December 15 of each year and began on December 15, 2018. Interest on the Floating Rate Notes for a particular interest period will be a rate equal to three-month LIBOR on the interest determination date plus 0.87% per annum and is payable in cash quarterly in arrears on February 15, May 15, August 15, and November 15 of each year and began on August 15, 2018. The net proceeds of the sale of the notes were used to repay borrowings under our Revolver, our prior $800.0 million three-year delayed draw term loan facility (“Term Loan”) and our CP program. 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 2021 Notes, 2023 Notes and Floating Rate Notes are unsecured and rank equally with all of our 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 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 December 31, 2020, there were $0.7 million of letters of credit issued under the Revolver, no borrowings on the Revolver, and no commercial paper borrowings. Availability under the Revolver was $1.1 billion at December 31, 2020.
Under the Revolver, the Company must comply with various financial and non-financial covenants. The financial covenants require the Company to maintain a maximum leverage ratio, defined as consolidated funded debt divided by consolidated EBITDA (as set forth in the applicable credit agreement) for the preceding four quarters, of not more than 3.5 to 1.0. The Company may, subject to the terms of the Revolver, increase the covenant by 0.5 (i.e. to 4.0 to 1.0) for a four consecutive fiscal quarter period following a material acquisition. On April 10, 2020, we amended our existing revolving credit facility to increase the maximum leverage ratio to provide additional financial flexibility. The amendment increases the maximum leverage ratio, defined as consolidated funded debt divided by consolidated EBITDA for the preceding four quarters, to (i) 4.5 to 1.0 for fiscal quarters ending on June 30, 2020 through and including September 30, 2021 and (ii) 4.0 to 1.0 for the fiscal quarter ending on December 31, 2021. The maximum leverage ratio will return to 3.5 to 1.0 beginning with the fiscal quarter ending March 31, 2022 and thereafter. Compliance with this financial covenant is tested quarterly. The non-financial covenants include limitations on liens, subsidiary debt, mergers, liquidations, asset dispositions, acquisitions, certain restricted payments, transactions with affiliates, certain accounting changes, restricting subsidiary dividends and distributions, hedging agreements, and certain government regulations. As of December 31, 2020, we were in compliance with our covenants under the Revolver. Our borrowings under these facilities, which have not been guaranteed by any of our subsidiaries, are unsecured and will rank on parity in right of payment with all of our other unsecured and unsubordinated indebtedness from time to time outstanding.
At December 31, 2020, interest was payable on borrowings under the Revolver at the base rate or London Interbank Offered Rate, or LIBOR, plus a specified margin. The Company is required to pay on a quarterly basis a commitment fee with respect to our Revolver, which is calculated based upon the amount of daily usage of the Revolver over the available aggregate lender commitments thereunder during the applicable quarterly period. Both the applicable interest rate and the commitment fee are subject to adjustment based on the Company’s debt ratings.
Commercial Paper Program. In the second quarter of 2019, we increased our CP program to $1.1 billion. Our CP program has been established through the private placement of CP notes from time to time, in which borrowings bear interest at either a variable rate (based on LIBOR or other benchmarks) or a fixed rate, with the applicable rate and margin. Maturities of CP can range from overnight to 397 days. Because the CP program is backstopped by the 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 under the facility and, pursuant to our existing Board of Directors authorization, by the outstanding borrowings under our Revolver. At December 31, 2020, there were no CP notes outstanding.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Receivables Funding Facility. In the fourth quarter of 2017, Equifax entered a $225.0 million receivables funding facility (the “Receivables Facility”) which had an original maturity in 2019 and was amended in December 2019 to extend the maturity to December 2022. Under the Receivables Facility, Equifax and certain of its U.S. subsidiaries sold the eligible third-party receivables of its U.S. based business, to Equifax Receivables Funding LLC, a consolidated, wholly-owned, bankruptcy-remote subsidiary that subsequently transferred, without recourse, an undivided interest in these accounts receivable to investors. The investors had no recourse to the Company’s other assets except for customary repurchase, warranty and indemnity claims. Creditors of Equifax did not have recourse to the assets of Equifax Receivables Funding LLC. The Receivables Facility contained 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) were guaranteed by Equifax. In November 2020, we terminated the Receivables Facility.
2.3% and 3.25% Senior Notes. On May 12, 2016, we issued $500.0 million principal amount of 2.3%, five-year senior notes and $275.0 million principal amount of 3.25%, ten-year senior notes in an underwritten public offering. Interest 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 prior revolving credit facility and a portion of the borrowings under our commercial paper program incurred to finance the acquisition of Veda. 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 senior notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness.
7.0% Senior Notes. On June 28, 2007, we issued $250.0 million principal amount of 7.0%, thirty-year senior notes in underwritten public offerings. Interest is payable semi-annually in arrears on January 1 and July 1 of each year. The net proceeds of the financing were used to repay short-term indebtedness, a substantial portion of which was incurred in connection with our acquisition of TALX. We must comply with various non-financial covenants, including certain limitations on liens, additional debt and mortgages, mergers, asset dispositions and sale-leaseback arrangements. The senior notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness.
3.3% Senior Notes. On December 17, 2012, we issued $500.0 million principal amount of 3.3%, ten-year senior notes in an underwritten public offering. Interest is payable semi-annually in arrears on December 15 and June 15 of each year. The net proceeds of the sale of the notes were used to partially finance the acquisition of CSC Credit Services in December 2012. We must comply with various non-financial covenants, including certain limitations on liens, additional debt and mortgages, mergers, asset dispositions and sale-leaseback arrangements. The senior notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness.
6.9% Debentures. We have $125.0 million of debentures outstanding with a maturity date of 2028. The debentures are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness.
Cash paid for interest was $130.9 million, $105.3 million and $88.2 million during the twelve months ended December 31, 2020, 2019 and 2018, respectively.
6. COMMITMENTS AND CONTINGENCIES
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. Criminals exploited a software vulnerability in a U.S. website application to gain unauthorized access to our network. In March 2017, the U.S. Department of Homeland Security distributed a notice concerning the software vulnerability. We undertook efforts to identify and remediate vulnerable systems; however, the vulnerability in the website application that was exploited was not identified by our security processes. We discovered unusual network activity in late-July 2017 and upon discovery promptly investigated the activity. Once the activity was identified as potential unauthorized access, we acted to stop the intrusion and engaged a leading, independent cybersecurity firm to conduct a forensic investigation to determine the scope of the unauthorized access, including the specific information potentially impacted. Based on our forensic investigation, the unauthorized access occurred from mid-May through July 2017.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Product Liability. As a result of the 2017 cybersecurity incident, we offered TrustedID® Premier, a credit file monitoring and identity theft protection product, for free to all eligible U.S. consumers who signed up through January 31, 2018. In late 2018, the Company extended the free credit monitoring services for an additional twelve months for eligible consumers impacted by the 2017 cybersecurity incident by providing them the opportunity to enroll in Experian® IDNotify™ at no cost. We also provided free credit reports and scores, credit monitoring and identity theft protection for twenty four months to impacted consumers in Canada and the U.K. We have recorded the expenses necessary to provide this service to those who signed up. The remaining product liability balance at December 31, 2020 and 2019 was not material to the Consolidated Financial Statements.
Litigation, Claims and Government Investigations. 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.
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 and the settlement becomes final in accordance with its terms, we can provide no assurance that the U.S. Consumer MDL Litigation will be resolved as contemplated by the settlement agreement. If the Court’s order approving the settlement agreement was overturned by an appellate court and not cured in accordance with the terms of the consent orders with the FTC and CFPB, the consent orders with the FTC, CFPB and MSAG Group would remain in place and the Consumer Restitution Fund would be administered by the FTC. In that event, 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. 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. The court granted final approval of the settlement on October 22, 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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. Five putative Canadian class actions, four of which are on behalf of a national class of approximately 19,000 Canadian consumers, are pending against us in Ontario, 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. In addition to seeking class certification on behalf of the approximately 19,000 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 December 13, 2019, the court in Ontario granted certification of a nationwide class that includes all impacted Canadians as well as Canadians who had subscription products with Equifax between March 7, 2017 and July 30, 2017 who were not impacted by the incident. Our motion for leave to appeal this decision was granted in part, and our appeal is now pending. All remaining purported class actions are at preliminary stages or stayed.
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. Except as described below, these investigations have been resolved as discussed in prior filings or there has been no further activity.
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.
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. The agreements expire between 2021 and 2027. The estimated aggregate minimum contractual obligation remaining under these agreements is approximately $318 million as of December 31, 2020, with no future year’s minimum contractual obligation expected to exceed approximately $133 million. Annual payment obligations in regard to these agreements vary due to factors such as the volume of data processed; changes in our servicing needs as a result of new product offerings, acquisitions or divestitures; the introduction of significant new technologies; foreign currency; or the general rate of inflation. In certain circumstances (e.g., a change in control or for our convenience), we may terminate these data processing and outsourcing agreements, and, in doing so, certain of these agreements require us to pay significant termination fees.
Under our agreement with IBM (which covers our operations in North America, Europe and Asia Pacific), we have outsourced certain of our mainframe and midrange operations, help desk service and desktop support functions, and the operation of our voice and data networks. The scope of services provided by IBM, and the term of our agreement with respect to such services, varies by geography and location. The estimated future minimum contractual obligation under the revised North America (US and Canada), Europe (UK and Spain), Australia and Latin America agreements is approximately $61 million for the remaining term, with no individual year’s minimum expected to exceed approximately $37 million. We may terminate certain portions of this agreement without penalty in the event that IBM is in material breach of the terms of the agreement. During 2020, 2019 and 2018, we paid approximately $50 million, $52 million and $49 million, respectively, for these services.
Under our agreement with Google, we have outsourced certain areas of our network and security infrastructure. The estimated future minimum contractual obligation under the agreement is approximately $120 million for the remaining term, with no individual year’s minimum expected to exceed approximately $44 million. We may terminate certain portions of this
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
agreement without penalty in the event that Google is in material breach of the terms of the agreement. During 2020, 2019 and 2018, we paid approximately $29 million, $14 million and $7 million, respectively, for these services.
Change in Control Agreements
In February 2019, we adopted the Equifax Inc. Change in Control Severance Plan (the “CIC Plan”) for certain key executives. The CIC Plan does not apply to Mark W. Begor, our Chief Executive Officer, whose severance benefits in a change of control are contained in his employment agreement with the Company. The CIC Plan and Mr. Begor’s agreement provide for, among other things, certain payments and benefits in the event of a qualifying termination of employment (i.e., termination of employment by the executive for “good reason” or termination of employment by the Company without “cause,” each as defined in the applicable document) following a change in control of the Company. In the event of a qualifying termination, the executive will become entitled to continuation of certain employee benefits for two years, as well as a lump sum severance payment, all of which differs by executive.
Change in control events potentially triggering benefits under the CIC Plan and Mr. Begor’s agreement would occur, subject to certain exceptions, if (1) any person acquires 20% or more of our voting stock; (2) upon a merger or other business combination, our shareholders receive less than two-thirds of the common stock and combined voting power of the new company; (3) members of the current Board of Directors ceasing to constitute a majority of the Board of Directors, except for new directors that are regularly elected; (4) we sell or otherwise dispose of all or substantially all of our assets; or (5) we liquidate or dissolve. If these change in control benefits had been triggered as of December 31, 2020, payments of approximately $32.4 million would have been made.
Under the Company’s existing employee stock benefit plans, upon a change in control, outstanding awards will continue to vest in accordance with the terms. However, if outstanding awards are not assumed or continued in the change in control transaction or if the executive incurs a qualifying termination in connection with the change in control, then all outstanding stock options and nonvested stock awards will vest. With respect to unvested performance based share awards dependent upon the Company’s three-year relative total shareholder return, if at least one calendar year of performance during the performance period has been completed prior to the change in control event, the awards will be paid out based on the Company’s performance at that time; otherwise the payout of shares will be at 100% of the target award. Under the Company’s existing director stock benefit plans, upon a change in control, all outstanding nonvested stock awards will vest.
Guarantees
We will from time to time issue standby letters of credit, performance or surety bonds or other guarantees in the normal course of business. The aggregate notional amount of all performance bonds, surety bonds, and standby letters of credit is not material at December 31, 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 is not material at December 31, 2020. We have agreed to guarantee the liabilities and performance obligations (some of which have limitations) of a certain debt collections and recovery management VIE under its commercial agreements. We cannot reasonably estimate our potential future payments under the guarantees and related provisions described above because we cannot predict when and under what circumstances these provisions may be triggered. We had no accruals related to guarantees on our Consolidated Balance Sheets at December 31, 2020.
General Indemnifications
Many of our commercial agreements contain commercially standard indemnification obligations related to tort, material breach or other liabilities that arise during the course of performance under the agreement. These indemnification obligations are typically mutual.
We are the lessee under many real estate leases. It is common in these commercial lease transactions for us, as the lessee, to agree to indemnify the lessor and other related third parties for tort, environmental and other liabilities that arise out of or relate to our use or occupancy of the leased premises. This type of indemnity would typically make us responsible to indemnified parties for liabilities arising out of the conduct of, among others, contractors, licensees and invitees at or in connection with the use or occupancy of the leased premises. This indemnity often extends to related liabilities arising from the negligence of the indemnified parties, but usually excludes any liabilities caused by either their sole or gross negligence and their willful misconduct.
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 certain of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
these credit agreements, we also bear the risk of certain changes in tax laws that would be subject to payments to non-U.S. lenders to withholding taxes.
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.
The Company has entered into indemnification agreements with its directors and executive officers. Under these agreements, the Company has agreed to indemnify such individuals to the fullest extent permitted by law against liabilities that arise by reason of their status as directors or officers and to advance expenses incurred by such individuals in connection with the related legal proceedings. The Company maintains directors and officers liability insurance coverage to reduce its exposure to such obligations.
We cannot reasonably estimate our potential future payments under the indemnities and related provisions described above because we cannot predict when and under what circumstances these provisions may be triggered. We have no accrual related to indemnifications on our Consolidated Balance Sheets at December 31, 2020 and 2019.
Subsidiary Dividend and Fund Transfer Limitations
The ability of some of our subsidiaries and associated companies to transfer funds to us is limited, in some cases, by certain restrictions imposed by foreign governments, which do not, individually or in the aggregate, materially limit our ability to service our indebtedness, meet our current obligations or pay dividends.
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.
Although the final outcome of these matters cannot be predicted with certainty, any possible adverse outcome arising from these matters is not expected to have a material impact on our Consolidated Financial Statements, either individually or in the aggregate. However, our evaluation of the likely impact of these matters may change in the future. We accrue for unpaid legal fees for services performed to date.
7. INCOME TAXES
The provision from (benefit for) income taxes consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
|
(In millions)
|
Current:
|
|
|
|
|
|
Federal
|
$
|
34.8
|
|
|
$
|
(5.2)
|
|
|
$
|
9.0
|
|
State
|
24.0
|
|
|
8.5
|
|
|
11.4
|
|
Foreign
|
33.7
|
|
|
43.7
|
|
|
31.5
|
|
|
92.5
|
|
|
47.0
|
|
|
51.9
|
|
Deferred:
|
|
|
|
|
|
Federal
|
40.6
|
|
|
(48.2)
|
|
|
25.4
|
|
State
|
(0.1)
|
|
|
(11.3)
|
|
|
1.6
|
|
Foreign
|
26.0
|
|
|
(23.2)
|
|
|
(25.5)
|
|
|
66.5
|
|
|
(82.7)
|
|
|
1.5
|
|
Provision from (benefit for) income taxes
|
$
|
159.0
|
|
|
$
|
(35.7)
|
|
|
$
|
53.4
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Domestic and foreign income (loss) before income taxes was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
|
(In millions)
|
U.S.
|
$
|
470.3
|
|
|
$
|
(522.7)
|
|
|
$
|
354.3
|
|
Foreign
|
214.9
|
|
|
108.9
|
|
|
16.1
|
|
|
$
|
685.2
|
|
|
$
|
(413.8)
|
|
|
$
|
370.4
|
|
The provision from (benefit for) income taxes reconciles with the U.S. federal statutory rate, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
|
(In millions)
|
Federal statutory rate
|
21.0
|
%
|
|
21.0
|
%
|
|
21.0
|
%
|
|
|
|
|
|
|
Provision computed at federal statutory rate
|
$
|
143.9
|
|
|
$
|
(86.9)
|
|
|
$
|
77.8
|
|
State and local taxes, net of federal tax benefit
|
17.8
|
|
|
(6.3)
|
|
|
11.2
|
|
Foreign
|
5.5
|
|
|
(2.7)
|
|
|
—
|
|
|
|
|
|
|
|
Federal research & development credit
|
(15.9)
|
|
|
(14.9)
|
|
|
(13.0)
|
|
Equity compensation
|
(6.0)
|
|
|
(3.0)
|
|
|
(7.5)
|
|
Tax reserves
|
1.4
|
|
|
1.2
|
|
|
2.4
|
|
Australia settlement
|
—
|
|
|
—
|
|
|
(14.1)
|
|
Legal settlement
|
0.1
|
|
|
69.1
|
|
|
—
|
|
Excess officer’s compensation
|
5.8
|
|
|
5.1
|
|
|
2.7
|
|
Valuation Allowance
|
7.8
|
|
|
—
|
|
|
—
|
|
Other
|
(1.4)
|
|
|
2.7
|
|
|
(6.1)
|
|
Provision from (benefit for) income taxes
|
$
|
159.0
|
|
|
$
|
(35.7)
|
|
|
$
|
53.4
|
|
|
|
|
|
|
|
Effective income tax rate
|
23.2
|
%
|
|
8.6
|
%
|
|
14.4
|
%
|
We record deferred income taxes using enacted tax laws and rates for the years in which the taxes are expected to be paid. Deferred income tax assets and liabilities are recorded based on the differences between the financial reporting and income tax bases of assets and liabilities. For additional information about our income tax policy see Note 1 of the Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Components of the deferred income tax assets and liabilities at December 31, 2020 and 2019, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
(In millions)
|
Deferred income tax assets:
|
|
|
|
Net operating and capital loss carryforwards
|
$
|
286.1
|
|
|
$
|
285.1
|
|
Goodwill and intangible assets
|
128.0
|
|
|
119.1
|
|
Employee compensation programs
|
62.7
|
|
|
40.5
|
|
Foreign tax credits
|
17.4
|
|
|
16.6
|
|
Employee pension benefits
|
34.6
|
|
|
31.1
|
|
Reserves and accrued expenses
|
17.6
|
|
|
14.9
|
|
Accrued legal expense
|
94.9
|
|
|
136.3
|
|
Research and development costs
|
33.0
|
|
|
32.4
|
|
Operating lease asset
|
23.1
|
|
|
26.6
|
|
Other
|
11.8
|
|
|
18.3
|
|
Gross deferred income tax assets
|
709.2
|
|
|
720.9
|
|
Valuation allowance
|
(382.7)
|
|
|
(379.8)
|
|
Total deferred income tax assets, net
|
326.5
|
|
|
341.1
|
|
|
|
|
|
Deferred income tax liabilities:
|
|
|
|
Goodwill and intangible assets
|
(540.7)
|
|
|
(472.5)
|
|
Undistributed earnings of foreign subsidiaries
|
(11.3)
|
|
|
(8.3)
|
|
Depreciation
|
(19.1)
|
|
|
(33.6)
|
|
Operating lease liability
|
(23.1)
|
|
|
(26.6)
|
|
Accrued insurance
|
—
|
|
|
(27.5)
|
|
Prepaid expenses
|
(11.6)
|
|
|
(8.1)
|
|
Investment basis difference
|
(41.5)
|
|
|
(1.2)
|
|
Other
|
(2.3)
|
|
|
(2.1)
|
|
Total deferred income tax liability
|
(649.6)
|
|
|
(579.9)
|
|
Net deferred income tax liability
|
$
|
(323.1)
|
|
|
$
|
(238.8)
|
|
Our deferred income tax assets and deferred income tax liabilities at December 31, 2020 and 2019, are included in the accompanying Consolidated Balance Sheets as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
(In millions)
|
|
|
|
|
Long-term deferred income tax assets, included in other assets
|
$
|
9.2
|
|
|
$
|
9.2
|
|
Long-term deferred income tax liabilities
|
(332.3)
|
|
|
(248.0)
|
|
Net deferred income tax liability
|
$
|
(323.1)
|
|
|
$
|
(238.8)
|
|
We record deferred income taxes on the temporary differences of our foreign subsidiaries and branches, except for the temporary differences related to undistributed earnings of subsidiaries which we consider indefinitely invested. As of December 31, 2020, we have indefinitely invested $247.8 million attributable to undistributed earnings of our Canadian and Chilean subsidiaries. If these earnings were not considered indefinitely invested, we estimate that $23.3 million of deferred withholding tax liability would have been provided. Further, we are permanently invested with respect to the original investment in foreign subsidiaries. Therefore, we have not provided the deferred tax assets on the outside basis of these subsidiaries as we have no intent to sell or divest of these subsidiaries. Cumulative undistributed earnings were subject to a transition tax as a result of the Tax Act which we estimated to be zero. However, the Company has provided for local country withholding taxes related to these earnings.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2020, we had U.S. federal and state net operating loss carryforwards of $11.5 million and $240.1 million, respectively, which will expire at various times between 2021 and 2039. We also had foreign net operating loss carryforwards totaling $1,037.5 million of which $312.4 million will expire between 2021 and 2037 and the remaining $725.1 million will carryforward indefinitely. Foreign capital loss carryforwards of $16.7 million may be carried forward indefinitely. We had foreign tax credit carryforwards of $17.4 million which will expire in the years 2025 through 2027. Additionally, we had state and foreign research and development credit carryforwards of $33.0 million. The U.S. credits expire between 2021 through 2029 and the foreign credits have an indefinite expiration period. We have state §163(j) interest limitation carryovers of $355.1 million which have an indefinite expiration period. The tax effected amount of the state §163(j) interest limitation carryovers is $3.3 million. The deferred tax asset related to the net operating loss, capital loss carryforwards, foreign tax credit carryforwards, §163(j) carryforwards, and research and development credit is $339.8 million of which $250.3 million has been fully reserved in the deferred tax valuation allowance.
Cash paid for income taxes, net of amounts refunded, was $62.0 million, $(2.5) million and $59.6 million during the twelve months ended December 31, 2020, 2019 and 2018, respectively.
We recognize interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes on our Consolidated Statements of Income (Loss).
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
(In millions)
|
Beginning balance (January 1)
|
$
|
27.5
|
|
|
$
|
25.9
|
|
Increases related to prior year tax positions
|
12.7
|
|
|
2.0
|
|
Decreases related to prior year tax positions
|
(0.1)
|
|
|
(0.1)
|
|
Increases related to current year tax positions
|
9.1
|
|
|
7.2
|
|
Decreases related to settlements
|
(0.2)
|
|
|
(1.3)
|
|
Expiration of the statute of limitations for the assessment of taxes
|
(7.2)
|
|
|
(5.9)
|
|
Currency translation adjustment
|
(0.3)
|
|
|
(0.3)
|
|
Ending balance (December 31)
|
$
|
41.5
|
|
|
$
|
27.5
|
|
We recorded liabilities of $27.1 million and $24.6 million for unrecognized tax benefits as of December 31, 2020 and 2019, respectively, which included interest and penalties of $3.1 million and $2.9 million, respectively. As of December 31, 2020 and 2019, the total amount of unrecognized benefits that, if recognized, would have affected the effective tax rate was $26.2 million and $23.8 million, respectively, which included interest and penalties of $2.8 million and $2.6 million, respectively. During 2020 and 2019, interest and penalties of $1.0 million were accrued in each period.
As of December 31, 2020 and 2019, the gross amount of unrecognized tax benefits was $41.5 million and $27.5 million, respectively. Of the total, $17.5 million in 2020 and $5.8 million in 2019 relate to unrecognized tax benefits for which no liability has been recorded associated with the carryforward of certain state attributes. If we were to prevail on all uncertain tax positions, the net effect would be a benefit of $24.0 million and $21.7 million in 2020 and 2019, respectively, exclusive of any benefits related to interest and penalties.
Equifax and its subsidiaries 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. Due to the potential for resolution of state and foreign examinations, and the expiration of various statutes of limitations, it is reasonably possible that Equifax’s gross unrecognized tax benefit balance may change within the next twelve months by a range of zero to $6.8 million.
The Tax Cuts and Jobs Act (“Tax Act”)
The Tax Act was enacted in the United States on December 22, 2017. The Tax Act reduced the U.S. federal corporate income tax rate to 21% from 35%, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign-sourced earnings.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SAB 118 Measurement Period
We applied the guidance in SAB 118 when accounting for the enactment-date effects of the Tax Act in 2017 and throughout 2018. At December 31, 2017, we had not completed our accounting for all of the enactment-date income tax effects of the Tax Act under ASC 740, Income Taxes, for the following aspects: re-measurement of deferred tax assets and liabilities, one-time transition tax and tax on global intangible low-taxed income. At December 31, 2018 we completed our accounting for all of the enactment-date income tax effects of the Tax Act. During 2018, no adjustments were required to the provisional amounts recorded at December 31, 2017. For provisional amounts recorded during 2018, adjustments were made in the fourth quarter of 2018 as a result of notices and regulations issued and proposed by the U.S. Department of the Treasury and the Internal Revenue Service (“Proposed Regulations”) that were issued in the quarter for the Section 163(j) interest limitation provisions and the foreign tax credits provisions
One-Time Transition Tax
The one-time transition tax is based on our total post-1986 earnings and profits (E&P), the tax on which we previously deferred from U.S. income taxes under U.S. law. The Company determined it was not subject to the one-time transition tax.
Deferred Tax Assets and Liabilities
As of December 31, 2017, we remeasured certain deferred tax assets and liabilities based on the rates at which they were expected to reverse in the future (which was generally 21%), by recording a provisional amount of $85.1 million. Further analysis of certain aspects of the Tax Act and refinement of our calculations during the twelve months ending December 31, 2018 resulted in no material adjustments to our provisional amounts.
Global Intangible Low-Taxed Income (“GILTI”)
We have elected to account for GILTI in the year the tax is incurred. We were not subject to the GILTI tax for the twelve months ended December 31, 2020, 2019 and 2018.
8. STOCK-BASED COMPENSATION
We have one active share-based award plan, the amended and restated 2008 Omnibus Incentive Plan. This plan was originally approved by our shareholders in 2008 and was amended and restated with shareholder approval in May 2013 to, among other things, increase the reserve for awards under the plan by 11 million shares. The plan provides our directors, officers and certain key employees with stock options, restricted stock units and performance share awards. The plan is described below. We expect to issue common shares held as either treasury stock or new issue shares upon the exercise of stock options or once shares vest pursuant to restricted stock units or performance share awards. Total stock-based compensation expense in our Consolidated Statements of Income (Loss) during the twelve months ended December 31, 2020, 2019 and 2018, was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31,
|
|
|
2020
|
|
2019
|
|
2018
|
|
|
(In millions)
|
Cost of services
|
|
$
|
11.2
|
|
|
$
|
10.7
|
|
|
$
|
9.5
|
|
Selling, general and administrative expenses
|
|
43.5
|
|
|
39.0
|
|
|
33.0
|
|
Stock-based compensation expense, before income taxes
|
|
$
|
54.7
|
|
|
$
|
49.7
|
|
|
$
|
42.5
|
|
The total income tax benefit recognized for stock-based compensation expense was $13.0 million, $12.2 million and $9.7 million for the twelve months ended December 31, 2020, 2019 and 2018, respectively.
Stock Options. The 2008 Omnibus Incentive Plan provides that qualified and nonqualified stock options may be granted to officers and other employees. The 2008 Omnibus Incentive Plan requires that stock options be granted at exercise prices not less than market value on the date of grant. Generally, stock options are subject to graded vesting for periods of up to three years based on service, with 33% vesting for each year of completed service, and expire ten years from the grant date.
We use the binomial model to calculate the fair value of stock options granted. The binomial model incorporates assumptions regarding anticipated employee exercise behavior, expected stock price volatility, dividend yield and risk-free interest rate. Anticipated employee exercise behavior and expected post-vesting cancellations over the contractual term used in
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
the binomial model were primarily based on historical exercise patterns. These historical exercise patterns indicated there was not significantly different exercise behavior between employee groups. For our expected stock price volatility assumption, we weighted historical volatility and implied volatility. We used daily observations for historical volatility, while our implied volatility assumption was based on actively traded options related to our common stock. The expected term is derived from the binomial model, based on assumptions incorporated into the binomial model as described above.
The fair value for stock options granted during the twelve months ended December 31, 2020, 2019 and 2018, was estimated at the date of grant, using the binomial model with the following weighted-average assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
Dividend yield
|
1.3
|
%
|
|
1.3
|
%
|
|
1.2
|
%
|
Expected volatility
|
23.5
|
%
|
|
23.0
|
%
|
|
21.8
|
%
|
Risk-free interest rate
|
1.3
|
%
|
|
2.4
|
%
|
|
2.7
|
%
|
Expected term (in years)
|
4.4
|
|
4.7
|
|
4.8
|
Weighted-average fair value of stock options granted
|
$
|
24.29
|
|
|
$
|
14.97
|
|
|
$
|
24.34
|
|
The following table summarizes changes in outstanding stock options during the twelve months ended December 31, 2020, as well as stock options that are vested and expected to vest and stock options exercisable at December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Term
|
|
Aggregate Intrinsic Value
|
|
(In thousands)
|
|
|
|
(In years)
|
|
(In millions)
|
Outstanding at December 31, 2019
|
1,825
|
|
|
$
|
122.46
|
|
|
|
|
|
Granted (all at market price)
|
433
|
|
|
$
|
158.62
|
|
|
|
|
|
Exercised
|
(365)
|
|
|
$
|
106.04
|
|
|
|
|
|
Forfeited and canceled
|
(62)
|
|
|
$
|
147.83
|
|
|
|
|
|
Outstanding at December 31, 2020
|
1,831
|
|
|
$
|
137.01
|
|
|
6.8
|
|
$
|
102.3
|
|
Vested and expected to vest at December 31, 2020
|
1,777
|
|
|
$
|
136.83
|
|
|
6.8
|
|
$
|
99.5
|
|
Exercisable at December 31, 2020
|
563
|
|
|
$
|
112.11
|
|
|
7.2
|
|
$
|
45.5
|
|
The aggregate intrinsic value amounts in the table above represent the difference between the closing price of Equifax’s common stock on December 31, 2020 and the exercise price, multiplied by the number of in-the-money stock options as of the same date. This represents the value that would have been received by the stock option holders if they had all exercised their stock options on December 31, 2020. In future periods, this amount will change depending on fluctuations in Equifax’s stock price. The total intrinsic value of stock options exercised during the twelve months ended December 31, 2020, 2019 and 2018, was $20.3 million, $18.6 million and $13.3 million, respectively. At December 31, 2020, our total unrecognized compensation cost related to stock options was $7.1 million with a weighted-average recognition period of 1.3 years.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes changes in outstanding options and the related weighted-average exercise price per share for the twelve months ended December 31, 2019 and 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2019
|
|
2018
|
|
Shares
|
|
Weighted-
Average Price
|
|
Shares
|
|
Weighted-
Average Price
|
|
(In thousands)
|
|
|
|
(In thousands)
|
|
|
Outstanding at the beginning of the year
|
1,462
|
|
|
$
|
103.50
|
|
|
1,184
|
|
|
$
|
87.64
|
|
Granted (all at market price)
|
740
|
|
|
$
|
112.48
|
|
|
553
|
|
|
$
|
122.35
|
|
Exercised
|
(307)
|
|
|
$
|
72.45
|
|
|
(212)
|
|
|
$
|
60.55
|
|
Forfeited and canceled
|
(70)
|
|
|
$
|
123.62
|
|
|
(63)
|
|
|
$
|
114.67
|
|
Outstanding at the end of the year
|
1,825
|
|
|
$
|
122.46
|
|
|
1,462
|
|
|
$
|
103.50
|
|
Exercisable at end of year
|
643
|
|
|
$
|
104.95
|
|
|
631
|
|
|
$
|
80.81
|
|
Other Stock Awards. Our 2008 Omnibus Incentive Plan also provides for awards of restricted stock units and performance shares or units that are settled in shares of our common stock that can be granted to executive officers, employees and directors. Such stock awards are generally subject to cliff vesting over a period between one to three years based on service and may also have vesting conditions based on meeting specified performance goals.
The fair value of these stock awards is based on the fair market value of our common stock on the date of grant. However, stock awards granted prior to February 16, 2017 did not accrue or pay dividends during the vesting period, so the fair value on the date of grant for the pre-2017 awards was reduced by the present value of the expected dividends over the requisite service period (discounted using the appropriate risk-free interest rate). Stock awards granted beginning in 2017 do include the right to dividends or dividend equivalents, which are accrued and payable only if and when the underlying stock vests and is payable.
Pursuant to our 2008 Omnibus Incentive Plan, certain executive officers have been granted performance shares in which the number of shares earned is dependent upon the Company’s three-year total shareholder return relative to the three-year total shareholder return of the companies in the S&P 500 stock index, as comprised on the grant date, subject to adjustment, and, in 2017, have also been granted performance shares in which the number of shares earned is dependent upon the Company’s three-year cumulative adjusted earnings per share. The number of shares which could potentially be issued under these performance share awards ranges from zero to 200% of the target award. The grants outstanding subject to market performance as of December 31, 2020 would result in 290,033 shares outstanding at 100% of target and 580,066 at 200% of target at the end of the vesting period. Compensation expense for shares earned based on the Company’s three-year total shareholder return is recognized on a straight-line basis over the measurement period and is based upon the fair market value of the shares estimated to be earned at the date of grant using a Monte-Carlo simulation. Compensation expense for shares earned based on the Company’s three-year cumulative adjusted earnings per share is recognized on a straight-line basis over the measurement period based on the grant date fair value of our common stock and the number of awards expected to vest at each reporting date.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes changes in these other stock awards during the twelve months ended December 31, 2020, 2019 and 2018 and the related weighted-average grant date fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Weighted-Average
Grant Date
Fair Value
|
|
(In thousands)
|
|
|
Nonvested at December 31, 2017
|
1,011
|
|
|
$
|
109.48
|
|
Granted
|
563
|
|
|
$
|
109.71
|
|
Vested
|
(417)
|
|
|
$
|
87.09
|
|
Forfeited
|
(82)
|
|
|
$
|
115.40
|
|
Nonvested at December 31, 2018
|
1,075
|
|
|
$
|
120.11
|
|
Granted
|
386
|
|
|
$
|
115.68
|
|
Vested
|
(256)
|
|
|
$
|
127.17
|
|
Forfeited
|
(164)
|
|
|
$
|
119.36
|
|
Nonvested at December 31, 2019
|
1,041
|
|
|
$
|
118.25
|
|
Granted
|
257
|
|
|
$
|
155.84
|
|
Vested
|
(279)
|
|
|
$
|
157.73
|
|
Forfeited
|
(92)
|
|
|
$
|
153.43
|
|
Nonvested at December 31, 2020
|
927
|
|
|
$
|
128.04
|
|
The total fair value of stock awards that vested during the twelve months ended December 31, 2020, 2019 and 2018, was $44.0 million, $32.6 million and $50.2 million, respectively, based on the weighted-average fair value on the vesting date, and $32.5 million, $30.5 million and $40.4 million, respectively, based on the weighted-average fair value on the date of grant. At December 31, 2020, our total unrecognized compensation cost related to these nonvested stock awards was $39.9 million with a weighted-average recognition period of 1.6 years.
Employee Stock Purchase Plan. Effective July 1, 2020, the Equifax board approved the 2020 Employee Stock Purchase Plan (“ESPP”). Under the ESPP, participating employees will have the option to withhold 1% - 10% of their annual salary, up to $25,000 annually, to purchase Equifax stock at a 5% discount based on the closing stock price of the final day of the offering period. The ESPP is noncompensatory in nature, and is treated as any other sale of the Company's equity instruments.
9. BENEFIT PLANS
We have defined benefit pension plans and defined contribution plans. We also maintain certain healthcare and life insurance benefit plans for eligible retired employees. The measurement date for our defined benefit pension plans and other postretirement benefit plans is December 31 of each year.
In the fourth quarter of 2020, we voluntarily changed our accounting principle for recognizing actuarial gains and losses and expected returns on plan assets for our defined benefit pension and postretirement benefit plans. See Note 1 for amounts recognized related to this change. The information within this Note has been revised to reflect the change in accounting principle for current and prior periods.
Pension Benefits. Pension benefits are provided through U.S. and Canadian defined benefit pension plans and three supplemental executive defined benefit pension plans.
U.S. and Canadian Retirement Plans. We sponsor a qualified defined benefit retirement plan, the U.S. Retirement Income Plan (“USRIP”), that covers approximately 10% of current U.S. salaried employees who were hired on or before June 30, 2007, the last date on which an individual could be hired and enter the plan before the USRIP was closed to new participation at December 31, 2008. This plan also covers retirees as well as certain terminated but vested individuals not yet in retirement status. We also sponsor a retirement plan with both defined benefit and defined contribution components that cover most salaried and hourly employees in Canada, the Canadian Retirement Income Plan (“CRIP”); the defined benefit component was also closed to new hires on October 1, 2011.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Effective December 31, 2014, the USRIP plan was frozen for all participants eligible to accrue benefits. Accordingly, pension plan participants earn no new benefits under the plan formula. Additionally, the CRIP, a registered defined benefit pension plan, was changed for employees who did not meet retirement-eligibility status under the CRIP as of December 31, 2012 (“Non-Grandfathered” participants). Under the plan amendment, the service credit for Non-Grandfathered participants froze, but these participants will continue to receive credit for salary increases and vesting service. Additionally, Non-Grandfathered employees and certain other employees not eligible to participate in the CRIP (i.e., new hires on or after October 1, 2011) are eligible to participate in an enhanced defined contribution plan. In 2019, the Compensation Committee of the Board of Directors approved the termination of the plan. The CRIP was frozen effective December 31, 2020 at which date we ceased accruing benefits for all active members. The obligation is expected to be settled in 2022 with lump sum distributions and an annuity purchase.
During the twelve months ended December 31, 2020, we made no voluntary contributions to the USRIP or the CRIP. During the twelve months ended December 31, 2019, we made no voluntary contributions to the USRIP and made contributions of $0.2 million to the CRIP. At December 31, 2020, the USRIP met or exceeded ERISA’s minimum funding requirements.
The annual report produced by our consulting actuaries specifies the funding requirements for our plans, based on projected benefits for plan participants, historical investment results on plan assets, current discount rates for liabilities, assumptions for future demographic developments and recent changes in statutory requirements. We may elect to make additional discretionary contributions to our plans in excess of minimum funding requirements, subject to statutory limitations.
Supplemental Retirement Plans. We maintain three supplemental executive retirement programs for certain key employees. The plans, which are unfunded, provide supplemental retirement payments, based on salary and years of service.
Other Benefits. We maintain certain healthcare and life insurance benefit plans for eligible retired employees. Substantially all of our U.S. employees may become eligible for the retiree healthcare benefits if they reach retirement age while working for us and satisfy certain years of service requirements. Employees hired on or after January 1, 2009 are required to pay the full cost of coverage after retirement. The retiree life insurance program covers employees who retired on or before December 31, 2003. We accrue the cost of providing healthcare benefits over the active service period of the employee.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Obligations and Funded Status. A reconciliation of the projected benefit obligations, plan assets and funded status of the plans is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Benefits
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(In millions)
|
Change in projected benefit obligation
|
|
|
|
|
|
|
|
Benefit obligation at January 1,
|
$
|
720.0
|
|
|
$
|
666.0
|
|
|
$
|
18.7
|
|
|
$
|
21.9
|
|
Service cost
|
1.7
|
|
|
2.8
|
|
|
0.2
|
|
|
0.3
|
|
Interest cost
|
23.5
|
|
|
28.3
|
|
|
0.6
|
|
|
0.9
|
|
Plan participants’ contributions
|
—
|
|
|
—
|
|
|
1.2
|
|
|
0.8
|
|
Amendments
|
—
|
|
|
(6.7)
|
|
|
—
|
|
|
—
|
|
Actuarial loss (gain)
|
63.2
|
|
|
71.0
|
|
|
2.7
|
|
|
(2.9)
|
|
Foreign currency exchange rate changes
|
1.3
|
|
|
1.9
|
|
|
—
|
|
|
0.1
|
|
Curtailments
|
—
|
|
|
(0.3)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Benefits paid
|
(43.2)
|
|
|
(43.0)
|
|
|
(2.7)
|
|
|
(2.4)
|
|
Projected benefit obligation at December 31,
|
766.5
|
|
|
720.0
|
|
|
20.7
|
|
|
18.7
|
|
Change in plan assets
|
|
|
|
|
|
|
|
Fair value of plan assets at January 1,
|
603.2
|
|
|
533.8
|
|
|
15.4
|
|
|
13.9
|
|
Actual return on plan assets
|
70.5
|
|
|
104.8
|
|
|
1.8
|
|
|
3.0
|
|
Employer contributions
|
6.7
|
|
|
6.0
|
|
|
1.5
|
|
|
1.6
|
|
Plan participants’ contributions
|
—
|
|
|
—
|
|
|
1.2
|
|
|
0.8
|
|
Foreign currency exchange rate changes
|
1.2
|
|
|
1.6
|
|
|
—
|
|
|
—
|
|
Other disbursements
|
—
|
|
|
—
|
|
|
(1.4)
|
|
|
(1.5)
|
|
|
|
|
|
|
|
|
|
Benefits paid
|
(43.2)
|
|
|
(43.0)
|
|
|
(2.7)
|
|
|
(2.4)
|
|
Fair value of plan assets at December 31,
|
638.4
|
|
|
603.2
|
|
|
15.8
|
|
|
15.4
|
|
Funded status of plan
|
$
|
(128.1)
|
|
|
$
|
(116.8)
|
|
|
$
|
(4.9)
|
|
|
$
|
(3.3)
|
|
The accumulated benefit obligation for the USRIP, CRIP and Supplemental Retirement Plans was $765.9 million at December 31, 2020. The accumulated benefit obligation for the USRIP, CRIP and Supplemental Retirement Plans was $712.4 million at December 31, 2019.
At December 31, 2020, the USRIP had projected benefit obligations and accumulated benefit obligations in excess of the plan's respective assets. The fair value of plan assets for this plan were $585.3 million and the projected benefit obligation and accumulated benefit obligation were $588.4 million at December 31, 2020.
At December 31, 2020, the Supplemental Retirement Plans had projected benefit obligations and accumulated benefit obligations in excess of those plans’ respective assets. The projected benefit obligation and accumulated benefit obligation for these plans in the aggregate were $115.6 million and $115.0 million, respectively, and these plans did not have any plan assets at December 31, 2020. The fair value of plan assets for the CRIP was $53.1 million and the projected benefit obligation and accumulated benefit obligation for the CRIP was $62.4 million at December 31, 2020.
At December 31, 2019, the USRIP had plan assets in excess of the projected benefit obligations and accumulated benefit obligations. The fair value of plan assets for this plan were $554.0 million and the projected benefit obligation and accumulated benefit obligation were $552.9 million at December 31, 2019.
At December 31, 2019, the Supplemental Retirement Plans had projected benefit obligations and accumulated benefit obligations in excess of those plans’ respective assets. The projected benefit obligation and accumulated benefit obligation for these plans in the aggregate were $108.4 million and $108.3 million, respectively, and these plans did not have any plan assets at December 31, 2019. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the CRIP were $58.7 million, $51.2 million and $49.3 million, respectively, at December 31, 2019.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table represents the net amounts recognized, or the funded status of our pension and other postretirement benefit plans, in our Consolidated Balance Sheets at December 31, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Benefits
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(In millions)
|
Amounts recognized in the statements of financial position consist of:
|
|
|
|
|
|
|
|
|
Noncurrent assets
|
|
$
|
—
|
|
|
$
|
1.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Current liabilities
|
|
(6.8)
|
|
|
(6.6)
|
|
|
(0.1)
|
|
|
(0.1)
|
|
Long-term liabilities
|
|
(121.3)
|
|
|
(111.2)
|
|
|
(4.8)
|
|
|
(3.2)
|
|
Net amount recognized
|
|
$
|
(128.1)
|
|
|
$
|
(116.8)
|
|
|
$
|
(4.9)
|
|
|
$
|
(3.3)
|
|
At December 31, 2020 and 2019 amounts included in accumulated other comprehensive loss related to pension benefit plans which consisted of prior service cost of $2.0 million and $0.9 million, net of accumulated taxes of $0.5 million and $0.2 million, respectively. For the twelve months ended December 31, 2020 and 2019, we recognized a $32.2 million loss and $4.8 million gain, respectively, through net periodic benefit cost related to the annual mark-to-market remeasurement of our pension and postretirement plans. For the twelve months ended December 31, 2020 and 2019, amounts recognized through net periodic benefit cost related to prior service cost, curtailments and settlements were not material.
Components of Net Periodic Benefit Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Benefits
|
|
2020
|
|
2019
|
|
2018
|
|
2020
|
|
2019
|
|
2018
|
|
(In millions)
|
Service cost
|
$
|
1.7
|
|
|
$
|
2.8
|
|
|
$
|
3.6
|
|
|
$
|
0.2
|
|
|
$
|
0.3
|
|
|
$
|
0.4
|
|
Interest cost
|
23.5
|
|
|
28.3
|
|
|
26.4
|
|
|
0.6
|
|
|
0.9
|
|
|
0.8
|
|
Expected return on plan assets
|
(37.7)
|
|
|
(34.3)
|
|
|
(38.6)
|
|
|
(1.0)
|
|
|
(0.9)
|
|
|
(1.2)
|
|
Amortization of prior service cost
|
(1.7)
|
|
|
0.5
|
|
|
0.5
|
|
|
(0.2)
|
|
|
(1.0)
|
|
|
(1.0)
|
|
Recognized actuarial loss (gain) - mark to market
|
30.4
|
|
|
0.2
|
|
|
7.7
|
|
|
1.8
|
|
|
(5.0)
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net periodic benefit cost (income)
|
$
|
16.2
|
|
|
$
|
(2.5)
|
|
|
$
|
(0.4)
|
|
|
$
|
1.4
|
|
|
$
|
(5.7)
|
|
|
$
|
(0.6)
|
|
Weighted-Average Assumptions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average assumptions used to determine benefit obligations at December 31,
|
|
Pension Benefits
|
|
Other Benefits
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Discount rate
|
|
2.56
|
%
|
|
3.38
|
%
|
|
2.47
|
%
|
|
3.26
|
%
|
Rate of compensation increase
|
|
5.97
|
%
|
|
4.94
|
%
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average assumptions used to determine net periodic benefit cost at December 31,
|
|
Pension Benefits
|
|
Other Benefits
|
|
2020
|
|
2019
|
|
2018
|
|
2020
|
|
2019
|
|
2018
|
Discount rate
|
|
3.38
|
%
|
|
4.39
|
%
|
|
3.73
|
%
|
|
3.26
|
%
|
|
4.30
|
%
|
|
3.60
|
%
|
Expected return on plan assets
|
|
6.46
|
%
|
|
6.46
|
%
|
|
7.14
|
%
|
|
6.50
|
%
|
|
6.70
|
%
|
|
7.25
|
%
|
Rate of compensation increase
|
|
4.37
|
%
|
|
4.93
|
%
|
|
4.88
|
%
|
|
N/A
|
|
N/A
|
|
N/A
|
During 2020, we adopted the new MP-2020 mortality improvement scale in determining liability for the U.S. plans. The updated projection scale contributed to a slight decrease in the projected benefit obligation, partially offsetting the decrease in the discount rates in 2020, the net of which resulted in the increase of the projected benefit obligation as of December 31, 2020.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During 2019, we adopted the new Pri-2012 mortality tables and MP-2019 mortality improvement projection scale in determining the liability for the U.S. plans. The updated mortality tables and projection scale, partially offset the decrease in the discount rates in 2019, the net of which resulted in the increase in the projected benefit obligation as of December 31, 2019.
During 2018, we adopted the new MP-2018 mortality improvement projection scale in determining the liability for the U.S. plans. This updated scale, along with the change in the discount rates, contributed to a decrease in the projected benefit obligation as of December 31, 2018.
Discount Rates. We determine our discount rates primarily based on high-quality, fixed-income investments and yield-to-maturity analyses specific to our estimated future benefit payments available as of the measurement date. Discount rates are reset annually on the measurement date to reflect current market conditions. To determine the discount rate for our U.S. pension and postretirement benefit plans, we use a bond matching approach to select specific bonds that would satisfy our projected benefit payments. We believe the bond matching approach reflects the process we would employ to settle our pension and postretirement benefit obligations. For our Canadian plans we use a third-party yield curve to develop our discount rates. The yield curve provides discount rates related to a dedicated high-quality bond portfolio whose cash flows extend beyond the current period, from which we choose a rate matched to the expected benefit payments required for each plan.
Expected and Actual Return on Plan Assets. As stated in Note 1, in the fourth quarter of 2020 we voluntarily changed our method of accounting for recognizing actuarial gains and losses and expected return on plan assets for our defined benefit pension and other postretirement benefit plans. Under the new accounting principle the expected returns on plan assets are used to estimate pension expense throughout the year and remeasurement of the projected benefit obligation and plan assets are immediately recognized in earnings through net periodic benefit cost within Other Income (Expense) on the Consolidated Statements of Income (Loss), with pension and postretirement plans to be remeasured annually in the fourth quarter. Prior to 2020, actuarial gains and losses and the differences between the expected and actual return on plan assets were recognized as a component of Accumulated Other Comprehensive Loss, and were subject to amortization into earnings over time.
Healthcare Costs. For the U.S. plan, an initial 6.5% annual rate of increase in the per capita cost of covered healthcare benefits was assumed for 2021 for pre-Medicare coverage. The rate was assumed to decrease gradually to an ultimate rate of 5.0% by 2027. For the Canadian plan, a flat 5.0% annual rate of increase in the per capita cost of covered healthcare benefits was assumed for 2021 and thereafter. Assumed healthcare cost trend rates have a significant effect on the amounts reported for the healthcare plan.
We estimate that the future benefits payable for our retirement and postretirement plans are as follows at December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ending December 31, 2020
|
|
U.S. Defined Benefit Plans
|
|
Non-U.S. Defined Benefit Plans
|
|
Other Benefit Plans
|
|
|
(In millions)
|
2021
|
|
$
|
42.8
|
|
|
$
|
2.0
|
|
|
$
|
1.5
|
|
2022
|
|
$
|
42.6
|
|
|
$
|
60.7
|
|
|
$
|
1.5
|
|
2023
|
|
$
|
42.5
|
|
|
$
|
—
|
|
|
$
|
1.5
|
|
2024
|
|
$
|
42.0
|
|
|
$
|
—
|
|
|
$
|
1.5
|
|
2025
|
|
$
|
41.4
|
|
|
$
|
—
|
|
|
$
|
1.5
|
|
Next five fiscal years to December 31, 2030
|
|
$
|
195.8
|
|
|
$
|
—
|
|
|
$
|
7.1
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fair Value of Plan Assets. The fair value of the pension assets at December 31, 2020 and 2019, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using:
|
|
|
|
Fair Value at December 31, 2020
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
|
|
(In millions)
|
U.S. Equity
|
(1)
|
|
$
|
38.5
|
|
|
$
|
38.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
International Equity
|
(2)
|
|
42.4
|
|
|
—
|
|
|
42.4
|
|
|
—
|
|
Fixed Income
|
(2)
|
|
489.8
|
|
|
—
|
|
|
489.8
|
|
|
—
|
|
Private Equity
|
(3)
|
|
9.8
|
|
|
—
|
|
|
—
|
|
|
9.8
|
|
Hedge Funds
|
(4)
|
|
15.3
|
|
|
—
|
|
|
—
|
|
|
15.3
|
|
Real Assets
|
(5)
|
|
16.3
|
|
|
—
|
|
|
—
|
|
|
16.3
|
|
Cash
|
(1)
|
|
26.3
|
|
|
26.3
|
|
|
—
|
|
|
—
|
|
Total
|
|
|
$
|
638.4
|
|
|
$
|
64.8
|
|
|
$
|
532.2
|
|
|
$
|
41.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using:
|
|
|
|
Fair Value at December 31, 2019
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
|
|
(In millions)
|
U.S. Equity
|
(1)
|
|
$
|
63.7
|
|
|
$
|
63.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
International Equity
|
(2)
|
|
94.5
|
|
|
—
|
|
|
94.5
|
|
|
—
|
|
Fixed Income
|
(2)
|
|
367.2
|
|
|
—
|
|
|
367.2
|
|
|
—
|
|
Private Equity
|
(3)
|
|
12.9
|
|
|
—
|
|
|
—
|
|
|
12.9
|
|
Hedge Funds
|
(4)
|
|
36.3
|
|
|
—
|
|
|
—
|
|
|
36.3
|
|
Real Assets
|
(5)
|
|
18.9
|
|
|
—
|
|
|
—
|
|
|
18.9
|
|
Cash
|
(1)
|
|
9.7
|
|
|
9.7
|
|
|
—
|
|
|
—
|
|
Total
|
|
|
$
|
603.2
|
|
|
$
|
73.4
|
|
|
$
|
461.7
|
|
|
$
|
68.1
|
|
(1)Fair value is based on observable market prices for the assets.
(2)For the portion of this asset class categorized as Level 2, fair value is determined using dealer and broker quotations, certain pricing models, bid prices, quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.
(3)Private equity investments are initially valued at cost. Fund managers periodically review the valuations utilizing subsequent company-specific transactions or deterioration in the company’s financial performance to determine if fair value adjustments are necessary. Private equity investments are typically viewed as long term, less liquid investments with return of capital coming via cash distributions from the sale of underlying fund assets. The Plan intends to hold these investments through each fund’s normal life cycle and wind down period. As of December 31, 2020 and 2019, we had $21.9 million and $6.0 million, respectively, of remaining commitments related to these private equity investments.
(4)Fair value is reported by the fund manager based on observable market prices for actively traded assets within the funds, as well as financial models, comparable financial transactions or other factors relevant to the specific asset for assets with no observable market. These investments are redeemable quarterly with a range of 30 – 90 days notice.
(5)The fair value of Real Assets are reported by the fund manager based on a combination of the following valuation approaches: current replacement cost less deterioration and obsolescence, a discounted cash flow model of income streams, and comparable market sales. As of December 31, 2020 and 2019, we had $0.1 million of remaining commitments related to the real asset investments.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table shows a reconciliation of the beginning and ending balances for assets valued using significant unobservable inputs for the years ended December 31, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private Equity
|
|
Hedge Funds
|
|
Real Assets
|
|
(In millions)
|
Balance at December 31, 2018
|
$
|
18.6
|
|
|
$
|
34.3
|
|
|
$
|
19.9
|
|
Return on plan assets:
|
|
|
|
|
|
Unrealized
|
—
|
|
|
2.3
|
|
|
0.7
|
|
Realized
|
(2.0)
|
|
|
(0.3)
|
|
|
(0.6)
|
|
Purchases
|
0.5
|
|
|
—
|
|
|
0.1
|
|
Sales
|
(4.2)
|
|
|
—
|
|
|
(1.2)
|
|
Balance at December 31, 2019
|
$
|
12.9
|
|
|
$
|
36.3
|
|
|
$
|
18.9
|
|
Return on plan assets:
|
|
|
|
|
|
Unrealized
|
$
|
(0.1)
|
|
|
$
|
—
|
|
|
$
|
(0.1)
|
|
Realized
|
(1.0)
|
|
|
(1.3)
|
|
|
0.1
|
|
Purchases
|
0.1
|
|
|
—
|
|
|
0.1
|
|
Sales
|
(2.1)
|
|
|
(19.7)
|
|
|
(2.7)
|
|
Balance at December 31, 2020
|
$
|
9.8
|
|
|
$
|
15.3
|
|
|
$
|
16.3
|
|
The fair value of the postretirement assets at December 31, 2020 and 2019, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using:
|
Description
|
|
Fair Value at December 31, 2020
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
|
|
(In millions)
|
U.S. Equity
|
(1)
|
|
1.0
|
|
|
1.0
|
|
|
—
|
|
|
—
|
|
International Equity
|
(2)
|
|
0.9
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
Fixed Income
|
(2)
|
|
12.2
|
|
|
—
|
|
|
12.2
|
|
|
—
|
|
Private Equity
|
(3)
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
Hedge Funds
|
(4)
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
Real Assets
|
(5)
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
Cash
|
(1)
|
|
0.6
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
Total
|
|
|
$
|
15.8
|
|
|
$
|
1.6
|
|
|
$
|
13.1
|
|
|
$
|
1.1
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using:
|
Description
|
|
Fair Value at December 31, 2019
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
|
|
(In millions)
|
U.S. Equity
|
(1)
|
|
$
|
1.7
|
|
|
$
|
1.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
International Equity
|
(2)
|
|
2.0
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
Fixed Income
|
(2)
|
|
9.5
|
|
|
—
|
|
|
9.5
|
|
|
—
|
|
Private Equity
|
(3)
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
Hedge Funds
|
(4)
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
Real Assets
|
(5)
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
Cash
|
(1)
|
|
0.3
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
Total
|
|
|
$
|
15.4
|
|
|
$
|
2.0
|
|
|
$
|
11.5
|
|
|
$
|
1.9
|
|
(1)Fair value is based on observable market prices for the assets.
(2)For the portion of this asset class categorized as Level 2, fair value is determined using dealer and broker quotations, certain pricing models, bid prices, quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.
(3)Private equity investments are initially valued at cost. Fund managers periodically review the valuations utilizing subsequent company-specific transactions or deterioration in the company’s financial performance to determine if fair value adjustments are necessary. Private equity investments are typically viewed as long term, less liquid investments with return of capital coming via cash distributions from the sale of underlying fund assets. The Plan intends to hold these investments through each fund’s normal life cycle and wind down period.
(4)Fair value is reported by the fund manager based on observable market prices for actively traded assets within the funds, as well as financial models, comparable financial transactions or other factors relevant to the specific asset for assets with no observable market. These investments are redeemable quarterly with a range of 30 – 90 days notice.
(5)The fair value of Real Assets are reported by the fund manager based on a combination of the following valuation approaches: current replacement cost less deterioration and obsolescence, a discounted cash flow model of income streams and comparable market sales.
Gross realized and unrealized gains and losses, purchases and sales for Level 3 postretirement assets were not material for the twelve months ended December 31, 2020.
USRIP, or the Plan, Investment and Asset Allocation Strategies. The primary goal of the asset allocation strategy of the Plan is to produce a total investment return which will satisfy future annual cash benefit payments to participants and minimize future contributions from the Company. Additionally, this strategy will diversify the plan assets to minimize nonsystemic risk and provide reasonable assurance that no single security or class of security will have a disproportionate negative impact on the Plan. Investment managers are required to abide by the provisions of ERISA. Standards of performance for each manager include an expected return versus an assigned benchmark, a measure of volatility, and a time period of evaluation.
The asset allocation strategy and investment manager recommendations are determined by the Investment Committee, with the advice of our external advisor. The asset allocation and ranges are approved by our in-house Investment Committee and Plan Administrators, who are Named Fiduciaries under ERISA.
In an effort to meet asset allocation and funded status objectives of the Plan, assets are categorized as Liability-Hedging Assets and Return-Seeking Assets. During 2020, the Investment Committee made the decision to reduce exposure to Return-Seeking Assets due to the plan's high funded status. As of December 31, 2020, the approved allocation ranges are set forth in the table below, with an 80% targeted allocation to Liability-Hedging Assets and a 20% targeted allocation to Return-Seeking Assets. Liability-Hedging Assets represent investments which are meant to provide a hedge relative to the Plan’s
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
liabilities and consist primarily of fixed income securities. Return-Seeking Assets include any asset class not intended to hedge the Plan’s liabilities. At December 31, 2020, these assets included domestic and international equities, private equity (including secondary private equity), real assets, and hedge funds. Additionally, the Plan allows certain of their managers, subject to specific risk constraints, to utilize derivative instruments in order to enhance asset return, reduce volatility or both. Derivatives are primarily employed by the Plans in their fixed income portfolios and in the hedge fund-of-funds area. Derivatives can be used for hedging purposes to reduce risk.
No shares of Equifax common stock were directly owned by the Plan at December 31, 2020 or 2019. Not more than 5% of the portfolio (at cost), and 10% of the equity portfolio’s market value, shall be invested in the securities of any one issuer, except the U.S. Government and U.S. Government Agencies.
The following asset allocation ranges and actual allocations were in effect as of December 31, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range
|
|
Actual
|
USRIP
|
2020
|
|
2019
|
|
2020
|
|
2019
|
U.S. Equity
|
0% - 20%
|
|
5% - 35%
|
|
6.6
|
%
|
|
11.5
|
%
|
International Equity
|
0% - 10%
|
|
5% - 20%
|
|
5.8
|
%
|
|
12.7
|
%
|
Private Equity
|
0% - 10%
|
|
0% - 10%
|
|
1.7
|
%
|
|
2.3
|
%
|
Hedge Funds
|
0% - 10%
|
|
0% - 10%
|
|
2.6
|
%
|
|
6.6
|
%
|
Real Assets
|
0% - 10%
|
|
0% - 10%
|
|
2.8
|
%
|
|
3.4
|
%
|
Fixed Income
|
65% - 100%
|
|
35% - 65%
|
|
76.7
|
%
|
|
61.8
|
%
|
Cash
|
0% - 15%
|
|
0% - 15%
|
|
3.8
|
%
|
|
1.7
|
%
|
CRIP Investment and Asset Allocation Strategies. The primary goal of the asset allocation strategy of the Plan is to produce a total investment return which will satisfy future annual cash benefit payments to participants and minimize future contributions from the Company. Additionally, this strategy will diversify the plan assets to minimize nonsystemic risk and provide reasonable assurance that no single security or class of security will have a disproportionate impact on the Plan. Due to the high funded status of the Plan, the Investment Committee of the CRIP has adopted a conservative asset allocation and in 2020 further continued to de-risk the Plan by reducing equity exposure. The Investment Committee maintains an investment policy for the CRIP, which imposes certain limitations and restrictions regarding allowable types of investments. The current investment policy imposes those restrictions on investments or transactions such as (1) Equifax common stock or securities, except as might be incidental to any pooled funds which the plan may have, (2) commodities or loans, (3) short sales and the use of margin accounts, (4) put and call options, (5) private placements, and (6) transactions which are “related-party” in nature as specified by the Canadian Pension Benefits Standards Act and its regulations.
The following specifies the asset allocation ranges and actual allocation as of December 31, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range
|
|
Actual
|
CRIP
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Public Equities
|
0% - 40%
|
|
25% - 55%
|
|
16.3
|
%
|
|
49.1
|
%
|
Fixed Income
|
60% - 100%
|
|
40% - 60%
|
|
75.8
|
%
|
|
50.7
|
%
|
Money Market
|
0% - 10%
|
|
0% - 10%
|
|
7.9
|
%
|
|
0.2
|
%
|
Alternative Credit
|
0% - 10%
|
|
0% - 20%
|
|
—
|
%
|
|
—
|
%
|
Equifax Retirement Savings Plans. Equifax sponsors a U.S. tax qualified defined contribution plan, the Equifax Inc. 401(k) Plan, or the Plan. Beginning with the 2019 plan year, we provide a discretionary match of participants’ contributions, up to five or six percent of employees eligible pay depending on certain eligibility rules under the Plan. Prior to the 2019 plan year, we also provided a discretionary direct contribution to certain eligible employees, the percentage of which was based upon an employee’s credited years of service. Company contributions for the Plan during the twelve months ended December 31, 2020, 2019 and 2018 were $31.8 million, $26.9 million and $30.7 million, respectively.
Foreign Retirement Plans. We also maintain defined contribution plans for certain employees in Canada and Spain, and meet certain compulsory contribution requirements to retirement funds for employees in Australia, the U.K. and Ireland. For the years ended December 31, 2020, 2019 and 2018, our contributions related to these plans were $13.4 million, $13.9 million, and $14.1 million, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred Compensation Plans. We maintain deferred compensation plans that allow for certain management employees and the Board of Directors to defer the receipt of compensation (such as salary, incentive compensation or shares payable under vested restricted stock units) until a later date based on the terms of the plans. The Company also makes contributions to the accounts of certain executives who are not eligible to participate in either of the Supplemental Retirement Plans. The benefits under our deferred compensation plans are guaranteed by the assets of a grantor trust which, through our funding, make investments in certain mutual funds. The purpose of this trust is to ensure, subject to the claims of the Company’s creditors in the event of the Company’s insolvency, the distribution of benefits accrued by participants of the deferred compensation plans, and to ensure full funding, upon a change in control, of the present value of accrued benefits payable to participants or beneficiaries under the plans.
Annual Incentive Plan. We have a shareholder-approved Annual Incentive Plan, which is a component of our amended and restated 2008 Omnibus Incentive Plan, for certain key officers that provides for annual or long-term cash awards at the end of various measurement periods, based on the earnings per share, revenue and/or various other criteria over the measurement period. Our total accrued incentive compensation for all incentive plans included in accrued salaries and bonuses on our Consolidated Balance Sheets was $149.0 million and $77.7 million at December 31, 2020 and 2019, respectively.
Employee Benefit Trusts. We maintain two employee benefit trusts for the purpose of satisfying obligations under the two Supplemental Retirement Plans. One of these trusts held 0.6 million shares of Equifax stock with a value, at cost, of $5.9 million at December 31, 2020 and 2019, as well as cash, which was not material for both periods presented. These employee benefits trust assets are dedicated to ensure the payment of benefits accrued under our Supplemental Retirement Plans, and to ensure full funding of the accrued benefits in case of a change in control, as defined in the trust agreements. The assets in these plan trusts which are recorded on our Consolidated Balance Sheets are subject to creditor’s claims in case of insolvency of Equifax Inc.
10. ACCUMULATED OTHER COMPREHENSIVE LOSS
Changes in accumulated other comprehensive loss by component, after tax, for the twelve months ended December 31, 2020, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency
|
|
Pension and other postretirement benefit plans
|
|
Cash flow hedging transactions
|
|
Total
|
|
(In millions)
|
Balance, December 31, 2019 (revised)
|
$
|
(352.4)
|
|
|
$
|
(0.9)
|
|
|
$
|
(1.1)
|
|
|
$
|
(354.4)
|
|
Other comprehensive income before reclassifications
|
184.0
|
|
|
—
|
|
|
0.1
|
|
|
184.1
|
|
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
(1.1)
|
|
|
—
|
|
|
(1.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020
|
$
|
(168.4)
|
|
|
$
|
(2.0)
|
|
|
$
|
(1.0)
|
|
|
$
|
(171.4)
|
|
Changes in accumulated other comprehensive loss related to noncontrolling interests were not material as of December 31, 2020.
11. RESTRUCTURING CHARGES
In the fourth quarter of 2020, first quarter of 2019 and fourth quarter of 2018, we recorded $31.9 million ($24.3 million, net of tax), $11.5 million ($8.8 million, net of tax) and $46.1 million ($35.0 million, net of tax) of restructuring charges, respectively, all of which were recorded in selling, general and administrative expenses on our Consolidated Statements of Income (Loss). These charges were recorded to general corporate expense and resulted from our continuing efforts to realign our internal resources to support the Company’s strategic objectives. The 2020, 2019 and 2018 restructuring charges primarily relate to a reduction in headcount. As of December 31, 2020, payments made related to the 2020 restructuring charge were $4.1 million, and we consider the payments for the 2019 and 2018 charges to be substantially completed.
12. LEASES
We determine if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets and liabilities are included in other assets, net and other current and long-term liabilities, respectively, in our Consolidated Balance Sheets.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Operating lease ROU assets and lease liabilities are recognized based on the present value of the future fixed lease payments over the lease term at the commencement date. As most of our leases do not provide an implicit rate, we use our quarterly incremental borrowing rate based on the information available that corresponds to each lease commencement date and lease term when determining the present value of future payments.
Our operating leases principally involve office space. These operating leases may contain variable non-lease components consisting of common area maintenance, operating expenses, insurance, and similar costs of the office space that we occupy. We have adopted the practical expedient to not separate these non-lease components from the lease components and instead account for them as a single lease component for all of our leases. The operating lease ROU assets include future fixed lease payments made as well as any initial direct costs incurred and exclude lease incentives. Variable lease payments are not included within the operating lease ROU assets or lease liabilities and are expensed in the period in which they are incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
Lease expense for operating leases was $39.3 million, $40.8 million and $41.3 million for the twelve months ended December 31, 2020, 2019 and 2018, respectively. Our leases have remaining lease terms of one year to thirteen years, some of which may include options to extend the lease term up to five years and some of which may include options to terminate leases within one year. We have elected to not record operating lease ROU assets and liabilities for short-term leases that have a term of twelve months or less. Our lease expense includes our short-term lease cost which is not material to our Consolidated Financial Statements.
Other information related to our operating leases was as follows:
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2020
|
|
Amount
|
(in millions, except lease term and discount rate)
|
|
|
Supplemental Cash Flows Information
|
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
Operating cash flows used by operating leases
|
|
$
|
28.8
|
|
Right-of-use assets obtained in exchange for lease obligations (non-cash):
|
|
|
Operating leases
|
|
$
|
16.1
|
|
|
|
|
Weighted Average Remaining Lease Term
|
|
5.5 years
|
Weighted Average Discount Rate
|
|
4.1
|
%
|
Estimated future minimum payment obligations for non-cancelable operating leases are as follows as of December 31, 2020:
|
|
|
|
|
|
|
|
|
Years ending December 31,
|
|
Amount
|
|
|
(In millions)
|
2021
|
|
$
|
26.3
|
|
2022
|
|
24.7
|
|
2023
|
|
21.7
|
|
2024
|
|
13.7
|
|
2025
|
|
11.1
|
|
Thereafter
|
|
19.2
|
|
|
|
$
|
116.7
|
|
We do not have any sublease agreements and, as a result, expected sublease income is not reflected as a reduction in the total minimum rental obligations under operating leases in the table above.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. 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
•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 (see Note 1). We evaluate the performance of these reportable segments based on their operating revenue, operating income and operating margins, excluding any 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 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, locate services, fraud detection and prevention services, identity verification services and other consulting services); mortgage services; 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 to consumers primarily via the internet 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.
Segment information for the twelve months ended December 31, 2020, 2019 and 2018 and as of December 31, 2020 and 2019 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31,
|
Operating revenue:
|
|
2020
|
|
2019
|
|
2018
|
|
|
(In millions)
|
U.S. Information Solutions
|
|
$
|
1,482.5
|
|
|
$
|
1,277.4
|
|
|
$
|
1,247.3
|
|
Workforce Solutions
|
|
1,437.9
|
|
|
949.7
|
|
|
826.8
|
|
International
|
|
862.1
|
|
|
920.6
|
|
|
966.2
|
|
Global Consumer Solutions
|
|
345.0
|
|
|
359.9
|
|
|
371.8
|
|
Total operating revenue
|
|
$
|
4,127.5
|
|
|
$
|
3,507.6
|
|
|
$
|
3,412.1
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31,
|
Operating income (loss):
|
|
2020
|
|
2019
|
|
2018
|
|
|
(In millions)
|
U.S. Information Solutions
|
|
$
|
463.9
|
|
|
$
|
423.4
|
|
|
$
|
441.7
|
|
Workforce Solutions
|
|
700.7
|
|
|
389.7
|
|
|
332.7
|
|
International
|
|
66.7
|
|
|
96.1
|
|
|
108.6
|
|
Global Consumer Solutions
|
|
37.0
|
|
|
48.4
|
|
|
68.6
|
|
General Corporate Expense
|
|
(591.7)
|
|
|
(1,293.0)
|
|
|
(503.6)
|
|
Total operating income (loss)
|
|
$
|
676.6
|
|
|
$
|
(335.4)
|
|
|
$
|
448.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
Total assets:
|
|
2020
|
|
2019
|
|
|
(In millions)
|
U.S. Information Solutions
|
|
$
|
2,177.1
|
|
|
$
|
1,922.9
|
|
Workforce Solutions
|
|
1,601.3
|
|
|
1,338.6
|
|
International
|
|
3,368.3
|
|
|
2,977.0
|
|
Global Consumer Solutions
|
|
319.1
|
|
|
275.3
|
|
General Corporate
|
|
2,146.0
|
|
|
1,395.2
|
|
Total assets
|
|
$
|
9,611.8
|
|
|
$
|
7,909.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31,
|
Depreciation and amortization expense:
|
|
2020
|
|
2019
|
|
2018
|
|
|
(In millions)
|
U.S. Information Solutions
|
|
$
|
114.4
|
|
|
$
|
81.8
|
|
|
$
|
79.2
|
|
Workforce Solutions
|
|
69.7
|
|
|
53.6
|
|
|
45.8
|
|
International
|
|
131.6
|
|
|
117.8
|
|
|
118.5
|
|
Global Consumer Solutions
|
|
18.6
|
|
|
15.0
|
|
|
14.9
|
|
General Corporate
|
|
56.7
|
|
|
62.9
|
|
|
52.0
|
|
Total depreciation and amortization expense
|
|
$
|
391.0
|
|
|
$
|
331.1
|
|
|
$
|
310.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31,
|
Capital expenditures:
|
|
2020
|
|
2019
|
|
2018
|
|
|
(In millions)
|
U.S. Information Solutions
|
|
$
|
94.2
|
|
|
$
|
67.6
|
|
|
$
|
42.0
|
|
Workforce Solutions
|
|
73.3
|
|
|
50.5
|
|
|
44.0
|
|
International
|
|
64.7
|
|
|
76.8
|
|
|
104.4
|
|
Global Consumer Solutions
|
|
36.7
|
|
|
26.0
|
|
|
29.4
|
|
General Corporate
|
|
161.8
|
|
|
155.0
|
|
|
148.3
|
|
Total capital expenditures*
|
|
$
|
430.7
|
|
|
$
|
375.9
|
|
|
$
|
368.1
|
|
*Amounts above include accruals for capital expenditures.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Financial information by geographic area is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31,
|
|
|
2020
|
|
2019
|
|
2018
|
|
|
|
|
|
|
(In millions)
|
|
|
|
|
Operating revenue (based on location of customer):
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
U.S.
|
|
$
|
3,217.1
|
|
|
78
|
%
|
|
$
|
2,543.2
|
|
|
73
|
%
|
|
$
|
2,405.1
|
|
|
71
|
%
|
U.K.
|
|
285.2
|
|
|
7
|
%
|
|
303.8
|
|
|
9
|
%
|
|
316.4
|
|
|
9
|
%
|
Australia
|
|
282.6
|
|
|
7
|
%
|
|
289.9
|
|
|
5
|
%
|
|
321.2
|
|
|
9
|
%
|
Canada
|
|
168.4
|
|
|
4
|
%
|
|
170.0
|
|
|
8
|
%
|
|
158.5
|
|
|
5
|
%
|
Other
|
|
174.2
|
|
|
4
|
%
|
|
200.7
|
|
|
5
|
%
|
|
210.9
|
|
|
6
|
%
|
Total operating revenue
|
|
$
|
4,127.5
|
|
|
100
|
%
|
|
$
|
3,507.6
|
|
|
100
|
%
|
|
$
|
3,412.1
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2020
|
|
2019
|
|
|
|
|
(In millions)
|
|
|
Long-lived assets:
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
U.S.
|
|
$
|
4,005.7
|
|
|
56
|
%
|
|
$
|
3,911.5
|
|
|
58
|
%
|
U.K.
|
|
319.3
|
|
|
5
|
%
|
|
312.8
|
|
|
5
|
%
|
Australia
|
|
2,021.2
|
|
|
28
|
%
|
|
1,918.6
|
|
|
29
|
%
|
Canada
|
|
133.9
|
|
|
2
|
%
|
|
128.0
|
|
|
2
|
%
|
Other
|
|
653.4
|
|
|
9
|
%
|
|
428.7
|
|
|
6
|
%
|
Total long-lived assets
|
|
$
|
7,133.5
|
|
|
100
|
%
|
|
$
|
6,699.6
|
|
|
100
|
%
|
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following selected quarterly operating results for each quarter of fiscal 2020 and 2019 have been revised to reflect the change in accounting principle as described in Note 1.
Quarterly financial data for 2020 and 2019 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
2020
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
|
(In millions, except per share data)
|
Operating revenue
|
|
$
|
957.9
|
|
|
$
|
982.8
|
|
|
$
|
1,068.3
|
|
|
$
|
1,118.5
|
|
Operating income
|
|
$
|
135.9
|
|
|
$
|
166.8
|
|
|
$
|
204.4
|
|
|
$
|
169.5
|
|
Consolidated net income
|
|
$
|
118.8
|
|
|
$
|
100.4
|
|
|
$
|
229.3
|
|
|
$
|
77.7
|
|
Net income attributable to Equifax
|
|
$
|
116.9
|
|
|
$
|
100.2
|
|
|
$
|
228.5
|
|
|
$
|
74.5
|
|
Basic earnings per share*
|
|
|
|
|
|
|
|
|
Net income attributable to Equifax
|
|
$
|
0.96
|
|
|
$
|
0.83
|
|
|
$
|
1.88
|
|
|
$
|
0.61
|
|
Diluted earnings per share*
|
|
|
|
|
|
|
|
|
Net income attributable to Equifax
|
|
$
|
0.95
|
|
|
$
|
0.82
|
|
|
$
|
1.86
|
|
|
$
|
0.61
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
2019
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
|
(In millions, except per share data)
|
Operating revenue
|
|
$
|
846.1
|
|
|
$
|
880.0
|
|
|
$
|
875.7
|
|
|
$
|
905.8
|
|
Operating (loss) income
|
|
$
|
(617.9)
|
|
|
$
|
113.8
|
|
|
$
|
121.6
|
|
|
$
|
47.0
|
|
Consolidated net (loss) income
|
|
$
|
(551.7)
|
|
|
$
|
71.0
|
|
|
$
|
85.2
|
|
|
$
|
17.4
|
|
Net (loss) income attributable to Equifax
|
|
$
|
(553.2)
|
|
|
$
|
69.5
|
|
|
$
|
83.8
|
|
|
$
|
15.8
|
|
Basic earnings per share*
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Equifax
|
|
$
|
(4.58)
|
|
|
$
|
0.58
|
|
|
$
|
0.69
|
|
|
$
|
0.13
|
|
Diluted earnings per share*
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Equifax
|
|
$
|
(4.55)
|
|
|
$
|
0.57
|
|
|
$
|
0.69
|
|
|
$
|
0.13
|
|
*The sum of the quarterly EPS does not equal the annual EPS due to changes in the weighted-average shares between periods. Other amounts may not equal the annual total due to rounding between periods.
The comparability of our quarterly financial results during 2020 and 2019 was impacted by certain events, as follows:
•For the year ended December 31, 2019, the Company recorded $800.9 million of losses, net of insurance recoveries, associated with certain legal proceedings and government investigations related to the 2017 cybersecurity incident, exclusive of our legal professional services expenses.
Below reflects the quarterly impact of the change in accounting principle on the quarterly financial data presented:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, 2020
|
(In millions, except per share data)
|
|
|
Consolidated net income, as computed under previous method
|
|
$
|
97.7
|
|
Impact of pension accounting change
|
|
(20.0)
|
|
Consolidated net income, as reported under new method
|
|
$
|
77.7
|
|
|
|
|
Net income attributable to Equifax, as computed under previous method
|
|
$
|
94.5
|
|
Impact of pension accounting change
|
|
(20.0)
|
|
Net income attributable to Equifax, as reported under new method
|
|
$
|
74.5
|
|
|
|
|
Basic earnings per share*
|
|
|
Net income attributable to Equifax, as computed under previous method
|
|
$
|
0.77
|
|
Impact of pension accounting change
|
|
(0.16)
|
|
Net income attributable to Equifax, as reported under new method
|
|
$
|
0.61
|
|
|
|
|
Diluted earnings per share*
|
|
|
Net income attributable to Equifax, as computed under previous method
|
|
$
|
0.77
|
|
Impact of pension accounting change
|
|
(0.16)
|
|
Net income attributable to Equifax, as reported under new method
|
|
$
|
0.61
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
2020
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
|
(In millions, except per share data)
|
Consolidated net income, previously reported
|
|
$
|
114.5
|
|
|
$
|
96.1
|
|
|
$
|
225.0
|
|
Impact of pension accounting change
|
|
4.3
|
|
|
4.3
|
|
|
4.3
|
|
Consolidated net income, revised
|
|
$
|
118.8
|
|
|
$
|
100.4
|
|
|
$
|
229.3
|
|
|
|
|
|
|
|
|
Net income attributable to Equifax, previously reported
|
|
$
|
112.6
|
|
|
$
|
95.9
|
|
|
$
|
224.2
|
|
Impact of pension accounting change
|
|
4.3
|
|
|
4.3
|
|
|
4.3
|
|
Net income attributable to Equifax, revised
|
|
$
|
116.9
|
|
|
$
|
100.2
|
|
|
$
|
228.5
|
|
|
|
|
|
|
|
|
Basic earnings per share*
|
|
|
|
|
|
|
Net income attributable to Equifax, previously reported
|
|
$
|
0.93
|
|
|
$
|
0.79
|
|
|
$
|
1.84
|
|
Impact of pension accounting change
|
|
0.03
|
|
|
0.04
|
|
|
0.04
|
|
Net income attributable to Equifax, revised
|
|
$
|
0.96
|
|
|
$
|
0.83
|
|
|
$
|
1.88
|
|
|
|
|
|
|
|
|
Diluted earnings per share*
|
|
|
|
|
|
|
Net income attributable to Equifax, previously reported
|
|
$
|
0.92
|
|
|
$
|
0.78
|
|
|
$
|
1.82
|
|
Impact of pension accounting change
|
|
0.03
|
|
|
0.04
|
|
|
0.04
|
|
Net income attributable to Equifax, revised
|
|
$
|
0.95
|
|
|
$
|
0.82
|
|
|
$
|
1.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
2019
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
|
(In millions, except per share data)
|
Consolidated net (loss) income, previously reported
|
|
$
|
(554.4)
|
|
|
$
|
68.3
|
|
|
$
|
82.5
|
|
|
$
|
10.8
|
|
Impact of pension accounting change
|
|
2.7
|
|
|
2.7
|
|
|
2.7
|
|
|
6.6
|
|
Consolidated net (loss) income, revised
|
|
$
|
(551.7)
|
|
|
$
|
71.0
|
|
|
$
|
85.2
|
|
|
$
|
17.4
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Equifax, previously reported
|
|
$
|
(555.9)
|
|
|
$
|
66.8
|
|
|
$
|
81.1
|
|
|
$
|
9.2
|
|
Impact of pension accounting change
|
|
2.7
|
|
|
2.7
|
|
|
2.7
|
|
|
6.6
|
|
Net (loss) income attributable to Equifax, revised
|
|
$
|
(553.2)
|
|
|
$
|
69.5
|
|
|
$
|
83.8
|
|
|
$
|
15.8
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share*
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Equifax, previously reported
|
|
$
|
(4.60)
|
|
|
$
|
0.55
|
|
|
$
|
0.67
|
|
|
$
|
0.08
|
|
Impact of pension accounting change
|
|
0.02
|
|
|
0.03
|
|
|
0.02
|
|
|
0.05
|
|
Net (loss) income attributable to Equifax, revised
|
|
$
|
(4.58)
|
|
|
$
|
0.58
|
|
|
$
|
0.69
|
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share*
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Equifax, previously reported
|
|
$
|
(4.57)
|
|
|
$
|
0.55
|
|
|
$
|
0.66
|
|
|
$
|
0.07
|
|
Impact of pension accounting change
|
|
0.02
|
|
|
0.02
|
|
|
0.03
|
|
|
0.06
|
|
Net (loss) income attributable to Equifax, revised
|
|
$
|
(4.55)
|
|
|
$
|
0.57
|
|
|
$
|
0.69
|
|
|
$
|
0.13
|
|
*The sum of the quarterly EPS does not equal the annual EPS due to changes in the weighted-average shares between periods. Other amounts may not equal the annual total due to rounding between periods.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. IMPACT OF CHANGE IN ACCOUNTING PRINCIPLE ON CURRENT AND PRIOR PERIOD FINANCIAL STATEMENTS
As discussed in Note 1, we voluntarily changed our method of accounting for recognizing actuarial gains and losses and expected return on plan assets for our defined benefit pension and other postretirement benefit plans. The following tables reflect the effects of the change in accounting principles on the 2020 and previously reported Consolidated Financial Statements:
Consolidated Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2020
|
|
|
As Computed Under Previous Method
|
|
Effect of Accounting Change
|
|
As Reported Under New Method
|
|
|
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net
|
|
$
|
159.4
|
|
|
$
|
(9.2)
|
|
|
$
|
150.2
|
|
Consolidated income before income taxes
|
|
694.4
|
|
|
(9.2)
|
|
|
685.2
|
|
Provision for income taxes
|
|
(161.3)
|
|
|
2.3
|
|
|
(159.0)
|
|
Consolidated net income
|
|
533.1
|
|
|
(6.9)
|
|
|
526.2
|
|
Net income attributable to Equifax
|
|
$
|
527.0
|
|
|
$
|
(6.9)
|
|
|
$
|
520.1
|
|
|
|
|
|
|
|
|
Basic earnings per common share
|
|
$
|
4.34
|
|
|
$
|
(0.06)
|
|
|
$
|
4.28
|
|
Diluted earnings per common share
|
|
$
|
4.30
|
|
|
$
|
(0.06)
|
|
|
$
|
4.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2019
|
|
Twelve Months Ended December 31, 2018
|
|
|
As Reported
|
|
Revisions
|
|
Revised
|
|
As Reported
|
|
Revisions
|
|
Revised
|
|
|
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net
|
|
$
|
14.1
|
|
|
$
|
19.2
|
|
|
$
|
33.3
|
|
|
$
|
11.8
|
|
|
$
|
14.1
|
|
|
$
|
25.9
|
|
Consolidated income before income taxes
|
|
(433.0)
|
|
|
19.2
|
|
|
(413.8)
|
|
|
356.3
|
|
|
14.1
|
|
|
370.4
|
|
Provision for income taxes
|
|
40.2
|
|
|
(4.5)
|
|
|
35.7
|
|
|
(50.0)
|
|
|
(3.4)
|
|
|
(53.4)
|
|
Consolidated net income
|
|
(392.8)
|
|
|
14.7
|
|
|
(378.1)
|
|
|
306.3
|
|
|
10.7
|
|
|
317.0
|
|
Net income attributable to Equifax
|
|
$
|
(398.8)
|
|
|
$
|
14.7
|
|
|
$
|
(384.1)
|
|
|
$
|
299.8
|
|
|
$
|
10.7
|
|
|
$
|
310.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share
|
|
$
|
(3.30)
|
|
|
$
|
0.12
|
|
|
$
|
(3.18)
|
|
|
$
|
2.49
|
|
|
$
|
0.09
|
|
|
$
|
2.58
|
|
Diluted earnings per common share
|
|
$
|
(3.27)
|
|
|
$
|
0.12
|
|
|
$
|
(3.15)
|
|
|
$
|
2.47
|
|
|
$
|
0.09
|
|
|
$
|
2.56
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Comprehensive Income Attributable to Equifax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2020
|
|
|
As Computed Under Previous Method
|
|
Effect of Accounting Change
|
|
As Reported Under New Method
|
|
|
(In millions, except per share amounts)
|
Net Income
|
|
$
|
527.0
|
|
|
$
|
(6.9)
|
|
|
$
|
520.1
|
|
Other comprehensive income:
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
184.0
|
|
|
—
|
|
|
184.0
|
|
Change in unrecognized prior service cost and actuarial (losses) gains related to our pension and other postretirement benefit plans, net
|
|
(8.0)
|
|
|
6.9
|
|
|
(1.1)
|
|
Change in cumulative gain from cash flow hedging, net
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
Comprehensive income
|
|
$
|
703.1
|
|
|
$
|
—
|
|
|
$
|
703.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2019
|
|
Twelve Months Ended December 31, 2018
|
|
|
As Reported
|
|
Revisions
|
|
Revised
|
|
As Reported
|
|
Revisions
|
|
Revised
|
|
|
(In millions, except per share amounts)
|
Net Income
|
|
$
|
(398.8)
|
|
|
$
|
14.7
|
|
|
$
|
(384.1)
|
|
|
$
|
299.8
|
|
|
$
|
10.7
|
|
|
$
|
310.5
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
(24.4)
|
|
|
—
|
|
|
(24.4)
|
|
|
(224.7)
|
|
|
—
|
|
|
(224.7)
|
|
Change in unrecognized prior service cost and actuarial gains (losses) related to our pension and other postretirement benefit plans, net
|
|
19.0
|
|
|
(14.7)
|
|
|
4.3
|
|
|
10.4
|
|
|
291.8
|
|
|
302.2
|
|
Change in cumulative gain from cash flow hedging, net
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Comprehensive income
|
|
$
|
(404.1)
|
|
|
$
|
—
|
|
|
$
|
(404.1)
|
|
|
$
|
85.5
|
|
|
$
|
302.5
|
|
|
$
|
388.0
|
|
Consolidated Statements of Financial Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
|
As Computed Under Previous Method
|
|
Effect of Accounting Change
|
|
As Reported Under New Method
|
|
|
(In millions, except per share amounts)
|
Retained Earnings
|
|
$
|
4,469.5
|
|
|
$
|
(284.1)
|
|
|
$
|
4,185.4
|
|
Accumulated other comprehensive loss
|
|
$
|
(455.5)
|
|
|
$
|
284.1
|
|
|
$
|
(171.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
|
As Reported
|
|
Revisions
|
|
Revised
|
|
|
(In millions, except per share amounts)
|
Retained Earnings
|
|
$
|
4,131.8
|
|
|
$
|
(277.2)
|
|
|
$
|
3,854.6
|
|
Accumulated other comprehensive loss
|
|
$
|
(631.6)
|
|
|
$
|
277.2
|
|
|
$
|
(354.4)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
|
As Computed Under Previous Method
|
|
Effect of Accounting Change
|
|
As Reported Under New Method
|
|
|
(In millions, except per share amounts)
|
Operating activities:
|
|
|
|
|
|
|
Consolidated net income
|
|
$
|
533.1
|
|
|
$
|
(6.9)
|
|
|
$
|
526.2
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
Deferred Income Taxes
|
|
$
|
68.6
|
|
|
$
|
(2.1)
|
|
|
$
|
66.5
|
|
Changes in assets and liabilities, excluding effects of acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current and long-term liabilities, excluding debt
|
|
$
|
97.9
|
|
|
$
|
9.0
|
|
|
$
|
106.9
|
|
Cash provided by operating activities
|
|
$
|
946.2
|
|
|
$
|
—
|
|
|
$
|
946.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2019
|
|
Twelve Months Ended December 31, 2018
|
|
|
As Reported
|
|
Revisions
|
|
Revised
|
|
As Reported
|
|
Revisions
|
|
Revised
|
|
|
(In millions, except per share amounts)
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net (loss) income
|
|
$
|
(392.8)
|
|
|
$
|
14.7
|
|
|
$
|
(378.1)
|
|
|
$
|
306.3
|
|
|
$
|
10.7
|
|
|
$
|
317.0
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Income Taxes
|
|
$
|
(87.2)
|
|
|
$
|
4.5
|
|
|
$
|
(82.7)
|
|
|
$
|
(2.3)
|
|
|
$
|
3.6
|
|
|
$
|
1.3
|
|
Changes in assets and liabilities, excluding effects of acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current and long-term liabilities, excluding debt
|
|
$
|
546.9
|
|
|
$
|
(19.2)
|
|
|
$
|
527.7
|
|
|
$
|
62.6
|
|
|
$
|
(14.3)
|
|
|
$
|
48.3
|
|
Cash provided by operating activities
|
|
$
|
313.8
|
|
|
$
|
—
|
|
|
$
|
313.8
|
|
|
$
|
672.2
|
|
|
$
|
—
|
|
|
$
|
672.2
|
|
Consolidated Statements of Shareholders' Equity and Accumulated Other Comprehensive Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
As Computed Under Previous Method
|
|
Effect of Accounting Change
|
|
As Reported Under New Method
|
|
|
(In millions, except per share amounts)
|
Beginning of period retained earnings
|
|
$
|
4,131.8
|
|
|
$
|
(277.2)
|
|
|
$
|
3,854.6
|
|
Net income
|
|
$
|
527.0
|
|
|
$
|
(6.9)
|
|
|
$
|
520.1
|
|
End of period retained earnings
|
|
$
|
4,469.5
|
|
|
$
|
(284.1)
|
|
|
$
|
4,185.4
|
|
|
|
|
|
|
|
|
Beginning of period accumulated other comprehensive loss
|
|
$
|
(631.6)
|
|
|
$
|
277.2
|
|
|
$
|
(354.4)
|
|
Other comprehensive income
|
|
$
|
176.1
|
|
|
$
|
6.9
|
|
|
$
|
183.0
|
|
End of period accumulated other comprehensive loss
|
|
$
|
(455.5)
|
|
|
$
|
284.1
|
|
|
$
|
(171.4)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
|
As Reported
|
|
Revisions
|
|
Revised
|
|
As Reported
|
|
Revisions
|
|
Revised
|
|
|
(In millions, except per share amounts)
|
Beginning of period retained earnings
|
|
$
|
4,717.8
|
|
|
$
|
(291.9)
|
|
|
$
|
4,425.9
|
|
|
$
|
4,600.6
|
|
|
$
|
—
|
|
|
$
|
4,600.6
|
|
Net (loss) income
|
|
$
|
(398.8)
|
|
|
$
|
14.7
|
|
|
$
|
(384.1)
|
|
|
$
|
299.8
|
|
|
$
|
10.7
|
|
|
$
|
310.5
|
|
Cumulative adjustment from change in accounting principle
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4.2
|
|
|
$
|
(302.6)
|
|
|
$
|
(298.4)
|
|
End of period retained earnings
|
|
$
|
4,131.8
|
|
|
$
|
(277.2)
|
|
|
$
|
3,854.6
|
|
|
$
|
4,717.8
|
|
|
$
|
(291.9)
|
|
|
$
|
4,425.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period accumulated other comprehensive loss
|
|
$
|
(626.3)
|
|
|
$
|
291.9
|
|
|
$
|
(334.4)
|
|
|
$
|
(412.0)
|
|
|
$
|
—
|
|
|
$
|
(412.0)
|
|
Other comprehensive loss
|
|
$
|
(5.3)
|
|
|
$
|
(14.7)
|
|
|
$
|
(20.0)
|
|
|
$
|
(207.3)
|
|
|
$
|
(10.7)
|
|
|
$
|
(218.0)
|
|
Cumulative adjustment from change in accounting principle
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
302.6
|
|
|
$
|
302.6
|
|
End of period accumulated other comprehensive loss
|
|
$
|
(631.6)
|
|
|
$
|
277.2
|
|
|
$
|
(354.4)
|
|
|
$
|
(626.3)
|
|
|
$
|
291.9
|
|
|
$
|
(334.4)
|
|
Accumulated Other Comprehensive Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
As Computed Under Previous Method
|
|
Effect of Accounting Change
|
|
As Reported Under New Method
|
|
|
(In millions, except per share amounts)
|
Foreign currency translation
|
|
$
|
(168.5)
|
|
|
$
|
—
|
|
|
$
|
(168.5)
|
|
Unrecognized actuarial losses and prior service cost related to our pension and other postretirement benefit plans, net of accumulated tax
|
|
(286.0)
|
|
|
284.1
|
|
|
(1.9)
|
|
Cash flow hedging transactions, net of tax
|
|
(1.0)
|
|
|
—
|
|
|
(1.0)
|
|
Accumulated other comprehensive loss
|
|
$
|
(455.5)
|
|
|
$
|
284.1
|
|
|
$
|
(171.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
|
As Reported
|
|
Revisions
|
|
Revised
|
|
As Reported
|
|
Revisions
|
|
Revised
|
|
|
(In millions, except per share amounts)
|
Foreign currency translation
|
|
$
|
(352.4)
|
|
|
$
|
—
|
|
|
$
|
(352.4)
|
|
|
$
|
(328.0)
|
|
|
$
|
—
|
|
|
$
|
(328.0)
|
|
Unrecognized actuarial losses and prior service cost related to our pension and other postretirement benefit plans, net of accumulated tax
|
|
(278.1)
|
|
|
277.2
|
|
|
$
|
(0.9)
|
|
|
(297.1)
|
|
|
291.9
|
|
|
$
|
(5.2)
|
|
Cash flow hedging transactions, net of tax
|
|
(1.1)
|
|
|
—
|
|
|
$
|
(1.1)
|
|
|
(1.2)
|
|
|
—
|
|
|
$
|
(1.2)
|
|
Accumulated other comprehensive loss
|
|
$
|
(631.6)
|
|
|
$
|
277.2
|
|
|
$
|
(354.4)
|
|
|
$
|
(626.3)
|
|
|
$
|
291.9
|
|
|
$
|
(334.4)
|
|
16. SUBSEQUENT EVENT
The Company acquired 100% of the ordinary shares of Kount, which closed on February 10, 2021, for cash consideration of approximately $640 million. Kount will be reported within the USIS business unit. The Company will account for this acquisition in accordance with ASC 805, Business Combinations, which requires the assets acquired and the liabilities assumed to be measured at fair value at the date of the acquisition. The accounting for the acquisition is incomplete as of the date of our filing.