Equifax Ends 2006 with Strong Broad-Based Revenue and EPS Growth for the Quarter and Full Year

ATLANTA, Jan. 31 /PRNewswire-FirstCall/ -- Equifax Inc. (NYSE: EFX) today announced financial results for the quarter and year ended December 31, 2006. For the fourth quarter of 2006, revenue increased to $390.0 million, up 8 percent compared to the fourth quarter of 2005. Net income rose to $63.1 million, a slight increase from a year ago. Diluted earnings per share ("EPS") grew to $0.50, up 4 percent from the fourth quarter of 2005.

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On a non-GAAP basis, excluding the impact of a charge in the fourth quarter of 2006 related to the company's organizational realignment and the negative incremental impact of adopting Statement of Financial Accounting Standards No. 123R, "Share-Based Payment" ("SFAS 123R") on January 1, 2006, net income grew to $67.8 million, up 8 percent, and EPS rose to $0.53, a 12 percent increase from the fourth quarter of 2005. See the reconciliations of non-GAAP financial measures to the comparable GAAP financial measures attached to this earnings release for additional information.

For the full year 2006, revenue increased to $1.55 billion, up 7 percent compared to the full year 2005. Net income rose to $274.5 million, an 11 percent increase from a year ago. EPS grew to $2.12, up 14 percent from the full year 2005. On a non-GAAP basis, excluding the impact of certain items in 2006, net income grew to $260.5 million, up 6 percent, and EPS rose to $2.01, an 8 percent increase from 2005. When also excluding the incremental impact of adopting SFAS 123R from the non-GAAP measures above, net income increased to $265.7 million, up 8 percent, and EPS rose to $2.05, a 10 percent increase from 2005.

"The performance in the fourth quarter of 2006 reflects the strength and capability of the company, enabling us to deliver strong financial results for the year," said Richard F. Smith, Equifax Chairman and Chief Executive Officer. "For the year, we met or exceeded the guidance provided in all areas, further underscoring our long-standing commitment to shareholders."

    Fourth Quarter 2006 Highlights
    - Double-digit revenue growth in four of five business units contributed
      to an 8 percent increase in revenue in the fourth quarter of 2006, when
      compared to the same period in 2005.
    - The company completed an organizational realignment, effective
      January 1, 2007, to better support our strategic objectives. We recorded
      a $6.4 million severance charge in the quarter related to the
      elimination of certain positions as part of the realignment.
    - Operating margin decreased to 28.2 percent in the fourth quarter of 2006
      from 29.3 percent in the fourth quarter of 2005. On a non-GAAP basis,
      excluding the unfavorable impact of the $6.4 million charge related to
      our organizational realignment and the negative incremental impact of
      adopting SFAS 123R, operating margin increased to 30.0 percent in the
      fourth quarter of 2006.
    - Cash provided by operating activities for the fourth quarter of 2006 was
      $118.9 million, a 12 percent increase when compared to the same period
      in 2005.
    - The company repurchased 1.4 million shares of its common stock on the
      open market for $50.7 million during the fourth quarter of 2006. At
      December 31, 2006, $132.6 million remained authorized for future share
      repurchases.
    - The company acquired Austin-Tetra, Inc. on October 6, 2006 for $34.4
      million. Austin-Tetra is a leading provider of business-to-business data
      management and enhancement services to the commercial market. This
      acquisition is an integral part of our long-term growth strategy,
      complementing our commercial information business.

    North America

Total revenue was $308.9 million in the fourth quarter of 2006, a 6 percent increase from the fourth quarter of 2005. Operating margin for North America was 38.8 percent in the fourth quarter of 2006 compared to 37.8 percent in the fourth quarter of 2005.

    - North America Information Services revenue was $203.6 million, up 3
      percent compared to the fourth quarter of 2005.
    - Marketing Services revenue was $73.6 million, up 11 percent compared to
      the fourth quarter of 2005.
    - Personal Solutions revenue was $31.7 million, up 18 percent compared to
      the fourth quarter of 2005.

    Europe

Total revenue was $41.3 million, up 17 percent compared to the fourth quarter of 2005. In local currency, revenue was up 7 percent when compared to the same period in the prior year. Operating margin was 20.6 percent, down from 25.8 percent in the fourth quarter of 2005.

Latin America

Total revenue was $39.8 million, up 10 percent compared to the fourth quarter of 2005. In local currency, revenue was up 8 percent when compared to the same period in the prior year. Operating margin was 32.8 percent, up from 24.7 percent in the fourth quarter of 2005.

    Full Year 2006 Highlights
    - Broad-based revenue growth across business units contributed to 7
      percent increase in revenue in 2006, when compared to the same period in
      2005.
    - Operating margin decreased to 28.2 percent for the full year 2006 from
      29.2 percent for the full year 2005. On a non-GAAP basis, excluding the
      impact of certain litigation matters, the $6.4 million severance charge
      in 2006 related to our organizational realignment, and the negative
      incremental impact of adopting SFAS 123R, operating margin increased to
      29.7 percent for the full year 2006.
    - Cash provided by operating activities for the full year 2006 was $374.3
      million, an 11 percent increase when compared to the same period in
      2005.
    - Equifax repurchased 6.0 million shares of its common stock on the open
      market for $212.7 million during the full year 2006.
    - The effective tax rate for the full year 2006 was 34.0 percent, as
      compared to 36.9 percent for the same period in 2005. The decline was
      primarily driven by the reversal of certain income tax reserves related
      to uncertain tax positions due to the expiration of the applicable
      statute of limitations during the third quarter of 2006, and a non-
      taxable gain related to a litigation settlement during the second
      quarter of 2006. On a non-GAAP basis, excluding the favorable impact of
      the reversal of certain income tax reserves and the litigation
      settlement, our effective tax rate was 37.6 percent for the full year
      2006.
    - Total debt declined $52.2 million from December 31, 2005 to December 31,
      2006.

    North America

Total revenue was $1.24 billion in 2006, a 5 percent increase from 2005. Operating margin for North America was 36.8 percent in the full year 2006 compared to 37.8 percent in the full year 2005. On a non-GAAP basis, excluding the impact of certain litigation matters, operating margin was 37.5 percent in 2006.

    - North America Information Services revenue was $835.5 million, up 4
      percent compared to the full year 2005.
    - Marketing Services revenue was $277.2 million, up 9 percent compared to
      the full year 2005.
    - Personal Solutions revenue was $126.0 million, up 10 percent compared to
      the full year 2005.

    Europe

Total revenue was $153.6 million, up 8 percent compared to the full year 2005. In local currency, revenue was up 7 percent when compared to the prior year. Operating margin was 23.1 percent, down from 23.5 percent in the full year 2005.

Latin America

Total revenue was $154.0 million, up 21 percent compared to 2005. In local currency, revenue was up 14 percent when compared to the prior year. Operating margin was 29.8 percent, up from 26.3 percent in the full year 2005.

2007 Annual Outlook

Based on current business trends and management's outlook, Equifax expects consolidated annual revenue growth to be between 6 percent and 10 percent. In 2007, we expect quarterly year-over-year growth to be in the lower portion of this range in the first quarter and to increase over the course of the year as new product and market initiatives yield increasing results. EPS for the full year is expected to be between $2.15 and $2.23, representing growth ranging from 7 percent to 11 percent over our 2006 EPS, excluding certain items, of $2.01. EBITDA, a non-GAAP financial measure defined by us as operating income before depreciation and amortization expense, is expected to be in the range of $555 million to $575 million for the full year. Annual capital expenditures are targeted at $70 million to $100 million. A reconciliation of EBITDA to its most directly comparable GAAP measure and related notes are presented in the attached Q&A.

About Equifax

Equifax Inc. is a global leader in information technology that enables and secures global commerce with consumers and businesses. We are one of the largest sources of consumer and commercial data. Utilizing our databases, advanced analytics and proprietary enabling technology, we provide real-time answers for our customers. This innovative ability to transform information into intelligence is valued by customers across a wide range of industries and markets. Headquartered in Atlanta, Georgia, Equifax employs approximately 4,900 people in 14 countries throughout North America, Latin America and Europe. Equifax was founded 107 years ago, and today is a member of Standard & Poor's (S&P) 500(R) Index. Our common stock is traded on the New York Stock Exchange under the symbol EFX.

www.equifax.com

Earnings Conference Call and Webcast

Equifax's quarterly teleconference to discuss the fourth quarter and full year earnings release will be held tomorrow at 8:30 a.m. (EDT). The live audio Webcast of the speakers' presentations will be available at www.equifax.com and a replay will be available at the same site shortly after the conclusion of the Webcast. This press release, the financial tables, as well as other supplemental information, are also available at that Web site.

Supplemental Financial Information and Non-GAAP Financial Measures

The Common Questions and Answers (Unaudited) ("Q&A") that are a part of this press release include supplemental financial information which Equifax believes is useful to assess its operating performance. The following financial measures included herein or in the Q&A are not prepared in accordance with U.S. generally accepted accounting principles ("GAAP"): consolidated pretax income, net income and diluted earnings per share, excluding certain items; operating income and operating margin, excluding certain items for our consolidated results and particular business units; effective tax rate, excluding certain items, and EBITDA. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures and related notes are presented in the Q&A. This information can also be found under "Our Company/Investor Center/Non-GAAP/GAAP Financial Measures" on our Web site at www.equifax.com. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

Caution Concerning Forward-Looking Statements

Statements in this press release that relate to Equifax's future plans, objectives, expectations, performance, events and the like may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Future events, risks and uncertainties, individually or in the aggregate, could cause our actual results to differ materially from those expressed or implied in these forward-looking statements. Those factors include, but are not limited to, changes in worldwide and U.S. economic conditions and movements in interest rates that materially impact consumer spending and use of consumer debt, including mortgages; changes in demand for Equifax's products and services; our ability to successfully develop and market new products and services; pricing and other competitive pressures which could result in a loss of customers or a rate of increase or decrease in prices for our services different than past experience; risks relating to illegal third party efforts to access data and our operating systems; risks associated with the integration of acquired technologies, businesses and other investments; changes in laws and regulations governing our business and the application of existing laws, including federal or state responses to identity theft concerns and governing the use of consumer or business credit or marketing information, which could increase our operating costs or reduce the market for our services; disruptions in our business critical systems and operations which could interfere with our ability to deliver services to our customers; third party claims alleging infringement of intellectual property or other proprietary rights or alleging unfair competition or violation of privacy rights; the outcome of pending litigation; and certain other factors discussed under Item 1A, "Risk Factors" in Equifax's 2005 Annual Report on Form 10-K, and in our other filings with the Securities and Exchange Commission. Equifax assumes no obligation to update any forward-looking statements to reflect events that occur or circumstances that exist after the date on which they were made.


    EQUIFAX
    CONSOLIDATED STATEMENTS OF INCOME
                                                       Three Months Ended
                                                           December 31,
                                                     2006              2005
     (In millions, except per share amounts)              (Unaudited)

    Operating revenue                               $390.0            $361.3
    Operating expenses:
       Cost of services (exclusive of
        depreciation and amortization below)         159.9             150.9
       Selling, general and
        administrative expenses                       99.4              82.7
       Depreciation and amortization                  20.8              21.7
              Total operating expenses               280.1             255.3
    Operating income                                 109.9             106.0
       Interest expense                               (7.9)             (8.1)
       Minority interests in earnings,
        net of tax                                    (1.5)             (1.3)
       Other income (expense), net                     0.2              (0.7)
    Income before income taxes                       100.7              95.9
       Provision for income taxes                    (37.6)            (33.1)
    Net income                                       $63.1             $62.8

    Basic earnings per common share                  $0.50             $0.48
    Shares used in computing basic
     earnings per share                              125.0             129.5
    Diluted earnings per common share                $0.50             $0.48
    Shares used in computing diluted
     earnings per share                              127.2             132.0
    Dividends per common share                       $0.04             $0.04


    EQUIFAX
    CONSOLIDATED STATEMENTS OF INCOME
                                                    Twelve Months Ended
                                                        December 31,
                                                   2006              2005
     (In millions, except per share amounts)    (Unaudited)

    Operating revenue                             $1,546.3          $1,443.4
    Operating expenses:
       Cost of services (exclusive of
        depreciation and amortization below)         626.4             594.2
       Selling, general and
        administrative expenses                      401.0             345.0
       Depreciation and amortization                  82.8              82.2
              Total operating expenses             1,110.2           1,021.4
    Operating income                                 436.1             422.0
       Interest expense                              (31.9)            (35.6)
       Minority interests in earnings,
        net of tax                                    (4.5)             (4.9)
       Other income, net                              16.2               9.2
    Income before income taxes                       415.9             390.7
       Provision for income taxes                   (141.4)           (144.2)
    Net income                                      $274.5            $246.5

    Basic earnings per common share                  $2.16             $1.90
    Shares used in computing basic
     earnings per share                              127.1             129.7
    Diluted earnings per common share                $2.12             $1.86
    Shares used in computing diluted
     earnings per share                              129.4             132.2
    Dividends per common share                       $0.16             $0.15


    EQUIFAX
    CONSOLIDATED BALANCE SHEETS
                                                           December 31,
                                                     2006              2005
    (In millions, except par values)              (Unaudited)
    ASSETS

    Current assets:
       Cash and cash equivalents                     $67.8             $37.5
        Trade accounts receivable, net of
        allowance for doubtful accounts
        of $8.7 and $9.6 at December 31,
        2006 and 2005, respectively                   244.8             216.0
       Prepaid expenses                               21.5              17.9
       Other current assets                           11.1               9.0

         Total current assets                        345.2             280.4

    Property and equipment:
       Capitalized internal-use software
        and system costs                             243.8             205.9
       Data processing equipment and
        furniture                                    132.2             124.5
       Land, buildings and improvements               29.7              29.1

         Total property and equipment                405.7             359.5

       Less accumulated depreciation and
        amortization                                (243.8)           (202.7)

        Total property and equipment, net            161.9             156.8

    Goodwill                                         842.0             791.2
    Indefinite-lived intangible assets                95.2              95.0
    Purchased intangible assets, net                 242.2             263.4
    Prepaid pension asset                             47.7             183.7
    Other assets, net                                 56.4              61.0

           Total assets                           $1,790.6          $1,831.5

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities:
        Short-term debt and current
         maturities                                 $330.0             $92.3
        Accounts payable                              23.5               5.9
        Accrued expenses                              62.0              54.0
        Accrued salaries and bonuses                  41.9              40.7
        Deferred revenue                              62.7              49.2
        Other current liabilities                     62.0              52.4

           Total current liabilities                 582.1             294.5

    Long-term debt                                   173.9             463.8
    Deferred income tax liabilities, net              70.8             126.1
    Long-term pension and other
     postretirement benefit liabilities               65.3              56.2
    Other long-term liabilities                       60.4              70.6

       Total liabilities                             952.5           1,011.2

    Shareholders' equity:
       Preferred stock, $0.01 par value:
        Authorized shares - 10.0; Issued
        shares - none                                  -                 -
       Common stock, $1.25 par value:
        Authorized shares - 300.0;
        Issued shares - 186.3 and 185.2
         at December 31, 2006 and 2005,
         respectively;
        Outstanding shares - 124.7 and
         129.2 at December 31, 2006 and
         2005, respectively                          232.9             231.5
       Paid-in capital                               609.2             559.0
       Retained earnings                           1,778.6           1,525.1
       Accumulated other comprehensive
        loss                                        (232.2)           (157.8)
       Treasury stock, at cost, 57.7
        shares and 51.7 shares at
        December 31, 2006 and 2005,
        respectively                              (1,490.9)         (1,274.6)
       Stock held by employee benefits
        trusts, at cost, 3.9 shares and
        4.3 shares at December 31,
        2006 and 2005, respectively                  (59.5)            (62.9)
       Total shareholders' equity                    838.1             820.3

           Total liabilities and
            shareholders' equity                  $1,790.6          $1,831.5


    EQUIFAX
    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                      Twelve Months Ended
                                                          December 31,
                                                     2006              2005
    (In millions)                                (Unaudited)
    Operating activities:
      Net income                                    $274.5            $246.5
      Adjustments to reconcile net income
       to net cash provided by operating
       activities:
          Depreciation and amortization               82.8              82.2
          Stock-based compensation
           expense                                    17.4               8.2
          Tax effects of stock-based
           compensation plans                          8.9              18.1
          Excess tax benefits from stock-
           based compensation plans                   (5.0)              -
          Deferred income taxes                       (2.6)             11.8
          Changes in assets and
           liabilities, excluding effects
           of acquisitions:
            Accounts receivable, net                 (22.8)            (14.3)
            Prepaid expenses and other
             current assets                           (2.4)             10.5
            Other assets                              (1.6)              0.5
            Current liabilities,
             excluding debt                           49.1             (14.0)
            Other long-term liabilities,
             excluding debt                          (24.0)            (11.7)

    Cash provided by operating activities            374.3             337.8

    Investing activities:
        Capital expenditures                         (52.0)            (46.2)
        Acquisitions, net of cash
         acquired                                    (34.4)           (121.8)
        Other                                         (0.4)             10.1

    Cash used in investing activities                (86.8)           (157.9)

    Financing activities:
        Net short-term (repayments) borrowings       (12.2)             92.3
        Net (repayments) borrowings under
         long-term revolving credit
         facilities                                  (40.0)             65.0
        Payments on long-term debt                      --            (250.0)
        Treasury stock purchases                    (215.2)           (144.0)
        Dividends paid                               (20.3)            (20.2)
        Proceeds from exercise of stock
         options                                      26.1              62.8
        Excess tax benefits from stock-
         based compensation plans                      5.0               -
        Other                                         (0.6)              0.6

    Cash used in financing activities               (257.2)           (193.5)

    Effect of foreign currency exchange
     rates on cash and cash equivalents                 --              (1.0)

    Increase (decrease) in cash and cash
     equivalents                                      30.3             (14.6)

    Cash and cash equivalents, beginning
     of period                                        37.5              52.1

    Cash and cash equivalents, end of
     period                                          $67.8             $37.5


    Common Questions & Answers (Unaudited)
    (Dollars in millions, except per share amounts)

    1. What impact did the organizational realignment have on the financial
       results for the three and twelve months ended December 31, 2006?

       As a result of the organizational realignment to better fit our new
       strategy, we recorded a severance charge totaling $6.4 million during
       the fourth quarter of 2006.


                                  Three Months Ended    Twelve Months Ended
                                  December 31, 2006      December 31, 2006
                                        Net of  Diluted        Net of  Diluted
     Income (expense)           Pretax    Tax     EPS   Pretax   Tax     EPS
     Charge related to
      organizational
      realignment                 $(6.4) $(4.0) $(0.03) $(6.4) $(4.0) $(0.03)

     See non-GAAP reconciliations A and F herein, including the related notes,
      for additional information.


    2. What were the events associated with certain litigation matters that
       occurred during the twelve months ended December 31, 2006?

       During the twelve months ended December 31, 2006, we recorded the
       following loss contingencies related to certain litigation matters.
       There were no adjustments to these loss contingencies, however,
       during the fourth quarter of 2006.

       * a $5.0 million, pretax, loss contingency in our Personal Solutions
         segment financial results. Of the $5.0 million, pretax, loss, $4.0
         million was recorded to selling, general and administrative expenses
         and $1.0 million was recorded to cost of services in our
         Consolidated Statement of Income.
       * a $4.0 million, pretax, loss contingency associated with certain
         legal matters within our North America Information Services segment.
         Of the $4.0 million, pretax, loss, $3.5 million was recorded to
         selling, general and administrative expenses and $0.5 million was
         recorded to cost of services in our Consolidated Statement of Income.

    The following is the impact of these litigation matters on our
     Consolidated Statements of Income for the three and twelve months ended
     December 31, 2006:


                                  Three Months Ended    Twelve Months Ended
                                  December 31, 2006      December 31, 2006
     Income (expense)                   Net of  Diluted        Net of  Diluted
                                Pretax    Tax     EPS   Pretax   Tax     EPS

     Loss contingency (Personal
      Solutions)*                  $-      $-     $-     $(5.0) $(3.1)$(0.02)
     Loss contingency
      (Information Services)*       -       -      -      (4.0)  (2.5) (0.02)
     Total litigation matters,
      net                          $-      $-     $-     $(9.0) $(5.6)$(0.04)

     * Personal Solutions and Information Services financial results are
       both reported in the North America segment financial results.


     See non-GAAP reconciliations A and C through F herein, including the
      related notes, for additional information.

    3. What drove the increase in other income, net for the twelve months
       ended December 31, 2006 as compared to the same period in 2005?

       The increase in other income, net was primarily due to the settlement
       of claims against former selling shareholders of Naviant, Inc., an
       acquisition in 2002, which resulted in a $14.1 million non-taxable gain
       recorded during the second quarter of 2006, partially offset by a $3.3
       million, pretax, gain recorded during the third quarter of 2005
       related to an agreement with RMA Holdings, LLC.

       The following is the impact of the Naviant litigation settlement on our
       Consolidated Statements of Income for the three and twelve months ended
       December 31, 2006:


                                  Three Months Ended    Twelve Months Ended
                                  December 31, 2006      December 31, 2006
                                        Net of  Diluted        Net of  Diluted
                                Pretax    Tax     EPS   Pretax   Tax     EPS
     Gain on litigation
      settlement                   $-      $-     $-     $14.1  $14.1  $0.11

     See non-GAAP reconciliations A and B herein, including the
      related notes, for additional information.

    4. What drove the fluctuation in the effective tax rate?

       Our effective income tax rate was 37.3% for the three months ended
       December 31, 2006, up from 34.5% for the same period in 2005, due
       primarily to an increase in foreign taxes in the fourth quarter of 2006
       and favorable discrete items during the fourth quarter of 2005.

       Our effective income tax rate was 34.0% for the twelve months ended
       December 31, 2006 down from 36.9% for the same period in 2005.  The
       reduction was due primarily to the reversal of income tax reserves
       related to uncertain tax positions for which the applicable statute of
       limitations  expired in the third quarter of 2006 and the non-taxable
       litigation settlement related to Naviant Inc. during the second quarter
       of 2006.

       The following is the impact of the reversal of the income tax reserves,
       which resulted in an income tax benefit, on our Consolidated Statements
       of Income for the three and twelve months ended December 31, 2006:


                                  Three Months Ended    Twelve Months Ended
                                  December 31, 2006      December 31, 2006
                                        Net of  Diluted        Net of  Diluted
                                Pretax    Tax     EPS   Pretax   Tax     EPS
     Income tax benefit (third
      quarter of 2006)             $-      $-     $-      $-     $9.5  $0.07

     See non-GAAP reconciliations A and B herein, including the related notes,
      for additional information.


    5.  What was the incremental impact on the Consolidated Statements of
        Income for the three and twelve months ended December 31, 2006 as a
        result of adopting Statement of Financial Accounting Standards No.
        123R, "Share-Based Payment" ("SFAS 123R") on January 1, 2006?

        The adoption of SFAS 123R resulted in the following negative
        incremental impact on our Consolidated Statements of Income for the
        three and twelve months ended December 31, 2006:


                                  Three Months Ended    Twelve Months Ended
                                  December 31, 2006      December 31, 2006
                                        Net of  Diluted        Net of  Diluted
                                Pretax    Tax     EPS   Pretax   Tax     EPS
     Incremental (expense) due
      to SFAS 123R               $(1.0) $(0.7)   $-     $(7.6) $(5.2) $(0.04)

     See non-GAAP reconciliations A and F herein, including the related
      notes, for additional information.


    6. Why did General Corporate Expense increase $9.7 million in the fourth
       quarter of 2006, as compared to the same period in 2005?

       General Corporate Expense increased $9.7 million primarily due to the
       $6.4 million severance charge in the fourth quarter of 2006 related to
       our organizational realignment and the impact of adopting SFAS 123R,
       as described in the answer to question 5 above.

    7. Why did short-term debt and current maturities increase from $92.3
       million at December 31, 2005 to $330.0 million at December 31, 2006?

       The increase is primarily due to the reclassification of our 4.95%
       Notes from long-term debt to short-term debt and current maturities
       since these Notes mature in November 2007.

    8. Can you provide a further analysis of operating revenue and operating
       income?

       Operating revenue and operating income consist of the following
       components:


                                         Three Months Ended December 31,
                                             % of          % of     $     %
       Operating revenue:             2006 Revenue 2005  Revenue Change Change
          North America
              Information Services   $203.6   52%  $196.8   54%   $6.8    3%
              Marketing Services       73.6   19%    66.5   18%    7.1   11%
              Personal Solutions       31.7    8%    26.8    8%    4.9   18%
          North America - Total       308.9   79%   290.1   80%   18.8    6%
          Europe                       41.3   11%    35.2   10%    6.1   17%
          Latin America                39.8   10%    36.0   10%    3.8   10%
           Total operating revenue   $390.0  100%  $361.3  100%  $28.7    8%



                                     Three Months Ended December 31,
                                     Operating        Operating    $     %
      Operating income:         2006  Margin     2005  Margin   Change Change
         North America
             Information
              Services         $81.8   40.2%    $81.9   41.6%   $(0.1)    0%
             Marketing
              Services          29.7   40.3%     24.3   37.0%     5.4    22%
             Personal
              Solutions          8.4   26.5%      3.7   13.9%     4.7   125%
         North America -
          Total                119.9   38.8%    109.9   37.8%    10.0     9%
         Europe                  8.5   20.6%      9.0   25.8%    (0.5)   -7%
         Latin America          13.0   32.8%      8.9   24.7%     4.1    46%
         General Corporate
          Expense              (31.5)     nm    (21.8)     nm    (9.7)  -44%
          Total operating
           income             $109.9   28.2%   $106.0   29.3%    $3.9     4%



                                       Twelve Months Ended December 31,
                                         % of            % of       $     %
       Operating revenue:          2006 Revenue   2005   Revenue Change Change
          North America
              Information
               Services           $835.5   54%    $806.3   55%   $29.2    4%
              Marketing Services   277.2   18%     253.7   18%    23.5    9%
              Personal Solutions   126.0    8%     114.7    8%    11.3   10%
          North America - Total  1,238.7   80%   1,174.7   81%    64.0    5%
          Europe                   153.6   10%     142.0   10%    11.6    8%
          Latin America            154.0   10%     126.7    9%    27.3   21%
           Total operating
            revenue             $1,546.3  100%  $1,443.4  100%  $102.9    7%



                                     Twelve Months Ended December 31,
                                     Operating       Operating    $      %
      Operating income:         2006  Margin    2005  Margin   Change Change
         North America
             Information
              Services        $343.3   41.1%   $345.5   42.8%   $(2.2)   -1%
             Marketing
              Services          99.1   35.7%     85.2   33.5%    13.9    16%
             Personal
              Solutions         13.6   10.8%     13.5   11.8%     0.1     1%
         North America -
          Total                456.0   36.8%    444.2   37.8%    11.8     3%
         Europe                 35.4   23.1%     33.4   23.5%     2.0     6%
         Latin America          45.9   29.8%     33.3   26.3%    12.6    38%
         General Corporate
          Expense             (101.2)     nm    (88.9)     nm   (12.3)  -14%
          Total operating
           income             $436.1   28.2%   $422.0   29.2%   $14.1     3%

      nm - not meaningful

    9. Can you provide a further analysis of operating revenue in the North
       America segment?

       North America operating revenue consists of the following components:


                                        Three Months Ended December 31,
                                          % of            % of     $      %
       North America operating     2006  Revenue   2005  Revenue Change Change
       revenue:
       U.S. Consumer and
        Commercial Services        $158.8   51%    $149.7   51%   $9.1    6%
       Mortgage Services             15.0    5%      19.1    7%   (4.1) -22%
       Canadian Operations           29.8   10%      28.0   10%    1.8    6%
          Total Information
           Services                 203.6   66%     196.8   68%    6.8    3%
       Credit Marketing Services     44.3   14%      37.9   13%    6.4   17%
       Direct Marketing Services     29.3   10%      28.6   10%    0.7    2%
          Total Marketing
           Services                  73.6   24%      66.5   23%    7.1   11%
       Personal Solutions            31.7   10%      26.8    9%    4.9   18%
          Total North America
           operating revenue       $308.9  100%    $290.1  100%  $18.8    6%


                                       Twelve Months Ended December 31,
                                            % of           % of     $     %
       North America operating     2006  Revenue   2005  Revenue Change Change
       revenue:
       U.S. Consumer and
        Commercial Services        $645.6   52%    $610.4   52%  $35.2    6%
       Mortgage Services             71.7    6%      85.1    7%  (13.4) -16%
       Canadian Operations          118.2   10%     110.8    9%    7.4    7%
          Total Information
           Services                 835.5   68%     806.3   68%   29.2    4%
       Credit Marketing Services    166.3   13%     150.7   13%   15.6   10%
       Direct Marketing Services    110.9    9%     103.0    9%    7.9    8%
          Total Marketing
           Services                 277.2   22%     253.7   22%   23.5    9%
       Personal Solutions           126.0   10%     114.7   10%   11.3   10%
          Total North America
           operating revenue     $1,238.7  100%  $1,174.7  100%  $64.0    5%


    10. Can you provide depreciation and amortization by segment?

        Depreciation and amortization are as follows:


                                           Three Months      Twelve Months
                                             Ended              Ended
                                            December 31,      December 31,
                                           2006     2005     2006     2005

        North America                      $15.1    $15.4    $59.6    $58.9
        Europe                               1.6      1.4      5.8      5.7
        Latin America                        1.8      2.3      7.1      7.5
        General Corporate Expense            2.3      2.6     10.3     10.1
          Total depreciation and
           amortization                    $20.8    $21.7    $82.8    $82.2


    11. What was the currency impact on the foreign operations?

        The U.S. dollar impact on operating revenue and operating
        income is as follows:


                                         Three Months Ended December 31, 2006
                                         Operating Revenue   Operating Income
                                           Amount       %    Amount       %

        Canada                               $0.9       3%     $0.3       4%
        Europe                                3.6      10%      0.7       8%
        Latin America                         0.8       2%      0.1       1%
                                             $5.3       1%     $1.1       1%


                                         Twelve Months Ended December 31, 2006
                                         Operating Revenue  Operating Income
                                           Amount       %    Amount       %

        Canada                               $7.6       7%     $2.8       7%
        Europe                                2.2       1%      0.3       1%
        Latin America                         8.9       7%      1.7       5%
                                            $18.7       1%     $4.8       1%

    12. How did your business units change as a result of the organizational
        realignment?

        Effective January 1, 2007, we implemented our organizational
        realignment which changed our internal structure resulting in four
        business units: U.S. Consumer Information Solutions, International,
        North America Personal Solutions and North America Commercial
        Solutions. These business units are described further below:

          * U.S. Consumer Information Solutions consists of the former
            North America Information Services (excluding U.S. Commercial and
            Canada Consumer and Commercial) and Marketing Services.
          * International includes Latin America, Europe and Canada Consumer.
          * North America Personal Solutions did not change.
          * North America Commercial Solutions consists of our U.S. and
            Canada Commercial businesses that were formerly included in North
            America Information Services.


    12a. Can you provide a presentation of operating revenue for your business
         units under the new organizational structure by quarter in 2006 and
         2005 and in total for each respective year, including period-over-
         period operating revenue growth?


                                          Three Months Ended,
                                      March   June September December
                                       31,     30,     30,     31,     Total
       Operating revenue:             2006    2006    2006    2006      2006
       U.S. Consumer Information
        Solutions                    $240.6  $245.4  $245.5  $236.6    $968.1
       International                   92.6   100.2   105.1   104.9     402.8
       North America Personal
        Solutions                      30.6    31.2    32.5    31.7     126.0
       North America Commercial
        Solutions                      10.2    10.9    11.5    16.8      49.4
          Total operating revenue    $374.0  $387.7  $394.6  $390.0  $1,546.3


                                          Three Months Ended,
                                      March   June September December
                                       31,     30,     30,     31,     Total
       Operating revenue:             2005    2005    2005    2005     2005
       U.S. Consumer Information
        Solutions                    $221.7  $237.4  $244.8  $229.4    $933.3
       International                   83.8    88.1    92.6    93.8     358.3
       North America Personal
        Solutions                      29.8    29.3    28.8    26.8     114.7
       North America Commercial
        Solutions                       8.1     8.6     9.1    11.3      37.1
          Total operating revenue    $343.4  $363.4  $375.3  $361.3  $1,443.4


                                          Three Months Ended,
                                      March   June September December
                                       31,     30,     30,     31,     Total
       Operating revenue growth:      2006    2006    2006    2006     2006
                                       vs.     vs.     vs.     vs.      vs.
                                      2005    2005    2005    2005     2005
       U.S. Consumer Information
        Solutions                        9%      3%      0%      3%        4%
       International                    10%     14%     14%     12%       12%
       North America Personal
        Solutions                        3%      7%     13%     18%       10%
       North America Commercial
        Solutions                       26%     27%     27%     49%       33%
          Total operating revenue
           growth                        9%      7%      5%      8%        7%


    12b. Can you provide a presentation of operating income for your business
         units under the new organizational structure for each quarter in 2006
         and 2005 and in total for each respective year, including operating
         margin?

                                            Three Months Ended,
                                        March   June September December
                                         31,     30,     30,     31,     Total
       Operating income:                2006    2006    2006    2006     2006
       U.S. Consumer Information
        Solutions                       $99.8  $102.0   $96.0   $97.9  $395.7
       International                     26.8    29.8    31.3    30.2   118.1
       North America Personal
        Solutions                         0.9   (11.3)   15.6     8.4    13.6
       North America Commercial
        Solutions                         1.2     1.5     2.4     4.8     9.9
       General Corporate Expense        (19.5)  (25.6)  (24.7)  (31.4) (101.2)
          Total operating income       $109.2   $96.4  $120.6  $109.9  $436.1


                                            Three Months Ended,
                                        March   June September December
                                         31,     30,     30,     31,     Total
       Operating margin:                2006    2006    2006    2006     2006
       U.S. Consumer Information
        Solutions                       41.5%   41.5%   39.1%   41.4%   40.9%
       International                    28.9%   29.7%   29.7%   28.8%   29.3%
       North America Personal
        Solutions                        2.9%  -36.1%   48.1%   26.5%   10.8%
       North America Commercial
        Solutions                       12.2%   13.5%   21.3%   28.8%   20.2%
       General Corporate Expense           nm      nm      nm      nm      nm
          Total operating margin        29.2%   24.9%   30.6%   28.2%   28.2%


                                            Three Months Ended,
                                       March   June September December
                                        31,     30,     30,     31,     Total
       Operating income:               2005    2005    2005    2005     2005
       U.S. Consumer Information
        Solutions                       $94.4   $97.9  $104.3   $95.6  $392.2
       International                     22.0    25.5    27.5    25.8   100.8
       North America Personal
        Solutions                         3.0     4.3     2.5     3.7    13.5
       North America Commercial
        Solutions                         0.5     0.3     0.8     2.8     4.4
       General Corporate Expense        (17.9)  (21.3)  (27.8)  (21.9)  (88.9)
          Total operating income       $102.0  $106.7  $107.3  $106.0  $422.0


                                            Three Months Ended,
                                        March   June September December
                                         31,     30,     30,     31,    Total
       Operating margin:                2005    2005    2005    2005    2005
       U.S. Consumer Information
        Solutions                       42.6%   41.2%   42.6%   41.7%   42.0%
       International                    26.3%   29.0%   29.7%   27.5%   28.1%
       North America Personal
        Solutions                        9.9%   14.7%    8.7%   13.9%   11.8%
       North America Commercial
        Solutions                        5.6%    4.0%    8.7%   24.8%   11.8%
       General Corporate Expense           nm      nm      nm      nm      nm
          Total operating margin        29.7%   29.4%   28.6%   29.3%   29.2%

       nm - not meaningful

    12c. Can you provide a presentation of operating revenue in more detail by
         business unit under the new organizational structure by quarter in
         2006 and 2005 and in total for each respective year, including
         period-over-period operating revenue growth?

                                          Three Months Ended,
                                      March   June September December
                                       31,     30,     30,     31,     Total
       Operating revenue:             2006    2006    2006    2006     2006
       Consumer Information
        Solutions                    $154.9  $156.9  $159.4  $148.0    $619.2
       Mortgage Reporting Solutions    20.1    19.2    17.4    15.0      71.7
       Credit Marketing Services       39.7    40.7    41.6    44.3     166.3
       Direct Marketing Services       25.9    28.6    27.1    29.3     110.9
          Total U.S. Consumer
           Information Solutions      240.6   245.4   245.5   236.6     968.1
       Europe                          34.9    37.6    39.8    41.3     153.6
       Latin America                   35.0    38.5    40.7    39.8     154.0
       Canada Consumer                 22.7    24.1    24.6    23.8      95.2
          Total International          92.6   100.2   105.1   104.9     402.8
       North America Personal
        Solutions                      30.6    31.2    32.5    31.7     126.0
       North America Commercial
        Solutions                      10.2    10.9    11.5    16.8      49.4
          Total operating revenue    $374.0  $387.7  $394.6  $390.0  $1,546.3


                                          Three Months Ended,
                                      March   June September December
                                       31,     30,     30,     31,     Total
       Operating revenue:             2005    2005    2005    2005     2005
       Consumer Information
        Solutions                    $141.5  $152.8  $156.4  $143.8    $594.5
       Mortgage Reporting Solutions    21.4    21.8    22.8    19.1      85.1
       Credit Marketing Services       34.6    38.4    39.8    37.9     150.7
       Direct Marketing Services       24.2    24.4    25.8    28.6     103.0
          Total U.S. Consumer
           Information Solutions      221.7   237.4   244.8   229.4     933.3
       Europe                          36.7    35.0    35.1    35.2     142.0
       Latin America                   25.6    30.5    34.6    36.0     126.7
       Canada Consumer                 21.5    22.6    22.9    22.6      89.6
          Total International          83.8    88.1    92.6    93.8     358.3
       North America Personal
        Solutions                      29.8    29.3    28.8    26.8     114.7
       North America Commercial
        Solutions                       8.1     8.6     9.1    11.3      37.1
          Total operating revenue    $343.4  $363.4  $375.3  $361.3  $1,443.4


                                          Three Months Ended,
                                      March   June September December
                                       31,     30,     30,     31,     Total
       Operating revenue growth:      2006    2006    2006    2006     2006
                                       vs.     vs.     vs.     vs.     vs.
                                      2005    2005    2005    2005     2005
       Consumer Information
        Solutions                        9%      3%      2%      3%        4%
       Mortgage Reporting Solutions     -6%    -12%    -24%    -22%      -16%
       Credit Marketing Services        15%      6%      4%     17%       10%
       Direct Marketing Services         7%     17%      5%      2%        8%
          Total U.S. Consumer
           Information Solutions         9%      3%      0%      3%        4%
       Europe                           -5%      7%     13%     17%        8%
       Latin America                    37%     26%     18%     10%       21%
       Canada Consumer                   5%      6%      8%      5%        6%
          Total International           10%     14%     14%     12%       12%
       North America Personal
        Solutions                        3%      7%     13%     18%       10%
       North America Commercial
        Solutions                       26%     27%     27%     49%       33%
          Total operating revenue
           growth                        9%      7%      5%      8%        7%




    Reconciliations of Non-GAAP Financial Measures to the Comparable GAAP
    Financial Measures (Unaudited)
    (Dollars in millions, except per share amounts)

    A. Reconciliation of consolidated pretax income to pretax income,
       excluding certain items; net income to net income, excluding certain
       items; and diluted earnings per share to diluted earnings per share,
       excluding certain items:


                                Three Months Ended      Three Months Ended
                                 December 31, 2006       December 31, 2005
                                      Net of  Diluted         Net of  Diluted
                               Pretax   Tax     EPS   Pretax   Tax      EPS

      Income from continuing
       operations              $100.7   $63.1  $0.50   $95.9   $62.8    $0.48

       Charge related to
        organizational
        realignment (1)           6.4     4.0   0.03     -       -        -

      Income from continuing
       operations, excluding
       the charge related to
       organizational
       realignment              107.1    67.1   0.53    95.9    62.8     0.48

       Incremental impact of
        SFAS 123R (4)             1.0     0.7    -       -       -        -

      Income from continuing
       operations, excluding
       certain items           $108.1   $67.8  $0.53   $95.9   $62.8    $0.48


                                Twelve Months Ended     Twelve Months Ended
                                 December 31, 2006       December 31, 2005
                                      Net of  Diluted         Net of  Diluted
                               Pretax   Tax     EPS   Pretax   Tax      EPS

      Income from continuing
       operations              $415.9  $274.5  $2.12  $390.7  $246.5    $1.86

       Charge related to
        organizational
        realignment (1)           6.4     4.0   0.03     -       -        -

       Litigation
        settlement (5)          (14.1)  (14.1) (0.11)    -       -        -

       Loss contingencies (2)     9.0     5.6   0.04     -       -        -

       Income tax benefit (3)     -      (9.5) (0.07)    -       -        -

      Income from continuing
       operations, excluding
       the charge related
       to organizational
       realignment and
       certain litigation and
       tax matters              417.2   260.5   2.01   390.7   246.5     1.86

       Incremental impact of
        SFAS 123R (4)             7.6     5.2   0.04     -       -        -

      Income from continuing
       operations, excluding
       certain items           $424.8  $265.7  $2.05  $390.7  $246.5    $1.86

      (1) See Question #1 in the Q&A section of this document.
      (2) See Question #2 in the Q&A section of this document.
      (3) Due to the reversal of income tax reserves. See Question #4 in the
          Q&A section of this document.
      (4) Represents the incremental stock-based compensation expense related
          to our adoption of SFAS 123R on January 1, 2006.
      (5) During the second quarter of 2006, we recorded a non-taxable gain
          related to a settlement of claims against certain former selling
          shareholders of Naviant, Inc. The non-taxable gain is included in
          other income, net, on our Consolidated Statement of Income for the
          twelve months ended December 31, 2006.

    B. Reconciliation of our effective tax rate to an effective tax rate,
       excluding certain items:

                                Three Months   Twelve Months
                                   Ended           Ended
                                December 31,   December 31,
                                2006    2005   2006    2005

      Effective tax rate        37.3%   34.5%  34.0%   36.9%

       Income tax benefit (1)     -       -     2.3%     -

       Litigation
        settlement (2)            -       -     1.3%     -

      Effective tax rate,
       excluding certain items  37.3%   34.5%  37.6%   36.9%

      (1) Due to the reversal of income tax reserves. See Question #4 in the
          Q&A section of this document.
      (2) During the second quarter of 2006, we recorded a non-taxable
          gain related to a settlement of claims against certain former
          selling shareholders of Naviant, Inc. The non-taxable gain is
          included in other income, net, on our Consolidated Statement of
          Income for the twelve months ended December 31, 2006.

    C. Reconciliation of Personal Solutions operating income to operating
       income, excluding certain litigation matters, and operating margin to
       operating margin, excluding certain litigation matters:


                                 Three Months Ended       Twelve Months Ended
                                     December 31,             December 31,
                                2006     2005 % Change   2006   2005  % Change

      Personal Solutions
       operating income         $8.4     $3.7    125%    $13.6  $13.5    1%

       Certain litigation
        matters                  -        -                5.0    -

      Personal Solutions
       operating income,
       excluding certain
       litigation matters       $8.4     $3.7    125%    $18.6  $13.5   38%


                              Three Months Ended  Twelve Months Ended
                                 December 31,         December 31,
                                  2006     2005     2006     2005

      Personal Solutions
       operating margin          26.5%    13.9%    10.8%    11.8%

       Certain litigation
        matters                    -        -       4.0%      -

      Personal Solutions
       operating margin,
       excluding certain
       litigation matters        26.5%    13.9%    14.8%    11.8%



    D. Reconciliation of North America Information Services operating
       income to operating income, excluding certain litigation matters, and
       operating margin to operating margin, excluding certain litigation
       matters:


                              Three Months Ended      Twelve Months Ended
                                 December 31,             December 31,
                               2006     2005 % Change    2006   2005  % Change

      North America
       Information Services
       operating income       $81.8    $81.9     0%     $343.3  $345.5   -1%

       Certain litigation
        matters                 -        -                 4.0      -

      North America
       Information Services
       operating income,
       excluding certain
       litigation matters     $81.8    $81.9     0%     $347.3  $345.5    1%


                              Three Months Ended  Twelve Months Ended
                                 December 31,       December 31,
                                2006     2005       2006     2005

      North America
       Information Services
       operating margin          40.2%    41.6%     41.1%    42.8%

       Certain litigation
        matters                    -        -        0.5%      -

      North America
       Information Services
       operating margin,
       excluding certain
       litigation matter         40.2%    41.6%     41.6%    42.8%


    E. Reconciliation of North America operating income to operating income,
       excluding certain litigation matters, and operating margin to operating
       margin, excluding certain litigation matters:


                              Three Months Ended      Twelve Months Ended
                                 December 31,             December 31,
                               2006     2005 % Change    2006   2005  % Change

      North America operating
       income                  $119.9   $109.9    9%    $456.0 $444.2   3%

       Certain litigation
        matters                   -        -               9.0    -

      North America operating
       income, excluding
       certain litigation
       matters                 $119.9   $109.9    9%    $465.0 $444.2   5%


                              Three Months Ended  Twelve Months Ended
                                 December 31,       December 31,
                                  2006     2005    2006     2005

      North America operating
       margin                    38.8%    37.8%   36.8%    37.8%

       Certain litigation
        matters                    -        -      0.7%      -

      North America operating
       margin, excluding
       certain
       litigation matters        38.8%    37.8%   37.5%    37.8%



    F. Reconciliation of Consolidated operating income to operating income,
       excluding certain items and operating margin to operating margin,
       excluding certain items


                              Three Months Ended      Twelve Months Ended
                                 December 31,             December 31,
                               2006     2005 % Change    2006   2005  % Change

      Consolidated operating
       income                  $109.9   $106.0    4%     $436.1 $422.0  3%

       Charge related to
        organizational
        realignment               6.4      -                6.4    -

       Certain litigation
        matters                   -        -                9.0    -

       Incremental impact of
        SFAS 123R                 1.0      -                7.6    -

      Consolidated operating
       income, excluding
       certain items           $117.3   $106.0   11%     $459.1 $422.0  9%


                              Three Months Ended  Twelve Months Ended
                                 December 31,        December 31,
                                 2006     2005      2006     2005

      Consolidated operating
       margin                    28.2%    29.3%     28.2%    29.2%

       Charge related to
        organizational
        realignment               1.6%      -        0.4%      -

       Certain litigation
        matters                    -        -        0.6%      -

       Incremental impact of
        SFAS 123R                 0.2%      -        0.5%      -

      Consolidated operating
       margin, excluding
       certain items             30.0%    29.3%     29.7%    29.2%


    G. Reconciliation of operating income to EBITDA (operating income before
       depreciation and amortization expense):


                                                 Twelve Months Ended
                                             Reported        Forecasted*
                                           December 31,      December 31,
                                               2006             2007

       Operating income                        $436.1       $465       $480

        Depreciation and amortization
         expense                                 82.8         90         95

       EBITDA                                  $518.9       $555       $575

    * See the "Caution Concerning Forward-Looking Statements" section in
      this earnings release regarding forecasted amounts or expectations
      related to results associated with future periods.

Notes to Reconciliations of Non-GAAP Financial Measures to the Comparable GAAP Financial Measures

Effective Tax Rate, Excluding Certain Items -- This financial measure is not prepared in conformity with U.S. generally accepted accounting principles ("GAAP") and excludes certain items, including (1) the reversal of a $9.5 million income tax reserve related to uncertain tax positions primarily due to the expiration of the applicable statute of limitations during the third quarter of 2006 and (2) the impact of the non-taxable $14.1 million gain recorded during the second quarter of 2006 related to the settlement of claims against the former selling shareholders of Naviant, Inc., an acquisition in 2002. The effective tax rate, excluding certain items, is not a measurement of profitability under GAAP and should not be considered as an alternative to net income, operating income, provision for income taxes or earnings per share.

Management believes our effective tax rate, excluding certain items, provides meaningful supplemental information regarding our performance by excluding the items discussed above in order to show a comparable effective tax rate since the items during the periods are material amounts and not comparable to similar activity in the prior periods presented. Equifax believes that this financial information is useful to our management and investors in assessing Equifax's historical performance and when planning, forecasting and analyzing future periods.

Pretax Income, Net Income and Diluted Earnings per Share, Excluding Certain Items; Personal Solutions Operating Income and Profit Margin, Excluding Certain Litigation Matters; North America Information Services Operating Income and Profit Margin, Excluding Certain Litigation Matters; North America Operating Income and Profit Margin, Excluding Certain Litigation Matters; and Consolidated Operating Income and Profit Margin, Excluding Certain Items

Charge Related to Organizational Realignment -- During the fourth quarter of 2006, we recorded a $6.4 million severance charge related to our organizational realignment. Management believes excluding this charge from certain financial results provides meaningful supplemental information regarding our financial results for the three and twelve months ended December 31, 2006, as compared to the same periods in 2005 since a charge of such a material amount during the periods is not comparable to similar activity in the prior periods presented. This is consistent with how our management reviews and assesses Equifax's historical performance and is useful when planning, forecasting and analyzing future periods.

Litigation Settlement -- In June 2006, we consummated a settlement of claims against certain former selling shareholders of Naviant, Inc. In 2004, we served a demand for arbitration alleging, among other things, that the sellers were liable for rescission or for indemnification as a result of breaches of various representations and warranties concerning information furnished to us in connection with our acquisition of Naviant, Inc. in 2002. As a result of this settlement, we recognized a $14.1 million non-taxable gain in other income, net, on our Consolidated Statement of Income for the twelve months ended December 31, 2006.

Management believes excluding this litigation settlement from certain financial results provides meaningful supplemental information regarding our financial results for the twelve months ended December 31, 2006, as compared to the same period in 2005 since the gain related to the litigation settlement associated with our previous acquisition of Naviant, Inc. is material and is not reflective of our core operations. This is consistent with how our management reviews and assesses Equifax's historical performance and is useful when planning, forecasting and analyzing future periods.

Other Litigation Matters -- During the first nine months of 2006, we recorded a $5.0 million, pretax, loss contingency related to certain legal matters. Of this $5.0 million, pretax loss, $4.0 million was recognized in selling, general and administrative expenses and $1.0 million was recognized in cost of services on our Consolidated Statements of Income. This loss is included within our Personal Solutions segment financial results.

During the third quarter of 2006, we also recorded a $4.0 million, pretax, loss associated with certain litigation matters within our North America Information Services segment. Of this $4.0 million, pretax loss, $3.5 million was recognized in selling, general and administrative expenses and $0.5 million was recognized in cost of services on our Consolidated Statements of Income.

Management believes excluding these litigation matters from certain financial results provides meaningful supplemental information regarding our financial results for the twelve months ended December 31, 2006, as compared to the same periods in 2005 since the litigation loss contingencies and related reversal of such a material amount during the periods is not comparable to similar activity in the prior periods presented. This is consistent with how our management reviews and assesses Equifax's historical performance and is useful when planning, forecasting and analyzing future periods.

Income Tax Benefit -- During the third quarter of 2006, the applicable statute of limitations related to uncertain tax positions expired, resulting in the reversal of the related income tax reserve. The reversal of the reserves resulted in a $9.5 million income tax benefit. The income tax benefit was recorded in provision for income taxes on our Consolidated Statements of Income for the twelve months ended December 31, 2006.

Management believes excluding this income tax benefit from certain financial results provides meaningful supplemental information regarding our financial results for the twelve months ended December 31, 2006, as compared to the same period in 2005 since an income tax benefit of such a material amount is not comparable to similar activity in the prior period presented. This is consistent with how our management reviews and assesses Equifax's historical performance and is useful when planning, forecasting and analyzing future periods.

SFAS 123R -- On January 1, 2006, we adopted Statement of Financial Accounting Standards No. 123R, "Share-Based Payment" ("SFAS 123R"), which requires the cost relating to share-based payment transactions in which an entity exchanges its equity instruments for goods or services from either employees or non-employees be recognized in the Consolidated Financial Statements as the goods or services are rendered. The cost is measured at the fair value of the equity instrument issued. Since the date of adoption of SFAS 123R, we are no longer permitted to follow the intrinsic value accounting method under previous accounting guidance, which resulted in no stock-based compensation expense for stock options for which the exercise price was equal to the fair value of the underlying stock on the date of grant.

Management believes excluding the incremental impact of SFAS 123R from pretax, net income and diluted earnings per share provides meaningful supplemental information regarding our financial results for the three and twelve months ended December 31, 2006, as compared to the same periods in 2005 since our Consolidated Financial Statements issued prior to January 1, 2006 did not change as a result of adopting SFAS 123R. There was no change to our prior years' Consolidated Financial Statements because we elected the modified prospective transition method. Equifax believes that this financial information is useful to investors since it is consistent with how management assesses Equifax's historical performance and year-over-year growth and when planning, forecasting and analyzing future periods. By excluding the incremental impact of SFAS 123R, our management is able to evaluate and review the financial and operational impact of various business initiatives.

The incremental impact of SFAS 123R during the three and twelve months ended December 31, 2006 represents (1) the stock option expense related to stock options unvested at the time of adoption and granted during 2006, (2) the accelerated expense recognition for nonvested shares that were issued during 2006 to employees that are retirement-eligible prior to the expiration of the stated vesting period, and (3) the impact of estimating forfeitures related to nonvested shares. For additional information about SFAS 123R, see Note 2 of the Notes to Consolidated Financial Statements in our Form 10-Q for the three months ended September 30, 2006.

EBITDA -- This financial measure is not prepared in conformity with GAAP and is calculated by excluding depreciation and amortization expense from operating income ("EBITDA"). EBITDA is not a measurement of profitability under GAAP since this financial measure excludes depreciation and amortization expense, as well as interest expense, minority interest in earnings (net of tax), other income, net and provision for income taxes from earnings. This non-GAAP financial measure should not be considered as an alternative to net income, operating income, operating margin, or cash provided by operating activities. Equifax's definition of EBITDA may not be comparable with non-GAAP financial measures used by other companies.

Management believes EBITDA provides meaningful supplemental information regarding our liquidity performance by excluding the items discussed above. Additionally, management believes this financial information is useful to investors in assessing Equifax's historical financial performance and for planning, forecasting and analyzing future periods since it is an important metric used by management for those same activities, as well as evaluating future investing and financing decisions. While management uses EBITDA as a measurement of liquidity, this non-GAAP financial measure does not consider debt-service payments, or cash generated by us that is available for capital expenditures, dividends and discretionary investment.

These non-GAAP financial measures are not a measurement of financial performance under GAAP and should not be considered as an alternative to net income, operating income, operating margin or earnings per share and may not be comparable to non-GAAP financial measures used by other companies.

SOURCE Equifax Inc.