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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2021
 
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                                      to                                      .
 
Commission File Number: 001-06605
 

EQUIFAX INC.
(Exact name of registrant as specified in its charter) 

Georgia58-0401110
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
 
1550 Peachtree StreetN.W. AtlantaGeorgia30309
(Address of principal executive offices)(Zip Code)
 
404-885-8000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common stock, $1.25 par value per shareEFXNew York Stock Exchange
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes       No   
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes       No   
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    No  

On April 9, 2021, there were 121,702,526 shares of the registrant’s common stock outstanding.
1


EQUIFAX INC.
 
QUARTERLY REPORT ON FORM 10-Q
 
QUARTER ENDED MARCH 31, 2021
 
INDEX
 
  Page
 
 
 
 
 
 
 
 
2


FORWARD-LOOKING STATEMENTS
 
This report contains information that may constitute “forward-looking statements.” Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “may” and similar expressions identify forward-looking statements, which generally are not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future, including statements relating to future operating results, the 2017 cybersecurity incident, improvements in our information technology and data security infrastructure, including as a part of our cloud data and technology transformation, our strategy, our ability to mitigate or manage disruptions posed by COVID-19, the impact of COVID-19 and changes in U.S. and worldwide economic conditions that materially impact consumer spending, consumer debt and employment and the demand for Equifax's products and services, our culture, our ability to innovate, the market acceptance of new products and services and similar statements about our business plans are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part II, “Item 1A. Risk Factors,” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2020, as well as subsequent reports filed with the Securities and Exchange Commission. As a result of such risks and uncertainties, we urge you not to place undue reliance on any such forward-looking statements. Forward-looking statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
3


PART I.  FINANCIAL INFORMATION
 
ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)
 
EQUIFAX INC.
 

CONSOLIDATED STATEMENTS OF INCOME
 
(Unaudited)

Three Months Ended 
March 31,
 20212020
(In millions, except per share amounts)
Operating revenue$1,213.0 $957.9 
Operating expenses:  
Cost of services (exclusive of depreciation and amortization below)483.3 414.1 
Selling, general and administrative expenses308.8 316.0 
Depreciation and amortization114.3 91.9 
Total operating expenses906.4 822.0 
Operating income306.6 135.9 
Interest expense(37.2)(30.7)
Other (expense) income, net(0.9)51.1 
Consolidated income before income taxes268.5 156.3 
Provision for income taxes(65.6)(37.5)
Consolidated net income202.9 118.8 
Less: Net income attributable to noncontrolling interests including redeemable noncontrolling interests(1.3)(1.9)
Net income attributable to Equifax$201.6 $116.9 
Basic earnings per common share:  
Net income attributable to Equifax$1.66 $0.96 
Weighted-average shares used in computing basic earnings per share121.8 121.3 
Diluted earnings per common share:  
Net income attributable to Equifax$1.64 $0.95 
Weighted-average shares used in computing diluted earnings per share123.2 122.6 
Dividends per common share$0.39 $0.39 

See Notes to Consolidated Financial Statements.
4

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
(Unaudited)
 
 Three Months Ended March 31,
20212020
Equifax
Shareholders
Noncontrolling
Interests
TotalEquifax
Shareholders
Noncontrolling
Interests
Total
 (In millions)
Net income$201.6 $1.3 $202.9 $116.9 $1.9 $118.8 
Other comprehensive income (loss):      
Foreign currency translation adjustment10.4 1.0 11.4 (291.0)(2.2)(293.2)
Change in unrecognized prior service cost related to our pension and other postretirement benefit plans, net(0.3) (0.3)(0.6) (0.6)
Comprehensive income (loss)$211.7 $2.3 $214.0 $(174.7)$(0.3)$(175.0)


See Notes to Consolidated Financial Statements.
5

EQUIFAX INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)
March 31, 2021December 31, 2020
(In millions, except par values) 
ASSETS  
Current assets:  
Cash and cash equivalents$765.9 $1,684.6 
Trade accounts receivable, net of allowance for doubtful accounts of $11.8 and $12.9 at March 31, 2021 and December 31, 2020, respectively
708.8 630.6 
Prepaid expenses138.8 104.1 
Other current assets51.5 59.0 
Total current assets1,665.0 2,478.3 
Property and equipment:  
Capitalized internal-use software and system costs1,446.0 1,374.5 
Data processing equipment and furniture297.5 299.9 
Land, buildings and improvements245.4 239.1 
Total property and equipment1,988.9 1,913.5 
Less accumulated depreciation and amortization(814.1)(774.1)
Total property and equipment, net1,174.8 1,139.4 
Goodwill5,089.3 4,495.8 
Indefinite-lived intangible assets95.2 94.9 
Purchased intangible assets, net1,265.5 997.8 
Other assets, net379.6 405.6 
Total assets$9,669.4 $9,611.8 
LIABILITIES AND EQUITY 
Current liabilities:  
Short-term debt and current maturities of long-term debt$1,100.6 $1,101.1 
Accounts payable173.0 159.1 
Accrued expenses224.1 251.8 
Accrued salaries and bonuses111.2 250.3 
Deferred revenue117.1 108.3 
Other current liabilities615.7 612.5 
Total current liabilities2,341.7 2,483.1 
Long-term debt3,279.1 3,277.3 
Deferred income tax liabilities, net380.7 332.3 
Long-term pension and other postretirement benefit liabilities126.6 130.7 
Other long-term liabilities184.3 178.1 
Total liabilities6,312.4 6,401.5 
Commitments and Contingencies (see Note 6)
Equifax shareholders' equity: 
Preferred stock, $0.01 par value: Authorized shares - 10.0; Issued shares - none
  
Common stock, $1.25 par value: Authorized shares - 300.0;
Issued shares - 189.3 at March 31, 2021 and December 31, 2020;
Outstanding shares - 121.7 and 121.8 at March 31, 2021 and December 31, 2020, respectively
236.6 236.6 
Paid-in capital1,489.5 1,470.7 
Retained earnings4,342.0 4,185.4 
Accumulated other comprehensive loss(161.3)(171.4)
Treasury stock, at cost, 67.0 shares and 66.9 shares at March 31, 2021 and December 31, 2020, respectively
(2,582.9)(2,547.0)
Stock held by employee benefit trusts, at cost, 0.6 shares at March 31, 2021 and December 31, 2020
(5.9)(5.9)
Total Equifax shareholders’ equity3,318.0 3,168.4 
Noncontrolling interests including redeemable noncontrolling interests39.0 41.9 
Total equity3,357.0 3,210.3 
Total liabilities and equity$9,669.4 $9,611.8 

 See Notes to Consolidated Financial Statements.
6

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(Unaudited)

Three Months Ended March 31,
 20212020
(In millions)
Operating activities:  
Consolidated net income$202.9 $118.8 
Adjustments to reconcile consolidated net income to net cash provided by operating activities:  
Depreciation and amortization116.7 94.3 
Stock-based compensation expense20.7 18.8 
Deferred income taxes23.1 18.5 
Loss (gain) on fair market value adjustment of equity investments11.9 (32.9)
Gain on divestiture(0.2) 
Changes in assets and liabilities, excluding effects of acquisitions: 
Accounts receivable, net(65.8)(83.9)
Other assets, current and long-term14.7 29.6 
Current and long term liabilities, excluding debt(180.6)(132.4)
Cash provided by operating activities143.4 30.8 
Investing activities: 
Capital expenditures(113.0)(88.0)
Acquisitions, net of cash acquired(862.0)(48.1)
Cash received from divestiture1.5  
Cash used in investing activities(973.5)(136.1)
Financing activities: 
Net short-term borrowings(0.7)0.2 
Borrowings on long-term debt 125.0 
Treasury stock purchases(34.1) 
Dividends paid to Equifax shareholders(47.5)(47.3)
Dividends paid to noncontrolling interests(0.7)(0.3)
Proceeds from exercise of stock options and employee stock purchase plan6.6 16.7 
Payment of taxes related to settlement of equity awards(8.6) 
Purchase of redeemable noncontrolling interests(3.6) 
Debt issuance costs (1.6)
Cash (used in) provided by financing activities(88.6)92.7 
Effect of foreign currency exchange rates on cash and cash equivalents (18.8)
Decrease in cash and cash equivalents(918.7)(31.4)
Cash and cash equivalents, beginning of period1,684.6 401.3 
Cash and cash equivalents, end of period$765.9 $369.9 
 
See Notes to Consolidated Financial Statements.
7

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND ACCUMULATED OTHER COMPREHENSIVE LOSS
 
(Unaudited)

For the Three Months Ended March 31, 2021
 
 Equifax Shareholders  
Accumulated Other Comprehensive LossStock
Held By Employee Benefits Trusts
 Common Stock     
Shares
Outstanding
AmountPaid-In
Capital
Retained
Earnings
Treasury
Stock
Noncontrolling
Interests
Total
Equity
 (In millions, except per share amounts)
Balance, December 31, 2020121.8 $236.6 $1,470.7 $4,185.4 $(171.4)$(2,547.0)$(5.9)$41.9 $3,210.3 
Net income   201.6    1.3 202.9 
Other comprehensive income    10.1   1.0 11.1 
Shares issued under stock and benefit plans, net of minimum tax withholdings0.1  (0.3)  (1.8)  (2.1)
Treasury stock purchased under share repurchase program*(0.2)    (34.1)  (34.1)
Cash dividends ($0.39 per share)
   (47.7)    (47.7)
Dividends paid to employee benefits trusts  0.2      0.2 
Stock-based compensation expense  20.7      20.7 
Redeemable noncontrolling interest adjustment   2.7    (2.7) 
Dividends paid to noncontrolling interests       (0.7)(0.7)
Purchases of noncontrolling interests  (1.8)    (1.8)(3.6)
Balance, March 31, 2021121.7 $236.6 $1,489.5 $4,342.0 $(161.3)$(2,582.9)$(5.9)$39.0 $3,357.0 

* At March 31, 2021, $556.0 million was available for future purchases of common stock under our share repurchase authorization.

For the Three Months Ended March 31, 2020

 Equifax Shareholders  
Accumulated Other Comprehensive LossStock
Held By Employee Benefits Trusts
 Common Stock     
Shares
Outstanding
AmountPaid-In
Capital
Retained
Earnings
Treasury
Stock
Noncontrolling
Interests
Total
Equity
 (In millions, except per share amounts)
Balance, December 31, 2019121.2 $236.6 $1,405.1 $3,854.6 $(354.4)$(2,557.4)$(5.9)$44.3 $2,622.9 
Net income— — — 116.9 — — — 1.9 118.8 
Other comprehensive loss— — — — (291.6)— — (2.2)(293.8)
Shares issued under stock and benefit plans, net of minimum tax withholdings0.2 — 7.6 — — 3.5 — — 11.1 
Cash dividends ($0.39 per share)
— — — (47.5)— — — — (47.5)
Dividends paid to employee benefits trusts— — 0.2 — — — — — 0.2 
Stock-based compensation expense— — 18.8 — — — — — 18.8 
Redeemable noncontrolling interest adjustment— — — 0.4 — — — (0.4) 
Dividends paid to noncontrolling interests— — — — — — — (0.3)(0.3)
Cumulative adjustment from change in accounting principle— — — (0.4)— — — — (0.4)
Other— — (0.1)0.1 — — — —  
Balance, March 31, 2020121.4 $236.6 $1,431.6 $3,924.1 $(646.0)$(2,553.9)$(5.9)$43.3 $2,429.8 

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Accumulated Other Comprehensive Loss consists of the following components:
 
March 31, 2021December 31, 2020
 (In millions)
Foreign currency translation$(158.0)$(168.4)
Unrecognized prior service cost related to our pension and other postretirement benefit plans, net of accumulated tax of $0.6 and $0.5 at March 31, 2021 and December 31, 2020, respectively
(2.3)(2.0)
Cash flow hedging transactions, net of accumulated tax of $0.6 and $0.7 at March 31, 2021 and December 31, 2020, respectively
(1.0)(1.0)
Accumulated other comprehensive loss$(161.3)$(171.4)
 

See Notes to Consolidated Financial Statements.
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EQUIFAX INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
March 31, 2021
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
As used herein, the terms Equifax, the Company, we, our and us refer to Equifax Inc., a Georgia corporation, and its consolidated subsidiaries as a combined entity, except where it is clear that the terms mean only Equifax Inc.

Nature of Operations.  We collect, analyze and manage various types of financial, demographic, employment and marketing information. Our products and services enable businesses to make credit and service decisions, manage their portfolio risk, automate or outsource certain payroll-related, tax and human resources business processes, and develop marketing strategies concerning consumers and commercial enterprises. We serve customers across a wide range of industries, including the financial services, mortgage, retail, telecommunications, utilities, automotive, brokerage, healthcare and insurance industries, as well as government agencies. We also enable consumers to manage and protect their financial health through a portfolio of products offered directly to consumers. As of March 31, 2021, 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 and Singapore and have an investment in a consumer and commercial credit information company in Brazil.
 
We develop, maintain and enhance secured proprietary information databases through the compilation of consumer specific data, including credit, income, employment, asset, liquidity, net worth and spending activity, and business data, including credit and business demographics, that we obtain from a variety of sources, such as credit granting institutions, and income and tax information primarily from large to mid-sized companies in the U.S. We process this information utilizing our proprietary information management systems. We also provide information, technology and services to support debt collections and recovery management.
 
Basis of Presentation.  The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, the instructions to Form 10-Q and applicable sections of SEC Regulation S-X. This Form 10-Q should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in our annual report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”).
 
Our unaudited Consolidated Financial Statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the periods presented and are of a normal recurring nature.
 
Earnings Per Share.  Our basic earnings per share, or EPS, is calculated as net income attributable to Equifax divided by the weighted-average number of common shares outstanding during the period. Diluted EPS is calculated to reflect the potential dilution that would occur if stock options, restricted stock units, or other contracts to issue common stock were exercised and resulted in additional common shares outstanding. The net income amounts used in both our basic and diluted EPS calculations are the same. A reconciliation of the weighted-average outstanding shares used in the two calculations is as follows: 

 Three Months Ended March 31,
 20212020
 (In millions)
Weighted-average shares outstanding (basic)121.8 121.3 
Effect of dilutive securities: 
Stock options and restricted stock units1.4 1.3 
Weighted-average shares outstanding (diluted)123.2 122.6 
 
For the three months ended March 31, 2021 and 2020, stock options that were anti-dilutive were not material.
 
Financial Instruments.  Our financial instruments consist 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
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market values due to the short-term nature of these instruments. The fair value of our fixed-rate debt is determined using Level 2 inputs such as quoted market prices for similar publicly traded instruments and for non-publicly traded instruments through valuation techniques involving observable inputs based on the specific characteristics of the debt instrument. As of March 31, 2021 and December 31, 2020, the fair value of our long-term debt, including the current portion, was $4.7 billion and $4.8 billion, respectively, compared to its carrying value of $4.4 billion and $4.4 billion, respectively.
 
Fair Value Measurements.  Fair value is determined based on the assumptions marketplace participants use in pricing the asset or liability. We use a three level fair value hierarchy to prioritize the inputs used in valuation techniques between observable inputs that reflect quoted prices in active markets, inputs other than quoted prices with observable market data and unobservable data (e.g., a company’s own data).
     
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis. We completed various acquisitions during the three months ended March 31, 2021 and the year ended December 31, 2020. The values of net assets acquired and the resulting goodwill were recorded at fair value using Level 3 inputs. The majority of the related current assets acquired and liabilities assumed were recorded at their carrying values as of the date of acquisition, as their carrying values approximated their fair values due to their short-term nature. The fair values of goodwill and definite-lived intangible assets acquired in these acquisitions were internally or externally estimated primarily based on the income approach. The income approach estimates fair value based on the present value of the cash flows that the assets are expected to generate in the future. We developed internal estimates for the expected cash flows and discount rates used in the present value calculations.

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

The allowance for doubtful accounts is based on management's estimate for expected credit losses for outstanding trade accounts receivables. We determine expected credit losses based on historical write-off experience, an analysis of the aging of outstanding receivables, customer payment patterns, the establishment of specific reserves for customers in an adverse financial condition and is 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 in the accompanying Consolidated Statements of Income. Below is a rollforward of our allowance for doubtful accounts for the three months ended March 31, 2021 and 2020, respectively.

Three Months Ended March 31,
20212020
(In millions)
Allowance for doubtful accounts, beginning of period$12.9 $11.2 
Current period bad debt (recoveries) expense(0.3)2.5 
Write-offs, net of recoveries(0.8)(0.3)
Allowance for doubtful accounts, end of period$11.8 $13.4 

Other Current Assets. Other current assets on our Consolidated Balance Sheets include amounts receivable from tax authorities. Other current assets also include amounts in specifically designated accounts that hold the funds that are due to customers from our debt collection and recovery management services. As of March 31, 2021, these assets were approximately $17.9 million, with a corresponding balance in other current liabilities. These amounts are restricted as to their current use, and will be released according to the specific customer agreements.
 
Other Assets.  Other assets on our Consolidated Balance Sheets primarily represent the Company’s operating lease right-of-use assets, our investments in unconsolidated affiliates, employee benefit trust assets, and assets related to life insurance policies covering certain officers of the Company.

Equity Investment. We record our equity investment in Brazil within Other Assets at fair value, using observable Level 1 inputs. The carrying value of the investment has been adjusted to $106.0 million as of March 31, 2021 based on quoted market prices as of the date noted above, resulting in an unrealized loss of $11.9 million for the three months ended March 31, 2021. All unrealized gains or losses on the investment are recorded in Other income (expense), net within the Consolidated Statements of Income.
 
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Other Current Liabilities. Other current liabilities on our Consolidated Balance Sheets consist of the current portion of operating lease liabilities and various accrued liabilities such as costs related to the 2017 cybersecurity incident as described more fully in Note 6. Other current liabilities also include corresponding amounts of other current assets related to amounts in specifically designated accounts that hold the funds that are due to customers from our debt collection and recovery management services. As of March 31, 2021, these funds were approximately $17.9 million. These amounts are restricted as to their current use and will be released according to the specific customer agreements.

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

2. REVENUE

Revenue Recognition. Based on the information that management reviews internally for evaluating operating segment performance and nature, amount, timing, and uncertainty of revenue and cash flows affected by economic factors, we disaggregate revenue as follows:
Three Months Ended March 31,Change
Consolidated Operating Revenue20212020$%
(In millions)
Verification Services$385.2 $220.2 $165.0 75 %
Employer Services95.7 81.4 14.3 17 %
Total Workforce Solutions480.9 301.6 179.3 59 %
Online Information Solutions302.0 252.8 49.2 19 %
Mortgage Solutions54.1 42.8 11.3 27 %
Financial Marketing Services53.3 47.6 5.7 12 %
Total U.S. Information Solutions409.4 343.2 66.2 19 %
Asia Pacific86.9 69.7 17.2 25 %
Europe68.7 66.4 2.3 3 %
Latin America41.6 43.2 (1.6)(4)%
Canada 44.1 36.7 7.4 20 %
Total International241.3 216.0 25.3 12 %
Global Consumer Solutions81.4 97.1 (15.7)(16)%
Total operating revenue$1,213.0 $957.9 $255.1 27 %

Remaining Performance Obligation – We have elected to disclose only the remaining performance obligations for those contracts with an expected duration of greater than one year and do not disclose the value of remaining performance obligations for contracts in which we recognize revenue at the amount to which we have the right to invoice. We expect to recognize as revenue the following amounts related to our remaining performance obligations as of March 31, 2021 inclusive of foreign exchange impact:

Performance ObligationAmount
(In millions)
Less than 1 year$38.3 
1 to 3 years37.5 
3 to 5 years21.1 
Thereafter41.4 
Total remaining performance obligation$138.3 
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3. ACQUISITIONS AND INVESTMENTS

2021 Acquisitions and Investments. On February 10, 2021, the Company acquired 100% of the ordinary shares of Kount, a provider of fraud prevention and digital identity solutions for $640 million within the USIS business unit. Additionally in the first quarter of 2021, the Company acquired 100% of HIREtech and i2Verify within the Workforce Solutions business unit as well as a small acquisition and purchase of the remaining noncontrolling interest of a business within our International business unit. All of these acquisitions expand the Company's data assets as well as product offerings. The purchase price allocations for these acquisitions are not yet finalized and open areas related to measurement of intangible assets, income taxes and working capital, as well as the assignment of goodwill recognized in the transactions to the appropriate reporting units. For the Workforce Solutions acquisitions, management estimated the allocation of purchased intangible assets and goodwill based on an analysis of previous acquisitions. Accordingly, adjustments will be made to the values of the assets acquired and liabilities assumed as additional information is obtained about the facts and circumstances that existed at the valuation date.

2020 Acquisitions and Investments. In February 2020, we acquired the remaining 40.6% interest in our India joint venture.

4. GOODWILL AND INTANGIBLE ASSETS
 
Goodwill.  Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. Goodwill is tested for impairment at the reporting unit level on an annual basis and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We perform our annual goodwill impairment tests as of September 30.

Changes in the amount of goodwill for the three months ended March 31, 2021, are as follows:
Workforce SolutionsU.S.
Information
Solutions
InternationalGlobal Consumer SolutionsTotal
 
Balance, December 31, 2020$1,010.7 $1,286.7 $2,007.9 $190.5 $4,495.8 
Acquisitions128.2 433.1 18.4  579.7 
Foreign currency translation  13.1 2.0 15.1 
Divestitures  (1.3) (1.3)
Balance, March 31, 2021$1,138.9 $1,719.8 $2,038.1 $192.5 $5,089.3 

Indefinite-Lived Intangible Assets.  Indefinite-lived intangible assets consist of indefinite-lived reacquired rights representing the value of rights which we had granted to various affiliate credit reporting agencies that were reacquired in the U.S. and Canada. At the time we acquired these agreements, they were considered perpetual in nature under the accounting guidance in place at that time and, therefore, the useful lives are considered indefinite. Indefinite-lived intangible assets are not amortized. We are required to test indefinite-lived intangible assets for impairment annually and whenever events or circumstances indicate that there may be an impairment of the asset value. We perform our annual indefinite-lived intangible asset impairment test as of September 30. The estimated fair value of our indefinite-lived intangible assets exceeded the carrying value as of September 30, 2020. As a result, no impairment was recorded. Our indefinite-lived intangible asset carrying amounts did not change materially during the three months ended March 31, 2021.
 
Purchased Intangible Assets.  Purchased intangible assets represent the estimated acquisition date fair value of acquired intangible assets used in our business. Purchased data files represent the estimated acquisition date fair value of consumer information files acquired primarily through the purchase of independent credit reporting agencies in the U.S., Canada and Australia. We expense the cost of modifying and updating credit files in the period such costs are incurred. We amortize all of our purchased intangible assets on a straight-line basis. For additional information about the useful lives related to our purchased intangible assets, see Note 1 of the Notes to Consolidated Financial Statements in our 2020 Form 10-K.

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Purchased intangible assets at March 31, 2021 and December 31, 2020 consisted of the following:

 March 31, 2021December 31, 2020
GrossAccumulated
Amortization
NetGrossAccumulated
Amortization
Net
Definite-lived intangible assets:(In millions)
Purchased data files$1,145.1 $(417.4)$727.7 $913.7 $(399.2)$514.5 
Acquired software and technology44.5 (32.5)12.0 115.3 (106.6)8.7 
Customer relationships686.2 (339.3)346.9 680.1 (331.4)348.7 
Proprietary database201.2 (36.0)165.2 148.6 (30.7)117.9 
Non-compete agreements9.3 (3.5)5.8 6.5 (3.5)3.0 
Trade names and other intangible assets18.0 (10.1)7.9 14.4 (9.4)5.0 
Total definite-lived intangible assets$2,104.3 $(838.8)$1,265.5 $1,878.6 $(880.8)$997.8 
 
Amortization expense related to purchased intangible assets was $39.4 million and $35.0 million during the three months ended March 31, 2021 and 2020, respectively.

Estimated future amortization expense related to definite-lived purchased intangible assets at March 31, 2021 is as follows:

Years ending December 31,
Amount (1)
 (In millions)
2021$119.8 
2022155.1 
2023149.7 
2024141.2 
2025137.8 
Thereafter561.9 
 $1,265.5 

(1)Future amortization expense amounts are subject to change as we finalize purchase price allocations.

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5. DEBT
 
Debt outstanding at March 31, 2021 and December 31, 2020 was as follows:
March 31, 2021December 31, 2020
 (In millions)
Notes, 2.30%, due June 2021
$500.0 $500.0 
Notes, 3.60%, due August 2021
300.0 300.0 
Notes, Floating Rate, due August 2021300.0 300.0 
Notes, 3.30%, due December 2022
500.0 500.0 
Notes, 3.95%, due June 2023
400.0 400.0 
Notes, 2.60%, due December 2024
750.0 750.0 
Notes, 2.60%, due December 2025
400.0 400.0 
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
600.0 600.0 
Notes, 7.00%, due July 2037
250.0 250.0 
Other1.4 2.2 
Total debt4,401.4 4,402.2 
Less short-term debt and current maturities(1,100.6)(1,101.1)
Less unamortized discounts and debt issuance costs(21.7)(23.8)
Total long-term debt, net$3,279.1 $3,277.3 
 
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 a $225.0 million receivables funding facility (“Receivables Facility”) that was terminated in November 2020, while the remaining funds are intended for general corporate purposes, which may include the repayment of a portion of the 2021 debt maturities or borrowings under our Revolver. We must comply with various non-financial covenants, including certain limitations on mortgages, liens and sale-leaseback transactions, as well as mergers and sales of substantially all of our assets. The 2025 Notes and 2030 Notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness.

Senior Credit Facility.  In September 2018, the Company entered into a $1.1 billion five-year unsecured revolving credit facility with a group of financial institutions, which will mature in September 2023 (the “Revolver”). The Revolver replaced the Company’s previous $900.0 million unsecured revolving credit facility that was scheduled to mature in November 2020. Borrowings under the Revolver may be used for general corporate purposes, including working capital, capital expenditures, acquisitions and share repurchase programs. The Revolver has an accordion feature that allows us to request an increase in the total commitment to $1.6 billion. The Revolver includes an option to request a maximum of two one-year extensions of the maturity date, any time after the first anniversary of the Revolver closing. Availability of the Revolver is reduced by the outstanding principal balance of our commercial paper notes and by any letters of credit issued under the facility. As of March 31, 2021, there were $0.7 million of letters of credit outstanding, no principal drawn amounts under the Revolver, and no commercial paper borrowings. Availability under the Revolver was $1.1 billion at March 31, 2021.
 
Commercial Paper Program.  In the second quarter of 2019, we increased our commercial paper program to $1.1 billion. Our commercial paper program has been established through the private placement of commercial paper notes from time-to-time, in which borrowings may bear interest at either a floating rate or a fixed rate, plus the applicable margin. Maturities of commercial paper can range from overnight to 397 days. Because the commercial paper is backstopped by our Revolver, the amount of commercial paper which may be issued under the program is reduced by the outstanding face amount of any letters of credit issued and by the outstanding borrowings under our Revolver. At March 31, 2021, there were no outstanding commercial paper notes.

15


For additional information about our debt agreements, see Note 5 of the Notes to Consolidated Financial Statements in our 2020 Form 10-K.
 
6. COMMITMENTS AND CONTINGENCIES

Litigation, Claims and Government Investigations Related to the 2017 Cybersecurity Incident.  In fiscal 2017, we experienced a cybersecurity incident following a criminal attack on our systems that involved the theft of certain personally identifiable information of U.S., Canadian and U.K. consumers. Following the 2017 cybersecurity incident, hundreds of class actions and other lawsuits were filed against us typically alleging harm from the incident and seeking various remedies, including monetary and injunctive relief. We were also subject to investigations and inquiries by federal, state and foreign governmental agencies and officials regarding the 2017 cybersecurity incident and related matters. Most of these lawsuits and government investigations have concluded or been resolved, including pursuant to the settlement agreements described below, while others remain ongoing. The Company’s participation in these settlements does not constitute an admission by the Company of any fault or liability, and the Company does not admit fault or liability.

We believe it is probable that we will incur losses associated with certain of the proceedings and investigations related to the 2017 cybersecurity incident. In 2019, we recorded expenses, net of insurance recoveries, of $800.9 million in other current liabilities and selling, general, and administrative expenses in our Consolidated Balance Sheets and Statements of Income (Loss), respectively, exclusive of our legal and professional services expenses. The amount accrued represents our best estimate of the liability related to these matters. The Company will continue to evaluate information as it becomes known and adjust accruals for new information and further developments in accordance with ASC 450-20-25. While it is reasonably possible that losses exceeding the amount accrued may be incurred, it is not possible at this time to estimate the additional possible loss in excess of the amount already accrued that might result from adverse judgments, settlements, penalties or other resolution of the proceedings and investigations described below based on a number of factors, such as the various stages of these proceedings and investigations, including matters on appeal, that alleged damages have not been specified or are uncertain, the uncertainty as to the certification of a class or classes and the size of any certified class, as applicable, and the lack of resolution on significant factual and legal issues. The ultimate amount paid on these actions, claims and investigations in excess of the amount already accrued could be material to the Company’s consolidated financial condition, results of operations, or cash flows in future periods.

Consumer Settlement. On July 19, 2019 and July 22, 2019, we entered into multiple agreements that resolve the U.S. consolidated consumer class action cases, captioned In re: Equifax, Inc. Customer Data Security Breach Litigation, MDL No. 2800 (the “U.S. Consumer MDL Litigation”), and the investigations of the FTC, the CFPB, the Attorneys General of 48 states, the District of Columbia and Puerto Rico and the NYDFS (collectively, the “Consumer Settlement”). Under the terms of the Consumer Settlement, the Company will contribute $380.5 million to a non-reversionary settlement fund (the “Consumer Restitution Fund”) to provide restitution for U.S. consumers identified by the Company whose personal information was compromised as a result of the 2017 cybersecurity incident as well as to pay reasonable attorneys’ fees and reasonable costs and expenses for the plaintiffs’ counsel in the U.S. Consumer MDL Litigation (not to exceed $80.5 million), settlement administration costs and notice costs. The Company has agreed to contribute up to an additional $125.0 million to the Consumer Restitution Fund to cover certain unreimbursed costs and expenditures incurred by affected U.S. consumers in the event the $380.5 million in the Consumer Restitution Fund is exhausted. The Company also agreed to various business practice commitments related to consumer assistance and its information security program, including conducting third party assessments of its information security program.

On January 13, 2020, the Northern District of Georgia, the U.S. District Court overseeing centralized pre-trial proceedings for the U.S. Consumer MDL Litigation and numerous other federal court actions relating to the 2017 cybersecurity incident (the “MDL Court”), entered an order granting final approval of the settlement in connection with the U.S. Consumer MDL Litigation. The MDL Court entered an amended order granting final approval of the settlement on March 17, 2020. Several objectors have appealed the final approval order. Until the appeals are finally adjudicated or dismissed, we can provide no assurance that the U.S. Consumer MDL Litigation will be resolved as contemplated by the settlement agreement. If the MDL Court’s order approving the settlement is reversed by an appellate court, there is a risk that we would not be able to settle the U.S. Consumer MDL Litigation on acceptable terms or at all, which could have a material adverse effect on our financial condition.

Other 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.
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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 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 and most of these investigations have been resolved as discussed in prior filings.

The U.K.’s Financial Conduct Authority (“FCA”) opened an enforcement investigation against our U.K. subsidiary, Equifax Limited, in October 2017. The investigation by the FCA has involved a number of information requirements and interviews. We continue to respond to the information requirements and are cooperating with the investigation.

Although we continue to cooperate in the above investigations and inquiries, an adverse outcome to any such investigations and inquiries could subject us to fines or other obligations, which may have an adverse effect on how we operate our business or our results of operations.

Data Processing, Outsourcing Services and Other Agreements

We have separate agreements with Google, Amazon Web Services, IBM, Tata Consultancy Services and others to outsource portions of our network and security infrastructure, computer data processing operations, applications development, business continuity and recovery services, help desk service and desktop support functions, operation of our voice and data networks, maintenance and related functions and to provide certain other administrative and operational services. Annual payment obligations in regard to these agreements vary due to factors such as the volume of data processed; changes in our servicing needs as a result of new product offerings, acquisitions or divestitures; the introduction of significant new technologies; foreign currency; or the general rate of inflation. In certain circumstances (e.g., a change in control or for our convenience), we may terminate these data processing and outsourcing agreements, and, in doing so, certain of these agreements require us to pay significant termination fees.

Guarantees and General Indemnifications

We may issue standby letters of credit and performance and surety bonds in the normal course of business. The aggregate notional amounts of all performance and surety bonds and standby letters of credit was not material at March 31, 2021 and generally have a remaining maturity of one year or less. We may issue other guarantees in the ordinary course of business. The maximum potential future payments we could be required to make under the guarantees in the ordinary course of business was not material at March 31, 2021. We have agreed to guarantee the liabilities and performance obligations (some of which have limitations) of a certain debt collections and recovery management variable interest entity under its commercial agreements.

We have agreed to standard indemnification clauses in many of our lease agreements for office space, covering such things as tort, environmental and other liabilities that arise out of or relate to our use or occupancy of the leased premises.
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Certain of our credit agreements include provisions which require us to make payments to preserve an expected economic return to the lenders if that economic return is diminished due to certain changes in law or regulations. In conjunction with certain transactions, such as sales or purchases of operating assets or services in the ordinary course of business, or the disposition of certain assets or businesses, we sometimes provide routine indemnifications, the terms of which range in duration and sometimes are not limited. Additionally, the Company has entered into indemnification agreements with its directors and executive officers to indemnify such individuals to the fullest extent permitted by applicable law against liabilities that arise by reason of their status as directors or officers. The Company maintains directors and officers liability insurance coverage to reduce its exposure to such obligations.

We cannot reasonably estimate our potential future payments under the guarantees and indemnities and related provisions described above because we cannot predict when and under what circumstances these provisions may be triggered.

Contingencies

In addition to the matters set forth above, we are involved in legal and regulatory matters, government investigations, claims and litigation arising in the ordinary course of business. We periodically assess our exposure related to these matters based on the information that is available. We have recorded accruals in our Consolidated Financial Statements for those matters in which it is probable that we have incurred a loss and the amount of the loss, or range of loss, can be reasonably estimated.

For additional information about these and other commitments and contingencies, see Note 6 of the Notes to Consolidated Financial Statements in our 2020 Form 10-K.

7. INCOME TAXES
 
We are subject to U.S. federal, state and international income taxes. We are generally no longer subject to federal, state, or international income tax examinations by tax authorities for years before 2017 with a few exceptions. Due to the potential for resolution of state and foreign examinations, and the expiration of various statutes of limitations, it is reasonably possible that our gross unrecognized tax benefit balance may change within the next twelve months by a range of $0 to $7.0 million.
 
Effective Tax Rate

Our effective income tax rate is 24.4% for the three months ended March 31, 2021, compared to 24.0% for the three months ended March 31, 2020. Our effective tax rate was slightly higher during the first quarter of 2021 as compared to 2020 due to a slightly greater foreign income tax rate differential and lower forecasted research and development credits in 2021.

In the first quarter of 2020, the adverse economic effects of the COVID-19 pandemic caused the Company to reassess the need for valuation allowances against deferred tax assets. As a result of this analysis, the Company determined it was necessary to place valuation allowances against deferred tax assets of certain subsidiaries. The total amount of the valuation allowances recorded in the first quarter of 2020 was approximately $7.0 million.

8. ACCUMULATED OTHER COMPREHENSIVE LOSS
 
Changes in accumulated other comprehensive loss by component, after tax, for the three months ended March 31, 2021, are as follows: 
Foreign
currency
Pension and other
postretirement
benefit plans
Cash flow
hedging
transactions
Total
 (In millions)
Balance, December 31, 2020$(168.4)$(2.0)$(1.0)$(171.4)
Other comprehensive loss before reclassifications10.4   10.4 
Amounts reclassified from accumulated other comprehensive loss (0.3) (0.3)
Net current-period other comprehensive (loss) income10.4 (0.3) 10.1 
Balance, March 31, 2021$(158.0)$(2.3)$(1.0)$(161.3)
 
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Changes in accumulated other comprehensive loss related to noncontrolling interests were not material as of March 31, 2021.

9. RESTRUCTURING CHARGES
 
    In the fourth quarter of 2020, we recorded $31.9 million ($24.3 million, net of tax) of restructuring charges, all of which were recorded in selling, general and administrative expenses within our Consolidated Statements of Income. 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 and primarily relate to a reduction in headcount. To date, we have paid $14.1 million of the 2020 restructuring costs with $10.1 million of it paid during the three months ended March 31, 2021. The remaining future payments are expected to be completed later in 2021.

10. 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:

Workforce Solutions
U.S. Information Solutions (“USIS”)
International
Global Consumer Solutions (“GCS”)