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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                For the fiscal year ended December 31, 2002

OR

o            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)

Registrant’s telephone number, including area code: 404-885-8000

Securities registered pursuant to Section 12(b) of the Act:

Securities to be registered pursuant to Section 12(g) of the Act: None.

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.
                x YES                 o NO

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
                x YES                 o NO

The aggregate market value of the voting and non-voting common equity held by non-affiliates, based upon the closing price for the Common Stock as reported on the New York Stock Exchange composite tape on March 21, 2003, was $2,976,429,508. All executive offers, directors, and holders of 5% or more of the outstanding Common Stock of registrant have been deemed, solely for purposes of the foregoing calculation, to be “affiliates” of the registrant.

As of March 21, 2003, 140,996,187 shares of registrant’s Common Stock were outstanding.

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DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III of this Form 10-K, to the extent not set forth herein, is incorporated herein by reference from the registrant’s definitive proxy statement for the Annual Meeting of Shareholders to be held on May 14, 2003, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the close of the registrant’s fiscal year.

EQUIFAX INC.
FORM 10-K
For the Year Ended December 31, 2002

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FORWARD-LOOKING STATEMENTS

As used herein, the terms “Equifax,” “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.

This Form 10-K and certain information incorporated herein by reference contains forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. In addition, certain statements included in our future filings with the Securities and Exchange Commission (the “SEC”), in press releases, and in oral and written statements made by us or with our approval, that are not statements of historical fact, are forward-looking statements. Words such as “may,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “seeks,” “plan,” “project,” “continue,” “predict,” and other words or expressions of similar meaning are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are found at various places throughout this report and in the documents incorporated herein by reference. These statements are based on our current expectations about future events or results and information that is currently available to us, involve assumptions, risks and uncertainties, and speak only as of the date on which such statements are made. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Our actual results may differ materially from the results discussed in such forward-looking statements. Factors that may cause such a difference, include, but are not limited to those discussed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations – Risk Factors, below, as well as: declines in the rate of growth, or absolute declines, in consumer spending and consumer debt in our market areas; changes in the marketing techniques of credit card issuers; increased pricing pressures; changes in or failure to comply with U.S. and international legislation or governmental regulations, including the Fair Credit Reporting Act and Gramm-Leach-Bliley Act; successful integration of acquisitions; exchange rate fluctuations and other risks associated with investments and operations in foreign countries; increased domestic or international competition; our ability to successfully develop and market new products and services, successful incorporation of new technology and adaptation to technological change and equity markets, including market disruptions and significant interest rate fluctuations, which may impede our access to, or increase the cost of, external financing; increased competitive pressures both domestically and internationally; and international conflict, including terrorist acts.

Readers should carefully review the disclosures and the risk factors described in this and other documents we file from time to time with the SEC, including our reports on Forms 10-Q and 8-K to be filed by us in fiscal year 2003.

PART I

ITEM 1.         BUSINESS.

Overview

We were founded in Atlanta, Georgia, in 1899 and have been known as Equifax Inc. since 1975. We have been publicly owned since 1965, listed on the New York Stock Exchange since 1971, and are a member of the S&P 500.

We collect, organize and manage various types of credit, financial, demographic, and marketing information regarding individuals and businesses, which we collect from a variety of sources. These sources include financial or credit granting institutions, which provide accounts receivable information; public records of bankruptcies, liens, and judgments; and surveys and warranty cards from which we gather demographic and marketing information. We maintain information in our proprietary databases regarding more than 400.0 million consumers and businesses worldwide. We compile and process this data utilizing our proprietary systems and make it available to customers in user-friendly and value-added formats.

Our products and services include consumer credit information, information management, marketing information, business information, and identity verification services which enable businesses to make informed decisions about extending credit or service, manage their portfolio risk, and develop marketing strategies about consumers and businesses. We also enable consumers to manage and protect their financial affairs through a portfolio of products that we sell directly to individuals via the Internet.

We operate in 13 countries: North America (the United States and Canada), Europe (the United Kingdom, Ireland, Spain, Italy, and Portugal) and Latin America (Brazil, Argentina, Chile, El Salvador, Peru, and Uruguay). We serve customers across a wide range of industries, including the financial services, retail, telecommunications, utilities,

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automotive, brokerage, healthcare, and insurance industries, as well as state and federal governments. Our revenue stream is highly diversified and our largest customer provides less than 3% of our total revenues.

Recent Developments

Asset Acquisition from CBC Companies, Inc.

In November 2002, we acquired the credit files, contractual rights to territories, customer relationships and related businesses from CBC Companies, Inc., an independent credit reporting agency, for $95.0 million in cash. As one of our “Affiliate” credit reporting agencies we collected, formatted, and processed CBC’s data for more than 14 years. When a customer requested a credit report regarding an individual whose credit file was owned by CBC directly from CBC, we prepared the report in exchange for a processing fee from CBC, and CBC sold it to the customer. Alternatively, if the customer requested this same report from us, we processed the report and sold it to the customer, but we paid a fee to CBC for the underlying data. The purchased CBC database includes customers from Ohio, Florida, West Virginia, South Dakota, North Dakota, and Indiana.

Acquisition of Naviant, Inc.

In August 2002, we acquired Naviant, Inc. for $135.0 million in cash. Naviant is a direct marketing company with a database of more than 100 million permission-based email addresses. Naviant’s products and services enable marketers to identify, target, and build consumer relationships through email marketing. Naviant’s products and services include:

•         Email Lists: Naviant sells email lists and provides fulfillment services to over 3,000 customers. The email lists include physical addresses, demographics and purchasing power data on consumers who have given their consent to receive marketing information.

•         Email Append: Naviant’s email append service combines its email addresses with a customer’s database to significantly reduce direct marketing costs while increasing results and tracking capabilities.

•         List Services: List services allow marketers to identify and market to active online households. The list services suite includes the High Tech Household file, which we believe to be the largest and most comprehensive resource for Internet-enabled households.

Exit from Commercial Services in Spain

During the third quarter of 2002, we made the decision to exit our commercial services business in Spain, and this business is now held for sale, with the expectation that we will sell the business in 2003. In accordance with SFAS No. 144, the net assets, results of operations and cash flows of the Spain commercial business for 2002 have been classified as “Discontinued Operations.”

Spin-Off of Payment Services

On July 7, 2001, we completed the spin-off of our Payment Services segment. The spin-off was accomplished by the consolidation of the business units that comprised our Payment Services segment into one wholly-owned subsidiary, Certegy Inc., and the subsequent distribution of all the common stock of Certegy Inc. to our shareholders. The two companies were separated for accounting purposes as of June 30, 2001. All financial information in this Form 10-K, including the historical financial information set forth below in Part II, Item 6, Selected Financial Data, has been restated to reflect the spin-off of our Payment Services segment, and the operating results of that segment are included in Discontinued Operations. As a result of the spin-off, our financial statements for the fiscal years ended December 31, 1997 through 2001, and the fiscal quarters ended March 31, June 30, and September 30, 2001, have been restated to isolate and show Certegy’s net assets, results of operations, and cash flows as Discontinued Operations.

Segment Reporting

We manage our business and report our financial results through the following three core operating segments:

•         Equifax North America

•         Equifax Europe

•         Equifax Latin America

We renamed our “North American Information Services” segment “Equifax North America” in 2002 for purposes of consistency and to more appropriately reflect the range of businesses conducted in this segment. Our financial results

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also include two additional segments- “Other” and “Divested Operations,” which are described below under the heading “Other and Divested Operations segments.” Detailed financial results and segment information are provided below in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in Part II, Item 8, Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements, Note 12, Segment Information.

Products and Services

Overview

Product Lines.

Our products and services are now categorized into the following three product lines:

•         Information Services

•         Marketing Services

•         Consumer Direct

We provide our Information Services products to varying degrees in each of our operating segments and, currently, we provide our Marketing Services and Consumer Direct products through our Equifax North America segment. In 2002, we redefined our Information Services product line, establishing our Marketing Services as a separate product line to accommodate and reflect the strategic expansion of our direct marketing products and services resulting from, among other things, the acquisition of Naviant, Inc., a direct marketing company that we acquired in August 2002. Information Services will, however, continue to include our Consumer and Commercial Services, which had been referred to as our “credit information services,” and our “Mortgage Services”, which includes the provision of consumer credit information to mortgage lenders in the United States. When we refer to our “U.S. Consumer and Commercial Services” from time to time, we mean the Consumer and Commercial Services that we provide in the United States, which we previously referred to as “U.S. Credit Information Services.” Similarly, when we refer to our “Canadian Operations,” we mean the Consumer and Commercial Services that we provide in Canada.

Information Services. Information Services, which is our largest product line, includes our Consumer Services, Commercial Services and our Mortgage Services.

Our Consumer Services, which are products and services derived from the credit information that we maintain regarding individual consumers, include credit reporting, credit scoring, mortgage reporting, risk management, prescreen services that facilitate preapproved offers of credit, fraud detection, modeling services and certain of our decisioning products that automate a variety of decisions. Our customers utilize the information we provide to make decisions for a wide range of credit and business purposes, such as whether to, and on what terms to, approve mortgage or auto loans, credit card applications, identity verification, and similar business uses. We offer our Consumer Services in every market where we operate and we are a market leader in North America and in most of the international markets where we have operations.

Our Commercial Services, which are products and services derived from our database of information about businesses, include credit reporting, credit scoring and risk management. These products and services are provided to a wide variety of customers primarily in Canada, the United Kingdom, and Brazil, where we are a market leader. We are continuing to develop our limited Commercial Services offerings in the United States.

Our Mortgage Services include the provision of specialized credit reports to mortgage lenders in the United States. These products combine the reports of the three major credit reporting agencies into one.

Marketing Services. Our Marketing Services includes our Credit Marketing and Direct Marketing products and services. Our Credit Marketing products and services are derived from our consumer credit information databases and help our customers acquire new customers and monitor current relationships. Our Direct Marketing products and services, which are available in the United States, include compiled, self-reported, permission-based consumer marketing databases and services, which customers use to solicit consumers via direct marketing and email communications. Our targeted high quality demographic and lifestyle information lists and list performance services, which include data enhancement, list hygiene (which is verifying a customer’s information against other data), modeling and analytical consulting, facilitate improved direct mail and email response, and increased customer loyalty. Our products also enable customers to target specifically defined market segments, individuals, and businesses, and design more effective and cost efficient marketing campaigns.

Consumer Direct. In 1999 we began providing our Consumer Direct line of individual credit information and other financial products to consumers in the United States through a secure Internet channel. In 2002, we began offering Consumer Direct products to Canadian consumers.

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Equifax North America

Overview

Equifax North America is our largest segment and in 2002 generated 81% of our revenue and 91% of our operating profit before corporate expense. This segment includes results of our Information Services, Marketing Services, and Consumer Direct product lines sold in the United States and Canada. Approximately 2,850 employees were employed in the Equifax North America segment as of December 31, 2002.

Our strategic objective for Equifax North America is to provide products that:

•         Enable customers to utilize an individual’s or small business’s credit history in determining whom to do business with;

•         Assist customers in reducing the impact of fraudulent activities;

•         Assist companies in the management of their credit portfolios;

•         Enable customers to manage their debt recovery activities;

•         Enable customers to market specific products and services to consumers;

•         Enable customers to develop marketing strategies for cross-selling other products and services to their entire customer base;

•         Enlighten, empower and enable consumers to manage information on their personal credit and financial histories; and

•         Enable customers to comply with the USA PATRIOT Act.

Information Services

In the Equifax North America segment, our Information Services product line consists of the following components: Consumer Services, Commercial Services, Mortgage Services and our Canadian Operations.

Our Consumer Services products and services are derived from the credit information that we maintain about individual consumers, and is the dominant business in our Equifax North America segment. We maintain information on more than 220.0 million consumers in North America, where we are a market leader in Consumer Services. We offer a full range of Consumer Services products in our North America markets, including credit reporting, credit scoring, mortgage reporting, prescreen services, risk management, fraud detection and modeling services, and certain of our decisioning products that facilitate preapproved offers of credit that automate a variety of decisions. Our customers utilize the information we provide to make decisions for a wide range of credit and business purposes, such as whether to, and on what terms to, approve mortgage or auto loans, credit card applications, identity verification, and similar business uses. Risk management and fraud detection and prevention services enable banks and financial institutions to monitor default rates by proactively managing their existing credit card accounts.

Customers of our Consumer Services products and services access them through a full range of electronic distribution mechanisms, including direct real-time access, which facilitates instant decisions, such as the instant granting of credit. Customers of our Consumer Services products include banks, mortgage lenders, financial institutions, telecommunications and utility companies, retailers, automotive manufacturers and dealers, brokerage firms, insurance companies, healthcare providers, and governments. Our Commercial Services products and services are available predominately in Canada. These products are derived from our databases of credit and financial information about businesses. The sale of credit reports is the primary source of revenue, and our reports are purchased by a wide variety of customers. We are continuing to develop our limited Commercial Services offerings in the United States by focusing on small businesses. We have created a unique single source of small business credit information, and thus far maintain information on more than 14 million small businesses. In 2002, we introduced our Small Business Credit Report that includes loan, credit card, and leasing history as well as trade accounts receivable performance. Customers utilize our reports to make financial and marketing decisions.

Our Mortgage Services products, available only in the United States, consist of specialized credit reports that combine the reports of the three major credit reporting agencies into one. These reports are used by mortgage lenders in making underwriting decisions.

Our operations in Canada include our Consumer and Commercial Services product lines and these revenues are consolidated on a geographic basis as Canadian Operations. Consumer Direct revenues relating to Canada are reported in the results for that product line.

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Marketing Services

Our Marketing Services product line includes our Credit Marketing and Direct Marketing products and services. Our Credit Marketing products and services, available in the United States, Canada, Latin America, and the U.K., utilize our consumer credit information databases through batch processing to help our customers acquire new customers and monitor current relationships using a variety of products and services including prescreen and account review services.

We offer a full range of Direct Marketing Services products in the United States, which provide customers with the tools they need to maximize and manage their direct marketing efforts, effectively utilize a variety of direct marketing methods, efficiently identify and acquire new customers, and realize additional revenue from existing customers. Our Marketing Services products enable customers to:

•         Identify, target, and reach the best prospects and customers;

•         Derive benefits from accurate and powerful consumer databases;

•         Segment customers according to particular criteria;

•         Select from specialty, self-reported, or permission-based direct mailing lists;

•         Easily access online customer mailing lists;

•         Use “what-if” scenarios to create customized mailing lists online;

•         Improve their direct mail response rate; and

•         Reduce costs associated with unwanted or unnecessary mailings.

We provide Direct Marketing Services products, such as compiled, self-reported and permission-based consumer marketing databases and services. Our targeted high quality demographic and lifestyle information lists and list performance services, which include data enhancement, list hygiene, modeling and analytical consulting, facilitate improved direct mail response, and increased customer loyalty. Our products enable customers to target specifically defined market segments, individuals, and to design more effective and economically efficient marketing campaigns. Customers include financial institutions, insurers, catalogers, publishers, technology companies, manufacturers and telecommunications companies.

In August 2002, we acquired Naviant, Inc., a company that provides integrated precision marketing tools that enable marketers to identify, target, and build consumer relationships through email marketing. Naviant’s database of more than 100 million unique permission-based email addresses, also includes other attributes such as physical address, age, income, purchasing power, occupation, and SIC codes. Data sources include electronic product registration websites, co-registration partner websites that direct consumers to Naviant’s website, and third parties from whom Naviant purchases or licenses data. Naviant’s products and services enable marketers to identify, target, and build consumer relationships through email marketing. We believe that combining Naviant’s email database with our extensive marketing data and technology will accelerate growth in Marketing Services.

Consumer Direct

In late 1999, we began offering credit information directly to consumers in the United States via the Internet at www.equifax.com. Equifax Credit Profile®, our first Consumer Direct product, provides secure online access to a user-friendly credit report. In 2001, we introduced Equifax Credit Watch^TM, which is a subscription service that assists consumers in protecting against identity fraud, and ScorePower®, the only on-line service that gives consumers access to their BEACON 96^TM score, a form of the credit score most widely used by creditors. In 2002, we further expanded the product line by introducing a 3-in-1 Credit Report^TM, which combines reports from the three U.S. credit reporting agencies, and also began offering insurance reports and scores. In 2002, we began offering Equifax Credit Profile and ScorePower to Canadian consumers. We intend to continue to expand our product offerings, expand geographically, and develop creative marketing strategies for profitable growth. Customers of our Consumer Direct products include consumers, as well as businesses that offer Consumer Direct products to their customers.

Equifax Europe

Our Equifax Europe segment consists of our operations conducted in the United Kingdom, Ireland, Spain, Italy, and Portugal, and accounted for 11% of our 2002 revenue, with the United Kingdom accounting for 77% of the segment’s revenue. We employ approximately 925 employees in the Equifax Europe segment.

Our Information Services product line is sold in each country that makes up the Equifax Europe segment except for Ireland, where we have support operations. These products are based on the more than 45.0 million consumer credit records that we maintain. The Consumer Services products we provide in Equifax Europe include credit reporting,

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credit scoring, risk management, fraud detection, and modeling services. Our Commercial Services products, such as credit reporting and commercial risk management services, are also available predominately in the United Kingdom. During the third quarter of 2002 we made the decision to exit the Commercial Services business in Spain and this business is now held for sale and reported as Discontinued Operations. Information on the Discontinued Operations is included in Part II, Item 8, Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements, Note 2, Discontinued Operations.

We also provide, primarily in the United Kingdom, Credit Marketing products, such as business prospect lists, business profile analysis, and database management. We are exploring expanding our Consumer Direct product line into Europe, where it is currently not offered.

Equifax Europe customers include banks, mortgage lenders, financial institutions, and governments, which utilize the information we provide to make decisions for a wide range of credit and business purposes, such as approval of auto loans, and credit card applications, verification of identities, and similar business uses. Products are developed by Equifax Europe to respond to market needs and opportunities and may include variations of products offered in the United States market.

Equifax Latin America

Our Equifax Latin America segment consists of our operations conducted in Brazil, Argentina, Chile, El Salvador, Peru, and Uruguay, and accounted for 7% of our 2002 revenue, with Brazil accounting for 57% of the segment’s revenue. We employ approximately 1,125 employees in the Equifax Latin America segment. Our Information Services product and services line is sold in each country that makes up the Equifax Latin America segment and our Consumer Services products and services are the dominant source of revenue in each of these countries, with the exception of Brazil. We offer a full range of Consumer Services products based on the consumer credit records that we maintain on more than 72.0 million consumers in Latin America, including: credit reporting, credit scoring, risk management, identity verification, and fraud detection services.

We offer our Commercial Services products and services line in each of the Equifax Latin America countries to varying degrees, and it is the dominant source of revenue in Brazil where we are a market leader. Services offered include credit reporting, decisioning tools and software and commercial risk management services on businesses operating in the several countries. We also offer our Credit Marketing products and services to varying degrees in each of the Equifax Latin America countries, and provide a variety of consumer and commercial marketing services based on our extensive credit information databases including: account profitability analysis, business profile analysis, business prospect lists, and database management.

Equifax Latin America customers include banks, telecommunications companies, retailers, financial institutions, and governments which utilize the information we provide to make decisions for a wide range of credit and business purposes such as: credit card applications, service applications, identity verification, and similar business uses. In each of this segment’s countries, the majority of our customers access our products and services through a number of electronic distribution mechanisms, including direct real-time access, which facilitates instant decisions and cross-selling opportunities. We also sell directly our various reports and services via branches, websites, and mail fulfillment.

Sales and Distribution

We have a worldwide sales organization with approximately 1,400 employees as of December 31, 2002 including sales management and administration. We sell our products primarily through our direct sales force, although the sales channels used by us vary by product and service. We also sell and market our products and services through indirect sales channels, such as our Affiliate credit bureaus, our marketing alliances, and value-added resellers. We also sell through direct mail, telemarketing, and various websites, such as www.equifax.com, which is the main distribution channel for our Consumer Direct products and services.

We distribute our products and services to customers worldwide primarily through electronic data interfaces. Equifax ePORT^TM, our web-based product delivery channel, enables us to deliver services to our customers via a secure Internet connection. The success of our Consumer Direct product line is directly linked to delivery of products to consumers through a secure Internet channel. We will continue to capitalize on the most efficient and effective means of delivering products and services to our customers.

Product Development

Our products and services are based on our proprietary technology and databases and enable customers to operate their businesses with efficiency. We are constantly seeking to expand our product and service offerings. Generally, we expand product offerings through internal development, partnering with third parties, or by acquisition. An example of recent new products generated through internal development is our patented eIDverifier® Internet identity verification products. Our recently introduced Small Businesses Credit Report demonstrates the expansion of our technological

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expertise into a new market. Another new service offering is our safety and security initiative which assists customers in meeting regulatory compliance issues and established uncovering money-laundering risks. In addition, our recent acquisition of Naviant provides us with the ability to offer a range of established email marketing products.

Data Sources

We rely extensively upon data from external sources to maintain our proprietary and non-proprietary databases. These sources include financial or credit granting institutions, which provide accounts receivable information; public records of bankruptcies, liens, and judgments; and surveys and warranty cards from which we gather demographic and marketing information. Our Information Services product line relies predominately on data received from customers via contractual relationships and from various government and public record services. Additionally, in the United States we also rely on contractual relationships with a limited number of Affiliate third party credit reporting agencies to provide us data in certain geographic areas. Outside of the United States, governmental data sources are generally more significant to our business.

Our Marketing Services product line, with the exception of our Credit Marketing Services products, is derived from our proprietary databases consisting of consumer, lifestyle and demographic information. The majority of this information is gathered by consumers reporting information on warranty cards, voluntarily providing information via websites maintained by us, or otherwise requesting certain types of information. This permission-based information is generally less regulated and restricted than the credit information that we maintain. See “Government Regulation” below. With the acquisition of Naviant we acquired extensive databases comprised of permission-based email information. These databases provide us the opportunity to develop new products and to explore cross-selling synergies with our existing databases. Our Credit Marketing Services products utilize the credit based consumer data that also underlies our Information Services products.

The databases underlying our Information Services and Marketing Services product lines include numerous generalized databases and specialized databases of varying sizes. Some of these databases are subject to regulatory restrictions regarding usage. All our databases are regularly updated by information provided by banks, financial institutions, other trade credit providers, and governments and we are committed to enhancing, expanding and maintaining the integrity of our proprietary databases. Our Consumer Direct product line relies on the consumer credit information databases, which underlay our Consumer Services products.

Government Regulation

Because our business involves the collection of consumer data and the distribution of such information to businesses who make credit, service, and marketing decisions, certain of our activities and products and services are subject to regulation under various local, state and federal laws in the United States, including the Fair Credit Reporting Act, or FCRA, which regulates the use of consumer credit information and to a lesser extent, the Gramm-Leach-Bliley Act, which regulates the use of non-public personal information. Portions of the FCRA relating to prescreen services are expiring in 2003, and if not renewed could adversely impact sales of our Credit Marketing products and services. We are also subject to privacy and consumer credit laws and regulations in foreign countries where we do business, notably, the United Kingdom’s Data Protection Act of 1998, which became fully effective on October 24, 2001 and, which regulates the manner in which we can use third-party data, and recent regulatory limitations relating to use of the Electoral Roll, one of our key data sources in the United Kingdom. Generally, the data underlying the products offered by our Information Services and Consumer Direct product lines, excluding our Commercial Services products, are subject to these regulations.

The information underlying our Commercial Services and Direct Marketing Services is less regulated than the other portions of our business where data relates to consumers or is credit based. Information underlying our Commercial Services business, which relates to commercial enterprises, is generally less regulated than information relating to individual consumers. A significant portion of the information maintained by our Marketing Services business is voluntarily provided by individuals, rendering it subject to fewer restrictions on use. It is our policy, however, to treat all information with a high degree of security reflecting our recognition of individuals’ privacy concerns.

Intellectual Property

We own and control a number of trade secrets and other confidential information, trademarks, service marks, trade names, copyrights, patents, and other proprietary and intellectual property rights that, in the aggregate, are of material importance to our business. These rights include the “Equifax “ name and related marks and logos, and our proprietary data, which we believe are individually of material importance to our business. We consider these to be proprietary, and we rely on a combination of copyright, trademark and service mark, patent, trade secret, non-disclosure and other contractual and intellectual property safeguards for protection. We do not hold any franchises or concessions that are material to our business or results of operations.

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We are licensed to use certain data, technology and other intellectual property rights owned and controlled by others. Other than the licenses from Fair, Isaac and Company, Inc. and Seisint, Inc., we do not consider these licenses to be material to our business. We have a series of license agreements with Fair, Isaac pursuant to which we obtain among other rights, the right to use in our Information Services products, several credit scoring algorithms, and the right to sell scores derived from these algorithms. These agreements have varying durations and generally provide for usage-based fees. Seisint, Inc. has granted us a license to use certain software for our Direct Marketing Services products. This license facilitates our sale of marketing lists and other Direct Marketing Services products. A second license permits us to utilize this platform to support our Credit Marketing products. Both Seisint licenses have a 10-year term, beginning in 2002, and may be renewed for yearly periods thereafter.

We license other companies to use certain data, technology and other intellectual property rights that we own and control, primarily as core components of our products and services, on terms that are consistent with customary industry standards.

Competition

We operate in a number of geographic, product and service markets, which are highly competitive. Our Information Services products primarily compete with the products of two global consumer credit reporting companies, Experian Information Solutions, Inc. and Trans Union LLC, which offer a range of consumer credit reporting products that are similar to products that we offer. We believe that our products and services offer customers an advantage over those of our competitors’ because of the quality of our data files which we believe to be superior in terms of depth and accuracy. Our competitive strategy is to rely on product features and quality while remaining competitive on price. Experian and Dun & Bradstreet, Inc. are the major competitors to our Commercial Services products, although we believe that we are addressing in a unique way the small business segment of that market where neither is particularly strong. Our Marketing Services products also compete with these and other companies that offer demographic information products and services, including Acxiom Corporation, Harte-Hanks, Inc. and InfoUSA, Inc. We believe that Marketing Services products and services that we offer are superior and in some cases unique, to those offered by our competitors at comparable prices. Our Consumer Direct products and services compete with similar offerings sold directly by Experian and Trans Union and also with offerings from a number of resellers of Experian, Trans Union and our credit reports. We tailor our pricing of Consumer Direct products, to the needs of the market which can change frequently due to the dynamic nature of the consumer market. We change our pricing periodically to accommodate new product introductions, or other market conditions.

Employees

We employed approximately 5,000 employees in 13 countries as of December 31, 2002. The Equifax North America segment employed 2,850 of these employees, Equifax Europe employed 925, Equifax Latin America employed 1,125 and 100 were employed by General Corporate. None of our U.S. employees are subject to a collective bargaining agreement. Pursuant to local laws, our employees in Brazil and Argentina, are subject to collective bargaining agreements that govern general salary and compensation matters, basic benefits, and hours of work. The Company is not a party to these agreements. We consider our employee relations to be good.

Available Information

Our website is www.equifax.com. We make available on this website, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file or furnish such materials to the SEC. Information contained on our website is not part of this Form 10-K or our other filings with the SEC.

Financial Information About Geographic Areas

Detailed financial information by geographic area, including revenues for the past three fiscal years from our customers in the United States, from our customers outside the United States, and from customers in certain foreign countries, is set forth in Part II, Item 8, Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements, Note 12, Segment Information.

Other and Divested Operations Segments

In addition to our three core operating segments, we report, in our “Other” segment, information about our former lottery business, which consists solely of an agreement between a subsidiary of ours and GTECH Corporation. Pursuant to this subcontract, GTECH assumed obligations of our subsidiary under a contract with the State of California to install a system to automate the processing of instant lottery tickets, provide terminals and related security hardware, and license various software applications developed to support the system. After the second quarter of 2002 we did not receive and do not expect any further revenue or operating income from this segment.

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In our “Divested Operations” segment, we report information about the City Directory business that we sold in the fourth quarter of 2001, the risk management collections business located in the United States, Canada, and the United Kingdom that we sold in October 2000, the vehicle information business located in the United Kingdom that we sold in December 2000, and a direct marketing business in Canada that we sold in December 2000. 

Executive Officers of the Registrant

Following are the persons serving as our executive officers as of March 28, 2003, together with their ages, positions, and brief summaries of their business experience:

There are no family relationships among our executive officers, nor are there any arrangements or understandings between any of the officers and any other persons pursuant to which they were selected as officers.

Mr. Chapman also serves as a Director. Messrs Chapman, Chandler, Dodge, Flynn, Schirk and Springman and Ms. Gaston have all been employed with Equifax or its subsidiaries in executive positions for the previous five years.

Mr. Miller was elected as our President and Chief Operating Officer in August 2002. Prior to joining Equifax, he was with Cendant Corporation where he served as President and Chief Executive Officer of Galileo International, its electronic global distribution services subsidiary, since October 2001. Prior to that, Mr. Miller was President and Chief Executive Officer of Cendant’s Travel Division, a position he assumed in January 2001 when Cendant completed its acquisition of Avis Group Holdings, Inc. At Avis, Mr. Miller was President and Chief Operating Officer of its Vehicle Management Services Group from June 1999 to January 2001. From July 1997 to June 1999, Mr. Miller served as President and Chief Executive Officer of PHH Arval, a vehicle management company and a related company, Wright Express, a corporate fuel card services provider. Before joining PHH in 1997, he was President of GE Capital Financial, a part of GE Capital Services.

Mr. Heroman joined Equifax as Corporate Vice President and Chief Financial Officer in November 2002. Prior to joining the Company he served as Executive Vice President and Chief Financial Officer of People’s Bank in Bridgeport, CT. Before joining People’s Bank, he was Senior Vice President and Treasurer of SunTrust Banks, Inc. from 1988 until 2001.

Mr. Mast joined Equifax in November 2000, and prior to that was a Senior Partner of Kilpatrick Stockton LLP, an international law firm, from 1990.

Mr. Gardaya joined Equifax in November 1998 as Senior Vice President, Global Communications Micro/LAN Services. Prior to being named to his current position in September 2001, Mr. Gardaya also served as our Corporate Vice President and Chief Technology Officer. Prior to that, Mr. Gardaya served as Vice President and Chief

Information Officer for GTE Wireless and GTE Airfone, and in various executive positions with GTE for more than five years.

Mr. Mazzilli served as our Corporate Vice President, Treasurer and Controller from 1992 through June 1999. In 1999, he became Executive Vice President and Chief Financial Officer of Nova Corporation, which provides transaction

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processing and related software application products to small merchants. He rejoined Equifax as Chief Financial Officer in February 2000, and assumed his present position in November 2002.

Mr. Story joined Equifax in March 2000 and was Vice President & Group Controller for Global Technology and Equifax Internet Solutions before being promoted to his current position in August 2001. Prior to joining Equifax, Mr. Story served as Chief Financial Officer, Zep Manufacturing Company from 1999 to 2000, and prior to that he was Vice President of Finance for Alumax Inc. from 1994 to 1998.

ITEM 2.         PROPERTIES.

Our executive offices are currently located at 1550 Peachtree Street, N.W., Atlanta, Georgia, in a leased facility that is also utilized by our Equifax North America and Equifax Latin America segments. Our other properties are geographically distributed to meet sales and operating requirements worldwide. We consider these properties to be both suitable and adequate to meet our current operating requirements, and most of the space is being utilized. We ordinarily lease office space for conducting our business and are obligated under approximately 129 leases and other rental arrangements for our headquarters and field locations. We own four office buildings. One is located in Wexford, Ireland and is utilized by Equifax Europe. One each, utilized by Equifax Latin America, is located in Sao Paolo, Brazil and in Santiago, Chile. A fourth located in Buenos Aires, Argentina was purchased in 2001 for use by Equifax Latin America but never occupied, and is now held for sale or lease. We also own approximately 23.5 acres in Windward Office Park located in Alpharetta, Georgia, adjacent to office space we currently lease.

ITEM 3.         LEGAL PROCEEDINGS.

A number of lawsuits seeking damages are brought against us each year, primarily as a result of the consumer credit reports that we issue. In 2002, a class of plaintiffs was recently certified in a lawsuit, Franklin Clark and Latanjala Denise Miller v. Equifax Inc. and Equifax Credit Information Services, Inc., which alleges that we violated the FCRA by failing to follow reasonable procedures to assure maximum possible accuracy with respect to the reporting of accounts included in a bankruptcy. All parties have reached an agreement to settle all claims, and the court has preliminarily approved the settlement. The suit was filed in April 2000, and is pending in federal court in South Carolina.

In addition, in 1600 Peachtree, L.L.C. v. Equifax Inc. the Plaintiff alleges breach of a guaranty agreement relating to our prior headquarters building, and seeks damages of approximately $43.0 million, substantially all of which represents future rent contingencies. We contend that the guaranty is void and intend to vigorously defend the matter. A related lawsuit based on the same facts, SouthTrust Bank f/k/a SouthTrust Bank National Association v. Equifax Inc., has been dismissed for lack of standing.

We are involved in other lawsuits, claims and proceedings in the ordinary course of our business. Any possible adverse outcome arising from these matters is not expected to have a material impact on our results of operations or financial position, either individually or in the aggregate. However, our evaluation of the likely impact of these pending lawsuits could change in the future.

We provide for estimated legal fees and settlements relating to pending lawsuits. In our opinion, the ultimate resolution of these matters will not have a materially adverse effect on our financial position, liquidity, or results of operations.

ITEM 4.         SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to a vote of our securities holders during the fourth quarter of 2002.

PART II

ITEM 5.         MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Market Information

Our common stock is listed and traded on the New York Stock Exchange under the ticker symbol “EFX”. The following table shows the high and low sales prices for our common stock, as listed on the New York Stock Exchange and adjusted to reflect the July 7, 2001 distribution to our shareholders of one share of Certegy Inc. for every two shares of our common stock held of record as of June 27, 2001, for each quarter in the last two fiscal years:

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Holders

According to records of our transfer agent, at March 5, 2003, we had approximately 9,458 holders of record of our common stock.

Dividends

The amount of our quarterly dividend was reduced in the third quarter of 2001 due to the spin-off of Certegy Inc. While we have historically paid dividends to common shareholders, the declaration and payment of future dividends will depend on many factors, including our earnings, financial condition, business development needs, and regulatory considerations and is at the discretion of our Board of Directors.

Securities Authorized for Issuance Under Equity Compensation Plans.

Information required by this Item regarding the Securities authorized for issuance under our equity compensation plans is included in the Section captioned “Equity Compensation Plan Information” of our Proxy Statement for the Annual Meeting of Shareholders to be held May 14, 2003, to be filed with the SEC and is incorporated herein by reference.

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ITEM 6.         SELECTED FINANCIAL DATA.

The table below summarizes our selected historical financial information for each of the last five years. The financial information for the years ended December 31, 2002, 2001, and 2000 has been derived from our audited financial statements included in Part II, Item 8 “Financial Statements and Supplementary Data.” The financial information for the years ended December 31, 1999 and 1998 has been derived from statements not included in this report. The historical selected financial information may not be indicative of our future performance, and should be read in conjunction with the information contained in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the financial statements. As a result of the spin-off of Certegy Inc. our financial statements for the years ended December 31, 1998 through 2001, have been restated to isolate and show Certegy’s net assets, results of operations, and cash flows as Discontinued Operations. See Part II, Item 8, “Financial Statements and Supplementary Data” Notes to Consolidated Financial Statements, at Note 2, Discontinued Operations.

   (1)  In 2001, we recorded restructuring and other charges of $60.4 million ($35.3 million after tax, or $0.25 per share) for employee severance, facilities consolidation, and the write-down of certain technology assets.

   (2)  In 2002, we adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.” SFAS 142 modifies the accounting for business combinations, goodwill, and identifiable intangible assets. As of January 1, 2002 all goodwill amortization ceased.

   (3)  Stock prices and market capitalization prior to 2001 have been adjusted to reflect the spin-off of Certegy.

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ITEM 7.         MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes in Part II, Item 8 – “Financial Statements and Supplementary Data.” This discussion contains forward-looking statements. Please see “Forward-Looking Statements,” above, and “Risk Factors,” below, for a discussion of the uncertainties, risks, and assumptions associated with these statements.

Overview

As a leading source of consumer and commercial credit information, we collect, organize and manage various types of financial, demographic, and marketing information. Our products and services enable businesses to make credit and service decisions, manage their portfolio risk, 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 state and federal governments. We also enable consumers to manage and protect their financial health through a portfolio of products offered directly to individuals. We have approximately 5,000 employees worldwide, and manage our business globally through the following three operating segments: Equifax North America, Equifax Europe, and Equifax Latin America. Our operations are predominantly located within the United States, with foreign operations principally located in Canada, the United Kingdom, and Brazil.

Our products and services are categorized as follows: Information Services, Marketing Services, and Consumer Direct. Our Information Services products and services allow customers to make credit decisions about consumers and commercial enterprises. Our Marketing Services information products and databases enable customers to identify a target audience for marketing purposes, and our Consumer Direct products and services provide information to consumers that enable them to reduce their exposure to identity fraud and to monitor their credit health.

We develop, maintain, and enhance secured proprietary information databases through compilation of accounts receivable information about consumers and businesses that we obtain from a variety of sources, such as credit granting institutions, public record information, including bankruptcies, liens, and judgments, and marketing information from surveys and warranty cards. We process this information utilizing our information management systems and make it available to our customers in a user-friendly format.

Summary of Selected Recent Events

Acquisitions. In November 2002, we acquired consumer credit files, contractual rights to territories, and customer relationships and related businesses from CBC Companies, Inc., or CBC, an independent credit reporting agency, for $95.0 million in cash. The purchased CBC database includes customers from Ohio, Florida, West Virginia, South Dakota, North Dakota and Indiana.

In August 2002, we acquired Naviant, Inc. for $135.0 million in cash. Naviant is a direct marketing company with a database of permission-based email addresses. Naviant’s products and services enable marketers to identify, target, and build consumer relationships through email marketing.

$250.0 Million Note Offering. In October 2002, we completed the sale of $250.0 million aggregate principal amount of our 4.95% senior unsecured notes, which mature November 1, 2007. The proceeds were used to pay down our revolving credit facility and for general corporate purposes, including the November 2002 acquisition of assets from CBC. In turn, we will borrow $200.0 million under our revolving credit facility to retire our $200.0 million aggregate principal amount of outstanding 6.5% senior unsecured notes, which mature June 2003. See Note 6 to our Consolidated Financial Statements.

Discontinued Operations – 2002 Spain Commercial and 2001 Spin-off of Certegy. In the third quarter of 2002, we initiated a plan to exit our commercial reporting business in Spain, which is now held for sale. Our decision to exit the business was driven by unfavorable growth prospects in this market and unsatisfactory financial performance. Discontinued after tax losses totaled $13.3 million in 2002 including a $9.0 million ($0.07 per share) estimated loss on disposal. The results for this business in 2001 and 2000 were not material, as revenues were less than 1% of our total sales, and thus have not been reclassified to Discontinued Operations.

On July 7, 2001, we completed the spin-off of our Payment Services segment. The spin-off was accomplished by the consolidation of the business units that comprised our Payment Services segment into a separate, wholly-owned

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subsidiary, Certegy Inc., and the subsequent distribution of all of the common stock of Certegy to our shareholders. As a result of the spin-off, our historical financial statements have been restated with Certegy’s net assets, results of operations and cash flows classified as “Discontinued Operations.” See Note 2 to the Consolidated Financial Statements.

Divested Operations in 2001 and 2000. In October 2001, we sold our City Directory business and, in the fourth quarter of 2000, we sold our risk management collections businesses in the United States, Canada, and the United Kingdom, our vehicle information businesses in the United Kingdom, and a direct marketing business in Canada. Combined revenues for these businesses in 2001 and 2000 were $29.2 million and $162.0 million, respectively, with a 2001 operating loss of $3.6 million and 2000 operating income of $9.0 million.

The operating results of these businesses are classified in Divested Operations for segment reporting purposes and are included in our income from continuing operations. See Note 4 to the Consolidated Financial Statements.

Restructuring and Impairment Charges in 2001. In the fourth quarter of 2001, we recorded restructuring and impairment charges of $60.4 million ($35.3 million after tax or $0.25 per diluted share). The restructuring charges, which total $37.2 million, are associated with the reconfiguration of our business after the spin-off of Certegy and the realignment of our cost structure in our international operations, and consist of severance costs and reserves to reflect our estimated exposure on facilities to be vacated or consolidated. The asset impairment charges, which total $23.2 million, reflect our write-down of several technology investments. See Note 5 to the Consolidated Financial Statements.

Components of Income Statement

Revenues from our three operating segments, Equifax North America, Equifax Europe and Equifax Latin America, are generated from a variety of products and services categorized into three groups: Information Services, Marketing Services, and Consumer Direct. In 2002, our Equifax North America segment generated 81% of our worldwide revenues and 91% of our operating profit before corporate expense.

Information Services revenues are principally transaction related, and are derived from our sales of the following products, many of which are delivered electronically: credit reporting and scoring, mortgage reporting, identity verification, fraud detection, decisioning and modeling services and credit marketing services. Revenues from our Marketing Services are derived from our sales of products that help customers acquire new customers. Consumer Direct revenues are transaction related, and are derived from our sales of credit reporting products and identity theft monitoring services, which we deliver to consumers electronically via the Internet and via mail. Our revenues are sensitive to a variety of factors, such as demand for, and price of, our services, technological competitiveness, our reputation for providing timely and reliable service, competition within our industry, federal, state, foreign and regulatory requirements governing privacy and use of data, and general economic conditions. See “Risk Factors,” below.

Our operating expenses include costs of services and selling, general, and administrative expense. Costs of services consist primarily of data acquisition and royalties; customer service costs, which include: personnel costs to collect, maintain and update our proprietary databases, to develop and maintain software application platforms, and to provide consumer and customer call center support; hardware and software expense associated with transaction processing systems; telecommunication and computer network expense; and occupancy costs associated with facilities where these functions are performed. Selling, general, and administrative, or SG&A expenses consist primarily of personnel costs for compensation paid to sales and administrative employees and management. Depreciation and amortization expense includes amortization of acquired intangible assets.

Adoption of SFAS 142

Beginning January 1, 2002, we adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”, or SFAS 142. SFAS 142 modifies the accounting for business combinations, goodwill, and identifiable intangible assets. As of January 1, 2002 all goodwill amortization ceased. SFAS 142 requires an initial impairment test of goodwill and certain other intangibles to be completed in the year of adoption and annually thereafter. In 2002, we completed our goodwill impairment testing required by SFAS 142, which resulted in no adjustment to the carrying amount of goodwill. Although the adoption of the impairment provisions of SFAS No. 142 did not have a material impact on our financial position, we cannot assure you that additional impairment tests will not require an impairment charge during future periods should circumstances indicate that our goodwill balances are impaired. Income from continuing operations for the years ended December 31, 2001 and 2000 included after tax goodwill amortization of $18.5 million ($0.13 per diluted share), and $19.6 million ($0.14 per diluted share), respectively.

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Consolidated Results of Operations

Our consolidated results for each of the three years in the periods ended December 31, were as follows:

All references to earnings per share data in this MD& A are to diluted earnings per share unless otherwise noted.

GAAP and Non-GAAP Financial Measures

The results presented in the above table are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, we discuss financial measures in accordance with GAAP and also on a non-GAAP basis. When we refer to a financial measure as “reported,” we are referring to a GAAP financial measure. When we refer to a financial measure as “adjusted,” we are referring to a non-GAAP financial measure.

The following events are reflected in our adjusted results and impacted years 2001 and 2000 only: our restructuring charge taken in the fourth quarter of 2001, our divested operations in 2001 and 2000, and the adoption of SFAS 142. We believe that our use of certain adjusted, non-GAAP financial measures allows our management and investors to evaluate and compare our core operating results from ongoing operations from period to period in a more meaningful and consistent manner. Reconciliations of GAAP to non-GAAP financial measures are included in this MD&A before Critical Accounting Policies.

All “adjusted,” or non-GAAP, financial measures that we discuss in this Item 7 exclude, and all “reported,” or GAAP, financial measures that we discuss in this Item 7 include, the following items:

Year 2001 Non-GAAP Items Reflected in “Adjusted”

•         An aggregate net pre-tax charge in 2001 of $94.6 million ($60.4 million after tax; $0.44 loss per share), consisting of:

•          $60.4 million restructuring and impairment charges ($35.3 million after tax; $0.25 loss per share);

•          a combined $8.8 million pre-tax loss ($3.0 million loss from operations and $5.8 million loss on sale included in other income and expense net) from the City Directory business that we sold in the fourth quarter ($6.6 million after tax; $0.06 loss per share) in the fourth quarter of 2001; and

•          the $25.4 million elimination of goodwill amortization expense ($18.5 million after tax; $0.13 income per share) as if SFAS No. 142 had been effective on January 1, 2001.

Year 2000 Non-GAAP Item Reflected in “Adjusted”

•         Aggregate net pre-tax income in 2000 of $26.7 million ($25.6 after tax income; $0.19 income per share), consisting of:

•          a pre-tax loss of $3.6 million ($2.1 million after tax; $0.02 loss per share) from the operations of the City Directory that we no longer own;

•          a combined $12.1 million of pre-tax income ($16.3 million in operating income less a $4.2 million loss on sale included in other income (expense net) from the risk management collections and vehicle

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information businesses ($8.0 million after tax; $0.06 income per share) that we sold in the fourth quarter of 2000;

•          a $7.6 million pro-forma reduction of interest expense ($4.5 million after tax; $0.03 income per share) as if the sale of our risk management collections and vehicle information businesses had occurred on January 1, 2000 thereby reducing our debt carrying cost based on cash proceeds at closing of approximately $149.2 million;

•          a $3.2 million pro forma increase in interest income ($1.9 million after tax; $0.02 income per share) from our $41.0 million note receivable established as part of seller financing with the divestiture of our risk management collections business;

•          lower income tax expense of $5.5 million ($0.04 income per share) to adjust the income tax effective rate from 43.2% to 41.2% to reflect the effective rate for ongoing operations; and

•          the $24.4 million elimination of goodwill amortization expense ($19.6 million after tax; $0.14 income per share) as if SFAS No. 142 had been effective on January 1, 2000.

Highlights for 2002 Consolidated Financial Results

•         Our reported consolidated revenues of $1.1 billion decreased 3%. As adjusted, our consolidated revenues were even with 2001.

•         Our reported income from continuing operations increased 63%. As adjusted, our income from continuing operations increased 8%.

•         Our operating margins improved to 32%.

•         Our interest expense of $41.2 million declined 14%.

•         Our reported operating income increased 38%. As adjusted, our operating income grew 3%.

•         Our reported earnings per share from continuing operations increased 64%. As adjusted, our earnings per share from continuing operations increased 8%.

•         Our total debt outstanding at December 31, 2002 was $924.5 million.

•         Our cash provided by operations was $248.8 million and our free cash flow, which is a non-GAAP measure of the amount of cash provided by our operating activities less capital expenditures, was $193.0 million.

•         We repurchased 2.9 million shares of common stock for a total investment of $72.5 million.

Year 2002 Compared With 2001

Our reported revenues of $1.1 billion in 2002 decreased 3% from 2001. Our adjusted revenues were even with 2002. In 2002, Equifax North America accounted for 81% of our total revenue and 91% of our operating income before corporate expense. Our revenue growth in 2002 was negatively impacted by a global economy that has continued to weaken. Equifax North America revenues grew 6% in 2002, delivering an additional $49.8 million in revenue, compared to 13% growth in 2001. Our 2002 revenue growth is attributable to increases in revenues from our Consumer Direct products, sales of Mortgage Services resulting from increased refinancing activity, and our acquisition of Naviant. International revenues declined $45.1 million or 18% driven by currency fluctuations, the decision to exit our commercial reporting business in Spain, and the decline of the Argentinean economy. The strengthening of the U.S. dollar against foreign currencies, particularly in Latin America, negatively impacted consolidated revenue by $16.7 million or 2%.

Consolidated operating expenses in 2002 of $758.0 million declined $127.2, million or 14% over 2001. Operating expense, as adjusted, decreased 1%, or $9.3 million. Excluding incremental operating expense from our Naviant acquisition, operating expenses declined 5%, driven by our continued focus on productivity improvements, discretionary expense control and our restructuring actions taken in 2001 after the Certegy spin-off. In the fourth quarter of 2001, we reduced our worldwide workforce 11% to approximately 5,200 employees, and in 2002, continued to drive productivity, resulting in an additional 5% decrease.

Cost of services in 2002 of $427.6 million declined $23.4 million or 5%. The divestiture of our City Directory business in October 2001 accounted for $9.3 million of the reduction. As adjusted, cost of services declined 3%, driven by our

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decision to exit of our commercial credit reporting business in Spain, lower personnel expense and professional service fees partially offset with higher royalties and data purchases expense on higher unit volumes in Equifax North America.

SG&A, expenses of $249.9 million declined nearly 7% over 2001, driven by the divestiture of City Directory. As adjusted, SG&A expense increased $4.5 million, or 2%, due to our Naviant acquisition. Our SG&A expense in 2002 was also negatively impacted by an increase of $4.3 million in bad debt expense, with the WorldCom bankruptcy representing the largest portion of such expense.

Operating income in 2002 increased 38%, to $351.3 million, with operating margins of 32%. Operating income, as adjusted, grew 3%, driven by our focus on productivity and expense control. Equifax North America’s ability to maintain strong operating margins while investing in key growth initiatives and Equifax Europe’s improvement in margins from 4% to 10% in 2002, offset margin erosion in our Marketing Services operations in the U.S., profit deterioration in Equifax Latin America due to economic conditions in Argentina, and the reduction in income from our former lottery business. See “Segment Results – Other,” below.

Year 2001 Compared With 2000

Our reported revenues of $1.1 billion in 2001 decreased 4%, or $50.2 million, driven by our divestiture of several businesses. See Note 4 to the Consolidated Financial Statements. In the fourth quarter of 2000, we sold the risk management collections business that we conducted in the United States, Canada and the United Kingdom, the vehicle information business that we conducted in the United Kingdom, and a direct marketing business that we conducted in Canada. On a combined basis these divested businesses including City Directory, which was sold in 2001, generated revenues of $162.0 million and operating profit of $9.0 million with margins of 6%. Revenues, as adjusted, increased 8% over 2000 driven by Equifax North America’s record 13% growth on strong credit reporting volumes and Consumer Direct revenue growth. The strengthening of the U.S. dollar against foreign currencies, particularly in Latin America, negatively impacted consolidated revenue by $26.9 million, or 3%.

Consolidated operating expenses in 2001 of $885.2 million, including a $60.4 million restructuring charge taken in the fourth quarter, increased $4.6 million over 2000. Operating expenses in 2001, as adjusted, were $767.3 compared to adjusted operating expenses of $706.9 in 2000. The $60.4 million increase was driven by record volumes in our North American operations and $22.8 million of incremental operating expense added from our acquisition of the Consumer Information Solutions Group from R.L. Polk & Co. in May 2000, and the November 2000 acquisition of two related Italian businesses named SEK S.r.l. and AIF Gruppo Securitas S.r.l. The products and services of the Consumer Information Solutions Group that we acquired from R.L. Polk & Co., which we had referred to as our Consumer Information Services, are now categorized within our Marketing Services product line, and reported in our Equifax North America segment.

Cost of services in 2001 of $451.0 million declined $62.2 million or 12%, driven by the sale of our risk management collections business in the United States, Canada and the United Kingdom, our vehicle information business in the United Kingdom, and a direct marketing business in Canada, which are classified as Divested Operations. Partially offsetting this decline is a $43.3 million increase in production and data processing expenses due to record volumes in our Equifax North America operations. SG&A expenses of $267.6 million increased 2% over 2000, driven by higher sales incentive payouts on record sales, incremental expense from our acquisition of the Consumer Information Solutions Group from R.L. Polk & Co., and growth in our Consumer Direct product line.

Operating income in 2001 of $253.8 million decreased 18% over 2000 driven by our $60.4 million restructuring charge taken in the fourth quarter of 2001. Operating income, as adjusted, increased 7% over 2000 driven by strong revenue growth in Equifax North America more than offsetting margin deterioration in our international operations.

Other income (expense), net

Other income (expense), net principally consists of interest income, gains and losses from divested businesses, and gains and losses on foreign currency. Interest income in 2002, 2001, and 2000 totaled $6.3 million, $8.3 million, and $7.9 million, respectively. Included in Other income (expense), net is the sale of our City Directory business in October 2001 and our risk management collections business and vehicle information business in 2000, which generated pre-tax losses of $5.8 million and $4.2 million, in 2001 and 2000, respectively.

Interest expense

Interest expense decreased $6.6 million and $8.0 million in 2002 and 2001, respectively. This reduction was driven by lower average debt outstanding and lower interest rates. Our total debt outstanding at December 31, 2002 was $924.5 million compared to $755.6 million at December 31, 2001. We expect interest expense to increase in 2003 due to higher outstanding debt levels.

Effective Tax Rates

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Our effective tax rates from continuing operations were 39.3%, 42.1%, and 43.4% in 2002, 2001, and 2000, respectively. Our lower effective rate in 2002 was driven by: the elimination of goodwill amortization beginning January 1, 2002, as required by SFAS 142; the tax basis of goodwill related to the loss on sale of City Directory in the third quarter of 2001; and the implementation of state tax planning strategies. Effective tax rate changes from 2000 to 2001 were mainly due to non-deductible goodwill associated with divestitures and changes in levels of foreign earnings.

Segment Results

Our segment results for each of the three years in the period ended December 31, 2002, are as follows:

Equifax North America

In 2002, Equifax North America generated 81% of our revenue and 91% of our operating profit before corporate expense. This segment’s revenue increased 6% in 2002. The Naviant acquisition, included in Marketing Services, positively impacted revenue growth 3.5% for the year. We experienced positive momentum in the second half of the year as revenues grew 6% compared to a 1% decline in the first half, excluding revenues from the Naviant acquisition.

As shown in the following table, our Equifax North America segment includes revenues from our:

•         U.S. Consumer and Commercial Services, which are comprised of the Consumer and Commercial Services that we provide in the U.S., which we previously referred to as U.S. Credit Information Services.

•         Mortgage Services that we provide in the U.S., which we prevciously referred to as U.S. Credit INformation Services.

•         Canadian Operations, which are comprised of the Consumer Services, Commercial Services and Credit Marketing Services that we provide in Canada;

•         Credit Marketing Services that we provide in the U.S.;

•         Direct Marketing Services, are comprised of the direct and email marketing services that we provide in the U.S. and include the products and services that we formerly referred to as our Consumer Information Services, and now include Naviant’s products and services; and

•         Consumer Direct products and services.

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Year 2002 Compared With 2001.

U.S. Consumer and Commercial Services 2002 revenue growth was 1% over 2001. Revenue growth in 2002 was challenging due to tough economic conditions in the U.S. and a record 2001 base year. Revenues in the second half of 2002 grew 5.5% compared to a 3% decline in the first half of the year. The momentum was driven by mortgage refinancing and market share gains, principally in financial services. Average prices were flat year over year, influenced by higher mortgage activity. Mortgage Services delivered record revenues with 24% growth. With continued economic weakness, we expect to see low to mid single digit revenue growth percentages in 2003. Mortgage loan originations, a significant contributor to our credit reporting volume growth in 2002 and 2001, are expected to slow during 2003.

Our Marketing Services product lines delivered $274.8 million in revenues or 6% growth in 2002, driven by incremental revenues from our Naviant acquisition. Revenues from our Credit Marketing Services, which include pre-screening, portfolio review, database and other marketing products, were down 1% for the year principally due to the economic conditions. Revenues from Direct Marketing Services were $110.5 million, or 19% above the prior year, driven by incremental revenues from our Naviant acquisition. Our Direct Marketing Services revenues continued to be negatively impacted by the slow down in spending for advertising, mailings, and promotions.

Consumer Direct services revenues grew 80% over the prior year. All products continued strong growth including $6.6 million of incremental sales from the launch of our Equifax 3-in-1 credit report. We continue to expect strong revenue growth in 2003.

Equifax North America delivered record profit of $361.6 million with 6% growth over adjusted operating income on solid revenue growth and strong expense management. We maintained operating margins of 40% as we continue to invest in growth initiatives such as our U.S. Small Business Credit Report and our Safety and Security Services.

Year 2001 compared with 2000.

U.S. Consumer and Commercial Services delivered revenue growth of 14% in 2001 on a record credit reporting volume increase of 20%. The key industry growth drivers were mortgage, telecommunications, financial services, and automotive. Lower interest rates helped generate record volumes in mortgage refinancing, cellular usage increased, and automakers’ zero rate financing incentives, which combined to drive consolidated volumes with consecutive quarterly growth in 2001. Volume growth was partially offset by average unit price declines of 6% in 2001. Mortgage Services revenues grew 73% in 2001 caused by a favorable interest rate environment, compared with a 21% decrease in 2000. Canadian operations revenues increased 14% in 2001 on strong consumer credit volume growth.

Our Marketing Services product lines generated combined revenues of $259.4 million, or almost even with $259.8 million in 2000. Revenues from our Credit Marketing Services declined 6% in 2001 versus 2000. Lower revenues in 2001 were principally due to product mix shifts to lower priced risk management products, and price compression due to customer consolidation. Our 2001 revenues from Direct Marketing Services were $92.9 million, a 13% increase over 2000. Excluding incremental revenues as a result of the May 2000 acquisition from R.L. Polk & Co., revenues declined 11%, principally driven by a significant slow down in advertising and marketing expenditures by our customers due to the slowing U.S. economy.

Consumer Direct revenues in 2001 more than doubled to $21.9 million largely due to $9.7 million of incremental sales from the new ScorePower® credit score product launched in March 2001 and increased sales of the Equifax Credit Report^TM credit report and Equifax Credit Watch^TM credit monitoring service. Consumer Direct sales in 2000 totaled $7.8 million.

Operating income for Equifax North America increased 15% in 2001 on record revenue and volume growth. Excluding the impact of our May 2000 acquisition from R.L. Polk, operating income growth for 2001 was 16%.

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Year 2002 compared with 2001.

Equifax Europe, which includes the results of our operations in the United Kingdom, Spain, Portugal and Italy, and our support operations in Ireland, continued to improve its profit and operating margins through expense reductions and operating efficiencies, and the decision to exit the commercial credit reporting business in Spain. Revenues declined 14% on a local currency basis driven by our decision to exit the commercial credit reporting business in Spain, and lower revenues from our United Kingdom operations. Our United Kingdom operations generated 77% of Equifax Europe’s revenues in 2002. U.S. dollar revenue benefited $5.4 million from the strengthening of local currencies, British pound and the euro.

Operating expenses in 2002 of $113.4 million declined 16%. United Kingdom expenses decreased 11% driven by our fourth quarter 2001 restructuring plan focused on rightsizing our United Kingdom operations and driving productivity. During the third quarter of 2002, we made the decision to exit the commercial credit reporting business in Spain due to local market conditions, and this business is now held for sale. See Note 2 to the Consolidated Financial Statements. For 2002, the results of the Spanish commercial business have been classified as discontinued operations. 2001 results were not material to our consolidated results and as such have not been reclassified to discontinued operations.

Operating income of $12.7 million more than doubled over 2001 driven by United Kingdom expense reductions. We continue to focus on driving operational efficiencies in our European businesses and expect continued margin improvement in 2003.

Year 2001 compared with 2000.

Equifax Europe achieved 2001 revenue growth of 3% in local currency. Our revenue growth was attributable to the November 2000 acquisition of two related Italian businesses named SEK S.r.l. and AIF Gruppo Securitas S.r.l. The strengthening of the U.S. dollar against the British pound and Spanish peseta reduced our revenue in 2001 by approximately $6.0 million. Additionally, we experienced revenue declines in our United Kingdom and Spain commercial credit reporting services.

Operating income, as adjusted, in 2001 of $5.8 million declined $11.4 million from 2000 on lower revenues in the United Kingdom and Spain.

Equifax Latin America

Year 2002 compared with 2001.

Revenues of our Equifax Latin America segment, which includes results of our operations in Brazil, Argentina, Chile, Peru, Uruguay and El Salvador, declined by $30.1 million, or 28% from 2001, driven by currency devaluation and the economic crisis in Argentina. Currency devaluation negatively impacted our Latin America revenues by $21.8 million, of which Brazil and Argentina accounted for $18.3 million. Argentina’s operating revenue and profit declined $21.8 million and $10.4 million, respectively. In local currency, Brazil’s revenues grew 8% in 2002 driven by performance in commercial reporting services.

Operating income, as adjusted, declined 37% to $20.3 million compared to 2001 principally due to Argentina’s economic decline. Despite the economic challenges, Equifax Latin America delivered solid operating margins of 26% in 2002 versus 30% in 2001.

Year 2001 compared with 2000.

Equifax Latin America generated revenue of $106.7 million and operating margins of 30% in 2001. In local currency, revenues increased three percent in 2001. The strengthening of the U.S. dollar against the Brazilian real and the Chilean peso reduced this segment’s revenue by approximately $17.5 million in 2001.

Operating income, as adjusted, in 2001 decreased $8.0 million mainly due to weak currencies and economic conditions in the region. Cost containment measures helped deliver strong margins of 30% in 2001.

Other

In our Other segment, we report information about our former lottery business, which consists solely of an agreement between a subsidiary of ours and GTECH Corporation. Pursuant to this subcontract, GTECH assumed obligations of our subsidiary under a contract with the State of California to install a system to automate the processing of instant lottery tickets, provide terminals and related security hardware, and license various software applications developed to support the system. We have exited the lottery business, and all previously deferred revenue related to this subcontract has now been recognized, and no further revenue or operating income is expected to occur in this segment.

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General Corporate

General corporate expense increased $2.9 million in 2002 based on higher incentive compensation expense and one-time expenses associated with the hiring of senior executive management. Our 2001 expense increase of $3.1 million was driven by higher incentive compensation plan expense.

Liquidity and Capital Resources

Overview

Our principal sources of liquidity are cash flow provided by our operating activities, our revolving credit facilities, and cash and cash equivalents.

We believe that our ability to generate cash from our operations is one of our fundamental financial strengths. In 2002 we generated cash flow from operations of $248.8 million. Our free cash flow, the cash flow provided by our operating activities less capital expenditures, was $193.0 million in 2002. Our capital expenditures are used for developing, enhancing and deploying new and existing technology platforms, replacing or adding equipment, updating systems for regulatory compliance, the licensing of software applications and investing in disaster recovery systems. We use free cash flow, along with borrowings, to make acquisitions, to retire outstanding indebtedness, to pay dividends, and to make share repurchases.

Cash from Operations

Our net cash provided by operating activities in 2002 was $248.8 million compared to $255.1 million in 2001. Increased cash flows generated from lower trade receivable balances were offset by payments associated with our fourth quarter restructuring plan in 2001, ongoing data purchases, and a $20.0 million contribution to our U.S. defined benefit pension plan. Our operating cash flow continues to be driven by operating margin performance and aggressive working capital management (days sales outstanding declined from 63 days in 2001 to 55 days in 2002).

Cash provided by operations in 2001 amounted to $255.1 million, an increase of 32% from 2000. The improvement over 2000 was largely influenced by three factors: higher operating income, aggressive working capital management of receivables, and a $24.8 million reduction in capital expenditures.

Investing Activities

In 2002, net cash used in investing activities totaled $341.0 million, an increase of $234.5 million compared to 2001. The increase was primarily a result of our acquisition of Naviant and acquisition of assets from CBC. Our acquisitions, net of cash acquired, accounted for $321.2 million of total cash invested in 2002. Capital expenditures exclusive of acquisitions totaled $55.8 million, which principally represented development associated with key technology platforms in our businesses. We expect to generate free cash flow in excess of $200.0 million in 2003, with capital expenditures expected to range from $45.0 to $55.0 million.

In the third quarter of 2002, our $41.0 million note receivable associated with the sale of our risk management collections business in 2000 was completely paid.

In 2001, net cash used in investing activities totaled $106.5 million, a decrease of $156.5 million compared to 2000. The decrease was primarily the result of the fact that we were less acquisitive in 2001, focusing on our spin-off of Certegy. Capital expenditures, exclusive of acquisitions and investments, amounted to $47.1 million in 2001 compared to $71.9 million in 2000. Acquisitions and investments, net of cash acquired, declined from $346.8 million in 2000 to $68.7 million in 2001, largely due to our acquisition of the Consumer Information Solutions Group from R.L. Polk & Co. in May 2000. These amounts were offset by cash proceeds generated from the sale of businesses and other assets, which amounted to $12.4 million in 2001 and $157.5 million in 2000, and are principally associated with the sale of our City Directory business in 2001 and the sale of our risk management collections and vehicle information businesses in 2000.

Financing Activities

Net cash provided by financing activities during 2002 totaled $92.6 million, compared with net cash used in financing activities during 2001 that totaled $325.5 million, and net cash provided by financing activities during 2000 that totaled $16.4 million.

In 2002, we received $249.5 million in proceeds from the sale of $250.0 million aggregate principal amount of our 4.95% senior unsecured notes, which mature November 1, 2007. During 2002 we invested $79.8 million to repurchase 2.9 million shares of our common stock, and received $34.2 million in proceeds from the exercise of stock options. At December 31, 2001, our remaining authorization for share repurchases was approximately $45.0 million, and in February 2002, our

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Board of Directors approved an additional $250.0 million for share repurchases. We also continued our 90-year history of paying dividends, which totaled $11.4 million in 2002.

In 2001, we reduced our long-term debt $298.9 million through the repayment of borrowings under our $465.0 million revolving credit facility. Debt repayments were funded through operating cash flows and the cash dividend received from Certegy in conjunction with the spin-off. During 2001, we invested $42.3 million to repurchase 2.2 million shares of our common stock, up from $6.5 million invested to repurchase shares in 2000, and we received $36.4 million in proceeds from the exercise of stock options. Share repurchases were temporarily suspended in 2000 to enable us to apply available cash to the repayment of debt incurred in connection with our acquisition of the Consumer Information Services Group from R.L. Polk & Co. in May 2000. In 2001, our payment of dividends totaled $32.3 million, a decrease of $20.0 million compared to 2000, due to a reduction of our quarterly dividend after the Certegy spin-off from $0.093 to $0.02 per share.

We expect to increase the amount outstanding under our $465.0 million credit facility in 2003 for purposes of retiring the $200.0 million aggregate principal amount of our outstanding 6.5% senior unsecured notes that mature in June 2003.

Cash and Cash Equivalents

Our cash and cash equivalents balance was $30.5 million and $33.2 million at December 31, 2002 and 2001, respectively.

Revolving Credit Facilities

Our $465.0 million revolving credit facility, which we entered into with Bank of America, N.A. and certain other lenders on October 4, 2001, provides for a variable interest rate tied to Base Rate, LIBOR and competitive bid options. The weighted average interest rate of borrowings outstanding under this facility was approximately 2.6% as of December 31, 2002. The credit facility consists of a $160.0 million 364-day portion and a $305.0 million multi-year portion which expire on October 2, 2003 and October 4, 2004, respectively. The agreement governing this facility contains various covenants and restrictions, including, among other things, limitations on liens, subsidiary debt, mergers, liquidation, asset dispositions, acquisitions, and maintenance of certain financial covenants. Our borrowings under this facility, which have not been guaranteed by any of our subsidiaries, are unsecured and will rank on parity in right of payment with all of our other unsecured and unsubordinated indebtedness from time to time outstanding. As of December 31, 2002, we had $443.2 million of borrowing capacity available under our $465.0 million revolving credit facility.

One of our Canadian subsidiaries has an unsecured, 364-day C$100.0 million revolving credit facility that will expire in October 2003. The agreement provides for borrowings tied to Prime, Base Rate, LIBOR and Canadian Bankers’ Acceptances, and contains financial covenants related to interest coverage, funded debt to cash flow, and limitations on subsidiary indebtedness. We have guaranteed the indebtedness of our Canadian subsidiary under this facility. As of December 31, 2002, U.S. $34.3 million of borrowing capacity was available under this credit facility.

Contractual Obligations and Commercial Commitments

The following table summarizes our significant contractual obligations and commitments as of December 31, 2002:

We believe that future cash flows provided by our operating activities, together with current cash and cash equivalent balances, will be sufficient to meet our projected cash requirements for the next 12 months, and the foreseeable future thereafter, although any projections of future cash needs and cash flows are subject to substantial uncertainty. For instance, Computer Sciences Corporation has an option, exercisable at any time prior to 2013, to sell its credit reporting business to us. The option exercise price will be determined by a third-party appraisal process and would be due in cash within 180 days after the exercise of the option. We estimate that if CSC were to exercise the option today, the option

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price would be approximately $650.0 to $700.0 million. This estimate is based solely on our internal analysis of the value of the business, current market conditions, and other factors, all of which are subject to constant change. If CSC were to exercise its option, we would have to obtain additional sources of funding. We believe that this funding would be available from sources such as additional bank lines of credit and the issuance of public debt and/or equity. However, the availability and terms of any such financing would be subject to a number of factors, including credit market conditions, the state of the equity markets, general economic conditions, and our financial performance and condition. Because we do not control the timing of CSC’s exercise of its option, we could be required to seek such financing and increase our indebtedness at a time when market or other conditions are unfavorable. See “Risk Factors,” below.

We continually evaluate opportunities to sell additional equity or debt securities, obtain credit facilities from lenders, and restructure our long-term debt for strategic reasons, or to further strengthen our financial position. The sale of additional equity or convertible debt securities could result in additional dilution to our shareholders. In addition, we will, from time to time, consider the acquisition of, or investment in, complementary businesses, products, services and technologies, and the repurchase and retirement of debt, which might affect our liquidity requirements or cause us to issue additional equity or debt securities. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all.

Off Balance Sheet Transactions

Other than facility leasing arrangements, we do not engage in off-balance sheet financing activities. We have entered into a synthetic lease on our Atlanta corporate headquarters building in order to provide us with favorable financing terms with regard to this facility. This $29.0 million lease was entered into in 1998 and expires in 2010. Total lease payments for the remaining term total $13.5 million. Under this synthetic lease arrangement, we have also guaranteed the residual value of the leased property to a lessor. In the event that the property were to be sold by the lessor at the end of the lease term, we would be responsible for any shortfall of the sales proceeds, up to a maximum amount of $23.2 million, which equals 80 percent of the value of the property at the beginning of the lease term. We believe that the fair market value of this property exceeds the amount of the guarantee.

Letters of credit and guarantees

We will, from time to time, issue standby letters of credit, performance bonds or other guarantees in the normal course of our business. The aggregate notional amount of all performance bonds and standby letters of credit is less than $15.0 million and they all have a maturity of one year or less. We provide these guarantees from time to time to support the needs of our operating units. Except for our guarantee of the synthetic lease referred to above, our only outstanding guarantee that is not reflected as a liability on our balance sheet was extended in connection with the sale of our risk management collections business to RMA Holdings, LLC, or RMA, in October 2000, at which time we guaranteed the operating lease payments of a partnership affiliated with RMA to a lender of the partnership pursuant to a term loan. The term loan, which had $7.9 million outstanding as of December 31, 2002, expires December 1, 2011. Our obligations under the RMA guarantee are not secured. We believe that the likelihood of demand for payment under these instruments is minimal and expect no material losses to occur in connection with these instruments.

Subsidiary funds transfer limitations

The ability of certain of our subsidiaries and associated companies to transfer funds is limited in some cases by foreign government regulations. At December 31, 2002, the amount of equity subject to such restrictions for consolidated subsidiaries was not material.

Pension Benefits

During 2002, actual asset returns for our U.S. defined benefit pension plan were adversely impacted by the performance of the U.S. stock market, resulting in a decrease in the market value of our retirement plan assets. The fair value of our defined benefit pension plan assets decreased from $413.1 million at December 31, 2001 to $344.8 million at December 31, 2002. In addition, we lowered our discount rate from 7.25% to 6.75%, which increased our U.S. projected benefit obligations from $419.0 million to $451.2 million. The negative investment performance and declining discount rates during 2002 created an unfunded status in accordance with Statement of Financial Accounting Standards No. 87 (“SFAS 87”) at December 31, 2002. As required under SFAS 87, a non-cash minimum pension liability of $179.4 million ($112.4 million after tax) reducing shareholders’ equity was recorded at December 31, 2002. The impact of our plan’s funded status would be reversed, and shareholder’s equity consequently restored, on December 31 of any year in which the fair value of plan assets exceeded the accumulated benefit obligation as of that date. Further, this adjustment had no impact on our income statement, and did not affect cash flow or our compliance with any financial covenants contained in any of our debt agreements.

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We continually monitor and evaluate the level of pension contributions based on various factors that include, but are not limited to, investment performance, actuarial valuation and tax deductibility. While the asset return and interest rate environment have negatively impacted the funded status of our U.S. defined benefit pension plan under SFAS 87, our minimum funding requirements, as set forth in the Employment Retirement Income Security Act (ERISA) and federal tax laws have been zero for the past five years. In addition, we expect no mandatory funding requirements in 2003 or 2004. Although no minimum funding was required, at our discretion we contributed $20.0 million to our U.S. defined benefit pension plan in 2002.

Our U.S. defined benefit pension plan delivered pension income of $11.0 million in 2002, and approximately $8.6 million in 2001. The annual pension income is calculated using a number of actuarial assumptions, including the expected long-term rate of return on assets and a discount rate. In determining the expected long-term rate of return on assets, we evaluate input from our investment consultants, investment management firms and actuaries. Additionally, we consider our historical 15-year compounded returns, which have been in excess of our forward-looking return expectations. The expected long-term rate of return on this basis for 2002 was 9.5%. For determination of 2003 pension expense, the long term-rate of return will be reduced to 8.75%. We believe that 8.75% is a reasonable long-term rate of return on assets, despite the recent market downturn in which our plan assets had a return loss of approximately 12.8% for the year ended December 31, 2002.

Our determination of pension income and expense is based on a market related valuation of assets, which reduces year-to-year volatility. This market related valuation of assets recognizes investment gains and losses over a five-year period from the year in which they occur. Investment gains and losses for this purpose are the difference between expected return calculated using the market related value of assets and the actual return on the market related value of assets. Since the market related value of assets recognizes gains or losses over a five year period, the future value of assets will be affected as previously deferred gains or losses are recognized. Our U.S. cumulative unrecognized actuarial losses at December 31, 2002 were $202.0 million. These unrecognized losses will result in a decrease in our future pension income depending on several factors, including their relative size to our projected benefit obligation and market related value of plan assets.

The discount rate we utilize for determining future pension obligations is based on the yield associated with Moody’s Long-Term Aa-rated Corporate Bond Index. The discount rate determined on this basis has decreased from 7.25% at December 31, 2001 to 6.75% at December 31, 2002.

Inflation

We do not believe that the rate of inflation has had a material effect on our operating results. However, inflation could adversely affect our future operating results if it were to result in a substantial weakening in economic conditions.

Recent Accounting Pronouncements. In January 2002, we adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” The statement supersedes SFAS No. 121 “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of”, but retains the fundamental provisions of that statement related to the recognition and measurement of the impairment of long-lived assets to be held and used while expanding the measurement requirements of long-lived assets to be disposed of by sale to include discontinued operations. The Statement also supersedes Accounting Principles Board Opinion No. 30 (APB 30), for the disposal of a segment of business, extending the reporting of a discontinued operation to a “component of an entity.” Further, the Statement requires operating losses from a “component of an entity” to be recognized in the period(s) in which they occur rather than at the measurement date as had been required under APB 30.

In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” SFAS No. 145 amends SFAS No. 13, “Accounting for Leases,” to eliminate inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. SFAS No. 145 also rescinds SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt.” Accordingly, gains or losses from extinguishment of debt shall not be reported as extraordinary items unless the extinguishment qualifies as an extraordinary item under the criteria APB Opinion No. 30, “Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions.” SFAS No. 145 is effective for fiscal years beginning after May 15, 2002. We adopted SFAS No. 145 on January 1, 2003.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 provides guidance related to accounting for costs associated with disposal activities covered by SFAS No. 144 or with exit or restructuring activities previously covered by Emerging Issues Task Force (“EITF”) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” SFAS No. 146 supercedes EITF Issue No. 94-3 in its entirety. SFAS No. 146 requires that costs related to exiting an activity or to a restructuring not be recognized until the liability

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is incurred. SFAS No. 146 will be applied prospectively to exit or disposal activities that are initiated after December 31, 2002. We adopted SFAS No. 146 on January 1, 2003.

In November 2002, the FASB issued FASB Interpretation No. 45 (“FIN 45”), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN 45 currently requires that a liability be recorded in the guarantor’s balance sheet upon issuance of a guarantee. In addition, as of December 31, 2002, FIN 45 requires disclosures about the guarantees that an entity has issued, including a roll-forward of the entity’s product warranty liabilities. We adopted the disclosure requirements of FIN 45 effective December 31, 2002 and the remaining provisions on January 1, 2003 and have included the required disclosures in the Notes to the 2002 Consolidated Financial Statements.

In November 2002, the EITF reached a consensus on Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables.” EITF Issue No. 00-21 provides guidance on how to account for arrangements that involve the delivery or performance of multiple products, services and/or rights to use assets. The provisions of EITF Issue No. 00-21 will apply to revenue arrangements entered into in fiscal periods beginning after June 15, 2003 and are not expected to have a material impact on our financial position or results of operations.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation, Transition and Disclosure.” SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure provisions of SFAS No. 123 “Accounting for Stock Based Compensation” to currently require disclosure in the summary of significant accounting policies of the effects of an entity’s accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements. SFAS No. 148 does not amend SFAS No. 123 to require companies to account for their employee stock-based awards using the fair value method. However, the disclosure provisions are required for all companies with stock-based employee compensation, regardless of whether they utilize the fair value method of accounting described in SFAS No. 123 or the intrinsic value method described in APB Opinion No. 25, “Accounting for Stock Issued to Employees”. We adopted SFAS No. 148 on January 1, 2003 and have included the initial required disclosures in the Notes to the 2002 Consolidated Financial Statements.

In January 2003, the FASB issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.” FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. We are evaluating the impact of FIN 46 on our financial position and results of operations.

Reconciliations of GAAP to Non-GAAP Financial Measures

GAAP to Non-GAAP financial measures - Consolidated Results Reconciliations:

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