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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

For the quarterly period ended March 31, 2003

OR

For the transition period from                                  to                             

Commission File Number: 001-06605

EQUIFAX INC.

(Exact name of registrant as specified in its charter)

404-885-8000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x     No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x     No ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

CONSOLIDATED BALANCE SHEETS

See Notes to Consolidated Financial Statements

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CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

See Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

See Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

Accumulated Other Comprehensive Loss consists of the following components:

See Notes to Consolidated Financial Statements.

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EQUIFAX INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2003

As used herein, the terms “Equifax”, “the Company”, “we”, “our”, and “us” refer to Equifax Inc., a Georgia corporation, and its consolidated subsidiaries as a combined entity, except where it is clear that the terms mean only Equifax Inc.

1. BASIS OF PRESENTATION

We have prepared the accompanying unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. This information reflects all adjustments, which are in the opinion of management, necessary for a fair presentation of the statement of financial position as of March 31, 2003, and the results of operations for the three month periods ending March 31, 2003 and 2002 and the cash flows for the three month periods ending March 31, 2003 and 2002. All adjustments made have been of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S., or GAAP, have been condensed or omitted. We believe that the disclosures are adequate to make the information presented not misleading. Certain prior year amounts have been reclassified to conform to the current year presentation. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our annual report on Form 10-K for the fiscal year ended December 31, 2002.

The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

2. NATURE OF OPERATIONS

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 proprietary information management systems and make it available to our customers in a user-friendly format.

3. ACQUISITIONS

In March 2003, in order to continue to grow our credit data franchise, we acquired the credit files, contractual rights to territories (generally states of integration areas), and customer relationships and related businesses of an independent credit reporting agency that houses consumer information on our system (“Affiliate”). We acquired this business for $12.7 million in cash, allocating $5.4 million of the purchase price to goodwill, $6.4 million to purchased data files, and $0.9 million to non-compete agreements. These allocations are preliminary estimates

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and will be finalized upon completion of the purchase valuation. The results of operations for this acquisition have been included in the consolidated statement of income from the date of acquisition, and have not been material.

4. DISCONTINUED OPERATIONS

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 it will be sold by the end of the third quarter of 2003. In accordance with the Financial Accounting Standards Board’s (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 144 the net assets, results of operations and cash flows of the Spain commercial business have been classified as “discontinued operations.” For the first quarter of 2003 and 2002, revenues totaled $2.3 million and $2.4 million respectively. Our loss on discontinued operations, net of income taxes was $1.3 million for the first quarter of 2003 and $0.3 million for the first quarter of 2002.

5. RESTRUCTURING AND IMPAIRMENT CHARGES

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, were associated with the alignment of our cost structure with changing market conditions to reduce expenses and improve efficiencies, particularly in international operations. The restructuring plan, which included headcount reductions of approximately 700 employees, consisted 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, reflected our write-down of several technology investments. At December 31, 2002, our remaining reserve balance was $16.3 million. During the first quarter 2003, we paid $1.2 million against the reserve, leaving a remaining balance of $15.1 million. An analysis of 2003 activity in the reserve through March 31 is as follows (in millions):

6. LONG-TERM DEBT AND SHORT-TERM BORROWINGS

In October 2002, we issued new 4.95% fixed rate five-year unsecured notes with a face value of $250.0 million. The notes, which expire in 2007, were sold at a discount of $0.5 million. The discount, and related issuance costs, will be amortized on a straight-line basis over the term of the notes. Our $200.0 million 6.5% senior unsecured notes, originally issued in 1993, mature during June 2003, and therefore are classified in the short-term debt and current maturities. The indebtedness evidenced by our 4.95% notes, our 6.5% senior notes, our 6.3% notes, and our 6.9% debentures, none of which has been guaranteed by any of our subsidiaries, is unsecured, pari passu, and ranks on parity in right of payment with all of our other unsecured and unsubordinated indebtedness from time to time outstanding.

7. INCOME TAXES

Effective Tax Rates. The effective tax rates from continuing operations were 37.5% in 2003 and 39.3% in 2002. The decrease in 2003 was due to the implementation of state tax planning strategies related to the apportionment of state income taxes and franchise taxes.

Deferred Tax Assets. We estimate levels of future taxable income and utilize prudent and feasible tax planning strategies in establishing and maintaining deferred tax assets. If we are unable to realize all or part of its deferred tax assets in the future, our effective tax rate could increase.

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8. SHAREHOLDERS’ EQUITY

Treasury Stock. During the first three months of 2003, we repurchased 987,100 shares at an average price of $19.68 through open market transactions at an aggregate investment of $19.4 million. As of March 31, 2003, approximately $202.8 million remained authorized for future share repurchases.

9. STOCK-BASED COMPENSATION

In accordance with the provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS No. 123), we have elected to apply APB Opinion No. 25 and related interpretations in accounting for our stock option and performance share plans. Accordingly, we do not recognize compensation cost in connection with our stock option plans and record compensation expense related to our performance share plan based on the current market price of our common stock and the extent to which performance criteria are being met. If we had elected to recognize compensation cost for these plans based on the fair value at grant date as prescribed by SFAS No. 123, net income and net income per share would have been reduced to the pro forma amounts indicated in the table below (in millions, except per share amounts):

10. COMMITMENTS AND CONTINGENCIES

Agreement with Computer Sciences Corporation. We have an agreement with Computer Sciences Corporation and certain of its affiliates, collectively, CSC, under which CSC-owned credit reporting agencies utilize our computerized credit database services. CSC retains ownership of its credit files and the revenues generated by its credit reporting activity. We receive a processing fee for maintaining the database and for each report supplied. The agreement was renewed by CSC for a ten-year period beginning August 1, 1998. The agreement provides us with an option to purchase CSC’s credit reporting business if CSC does not elect to renew the agreement or if there is a change in control of CSC while the agreement is in effect. Under the agreement CSC also has an option, exercisable at any time, to sell its credit reporting business to us. The option expires in 2013. 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 the option were exercised at this time, the price would fall within a range of approximately $650.0 to $700.0 million. This estimate is based solely on our internal analysis of the value of the businesses, market conditions at the time of our analysis, and other factors, all of which are subject to constant change. Therefore, the actual option exercise price could be materially higher or lower than the estimated amount. 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 capital 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. See the “Risk Factors” section of the “Management’s Discussion and Analysis” included in our annual report on Form 10-K for the year ended December 31, 2002.

Data Processing and Outsourcing Services Agreements. We have separate agreements with IBM, PwCES LLC, Polk/Acxiom, Seisint Inc., Xerox Connect, Inc., and Jones Lang LaSalle which outsource portions of our computer data processing operations and related functions and certain administrative functions. The agreements expire between 2004 and 2010. The estimated aggregate contractual obligation remaining under these agreements is $556.9 million as of March 31, 2003, with no future year expected to exceed $115.0 million. However, these amounts could be more or less depending on various factors such as the inflation rate, the introduction of significant new technologies, or changes in our servicing needs as a result of acquisitions or divestitures. Under certain circumstances (e.g., a change in control, or for our convenience), we may terminate these agreements. However, some of the agreements provide that we must pay a significant termination charge in the event of such a termination.

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Guarantees. We will from time to time issue standby letters of credit, performance bonds or other guarantees in the normal course of business. The aggregate notional amount of all performance bonds and standby of all letters of credit is less than $15.0 million and all have a maturity of less than one year. Guarantees are issued from time to time to support the needs of operating units. The 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 (“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 $7.8 million outstanding as of March 31, 2003, expires December 1, 2011. Our obligations under such guarantee are not secured. We believe the likelihood of demand for payment under these instruments is minimal and expect no material losses to occur in connection with these instruments.

Litigation. A number of lawsuits seeking damages are brought against us each year, primarily as a result of reports issued by us. 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 Fair Credit Reporting Act 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. We do not believe the final settlement will be material to our operations or financial condition. 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. The lawsuit was filed in 2001 and is pending in Superior Court of Fulton County, Georgia. 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 as is normal 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.

11. SEGMENT INFORMATION

Our operations are primarily organized in four reportable segments, with three segments based on the provision of our three core product lines (Information Services, Marketing Services and Consumer Direct) within geographic regions (Equifax North America, Equifax Europe, and Equifax Latin America), and two segments based on other criteria (Other and Divested Operations). We evaluate the segment performance-based on its operating income before unusual items (if any). Intersegment sales and transfers are not material. The measurements of segment profit or loss and segment assets for each reportable segment are substantially the same. All transactions between segments are accounted for at cost, and no timing differences occur between segments.

The operating results of our Commercial Services business in Spain have been reclassified to discontinued operations and are not included in Equifax Europe’s segment results below (Note 4).

A description of segment products and services is as follows:

Equifax North America: Information Services, which includes consumer services, such as credit information; locate services; fraud detection and prevention services; mortgage loan origination information; analytics and consulting; identity verification services; commercial services, primarily in Canada; Marketing Services, which consist of credit card marketing services and the provision of consumer demographic and lifestyle information; and Consumer Direct, which consists of credit and finance products sold directly to individuals.

Equifax Europe: Information Services, which includes Consumer and Commercial Services, such as credit, credit scoring and modeling services; and Credit Marketing Services.

Equifax Latin America: Information Services, which includes Consumer and Commercial Services such as credit and other commercial, financial, and consumer information.

Other: Lottery services relating solely to a contract to provide services to the state of California. No further revenue or operating income has been received since the second quarter 2002 or is expected to occur in this segment.

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Operating revenue and operating income by segment for the first quarter of 2003 and 2002 are as follows:

12. RECENT ACCOUNTING PRONOUNCEMENTS

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. We have no transactions during the first quarter of 2003 that are impacted by this pronouncement.

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 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. We did not plan or implement any exit or disposal activities during the first quarter of 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 Consolidated Financial Statements.

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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. We continue to evaluate rules under EITF Issue No. 00-21, and do not expect that adoption will 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 required disclosures in the Notes to the 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. There is no impact on our financial position or results of operations for the first quarter of 2003 under FIN 46.

13. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Effective January 1, 2001, we adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 133 requires that a company recognize derivatives as assets or liabilities on its balance sheet, and also requires that the gain or loss related to the effective portion of derivatives designated as cash flow hedges be recorded as a component of other comprehensive income.

We enter into hedging transactions in order to reduce financial volatility and manage the mix of fixed versus floating interest rate obligations of our debt portfolio. As of March 31, 2003, the only hedging transactions to which we were a counterparty, consisted of interest rate swap agreements.

At March 31, 2003, we have a $29.0 million notional amount floating-to-fixed interest rate swap agreement in place with a bank counterparty that fixes the interest rate on the $29.0 million synthetic lease related to our corporate headquarters through its maturity in 2010. This hedge has been designated as a cash flow hedge under No. SFAS 133, is fully effective, and at March 31, 2003, was valued as a liability totaling $4.7 million. This liability is included with other current liabilities in the accompanying consolidated balance sheets, and the related loss was recorded, net of income tax, as a component of accumulated other comprehensive loss.

At March 31, 2003, we also have interest rate swap agreements in place with a bank counterparty to float the interest rate on $250.0 million of our fixed rate senior unsecured notes through their maturity date in 2005. These derivatives have been designated as fair value hedges and are fully effective. The value of these swaps was $17.0 million at March 31, 2003, and was recorded as an asset along with a corresponding increase in long-term debt.

Our maximum exposure to loss due to credit risk on these interest rate swap agreements approximates $12.3 million if all of the bank counterparties default. We mitigate this exposure by monitoring the concentration of risk exposure that we have with any one bank, and through the use of minimum credit quality standards for all counterparties.

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The following discussion of our financial condition and results of operations should be read in conjunction with our annual report on Form 10-K for the fiscal year ended December 31, 2002 and our unaudited consolidated financial statements and the related notes in Part I, Item 14—“Financial Statements,” above.

Forward-Looking Statements

The following discussion 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. 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 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. Our actual results may differ materially from the results discussed in such forward-looking statements. Important factors that could cause actual results to differ materially from our forward-looking statements include, but are not limited to those discussed under the heading “Forward Looking Statements” and in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Factors,” in our 2002 annual report on Form 10-K, and those set forth in our other filings with the SEC and our press releases. We caution that the risks and factors discussed in our 2002 annual report on Form 10-K and in such other filings and press releases are not exclusive. 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.

Overview

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 into the following three product lines: Information Services, Marketing Services, and Consumer Direct.

In 2002, we redefined our Information Services product line, establishing 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. Marketing Services also includes our Credit Marketing Services, which help businesses acquire new customers and monitor current customer relationships.

Information Services now includes our Consumer Services, Commercial Services, and our Mortgage Services, which we had referred to collectively as our “credit information services.” Our Consumer Services, which are products and services derived from the credit information that we maintain regarding individual consumers, include credit reporting and scoring, identity verification, risk management, fraud detection, modeling services, and certain of our decisioning products, which are systems that automate a variety of decision making processes. Customers of our Consumer Services utilize information that we provide to make decisions for a wide range of credit and business purposes, such as whether to, and on what terms to, approve loans, credit card applications, identity verification, and similar business uses.

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. We are continuing to develop our limited Commercial Services offerings in the United States, recently introducing our Small Business suite of products, which are based on a database which now contains comprehensive credit information on nearly 16 million small businesses. These products, which include a risk rating tool for account origination and portfolio management and our Small Business Credit Report, are designed to help our customers make informed decisions about customers and prospects who are small businesses.

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. Information Services also includes our emerging Fraud, Safety & Security product offerings, which provide businesses and governments with solutions to help acquire, manage, and distribute information about high-risk individuals and entities, aid in the prevention of terrorist activity across the globe, and to help our customers meet regulatory compliance requirements, uncover money-laundering risks, and prevent terrorist financing.

Marketing Services include our Credit Marketing and Direct Marketing Services. Our Credit Marketing Services are derived from our consumer credit information databases, and include prescreen and account review services. Our Direct Marketing Services are comprised of the direct and email marketing services that we provide in the U.S., include the products and services that we formerly referred to as our Consumer Information Services, and now include Naviant’s products and services. Customers use our compiled, self-reported, permission-based consumer marketing databases and services 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, are designed to 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 includes our line of individual credit information and other financial products and services offered to consumers in the United States through a secure Internet channel. 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. In 2002, we began offering Consumer Direct products to Canadian consumers.

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. 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 Services, Commercial Services, Credit Marketing, and Consumer Direct services that we provide in Canada. References to North American Information Services include U.S. Consumer and Commercial Services, Mortgage Services, and Canadian Operations.

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 March 2003, we acquired consumer credit files, contractual rights to territories, and customer relationships and related businesses from an independent credit reporting agency, for $12.7 million in cash. See Note 3 to the Consolidated Financial Statements.

Discontinued Operations—2002 Spain Commercial. 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 $1.3 million in the first quarter 2003 and were $0.3 million in the first quarter 2002. The operating results of our Commercial Services business in Spain are included in our loss from discontinued operations. See Note 4 to the Consolidated Financial Statements.

Restructuring and Impairment Charges. 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, were associated with the alignment of our cost structure with changing market conditions to reduce expenses and improve efficiencies, particularly in international operations. The restructuring plan consisted 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, reflected our write-down of several technology investments. At December 31, 2002, our remaining reserve balance was $16.3 million. During the first quarter 2003, we charged $1.2 million against the reserve, leaving a remaining balance of $15.1 million. 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 the first quarter of 2003, our Equifax North America segment generated 85% of our worldwide revenues and 94% of our operating profit before corporate expense.

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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. Revenues from our Marketing Services are derived from our sales of products that help customers acquire new customers, and include our Credit Marketing and Direct Marketing Services. 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. Our operating expenses include costs of services and selling, general, and administrative, or SG&A, 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. 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.

Consolidated Results of Operations

Our consolidated results for the quarters ended March 31, 2003 and 2002 are as follows:

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

Highlights for First Quarter 2003 Consolidated Financial Results

First Quarter 2003 Compared With First Quarter 2002.

Our operating revenues of $301.6 million for the three months ended March 31, 2003 grew by $42.6 million, or 16%, over the same period one year ago. Excluding revenues of Naviant, which we acquired in the third quarter of 2002, our operating revenue grew 10%. This growth was provided primarily by our Equifax North America segment and was driven by volume increases across all of our product lines: Information Services, Marketing Services, and Consumer Direct. Information Services growth was fueled by 9% growth in our consumer reporting business and by 50% growth in our Mortgage Services due to continued refinancing volumes. Marketing Services grew 33% overall, and 4% organically from continued volume growth. Naviant

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provided significant revenue growth during the first quarter of 2003. Consumer Direct revenues grew 91% over the same period one year ago due to continued growth in consumer subscriptions and number of transactions. Equifax Latin America grew 5% in local currency despite continuing difficulties in the economic environment. Our revenues for Equifax Latin America declined by 21% compared to the prior period due to the unfavorable foreign currency impact of $5.1 million. Equifax Europe reported revenue declines of 13% in local currency. Foreign exchange rates provided a benefit of $3.9 million to Europe’s operating revenues. Our European segment reported first quarter revenues of $30.7 million, which is even with first quarter of 2002. Consolidated operating expenses for the first quarter of 2003 of $220.9 million grew by $41.2 million, or 23%, over the same period in 2002. This increase is the result of new growth initiatives, volume increases in correlation to revenue growth, and non recurring expenditures. Expenses associated with our Naviant business account for $19.7 million or 48% of our total expense growth. Other growth initiatives for which current expenditures will create future revenue streams are Fraud, Safety and Security and our Small Business Enterprise businesses. Volume growth in our Consumer Services, Mortgage Services and Consumer Direct businesses account for $10.6 million of our expense growth. We provided for additional legal and corporate reserves during the quarter due to our rapid business volume expansion and integration of acquisitions. In addition, we have incurred consulting fees in conjunction with a large scale productivity project which will drive future expense efficiencies in the maintenance and operation of our technology department. During the first quarter of 2003, we have reduced headcount by 156 full time equivalents across business units in a continued drive to provide operating efficiencies.

Costs of services during the first quarter of 2003 increased by $22.5 million or 21% over the first quarter of 2002. Costs of services represent 42% of total operating revenues for the quarter, an increase from 40% for the same quarter last year. Volume increases in our U.S. Consumer and Commercial Services, Mortgage Services and Consumer Direct businesses drove increased expenditures in royalty expenses, data costs, and production expenses.

SG&A, grew by $14.8 million or 26% over the same quarter a year ago. As a percent of total operating revenues, SG&A increased to 23% for the first quarter of 2003 from 22% from the same quarter in 2002. The increase in dollars is due primarily to our Naviant acquisition, and secondarily to an increase of $2.7 million in bad debts. The increase in the percentage of SG&A in relationship to revenue is due primarily to increases in legal and corporate reserves, allowance for doubtful accounts, and in consulting fees related to operational efficiency projects.

Operating income for the first quarter of 2003 increased by $1.4 million or 2% as investment in growth initiatives, growth in our lower margin Marketing Services and Consumer Direct businesses, non recurring expenses in SG&A and volume related increases in costs of sales combined to produce operating margins of 27% for the quarter compared to 31% for the same period of 2002. Our business mix is shifting over time as we diversify into marketing and consumer businesses for the purpose of driving incremental revenues and profits.

Other income, net

Other income, net of $3.8 million for the first quarter of 2003 is comprised primarily of interest income on cash balances of $0.4 million and income from our share of collections amounting to $3.4 million related to the sale of our risk management collections business in 2000.

Other income, net of $1.4 million for the first quarter of 2002 is comprised primarily of interest income of $2.1 million offset by losses on expenses related to investments.

Interest expense

Interest expense for the first quarter of 2003 of $11.7 million is an increase of $1.7 million over the same quarter a year ago due to higher average borrowings. Total debt outstanding of $936.8 million as of March 31, 2003 is $183.0 million higher than the balance of $753.8 million at March 31, 2002 generated principally due to acquisitions completed in the second half of 2002. The increase in debt from first quarter 2002 to first quarter 2003 provided cash for business acquisitions and for stock repurchases.

Effective Tax Rates

Our effective tax rates from continuing operations were 37.5% and 39.3% for the three month periods ended March 31, 2003 and 2002, respectively. Our lower effective rate in 2003 is due to the implementation of state tax planning strategies related to the apportionment of state income taxes and franchise taxes.

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Segment Results

Our segment results for the three month periods ended March 31, 2003 and 2002 are as follows: