FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period ended _________________________
Commission File Number 1-6605
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EQUIFAX INC.
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(Exact name of registrant as specified in its charter)
Georgia 58-0401110
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(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
1600 Peachtree Street, N.W. Atlanta, Georgia
P.O. Box 4081, Atlanta, Georgia 30302
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(Address of principal executive offices) (Zip Code)
404-885-8000
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(Registrant's telephone number, including area code)
None
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(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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at March 31, 1996
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Common Stock, $1.25 Par Value 153,056,494
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INDEX
Page No.
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Part I. Financial Information
Consolidated Balance Sheets --
March 31, 1996 and December 31, 1995 2 - 3
Consolidated Statements of Income --
Three Months Ended March 31, 1996 and 1995 4
Consolidated Statement of Shareholders'
Equity -- Three Months Ended March 31, 1996 5
Consolidated Statements of Cash Flows --
Three Months Ended March 31, 1996 and 1995 6
Notes to Consolidated Financial
Statements 7 - 9
Management's Discussion and Analysis
of Results of Operations and
Financial Condition 10 - 12
Review by Independent Public Accountants 12
Review Report by Independent Public Accountants 13
Part II. Other Information 14 - 15
Exhibit Index 16
Consent Letter Covering Review by Independent
Public Accountants 17
-1-
PART I. FINANCIAL INFORMATION
--------------------------------
CONSOLIDATED BALANCE SHEETS MARCH DECEMBER
31, 31,
(In thousands) 1996 1995
- -----------------------------------------------------------------------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................... $ 44,777 $ 26,136
Accounts receivable............................... 257,831 258,335
Deferred income tax assets........................ 28,076 30,594
Other current assets.............................. 43,488 51,611
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Total current assets............................. 374,172 366,676
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PROPERTY AND EQUIPMENT:
Land, buildings and improvements.................. 18,266 18,050
Data processing equipment and furniture........... 231,621 218,699
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249,887 236,749
Less-Accumulated depreciation..................... 157,206 148,901
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92,681 87,848
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GOODWILL.......................................... 358,471 353,571
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PURCHASED DATA FILES.............................. 72,076 74,828
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OTHER............................................. 181,073 170,772
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$ 1,078,473 $ 1,053,695
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The notes on pages 7 through 9 are an integral part of these statements.
-2-
CONSOLIDATED BALANCE SHEETS MARCH DECEMBER
31, 31,
(In thousands, except par value) 1996 1995
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(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt and current maturities............ $ 31,795 $ 20,384
Accounts payable.................................. 70,316 62,194
Accrued salaries and bonuses...................... 24,050 27,919
Income taxes payable.............................. 11,751 --
Other current liabilities......................... 143,608 140,123
----------- -----------
Total current liabilities....................... 281,520 250,620
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LONG-TERM DEBT, LESS CURRENT MATURITIES........... 250,608 302,665
----------- -----------
POSTRETIREMENT BENEFIT OBLIGATION................. 80,683 80,885
----------- -----------
LONG-TERM DEFERRED REVENUE........................ 45,773 --
----------- -----------
OTHER LONG-TERM LIABILITIES....................... 62,865 66,103
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COMMITMENTS AND CONTINGENCIES (Note 5)
SHAREHOLDERS' EQUITY:
Common stock, $1.25 par value; shares
authorized - 300,000; issued - 169,426 in 1996
and 168,812 in 1995; outstanding - 146,498
in 1996 and 147,245 in 1995..................... 211,783 211,015
Preferred stock, $0.01 par value; shares authorized -
10,000; issued and outstanding - none in 1996 or
1995............................................ -- --
Paid-in capital................................... 180,153 171,020
Retained earnings................................. 294,035 269,986
Cumulative foreign currency translation
adjustment...................................... (15,495) (13,777)
Treasury stock, at cost, 16,374 shares in 1996
and 14,847 shares in 1995....................... (248,868) (218,613)
Stock held by employee benefits trusts, at cost,
6,554 shares in 1996 and 6,719 shares in 1995... (64,584) (66,209)
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Total shareholders' equity...................... 357,024 353,422
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$ 1,078,473 $ 1,053,695
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The notes on pages 7 through 9 are an integral part of these statements.
-3-
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
(In thousands, except per share amounts) 1996 1995
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Operating revenue................................. $ 423,011 $ 384,193
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Costs of services................................. 270,370 252,123
Selling, general and administrative expenses...... 86,717 78,835
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Total operating expenses......................... 357,087 330,958
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Operating income.................................. 65,924 53,235
Other income, net................................. 448 2,256
Interest expense.................................. (5,239) (4,999)
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Income before income taxes........................ 61,133 50,492
Provision for income taxes........................ 24,288 21,020
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Net income........................................ $ 36,845 $ 29,472
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Weighted average common shares outstanding........ 146,669 152,324
=========== ===========
Per common share:
Net income...................................... $ 0.25 $ 0.19
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Dividends....................................... $ 0.083 $ 0.078
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The notes on pages 7 through 9 are an integral part of these statements.
-4-
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
THREE MONTHS ENDED
(In thousands) MARCH 31, 1996
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COMMON STOCK:
Balance at beginning of period............................. $ 211,015
Shares issued under stock plans............................ 768
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Balance at end of period................................... $ 211,783
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PAID-IN CAPITAL:
Balance at beginning of period............................. $ 171,020
Shares issued under stock plans............................ 8,592
Other...................................................... 541
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Balance at end of period................................... $ 180,153
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RETAINED EARNINGS:
Balance at beginning of period............................. $ 269,986
Net income................................................. 36,845
Cash dividends paid........................................ (12,796)
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Balance at end of period................................... $ 294,035
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CUMULATIVE FOREIGN CURRENCY TRANSLATION ADJUSTMENT:
Balance at beginning of period............................. $ (13,777)
Adjustment during period................................... (1,718)
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Balance at end of period................................... $ (15,495)
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TREASURY STOCK:
Balance at beginning of period............................. $ (218,613)
Cost of shares repurchased................................. (30,255)
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Balance at end of period................................... $ (248,868)
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STOCK HELD BY EMPLOYEE BENEFITS TRUSTS:
Balance at beginning of period............................. $ (66,209)
Cost of shares reissued under stock plans.................. 1,625
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Balance at end of period................................... $ (64,584)
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The notes on pages 7 through 9 are an integral part of this statement.
-5-
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) THREE MONTHS ENDED
MARCH 31,
(In thousands) 1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...................................... $ 36,845 $ 29,472
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization................. 19,118 18,885
Changes in assets and liabilities:
Accounts receivable, net.................... 1,186 7,722
Current liabilities, excluding debt......... 18,551 (19,888)
Other current assets........................ 8,224 (4,226)
Deferred income taxes....................... (2,205) (812)
Other long-term liabilities, excluding debt. 45,711 (1,922)
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Net cash provided by operating activities....... 127,430 29,231
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment............. (9,698) (7,829)
Additions to other assets, net.................. (8,630) (13,547)
Acquisitions, net of cash acquired.............. (14,975) (5,883)
Deferred payments on prior year acquisitions.... 0 (8,743)
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Net cash used by investing activities (33,303) (36,002)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net short-term borrowings....................... 4,813 30,243
Payments on long-term debt...................... (45,395) (913)
Dividends paid.................................. (12,796) (12,334)
Treasury stock purchases........................ (30,255) --
Proceeds from exercise of stock options......... 7,551 5,789
Other........................................... 541 521
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Net cash provided (used) by financing activities (75,541) 23,306
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Effect of foreign currency exchange rates on cash. 55 244
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Net cash provided................................. 18,641 16,779
Cash at beginning of period....................... 26,136 18,641
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Cash at end of period............................. $ 44,777 $ 35,420
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The notes on pages 7 through 9 are an integral part of these statements.
-6-
EQUIFAX INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1996
1. BASIS OF PRESENTATION:
The financial statements included herein have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange Commission.
This information reflects all adjustments which are, in the opinion of
management, necessary for a fair statement of the financial position of the
Company as of March 31, 1996 and the results of operation and cash flows for the
three months ended March 31, 1996 and 1995. All adjustments made have been of a
normal recurring nature. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The Company believes that
disclosures are adequate to make the information presented not misleading. It is
suggested that these financial statements be read in conjunction with the
financial statements and the notes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1995.
2. NATURE OF OPERATIONS:
The Company principally provides information services to businesses that help
them grant credit, authorize and process credit card and check transactions,
insure lives and property, and manage and control healthcare costs. The
principal lines of business are credit services, payment services, insurance
services, and healthcare information services. The principal markets for credit
and payment services are retailers, banks and financial institutions, while
those for insurance services are life and health and property and casualty
insurance companies. The principal markets for healthcare information services
are healthcare providers, payers, and managed care organizations. The Company's
operations are predominately located within the United States.
3. USE OF ESTIMATES:
The preparation of financial statements in conformity with generally accepted
accounting principles requires 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.
4. SHAREHOLDERS EQUITY:
COMMON AND PREFERRED STOCK. In May 1996, the Company's shareholders approved a
Board of Directors resolution which increased the authorized Common Stock of the
Company from 250 million to 300 million shares. The shareholders also approved
another Board of Directors resolution to authorize 10 million shares of blank
check preferred stock.
TREASURY STOCK. During the first quarter of 1996, the Company repurchased
approximately 1,527,000 of its common shares through open market transactions at
an aggregate cost of $30,255,000.
STOCK HELD BY EMPLOYEE BENEFITS TRUSTS. Also during the first quarter, the
Company reissued approximately 165,000 shares of stock held by an employee
benefits trust, with the shares used for stock option exercises and performance
share plan awards.
7
5. AGREEMENT WITH COMPUTER SCIENCES CORPORATION:
The Company has an agreement with Computer Sciences Corporation (CSC) under
which CSC-owned credit bureaus and certain CSC affiliate bureaus utilize the
Company's credit database service. CSC and these affiliates retain ownership of
their respective credit files and the revenues generated by their credit
reporting activity. The Company receives a processing fee for maintaining the
database and for each report supplied. The agreement expires in 1998, is
renewable at the option of CSC for successive ten-year periods, and provides CSC
with an option to sell its collection and credit reporting businesses to the
Company. The option is currently exercisable and expires in 2013. In the event
CSC does not exercise its option to sell and does not renew the agreement, or if
there is a change in control of CSC, the Company has the option to purchase
CSC's collection and credit reporting businesses. The option price is
determined, for all purposes, in accordance with the following schedule: on or
before July 31,1998, at the price determined by certain financial formulas
(currently estimated at approximately $400 million); and after July 31, 1998, at
appraised value.
6. LOTTERY CONTRACT DISPUTE, LITIGATION, AND SETTLEMENT:
High Integrity Systems, Inc. (HISI), a Company subsidiary, entered into a
contract in July 1992 to provide lottery services to the state of California,
whereby HISI agreed to provide a system to automate the processing of instant
lottery tickets and a system to sell on-line game tickets through 10,000 low-
volume terminals.
On April 26, 1993, the California State Lottery (CSL) filed suit against HISI in
Superior Court, Sacramento County, California, with said complaint amended May
7, 1993 naming Equifax Inc., et al. and Federal Insurance Company as additional
defendants. The CSL sought unspecified damages for alleged breach of contract
and injunctive relief. On May 7, 1993, HISI filed a cross-complaint against the
CSL seeking compensatory and general damages in an amount not less than $65
million and special and consequential damages in an amount not less than $100
million alleging breach of contract and seeking recovery of the reasonable value
of the labor and materials expended on behalf of the CSL based on the theory of
quantum meruit and unjust enrichment.
In September 1993, the Company recorded a provision of $48,438,000 ($30,939,000
after tax, or $.21 per share) related to the lottery contract to write down data
processing equipment and other assets to their estimated net realizable value
and to accrue for estimated costs related to litigation with the CSL.
On July 14, 1995, the CSL and HISI jointly announced a renewed business
agreement which allowed the litigation between the parties to be settled pending
execution of the terms of the contract. On November 9, 1995, the CSL and HISI
finalized the terms of the reinstated contract. The final settlement was
approved by the trial court on December 19, 1995, and provides that the CSL and
HISI shall file dismissals with prejudice of their respective claims no later
than 365 days following the trial court's approval.
The settlement provides for a reinstated contract whereby HISI will install its
system to automate the processing of instant lottery tickets, with the CSL
purchasing 6,700 terminals, related security hardware and licensing various
software applications developed to support the system from HISI for $25,000,000.
In the fourth quarter of 1995, the Company recorded a credit of $19,665,000
($11,996,000 after tax, or $.08 per share) to reflect the financial impact of
this settlement net of related legal expenses and additional costs to be
incurred by the Company to complete the system software and install the
terminals. Under the reinstated contract, HISI will initially install a minimum
of 6,000 terminals with HISI retaining an option to install up to 4,000
additional terminal locations, with CSL approval. HISI is also guaranteed to
receive 66 months of revenue for each of the 6,000 terminals at the rate of 5%
on each dollar of lottery ticket sales occurring from each terminal. If HISI
completes the system and acceptance testing within specified dates, an incentive
payment of up to $4,000,000 may be earned. HISI and the CSL have established an
oversight committee and engaged an independent technical advisor who will
consult in the design and implementation of acceptance testing and start-up
activities.
8
On February 6, 1996, HISI and GTECH Corporation (GTECH) entered into an
agreement whereby HISI subcontracted many of its obligations under the
reinstated contract to GTECH. This subcontract provides for a one-time payment
of $58,000,000 by GTECH to HISI, and also provides that future payments received
by HISI from the CSL for lottery ticket sales and incentives earned be paid to
GTECH. The Company received the $58,000,000 from GTECH and recognized $5,000,000
in revenue related to the subcontract in the first quarter, 1996. The current
portion of the remaining $53,000,000 balance is included in other current
liabilities, and the non-current portion is recorded as long-term deferred
revenue. The $53,000,000 balance will be recognized as revenue over the term of
the reinstated CSL contract, net of related expenses.
7. ACQUISITIONS:
During the first quarter, the Company acquired substantially all the assets and
business operations of a company which will operate in the Credit Services
segment. The acquisition was accounted for as a purchase, and had an aggregate
purchase price of $15.0 million, with approximately $9.5 million allocated to
goodwill and $6.7 million to other assets (primarily software). Their results of
operation have been included in the consolidated statement of income from the
date of acquisition and were not material to the results of operation of the
Company.
8. RESTRUCTURING:
In the fourth quarter of 1995, the Company initiated a restructuring program
designed to streamline operations by reducing staffing levels and consolidating
facilities. Staffing levels were reduced by approximately 750 employees
primarily in the Insurance Services, General Information Services, and Credit
Services Segments. The total cost of this program was $19,572,000 ($11,939,000
net of tax, or $.08 per share). Components of the restructuring provision and
utilization through March 31, 1996 are as follows:
Severance and
Termination Asset Lease
(In Thousands) Benefits Write-Offs Costs Total
- ------------- --------- ----------- ------- --------
Original provision $13,813 $ $ 2,994 2,765 $19,572
Utilized in 1995 (2,521) (2,994) (915) (6,430)
------- ----------- ----- -------
Balance, December 31, 1995 11,292 -- 1,850 13,142
Utilized in 1996 (4,224) -- (467) (4,691)
------- ----------- ----- -------
Balance, March 31, 1996 $ 7,068 $$ -- 1,383 $ 8,451
======= =========== ===== =======
The reserve balance at March 31, 1996 is included in other current liabilities
in the accompanying balance sheets.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Results of Operations - (first quarter of 1996 compared to the first
quarter of 1995)
First quarter revenue increased 10% over 1995. Acquisitions contributed
about two percentage points to revenue growth, while 1995 divestitures
decreased revenue growth by about four percentage points. Operating income
increased 24% over the prior year. This increase is primarily the result of
revenue growth in higher margin business units, improvement in the International
Operations segment, and the recognition of revenue from a lottery subcontract
(Note 6).
Net income for the quarter increased 25%, from $29.5 million to $36.8
million. Net income per share was $0.25 in 1996, an increase of 32% over the
prior year.
In the fourth quarter of 1995, the Company changed its segment reporting
structure by moving its Equifax National Decision Systems business unit from the
General Information Services segment to the Credit Services segment. First
quarter, 1995 information has been restated to conform with the new
presentation. Operating revenue and operating income by industry segment for the
first quarter of 1996 and 1995 are as follows (in thousands):
Operating Revenue: 1996 1995
- ----------------- ----- ----
Credit Services $138,690 $119,320
Payment Services 71,598 60,878
Insurance Services 135,755 127,099
International Operations 54,646 48,932
General Information Services 22,322 27,964
-------- --------
$423,011 $384,193
======== ========
Operating Income (Loss): 1996 1995
- ----------------------- ---- ----
Credit Services $ 47,539 $ 40,615
Payment Services 11,815 11,003
Insurance Services 9,858 9,558
International Operations 4,012 2,280
General Information Services 3,209 (1,481)
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Operating Contribution 76,433 61,975
General Corporate Expense (10,509) (8,740)
-------- --------
$ 65,924 $ 53,235
======== ========
The following discussion analyzes operating results by industry
segment, general corporate expense, and consolidated other income
and effective income tax rates.
Credit Services
- ---------------
Revenue in Credit Services, which includes Credit Reporting Services, Mortgage
Information Services, Risk Management Services, and Equifax National Decision
Systems, increased 16% in the first quarter, with two percentage points
attributable to acquisitions. Credit Reporting Services, excluding acquisitions,
was up 11% in the quarter driven by increased prescreening business for credit
card issuers and volume growth in the automotive, mortgage, banking and
utilities industries. Average prices continue to decline, but at a lower rate
than in prior quarters. However, this decline was more than offset by continued
volume growth. Revenue in Mortgage
10
Information Services, exclusive of a 1995 acquisition, increased 27% in the
quarter due to increased refinancing activity. Risk Management Services
increased 28%, due to new business from customers outsourcing the accounts
receivable management function of their businesses.
Operating income in the first quarter increased 17% from the prior year
due primarily to the revenue growth within Credit Reporting Services and
Risk Management Services.
Payment Services
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Revenue in Payment Services, which includes Check Services, Card Services, and
FBS Software, increased 18% over the prior year. Check Services revenue
increased 4%, with a 2% decline in check guarantee revenue offset by increases
in other Check Services products. Card Services revenue increased 23%, with
growth driven by increases in processing of both cardholder and merchant
transactions. FBS Software revenue improved $2.8 million due primarily to
several large consulting projects which began in the fourth quarter of 1995 and
the first quarter of 1996.
Operating income increased 7% in the quarter, with a 24% increase in Card
Services tempered by a $1.0 million decline in Check Services. Growth in Card
Services was attributable to the revenue improvement, while the decline in Check
Services operating income resulted primarily from higher selling and customer
service and support expenses.
Insurance Services
- ------------------
First quarter revenue increased 7%, with about four percentage points
attributable to motor vehicle registry (the fee charged by states for
their records, which the Company passes on to its customers). The balance of
the increase was due to improvements in Data Services (up 11%), Osborn
Laboratories (up 27%) and CUE U.K. (up 109%), but was tempered somewhat
by a 5% decline in Field Services revenue, due primarily to a shift by
customers toward lower priced products and adverse weather conditions. The
revenue increases in Data Services and Osborn Laboratories resulted primarily
from volume increases, while the CUE U.K. increase resulted from the late
1995 roll-out of the CUE Motor product and increased usage of the CUE Home
product.
Operating income improved 3% in the first quarter, with gains in Data
Services and CUE U.K. partially offset by a decline in Field Services.
International Operations
- ------------------------
International Operations revenue, adjusted for noncomparables (acquisitions and
the second quarter 1995 sale of the Canadian field services insurance products
business), increased 5% in the first quarter. In local currencies, excluding
noncomparables, revenue increased 2% in Canada and 9% in Europe, with modest
gains in most product lines.
Operating profit increased $1.7 million, or 76% in the first quarter, with
Canada up $.4 million, Europe improving by $1.0 million, and South American
joint ventures up $.4 million. Within Europe, leverage resulting from the
integration of the 1994 Infolink acquisition was partially offset by higher
costs associated with the 1995 Infocheck acquisition, which is currently being
integrated into the European Operations.
General Information Services
- ----------------------------
After adjusting to exclude the effects of the third quarter 1995 sales
of Elrick & Lavidge and Quick Test, revenue increased $6.4 million. This
increase was due to HISI's recognition of $5.0 million from its lottery
subcontract with GTECH (Note 6), and a $1.4 million (9%) increase in Healthcare
revenues.
11
This segment's operating income improved $4.7 million, primarily due to the
$5.0 million HISI revenue. The Elrick & Lavidge and Quick Test divestitures
negatively impacted the increase by $.7 million, but was partially offset by a
$.5 million improvement in Healthcare operations.
General Corporate Expense
- -------------------------
General corporate expense increased $1.8 million from the prior year due
primarily to higher incentive accruals and expenses for projects related to
system enhancements.
Other Income and Effective Income Tax Rates
- -------------------------------------------
The decrease in other income was due primarily to lower levels of interest
income and a nonrecurring item recorded in the first quarter of 1996.
The effective income tax rate declined to 39.7% from 41.6% in 1995, due in large
part to a change in the mix of foreign income between tax jurisdictions with
different effective tax rates.
FINANCIAL CONDITION
The Company's financial condition remained strong during the first quarter of
1996. Net cash provided by operations increased from $29.2 million to $127.4
million primarily due to the receipt of $58,000,000 related to the lottery
subcontract (Note 6), reduced disbursements for income taxes due to the timing
of payments between quarters, and a reduction in disbursements for salaries and
bonuses and other current liabilities between years. Normal capital expenditures
and dividend payments were met with these internally generated funds.
Other significant outlays in the first quarter included $30.3 million of
treasury stock purchases (Note 4), $15.0 million for an acquisition (Note 7),
and $45.4 million in debt repayments. These items were principally financed by
excess cash from operations.
Capital expenditures for the remainder of 1996 are currently projected to be
approximately $73 million, exclusive of acquisitions. Additional expenditures
are possible as opportunities arise. As of March 31, 1996, approximately $127
million remains authorized under the Company's share repurchase program, and
purchases have continued in the second quarter.
The remaining 1996 capital expenditures should be met with internally generated
funds. At March 31, 1996, $545 million was available under the Company's $550
million revolving credit facility to fund future capital requirements, including
the possible purchase of the CSC collections and credit reporting businesses
(Note 5). Management feels that the Company's liquidity will remain strong in
both the short-term and long-term, and that the Company has sufficient debt
capacity to finance all of these requirements, if necessary.
Limited Review By
Independent Public Accountants
Arthur Andersen LLP, independent public accountants, has performed a limited
review of the interim financial information contained herein in accordance with
established professional standards and procedures for such a review. Attached
hereto is a review report from Arthur Andersen LLP covering its limited review
of the interim financial information contained herein.
12
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Equifax Inc.:
We have reviewed the accompanying interim consolidated balance sheet of EQUIFAX
INC. (a Georgia corporation) AND SUBSIDIARIES as of March 31, 1996 and the
related interim consolidated statements of income for the three-month periods
ended March 31, 1996 and 1995, shareholders' equity for the three-month period
ended March 31, 1996, and cash flows for the three-month periods ended March 31,
1996 and 1995. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the accompanying consolidated balance sheet of Equifax Inc. and
subsidiaries as of December 31, 1995, and in our report dated February 16, 1996,
we expressed an unqualified opinion on that statement.
/s/ Arthur Andersen LLP
Atlanta, Georgia
May 13, 1996
- 13 -
PART II. OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
- ------- -----------------
On April 26, 1993, the California State Lottery filed suit against High
Integrity Systems, Inc., a Company subsidiary, in the Superior Court of the
State of California, Sacramento County.
Reference is made to information reported in Note 6 of the Notes to Consolidated
Financial Statements, included in Part I of this report.
Item 5. Other Information
- ------- -----------------
Reference is made to information reported in Notes 1, 2, 3, 4, 7 and 8 of the
Notes to Consolidated Financial Statements, included in Part I of this report.
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits
15 Letter from Arthur Andersen LLP, dated May 13, 1996.
(b) Reports on Form 8-K
Registrant did not file any reports on Form 8-K during the quarter for
which this report is filed.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EQUIFAX INC.
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(Registrant)
Date: May 14, 1996 /s/ D. W. McGlaughlin
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D. W. McGlaughlin, President
and Chief Executive Officer
Date: May 14, 1996 /s/ P. J. Mazzilli
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P. J. Mazzilli
Corporate Vice President
and Controller
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EXHIBIT INDEX
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Exhibit Description of Exhibit
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15 Arthur Andersen LLP
Letter dated May 13, 1996
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