UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One)
☒(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 20172020
 
OR
☐

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                                      to                                      .
 
Commission File Number: 001-06605
 

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

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

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


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

On October 31, 2017,9, 2020, there were 120,079,376121,642,955 shares of the registrant’s common stock outstanding.



EQUIFAX INC.
 
QUARTERLY REPORT ON FORM 10-Q
 
QUARTER ENDED SeptemberSEPTEMBER 30, 20172020
 
INDEX
 
Page
4
4
4
5
46
6
Consolidated Balance Sheets—September 30, 20172020 and December 31, 20162019
7
8
9
910
1012
2325
4043
4043
4144
4144
4246
4346
4548
4649
Index to Exhibits
47
 

2





FORWARD-LOOKING STATEMENTS
 
This report contains information that may constitute “forward-looking statements.” Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “may” and similar expressions identify forward-looking statements, which generally are not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future, including statements relating to future operating results, and statements related to the 2017 cybersecurity incident, reportedimprovements in our information technology and data security infrastructure, including as part of our EFX 2020 cloud technology, data and security transformation, our strategy, our ability to mitigate or manage disruptions posed by COVID-19, the third quarterimpact of 2017,COVID-19 and changes in U.S. and worldwide economic conditions that materially impact consumer spending, consumer debt and employment and the demand for Equifax's products and services, our culture, our ability to innovate, the market acceptance of new products and services and similar statements about our business plans are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from ourthe Company’s historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part II, “Item 1A. Risk Factors,” and elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2016, and those described from time to time in our future2019, as well as subsequent reports filed with the Securities and Exchange Commission. As a result of such risks and uncertainties, we urge you not to place undue reliance on any such forward-looking statements. Forward-looking statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

3




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

CONSOLIDATED STATEMENTS OF INCOME
 
(Unaudited)


Three Months Ended 
September 30,
 20202019
(In millions, except per share amounts)
Operating revenue$1,068.3 $875.7 
Operating expenses:  
Cost of services (exclusive of depreciation and amortization below)433.2 374.5 
Selling, general and administrative expenses330.0 295.5 
Depreciation and amortization100.7 84.1 
Total operating expenses863.9 754.1 
Operating income204.4 121.6 
Interest expense(37.4)(28.0)
Other income, net133.4 2.9 
Consolidated income before income taxes300.4 96.5 
Provision for income taxes(75.4)(14.0)
Consolidated net income225.0 82.5 
Less: Net income attributable to noncontrolling interests including redeemable noncontrolling interests(0.8)(1.4)
Net income attributable to Equifax$224.2 $81.1 
Basic earnings per common share:  
Net income attributable to Equifax$1.84 $0.67 
Weighted-average shares used in computing basic earnings per share121.5 121.0 
Diluted earnings per common share:  
Net income attributable to Equifax$1.82 $0.66 
Weighted-average shares used in computing diluted earnings per share123.0 122.3 
Dividends per common share$0.39 $0.39 
  Three Months Ended
September 30,
  2017 2016
(In millions, except per share amounts)  
Operating revenue $834.8
 $804.1
Operating expenses:  
  
Cost of services (exclusive of depreciation and amortization below) 297.3
 288.0
Selling, general and administrative expenses 312.2
 233.4
Depreciation and amortization 72.4
 70.6
Total operating expenses 681.9
 592.0
Operating income 152.9
 212.1
Interest expense (21.4) (24.3)
Other income, net 4.5
 2.4
Consolidated income before income taxes 136.0
 190.2
Provision for income taxes (35.5) (55.3)
Consolidated net income 100.5
 134.9
Less: Net income attributable to noncontrolling interests including redeemable noncontrolling interests (4.2) (2.1)
Net income attributable to Equifax $96.3
 $132.8
Basic earnings per common share:  
  
Net income attributable to Equifax $0.80
 $1.11
Weighted-average shares used in computing basic earnings per share 120.1
 119.5
Diluted earnings per common share:  
  
Net income attributable to Equifax $0.79
 $1.09
Weighted-average shares used in computing diluted earnings per share 121.4
 121.3
Dividends per common share $0.39
 $0.33




See Notes to Consolidated Financial Statements.

4














EQUIFAX INC.





CONSOLIDATED STATEMENTS OF INCOME (LOSS)
 
(Unaudited)



    
 Nine Months Ended 
 September 30,		Nine Months Ended September 30,
 2017 201620202019
(In millions, except per share amounts)  (In millions, except per share amounts)
Operating revenue $2,523.8
 $2,343.8
Operating revenue$3,009.1 $2,601.8 
Operating expenses:    Operating expenses:
Cost of services (exclusive of depreciation and amortization below) 891.9
 827.1
Cost of services (exclusive of depreciation and amortization below)1,256.5 1,138.9 
Selling, general and administrative expenses 783.9
 708.2
Selling, general and administrative expenses955.9 1,601.2 
Depreciation and amortization 214.2
 194.5
Depreciation and amortization289.5 244.2 
Total operating expenses 1,890.0
 1,729.8
Total operating expenses2,501.9 2,984.3 
Operating income 633.8
 614.0
Operating income (loss)Operating income (loss)507.2 (382.5)
Interest expense (70.1) (68.0)Interest expense(104.7)(82.3)
Other income (expense), net 10.6
 (0.4)
Consolidated income before income taxes 574.3
 545.6
Provision for income taxes (150.8) (175.3)
Consolidated net income 423.5
 370.3
Other income, netOther income, net171.1 7.9 
Consolidated income (loss) before income taxesConsolidated income (loss) before income taxes573.6 (456.9)
(Provision) benefit for income taxes(Provision) benefit for income taxes(138.0)53.3 
Consolidated net income (loss)Consolidated net income (loss)435.6 (403.6)
Less: Net income attributable to noncontrolling interests including redeemable noncontrolling interests (8.5) (4.5)Less: Net income attributable to noncontrolling interests including redeemable noncontrolling interests(2.9)(4.4)
Net income attributable to Equifax $415.0
 $365.8
Net income (loss) attributable to EquifaxNet income (loss) attributable to Equifax$432.7 $(408.0)
Basic earnings per common share:    Basic earnings per common share:
Net income attributable to Equifax $3.45
 $3.07
Net income (loss) attributable to EquifaxNet income (loss) attributable to Equifax$3.56 $(3.38)
Weighted-average shares used in computing basic earnings per share 120.1
 119.2
Weighted-average shares used in computing basic earnings per share121.4 120.8 
Diluted earnings per common share:    Diluted earnings per common share:
Net income attributable to Equifax $3.41
 $3.02
Net income (loss) attributable to EquifaxNet income (loss) attributable to Equifax$3.53 $(3.35)
Weighted-average shares used in computing diluted earnings per share 121.6
 121.1
Weighted-average shares used in computing diluted earnings per share122.7 122.0 
Dividends per common share $1.17
 $0.99
Dividends per common share$1.17 $1.17 




See Notes to Consolidated Financial Statements.

5




EQUIFAX INC.



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
(Unaudited)
 
 Three Months Ended September 30,
20202019
Equifax
Shareholders		Noncontrolling
Interests		TotalEquifax
Shareholders		Noncontrolling
Interests		Total
 (In millions)
Net income$224.2 $0.8 $225.0 $81.1 $1.4 $82.5 
Other comprehensive income (loss):      
Foreign currency translation adjustment49.4 0.2 49.6 (80.5)(1.4)(81.9)
Change in unrecognized prior service cost and actuarial losses related to our pension and other postretirement benefit plans, net3.8 0 3.8 3.0 0 3.0 
Comprehensive income$277.4 $1.0 $278.4 $3.6 $0 $3.6 
  Three Months Ended September 30,
  2017 2016
  
Equifax
Shareholders
 
Noncontrolling
Interests
 Total 
Equifax
Shareholders
 
Noncontrolling
Interests
 Total
  (In millions)
Net income $96.3
 $4.2
 $100.5
 $132.8
 $2.1
 $134.9
Other comprehensive income (loss):  
  
  
  
  
  
Foreign currency translation adjustment 91.1
 1.2
 92.3
 82.2
 —
 82.2
Change in unrecognized prior service cost and actuarial losses related to our pension and other postretirement benefit plans, net 2.6
 —
 2.6
 2.3
 —
 2.3
Change in cumulative loss from cash flow hedging transactions, net —
 —
 —
 —
 —
 —
Comprehensive income $190.0
 $5.4
 $195.4
 $217.3
 $2.1
 $219.4





Nine Months Ended September 30,
20202019
Equifax
Shareholders		Noncontrolling
Interests		TotalEquifax
Shareholders		Noncontrolling
Interests		Total
(In millions)
Net income (loss)$432.7 $2.9 $435.6 $(408.0)$4.4 $(403.6)
Other comprehensive income (loss):
Foreign currency translation adjustment(8.2)(1.5)(9.7)(100.3)(1.5)(101.8)
Change in unrecognized prior service cost and actuarial losses related to our pension and other postretirement benefit plans, net11.3 0 11.3 9.0 0 9.0 
Change in cumulative loss from cash flow hedging transactions, net0 0 0 0.1 0 0.1 
Comprehensive income (loss)$435.8 $1.4 $437.2 $(499.2)$2.9 $(496.3)
  Nine Months Ended September 30,
  2017 2016
  
Equifax
Shareholders
 
Noncontrolling
Interests
 Total 
Equifax
Shareholders
 
Noncontrolling
Interests
 Total
  (In millions)
Net income $415.0
 $8.5
 $423.5
 $365.8
 $4.5
 $370.3
Other comprehensive income (loss):  
  
  
  
  
  
Foreign currency translation adjustment 209.7
 3.4
 213.1
 114.1
 (1.3) 112.8
Change in unrecognized prior service cost and actuarial losses related to our pension and other postretirement benefit plans, net 7.6
 —
 7.6
 6.8
 —
 6.8
Change in cumulative loss from cash flow hedging transactions, net (0.2) —
 (0.2) 0.6
 —
 0.6
Comprehensive income $632.1
 $11.9
 $644.0
 $487.3
 $3.2
 $490.5





See Notes to Consolidated Financial Statements.
6

EQUIFAX INC.



CONSOLIDATED BALANCE SHEETS

(Unaudited)
September 30, 2020December 31, 2019
(In millions, except par values) 
ASSETS  
Current assets:  
Cash and cash equivalents$1,535.6 $401.3 
Trade accounts receivable, net of allowance for doubtful accounts of $15.8 and $11.2 at September 30, 2020 and December 31, 2019, respectively605.9 532.1��
Prepaid expenses123.3 88.1 
Other current assets46.8 187.9 
Total current assets2,311.6 1,209.4 
Property and equipment:  
Capitalized internal-use software and system costs1,254.3 979.4 
Data processing equipment and furniture329.5 325.1 
Land, buildings and improvements235.9 236.3 
Total property and equipment1,819.7 1,540.8 
Less accumulated depreciation and amortization(749.1)(593.2)
Total property and equipment, net1,070.6 947.6 
Goodwill4,366.0 4,308.3 
Indefinite-lived intangible assets94.8 94.9 
Purchased intangible assets, net1,001.4 1,044.6 
Other assets, net405.4 304.2 
Total assets$9,249.8 $7,909.0 
LIABILITIES AND EQUITY 
Current liabilities:  
Short-term debt and current maturities of long-term debt$1,102.1 $3.1 
Accounts payable159.5 148.3 
Accrued expenses186.4 163.5 
Accrued salaries and bonuses207.1 156.1 
Deferred revenue103.5 104.0 
Other current liabilities632.4 784.1 
Total current liabilities2,391.0 1,359.1 
Long-term debt3,275.3 3,379.5 
Deferred income tax liabilities, net339.9 248.0 
Long-term pension and other postretirement benefit liabilities106.1 118.9 
Other long-term liabilities170.7 180.6 
Total liabilities6,283.0 5,286.1 
Commitments and Contingencies (see Note 5)
Equifax shareholders' equity: 
Preferred stock, $0.01 par value: Authorized shares - 10.0; Issued shares - NaN0 0 
Common stock, $1.25 par value: Authorized shares - 300.0;
Issued shares - 189.3 at September 30, 2020 and December 31, 2019;
Outstanding shares - 121.6 and 121.2 at September 30, 2020 and December 31, 2019, respectively
236.6 236.6 
Paid-in capital1,454.1 1,405.1 
Retained earnings4,423.1 4,131.8 
Accumulated other comprehensive loss(628.5)(631.6)
Treasury stock, at cost, 67.1 shares and 67.5 shares at September 30, 2020 and December 31, 2019, respectively(2,550.4)(2,557.4)
Stock held by employee benefit trusts, at cost, 0.6 shares at September 30, 2020 and December 31, 2019(5.9)(5.9)
Total Equifax shareholders’ equity2,929.0 2,578.6 
Noncontrolling interests including redeemable noncontrolling interests37.8 44.3 
Total equity2,966.8 2,622.9 
Total liabilities and equity$9,249.8 $7,909.0 
  September 30, 2017 December 31, 2016
(In millions, except par values)    
ASSETS  
  
Current assets:  
  
Cash and cash equivalents $315.4
 $129.3
Trade accounts receivable, net of allowance for doubtful accounts of $10.2 and $7.8 at September 30, 2017 and December 31, 2016, respectively 458.3
 433.3
Prepaid expenses 76.9
 60.2
Other current assets 48.7
 50.1
Total current assets 899.3
 672.9
Property and equipment:  
  
Capitalized internal-use software and system costs 388.0
 307.0
Data processing equipment and furniture 294.3
 273.2
Land, buildings and improvements 214.5
 203.8
Total property and equipment 896.8
 784.0
Less accumulated depreciation and amortization (368.1) (317.1)
Total property and equipment, net 528.7
 466.9
Goodwill 4,178.4
 3,974.3
Indefinite-lived intangible assets 95.0
 94.8
Purchased intangible assets, net 1,276.8
 1,323.8
Other assets, net 137.5
 131.3
Total assets $7,115.7
 $6,664.0
LIABILITIES AND EQUITY  
  
Current liabilities:  
  
Short-term debt and current maturities of long-term debt $667.8
 $585.4
Accounts payable 82.5
 81.0
Accrued expenses 135.7
 149.3
Accrued salaries and bonuses 92.9
 158.8
Deferred revenue 117.4
 110.7
Other current liabilities 240.0
 174.4
Total current liabilities 1,336.3
 1,259.6
Long-term debt 2,038.7
 2,086.8
Deferred income tax liabilities, net 303.5
 325.4
Long-term pension and other postretirement benefit liabilities 175.6
 184.4
Other long-term liabilities 95.9
 86.5
Total liabilities 3,950.0
 3,942.7
Commitments and Contingencies (see Note 5) 

 

Equifax shareholders' equity:  
  
Preferred stock, $0.01 par value: Authorized shares - 10.0; Issued shares - none —
 —
Common stock, $1.25 par value: Authorized shares - 300.0;
Issued shares - 189.3 at September 30, 2017 and December 31, 2016;
Outstanding shares - 120.0 and 119.9 at September 30, 2017 and December 31, 2016, respectively		 236.6
 236.6
Paid-in capital 1,335.0
 1,313.3
Retained earnings 4,424.7
 4,153.2
Accumulated other comprehensive loss (311.8) (528.9)
Treasury stock, at cost, 68.7 shares and 68.8 shares at September 30, 2017 and December 31, 2016, respectively (2,578.2) (2,505.6)
Stock held by employee benefit trusts, at cost, 0.6 shares at September 30, 2017 and December 31, 2016 (5.9) (5.9)
Total Equifax shareholders' equity 3,100.4
 2,662.7
Noncontrolling interests including redeemable noncontrolling interests 65.3
 58.6
Total equity 3,165.7
 2,721.3
Total liabilities and equity $7,115.7
 $6,664.0


 See Notes to Consolidated Financial Statements.
7
EQUIFAX INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(Unaudited)


 Nine Months Ended September 30,Nine Months Ended September 30,
 2017 2016 20202019
 (In millions)(In millions)
Operating activities:  
  
Operating activities:  
Consolidated net income $423.5
 $370.3
Adjustments to reconcile consolidated net income to net cash provided by operating activities:  
  
Consolidated net income (loss)Consolidated net income (loss)$435.6 $(403.6)
Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities:Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities:  
Depreciation and amortization 216.7
 195.4
Depreciation and amortization295.2 248.8 
Stock-based compensation expense 34.6
 30.2
Stock-based compensation expense43.9 40.6 
Excess tax benefits from stock-based compensation plans —
 (29.6)
Deferred income taxes (40.6) (10.4)Deferred income taxes78.0 (81.7)
Gain on fair market value adjustment of equity investmentsGain on fair market value adjustment of equity investments(162.8)0 
Changes in assets and liabilities, excluding effects of acquisitions:    
Changes in assets and liabilities, excluding effects of acquisitions: 
Accounts receivable, net (14.9) (54.5)Accounts receivable, net(76.1)(49.9)
Other assets, current and long-term (24.4) (0.9)Other assets, current and long-term29.6 32.6 
Current and long term liabilities, excluding debt 13.8
 43.7
Current and long term liabilities, excluding debt5.6 296.3 
Cash provided by operating activities 608.7
 544.2
Cash provided by operating activities649.0 83.1 
Investing activities:    
Investing activities: 
Capital expenditures (157.5) (131.0)Capital expenditures(309.5)(305.7)
Acquisitions, net of cash acquired (77.3) (1,792.4)Acquisitions, net of cash acquired(61.4)(234.8)
Economic hedges —
 (10.8)
Cash received from sale of asset 8.6
 —
Investment in unconsolidated affiliates, netInvestment in unconsolidated affiliates, net(10.0)(25.0)
Cash used in investing activities (226.2) (1,934.2)Cash used in investing activities(380.9)(565.5)
Financing activities:    
Financing activities: 
Net short-term borrowings 354.9
 194.2
Net short-term borrowings0.3 367.0 
Payments on long-term debt (322.5) (300.0)Payments on long-term debt(125.0)(50.0)
Borrowings on long-term debt —
 1,574.7
Borrowings on long-term debt1,123.3 250.0 
Treasury stock purchases (77.1) —
Dividends paid to Equifax shareholders (140.7) (118.1)Dividends paid to Equifax shareholders(142.1)(141.4)
Dividends paid to noncontrolling interests (8.2) (5.8)Dividends paid to noncontrolling interests(2.6)(4.8)
Proceeds from exercise of stock options 18.8
 26.8
Proceeds from exercise of stock options and employee stock purchase planProceeds from exercise of stock options and employee stock purchase plan29.9 15.3 
Payment of taxes related to settlement of equity awards (28.0) (19.7)Payment of taxes related to settlement of equity awards0 (9.7)
Excess tax benefits from stock-based compensation plans —
 29.6
Purchase of redeemable noncontrolling interests —
 (3.6)Purchase of redeemable noncontrolling interests(9.0)0 
Debt issuance costsDebt issuance costs(9.8)0 
Other —
 (5.4)Other0.3 0 
Cash (used in) provided by financing activities (202.8) 1,372.7
Cash provided by financing activitiesCash provided by financing activities865.3 426.4 
Effect of foreign currency exchange rates on cash and cash equivalents 6.4
 35.5
Effect of foreign currency exchange rates on cash and cash equivalents0.9 (0.1)
Increase in cash and cash equivalents 186.1
 18.2
Increase (decrease) in cash and cash equivalentsIncrease (decrease) in cash and cash equivalents1,134.3 (56.1)
Cash and cash equivalents, beginning of period 129.3
 93.3
Cash and cash equivalents, beginning of period401.3 223.6 
Cash and cash equivalents, end of period $315.4
 $111.5
Cash and cash equivalents, end of period$1,535.6 $167.5 
 
See Notes to Consolidated Financial Statements.
8


EQUIFAX INC.

CONSOLIDATED STATEMENTSTATEMENTS OF CHANGES IN EQUITY AND OTHER COMPREHENSIVE INCOMELOSS
 
(Unaudited)

For the NineThree Months Ended September 30, 20172020
 
(Unaudited)
 Equifax Shareholders  
Accumulated Other Comprehensive LossStock
Held By Employee Benefits Trusts
 Common Stock     
Shares
Outstanding		AmountPaid-In
Capital		Retained
Earnings		Treasury
Stock		Noncontrolling
Interests		Total
Equity
 (In millions, except per share amounts)
Balance, June 30, 2020121.5 $236.6 $1,447.8 $4,248.0 $(681.7)$(2,550.7)$(5.9)$40.2 $2,734.3 
Net income— — — 224.2 — — — 0.8 225.0 
Other comprehensive income— — — — 53.2 — — 0.2 53.4 
Shares issued under stock and benefit plans, net of minimum tax withholdings0.1 — (1.0)— — 0.3 — — (0.7)
Cash dividends ($0.39 per share)— — — (47.6)— — — — (47.6)
Dividends paid to employee benefits trusts— — 0.2 — — — — — 0.2 
Stock-based compensation expense— — 12.2 — — — — — 12.2 
Redeemable noncontrolling interest adjustment— — — (1.5)— — — 1.5 0 
Dividends paid to noncontrolling interests— — — — — — — (1.0)(1.0)
Purchases of noncontrolling interests— — (5.1)— — — — (3.9)(9.0)
Balance, September 30, 2020121.6 $236.6 $1,454.1 $4,423.1 $(628.5)$(2,550.4)$(5.9)$37.8 $2,966.8 

  Equifax Shareholders    
          Accumulated Other Comprehensive Loss   
Stock
Held By Employee Benefits Trusts
    
  Common Stock            
  
Shares
Outstanding
 Amount 
Paid-In
Capital
 
Retained
Earnings
  
Treasury
Stock
  
Noncontrolling
Interests
 
Total
Equity
  (In millions, except per share amounts)
Balance, December 31, 2016 119.9
 $236.6
 $1,313.3
 $4,153.2
 $(528.9) $(2,505.6) $(5.9) $58.6
 $2,721.3
Net income —
 —
 —
 415.0
 —
 —
 —
 8.5
 423.5
Other comprehensive income —
 —
 —
 —
 217.1
 —
 —
 3.4
 220.5
Shares issued under stock and benefit plans,
net of minimum tax withholdings		 0.6
 —
 (13.4) —
 —
 4.5
 —
 —
 (8.9)
 Treasury stock purchased under share repurchase program* (0.5) —
 —
 —
 —
 (77.1) —
 —
 (77.1)
Cash dividends ($1.17 per share) —
 —
 —
 (141.3) —
 —
 —
 —
 (141.3)
Dividends paid to employee benefits trusts —
 —
 0.7
 —
 —
 —
 —
 —
 0.7
Stock-based compensation expense —
 —
 34.6
 —
 —
 —
 —
 —
 34.6
Redeemable noncontrolling interest adjustment —
 —
 —
 (2.3) —
 —
 —
 2.3
 —
Dividends paid to noncontrolling interests —
 —
 —
 —
 —
 —
 —
 (8.2) (8.2)
Other —
 —
 (0.2) 0.1
 —
 —
 —
 0.7
 0.6
Balance, September 30, 2017 120.0
 $236.6
 $1,335.0
 $4,424.7
 $(311.8) $(2,578.2) $(5.9) $65.3
 $3,165.7

* At September 30, 2017,2020, $590.1 million was available for future purchases of common stock under our share repurchase authorization.


For the Three Months Ended September 30, 2019

 Equifax Shareholders  
Accumulated Other Comprehensive LossStock
Held By Employee Benefits Trusts
 Common Stock     
Shares
Outstanding		AmountPaid-In
Capital		Retained
Earnings		Treasury
Stock		Noncontrolling
Interests		Total
Equity
 (In millions, except per share amounts)
Balance, June 30, 2019120.9 $236.6 $1,381.5 $4,135.5 $(640.0)$(2,564.3)$(5.9)$44.5 $2,587.9 
Net income— — — 81.1 — — — 1.4 82.5 
Other comprehensive loss— — — — (77.5)— — (1.4)(78.9)
Shares issued under stock and benefit plans, net of minimum tax withholdings0.2 — 0.1 — — 3.9 — — 4.0 
Cash dividends ($0.39 per share)— — — (47.4)— — — — (47.4)
Dividends paid to employee benefits trusts— — 0.2 — — — — — 0.2 
Stock-based compensation expense— — 10.8 — — — — — 10.8 
Redeemable noncontrolling interest adjustment— — — 1.2 — — — (1.2)0 
Balance, September 30, 2019121.1 $236.6 $1,392.6 $4,170.4 $(717.5)$(2,560.4)$(5.9)$43.3 $2,559.1 

9

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND OTHER COMPREHENSIVE LOSS
(Unaudited)

For the Nine Months Ended September 30, 2020
Equifax Shareholders
Accumulated Other Comprehensive LossStock
Held By Employee Benefits Trusts
Common Stock
Shares
Outstanding		AmountPaid-In
Capital		Retained
Earnings		Treasury
Stock		Noncontrolling
Interests		Total
Equity
(In millions, except per share amounts)
Balance, December 31, 2019121.2 $236.6 $1,405.1 $4,131.8 $(631.6)$(2,557.4)$(5.9)$44.3 $2,622.9 
Net income— — — 432.7 — — — 2.9 435.6 
Other comprehensive income (loss)— — — — 3.1 — — (1.5)1.6 
Shares issued under stock and benefit plans, net of minimum tax withholdings0.4 — 9.5 — — 7.0 — — 16.5 
Cash dividends ($1.17 per share)— — — (142.8)— — — — (142.8)
Dividends paid to employee benefits trusts— — 0.7 — — — — — 0.7 
Stock-based compensation expense— — 43.9 — — — — — 43.9 
Redeemable noncontrolling interest adjustment— — — 1.8 — — — (1.8)0 
Dividends paid to noncontrolling interests— — — — — — — (2.6)(2.6)
Purchases of noncontrolling interests— — (5.1)— — — — (3.9)(9.0)
Cumulative adjustment from change in accounting principle— — — (0.4)— — — — (0.4)
Other— — — — — — — 0.4 0.4 
Balance, September 30, 2020121.6 $236.6 $1,454.1 $4,423.1 $(628.5)$(2,550.4)$(5.9)$37.8 $2,966.8 

At September 30, 2020, $590.1 million was available for future purchases of common stock under our share repurchase authorization.

For the Nine Months Ended September 30, 2019

Equifax Shareholders
Accumulated Other Comprehensive LossStock
Held By Employee Benefits Trusts
Common Stock
Shares
Outstanding		AmountPaid-In
Capital		Retained
Earnings		Treasury
Stock		Noncontrolling
Interests		Total
Equity
(In millions, except per share amounts)
Balance, December 31, 2018120.6 $236.6 $1,356.6 $4,717.8 $(626.3)$(2,571.0)$(5.9)$47.9 $3,155.7 
Net (loss) income— — — (408.0)— — — 4.4 (403.6)
Other comprehensive loss— — — — (91.2)— — (1.5)(92.7)
Shares issued under stock and benefit plans, net of minimum tax withholdings0.5 — (5.3)— — 10.6 — — 5.3 
Cash dividends ($1.17 per share)— — — (142.1)— — — — (142.1)
Dividends paid to employee benefits trusts— — 0.7 — — — — — 0.7 
Stock-based compensation expense— — 40.6 — — — — — 40.6 
Redeemable noncontrolling interest adjustment— — — 2.7 — — — (2.7)0 
Dividends paid to noncontrolling interests— — — — — — — (4.8)(4.8)
Balance, September 30, 2019121.1 $236.6 $1,392.6 $4,170.4 $(717.5)$(2,560.4)$(5.9)$43.3 $2,559.1 

10




Accumulated Other Comprehensive Loss consists of the following components:
 
 September 30, 2017 December 31, 2016September 30, 2020December 31, 2019
 (In millions) (In millions)
Foreign currency translation  $(52.3) $(262.0)Foreign currency translation$(360.6)$(352.4)
Unrecognized actuarial losses and prior service cost related to our pension and other postretirement benefit plans, net of accumulated tax of $146.4 and $150.6 at September 30, 2017 and December 31, 2016, respectively (258.3) (265.9)
Cash flow hedging transactions, net of accumulated tax of $0.8 and $0.9 at September 30, 2017 and December 31, 2016, respectively (1.2) (1.0)
Unrecognized actuarial losses and prior service cost related to our pension and other postretirement benefit plans, net of accumulated tax of $84.5 and $88.4 at September 30, 2020 and December 31, 2019, respectivelyUnrecognized actuarial losses and prior service cost related to our pension and other postretirement benefit plans, net of accumulated tax of $84.5 and $88.4 at September 30, 2020 and December 31, 2019, respectively(266.8)(278.1)
Cash flow hedging transactions, net of accumulated tax of $0.7 at September 30, 2020 and December 31, 2019, respectivelyCash flow hedging transactions, net of accumulated tax of $0.7 at September 30, 2020 and December 31, 2019, respectively(1.1)(1.1)
Accumulated other comprehensive loss $(311.8) $(528.9)Accumulated other comprehensive loss$(628.5)$(631.6)
 


See Notes to Consolidated Financial Statements.

11


EQUIFAX INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
September 30, 20172020
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
As used herein, the terms Equifax, the Company, we, our and us refer to Equifax Inc., a Georgia corporation, and its consolidated subsidiaries as a combined entity, except where it is clear that the terms mean only Equifax Inc.


Nature of Operations.  We collect, organizeanalyze and manage various types of financial, demographic, employment and marketing information. Our products and services enable businesses to make credit and service decisions, manage their portfolio risk, automate or outsource certain human resources, employmentpayroll-related, tax and payroll-relatedhuman resources business processes, and develop marketing strategies concerning consumers and commercial enterprises. We serve customers across a wide range of industries, including the financial services, mortgage, retail, telecommunications, utilities, automotive, brokerage, healthcare and insurance industries, as well as government agencies. We also enable consumers to manage and protect their financial health through a portfolio of products offered directly to consumers. We also provide information, technology and services to support debt collections and recovery management. As of September 30, 2017,2020, we operated in the following countries: Argentina, Australia, Canada, Chile, Costa Rica, Ecuador, El Salvador, Honduras, India, Ireland, Mexico, New Zealand, Paraguay, Peru, Portugal, Spain, the United Kingdom, or U.K., Uruguay and the United States of America, or U.S. We also offer Equifax branded credit services in India and Russia through a joint ventures, weventure, have investments in consumer and/or commercial credit information companies through joint ventures in Cambodia, Malaysia, Singapore and Singapore,the United Arab Emirates and have an investment in a consumer and commercial credit information company in Brazil.
 
We develop, maintain and enhance secured proprietary information databases through the compilation of consumer specific data, including credit, income, employment, asset, liquidity, net worth and spending activity, and business data, including credit and business demographics, that we obtain from a variety of sources, such as credit granting institutions, public record information,and income and tax information primarily from large to mid-sized companies in the U.S., and survey-based marketing information. We process this information utilizing our proprietary information management systems. We also provide information, technology and services to support debt collections and recovery management.
 
Basis of Presentation.  The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, the instructions to Form 10-Q and applicable sections of SEC Regulation S-X. To understand our complete financial position and results, as defined by GAAP, thisThis Form 10-Q should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in our annual report on Form 10-K for the year ended December 31, 20162019 (“20162019 Form 10-K”).
 
Our unaudited Consolidated Financial Statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the periods presented and are of a normal recurring nature.
 
Earnings Per Share.  Our basic earnings per share, or EPS, is calculated as net income attributable to Equifax divided by the weighted-average number of common shares outstanding during the period. Diluted EPS is calculated to reflect the potential dilution that would occur if stock options, restricted stock units, or other contracts to issue common stock were exercised and resulted in additional common shares outstanding. The net income (loss) amounts used in both our basic and diluted EPS calculations are the same. A reconciliation of the weighted-average outstanding shares used in the two calculations is as follows: 
  Three Months Ended September 30,Nine Months Ended September 30,
  2017 20162017 2016
  (In millions)
Weighted-average shares outstanding (basic) 120.1
 119.5
120.1
 119.2
Effect of dilutive securities:    
 
  
Stock options and restricted stock units 1.3
 1.8
1.5
 1.9
Weighted-average shares outstanding (diluted) 121.4
 121.3
121.6
 121.1


 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
 (In millions)
Weighted-average shares outstanding (basic)121.5 121.0 121.4 120.8 
Effect of dilutive securities: 
Stock options and restricted stock units1.5 1.3 1.3 1.2 
Weighted-average shares outstanding (diluted)123.0 122.3 122.7 122.0 
For the three and nine months ended September 30, 20172020 and 2016,2019, stock options that were anti-dilutive were not0t material. For the nine months ended September 30, 2020 and 2019, stock options that were anti-dilutive were 0.6 million and 1.1 million, respectively.
 
12

Financial Instruments.  Our financial instruments consist of cash and cash equivalents, accounts and notes receivable, accounts payable and short- and long-term debt. The carrying amounts of these items, other than long-term debt,


approximate their fair market values due to the short-term nature of these instruments. The fair value of our fixed-rate debt is determined using Level 2 inputs such as quoted market prices for similar publicly traded instruments and for non-publicly traded instruments through valuation techniques involving observable inputs based on the specific characteristics of the debt instrument. As of September 30, 20172020 and December 31, 2016,2019, the fair value of our long-term debt, including the current portion, was $2.1$4.7 billion and $2.4$3.6 billion, respectively, compared to its carrying value of $2.0$4.4 billion and $2.4$3.4 billion, respectively.
 
Derivatives and Hedging Activities.   Although derivative financial instruments are not utilized for speculative purposes or as the Company’s primary risk management tool, derivatives have been used as a risk management tool to hedge the Company’s exposure to changes in interest rates and foreign exchange rates. We have used interest rate swaps and interest rate lock agreements to manage interest rate risk associated with our fixed and floating-rate borrowings. Forward contracts on various foreign currencies have been used to manage the foreign currency exchange rate risk of certain firm commitments denominated in foreign currencies. We recognize all derivatives on the balance sheet at fair value. Derivative valuations reflect the value of the instrument including the value associated with any material counterparty risk. 

Economic Hedges.   In December 2015, in anticipation of the acquisition of Veda Group Limited ("Veda"), we purchased foreign currency options to buy Australian dollars with a weighted average strike price of $0.7225 and a notional value of 1.0 billion Australian dollars. These foreign currency options ("options") were designed to act as economic hedges for the pending Veda acquisition and were marked to market. The options had an expiry date of February 18, 2016. In January 2016, we purchased additional options for a notional amount of 1.0 billion Australian dollars, with a weighted average strike price of $0.7091, with expiry dates of February 11, 2016 and February 16, 2016. We settled all of the options on the respective settlement dates in February 2016. We recognized a net loss of $15.4 million related to the options in the first quarter of 2016, which was recorded in other income (expense), net.

Fair Value Measurements.  Fair value is determined based on the assumptions marketplace participants use in pricing the asset or liability. We use a three level fair value hierarchy to prioritize the inputs used in valuation techniques between observable inputs that reflect quoted prices in active markets, inputs other than quoted prices with observable market data and unobservable data (e.g., a company’s own data).
 
The following table presents items measured at fair value on a recurring basis:
   Fair Value Measurements at Reporting Date Using:  Fair Value Measurements at Reporting Date Using:
Description 
Fair Value of Assets
(Liabilities) at
September 30, 2017
 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
DescriptionFair Value of Assets
(Liabilities) at
September 30, 2020		Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
 (In millions) (In millions)
Deferred Compensation Plan Assets(1)
 $33.3
 $33.3
 $—
 $—
Deferred Compensation Plan Assets(1)
$38.5 $38.5 $0 $0 
Deferred Compensation Plan Liability(1)
 (33.3) —
 (33.3) —
Deferred Compensation Plan Liability(1)
(38.5)0 (38.5)0 
Total $—
 $33.3
 $(33.3) $—
Total$0 $38.5 $(38.5)$0 
 
(1)        We maintain deferred compensation plans that allow for certain management employees to defer the receipt of compensation (such as salary and incentive compensation and commissions)compensation) until a later date based on the terms of the plan. The liability representing benefits accrued for plan participants is valued at the quoted market prices of the participants’ investment elections. The asset consists of mutual funds reflective of the participants’ investment selections and is valued at daily quoted market prices.
    
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis.As disclosed in Note 2, weWe completed various acquisitions during the nine months ended September 30, 20172020 and the year ended December 31, 2016.2019. The values of net assets acquired and the resulting goodwill were recorded at fair value using Level 3 inputs. The majority of the related current assets acquired and liabilities assumed were recorded at their carrying values as of the date of acquisition, as their carrying values approximated their fair values due to their short-term nature. The fair values of goodwill and definite-lived intangible assets acquired in this acquisitionthese acquisitions were internally or externally estimated primarily based on the income approach. The income approach estimates fair value based on the present value of the cash flows that the assets are expected to generate in the future. We developed internal estimates for the expected cash flows and discount rates used in the present value calculations.

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

The fair valueallowance for doubtful accounts is based on management's estimate for expected credit losses for outstanding trade accounts receivables. We determine expected credit losses based on historical write-off experience, an analysis of the equity method investment assets acquired were internally estimatedaging of outstanding receivables, customer payment patterns, the establishment of specific reserves for customers in an adverse financial condition and adjusted based upon our expectations of changes in macro-economic conditions that may impact the collectability of outstanding receivables. We reassess the adequacy of the allowance for doubtful accounts each reporting period. Increases to the allowance for doubtful accounts are recorded as bad debt expense, which are included in selling, general and administrative expenses on the market approach. Underaccompanying Consolidated Statements of Income (Loss). Below is a rollforward of our allowance for doubtful accounts for the market approach, we estimated fair value based on market multiples of comparable companies.three and nine months ended September 30, 2020 and 2019, respectively.



13

Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(In millions)
Allowance for doubtful accounts, beginning of period$16.9 $13.3 $11.2 $10.9 
Current period bad debt expense0.2 0.9 7.1 4.6 
Write-offs, net of recoveries(1.3)(1.7)(2.5)(3.0)
Allowance for doubtful accounts, end of period$15.8 $12.5 $15.8 $12.5 

Other Current Assets.Other current assets on our Consolidated Balance Sheets primarily representinclude amounts receivable from tax authorities and director and officers liability insurance receivable for costs incurred to date related to the 2017 cybersecurity incident that are reimbursable and probable for recovery under our insurance coverage. Other current assets also include amounts in specifically designated accounts that hold the funds that are due to customers from our debt collection and recovery


management services. As of September 30, 2017,2020, these assets were approximately $24.3$18.1 million, with a corresponding balance in other current liabilities. These amounts are restricted as to their current use, and will be released according to the specific customer agreements. Other current assets also include certain current tax accounts.
 
Variable Interest Entities. We hold interests in certain entities, including credit data, information solutions and debt collections and recovery management ventures that are considered variable interest entities, or VIEs.  These variable interests relate to ownership interests that require financial support for these entities.  Our investments related to these VIEs totaled $13.8 million at September 30, 2017, representing our maximum exposure to loss, with the exception of the guarantees referenced in Note 5.  We are not the primary beneficiary and are not required to consolidate any of these VIEs, with the exception of a debt collections and recovery management venture, for which we meet the consolidation criteria under Accounting Standards Codification ("ASC") 810, Consolidation. In regards to that consolidated VIE, we have a 75% equity ownership interest and control of the activities that most significantly impact the VIE's economic performance. The assets and liabilities of the VIE for which we are the primary beneficiary were not significant to the Company’s Consolidated Financial Statements, and no gain or loss was recognized because of its consolidation.

In evaluating whether we have the power to direct the activities of a VIE that most significantly impact its economic performance, we consider the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and our decision-making role, if any, in those activities that significantly determine the entity's economic performance as compared to other economic interest holders. This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the entity's future performance and the exercise of professional judgment in deciding which decision-making rights are most important.

In determining whether we have the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, we evaluate all of our economic interests in the entity, regardless of form (debt, equity, management and servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity's design, including: the entity's capital structure, contractual rights to earnings (losses), subordination of our interests relative to those of other investors, contingent payments, as well as other contractual arrangements that have the potential to be economically significant. The evaluation of each of these factors in reaching a conclusion about the potential significance of our economic interests is a matter that requires the exercise of professional judgment.
Certain of our VIEs have redeemable noncontrolling interests that are subject to classification outside of permanent equity on the Company's Consolidated Balance Sheet. The redeemable noncontrolling interests are reflected using the redemption method as of the balance sheet date. Redeemable noncontrolling interest adjustments to the redemption values are reflected in retained earnings. The adjustment of redemption value at the period end that reflects a redemption value in excess of fair value is included as an adjustment to net income attributable to Equifax stockholders for the purposes of the calculation of earnings per share. None of the current period adjustments reflect a redemption in excess of fair value. Additionally, due to the immaterial balance of the redeemable noncontrolling interest, we have elected to maintain the noncontrolling interest in permanent equity, rather than temporary equity, within our Consolidated Balance Sheet.

Other Assets. Other assets on our Consolidated Balance Sheets primarily representsrepresent the Company’s operating lease right-of-use assets, our investmentinvestments in unconsolidated affiliates, our cost method investment in Brazil,employee benefit trust assets, and assets related to life insurance policies covering certain officers of the Company, and employee benefit trust assets.Company.

Cost MethodEquity Investment.We monitor the status ofrecord our cost methodequity investment in order to determine if conditions existBrazil within Other Assets using the new measurement method of cost, less any impairment, plus or events and circumstances indicate that it may be impaired in that its carrying amount may exceed the fair value of the investment. Significant factors that are considered that could be indicative of an impairment include:minus changes resulting from observable price changes in business strategy, market conditions, underperformance relative to historical or expected future operating results; and negative industry or economic trends. If potential indicators of impairment exist, we estimateorderly transactions. As the fair value of the investment using a combination of a discounted cash flow analysishas not historically been readily determinable, our investment has been recorded at cost, less impairment. On September 30, 2020, the company in which we are invested in Brazil underwent an initial public offering and an evaluation of EBITDA multiples for comparable companies. If thebegan to trade publicly in Brazilian stock markets. The carrying value of the investment exceeds the estimated fair value, an impairment loss is recordedhas been adjusted to $133.8 million based on observable Level 1 inputs as of the amount by whichdate noted above, resulting in an unrealized gain of $129.9 million for the investment’s carrying amount exceeds its fair value. As ofthree and nine months ended September 30, 2017, our2020. All unrealized gains or losses on the investment are recorded in Brazil, recorded at 44 million Reais ($14.0 million)Other Income (Expense), approximatedNet within the fair value.Consolidated Statements of Income (Loss).

Other Current Liabilities.Other current liabilities on our Consolidated Balance Sheets consist of the current portion of operating lease liabilities and various accrued liabilities such as costs related to the 2017 cybersecurity incident as described more fully in Note 5. Other current liabilities also include corresponding amounts of other current assets related to amounts in specifically designated accounts that hold the funds that are due to customers from our debt collection and recovery management services. As of September 30, 2017,2020, these funds were approximately $24.3$18.1 million. These amounts are restricted as to their current use and will be released according to the specific customer agreements. Other current liabilities also include various accrued liabilities such as costs related to the cybersecurity



incident as described more fully in Note 5, interest expense, accrued employee benefits, accrued taxes, accrued payroll, and accrued legal expenses.

Change in Accounting Principle.In MarchJune 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-09 "Compensation - Stock Compensation (Topic 718)." This standard requires the recognition of the income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid-in capital pools. The guidance also allows for the employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting. The new guidance requires the related payments to taxing authorities to be retrospectively presented as a cash outflow from financing activities. As a result, we reclassified $19.7 million of cash outflows from operating activities in the first nine months of 2016 to a cash outflow from financing activities. In addition, the guidance allows for a policy election to account for forfeitures as they occur rather than on an estimated basis. The adoption of this guidance resulted in the recognition of $4.8 million, or $0.04 per diluted common share, and $24.5 million and $0.20 per diluted common share, of tax benefits in our Consolidated Statement of Income for the three and nine months ended September 30, 2017, respectively. We also prospectively applied the provisions of the new guidance related to the presentation of windfall tax benefits as cash flows from operating activities which resulted in classifying $4.8 million and $24.5 million of cash flows from financing activities to operating activities for the third quarter and first nine months ended September 30, 2017. We have elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized each period.

Recent Accounting Pronouncements.  Derivatives and Hedging. In August 2017, the FASB issued ASU 2017-12, “Targeted Improvements to AccountingNo. 2016-13 “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” which requires the measurement and recognition of expected credit losses for Hedging Activities (Topic 815).” The amendmentsfinancial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2017-12 provide targeted improvements to the accounting for hedging activities to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The adoption of ASU 2017-12 will become2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2018, although early adoption is permitted. This guidance must be applied on a prospective basis. We do not expect2019. As of January 1, 2020, we adopted the standard. The adoption of this ASU willthe standard did not have a material impact on our consolidated financial position, results of operations or cash flows.

Stock Compensation. In May 2017,statements with the FASB issued ASU 2017-09, "Compensation - Stock Compensation (Topic 718) Scope of Modification Accounting." The amendmentsmost significant impact being the increase in ASU 2017-09 require entitiesallowance for doubtful accounts related to apply modification accounting in Topic 718 only when changes to the terms or conditions of a share-based payment award result in changes to fair value, vesting conditions or the classification of the award as equity or liability.our trade accounts receivable. The adoption of ASU 2017-09 will become effective for annual periods beginning after December 15, 2017. Based on historical modifications we do not believe the adoption of this guidance will have a material impact on our financial position, results of operations or cash flows.

Pension Costs. In March 2017, the FASB issued ASU 2017-07 "Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715)." This new guidance changes how employers that sponsor defined benefit pension plans and other postretirement plans present the net periodic benefit costadjustment was recorded to Retained Earnings, as seen in the income statement. An employer is required to report the service cost componentConsolidated Statements of Changes in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. Other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The amendment also allows only the service cost component to be eligible for capitalization, when applicable. This new guidance will be effective for the Company for the first reporting period beginning after December 15, 2017, with early adoption permitted in the first quarter of 2017. The amendment will be applied retrospectively for the presentation requirements and prospectively for the capitalization of the service cost component requirements. We do not expect the adoption of this guidance to have a material impact on our financial position, results of operations or cash flows.Equity.


Goodwill. In January 2017, the FASB issued ASU 2017-04 "Simplifying“Simplifying the Test for Goodwill Impairment (Topic 350)."” This standard eliminates Step 2 from the current goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the goodwillreporting unit's carrying amount exceeds the reporting unit’s fair value. This guidance is effective for interim and annual goodwill impairment tests in fiscal years beginning after December 15, 2019 with early adoption permitted. This guidance must be applied on a prospective basis. The adoption of this standard did not materially impact our consolidated financial statements or disclosures.

In August 2018, the FASB issued ASU No. 2018-13 “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement” which eliminates, adds, and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. ASU 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019, and interim periods therein, but entities are permitted to early adopt either
14

the entire standard or only the provisions that eliminate or modify the requirements. The adoption of this standard did not materially impact our consolidated financial statements or disclosures.

In August 2018, the FASB issued ASU No. 2018-15 “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” ASU 2018-15 requires that issuers follow the internal-use software guidance in Accounting Standards Codification (ASC) 350-40 to determine which costs to capitalize as assets or expense as incurred. The ASC 350-40 guidance requires that certain costs incurred during the application development stage be capitalized and other costs incurred during the preliminary project and post-implementation stages be expensed as they are incurred. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019 and interim periods therein. The adoption of the standard did not have a material impact on our consolidated financial statements.
Recent Accounting Pronouncements.  Retirement Benefits. In August 2018, the FASB issued ASU No. 2018-14 “Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans” which requires minor changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other postretirement benefit plans. ASU 2018-14 is effective for fiscal years ending after December 15, 2020 and early adoption is permitted. The adoption of this standard will have an impact on our disclosures and will not materially impact our consolidated financial statements.
Reference Rate Reform. In March 2020, the FASB issued ASU No. 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The update provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) contract modifications on financial reporting, caused by reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. We are still evaluating the impact, but do not expect the adoption of this guidancethe standard to have a material impact on our financial position, results of operations or cash flows.

Definition of a business. In January 2017, the FASB issued ASU 2017-01 "Clarifying the Definition of a Business (Topic 805)." This standard provides criteria to determine when an asset acquired or group of assets acquired is not a business. When substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This reduces the number of transactions that need to be further evaluated. The guidance is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017


with early adoption permitted. We are currently evaluating the impact of the adoption of this guidance on our financial position, results of operations and cash flows.

Leases. In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842).” This standard requires lessees to record most leases on their balance sheets and expenses on their income statements in a manner similar to current lease accounting. The guidance also eliminates current real estate-specific provisions for all entities. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. All entities will classify leases to determine how to recognize lease-related revenue and expense. The guidance becomes effective for fiscal years and interim reporting periods beginning after December 15, 2018. The Company is evaluating the potential effects of the adoption of this standard on its Consolidated Financial Statements.


2. REVENUE

Revenue Recognition. In May 2014,Based on the FASB issued ASU No. 2014-9, "Revenue from Contracts with Customers." ASU 2014-9 is a comprehensive new revenue recognition modelinformation that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchangemanagement reviews internally for those goods or services. ASU 2014-9 also requires additional disclosure about theevaluating operating segment performance and nature, amount, timing, and uncertainty of revenue and cash flows arising from customeraffected by economic factors, we disaggregate revenue as follows:
Three Months Ended September 30,ChangeNine Months Ended September 30,Change
Consolidated Operating Revenue20202019$%20202019$%
(In millions)(In millions)
Online Information Solutions$284.7 $233.0 $51.7 22 %$800.3 $696.7 $103.6 15 %
Mortgage Solutions55.4 36.7 18.7 51 %149.4 104.4 45.0 43 %
Financial Marketing Services46.2 45.8 0.4 1 %145.4 145.4 0 0 %
Total U.S. Information Solutions386.3 315.5 70.8 22 %1,095.1 946.5 148.6 16 %
Verification Services301.1 185.3 115.8 63 %773.2 506.5 266.7 53 %
Employer Services75.7 55.3 20.4 37 %258.2 192.7 65.5 34 %
Total Workforce Solutions376.8 240.6 136.2 57 %1,031.4 699.2 332.2 48 %
Asia Pacific80.2 77.4 2.8 4 %215.1 226.4 (11.3)(5)%
Europe58.7 64.8 (6.1)(9)%173.2 199.3 (26.1)(13)%
Latin America40.4 49.2 (8.8)(18)%117.8 144.0 (26.2)(18)%
Canada38.7 39.1 (0.4)(1)%108.5 114.9 (6.4)(6)%
Total International218.0 230.5 (12.5)(5)%614.6 684.6 (70.0)(10)%
Global Consumer Solutions87.2 89.1 (1.9)(2)%268.0 271.5 (3.5)(1)%
Total operating revenue$1,068.3 $875.7 $192.6 22 %$3,009.1 $2,601.8 $407.3 16 %

15

Remaining Performance Obligation – We have elected to disclose only the remaining performance obligations for those contracts including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-9 was originally effective for annual reporting periods, and interim periods within that period, beginning after December 15, 2016 and early adoption was not permitted. On July 9, 2015, the FASB voted to defer the effective date bywith an expected duration of greater than one year and do not disclose the value of remaining performance obligations for contracts in which we recognize revenue at the amount to December 15, 2017 for interim and annual reporting periods beginning after that date and permitted early adoption ofwhich we have the standard, but not beforeright to invoice. We expect to recognize as revenue the original effective date of December 15, 2016. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-9.

Based on our current assessment, we anticipate adopting the standard using the modified retrospective method in the first quarter of fiscal 2018. The new standard will impact our contracts that have a known quantity over a defined term with price increases or decreases over the contract life. Under the current standard, the revenuefollowing amounts related to these contracts are limited by billings in a period. Under the new standard the total contract value will be recognized ratably over the defined term or by using a transactional standalone selling price resulting in the creationour remaining performance obligations as of a contract asset or contract liability as transactions are delivered. Based upon analysis performed to date, we have preliminarily determined that we do not expect the revenue recognition aspectsSeptember 30, 2020 inclusive of the new standard will materially affect our consolidated net earnings, financial position, or cash flow based on the application of the guidance to our contracts with customers. We will continue to review and evaluate our contracts under the new revenue recognition model to ascertain whether additional contract types or future contracts will be affected by the new standard. Additionally, the new guidance specifies that all incremental costs of obtaining a contract and the direct costs of fulfilling a contract with customers should be deferred and recognized over the contract period or expected customer life. Based on our current assessment, we do not anticipate a significant change in our cost capitalization practices resulting from the application of the guidance. Finally, we continue to review the additional disclosures required by the new standard.foreign exchange impact:


Performance ObligationAmount
(In millions)
Less than 1 year$29.6 
1 to 3 years28.2 
3 to 5 years21.3 
Thereafter46.3 
Total remaining performance obligation$125.4 
2. ACQUISITIONS AND INVESTMENTS

2017 Acquisitions and Investments. On August 10, 2017, the Company completed the acquisition of 100% of the outstanding stock of ID Watchdog, Inc., an identity theft protection and resolution company providing solutions to the employee benefits marketplace.

2016 Acquisitions and Investments. On February 24, 2016, the Company completed the acquisition of 100% of the ordinary voting shares of Veda for cash consideration of approximately $1.7 billion (2.4 billion Australian dollars) and debt assumed of approximately $189.5 million (261.9 million Australian dollars). The acquisition provides a strong platform for Equifax to offer data and analytic services and further broaden the Company's geographic footprint. Veda stockholders received 2.825 Australian dollars in cash for each share of Veda common stock they owned. The Company financed the transaction with $1.7 billion of debt, consisting of commercial paper, an $800 million 364-day revolving credit facility (the "364-day Revolver"), and an $800 million three-year delayed draw term loan facility (the "Term Loan"). Refer to Note 4 for further discussion on debt. Additionally, on August 23, 2016, the Company completed the acquisition of 100% of the assets and certain liabilities of unemployment tax and claims management specialists Barnett & Associates ("Barnett"), as well as the verifications business, Computersoft, LLC ("Computersoft").

Pro Forma Financial Information. The following table presents unaudited consolidated pro forma information as if our acquisition of Veda had occurred at the beginning of the earliest period presented. The pro forma amounts may not be necessarily indicative of the operating revenues and results of operations had the acquisition actually taken place at the beginning of the earliest period presented. Furthermore, the pro forma information may not be indicative of future performance.



  Nine months ended September 30,
  2016
  As Reported Pro Forma
  (In millions, except per share data)
Operating revenues $2,343.8
 $2,383.2
Net income attributable to Equifax 365.8
 368.4
Net income per share (basic) 3.07
 3.09
Net income per share (diluted) 3.02
 3.04


The unaudited pro forma financial information presented in the table above has been adjusted to give effect to adjustments that are (1) directly related to the business combination; (2) factually supportable; and (3) expected to have a continuing impact. These adjustments include, but are not limited to, the application of our accounting policies and depreciation and amortization related to fair value adjustments and intangible assets.

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


Our annual goodwill impairment testing was completed during the third quarter of 2017.2020. The estimated fair value for all reporting units exceeded the carrying value offor those units as of September 30, 2017.2020. As a result, no0 goodwill impairment was recorded. Refer to our methodology of fair value estimates as discussed in the "Application of Critical Accounting Policies" section in this Form 10-Q.


Changes in the amount of goodwill for the nine months ended September 30, 2017,2020, are as follows:
U.S.
Information
Solutions		Workforce SolutionsInternationalGlobal Consumer SolutionsTotal
 (In millions)
Balance, December 31, 2019$1,280.7 $1,010.4 $1,829.2 $188.0 $4,308.3 
Acquisitions6.0 0 52.3 0 58.3 
Adjustments to initial purchase price allocation0 0.3 0 0 0.3 
Foreign currency translation0 0 0.5 (1.4)(0.9)
Balance, September 30, 2020$1,286.7 $1,010.7 $1,882.0 $186.6 $4,366.0 
  U.S.
Information
Solutions		 International Workforce
Solutions		 Global Consumer Solutions Total
  (In millions)
Balance, December 31, 2016 $1,071.3
 $1,814.6
 $952.1
 $136.3
 $3,974.3
Acquisitions —
 3.4
 —
 48.5
 51.9
Adjustments to initial purchase price allocation —
 (1.1) —
 —
 (1.1)
Foreign currency translation —
 146.5
 —
 6.8
 153.3
Balance, September 30, 2017 $1,071.3
 $1,963.4
 $952.1
 $191.6
 $4,178.4


Indefinite-Lived Intangible Assets. Indefinite-lived intangible assets consist of indefinite-lived reacquired rights representing the value of rights which we had granted to various affiliate credit reporting agencies that were reacquired in the U.S. and Canada. At the time we acquired these agreements, they were considered perpetual in nature under the accounting guidance in place at that time and, therefore, the useful lives are considered indefinite. Indefinite-lived intangible assets are not amortized. We are required to test indefinite-lived intangible assets for impairment annually and whenever events or circumstances indicate that there may be an impairment of the asset value. We perform our annual indefinite-lived intangible asset impairment test as of September 30. The estimated fair value of our indefinite-lived intangible assets exceeded the carrying value as of September 30, 2017.2020. As a result, no0 impairment was recorded. Our indefinite-lived intangible asset carrying amounts did not change materially during the nine months ended September 30, 2017.  2020.
 
Purchased Intangible Assets. Purchased intangible assets represent the estimated acquisition date fair value of acquired intangible assets used in our business. Purchased data files represent the estimated acquisition date fair value of consumer credit files acquired primarily through the purchase of independent credit reporting agencies in the U.S. and, Canada and the Veda acquisition.Australia. We expense the cost of modifying and updating credit files in the period such costs are incurred. Our reacquired rights represent the value of rights which we had granted to Computer Sciences Corporation that were reacquired in connection with the acquisition of certain assets of CSC Credit Services (“CSC Credit Services Acquisition”) in the fourth quarter of 2012. These reacquired rights are being amortized over the remaining term of the affiliation agreement on a straight-


line basis until August 1, 2018. We amortize all of our purchased intangible assets on a straight-line basis. For additional information about the useful lives related to our purchased intangible assets, see Note 1 of the Notes to Consolidated Financial Statements in our 20162019 Form 10-K.


16

Purchased intangible assets at September 30, 20172020 and December 31, 20162019 consisted of the following:

 September 30, 2017 December 31, 2016 September 30, 2020December 31, 2019
 Gross 
Accumulated
Amortization
 Net Gross 
Accumulated
Amortization
 NetGrossAccumulated
Amortization		NetGrossAccumulated
Amortization		Net
Definite-lived intangible assets: (In millions)Definite-lived intangible assets:(In millions)
Purchased data files $1,029.2
 $(310.6) $718.6
 $1,012.7
 $(276.0) $736.7
Purchased data files$884.7 $(375.2)$509.5 $904.0 $(351.8)$552.2 
Acquired software and technology 139.6
 (59.6) 80.0
 131.5
 (36.1) 95.4
Acquired software and technology106.9 (94.3)12.6 110.1 (84.0)26.1 
Customer relationships 756.9
 (313.9) 443.0
 712.7
 (273.0) 439.7
Customer relationships672.0 (323.6)348.4 673.0 (305.1)367.9 
Reacquired rights 73.3
 (62.4) 10.9
 73.3
 (52.5) 20.8
Proprietary database 22.1
 (8.1) 14.0
 21.5
 (6.7) 14.8
Proprietary database148.5 (26.4)122.1 108.3 (20.9)87.4 
Non-compete agreements 14.1
 (12.1) 2.0
 26.8
 (22.2) 4.6
Non-compete agreements6.0 (2.7)3.3 7.8 (3.5)4.3 
Trade names and other intangible assets 18.9
 (10.6) 8.3
 54.1
 (42.3) 11.8
Trade names and other intangible assets15.3 (9.8)5.5 17.3 (10.6)6.7 
Total definite-lived intangible assets $2,054.1
 $(777.3) $1,276.8
 $2,032.6
 $(708.8) $1,323.8
Total definite-lived intangible assets$1,833.4 $(832.0)$1,001.4 $1,820.5 $(775.9)$1,044.6 
 
Amortization expense related to purchased intangible assets was $43.0$36.0 million and $47.5$35.1 million during the three months ended September 30, 20172020 and 2016,2019, respectively. Amortization expense related to purchased intangible assets was $129.8$105.8 million and $130.3$104.9 million duringfor the nine months ended September 30, 20172020 and 2016,2019, respectively.


Estimated future amortization expense related to definite-lived purchased intangible assets at September 30, 20172020 is as follows:

Years ending December 31,Amount
 (In millions)
2020$35.3 
2021126.9 
2022121.1 
2023119.6 
2024111.5 
Thereafter487.0 
 $1,001.4 

17
Years ending December 31, Amount
  (In millions)
2017 $43.0
2018 148.5
2019 129.2
2020 122.7
2021 105.1
Thereafter 728.3
  $1,276.8




4. DEBT
 
Debt outstanding at September 30, 20172020 and December 31, 20162019 was as follows:
September 30, 2020December 31, 2019
 September 30, 2017 December 31, 2016 (In millions)
 (In millions)
Commercial paper $665.3
 $310.3
Notes, 6.30%, due July 2017 —
 272.5
Term Loan, due Nov 2018 400.0
 450.0
Notes, 2.30%, due June 2021 500.0
 500.0
Notes, 2.30%, due June 2021$500.0 $500.0 
Notes, 3.30%, due Dec 2022 500.0
 500.0
Notes, 3.60%, due August 2021Notes, 3.60%, due August 2021300.0 300.0 
Notes, Floating Rate, due August 2021Notes, Floating Rate, due August 2021300.0 300.0 
Notes, 3.30%, due December 2022Notes, 3.30%, due December 2022500.0 500.0 
Notes, 3.95%, due June 2023Notes, 3.95%, due June 2023400.0 400.0 
Notes, 2.60%, due December 2024Notes, 2.60%, due December 2024750.0 750.0 
Notes, 2.60%, due December 2025Notes, 2.60%, due December 2025400.0 0 
Notes, 3.25%, due June 2026 275.0
 275.0
Notes, 3.25%, due June 2026275.0 275.0 
Debentures, 6.90%, due July 2028 125.0
 125.0
Debentures, 6.90%, due July 2028125.0 125.0 
Notes, 3.1%, due May 2030Notes, 3.1%, due May 2030600.0 0 
Notes, 7.00%, due July 2037 250.0
 250.0
Notes, 7.00%, due July 2037250.0 250.0 
Other 2.5
 2.6
Other3.4 3.1 
Total debt 2,717.8
 2,685.4
Total debt4,403.4 3,403.1 
Less short-term debt and current maturities (667.8) (585.4)Less short-term debt and current maturities(1,102.1)(3.1)
Less unamortized discounts and debt issuance costs (11.3) (13.2)Less unamortized discounts and debt issuance costs(26.0)(20.5)
Total long-term debt, net $2,038.7
 $2,086.8
Total long-term debt, net$3,275.3 $3,379.5 
 
2.6% and 3.1% Senior Notes. On April 22, 2020, we issued $400.0 million aggregate principal amount of 2.6% five-year Senior Notes due 2025 (the "2025 Notes") and $600.0 million aggregate principal amount of 3.1% ten-year Senior Notes due 2030 (the "2030 Notes") in an underwritten public offering. Interest on the 2025 Notes accrues at a rate of 2.6% per year and is payable semi-annually in arrears on June 15 and December 15, beginning on December 15, 2020. Interest on the 2030 Notes accrues at a rate of 3.1% per year and is payable semi-annually in arrears on May 15 and November 15, beginning on November 15, 2020. The net proceeds of the sale of the notes were used to repay borrowings under our Receivables Facility, while the remaining funds are intended for general corporate purposes, which may include the repayment of a portion of the 2021 debt maturities or borrowings under our Revolver. We must comply with various non-financial covenants, including certain limitations on mortgages, liens and sale-leaseback transactions, as well as mergers and sales of substantially all of our assets. The 2025 Notes and 2030 Notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness.

2.6% Senior Notes. On November 15, 2019, we issued $750.0 million aggregate principal amount of 2.6% five-year Senior Notes due 2024 (the “2024 Notes”) in an underwritten public offering. Interest on the 2024 Notes accrues at a rate of 2.6% per year and is payable semi-annually in arrears on June 1 and December 1 of each year. The net proceeds of the sale of the notes were used to repay borrowings under our Receivables Facility and our Commercial Paper program and for general corporate purposes. We must comply with various non-financial covenants, including certain limitations on mortgages, liens and sale-leaseback transactions, as well as mergers and sales of substantially all of our assets. The 2024 Notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness.

Senior Credit Facilities.  We are party toFacility. In September 2018, the Company entered into a $900.0 million$1.1 billion five-year unsecured revolving credit facility (the "Revolver") and the previously described Term Loan (the Revolver and the Term Loan collectively, the "Senior Credit Facilities"), with a group of financial institutions.institutions, which will mature in September 2023 (the “Revolver”). The Revolver also has an accordion featurereplaced the Company’s previous $900.0 million unsecured revolving credit facility that allows uswas scheduled to request an increasemature in November 2020. Borrowings under the total commitment to $1.2 billion.  BorrowingsRevolver may be used for general corporate purposes, including working capital, capital expenditures, acquisitions and share repurchase programs. The Revolver andhas an accordion feature that allows us to request an increase in the Term Loan are scheduledtotal commitment to expire in November 2020 and November 2018, respectively.$1.6 billion. The Revolver includes an option to request a maximum of two2 one-year extensions of the maturity date.date, any time after the first anniversary of the Revolver closing. Availability of the Revolver for borrowings is reduced by the outstanding principal balance of our commercial paper notes and by any letters of credit issued under the facility. As of September 30, 2017,2020, there were $0.5$0.7 million of letters of credit outstanding. As of September 30, 2017, there were no outstanding, borrowings0 principal drawn amounts under the Revolver, and $234.2 million was available for borrowing. On July 3, 2017 we repaid our July 2017 Senior Notes using the proceeds of0 commercial paper issued prior toborrowings. Availability under the Revolver was $1.1 billion at September 30, 2017. On October 12, 2017, we borrowed $100 million on our Revolver.2020.
 
18

Commercial Paper Program. In the second quarter of 2019, we increased our commercial paper program to $1.1 billion. Our $900.0 million commercial paper program has been established through the private placement of commercial paper notes from time-to-time, in which borrowings bear interest at either a floating rate (based on LIBOR or other benchmarks), or a fixed rate, plus the applicable margin. Maturities of commercial paper can range from overnight to 397 days. Because the commercial paper ("CP")CP is backstopped by our Senior Credit Facilities,Revolver, the amount of CP which may be issued under the program is reduced by the outstanding face amount of any letters of credit issued under the facility and pursuant to our existing Board of Directors authorization, by the outstanding borrowings under our Revolver. At September 30, 2017, $665.3 million in2020, there were 0 outstanding commercial paper notesnotes.

Receivables Funding Facility. In 2017, Equifax entered into a $225.0 million, two-year receivables funding facility (the “Receivables Facility”), which had an original maturity in November 2019. In November 2018, we amended the Receivables Facility to extend the maturity to November 2020. In December 2019, we amended the Receivables Facility to extend the maturity to December 2022. Under the Receivables Facility, Equifax and certain of its U.S. subsidiaries sell the eligible third-party receivables of its U.S. based business, to Equifax Receivables Funding LLC, a consolidated, wholly-owned, bankruptcy-remote subsidiary that may subsequently transfer, without recourse, an undivided interest in these accounts receivable to investors. The investors have no recourse to the Company’s other assets except for customary repurchase, warranty and indemnity claims. Creditors of Equifax do not have recourse to the assets of Equifax Receivables Funding LLC. The Receivables Facility contains standard representations, warranties and covenants made by Equifax and its U.S. subsidiaries in connection with the sale of the receivables, and any repurchase, warranty or indemnity obligations of the U.S. subsidiaries in connection with the sale of the receivables (but no obligations of Equifax Receivables Funding LLC) are guaranteed by Equifax.

There were 0 outstanding borrowings under the Receivables Facility at September 30, 2020. The Receivables Facility was outstanding.supported by $313.5 million of accounts receivable as collateral at September 30, 2020 which, as a retained interest, is included in accounts receivable, net in our Consolidated Balance Sheets.


For additional information about our debt agreements, see Note 5 of the Notes to Consolidated Financial Statements in our 20162019 Form 10-K.
 
5. COMMITMENTS AND CONTINGENCIES

Cybersecurity Incident. In the third quarter of fiscal 2017, we announced a cybersecurity incident potentially impacting approximately 145.5 million U.S. consumers. Criminals exploited a U.S. website application vulnerability to gain access to certain files. Based on our forensic investigation, the unauthorized access occurred from mid-May through July 2017. The information accessed primarily includes names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers. In addition, credit card numbers for approximately 209,000 U.S. and Canadian consumers, and certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers, were accessed. The investigation also determined that personal information of approximately 8,000 Canadian consumers was impacted and


approximately 690,000 potentially affected U.K. consumers will be contacted regarding access to personal information in the cybersecurity incident.

Upon discovery of the unauthorized access, we acted immediately to stop the intrusion and promptly engaged a leading, independent cybersecurity firm to conduct a comprehensive forensic review to determine the scope of the intrusion, including the specific data impacted. The forensic analysis of the consumers potentially impacted by the cybersecurity incident is now complete. We also reported the criminal access to law enforcement and continue to cooperate with law enforcement in connection with the criminal investigation into the actors responsible for the cybersecurity incident.

Expenses Incurred. In the third quarter of fiscal 2017, the Company recorded $27.3 million of pretax expenses related to the cybersecurity incident. These expenses are included in Selling, General and Administrative expenses in the accompanying Consolidated Statements of Income for the three and nine months ended September 30, 2017. Expenses include costs to investigate and remediate the cybersecurity incident and legal and other professional services related thereto, all of which were expensed as incurred.
Contingent Liability. Additionally, as a result of the cybersecurity incident, we are offering free credit file monitoring and identity theft protection to all U.S. consumers. We have concluded that the costs associated with providing this service are a contingent liability that is probable and estimable. We have therefore recorded an estimate of the expenses necessary to provide this service to those who have signed up or will sign up by the January 31, 2018 deadline. We have incurred $4.7 million through September 30, 2017 and have estimated a range of additional costs between $56 million and $110 million. In accordance with Accounting Standards Codification section 450-20-30-1, we have recorded a liability for the low end in the range as we do not believe that any amount within the range is a better estimate than any other amount.
Litigation, Claims and Government Investigations. AsInvestigations Related to the 2017 Cybersecurity Incident.  In fiscal 2017, we experienced a result of the cybersecurity incident we arefollowing a criminal attack on our systems that involved the theft of certain personally identifiable information of U.S., Canadian and U.K. consumers. Following the 2017 cybersecurity incident, hundreds of class actions and other lawsuits were filed against us typically alleging harm from the incident and seeking various remedies, including monetary and injunctive relief. We were also subject to a significant numberinvestigations and inquiries by federal, state and foreign governmental agencies and officials regarding the 2017 cybersecurity incident and related matters. Most of proceedingsthese lawsuits and government investigations ashave concluded or been resolved, including pursuant to the settlement agreements described below, while others remain ongoing. The Company’s participation in Part II, "Item 1. Legal Proceedings." While wethese settlements does not constitute an admission by the Company of any fault or liability, and the Company does not admit fault or liability.

We believe it is reasonably possibleprobable that we will incur losses associated with thesecertain of the proceedings and investigations related to the 2017 cybersecurity incident. In 2019, we recorded expenses, net of insurance recoveries, of $800.9 million in other current liabilities and selling, general, and administrative expenses in our Consolidated Balance Sheets and Statements of Income (Loss), respectively, exclusive of our legal and professional services expenses. The amount accrued represents our best estimate of the liability related to these matters. The Company will continue to evaluate information as it becomes known and adjust accruals for new information and further developments in accordance with ASC 450-20-25. While it is reasonably possible that losses exceeding the amount accrued may be incurred, it is not possible at this time to estimate the amount of loss or range ofadditional possible loss if any,in excess of the amount already accrued that might result from adverse judgments, settlements, penalties or other resolution of suchthe proceedings and investigations described below based on a number of factors, such as the early stagevarious stages of these proceedings and investigations, including matters on appeal, that alleged damages have not been specified or are uncertain, the uncertainty as to the certification of a class or classes and the size of any certified class, as applicable, and the lack of resolution on significant factual and legal issues. The ultimate amount paid on these actions, claims and investigations in excess of the amount already accrued could be material to the Company’s consolidated financial condition, results of operations, or cash flows in future periods.
Future Costs.
Consumer Settlement. On July 19, 2019 and July 22, 2019, we entered into multiple agreements that resolve the U.S. consolidated consumer class action cases, captioned In re: Equifax, Inc. Customer Data Security Breach Litigation, MDL No. 2800 (the “U.S. Consumer MDL Litigation”), and the investigations of the FTC, the CFPB, the Attorneys General of 48 states, the District of Columbia and Puerto Rico (the "MSAG Group") and the NYDFS (collectively, the “Consumer Settlement”).
19

Under the terms of the Consumer Settlement, the Company will contribute $380.5 million to a non-reversionary settlement fund (the “Consumer Restitution Fund”) to provide restitution for U.S. consumers identified by the Company whose personal information was compromised as a result of the 2017 cybersecurity incident as well as to pay reasonable attorneys’ fees and reasonable costs and expenses for the plaintiffs’ counsel in the U.S. Consumer MDL Litigation (not to exceed $80.5 million), settlement administration costs and notice costs. The Company has agreed to contribute up to an additional $125.0 million to the Consumer Restitution Fund to cover certain unreimbursed costs and expenditures incurred by affected U.S. consumers in the event the $380.5 million in the Consumer Restitution Fund is exhausted. The Company also agreed to various business practice commitments related to consumer assistance and its information security program, including conducting third party assessments of its information security program.

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

Other Settlements.
Financial Institutions MDL Class Action. On May 15, 2020, the Company entered into a settlement agreement to resolve the consolidated financial institutions class action cases pending before the MDL Court (the “Financial Institutions MDL Litigation”). Under the settlement, the Company agreed to pay for valid claims submitted by class members up to a maximum amount, reasonable settlement administration and notice costs, and reasonable attorneys’ fees and expenses. The Company also agreed to adopt and/or maintain certain business practices related to its information security program. The court granted final approval of the settlement on October 22, 2020.

Pennsylvania State Court Financial Institution Class Action. The Company entered into a settlement agreement to resolve the individual claims brought by one of the original named plaintiffs in the Financial Institutions MDL Litigation in the Court of Common Pleas of Lawrence County, Pennsylvania on behalf of itself and a class of financial institutions headquartered in Pennsylvania. The claims asserted in this matter were substantially similar to claims asserted by financial institutions that previously were dismissed in the MDL proceeding for lack of standing. The court granted approval of the settlement on July 13, 2020.

Other Matters. We expectface other lawsuits and government investigations related to incur significant legalthe 2017 cybersecurity incident that have not yet been concluded or resolved. These ongoing matters may result in judgments, fines or penalties, settlements or other relief. We dispute the allegations in the remaining lawsuits and intend to defend against such claims. Set forth below are descriptions of the main categories of these matters.

Georgia State Court Consumer Class Actions. Four putative class actions arising from the 2017 cybersecurity incident were filed against us in Fulton County Superior Court and Fulton County State Court in Georgia based on similar allegations and theories as alleged in the U.S. Consumer MDL Litigation and seek monetary damages, injunctive relief and other professional services expenses associatedrelated relief on behalf of Georgia citizens. These cases were transferred to a single judge in the Fulton County Business Court and three of the cases were consolidated into a single action. On July 27, 2018, the Fulton County Business Court granted the Company’s motion to stay the remaining single case, and on August 17, 2018, the Fulton County Business Court granted the Company’s motion to stay the consolidated case. These cases remain stayed pending final resolution of the U.S. Consumer MDL Litigation.

Canadian Class Actions. Five putative Canadian class actions, four of which are on behalf of a national class of approximately 19,000 Canadian consumers, are pending against us in Ontario, British Columbia and Alberta. Each of the proposed Canadian class actions asserts a number of common law and statutory claims seeking monetary damages and other related relief in connection with the 2017 cybersecurity incident. In addition to seeking class certification on behalf of Canadian consumers whose personal information was allegedly impacted by the 2017 cybersecurity incident, in future periods. some cases, plaintiffs also seek class certification on behalf of a larger group of Canadian consumers who had contracts for subscription products with Equifax around the time of the incident or earlier and were not impacted by the incident.

20

On December 13, 2019, the court in Ontario granted certification of a nationwide class that includes all impacted Canadians as well as Canadians who had subscription products with Equifax between March 7, 2017 and July 30, 2017 who were not impacted by the incident. Our motion for leave to appeal this decision was granted in part, and our appeal is now pending. All remaining purported class actions are at preliminary stages or stayed.

Government Investigations.We will recognizehave cooperated with federal, state and foreign governmental agencies and officials investigating or otherwise seeking information, testimony and/or documents, regarding the 2017 cybersecurity incident and related matters and most of these expensesinvestigations have been resolved as services are received. Costs relateddiscussed in prior filings.

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

The New York State Attorney General Investor Protection Bureau (“IPB”) issued a subpoena in future periods will also include increased expensesSeptember 2017 relating to its investigation of whether there has been a violation of the Martin Act. We have cooperated with the IPB in its investigation, and capital investments for IT and security. We expect to incur increased expenses for insurance, finance, compliance activities, and to meet increased legal and regulatory requirements. We will also incur increased costs to provide free services to consumers including increased customer support costs.
Insurance Coverage. We maintain insurance coverage to limit our exposure to losses such as those related to the cybersecurity incident. Our coverage has a $7.5 million deductible. As of September 30, 2017, the CompanyIPB has not recorded a receivable for costscontacted us regarding the Company has incurredinvestigation since January 2019.
Although we continue to date ascooperate in the above investigations and inquiries, an adverse outcome to any such investigations and inquiries could subject us to fines or other obligations, which may have an adverse effect on how we have not yet concluded that the costs are reimbursable and probableoperate our business or our results of recovery under our insurance coverage.operations.

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


Guarantees and General Indemnifications. Indemnifications

We may issue standby letters of credit and performance and surety bonds in the normal course of business. The aggregate notional amountamounts of all performance and surety bonds and standby letters of credit was not0t material at September 30, 2017,2020 and allgenerally have a remaining maturity of one year or less. We may issue other guarantees in the ordinary course of business. The maximum potential future payments we could be required to make under the guarantees in the ordinary course of business is notwas 0t material at September 30, 2017.2020. We have agreed to guarantee the liabilities and performance


obligations (some of which have limitations) of a certain debt collections and recovery management VIEvariable interest entity under its commercial agreements.


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

We cannot reasonably estimate our potential future payments under the guarantees and indemnities and related provisions described above because we cannot predict when and under what circumstances these provisions may be triggered. We had no accruals related

21

Contingencies

In addition to guarantees and indemnities on our Consolidated Balance Sheets at September 30, 2017 or December 31, 2016.
Contingencies.  Wethe matters set forth above, we are involved in legal and regulatory matters, government investigations, claims and litigation arising in the ordinary course of business. We periodically assess our exposure related to these matters based on the information which is available. We have recorded accruals in our Consolidated Financial Statements for those matters in which it is probable that we have incurred a loss and the amount of the loss, or range of loss, can be reasonably estimated.


For additional information about these and other commitments and contingencies, see Note 6 of the Notes to Consolidated Financial Statements in our 20162019 Form 10-K.


6. INCOME TAXES
 
We are subject to U.S. federal, state and international income taxes. We are generally no longer subject to federal, state, or international income tax examinations by tax authorities for years before 20142017 with few exceptions. Due to the potential for resolution of state and foreign examinations, and the expiration of various statutes of limitations, it is reasonably possible that our gross unrecognized tax benefit balance may change within the next twelve months by a range of $0 to $3.6$1.4 million.
 
Effective Tax Rate. 

Our effective income tax rate was 26.1% and 29.1%25.1% for the three months ended September 30, 2017 and2020, compared to 14.5% for the three months ended September 30, 2016, respectively. 2019. Our third quarter effective 2020 tax rate was adversely impacted by the tax treatment associated with the gain on the fair value adjustment of the Brazil investment.

Our effective income tax rate was 26.2% and 32.1%24.1% for the nine months ended September 30, 2017 and2020, compared to an 11.7% benefit for the nine months ended September 30, 2016, respectively. The decrease in our2019. Our effective income tax rate is primarily attributablewas higher year-to-date for 2020 as compared to 2019 due to permanent tax differences resulting from the accrual for losses associated with certain legal proceedings and investigations related to the adoption2017 cybersecurity incident included in the 2019 effective tax rate. The 2020 year-to-date rate has been adversely impacted by valuation allowances against the deferred tax assets of certain international operations as well as the tax treatment associated with the gain on the fair value adjustment of the new stock-based compensation guidance prospectively adopted inBrazil investment. However, these impacts were partially offset by favorable adjustments related to the first quarter2019 legal proceedings. 2019 income taxes were calculated using the discrete method, applying the actual year-to-date effective tax rate to our pre-tax loss.

On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (The CARES Act), also known as the Third COVID-19 Supplemental Relief bill, and the President of 2017 that requires the recognitionUnited States signed the legislation into law. The provisions of the legislation have not had a significant impact on the effective tax rate or the income tax payable and deferred income tax positions of the Company.

The adverse economic effects of awards in the income statement whencurrent COVID-19 pandemic have caused the awards vest or are settled. These amounts were previously recognized in additional paid-in-capital. Additionally,Company to reassess the need for valuation allowances against deferred tax assets. As a result of this analysis the first nine monthsCompany determined it was necessary to place valuation allowances against deferred tax assets of 2017,certain subsidiaries. The total amount of the ratevaluation allowances recorded year-to-date is lower due to adjustments for uncertain tax positions related to the first quarter 2017 settlement of an income tax audit. approximately $7.0 million.



22

7. ACCUMULATED OTHER COMPREHENSIVE INCOMELOSS
 
Changes in accumulated other comprehensive incomeloss by component, after tax, for the nine months ended September 30, 2017,2020, are as follows: 
  Foreign
currency		 Pension and other
postretirement
benefit plans		 Cash flow
hedging
transactions		 Total
  (In millions)
Balance, December 31, 2016 $(262.0) $(265.9) $(1.0) $(528.9)
Other comprehensive income before reclassifications 209.7
 —
 (0.2) 209.5
Amounts reclassified from accumulated other comprehensive income —
 7.6
 —
 7.6
Net current-period other comprehensive income 209.7
 7.6
 (0.2) 217.1
Balance, September 30, 2017 $(52.3) $(258.3) $(1.2) $(311.8)
Foreign
currency		Pension and other
postretirement
benefit plans		Cash flow
hedging
transactions		Total
 (In millions)
Balance, December 31, 2019$(352.4)$(278.1)$(1.1)$(631.6)
Other comprehensive loss before reclassifications(8.2)0 0 (8.2)
Amounts reclassified from accumulated other comprehensive loss0 11.3 0 11.3 
Net current-period other comprehensive (loss) income(8.2)11.3 0 3.1 
Balance, September 30, 2020$(360.6)$(266.8)$(1.1)$(628.5)
 
Reclassifications out of accumulated other comprehensive incomeloss for the nine months ended September 30, 2017,2020, are as follows: 
Details about accumulated other
comprehensive income components		 Amount reclassified
from accumulated other
comprehensive income		 Affected line item in
the statement where
net income is presented
Details about accumulated other
comprehensive loss components		Details about accumulated other
comprehensive loss components		Amount reclassified
from accumulated other
comprehensive loss		Affected line item in
the statement where
net income is presented
 (In millions)   (In millions) 
Amortization of pension and other postretirement plan items:  
  Amortization of pension and other postretirement plan items:  
Prior service cost $0.3
 (1)Prior service cost$(0.3)(1)
Recognized actuarial loss (12.6) (1)Recognized actuarial loss15.3 (1)
 (12.3) Total before tax 15.0 Total before tax
 4.7
 Tax benefit (3.7)Tax benefit
 $(7.6) Net of tax $11.3 Net of tax
 
(1)These accumulated other comprehensive incomeloss components are included in the computation of net periodic pension cost (See Note 8 Benefit Plans for additional details).


Changes in accumulated other comprehensive incomeloss related to noncontrolling interests were not material as of September 30, 2017.2020.



8. BENEFIT PLANS
 
We sponsor defined benefit pension plans and defined contribution plans. For additional information about our benefit plans, see Note 109 of the Notes to Consolidated Financial Statements in our 20162019 Form 10-K.


The following table provides the components of net periodic benefit cost. The service cost component is included in selling, general and administrative expenses and the other components of net periodic benefit cost are included in other income, net in the Consolidated Statements of Income (Loss) for the three and nine months ended September 30, 20172020 and 2016:2019:
 
 Pension BenefitsOther Benefits
 Three Months Ended September 30,
 2020201920202019
 (In millions)
Service cost$0.4 $0.7 $0.1 $0.1 
Interest cost5.9 7.1 0.1 0.2 
Expected return on plan assets(8.8)(9.0)(0.2)(0.2)
Amortization of prior service cost0 0.1 (0.1)(0.3)
Recognized actuarial loss4.9 3.7 0.2 0.3 
Total net periodic benefit cost$2.4 $2.6 $0.1 $0.1 

23

 Pension Benefits Other BenefitsPension BenefitsOther Benefits
 Three Months Ended September 30,Nine months ended September 30,
 2017 2016 2017 20162020201920202019
 (In millions)(In millions)
Service cost $1.0
 $0.9
 $0.1
 $0.1
Service cost$1.2 $2.1 $0.3 $0.3 
Interest cost 7.1
 8.0
 0.2
 0.2
Interest cost17.7 21.3 0.3 0.6 
Expected return on plan assets (9.3) (9.6) (0.3) (0.3)Expected return on plan assets(26.4)(27.0)(0.6)(0.6)
Amortization of prior service cost 0.2
 0.2
 (0.3) (0.3)Amortization of prior service cost0 0.3 (0.3)(0.9)
Recognized actuarial loss 3.8
 3.5
 0.4
 0.2
Recognized actuarial loss14.7 11.1 0.6 0.9 
Total net periodic benefit cost $2.8
 $3.0
 $0.1
 $(0.1)Total net periodic benefit cost$7.2 $7.8 $0.3 $0.3 



  Pension Benefits Other Benefits
  Nine months ended September 30,
  2017 2016 2017 2016
  (In millions)
Service cost $3.0
 $2.7
 $0.3
 $0.3
Interest cost 21.3
 24.0
 0.6
 0.6
Expected return on plan assets (27.9) (28.8) (0.9) (0.9)
Amortization of prior service cost 0.6
 0.6
 (0.9) (0.9)
Recognized actuarial loss 11.4
 10.5
 1.2
 0.6
Total net periodic benefit cost $8.4
 $9.0
 $0.3
 $(0.3)


9. SEGMENT INFORMATION
 
Reportable Segments. We manage our business and report our financial results through the following four4 reportable segments, which are the same as our operating segments:


-    U.S. Information Solutions ("USIS"(“USIS”)
-    International
-    Workforce Solutions
-    International
-    Global Consumer Solutions ("GCS")
 
The accounting policies of the reportable segments are the same as those described in our summary of significant accounting policies in Note 1 of the Notes to Consolidated Financial Statements in our 20162019 Form 10-K. We evaluate the performance of these reportable segments based on their operating revenues, operating income and operating margins, excluding unusual or infrequent items, if any. Inter-segment sales and transfers are not material for all periods presented. The measurement criteria for segment profit or loss and segment assets are substantially the same for each reportable segment. Inter-segment sales and transfers are not material for all periods presented. All transactions between segments are accounted for at fair market value or cost depending on the nature of the transaction, and no timing differences occur between segments.
 


A summary of segment products and services is as follows:
 
U.S. Information Solutions. This segment includes consumer and commercial information services (such as credit information and credit scoring, credit modeling services and portfolio analytics (decisioning tools), which are derived from our databases of business credit and financial information, locate services, fraud detection and prevention services, identity verification services and other consulting services); mortgage loan origination information; financial marketing services; and identity management.

Workforce Solutions.  This segment includes employment, income and social security number verification services as well as complementary payroll-based transaction services and employment tax management services.
 
International.  This segment includes information services products, which includes consumer and commercial services (such as credit and financial information, credit scoring and credit modeling services), credit and other marketing products and services. WeIn Asia Pacific, Europe, Latin America and Canada, we also provide information, technology and services to support debt collections and recovery management.
 
Workforce Solutions.  This segment includes employment, income and social security number verification services as well as complementary payroll-based transaction services and employment tax management services.
Global Consumer Solutions.  This segment includes credit information, credit monitoring and identity theft protection products sold directly and indirectly to consumers via the internet and in various hard-copy formats in the U.S., Canada, and the U.K. We also sell consumer and credit information to resellers who combine our information with other information to provide direct to consumer monitoring, reports and scores.
 
24

Operating revenue and operating income by operating segment during the three and nine months ended September 30, 20172020 and 20162019 are as follows:
 Three Months EndedNine Months Ended
(In millions)September 30,September 30,
Operating revenue:2020201920202019
U.S. Information Solutions$386.3 $315.5 $1,095.1 $946.5 
Workforce Solutions376.8 240.6 1,031.4 699.2 
International218.0 230.5 614.6 684.6 
Global Consumer Solutions87.2 89.1 268.0 271.5 
Total operating revenue$1,068.3 $875.7 $3,009.1 $2,601.8 
 
 Three Months EndedNine Months Ended
(In millions)September 30,September 30,
Operating income (loss):2020201920202019
U.S. Information Solutions$128.6 $98.2 $349.3 $312.2 
Workforce Solutions193.2 99.6 500.8 291.4 
International25.4 26.0 34.5 59.9 
Global Consumer Solutions12.5 11.9 33.4 36.2 
General Corporate Expense(155.3)(114.1)(410.8)(1,082.2)
Total operating income (loss)$204.4 $121.6 $507.2 $(382.5)
  Three Months Ended Nine Months Ended
(In millions) September 30, September 30,
Operating revenue: 2017 2016 2017 2016
U.S. Information Solutions
$307.7

$317.4

$949.7

$920.2
International
239.8

214.3

687.5

591.2
Workforce Solutions
186.4

171.3

580.9

528.7
Global Consumer Solutions
100.9

101.1

305.7

303.7
Total operating revenue $834.8
 $804.1
 $2,523.8
 $2,343.8
  Three Months Ended Nine Months Ended
(In millions) September 30, September 30,
Operating income: 2017 2016 2017 2016
U.S. Information Solutions
$129.5

$139.5

$408.9

$396.3
International
52.9

26.3

128.8

79.3
Workforce Solutions
80.3

69.9

258.7

226.9
Global Consumer Solutions
24.7

28.0

82.9

80.7
General Corporate Expense
(134.5)
(51.6)
(245.5)
(169.2)
Total operating income
$152.9

$212.1

$633.8

$614.0


Total assets by operating segment at September 30, 20172020 and December 31, 20162019 are as follows:
 September 30,December 31,
(In millions)20202019
Total assets:  
U.S. Information Solutions$1,966.7 $1,922.9 
Workforce Solutions1,344.5 1,338.6 
International3,161.3 2,977.0 
Global Consumer Solutions294.5 275.3 
General Corporate2,482.8 1,395.2 
Total assets$9,249.8 $7,909.0 

  September 30, December 31,
(In millions) 2017 2016
Total assets:    
U.S. Information Solutions $1,765.6
 $1,824.0
International 3,123.0
 2,932.5
Workforce Solutions 1,346.0
 1,337.0
Global Consumer Solutions 267.6
 193.7
General Corporate 613.5
 376.8
Total assets $7,115.7
 $6,664.0

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
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.
 
All references to earnings per share data in Management’s Discussion and Analysis, or MD&A, are to diluted earnings per share, or EPS, unless otherwise noted. Diluted EPS is calculated to reflect the potential dilution that would occur if stock options or other contracts to issue common stock were exercised and resulted in additional common shares outstanding.
 
BUSINESS OVERVIEW
 
Equifax Inc. is a global data, analytics and technology company. We are a leading global provider ofprovide information solutions employment and income verifications and human resources business process outsourcing services.services for businesses, governments and consumers. We leverage somehave a large and diversified group of the largest sourcesclients, including financial institutions, corporations, governments and individuals. Our services are based on comprehensive databases of consumer and commercial data, along withbusiness information derived from numerous sources including credit, financial assets, telecommunications and utility payments, employment, income, demographic and marketing data. We use advanced analyticsstatistical techniques, machine learning and proprietary technology,software tools to analyze available data to create customized insights, which enabledecision-making solutions and processing services for our business customersclients. We also provide information, technology and services to grow faster, more efficientlysupport debt collections and more profitably, and to inform and empower consumers.
Businesses rely on us for consumer and business credit intelligence, credit portfolio management, fraud detection, decisioning technology, marketing tools, debt managementrecovery management. Additionally, we are a leading provider of payroll-related and human resources-related services.
25

resource management business process outsourcing services in the United States of America, or U.S. For consumers, we provide products and services to help people understand, manage and protect their personal information and make more informed financial decisions.
We currently operate in four global regions: North America (U.S. and Canada), Asia Pacific (Australia, New Zealand and India), Europe (the United Kingdom, or U.K., Spain and Portugal) and Latin America (Argentina, Chile, Costa Rica, Ecuador, El Salvador, Honduras, Mexico, Paraguay, Peru and Uruguay). We maintain support operations in the Republic of Ireland, Chile, Costa Rica and India. We also offer Equifax branded credit services in Russia through a portfoliojoint venture, have investments in consumer and/or commercial credit information companies through joint ventures in Cambodia, Malaysia, Singapore and the United Arab Emirates, and have an investment in a consumer and commercial credit information company in Brazil.
Recent Events and Company Outlook
As further described in our 2019 Form 10-K, we operate in the United States, which represented 73% of our revenue in 2019, and internationally in 24 countries. Our products that enable individual consumers to manage their financial affairs and protect their identity. Our revenue stream is diversified among businesses acrossservices span a wide rangevariety of industries, international geographiesvertical markets including financial services, mortgage, federal, state and individual consumers.local governments, automotive, telecommunications and many others.

On March 11, 2020, the World Health Organization designated the novel coronavirus disease (“COVID-19”) as a global pandemic. The impact of COVID-19 and related actions to attempt to control its spread began to impact our consolidated operating results in March 2020. The impact on the operating results in each country in which we operate differed based on the conditions and the vertical markets we serve in that country. In the United States, consolidated revenue grew during the three months ended September 30, 2020, compared to the three months ended September 30, 2019, reflecting very strong mortgage market related revenue in both USIS and Workforce Solutions, and, to a lesser degree than we experienced in the three months ended June 30, 2020, higher revenue growth in our Workforce Solutions unemployment claims management business. However, in the U.S., we experienced year-over-year revenue declines in most other vertical markets including commercial, financial services and telecommunications. Internationally, all countries in which we operate experienced revenue declines, across most vertical markets. The year-over-year reductions in countries and vertical markets referenced were most pronounced in the second quarter. Although most countries continue to show year-over-year declines, performance in the third quarter of fiscal 2017, we announced a cybersecurity incident potentially impacting approximately 145.5 million U.S. consumers. Criminals exploited a U.S. website application vulnerability to gain access to certain files. Based on our forensic investigation,2020 has improved from the unauthorized access occurred from mid-May through July 2017. The information accessed primarily includes names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers. In addition, credit card numbers for approximately 209,000 U.S. and Canadian consumers, and certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers, were accessed. The investigation also determined that personal information of approximately 8,000 Canadian consumers was impacted and approximately 690,000 potentially affected U.K. consumers will be contacted regarding access to personal informationlevels seen in the cybersecurity incident.

Upon discoverysecond quarter. Due to the strong revenue growth in the U.S., total Equifax consolidated operating results improved in the third quarter of 2020 compared to both the unauthorized access, we acted immediately to stopfirst and second quarters of 2020 and the intrusion and promptly engaged a leading, independent cybersecurity firm to conduct a comprehensive forensic reviewthird quarter of 2019. We are unable to determine the scopeseverity or duration of the intrusion,impact of the COVID-19 pandemic on Equifax or how the impact on the individual markets in the countries we serve will change with time. Although consolidated revenue has grown during the first nine months of 2020 when compared to 2019, due to the uncertain effects of the global economy caused by the impact of COVID-19, there can be no assurances that revenues will continue to grow in the fourth quarter of 2020.

We expect that the global COVID-19 pandemic will continue to adversely impact our business and results of operations. During this uncertain time, our critical priorities are:

(i)the health and safety of our employees and their families;
(ii)providing support to consumers;
(iii)helping our customers execute their changing business plans by providing innovative solutions combining our unique data assets and leading analytical and technology capabilities; and
(iv)executing on our EFX2020 cloud technology, data and security transformation per our previously stated plans.
In the first quarter of 2020, we executed on our business continuity plans and formed a crisis management team to address the challenges related to the ongoing COVID-19 pandemic. In March and April 2020, our employees worked from home in each country where we operate, with only essential employees in customer support and data center operations working on site at our facilities. Beginning in May, in jurisdictions where local restrictions implemented to prevent the further spread of the virus were lifted, our employees began to return to their assigned offices, with limits placed on the number of employees on site at one time. For employees working at our offices and facilities, we have instituted social distancing protocols, increased the level of cleaning and sanitizing in those facilities and undertaken other actions to make these sites safer. We have also substantially reduced employee travel to only essential business needs. As part of our business continuity plans, we are generally following the requirements and protocols published by the U.S. Centers for Disease Control and the World Health Organization, and state and local governments. If public health authorities dictate further measures to limit further spread of the
26

virus, we may need to reinstate our business continuity plans in certain countries or regions in which we operate. As of the date of this filing, we do not believe our work from home and return to office protocol have materially adversely impacted our internal controls, financial reporting systems or our operations.
Our data and analytics, product and sales teams are focused on how to refine existing products and services, as well as generate new products and services, to meet changing needs of our customer in this environment. Our technology teams continue to execute on our EFX2020 cloud technology, data and security transformation, including the specific data impacted. The forensic analysiscontinued migration of our technology to cloud native environments. To date, the change in working environment has not caused material disruptions in the execution of these plans.
As a response to the ongoing COVID-19 pandemic, we have implemented plans to manage our costs. We have significantly limited the addition of new employees and third party contracted services, eliminated all travel except where necessary to meet customer or regulatory needs, and acted to limit discretionary spending. To the extent the business disruption continues for an extended period, additional cost management actions will be considered. Recovery from the COVID-19 induced recession remains highly uncertain and may require several years to return to economic levels experienced prior to the pandemic and may affect certain markets or regions we serve differently.Any future asset impairment charges, increase in allowance for doubtful accounts, or restructuring charges could be more likely and will be dependent on the severity and duration of this crisis.
At September 30, 2020, we had approximately $1.5 billion in cash and $1.3 billion available to borrow under our revolving credit facility that matures in September 2023 and receivables funding facility. In the second quarter of 2020, we amended our revolving credit facility to increase the maximum leverage ratio through 2021 to provide us with additional financial flexibility.
In light of the consumers potentiallyevolving health, social, economic and business environment, governmental regulations or mandates, and business disruptions that could occur, the potential impact that COVID-19 could have on our financial condition and operating results remains highly uncertain.
For more information, see “Item 1A. Risk Factors—Our business has been and will continue to be negatively impacted by the recent COVID-19 outbreak,” in our June 30, 2020 Form 10-Q.
2017 Cybersecurity Incident
Litigation, Claims and Government Investigations.As a result of the 2017 cybersecurity incident, is now complete. We also reportedwe are subject to a significant number of proceedings and investigations as described in Part II, “Item 1. Legal Proceedings” in this Form 10-Q.
In 2019, we recorded expenses, net of insurance recoveries, of $800.9 million in other current liabilities and selling, general, and administrative expenses in our Consolidated Balance Sheets and Statements of Income (Loss), respectively, exclusive of our legal and professional services expenses. The amount accrued represents our best estimate of the criminal accessliability related to law enforcement andthese matters. The Company will continue to cooperateevaluate information as it becomes known and adjust accruals for new information and further developments in accordance with law enforcementASC 450-20-25. The ultimate amount paid on these actions, claims and investigations in connection withexcess of the criminal investigation intoamount already accrued could be material to the actors responsible forCompany’s consolidated financial condition, results of operations, or cash flows in future periods.
Future Costs. We are currently executing substantial initiatives in security and consumer support, and a company-wide transformation of our technology infrastructure, which we refer to as our technology transformation, and incurred substantial increased expenses and capital expenditures in 2019 and the cybersecurity incident.first nine month of 2020 related to these initiatives. We expect to continue to incur significant expenses and capital expenditures in the remainder of 2020 related to these initiatives, at similar levels as those incurred in 2019.

We incurred significant legal and professional services expenses related to the lawsuits, claims and government investigations to which we were a party in 2019, and expect to continue to incur these expenses until all matters are fully resolved. However, due to the settlement of all significant matters in the U.S. in 2019, the level of legal and professional service expenses related to these matters was significantly lower in the first nine months of 2020 compared to the same period in 2019, and we expect that these expenses will continue to be significantly lower in the remainder of 2020.

We will recognize the expenses and capital expenditures referenced herein as they are incurred.

27

Segment and Geographic Information


Segments.  The USIS segment, the largest of our four segments, consists of three service lines: Online Information Solutions; Mortgage Solutions; and Financial Marketing Services. Online Information Solutions and Mortgage Solutions revenue is principally transaction-based and is derived from our sales of products such as consumer and commercial credit reporting and scoring, identity management, fraud detection and modeling services. USIS also markets certain decisioning software services, which facilitate and automate a variety of consumer and commercial credit-oriented decisions. Financial Marketing Services revenue is principally project and subscription based and is derived from our sales of batch credit and consumer wealth information such as those that assist clients in acquiring new customers, cross selling to existing customers and managing portfolio risk.
The International segment consists of Canada, Europe, Asia Pacific and Latin America. Following the acquisition of Veda, we have created an Asia Pacific reporting unit which consists mainly of our Australia and New Zealand operations. Canada’s services are similar to our USIS offerings, while Europe, Asia Pacific and Latin America are made up of varying mixes of service lines that are in our USIS reportable segment. We also provide information and technology services to support lenders and other creditors in the collections and recovery management process. Asia Pacific also has various consumer direct product offerings.

The Workforce Solutions segment consists of the Verification Services and Employer Services business lines. Verification Services revenue is transaction-based and is derived primarily from employment and income verification. Employer Services revenues are derived from our provision of certain human resources business process outsourcing services

that include both transaction and subscription based product offerings. These services include unemployment claims management, employment-based tax credit services and other complementary employment-based transaction services.
The International segment consists of Asia Pacific, Europe, Latin America and Canada. Canada’s services are similar to our USIS offerings, while Asia Pacific, Europe and Latin America are made up of varying mixes of service lines that are generally in our USIS segment. We also provide information and technology services to support lenders and other creditors in the collections and recovery management process.
 
Global Consumer Solutions revenue is both transaction and subscription based and is derived from the sale of credit monitoring and identity theft protection products, which we deliver electronically to consumers primarily via the internet in the U.S., Canada, and the U.K. We reach consumers directly and indirectly through partners. We also sell consumer and credit information to resellers who combine our information with other information to provide direct to consumerdirect-to-consumer monitoring, reports and scores. Due to the cybersecurity incident we have ceased advertising for new business as it relates to our consumer direct business and have now provided a free product as mentioned in Note 5 of the Notes to Consolidated Financial Statements in this Form 10-Q.

Geographic Information.  We currently have significant operations in the following countries: Argentina, Australia, Canada, Chile, Costa Rica, Ecuador, El Salvador, Honduras, India, Mexico, New Zealand, Paraguay, Peru, Portugal, the Republic of Ireland, Spain, the U.K., Uruguay and the U.S. We also offer Equifax branded credit services in India and Russia through a joint ventures, weventure, have investments in consumer and/or commercial credit information companies through joint ventures in Cambodia, Malaysia, and Singapore, and the United Arab Emirates, have an investment in a consumer and commercial credit information company in Brazil.Brazil, and have an investment in an identity authentication company in Canada. Approximately 78% and 72% of our revenue was generated in the U.S. during the three months ended September 30, 2020 and 2019, respectively. Approximately 78% and 72% of our revenue was generated in the U.S. during the nine months ended September 30, 2020 and 2019, respectively.
 
28

Key Performance Indicators.  Management focuses on a variety of key indicators to monitor operating and financial performance. These performance indicators include measurements of operating revenue, change in operating revenue, operating income, operating margin, net income, attributable to Equifax, diluted earnings per share, cash provided by operating activities and capital expenditures. The key performance indicators for the three and nine months ended September 30, 20172020 and 20162019 were as follows:

 Key Performance IndicatorsKey Performance Indicators
 Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended September 30,Nine months ended September 30,
 2017 2016 2017 20162020201920202019
 (In millions, except per share data) (In millions, except per share data)(In millions, except per share data)(In millions, except per share data)
Operating revenue $834.8
 $804.1
 $2,523.8
 $2,343.8
Operating revenue$1,068.3 $875.7 $3,009.1 $2,601.8 
Operating revenue change 4% 20% 8% 17%Operating revenue change22 %5 %16 %1 %
Operating income $152.9
 $212.1
 $633.8
 $614.0
Operating income (loss)Operating income (loss)$204.4 $121.6 $507.2 $(382.5)
Operating margin 18.3% 26.4% 25.1% 26.2%Operating margin19.1 %13.9 %16.9 %(14.7)%
Net income attributable to Equifax $96.3
 $132.8
 $415.0
 $365.8
Diluted earnings per share $0.79
 $1.09
 $3.41
 $3.02
Cash provided by operating activities $279.6
 $245.0
 $608.7
 $544.2
Net income (loss) attributable to EquifaxNet income (loss) attributable to Equifax$224.2 $81.1 $432.7 $(408.0)
Diluted earnings (loss) per shareDiluted earnings (loss) per share$1.82 $0.66 $3.53 $(3.35)
Cash provided by (used in) operating activitiesCash provided by (used in) operating activities$367.0 $(164.9)$649.0 $83.1 
Capital expenditures* $(56.0) $(48.2) $(142.8) $(131.0)Capital expenditures*$(112.3)$(87.8)$(309.6)$(285.9)


*Amounts above exclude changes ininclude accruals for capital expenditures.
 
Operational and Financial Highlights
 
•We repurchased 0.5 milliondid not repurchase shares of our common stock on the open market for $77.1 million during the first nine months of 2017.2020. At September 30, 2017,2020, $590.1 million was available for future purchases of common stock under our share repurchase authorization.


•We paid out $140.7$142.1 million or $1.17 per share in dividends to our shareholders during the first nine months of 2017.

2020.
 
Business Environment and Company Outlook
29
Demand for our services tends to be correlated to general levels of economic activity and to consumer credit activity, both enhanced by our own initiatives to expand our products and markets served, and to small commercial credit and marketing activity. In the United States we expect modest growth in overall economic activity and consumer credit for the remainder of


the year. Mortgage market volumes are expected to be down for the full year. Similar to the U.S., we expect modest economic growth in the U.K., Australia, Canada, Argentina, Chile and Spain, with GDP growth in those markets in the low single digits in 2017. In addition, we expect that in the second half of the year that stronger foreign exchange rates compared to the prior year, will positively impact both growth in revenue and profit when reported in U.S. dollars.

The cybersecurity incident announced in the third quarter of 2017 is expected to negatively impact revenue, principally in our U.S. businesses, and to a lesser extent in Canada and the U.K., in 2017 and 2018. We will also incur, in 2017 and 2018, legal, consulting and other costs related to the analysis and response to the cybersecurity incident. We will incur costs and capital expenditures for providing the free credit file monitoring and identity theft protection to U.S. consumers, as well as services to U.K. and Canadian consumers, in 2017 and 2018. Additionally, in 2017 and 2018, we will incur increased information technology and security costs and capital expenditures to improve information technology security and resilience globally related to near-term actions, and ongoing increases in the run-rate of IT and security spending. We also expect to incur increased expenses for insurance, finance, compliance activities, and to meet increased legal and regulatory requirements. We also expect to incur increased costs to provide free services to consumers, including increased customer support costs.

As a result of the cybersecurity incident, we are subject to a significant number of proceedings and investigations as described in Part II, "Item 1. Legal Proceedings." While we believe it is reasonably possible that we will incur losses associated with these proceedings and investigations, it is not possible to estimate the amount of loss or range of possible loss, if any, that might result from adverse judgments, settlements, penalties or other resolution of such proceedings and investigations based on the early stage of these proceedings and investigations, that alleged damages have not been specified, the uncertainty as to the certification of a class or classes and the size of any certified class, as applicable, and the lack of resolution on significant factual and legal issues.

RESULTS OF OPERATIONS—THREE AND NINE MONTHS ENDED SEPTEMBER 30, 20172020 AND 20162019
 
Consolidated Financial Results
 
Operating Revenue 
 Three Months Ended September 30, Change Nine Months Ended September 30, Change Three Months Ended September 30,ChangeNine Months Ended September 30,Change
Consolidated Operating Revenue 2017 2016 $ % 2017 2016 $ %Consolidated Operating Revenue20202019$%20202019$%
 (In millions) (In millions) (In millions)(In millions)
U.S. Information Solutions $307.7
 $317.4
 $(9.7) (3)% $949.7
 $920.2
 $29.5
 3%U.S. Information Solutions$386.3 $315.5 $70.8 22 %$1,095.1 $946.5 $148.6 16 %
Workforce SolutionsWorkforce Solutions376.8 240.6 136.2 57 %1,031.4 699.2 332.2 48 %
International 239.8
 214.3
 25.5
 12 % 687.5
 591.2
 96.3
 16%International218.0 230.5 (12.5)(5)%614.6 684.6 (70.0)(10)%
Workforce Solutions 186.4
 171.3
 15.1
 9 % 580.9
 528.7
 52.2
 10%
Global Consumer Solutions 100.9
 101.1
 (0.2) — % 305.7
 303.7
 2.0
 1%Global Consumer Solutions87.2 89.1 (1.9)(2)%268.0 271.5 (3.5)(1)%
Consolidated operating revenue $834.8
 $804.1
 $30.7
 4 % $2,523.8
 $2,343.8
 $180.0
 8%Consolidated operating revenue$1,068.3 $875.7 $192.6 22 %$3,009.1 $2,601.8 $407.3 16 %
 
Revenue increased by $30.7$192.6 million, or 4%22%, and $180.0by $407.3 million, or 8%16%, in the third quarter and first nine months of 2017,2020, respectively, compared to the same periods in 2016. The growth2019. Total revenue was not materially impacted by foreign exchange rates in the third quarter of 20172020 but was driven by our International and Workforce Solutions segments. International had strong growth across all regions. Workforce Solutions saw strong growth driven by Verification Services. USIS declinednegatively impacted in the third quarter, reflecting the impact of the cybersecurity incident, and the weakened U.S. mortgage market. Revenue growth for the first nine months of 2017, is also driven2020, which decreased revenue by growth$30.1 million, or 1%, compared to the same periods in International, reflecting broad based organic growth2019.

Revenue in the third quarter and the Veda acquisition, and Workforce Solutions. Growth in Workforce Solutions is driven by Verification Services. Additionally, USIS growth for the first nine months of 2017 reflects2020 increased due to growth in core credit decisioning,our Workforce Solutions and USIS businesses, primarily due to strong U.S. mortgage and identity and fraud solutions. Total revenue for third quarter was positively impacted by foreign exchange rates, which increased revenue, on a constant currency basis, by $3.2 million when compared to the third quarter of 2016. Total revenue for the first nine months of 2017volume as well as growth in our Workforce Solutions unemployment claims business. Revenue growth was negatively impacted by foreign exchange rates, which reduced revenue, ondue to a constant currency basis, by $14.0 million, or 1% when comparedsignificant decline beginning in the second half of March across International and GCS, due to the first nine monthseconomic impact of 2016. the COVID-19 pandemic.

Operating Expenses
 Three Months Ended September 30,ChangeNine Months Ended September 30,Change
Consolidated Operating Expenses20202019$%20202019$%
 (In millions)(In millions)
Consolidated cost of services$433.2 $374.5 $58.7 16 %$1,256.5 $1,138.9 $117.6 10 %
Consolidated selling, general and administrative expenses330.0 295.5 34.5 12 %955.9 1,601.2 (645.3)(40)%
Consolidated depreciation and amortization expense100.7 84.1 16.6 20 %289.5 244.2 45.3 19 %
Consolidated operating expenses$863.9 $754.1 $109.8 15 %$2,501.9 $2,984.3 $(482.4)(16)%
 
Operating Expenses
 
Three Months Ended September 30,
Change
Nine Months Ended September 30,
Change
Consolidated Operating Expenses
2017
2016
$
%
2017
2016
$
%
 
(In millions)
(In millions)
Consolidated cost of services
$297.3

$288.0

$9.3

3%
$891.9

$827.1

$64.8

8%
Consolidated selling, general and administrative expenses
312.2

233.4

78.8

34%
783.9

708.2

75.7

11%
Consolidated depreciation and amortization expense
72.4

70.6

1.8

3%
214.2

194.5

19.7

10%
Consolidated operating expenses
$681.9

$592.0

$89.9

15%
$1,890.0

$1,729.8

$160.2

9%
Cost of services increased $9.3$58.7 million and $64.8$117.6 million in the third quarter and first nine months of 2017,2020, respectively, as compared to the same periods in 2016.2019. The increase for the third quarter wasincreases were due to higheran increase in royalty and production costs driven by higher revenues and higher technology costs, partially offset by a decrease in people costs. The increase for the first nine months was due to higher productions costs driven by higher revenues, higher people and technology costs, as well as the Veda acquisition.incremental technology and data security costs related to our ongoing technology transformation. The impact of changes in foreign exchange rates increased coston costs of services by $1.8led to an increase of $0.6 million in the third quarter of 2020 and a decrease of $13.4 million for the first nine months of 2020, compared to the same periods in 2019.
Selling, general and administrative expenses increased $34.5 million and reduced cost of services by $5.9decreased $645.3 million in the third quarter and first nine months of 2017, respectively.
Selling, general and administrative expense increased $78.8 million and $75.7 million in the third quarter and first nine months of 2017,2020, respectively, as compared to the same periods in 2016.2019. The overall increase in the third quarter was due to the $87.5 million accrual ofan increase in people costs, related to the cybersecurity incident and higher occupancy expenses, partially offset by a declinedecrease in Veda integrationlegal expenses and transactionlower business travel costs. For the nine months ended September 30, 2020, the decrease is due to $701.3 million in legal accruals associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident recorded in the first nine months of 2019 that did not recur in 2020, partially offset by an increase in people costs. The impact of changes in foreign currency exchange rates increased ourdecreased selling, general and administrative expenses by $0.7$0.9 million and reduced our selling, general$10.8 million for the third quarter and administrative expensesfirst nine months of 2020, respectively, compared to the same periods in 2019.

Depreciation and amortization expense increased $16.6 million and $45.3 million for the third quarter and first nine months of 2020, respectively, compared to the same periods in 2019. The increases are due to the higher amortization of capitalized internal-use software and system costs.

30

Operating Income and Operating Margin
 Three Months Ended September 30,ChangeNine Months Ended September 30,Change
Consolidated Operating Income (Loss)20202019$%20202019$%
 (In millions)(In millions)
Consolidated operating revenue$1,068.3 $875.7 $192.6 22 %$3,009.1 $2,601.8 $407.3 16 %
Consolidated operating expenses863.9 754.1 109.8 15 %2,501.9 2,984.3 (482.4)(16)%
Consolidated operating income (loss)$204.4 $121.6 $82.8 68 %$507.2 $(382.5)$889.7 233 %
Consolidated operating margin19.1 %13.9 % 5.2  pts16.9 %(14.7)%31.6  pts

Total company operating margin increased by $4.55.2 percentage points and 31.6 percentage points in the third quarter and first nine months of 2020, respectively, compared to the same periods in 2019.

The margin increase in the third quarter of 2020 is due to increased revenue, partially offset by increased people, royalty and technology costs. The margin increase for the first nine months of 2020 is due to increased revenue and the prior year accrual for losses associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident that did not recur in 2020, partially offset by increased people, royalty and technology costs.
Interest Expense and Other (Expense) Income, net
Three Months Ended September 30,ChangeNine Months Ended September 30,Change
Consolidated Interest Expense and Other Income, net20202019$%20202019$%
 (In millions) (In millions)
Consolidated interest expense$(37.4)$(28.0)$(9.4)34 %$(104.7)$(82.3)$(22.4)27 %
Consolidated other income, net133.4 2.9 130.5 nm171.1 7.9 163.2 nm
Average cost of debt3.4 %3.7 % 3.5 %3.9 %
Total consolidated debt, net, at quarter end$4,377.4 $3,206.7 $1,170.7 37 %$4,377.4 $3,206.7 $1,170.7 37 %
nm - not meaningful
Interest expense increased by $9.4 million and $22.4 million for the third quarter and first nine months of 2020, respectively, compared to the same periods in 2019. The increase is due to the issuance of $1.0 billion senior notes in April 2020 and $750.0 million senior notes issued in November 2019, partially offset by Commercial Paper and Receivables Funding Facility balances that were outstanding in 2019, but not in 2020.
Other income, net, increased by $130.5 million and $163.2 million in the third quarter and first nine months of 2017, respectively.
Depreciation and amortization expense for the third quarter and first nine months of 2017 increased by $1.8 million and $19.7 million,2020, respectively, compared to the same periods in 2016. These increases are primarily2019. The increase in the third quarter of 2020 is due to a $129.9 million gain recorded related to a fair value adjustment of our investment in Brazil, due to its initial public offering during the Veda acquisition.quarter. The increase in the first nine months of 2020 also benefited from a $32.9 million gain recorded related to a fair value adjustment of the equity investment in India, for which we completed the acquisition of the remaining shareholder interests in the first quarter of 2020.



Income Taxes
Operating Income and Operating Margin
 Three Months Ended September 30,ChangeNine Months Ended September 30,Change
Consolidated (Provision) Benefit for Income Taxes20202019$%20202019$%
 (In millions)(In millions)
Consolidated (provision) benefit for income taxes$(75.4)$(14.0)$(61.4)439 %$(138.0)$53.3 $(191.3)(359)%
Effective income tax rate25.1 %14.5 %  24.1 %(11.7)%
Our effective income tax rate was 25.1% for the three months ended September 30, 2020, compared to 14.5% for the three months ended September 30, 2019. Our third quarter effective 2020 tax rate was adversely impacted by the tax treatment associated with the gain on the fair value adjustment of the Brazil investment.

31

  Three Months Ended September 30, Change   Nine Months Ended September 30, Change  
Consolidated Operating Income 2017 2016 $ %   2017 2016 $ %  
  (In millions)     (In millions)    
Consolidated operating revenue $834.8
 $804.1
 $30.7
 4 %   $2,523.8
 $2,343.8
 $180.0
 8 %  
Consolidated operating expenses 681.9
 592.0
 89.9
 15 %   1,890.0
 1,729.8
 160.2
 9 %  
Consolidated operating income $152.9
 $212.1
 $(59.2) (28)%   $633.8
 $614.0
 $19.8
 3 %  
Consolidated operating margin 18.3% 26.4%  
 (8.1) % pts 25.1% 26.2%  
 (1.1) % pts
Our effective income tax rate was 24.1% for the nine months ended September 30, 2020, compared to an 11.7% benefit for the nine months ended September 30, 2019. Our effective tax rate was higher year-to-date for 2020 as compared to 2019 due to permanent tax differences resulting from the accrual for losses associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident included in the 2019 effective tax rate.The 2020 year-to-date rate has been adversely impacted by valuation allowances against the deferred tax assets of certain international operations as well as the tax treatment associated with the gain on the fair value adjustment of the Brazil investment. However, these impacts were partially offset by favorable adjustments related to the 2019 legal proceedings. 2019 income taxes were calculated using the discrete method, applying the actual year-to-date effective tax rate to our pre-tax loss.


Total company operating margin decreasedNet Income
 Three Months Ended September 30,ChangeNine Months Ended September 30,Change
Consolidated Net Income (Loss)20202019$%20202019$%
 (In millions, except per share amounts)(In millions, except per share amounts)
Consolidated operating income (loss)$204.4 $121.6 $82.8 68 %$507.2 $(382.5)$889.7 233 %
Consolidated other income (expense), net96.0 (25.1)121.1 483 %66.4 (74.4)140.8 (189)%
Consolidated (provision) benefit for income taxes(75.4)(14.0)(61.4)437 %(138.0)53.3 (191.3)(359)%
Consolidated net income (loss)225.0 82.5 142.5 173 %435.6 (403.6)839.2 208 %
Net income (loss) attributable to noncontrolling interests(0.8)(1.4)0.6 40 %(2.9)(4.4)1.5 33 %
Net income (loss) attributable to Equifax$224.2 $81.1 $143.1 177 %$432.7 $(408.0)$840.7 206 %
Diluted earnings per common share:  
Net income (loss) attributable to Equifax$1.82 $0.66 $1.16 175 %$3.53 $(3.35)$6.88 205 %
Weighted-average shares used in computing diluted earnings per share123.0 122.3   122.7 122.0 
Consolidated net income (loss) increased by $142.5 million and $839.2 million in the third quarter and first nine months of 2017,2020, respectively, compared to the same periods in 2016, primarily2019. The increase for the third quarter of 2020 is due to increased operating income resulting from the accrualincrease in revenue as well as the gain recorded on the fair value adjustment of costs related to the cybersecurity incident, partially offset by increased margins in International and Equifax Workforce Solutions business segments. For the nine month period, the increased margin wasBrazil investment, partially offset by the increase in the amortization of intangibles from the Veda acquisition.
Interest Expensetax expense, people costs, royalty costs and Other Income (Expense), net
  Three Months Ended September 30, Change Nine Months Ended September 30, Change
Consolidated Interest Expense and Other Income (Expense), net    
 2017 2016 $ % 2017 2016 $ %
  (In millions)   (In millions)  
Consolidated interest expense $(21.4) $(24.3) $2.9
 (12)% $(70.1) $(68.0) $(2.1) 3 %
Consolidated other income (expense), net 4.5
 2.4
 2.1
 nm
 10.6
 (0.4) 11.0
 nm
Average cost of debt 3.2% 3.4%    
 3.5% 3.5%    
Total consolidated debt, net, at quarter end $2,706.5
 $2,843.0
 $(136.5) (5)% $2,706.5
 $2,843.0
 $(136.5) (5)%
Interest expense decreased for the third quarter and increased for the first nine months of 2017 when compared to the same periods in 2016.technology costs. The increase for the first nine months of 20172020 is due to an overall increase in our consolidated average debt outstanding as of September 30, 2017 incurred in order to finance the Veda acquisition. The decrease in interest expense and average cost of debt for the third quarter relates to the payment of a $272.5 million 6.3% note on July 3, 2017.
Other income (expense), net, for the third quarter of 2017, increased as compared to the prior year period, due primarily to higher earnings on equity method investments and lower foreign currency transaction losses. For the first nine months of 2017, the increase in other income (expense), net is due primarily to a 2016 loss on the economic hedges, offset by a foreign currency gain on intercompany debt, both items related to the Veda transaction which did not recur in 2017, as well as higher earnings on equity method investments in 2017.

Income Taxes
  Three Months Ended September 30, Change Nine Months Ended September 30, Change
Consolidated Provision for Income Taxes 2017 2016 $ % 2017 2016 $ %
  (In millions)   (In millions)  
Consolidated provision for income taxes $(35.5) $(55.3) $19.8
 (36)% $(150.8) $(175.3) $24.5
 (14)%
Effective income tax rate 26.1% 29.1%  
  
 26.2% 32.1%  
  
Our effective income tax rate was 26.1% for the third quarter of 2017, down from 29.1% for the third quarter of 2016. The effective income tax rate was 26.2% for the nine months ended September 30, 2017, as compared to 32.1% for the same period in 2016. The decrease in our effective income tax rate is primarily attributable to the adoption of the new stock-based compensation guidance prospectively adopted in the first quarter of 2017 that requires the recognition of the income tax effects of awards in the income statement when the awards vest or are settled. These amounts were previously recognized in additional paid-in-capital. Additionally, for the first nine months of 2017, the rate is lower due to adjustments for uncertain tax positions related to the first quarter 2017 settlement of an income tax audit.


Net Income
  Three Months Ended September 30, Change Nine Months Ended September 30, Change
Consolidated Net Income 2017 2016 $ % 2017 2016 $ %
  (In millions, except per share amounts) (In millions, except per share amounts)
Consolidated operating income $152.9
 $212.1
 $(59.2) (28)% $633.8
 $614.0
 $19.8
 3 %
Consolidated other expense, net (16.9) (21.9) 5.0
 (23)% (59.5) (68.4) 8.9
 (13)%
Consolidated provision for income taxes (35.5) (55.3) 19.8
 (36)% (150.8) (175.3) 24.5
 (14)%
Consolidated net income 100.5
 134.9
 (34.4) (26)% 423.5
 370.3
 53.2
 14 %
Net income attributable to noncontrolling interests (4.2) (2.1) (2.1) 100 % (8.5) (4.5) (4.0) 89 %
Net income attributable to Equifax $96.3
 $132.8
 $(36.5) (27)% $415.0
 $365.8
 $49.2
 13 %
Diluted earnings per common share:      
  
      
  
Net income attributable to Equifax $0.79
 $1.09
 $(0.30) (28)% $3.41
 $3.02
 $0.39
 13 %
Weighted-average shares used in computing diluted earnings per share 121.4
 121.3
  
  
 121.6
 121.1
  
  
Consolidated net income decreased by $34.4 million, or 26%, in the third quarter of 2017, primarily due to the accrual of costs related to the cybersecurity incident, decreased operating income in our USIS and GCS segments, partially offset by increased operating income in our International and Workforce Solutions segments and the tax benefit related to the prospective adoption of the new stock-based compensation guidance in the first quarter of 2017. Consolidated net income increased $53.2 million, or 14%, in the first nine months of 2017 due to increased operating income across all segments,resulting from the tax benefitincrease in revenue, the prior year accrual for losses associated with certain legal proceedings and investigations related to the prospective adoption2017 cybersecurity incident that did not recur in 2020 and an increase in Other Income resulting from the fair value adjustments of the new stock-based compensation guidance in the first quarter of 2017, adjustments for uncertain tax positions related to the recent settlement of an income tax audit,Brazil and India investments, partially offset by the accrualan increase in tax expense, people costs, royalty costs, technology costs, depreciation of costs related to the cybersecurity incident.capitalized projects and higher interest expense.


Segment Financial Results
 
USIS
  Three Months Ended September 30, Change   Nine Months Ended 
 September 30,		 Change  
U.S. Information Solutions 2017 2016 $ %   2017 2016 $ %  
  (In millions)     (In millions)    
Operating revenue:    
  
  
    
  
  
  
  
Online Information Solutions $221.0
 $229.8
 $(8.8) (4)%   $678.7
 $667.9
 $10.8
 2 %  
Mortgage Solutions 38.8
 39.4
 (0.6) (2)%   116.1
 105.9
 10.2
 10 %  
Financial Marketing Services 47.9
 48.2
 (0.3) (1)%   154.9
 146.4
 8.5
 6 %  
Total operating revenue $307.7
 $317.4
 $(9.7) (3)%   $949.7
 $920.2
 $29.5
 3 %  
% of consolidated revenue 37% 39%  
  
   38% 39%  
  
  
Total operating income $129.5
 $139.5
 $(10.0) (7)%   $408.9
 $396.3
 $12.6
 3 %  
Operating margin 42.1% 44.0%  
 (1.9) %pts 43.0% 43.1%  
 (0.1) % pts
USIS revenue decreased 3% in the third quarter of 2017 compared to the prior year period due to declines in our core credit decisioning services and core mortgage, reflecting the impact from the cybersecurity incident and weakened U.S. mortgage market and auto vertical, respectively. USIS revenue increased 3% in the first nine months of 2017, as compared to the prior year period, driven by growth across our core credit decisioning services, core mortgage, and identity and fraud solutions.
Online Information Solutions
Revenue for the third quarter and first nine months of 2017 decreased 4% and increased 2%, respectively, when compared to the prior year periods. The decrease in the third quarter of 2017, is driven by declines in our core credit decisioning business. The increase for the first nine months of 2017, is driven by an increase in our core credit decisioning and identity and fraud solutions businesses.  

Mortgage Solutions
Revenue decreased by 2% and increased by 10% for the third quarter and first nine months of 2017, respectively, when compared to the prior year periods. The increase for the first nine months of 2017 is primarily driven by growth in core mortgage, as well as growth from other mortgage product offerings.
Financial Marketing Services
Revenue decreased 1% and increased 6% for the third quarter and first nine months of 2017, respectively, as compared to the prior year periods. The increase for the first nine months of 2017 is due to strong project related revenue.
 Three Months Ended September 30,ChangeNine Months Ended September 30,Change
U.S. Information Solutions20202019$%20202019$%
 (In millions)(In millions)
Operating revenue:   
Online Information Solutions$284.7 $233.0 $51.7 22 %$800.3 $696.7 $103.6 15 %
Mortgage Solutions55.4 36.7 18.7 51 %149.4 104.4 45.0 43 %
Financial Marketing Services46.2 45.8 0.4 1 %145.4 145.4 — — %
Total operating revenue$386.3 $315.5 $70.8 22 %$1,095.1 $946.5 $148.6 16 %
% of consolidated revenue36 %36 %  36 %36 %
Total operating income$128.6 $98.2 $30.4 31 %$349.3 $312.2 $37.1 12 %
Operating margin33.3 %31.1 % 2.2 pts31.9 %33.0 %(1.1)pts
 
USIS Operating Margin
USIS operating margin decreased from 44.0% in the third quarter of 2016 to 42.1% in the third quarter of 2017 due to lower revenue. The USIS operating margin decreased from 43.1% to 43.0% in the first nine months of 2016 compared to the first nine months of 2017.

International
  Three Months Ended September 30, Change   Nine Months Ended September 30, Change  
International 2017 2016 $ %   2017 2016 $ %  
  (In millions)     (In millions)    
Operating revenue:  
  
  
  
    
  
  
  
  
Asia Pacific $81.2
 $73.6
 $7.6
 10%   $229.7
 $173.5
 $56.2
 32%  
Europe 69.0
 62.1
 6.9
 11%   199.2
 190.0
 9.2
 5%  
Latin America 54.5
 47.0
 7.5
 16%   158.5
 136.4
 22.1
 16%  
Canada 35.1
 31.6
 3.5
 11%   100.1
 91.3
 8.8
 10%  
Total operating revenue $239.8
 $214.3
 $25.5
 12%   $687.5
 $591.2
 $96.3
 16%  
% of consolidated revenue 29% 27%       27% 25%      
Total operating income $52.9
 $26.3
 $26.6
 101%   $128.7
 $79.3
 $49.4
 62%  
Operating margin 22.0% 12.3%  
 9.7
 %pts 18.7% 13.4%  
 5.3
 % pts
nm - not meaningful.
International revenue increased 12%by 22% and 16% in the third quarter and first nine months of 2017,2020, respectively, as compared to the priorsame periods in 2019. The increases are due to improvements in our core credit decisioning services and mortgage solutions volumes related to the strength of the U.S. mortgage market in 2020. 

32

Online Information Solutions
Revenue increased by 22% and 15% in the third quarter and first nine months of 2020, respectively, compared to the same periods in 2019. The increases in both periods are due to improved core credit decisioning services volumes related to improvements in the mortgage market. 2019 revenue was negatively impacted by a $15.0 million settlement with a commercial customer. We continue to see a reduction year periods. Local currencyover year related to non-mortgage online revenue growth forthat has declined due to the economic impact of COVID-19, which began in the latter half of March 2020.

Mortgage Solutions

Revenue increased by 51% and 43% in the third quarter and first nine months of 2020, respectively, compared to the same periods in 2019. The increases are due to increased mortgage market transaction volumes.

Financial Marketing Services

Revenue increased 1% and was flat in the third quarter and first nine months of 2020, respectively, compared to the same periods in 2019 due to the timing of project related revenue. 2019 revenue was negatively impacted by a $5.0 million settlement with a commercial customer. We also continue to see a reduction year over year in Financial Marketing Services due to the economic impact of COVID-19.

USIS Operating Margin

USIS operating margin increased from 31.1% in the third quarter of 20172019 to 33.3% in the third quarter of 2020, and decreased from 33.0% in the first nine months of 2019 to 31.9% in the first nine months of 2020. The margin increase during the third quarter of 2020 was 10%, drivendue to an increase of revenue, partially offset by strong growth across all regions. Local currency revenue growth, excluding Veda,the increase in people, incremental technology and data security, royalty and depreciation costs. The margin decrease for the first nine months of 20172020 was 11%,due to increased people, royalty, technology and depreciation costs, as well as incremental technology and data security costs, partially offset by the increase in revenue.

Workforce Solutions
Three Months Ended September 30,ChangeNine Months Ended September 30,Change
Workforce Solutions20202019$%20202019$%
 (In millions)(In millions)
Operating revenue:    
Verification Services$301.1 $185.3 $115.8 63 %$773.2 $506.5 $266.7 53 %
Employer Services75.7 55.3 20.4 37 %258.2 192.7 65.5 34 %
Total operating revenue$376.8 $240.6 $136.2 57 %$1,031.4 $699.2 $332.2 48 %
% of consolidated revenue35 %28 % 34 %27 %
Total operating income$193.2 $99.6 $93.6 94 %$500.8 $291.4 $209.4 72 %
Operating margin51.3 %41.4 % 9.9 pts48.6 %41.7 %6.9 pts
Workforce Solutions revenue increased by 57% and 48% in the third quarter and first nine months of 2020, respectively, compared to the same periods in 2019. The increases were due to strong growth in both Verification Services and Employer Services, driven by growth in mortgage and unemployment claims management during the first nine months of 2020.

Verification Services
Revenue increased by 63% and 53% in the third quarter and first nine months of 2020, respectively, compared to the same periods in 2019 due to strong growth in the mortgage vertical and continued addition of new records to The Work Number database. Starting in the second half of March, revenue from the commercial non-mortgage segment of Verification Services, including the talent solutions, debt management and auto segments, have experienced declines versus the same period in 2019 due to the economic impact of COVID-19.
33

Employer Services
Revenue increased by 37% and 34% in the third quarter and first nine months of 2020, respectively, compared to the same periods in 2019. The increase for both periods is due to increases in our unemployment claims management services, as U.S. unemployment claims increased substantially due to the economic impact of COVID-19 on the U.S. economy.
Workforce Solutions Operating Margin
Operating margin increased to 51.3% for the third quarter of 2020 from 41.4% for the third quarter of 2019 and to 48.6% for the first nine months of 2020 from 41.7% in 2019. The increased margins in both periods were due to an increase in revenue, partially offset by increases in royalty, people, technology and depreciation costs.

International
 Three Months Ended September 30,ChangeNine Months Ended September 30,Change
International20202019$%20202019$%
 (In millions)(In millions)
Operating revenue:    
Asia Pacific$80.2 $77.4 $2.8 4 %$215.1 $226.4 $(11.3)(5)%
Europe58.7 64.8 (6.1)(9)%173.2 199.3 (26.1)(13)%
Latin America40.4 49.2 (8.8)(18)%117.8 144.0 (26.2)(18)%
Canada38.7 39.1 (0.4)(1)%108.5 114.9 (6.4)(6)%
Total operating revenue$218.0 $230.5 $(12.5)(5)%$614.6 $684.6 $(70.0)(10)%
% of consolidated revenue21 %26 %21 %26 %
Total operating income$25.4 $26.0 $(0.6)(2)%$34.5 $59.9 $(25.4)(42)%
Operating margin11.6 %11.3 % 0.3 pts5.6 %8.7 %(3.1)pts
International revenue decreased by 5% and 10% in the third quarter and first nine months of 2020, respectively, compared to the same periods in 2019. On a local currency basis, revenue decreased by 5% and 6% in the third quarter and first nine months of 2020, respectively, driven by declines in Latin America and Europe in the third quarter of 2020 and declines across all regions.geographies for the nine month period. Local currency fluctuations against the U.S. dollar had minimal impact on revenue during the third quarter of 2020 and negatively impacted revenue by $29.8 million, or 4%, for the first nine months of 2020. Revenue growth was negatively impacted by a significant decline in volume beginning in the second half of March in each of the four regions within our International business, due to the impact of the COVID-19 pandemic on the regions, although local economies have begun to show signs of recovery in the third quarter.
Asia Pacific
On a local currency basis, revenue was flat and decreased by 2% in the third quarter and first nine months of 2020, respectively, compared to the same periods in 2019. For the third quarter of 2020, the negative impacts of COVID-19 on the consumer business were offset by non-recurring projects within the recovery management business. The decrease in revenue for the first nine months of 2020 was driven by decreases in our consumer and commercial businesses, marketing services and personal solutions related revenue, primarily driven by the economic recession in Australia and New Zealand due to COVID-19, partly offset by an increase in offline transactions within recovery management. Local currency fluctuations positively impacted revenue by $2.7 million, or 4%, in the third quarter of 2020 and negatively impacted revenue by $6.8 million, or 3%, for the first nine months of 2020. Reported revenue increased by 4% and decreased by 5% in the third quarter and first nine months of 2020, respectively, compared to the same periods in 2019.

Europe

On a local currency basis, revenue decreased by 13% in both the third quarter and first nine months of 2020, compared to the same periods in 2019. The decreases are primarily in the U.K. consumer and commercial businesses and debt services which experienced double digit declines in the third quarter and first nine months of 2020, due to the impact the COVID-19 pandemic has had on local economies. Local currency fluctuations against the U.S. dollar positively impacted revenue by $3.1$2.7 million, in the third quarter and negatively impacted revenue by $11.5 million in the first nine months of 2017.
Asia Pacific
On a local currency basis, revenue increased 6% and 30%or 4%, for the third quarter and first nine months of 2017, respectively, as compared to the prior year periods. The increase for the third quarter is driven by growth in Australia. Local currency fluctuations positively impacteddid not have a material impact on revenue by $3.0 million, or 4%, and $4.5 million, or 3% for the first nine months of 2017.2020. Reported revenue increased 10%decreased by 9% and 32%13% in the third quarter and first nine months of 2017, respectively. The increase for2020, respectively, compared to the nine month period was primarily driven by the Veda acquisition.same periods in 2019.


Europe
34

Latin America
 
On a local currency basis, revenue increased 10%decreased by 6% and 12%4% in the third quarter and first nine months of 2017,2020, respectively, as compared to the prior yearsame periods primarily due to growth in U.K. debt management services and other growth in the U.K. Local currency fluctuations against the U.S. dollar positively impacted revenue2019. The decrease was driven by $0.5 million, or 1% in the third quarter, andCOVID-19, which negatively impacted revenue by $14.3 million, or 8%, for the first nine months of 2017. Reported revenue increased 11% and 5%consumer credit operations in the third quarter and first nine months of 2017, respectively.


all Latin America
On a local currency basis, revenue increased 20% and 18% countries in the third quarter and first nine months of 2017, respectively, as compared to the prior year periods, driven by core revenue growth primarily in Argentina and Chile.which Equifax operates. Local currency fluctuations against the U.S. dollar negatively impacted revenue by $1.8$5.8 million, or 4%12%, and 2.7$20.9 million, or 14%, in the third quarter and first nine months of 2020, respectively, primarily from Argentina and Chile. Reported revenue decreased by 18% in both the third quarter and first nine months of 2020, compared to the same periods in 2019.
Canada
On a local currency basis, revenue was flat and decreased by 4% in the third quarter and first nine months of 2020, respectively, compared to the same periods in 2019. The decrease in the first nine months of 2020 is due to declines in consumer and commercial online volumes and offline analytics revenue, driven by the impacts of COVID-19. Local currency fluctuations against the U.S. dollar negatively impacted revenue by $0.3 million, or 1%, and $1.9 million, or 2%, in the third quarter and first nine months of 2017,2020, respectively. Reported revenue increaseddecreased by 16% in both the third quarter1% and first nine months of 2017.
Canada
On a local currency basis, revenue increased 7% and 9%6% in the third quarter and first nine months of 2017,2020, respectively, as compared to the prior yearsame periods in 2019.
International Operating Margin
Operating margin increased to 11.6% in the third quarter of 2020 from 11.3% in the third quarter of 2019 and decreased to 5.6% in the first nine months of 2020, down from 8.7% in the first nine months of 2019. The increased margin in the third quarter of 2020 is due to core organic growth. Local currency fluctuations againsta decline in people costs and discretionary expense control across all geographies, offset by the U.S. dollar positively impactednegative effects of COVID-19 on the countries' revenue where Equifax operates. The decreased margin in first nine months of 2020 was primarily due to the negative effects of COVID-19 on revenue, as well as an increase in depreciation costs and incremental technology costs related to the ongoing technology transformation, partially offset by $1.4 million, or 5%,discretionary expense control across the regions.

Global Consumer Solutions
 Three Months Ended September 30,ChangeNine Months Ended September 30,Change
Global Consumer Solutions20202019$%20202019$%
 (In millions)(In millions)
Total operating revenue$87.2 $89.1 $(1.9)(2)%$268.0 $271.5 $(3.5)(1)%
% of consolidated revenue8 %10 %  9 %11 %
Total operating income$12.5 $11.9 $0.6 5 %$33.4 $36.2 $(2.8)(8)%
Operating margin14.4 %13.4 % 1.0 pts12.5 %13.3 %(0.8)pts

Revenue decreased 2% and 1.0 million, or 1%, for the third quarter and first nine months of 2020, respectively, compared to the same periods in 2019. The decreases in the third quarter and first nine months of 2017, respectively. Reported2020 were driven by decreases in partner revenue, increasedpartially offset by 11%increases in event based business, benefits revenue and 10% in the third quarter of 2020 in the direct to consumer business due to strong consumer subscription performance in North America. Local currency fluctuations had minimal impact on the third quarter and first nine months of 2017, respectively.2020.

InternationalGlobal Consumer Solutions Operating Margin

Operating margin increased from 12.3%to 14.4% in the third quarter of 2016 to 22.0%2020 from 13.4% in the third quarter of 2017 due2019 and decreased to a decrease in integration costs related to the Veda acquisition, as well as changes in product mix and a decrease in people costs and purchased intangibles amortization. Operating margin increased from 13.4%12.5% in the first nine months of 2016 to 18.7%2020 from 13.3% in the first nine months of 20172019. The increased margin in the third quarter of 2020 was due to a decreasereduction in integrationroyalty costs relateddue to the Veda acquisition, a gain on the sale of an asset, as well as changes in product mix,lower revenue, partially offset by increased purchased intangibles amortization.

Workforce Solutions
  Three Months Ended September 30, Change   Nine Months Ended September 30, Change  
Workforce Solutions 2017 2016 $ %   2017 2016 $ %  
  (In millions)     (In millions)    
Operating revenue:  
  
  
  
    
  
  
  
  
Verification Services $129.9
 $114.6
 $15.3
 13%   $375.3
 $323.7
 $51.6
 16%  
Employer Services 56.5
 56.7
 (0.2) —%   205.6
 205.0
 0.6
 —%  
Total operating revenue $186.4
 $171.3
 $15.1
 9%   $580.9
 $528.7
 $52.2
 10%  
% of consolidated revenue 22% 21%  
     23% 23%  
    
Total operating income $80.3
 $69.9
 $10.4
 15%   $258.7
 $226.9
 $31.8
 14%  
Operating margin 43.1% 40.8%  
 2.3
 % pts 44.4% 42.9%  
 1.5
 %pts
Workforce Solutions revenue increased by 9%advertising and 10% in the third quarter and first nine months of 2017, respectively, as compared to the prior year periods.technology costs. The increase for the third quarter was due to strong growth in the government, financial, mortgage, and pre-employment screening verticals. The increase for the first nine months of 2017 was due to strong growth in the government, mortgage, financial, healthcare and auto verticals.

Verification Services
Revenue increased 13% and 16% in the third quarter and first nine months of 2017, respectively, as compared to the prior year periods, due to strong growth in government, financial, mortgage, and pre-employment screening verticals, and continued addition of new records to The Work Number database.
Employer Services
Revenue was flat in the third quarter and first nine months of 2017 as compared to the prior year periods. The third quarter as compared to the prior year was flat due to a decline in our workforce analytics services, offset by an increase in our on-boarding services. The first nine months of 2017 as compared to the prior year period was flat due to an increase in our on-boarding and unemployment claims services, offset by a decline in our employment based tax credit and workforce analytics services.

Workforce Solutions Operating Margin
Operatingdecreased margin increased from 40.8% for the third quarter of 2016 to 43.1% for the third quarter of 2017 and increased from 42.9% in the first nine months of 2016 to 44.5% for the first nine months of 2017. Margin expansion2020 was driven by product mix, strong revenue growth and a decrease in purchased intangibles amortization, offset by higher peopleincreased customer support and marketing costs, over the third quarter and first nine months of 2017.

Global Consumer Solutions
  Three Months Ended September 30, Change   Nine Months Ended September 30, Change  
Global Consumer Solutions 2017 2016 $ %   2017 2016 $ %  
  (In millions)     (In millions)    
Total operating revenue $100.9
 $101.1
 $(0.2) — %   $305.7
 $303.7
 $2.0
 1%  
% of consolidated revenue 12% 13%  
  
   12% 13%  
  
  
Total operating income $24.7
 $28.0
 $(3.3) (12)%   $82.9
 $80.7
 $2.2
 3%  
Operating margin 24.5% 27.6%  
 (3.1) %pts 27.1% 26.6%  
 0.5
 %pts
Revenue was flat and increased 1% on a local currency and as reported basis for the third quarter and first nine months of 2017, respectively, as compared to the prior year periods. The increase for the first nine months of 2017 was due to growth in our U.S. indirect business, partially offset by a decrease in our consumer direct and direct to consumer reseller businesses. Local currency fluctuations against the U.S. dollar had no impact on revenue for the third quarter, and negatively impacted revenue by $2.5 million, or 1%, for the first nine months of 2017. Operating margin decreased from 27.6% in the third quarter of 2016 to 24.5% in the third quarter of 2017lower royalty costs due to product mix and acquisition costs. Operating margin increased from 26.6% for the first nine months of 2016 to 27.1% for the first nine months of 2017, due to decreased marketing spend, offset by changes in product mix and increases in technology costs.lower revenue.



General Corporate Expense
 Three Months Ended September 30,ChangeNine Months Ended September 30,Change
General Corporate Expense20202019$%20202019$%
 (In millions)(In millions)
General corporate expense$155.3 $114.1 $41.2 36 %$410.8 $1,082.2 $(671.4)(62)%
35

  Three Months Ended September 30, Change Nine Months Ended September 30, Change
General Corporate Expense 2017 2016 $ % 2017 2016 $ %
  (In millions)   (In millions)  
General corporate expense $134.5
 $51.6
 $82.9
 161% $245.5
 $169.2
 $76.3
 45%
Our general corporate expenses are unallocated costs that are incurred at the corporate level and include those expenses impacted by corporate direction, including shared services, technology, security, data and analytics, administrative, legal, restructuring, and the portion of management incentive compensation determined by total company-wide performance.

General corporate expense increased $82.9$41.2 million and $76.3decreased $671.4 million in the third quarter and first nine months of 2017,2020, respectively, as compared to the prior year periods primarilyperiods. The increase in the third quarter is due to an increase in people costs, partially offset by lower technology and litigation expense. The decrease for the first nine months of 2020 is due to the accrual of costslegal accruals for losses associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident.incident of $701.3 million that were recorded in 2019 and did not recur in 2020 and lower technology costs, partially offset by increased people costs.


LIQUIDITY AND FINANCIAL CONDITION
 
Management assesses liquidity in terms of our ability to generate cash to fund operating, investing and financing activities. We continue to generate substantial cash from operating activities, and remain in a strong financial position, with resources available for reinvestment in existing businesses, strategic acquisitions and managingmanage our capital structure to meet shortshort- and long-term objectives.objectives including reinvestment in existing businesses and strategic acquisitions.
 
Sources and Uses of Cash
 
Funds generated by operating activities, our Revolver and related commercial paper program and our credit facilities continue to beReceivables Facility, more fully described below, are our most significant sources of liquidity. We expect thatIn April 2020, we issued $1.0 billion aggregate principal amount of senior notes. The net proceeds of the sale of the notes were used to repay borrowings under our Receivables Facility, while the remaining funds generated from results of operations will be sufficient to finance our anticipated working capital and other cash requirements (such as capital expenditures, expenses associated with the cybersecurity incident, interest payments, potential pension funding contributions, acquisition and integration costs, and dividend payments)are intended for the foreseeable future. If borrowings were needed, we would expect to borrow in the commercial paper orgeneral corporate bond markets; or in the event that credit market conditions were to deteriorate, we would rely more heavily on borrowings from the Revolver as described below.purposes. At September 30, 2017, $234.22020, we had $1.5 billion in cash balances, as well as $1.1 billion available to borrow under our Revolver. As of September 30, 2020, $225.0 million was available to borrow under our Revolver andReceivables Facility; however, we had cash and cash equivalents of $315.4 million included in our Consolidated Balance Sheets. On October 12, 2017, we borrowed $100 million on our Revolver.

Our Revolver does not include a provision under which lenders could refuseintend to allow us to borrow under theterminate this facility in the eventfourth quarter of a material adverse change in our financial condition, as long as we are in compliance with the covenants contained in the credit agreement.2020.

The following table summarizes our cash flows forCompany has and expects to make payments to resolve certain legal proceedings and investigations related to the nine months ended2017 cybersecurity incident, described more fully in Part II, “Item 1. Legal Proceedings” in this Form 10-Q. Through September 30, 2020, the Company has made payments of $439.3 million for legal settlements related to the 2017 cybersecurity incident. The remaining $346.7 million to be paid to the Consumer Restitution Fund will be made after a final adjudication affirming the U.S. Consumer MDL Litigation settlement or dismissal of the pending appeals. Although we expect this payment and 2016:  
  Nine Months Ended September 30, Change
Net cash provided by (used in): 2017 2016 2017 vs. 2016
  (In millions)
Operating activities $608.7
 $544.2
 $64.5
Investing activities $(226.2) $(1,934.2) $1,708.0
Financing activities $(202.8) $1,372.7
 $(1,575.5)
Operating Activities
Cash providedthe remaining settlement payments to be made later in 2020 or 2021, we can give no assurance that these payments will occur in 2020 due to pending approvals or appeals. As a result of the possible payments that could be made in 2020 related to the losses associated with certain legal proceedings and government investigations related to the 2017 cybersecurity incident, funds generated by operating activities in the nine months ended September 30, 2017 increased by $64.5 million over the prior year, dueare not expected to an increase in net income, partially offset by an increase inbe sufficient to fund working capital mostly driven by slower growth in current liabilities, excluding debt, and accounts receivable, offset by an increase in other current assets. cash requirements throughout 2020. Our plan is to finance the payments with existing available cash balances and borrowing capacity.


Fund Transfer Limitations.  The ability of certain of our subsidiaries and associated companies to transfer funds to the U.S. ismay be limited, in some cases, by certain restrictions imposed by foreign governments. These restrictions do not, individually or in the aggregate, materially limit our ability to service our indebtedness, meet our current obligations or pay dividends. As of September 30, 2017,2020, we held $137.4$235.1 million of cash in our foreign subsidiaries.    


Information about our cash flows, by category, is presented in the Consolidated Statements of Cash Flows. The following table summarizes our cash flows for the nine months ended September 30, 2020 and 2019:
 Nine Months Ended September 30,Change
Net cash provided by (used in):202020192020 vs. 2019
 (In millions)
Operating activities$649.0 $83.1 $565.9 
Investing activities$(380.9)$(565.5)$184.6 
Financing activities$865.3 $426.4 $438.9 
36

Operating Activities
Cash provided by operating activities in the nine months ended September 30, 2020 increased by $565.9 million compared the prior year period. The increase in cash from operations is due to increased net income and additional payments made in 2019 associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident.

Investing Activities
 
Capital Expenditures
 Nine Months Ended September 30, Change Nine Months Ended September 30,Change
Net cash used in: 2017 2016 2017 vs. 2016Net cash used in:202020192020 vs. 2019
 (In millions) (In millions)
Capital expenditures* $(157.5) $(131.0) $(26.5)Capital expenditures*$(309.5)$(305.7)$(3.8)
*Amounts above are total cash outflows for capital expenditures.

Our capital expenditures are used for developing, enhancing and deploying new and existing software in support of our expanding product set, replacing or adding facilities and equipment, updating systems for regulatory compliance, the licensing of standard software applications, and investing in system reliability, security and disaster recovery enhancements. enhancements, and updating or expanding our office facilities.

Capital expenditures paid in the first nine months of 20172020 increased by $26.5$3.8 million from the same period in 2016 as we paid amounts that were accrued as of December 31, 2016.2019. We are continuing to invest in enhanced technology systems, infrastructure and data security following the 2017 cybersecurity incident.
 
Acquisitions, Divestitures and Investments
 Nine Months Ended September 30, Change Nine Months Ended September 30,Change
Net cash used in: 2017 2016 2017 vs. 2016Net cash used in:202020192020 vs. 2019
 (In millions) (In millions)
Acquisitions, net of cash acquired $(77.3) $(1,792.4) $1,715.1
Acquisitions, net of cash acquired$(61.4)$(234.8)$173.4 
Economic hedges $—
 $(10.8) $10.8
Cash received from sale of asset $8.6
 $—
 $8.6
Investment in unconsolidated affiliates, netInvestment in unconsolidated affiliates, net$(10.0)$(25.0)$15.0 
 
During the third quarterfirst nine months of 2017,2020 we acquired the remaining interest in our India joint venture within the International segment and a tuck-in acquisition within our USIS segment. During the first nine months of 2019, we completed the acquisition of 100% of the outstanding stock of ID Watchdog, Inc.PayNet in our USIS and International operating segments and completed an additional acquisition in our Workforce Solutions segment.

During the first quarter of 2016, the Company completed the acquisition of 100% of the ordinary voting shares of Veda for cash consideration of approximately $1.7 billion.


During the first quarter of 2016, we settled all of the foreign currency options on the respective settlement dates for a net cash payment of $10.8 million.

Financing Activities
 
Borrowings and Credit Facility Availability
 Nine Months Ended September 30,Change
Net cash provided by (used in):202020192020 vs. 2019
 (In millions)
Net short-term borrowings$0.3 $367.0 $(366.7)
Payments on long-term debt$(125.0)$(50.0)$(75.0)
Borrowings on long-term debt$1,123.3 $250.0 $873.3 
37

  Nine Months Ended September 30, Change
Net cash provided by (used in): 2017 2016 2017 vs. 2016
  (In millions)
Net short-term borrowings $354.9
 $194.2
 $160.7
Payments on long-term debt $(322.5) $(300.0) $(22.5)
Borrowings on long-term debt $—
 $1,574.7
 $(1,574.7)
Debt issuance costs $—
 $(5.4) $5.4

Credit Facility Availability
 
Our principalIn September 2018, the Company entered into a $1.1 billion five-year unsecured revolving credit facility with a group of banks,financial institutions, which will mature in September 2023 (the “Revolver”). In the second quarter of 2019, we referincreased our commercial paper program to as$1.1 billion. Borrowings under the Revolver, permits us to borrow up to $900.0 million through November 2020. The Revolver may be used for general corporate purposes. Availabilitypurposes, including working capital, capital expenditures, acquisitions and share repurchase programs. The Revolver has an accordion feature that allows us to request an increase in the total commitment to $1.6 billion. The Revolver includes an option to request a maximum of two one-year extensions of the maturity date, any time after the first anniversary of the Revolver for borrowings is reduced by the outstanding face amount of any letters of credit issued under the facility and by the outstanding principal amount of our CP notes. As a condition to borrow under our Revolver, we are required to certify certain representations and warranties (as defined in the Revolver).closing. We believe we are currently in compliance with all such representations and warranties necessary as a condition for borrowing under the Revolver, but we cannot assure that we will be able to comply with all such conditions to borrowing in the future. On October 12, 2017, we borrowed $100 million onAvailability of the Revolver is reduced by the outstanding principal balance of our Revolver.commercial paper notes and by any letters of credit issued under the facility.

Our $900.0 million CP$1.1 billion commercial paper (CP) program has been established to allow for borrowing through the private placement of CP with maturities ranging from overnight to 397 days. We may use the proceeds of CP for general corporate purposes. The CP program is supported by our Revolver and pursuant to our existing Board of Directors authorization, the total amount of CP which may be issued is reduced by the amount of any outstanding borrowings under our Revolver. 

AtAs of September 30, 2017, $665.32020, there were $0.7 million of letters of credit issued under the Revolver, no principal drawn amounts under the Revolver, and no commercial paper borrowings. Availability under the Revolver was outstanding under our CP program. At$1.1 billion at September 30, 2017, a total of $234.2 million was available under our Revolver. On July 3, 2017, we repaid our July 2017 Senior Notes using the proceeds of commercial paper.2020.
 
At September 30, 2017, 61%2020, 93% of our debt was fixed-rate debt and 39%7% was effectively floating-ratevariable debt. Our floating-ratevariable-rate debt consists of the Floating Rate Senior Notes, our commercial paper which is generally issued forand our Receivables Facility. The interest rates reset periodically, depending on the terms of 1 to 100 days, and our Term Loan.the respective financing agreements. At September 30, 2017,2020, the interest ratesrate on our floating-ratevariable-rate debt ranged from 1.45% to 2.36%was 1.15%.
 
Borrowing and Repayment Activity
 
Net short-term borrowings primarily represent activity under our CP program and borrowings under the 364-day Revolver. We primarily borrow under our CP program, our Revolver or our Receivables Facility as needed and as availability allows.
 
The increase in netNet short-term borrowings primarily reflectsrepresent borrowings or repayments of outstanding amounts under our CP program in the first nine months of 2019.

Payments on long-term debt reflect $125.0 million and $50.0 million payments made on our Receivables Facility in the first nine months of 2020 and 2019, respectively.

Borrowings on long-term debt represent the net activityproceeds received from issuance of CPthe 2025 and 2030 senior notes in the first nine months of 2017, including a $272.5 million increase in CP to fund the payment of 6.30% term notes due July 2017, partially offset2020, as we have deleveraged following the 2016 Veda acquisition. The increase in net short-term borrowings primarily reflectswell as the net activity of CP notesproceeds received from draw downs on our Receivables Facility in the first nine months of 2016,2020 and 2019.

There were no borrowings outstanding under the Receivables Facility as wellof September 30, 2020. The Receivables Facility was supported by $313.5 million of accounts receivable as the draw down on the 364-Day Revolver during the first quarter of 2016 and the pay-off of the Veda assumed debtcollateral at September 30, 2020 which, as a retained interest, is included in the first quarter and the 364-Day Revolver during the third quarter of 2016.accounts receivable, net in our Consolidated Balance Sheets.


Payments on long-term debt reflect $323 million and $300 million payments made in the first nine months of 2017 and 2016, respectively, on our Term Loan. Borrowings on long-term debt reflect an $800 million draw down on our Term Loan and the issuance of $500.0 million principal amount of 2.3%, five-year senior notes and $275.0 million principal amount of 3.25%, ten-year senior notes in an underwritten public offering in the first nine months of 2016.


Debt Covenants.  A downgrade in our credit ratings would increase the cost of borrowings under our CP program and Senior Credit Facilities,Revolver, and could limit or, in the case of a significant downgrade, preclude our ability to issue CP. Our outstanding indentures and comparable instruments also contain customary covenants including, for example, limits on the incurrence of secured debtmortgages, liens, and sale/leaseback transactions. In addition,

On April 10, 2020, we amended our existing revolving credit facility to increase the Senior Credit Facilities limit the amount of subsidiary debt and the amount of debt secured by liens, and require us to maintain a maximum leverage ratio of not more thanto provide additional financial flexibility. The amendment increases the maximum leverage ratio, defined as consolidated funded debt divided by consolidated EBITDA for the preceding four quarters, to (i) 4.5 to 1.0 for fiscal quarters ending on June 30, 2020 through and including September 30, 2021 and (ii) 4.0 to 1.0 for the fiscal quarter ending on December 31, 2021. The maximum leverage ratio will return to 3.5 to 1.0. None1.0 beginning with the fiscal quarter ending March 31, 2022 and thereafter. Beginning January 1, 2021, we may also elect to increase the maximum leverage ratio by 0.5 to 1.0 (not to exceed 4.5 to 1.0) in connection with certain material acquisitions if we satisfy certain requirements.
38


The amendment also (i) permits cash in excess of these covenants are considered restrictive$200 million to our operationsbe netted against debt in the calculation of the leverage ratio through September 30, 2021, subject to certain restrictions and as(ii) extends the add-back of certain expenses related to the 2017 cybersecurity incident to the definition of Consolidated EBITDA through December 31, 2021.

As of September 30, 2017,2020, we were in compliance with all of our debt covenants.

We do not have any credit rating triggers that would accelerate the maturity of a material amount of our outstanding debt; however, our 2.3% Senior Notessenior notes due 2021, 3.6% senior notes due 2021, floating rate notes due 2021, 3.3% Senior Notessenior notes due 2022, 3.95% senior notes due 2023, 2.6% senior notes due 2024, 2.6% senior notes due 2025, 3.25% Senior Notessenior notes due 2026, 3.1% senior notes due 2030 and 7.0% Senior Notessenior notes due 2037 (together, the “Senior Notes”) contain change ofin control provisions. If we experience a change ofin control or publicly announce our intention to effect a change ofin control and the rating on the Senior Notes is lowered by each of Standard & Poor’s, or S&P, and Moody’s Investors Service, or Moody’s, below an investment grade rating within 60 days of such change ofin control or notice thereof, we will be required to offer to repurchase the Senior Notes at a price equal to 101% of the aggregate principal amount of the Senior Notes plus accrued and unpaid interest. As of September 30, 2017,2020, our S&P credit rating was BBB+BBB with a negative outlook and our Moody'sMoody’s credit rating was Baa1Baa2 with a stable outlook. These ratings are subject to change as events and circumstances change.


 For additional information about our debt, including the terms of our financing arrangements, basis for floating interest rates and debt covenants, see Note 5 of the Notes to Consolidated Financial Statements in our 20162019 Form 10-K.


Equity Transactions
 Nine Months Ended September 30,Change
Net cash provided by (used in):202020192020 vs. 2019
 (In millions)
Dividends paid to Equifax shareholders$(142.1)$(141.4)$(0.7)
Dividends paid to noncontrolling interests$(2.6)$(4.8)$2.2 
Proceeds from exercise of stock options and employee stock purchase plan$29.9 $15.3 $14.6 
  Nine Months Ended September 30, Change
Net cash provided by (used in): 2017 2016 2017 vs. 2016
  (In millions)
Treasury stock repurchases $(77.1) $—
 $(77.1)
Dividends paid to Equifax shareholders $(140.7) $(118.1) $(22.6)
Dividends paid to noncontrolling interests $(8.2) $(5.8) $(2.4)
Proceeds from exercise of stock options $18.8
 $26.8
 $(8.0)
Excess tax benefits from stock-based compensation plans $—
 $29.6
 $(29.6)
Purchase of redeemable noncontrolling interests $—
 $(3.6) $3.6


Sources and uses of cash related to equity during the nine months ended September 30, 20172020 and 20162019 were as follows:


-During the first nine months of 2017, we repurchased approximately 0.5 million of our common shares on the open market for $77.1 million, at an average price of $143.88 per share.  

-     During the first nine months of 2020 and 2019, we did not repurchase any shares of our stock.
-We increased our quarterly dividend from $0.33 per share to $0.39 per share as announced in the first quarter of 2017. We paid cash dividends to Equifax shareholders of $140.7 million, or $1.17 per share, and $118.1 million, or $0.99 per share, during the nine months ended September 30, 2017 and 2016, respectively.


-We received cash of $18.8 million and $26.8 million during the first nine months of 2017 and 2016, respectively, from the exercise of stock options.
-    We maintained our quarterly dividend of $0.39 per share in the third quarter of 2020. We paid cash dividends to Equifax shareholders of $142.1 million and $141.4 million, or $1.17 per share, during the nine months ended September 30, 2020 and 2019, respectively.

-    We received cash of $29.9 million and $15.3 million during the first nine months of 2020 and 2019, respectively, from the exercise of stock options and the employee stock purchase plan.
 
At September 30, 2017,2020, the Company had $590.1 million remaining for stock repurchases under the existing Board authorization. 
 
Contractual Obligations, Commercial Commitments and Other Contingencies
 
Our contractual obligations have not changed materially from those reported in our 20162019 Form 10-K. For additional information about certain obligations and contingencies, see Note 5 of the Notes to Consolidated Financial Statements in this Form 10-Q.
 

Off-Balance Sheet Arrangements
 
There have been no material changes with respect to our off-balance sheet arrangements from those presented in our 20162019 Form 10-K.
 
39

Benefit Plans
 
At December 31, 2016,2019, our U.S. Retirement Income Plan, or USRIP, met or exceeded ERISA’s minimum funding requirements. In the future, we expect to make minimum funding contributions as required and may make discretionary contributions, depending on certain circumstances, including market conditions and our liquidity needs. We believe additional funding contributions, if any, would not prevent us from continuing to meet our liquidity needs, which are primarily funded from cash flows generated by operating activities, available cash and cash equivalents, our CP program, our Revolver and our committed Senior Credit Facilities.Receivables Facility.
 
For our non-U.S., tax-qualified retirement plans, we fund an amount sufficient to meet minimum funding requirements but no more than allowed as a tax deduction pursuant to applicable tax regulations. For our non-qualified supplementary retirement plans, we fund the benefits as they are paid to retired participants, but accrue the associated expense and liabilities in accordance with GAAP.
 
For additional information about our benefit plans, see Note 109 of the Notes to Consolidated Financial Statements in our 20162019 Form 10-K.
 
Seasonality
 
WeTraditionally we experience seasonality in certain of our revenue streams. Revenue generated by the online consumer information services component of our USIS operating segment are typically the lowest during the first quarter, when consumer lending activity is at a seasonal low. Revenue generated from the Employer Services business unit within the Workforce Solutions operating segment is generally higher in the first quarter due primarily to the provision of Form W-2, 1094, and 1095 preparation services which occur in the first quarter each year. Revenue generated from our financial wealth asset products and data management services in our Financial Marketing Services business are generally higher in the fourth quarter each year. Mortgage related revenue is generally higher in the second and third quarters of the year due to the significant portion of our annual renewals and deliveries which occurincrease in consumer home purchasing during the summer in the fourthU.S. Due to the COVID-19 pandemic, as described above within “Recent Events and Company Outlook,” we are unsure of how future results will compare to historic seasonality trends.

Foreign Currency

Argentina has experienced multiple periods of increasing inflation rates, devaluation of the peso, and increasing borrowing rates. As such, Argentina has been deemed a highly inflationary economy by accounting policymakers. Beginning in the third quarter of each year.2018, we have accounted for Argentina as highly inflationary which resulted in the recognition of a $0.1 million and $0.5 million foreign currency loss that was recorded in other income, net in our Consolidated Statements of Income (Loss) during the three and nine months ended September 30, 2020, respectively.


RECENT ACCOUNTING PRONOUNCEMENTS
 
For information about new accounting pronouncements and the potential impact on our Consolidated Financial Statements, see Note 1 of the Notes to Consolidated Financial Statements in this Form 10-Q and Note 1 of the Notes to Consolidated Financial Statements in our 20162019 Form 10-K.
 
APPLICATION OF CRITICAL ACCOUNTING POLICIES
 
The preparation of financial statementsCompany’s Consolidated Financial Statements are prepared in conformity with GAAPU.S. generally accepted accounting principles, or GAAP. This requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in our Consolidated Financial Statements and the Notes to Consolidated Financial Statements. We believe the most complex and sensitive judgments, because of their significance to the Consolidated Financial Statements, result primarily from the need to make estimates and assumptions about the effects of matters that are inherently uncertain. The “Application of Critical Accounting Policies and Estimates” section in the MD&A, and Note 1 of the Notes to Consolidated Financial Statements, in our 20162019 Form 10-K describe the significant accounting estimates and policies used in the preparation of our Consolidated Financial Statements. Although we believe that our estimates, assumptions and judgments are reasonable, they are based upon information available at the time. Actual results may differ significantly from these estimates under different assumptions, judgments or conditions.
 

40





Goodwill
 
We review goodwill and indefinite lived intangible assets for impairment annually (as of September 30) and whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. These events or circumstances could include a significant change in the business climate, legal factors, operating performance or trends, competition, or sale or disposition of a significant portion of a reporting unit. We have eightseven reporting units comprised of USIS (which includes part of Online Information Solutions, Mortgage Solutions and Financial Marketing Services), Asia Pacific, Europe, Latin America, Canada, Global ConsumerGCS, and Equifax Workforce Solutions ("GCS"),(which includes Verification Services and Employer Services.Services).

The goodwill balance at September 30, 2017,2020, for our eightseven reporting units was as follows:


 September 30,
 2017
 (In millions)
U.S. Information Solutions$1,071.3
Asia Pacific1,526.7
Europe164.8
Latin America235.8
Canada36.1
Global Consumer Solutions191.6
Verification Services772.9
Employer Services179.2
Total goodwill$4,178.4
September 30,
2020
(In millions)
U.S. Information Solutions$1,286.7 
Workforce Solutions1,010.7 
Asia Pacific1,457.0 
Europe156.5 
Latin America217.7 
Canada50.8 
Global Consumer Solutions186.6 
Total goodwill$4,366.0 
 
We performed a qualitative assessment to determine whether further impairment testing was necessary for our USIS, Workforce Solutions, Europe, Canada and GCS reporting units. In this qualitative assessment, we considered the following items for each of the reporting units: macroeconomic conditions, industry and market conditions, overall financial performance and other entity specific events. In addition, for each of these reporting units, the most recent fair value determination resulted in an amount that significantly exceeded the carrying amount of the reporting units. Based on these assessments, we determined the likelihood that a current fair value determination would be less than the current carrying amount of the reporting unit is not more likely than not. As a result of our conclusions, no further testing was required for these reporting units.

Valuation Techniques
 
We performed a quantitative assessment for each of our Asia Pacific and Latin America reporting units to determine whether impairment exists.exists from the most recent valuation dates due to the size of the cushion and lower current year forecasts than the 2020 projections from the most recent valuations in relation to our other reporting units. In determining the fair value of the reporting unitsunit, we used a combination of the income and market approaches to estimate the reporting unit’s business enterprise value. We engaged a third party specialist to assist in developing these estimates and valuation approaches.
 
Under the income approach, we calculate the fair value of a reporting unit based on estimated future discounted cash flows which require assumptions about short and long-term revenue growth rates, operating margins for each reporting unit, discount rates, foreign currency exchange rates and estimates of capital charges.expenditures. The assumptions we use are based on what we believe a hypothetical marketplace participant would use in estimating fair value. Under the market approach, we estimate the fair value based on market multiples of revenue or earnings before income taxes, depreciation and amortization, for benchmark companies.companies or guideline transactions. We believe the benchmark companies used for each of theour Asia Pacific and Latin America reporting units serve as an appropriate input for calculating a fair value for the reporting unit as those benchmark companies have similar risks, participate in similar markets, provide similar services for their customers and compete with us directly. The companies we use as benchmarks are principally outlined in our discussion of Competition in our 20162019 Form 10-K. Data for the benchmark companies was obtained from publicly available information.

Competition for our USIS, Asia Pacific Europe,and Latin America Canada, and GCS reporting units generally includes two global consumer credit reporting companies, such as Experian, and TransUnion, both of which offer a product suite similar to ourthe reporting unit's credit reporting solutions. Additionally, for our GCS reporting unit, competition includes LifeLock, a national provider of personal identity theft protection products. Competition for our Verification Services and Employer Services reporting units includes payroll processors such as ADP and Paychex. Valuation multiples were selected based on a financial benchmarking analysis that compared the reporting unit’s operating result with the comparable companies’ information. In addition to these financial considerations, qualitative factors such as variations in growth opportunities and overall risk among the benchmark companies were considered in the ultimate selection of the multiple.


The values separately derived from each of the income and market approach valuation techniques were used to develop an overall estimate of a reporting unit’s fair value. We use a consistent approach across all reporting units when considering the weight of the income and market approaches for calculating the fair value of each of our reporting units. This approach relies more heavily on the calculated fair value derived from the income approach, with 70% of the value coming

from the income approach. We believe this approach is consistent with that of a market participant in valuing prospective
41




purchase business combinations. The selection and weighting of the various fair value techniques may result in a higher or lower fair value. Judgment is applied in determining the weightings that are most representative of fair value.
 
We have not made any material changes to the valuation methodology we use to assess goodwill impairment since the date of theour last annual impairment test.


Growth Assumptions
 
The assumptions for our future cash flows begin with our historical operating performance, the details of which are described in our Management’s Discussion & Analysis of operating performance. Additionally, we consider the impact that known economic, industry and market trends, including the potential impact of the COVID-19 global pandemic, will have on our future forecasts, as well as the impact that we expect from planned business initiatives including new product initiatives, client service and retention standards, and cost management programs. At the end of the forecast period, the long-term growth rate we used to determine the terminal value of each reporting unit was 3%, other thanour Asia Pacific and Latin America where we used a terminal growth rate of 5%American reporting units were between 3.0% and 5.5%, respectively,5.0% based on management’s assessment of the minimum expected terminal growth rate of the reporting unit, as well as broader economic considerations such as GDP, inflation and the maturity of the markets we serve.


We projected revenue growth in 20182021 for our Asia Pacific and Latin America reporting units in completing our 20172020 impairment testing based on expected economic recovery from the negative impact the COVID-19 pandemic has had on these regions in 2020, planned business initiatives and prevailing trends exhibited by these units and not based on the assumption of meaningful acceleration in economic growth for all reporting units other than GCS. For GCS we expect revenue growth to decline in 2018 as compared to 2017 and then resume revenue growth in 2019.growth. The anticipated revenue growth in ourthese reporting units, however, is partially offset by assumed increases in expenses for a majority of ourthe reporting unitsunit which reflectreflects the additional level of investment needed in order to achieve the planned revenue growth. Additionally, we have factored in any expected impactsgrowth and completion of the cybersecurity incident as further discussed below.our technology transformation initiatives.
 
Discount Rate Assumptions
 
We utilize a weighted average cost of capital, or WACC, in our impairment analysis that makes assumptions about the capital structure that we believe a market participant would make and include a risk premium based on an assessment of risks related to the projected cash flows of eachfor the reporting unit. We believe this approach yields a discount rate that is consistent with an implied rate of return that a market participant would require for an investment in a company having similar risks and business characteristics to the reporting unit being assessed. To calculate the WACC, the cost of equity and cost of debt are multiplied by the assumed capital structure of the reporting unit as compared to industry trends and relevant benchmark company structures. The cost of equity was computed using the Capital Asset Pricing Model which considers the risk-free interest rate, beta, equity risk premium and specific company risk premium related to a particular reporting unit. The cost of debt was computed using a benchmark rate and the Company’s tax rate. For the 20172020 annual goodwill impairment evaluation, the discount rates used to develop the estimated fair value of the reporting units evaluated were as follows for each reporting unit:

September 30,
2017
Discount rate
U.S. Information Solutions9.0%
Asia Pacific9.4%
Europe8.8%
Latin America15.5%
Canada8.9%
Global Consumer Solutions11.2%
Verification Services8.5%
Employer Services10.7%


Because of assigned market premiums, discount rates are lowest for reporting units whose cash flows are expected to be less volatile due to such factors as the maturity of the market they serve, their position in that market or other

macroeconomic factors. Where there is the greatest volatility of cash flows due to competition, or participation in less stable geographic markets than the United States, such as ourAsia Pacific and Latin America reporting unit, the discount rate selected is in the higher portion of the range as there is more inherent risk in the expected cash flows of that reporting unit. Additionally, for our USISunits were between 9.0% and GCS reporting units we utilized a higher beta to account for the additional volatility following the disclosure of the cybersecurity incident.16.0%.

Estimated Fair Value and Sensitivities
 
The estimated fair value of the reporting units is derived from the valuation techniques described above, incorporating the related projections and assumptions. An indication of possible impairmentImpairment occurs when the estimated fair value of the reporting unit is below the carrying value of its equity. The estimated fair value for our Asia Pacific and Latin America reporting units exceeded their related carrying valuevalues as of September 30, 2017.2020. As a result, no goodwill impairment was recorded. The percentage by which the fair value of the reporting unit exceeds the carrying value ("cushion") as of September 30, 2017, was as follows:

September 30,
2017
Cushion
U.S. Information Solutions395%
Asia Pacific5%
Europe155%
Latin America64%
Canada1,472%
Global Consumer Solutions141%
Verification Services405%
Employer Services58%


The estimated fair value of the reporting unit is highly sensitive to changes in these projections and assumptions; therefore, in some instances changes in these assumptions could impact whether the fair value of a reporting unit is greater than its carrying value. For example, an increase in the discount rate and decline in the projected cumulative cash flow of a reporting unit could cause the fair value of certain reporting units to be below its carrying value. We perform sensitivity analyses around these assumptions in order to assess the reasonableness of the assumptions and the resulting estimated fair values. Ultimately, future potential changes in these assumptions may impact the estimated fair value of a reporting unit and cause the fair value of the reporting unit to be below its carrying value. Our Asia Pacific reporting unit primarily represents our recently completed acquisition of Veda. Due to the recency of this acquisition and its overall significancelower cushions when compared to theother reporting unit,units, Asia Pacific isand Latin America are more sensitive to changes in the assumptions noted above that wouldcould result in a fair value that is less than its carrying value.

We have incorporated updated forecasts following The excess of fair value over carrying value for the cybersecurity incident that we disclosed during the third quarter. We expect our GCS reporting unit to be most impacted by the cybersecurity incident primarily due to the free product offerings we made to all consumers in the U.S. While our USISAsia Pacific reporting unit was also impacted,less than 5% and the excess fair value over carrying value for the Latin America reporting unit was between 15% and 20% as of September 30, 2020.

Given the small excess of fair value over carrying value for the Asia Pacific reporting unit, we believe that it is at risk of a possible future goodwill impairment. Although we experienced growth in this reporting unit for the three months ended
42




March 31, 2020 in comparison to the estimates used in the 2019 goodwill impairment testing, the COVID-19 pandemic has had a substantial negative impact is primarily delayed project revenue. However,on our results over the last six months. Avoidance of a future impairment will be dependent on continued economic recovery from the negative impact of the cybersecurity incident continuescaused by COVID-19 in 2020 and our ability to developexecute on initiatives to grow revenue and could result in additional regulatory requirements that could further impact our GCS or USIS reporting units.manage expenses prudently. We will continue to monitor developments and their impact on our growth assumptions and future cash flows and will evaluate any significant changes in assumptions as they occur.

Additionally, a significant portion of the revenue for our Employer Services business relates to Affordable Care Act compliance services. As such, the fair valueperformance of this reporting unit would be impacted if the Affordable Care Act were to be repealed. We continue to monitor developments and their impact on our growth assumptions and future cash flows and will evaluate any significant changes in assumptions as they occur.






Loss Contingencies

We are subject to various proceedings, lawsuits and claims arising in the normal course of our business. We determine whether to disclose and/or accrue for loss contingencies based on our assessment of whether the potential loss is estimable, probable, reasonably possible or remote.

In the third quarter of fiscal 2017, we announced a cybersecurity incident potentially impacting approximately 145.5 million U.S. consumers. As a result of the cybersecurity incident, we are subject to a significant number of proceedings and investigations as described in Part II, "Item 1. Legal Proceedings." While we believe it reasonably possible that we may incur losses associated with these proceedings and investigations, it is not possible to estimate the amount of loss or rangeensure no interim indications of possible loss, if any, that might result from adverse judgments, settlements, penalties or other resolution of such proceedings and investigations based on the early stage of these proceedings and investigations, that alleged damagesimpairment have not been specified, the uncertainty as to the certification of a class or classes and the size of any certified class, as applicable, and the lack of resolution on significant factual and legal issues.occurred before our next annual goodwill impairment assessment in September 2021.


Additionally, as a result of the cybersecurity incident, we are offering free credit file monitoring and identity theft protection to all U.S. consumers. We have concluded that the costs associated with providing this service are a contingent liability that is probable and estimable. We have therefore recorded an estimate of the expenses necessary to provide this service to those who have signed up or will sign up by the January 31, 2018 deadline. We have incurred $4.7 million through September 30, 2017 and have estimated a range of additional costs between $56 million and $110 million. In accordance with Accounting Standards Codification section 450-20-30-1, we have recorded a liability for the low end in the range as we do not believe that any amount within the range is a better estimate than any other amount. Refer to Note 5 of the Notes to Consolidated Financial Statements in this Form 10-Q for more information on the cybersecurity incident.

Judgments and uncertainties - We periodically review claims and legal proceedings and assess whether we have potential financial exposure based on consultation with internal and outside legal counsel and other advisors. If the likelihood of an adverse outcome from any claim or legal proceeding is probable and the amount can be reasonably estimated, we record a liability on our Consolidated Balance Sheets for the estimated amount. If the likelihood of an adverse outcome is reasonably possible, but not probable, we provide disclosures related to the potential loss contingency. Our assumptions related to loss contingencies are inherently subjective.

Effect if actual results differ from assumptions - With the exception of the cybersecurity incident, we do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to determine loss contingencies. However, if facts and circumstances change in the future that change our belief regarding assumptions used to determine our estimates, we may be exposed to a loss that could be material.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
For information regarding our exposure to certain market risks, see “Quantitative and Qualitative Disclosures about Market Risk,” in Part II, Item 7A of our 20162019 Form 10-K. There were no material changes to our market risk exposure during the three and nine months ended September 30, 2017.2020.
 
ITEM 4.  CONTROLS AND PROCEDURES
 
As discussed in Note 5 of the Notes to the Consolidated Financial Statements in this Form 10-Q, on September 7, 2017, we announced a cybersecurity incident. Our review of the circumstances and resulting impact on our internal controls over financial reporting (ICFR) identified two significant deficiencies in our IT General Controls environment, at this point in time. As part of the Company’s overall plan to address the cybersecurity incident, actions have already been and are being taken in the fourth quarter of 2017 to remediate these significant deficiencies.

Each of the Company and a Special Committee of the Board of Directors is conducting a review of the cybersecurity incident. We will consider the outcome of this work as we complete our evaluation of ICFR at year-end 2017. As of the end of the period covered by this report, an evaluation was carried out by the Company’s management, with the participation of our Interim Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, our Interim Chief Executive Officer and Chief Financial Officer concluded that thethese disclosure controls and procedures were effective as of the end of the period covered by this report.

In addition, as a result of the review to-date, we have made certain changes tono change in our people, policy and procedures related to ICFRinternal control over financial reporting (as defined in Rule 13a-15(f) under the Securities and Exchange Act of 1934), however we do not believe these changes have occurred during our most recent fiscal quarter that has materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting.

43

PART II.  OTHER INFORMATION
 
ITEM 1.  LEGAL PROCEEDINGS
 
Litigation and Investigations related to the 2017 Cybersecurity Incident Litigation, Claims

In fiscal 2017, we experienced a cybersecurity incident following a criminal attack on our systems that involved the theft of certain personally identifiable information of U.S., Canadian and Government Investigations. To date, more than 240U.K. consumers. Following the 2017 cybersecurity incident, hundreds of class actions have beenand other lawsuits were filed by consumers against us intypically alleging harm from the incident and seeking various remedies, including monetary and injunctive relief. We were also subject to investigations and inquiries by federal, state and Canadian courtsforeign governmental agencies and officials regarding the 2017 cybersecurity incident and related matters. Most of these lawsuits and government investigations have concluded or been resolved, including pursuant to the settlement agreements described below, while others remain ongoing. The Company’s participation in these settlements does not constitute an admission by the Company of any fault or liability, and the Company does not admit fault or liability.

Consumer Settlement.

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

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

Other Settlements.

Financial Institutions MDL Class Action. On May 15, 2020, the Company entered into a settlement agreement to resolve the consolidated financial institutions class action cases pending before the MDL Court (the “Financial Institutions MDL Litigation”). Under the settlement, the Company agreed to pay for valid claims submitted by class members up to a maximum amount, reasonable settlement administration and notice costs, and reasonable attorneys’ fees and expenses. The Company also agreed to adopt and/or maintain certain business practices related to its information security program. The court granted final approval of the settlement on October 22, 2020.

Pennsylvania State Court Financial Institution Class Action. The Company entered into a settlement agreement to resolve the individual claims brought by one of the original named plaintiffs in the Financial Institutions MDL Litigation in the Court of Common Pleas of Lawrence County, Pennsylvania on behalf of itself and a class of financial institutions headquartered in Pennsylvania. The claims asserted in this matter were substantially similar to claims asserted by financial institutions that previously were dismissed in the MDL proceeding for lack of standing. The court granted approval of the settlement on July 13, 2020.

44

Other Matters.

We face other lawsuits and government investigations related to the 2017 cybersecurity incident that have not yet been concluded or resolved. These ongoing matters may result in judgments, fines or penalties, settlements or other relief. We dispute the allegations in the remaining lawsuits and assertintend to defend against such claims. Set forth below are descriptions of the main categories of these matters.

Georgia State Court Consumer Class Actions. Four putative class actions arising from the 2017 cybersecurity incident were filed against us in Fulton County Superior Court and Fulton County State Court in Georgia based on similar allegations and theories as alleged in the U.S. Consumer MDL Litigation and seek monetary damages, injunctive relief and other related relief on behalf of Georgia citizens. These cases were transferred to a varietysingle judge in the Fulton County Business Court and three of the cases were consolidated into a single action. On July 27, 2018, the Fulton County Business Court granted the Company’s motion to stay the remaining single case, and on August 17, 2018, the Fulton County Business Court granted the Company’s motion to stay the consolidated case. These cases remain stayed pending final resolution of the U.S. Consumer MDL Litigation.

Canadian Class Actions. Five putative Canadian class actions, four of which are on behalf of a national class of approximately 19,000 Canadian consumers, are pending against us in Ontario, British Columbia and Alberta. Each of the proposed Canadian class actions asserts a number of common law and statutory claims seeking monetary damages injunctive relief and other related relief.relief in connection with the 2017 cybersecurity incident. In addition certainto seeking class actions have been filedcertification on behalf of Canadian consumers whose personal information was allegedly impacted by financial institutions who allege their businesses have been placed at risk due to the 2017 cybersecurity incident, in some cases, plaintiffs also seek class certification on behalf of a larger group of Canadian consumers who had contracts for subscription products with Equifax around the time of the incident or earlier and generally assert various common law claims such as claims for negligence and breachwere not impacted by the incident.

On December 13, 2019, the court in Ontario granted certification of contract,a nationwide class that includes all impacted Canadians as well as Canadians who had subscription products with Equifax between March 7, 2017 and July 30, 2017 who were not impacted by the incident. Our motion for leave to appeal this decision was granted in some cases, statutory claims. The financial institutionspart, and our appeal is now pending. All remaining purported class actions seek compensatory damages and other related relief. Motions for consolidation and transfer for pre-trial proceedings with respect to the U.S. cases discussed above to a single U.S. District Court are pending before the U.S. Judicial Panel on Multidistrict Litigation. The Company has sought a stay of these cases pending consolidation and transfer.at preliminary stages or stayed.

Government Investigations. We have also appeared or notified the appropriate parties of representation in the Canadian class actions, but such actions are all at the preliminary stages. In addition, putative class action lawsuits have been commenced against us and certain of our current and former officers and directors alleging violations of the federal securities laws in connection with statements regarding our cybersecurity systems and controls.  These complaints seek certification of a class of all persons who purchased or otherwise acquired Equifax securities during a set period of time and unspecified monetary damages, costs and attorneys’ fees.  We dispute the allegations in the complaints described above and intend to defend against such claims.

In addition, we are cooperatingcooperated with federal, state city and foreign governmental agencies and officials investigating or otherwise seeking information, testimony and/or documents, including through Civil Investigative Demands, regarding the 2017 cybersecurity incident and related matters including 50 state Attorneysand most of these investigations have been resolved as discussed in prior filings.

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

The New York State Attorney General offices, as well as the District of Columbia and Puerto Rico, the Federal Trade Commission (“FTC”), the Consumer FinanceInvestor Protection Bureau (“CFPB”IPB”), issued a subpoena in September 2017 relating to its investigation of whether there has been a violation of the U.S. SecuritiesMartin Act. We have cooperated with the IPB in its investigation, and Exchange Commission (“SEC”), the New York Department of Financial Services,IPB has not contacted us regarding the New York Department of State - Division of Consumer Protection, other U.S. state bank regulators, the Financial Industry Regulatory Authority (“FINRA”), certain Congressional committees of both the U.S. Senate and House of Representatives, the United Kingdom’s Financial Conduct Authority ("FCA"), the Information Commissioner’s Officeinvestigation since January 2019.
Although we continue to cooperate in the United Kingdom and the Office of the Privacy Commissioner of Canada. The Enforcement Division of the FCA has opened an investigation into Equifax Ltd. (our U.K. subsidiary). In addition, a civil enforcement action has been filed by the Attorney General of Massachusetts, and lawsuits have also been filed by the Chicago City Council and City of San Francisco with respect to the cybersecurity incident alleging violations of state laws and local ordinances governing protection of personal data, consumer fraud and breach notice requirements and business practices.  Although we are cooperating with theseabove investigations and inquiries, an adverse outcome to any such investigations and inquiries could subject us to fines or other obligations, which may have an adverse effect on how we operate our business or our results of operations. In addition, we have received subpoenas with respect to investigations by the SEC and the U.S. Attorney’s Office for the Northern District of Georgia regarding trading activities by certain of our employees in relation to the cybersecurity incident.
It is not possible to estimate the amount of loss or range of possible loss, if any, that might result from adverse judgments, settlements, penalties or other resolution of the above described proceedings and investigations based on the early stage of these proceedings and investigations, that alleged damages have not been specified, the uncertainty as to the certification of a class or classes and the size of any certified class, as applicable, and the lack of resolution on significant factual and legal issues.
Additional lawsuits and claims related to the cybersecurity incident may be asserted by or on behalf of consumers, customers, shareholders or others seeking damages or other related relief and additional inquiries from governmental agencies may be received or investigations by governmental agencies commenced.

California Bankruptcy Litigation. Litigation

In consolidated actions filed in the U.S. District Court for the Central District of California, captioned Terri N. White, et al. v. Equifax Information Services LLC, Jose Hernandez v. Equifax Information Services LLC, Kathryn L. Pike v. Equifax Information Services LLC, and Jose L. Acosta, Jr., et al. v. Trans Union LLC, et al., plaintiffs asserted that Equifax violated federal and state law (the FCRA, the California Credit Reporting Act and the California Unfair Competition Law) by failing to follow reasonable procedures to determine whether credit accounts are discharged in bankruptcy, including the method for updating the status of an account following a bankruptcy discharge. On August 20, 2008, the District Court approved a Settlement Agreement and Release providing for certain changes in the procedures used by defendants to record discharges in bankruptcy on consumer credit files. That settlement resolved claims for injunctive relief, but not plaintiffs’ claims for damages. On May 7, 2009, the District Court issued an order preliminarily approving an agreement

to settle remaining class claims. The District Court subsequently deferred final approval of the settlement and required the settling parties to send a supplemental notice to those class members who filed a claim and objected to the settlement or opted out, with the cost for the re-notice to be deducted from the plaintiffs’ counsel fee award. Mailing of the supplemental notice was completed on February
45

15, 2011 and the deadline for this group of settling plaintiffs to provide additional documentation to support their damage claims or to opt-out of the settlement was March 31, 2011. On July 15, 2011, the District Court approved the settlement. Several objecting plaintiffs subsequently filed notices of appeal to the U.S. Court of Appeals for the Ninth Circuit, which, on April 22, 2013, issued an order vacating the settlement and remanding the case to the District Court for further proceedings. On January 21, 2014, the District Court denied the objecting plaintiffs’ motion to disqualify counsel for the settling plaintiffs and granted the motion of counsel for the settling plaintiffs to be appointed as interim lead class counsel. On March 28, 2016, the U.S. Court of Appeals for the Ninth Circuit affirmed the District Court’s lead counsel appointment. On January 9, 2017, the United States Supreme Court denied the objectors’ Petition for a Writ of Certiorari. The parties re-engaged in settlement discussions, including participation in mediations in August 2016 and November 2016, and reached an agreement to again settle the monetary claims. Settlement documents were filed with the District Court on April 14, 2017. On June 16, 2017, the Court granted preliminary approval of the proposed settlement, conditionally certified the settlement class, and appointed class counsel and administrator. A Final Fairness Hearing was held on December 11, 2017 and on April 6, 2018, the Court granted final approval. A Notice of Appeal was filed on May 7, 2018. Following the Notice of Appeal, the parties reached a Stipulation Regarding Attorneys’ Fees and Costs with the District Court subject to affirmance of the settlement with the U.S. Court of Appeals for the Ninth Circuit. On December 12, 2019, the Ninth Circuit affirmed the settlement and remanded to the District Court for recalculation of the attorneys’ fee award to class counsel. On January 10, 2020, the objecting plaintiffs filed a Petition for Rehearing and Rehearing En Banc which was denied. On March 16, 2020, the objecting plaintiffs filed a Petition for Writ of Certiorari with the United States Supreme Court, which was denied. On July 17, 2020, the district court signed an order granting the final award of attorneys’ fees and setting forth deadlines for payment of the settlement costs and the distribution of the non-monetary award. Equifax has now paid all settlement costs and is scheduled for December 2017.in the process of distributing the non-monetary award to consumers.


Other.Other

Equifax has been named as a defendant in various other legal actions, including administrative claims, regulatory matters, government investigations, class actions and other litigation arising in connection with our business. Some of the legal actions include claims for substantial compensatory or punitive damages or claims for indeterminate amounts of damages. We believe we have strong defenses to and, where appropriate, will contest, many of these matters. Given the number of these matters, some are likely to result in adverse judgments, penalties, injunctions, fines or other relief. We may explore potential settlements before a case is taken through trial because of the uncertainty and risks inherent in the litigation processprocess.
For information regarding our accounting for legal contingencies, see Note 5 of the Notes to Consolidated Financial Statements in this Form 10-Q.
 

ITEM 1A.  RISK FACTORS
 
There have been no material changes with respect to the risk factors disclosed in our 20162019 Form 10-K except as set forth below. The risk factors set forth below update, and should be read together with, the risk factors disclosed in our 2016 Form 10-K.

We are in the process of assessing the impact of the cybersecurity incident and the resulting government investigations, litigation and other impacts on our business and results of operations.

The cybersecurity incident involved the theft of certain personally identifiable information of consumers through unauthorized access to our network. As a result of the cybersecurity incident, we are currently a party to more than 240 consumer class action lawsuits, as well as financial institution class action lawsuits, shareholder class action lawsuits and other lawsuits and claims allegedly arising out of the cybersecurity incident that may be asserted by or on behalf of consumers, customers, shareholders or others seeking monetary damages or other relief. A number of federal, state and foreign governmental officials and agencies are also investigating events related to the cybersecurity incident, including how it occurred, the consequences thereof and our response thereto. These claims and investigations may result in material costs, expenses and fines and will require significant attention by management, which may divertForm 10-Q for the focus of management from the operation of our business. In addition, the outcome of such claims and investigations could adversely affect or cause us to change how we operate our business. The governmental agencies investigating the cybersecurity incident may seek to impose injunctive relief, consent decrees, or other civil or criminal penalties, which could, among other things, impact our ability to collect and use consumer information, materially increase our data security costs and/or otherwise require us to alter how we operate our business. In addition, any legislative or regulatory changes adopted in reaction to the cybersecurity incident or other companies’ data breaches could require us to make modifications to the operation of our business that could have an adverse effect and/or increase or accelerate our compliance costs.quarter ended June 30, 2020.
Our remediation and security and IT enhancement efforts will be costly and may not be effective.

Following the cybersecurity incident, we began undertaking significant remediation efforts and other steps to enhance our data security infrastructure. In connection with these efforts to date, we have incurred significant costs and expect to incur additional significant costs as we take further steps to prevent unauthorized access to our systems and the data we maintain. The actions we have taken are based on our investigation of the causes of the cybersecurity incident to date, but there may be


additional changes needed to prevent a similar incident. We cannot assure that all potential causes of the incident have been identified and remediated and will not occur again. Because our products and services involve the storage and transmission of personal information of consumers, we will continue to be routinely targeted by outside third parties, including technically sophisticated and well-resourced bad actors attempting to access or steal the data that we store. If we experience additional breaches of our security measures, sensitive data may be accessed, which could cause us significant additional legal and financial exposure and damage to our reputation that could have a material adverse effect on our business.

In addition, our compliance with payment card industry data security standards is currently under review, and if we are found to not be in compliance with applicable requirements, we may incur additional costs for remediation, fees or other assessments related thereto.

The cybersecurity incident has had a negative impact on our reputation, and we cannot assure it will not have a long-term effect on our relationships with our customers, our revenue and our business.
Our USIS revenue declined in the third quarter of 2017 as compared to the third quarter of 2016 due in part to the impact of the cybersecurity incident. We believe that certain of our customers have determined to defer new contracts or projects unless and until we can provide assurances regarding our ability to prevent unauthorized access to our systems and the data we maintain. Many of our customers are requiring security audits of our systems and any negative results of such audits may cause the loss of customers. If we are unable to demonstrate the security of our systems and the data we maintain and rebuild the trust of our customers, consumers and data suppliers we could experience a material adverse impact on our business. In addition, our management is and will continue to be intensely focused on enhancing our security measures and responding to consumer and customer concerns relating to the cybersecurity incident and may not be able to devote sufficient time to new product development, which could cause us to be less competitive as compared to our peers, lose out on new revenue opportunities and have an adverse effect on our growth and our business. Due to the cybersecurity incident and our provision of free products to consumers, we ceased the advertisement and sale of new products in our direct to consumer business, which has resulted in a significant decline in revenue in that business. We expect that revenue from our direct to consumer business will continue to decline.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
The following table contains information with respect to purchases made by or on behalf of Equifax or any “affiliated purchaser” (as defined in Rule 10b-18(a) (3) under the Securities Exchange Act of 1934), of our common stock during our third quarter ended September 30, 2017:2020: 

  
Total
Number
of Shares
 
Average
Price
Paid
 
Total Number
of Shares Purchased
as Part of
Publicly-Announced
 
Maximum Number
(or Approximate
Dollar Value)
of Shares that May
Yet Be Purchased
Under the Plans or
Period Purchased (1) Per Share (2) Plans or Programs Programs (3)
July 1 - July 31 1,022
 $145.29
 90,000
 $654,122,910
August 1 - August 31 5,443
 $143.60
 445,901
 $590,092,166
September 1 - September 30 855
 $—
 —
 $590,092,166
Total 7,320
 $143.88
 535,901
 $590,092,166
Total
Number
of Shares		Average
Price
Paid		Total Number
of Shares Purchased
as Part of
Publicly-Announced		Maximum Number
(or Approximate
Dollar Value)
of Shares that May
Yet Be Purchased
Under the Plans or
PeriodPurchased (1)Per Share (2)Plans or ProgramsPrograms (3)
July 1 - July 31, 20207,155 $— — $590,092,166 
August 1 - August 31, 20202,660 $— — $590,092,166 
September 1 - September 30, 202036,270 $— — $590,092,166 
Total46,085 — 
 
(1)The total number of shares purchased for the quarter includes shares surrendered, or deemed surrendered, in satisfaction of the exercise price and/or to satisfy tax withholding obligations in connection with the exercise of employee stock options, totaling 1,022 shares for the month of July 2017, 5,443 shares for the month of August 2017, and 855 shares for the month of September 2017.

(2)Average price paid per share for shares purchased as part of our share repurchase program (includes brokerage commissions).

(3)At September 30, 2017, the amount authorized for future share repurchases under the share repurchase program was $590.1 million. The program does not have a stated expiration date.

(1)The total number of shares purchased for the quarter includes shares surrendered, or deemed surrendered, in satisfaction of the exercise price and/or to satisfy tax withholding obligations in connection with the exercise of

46


employee stock options, totaling 7,155 shares for the month of July 2020, 2,660 shares for the month of August 2020, and 36,270 shares for the month of September 2020.

(2)Average price paid per share for shares purchased as part of our share repurchase program (includes brokerage commissions).

(3)At September 30, 2020, the amount authorized for future share repurchases under the share repurchase program was $590.1 million. The program does not have a stated expiration date.

Dividend and Share Repurchase Restrictions
 
Our Senior Credit Facilities restrictRevolver restricts our ability to pay cash dividends on our capital stock or repurchase capital stock if a default or event of default exists or would result if these payments were to occur, according to the terms of the applicable credit agreements. 

47

ITEM 6.  EXHIBITS
 
Exhibit No.Description
10.131.1 
31.1
Rule 13a-14(a) Certification of Chief Executive Officer
31.2
32.1
32.2
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
101.DEF
XBRL Taxonomy Extension Definition Linkbase 
101.LAB
XBRL Taxonomy Extension Label Linkbase
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)



48


SIGNATURES
 
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.
(Registrant)
Date:November 9, 2017October 22, 2020By:/s/ Paulino R. Barros, Jr.Mark W. Begor
Paulino R. Barros, Jr.Mark W. Begor
Interim Chief Executive Officer
(Principal Executive Officer)
Date:November 9, 2017October 22, 2020/s/ John W. Gamble, Jr.
John W. Gamble, Jr.
Corporate Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date:November 9, 2017October 22, 2020/s/ NualaJames M. KingGriggs
NualaJames M. KingGriggs
Senior Vice PresidentChief Accounting Officer and Corporate Controller
(Principal Accounting Officer)


INDEX TO EXHIBITS

49
Exhibit No.Description
10.1
Agreement, dated September 25, 2017, between Equifax Inc. and Richard F. Smith
31.1
Rule 13a-14(a) Certification of Chief Executive Officer
31.2
Rule 13a-14(a) Certification of Chief Financial Officer
32.1
Section 1350 Certification of Chief Executive Officer
32.2
Section 1350 Certification of Chief Financial Officer
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
101.DEF
XBRL Taxonomy Extension Definition Linkbase 
101.LAB
XBRL Taxonomy Extension Label Linkbase
101.PRE
XBRL Taxonomy Extension Presentation Linkbase



47