FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended 12-31-94
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 1-6605
EQUIFAX INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GEORGIA 58-0401110
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION IDENTIFICATION NO.)
P.O. BOX 4081
1600 PEACHTREE ST., N.W., ATLANTA, GA 30302
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code (404) 885-8000
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
COMMON STOCK NEW YORK STOCK EXCHANGE
($2.50 PAR VALUE)
Securities registered pursuant to Section 12(g) of the Act: NONE
--------
(TITLE OF CLASS)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES /X/ NO / /
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K (SECTION 229.405 OF THIS CHAPTER) IS NOT CONTAINED HEREIN, AND
WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE
PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS
FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. / /
AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE
REGISTRANT, COMPUTED BY REFERENCE TO THE CLOSING SALES PRICE ON THE NEW YORK
STOCK EXCHANGE ON MARCH 22, 1995. $2,627,335,565.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
CLASS OUTSTANDING AT MARCH 22, 1995
----------------------------- -----------------------------
COMMON STOCK, $2.50 PAR VALUE 79,804,038
DOCUMENTS INCORPORATED BY REFERENCE
THE PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL
26, 1995, IS INCORPORATED BY REFERENCE, TO THE EXTENT INDICATED UNDER ITEMS 10,
11, 12, AND 13, INTO PART III OF THIS FORM 10-K.
EQUIFAX INC.
PART I
ITEM 1. BUSINESS
Equifax Inc. is structurally a holding company for its corporate
subsidiaries, which conduct the actual operations of the Company. The separate
business areas of the Company are conducted on a "profit center" basis with
self-contained functional integrity, although Equifax Inc. continues to supply
centralized overall financial, legal, public relations, tax and similar
services.
The Company was founded as a credit reporting agency under the name,
"Retail Credit Company" in Atlanta, Georgia, in 1899. Over the next several
years, the Company established itself in the area of investigation of applicants
for insurance. The business grew and, by 1920, the Company had numerous branch
offices throughout the United States and Canada. Since that time, the Company
has continued to expand and diversify by means of internal development and
strategic acquisitions. At the end of 1975, the Company changed its name from
Retail Credit Company to Equifax Inc. The specific products and services
presently offered by the Company are described below. In general, today's
Equifax companies provide a broad range of information-based administrative
services to business, industry and government throughout the United States,
Mexico and Canada, in Europe, the United Kingdom, in South America, Turkey, Hong
Kong, Singapore, Thailand and the Caribbean.
In January 1993, the Company implemented an open market stock repurchase
program. During 1994, the Company repurchased approximately 2,390,000 shares at
a cost of $57,985,000.
In January 1994, the Company acquired Cooperative Healthcare Networks, an
Atlanta-based electronic health care claims processing company. These
operations are presently owned and operated by Equifax Healthcare Information
Services, Inc.
In February 1994, the Company acquired the Credit Bureau of Charlotte,
Inc., a credit reporting and collection bureau in Charlotte, North Carolina.
These operations are presently owned and operated by Equifax Credit Information
Services, Inc.
In April 1994, the Company purchased an additional 30.1 percent interest in
Transax, plc, a check guarantee company located in the United Kingdom,
increasing its ownership interest to 50.1 percent. Transax, headquartered in
Birmingham, England, provides check authorization services throughout the United
Kingdom, Ireland, France, Australia and New Zealand. This ownership interest is
held by Equifax Europe (U.K.) Ltd.
In April 1994, the Company acquired Programming Resources Company, a
commercial software company located in Hartford, Connecticut. These operations
are presently owned and operated by Equifax Services Inc.
In May 1994, the Company acquired HealthChex, Inc., an analytical services
company specializing in cost saving physician profiling and claims review
systems, located in Rochester, New York. These operations are presently owned
by Equifax Inc. and operated by Equifax Healthcare Information Services, Inc.
In May 1994, Equifax Europe (U.K.) Ltd. entered into a joint venture with
Asociacion Nacional de
1
Entidades de Financiacion (ASNEF). Under this Agreement, Equifax and ASNEF will
operate a Spanish credit reporting company called ASNEF - Equifax Servicios de
Informacion de Credito, S.L., headquartered in Madrid, Spain.
Also, in May 1994, the Company, through its subsidiary Equifax South
America, Inc., entered into a joint venture with Organizacion Veraz, an
Argentine credit reporting company, and Banelco, an Argentine banking
association, to provide credit information services in Argentina. The joint
venture is headquartered in Buenos Aires, Argentina.
In July 1994, the Company acquired First Security Processing Services,
Inc., a provider of credit card transaction switching, merchant processing and
full-service card processing to credit unions located in Utah. These operations
are presently owned and operated by Equifax Payment Services, Inc.
In July 1994, the Company acquired First Bankcard Systems, Inc., a
commercial software company, located in Atlanta, Georgia. These operations are
presently owned by Equifax Inc. and operated by Equifax Credit Information
Services, Inc.
In August 1994, the Company acquired Canadian Bonded Credits, Ltd., the
second largest debt collection company in Canada, headquartered in the city of
North York, Ontario. These operations are presently owned and operated by
Equifax Canada, Inc.
In August 1994, the Company, through its subsidiary Equifax South America,
Inc., entered into a joint venture with DICOM S.A., a Chilean credit reporting
company, to provide credit information services in Chile. The joint venture is
headquartered in Santiago, Chile.
In September 1994, the Company acquired Electronic Tabulating Services, a
clearinghouse for electronic health claims, located in Atlanta, Georgia. These
operations are presently owned by Equifax Inc. and operated by Equifax
Healthcare Information Services, Inc.
In October 1994, the Company acquired UAPT-Infolink plc, a United Kingdom
credit referencing and risk management servicing firm headquartered in London,
England. These operations are presently owned and operated by Equifax Europe
(U.K.) Ltd.
In November 1994, the Company acquired Osborn Laboratories, Inc., which
specializes in health profile testing for the life and health insurance
industry, located in Olathe, Missouri. These operations are presently owned by
Equifax Inc. and operated by Equifax Services Inc.
2
INDUSTRY SEGMENT INFORMATION
Industry segment information is as follows:
1994 1993 1992
----------------------- ------------------------ -----------------------
(Dollars in thousands) Amount % of Total Amount % of Total Amount % of Total
- -------------------------------------------------------------------------------------------------------------------
Operating revenue:
Credit Information Services $ 445,637 31% $ 399,100 33% $ 341,989 30%
Payment Services 246,597 17% 210,416 17% 195,501 17%
Insurance Information Services 453,409 32% 396,519 33% 402,276 35%
International Operations 143,371 10% 97,296 8% 103,985 9%
General Information Services 132,982 9% 113,886 9% 90,582 8%
---------- ---- ---------- ---- ---------- ----
$1,421,996 100% $1,217,217 100% $1,134,333 100%
========== ==== ========== ==== ========== ====
Operating income (loss):
Credit Information Services $ 147,099 60% $ 130,053 88% $ 93,233 56%
Payment Services 57,460 24% 51,910 35% 49,408 30%
Insurance Information Services 18,504 8% 5,537 4% 10,990 7%
International Operations 16,458 7% 18,056 12% 17,704 11%
General Information Services 3,792 2% (56,965)* (38%) (5,099) (3%)
---------- ---- ---------- ---- -------- ---
Operating contribution 243,313 100% 148,591 100% 166,236 100%
=== === ===
General corporate expense (29,206) (29,562) (24,898)
---------- ---------- ---------
$ 214,107 $ 119,029 $ 141,338
========== ========== ==========
Identifiable assets at
December 31:
Credit Information Services $ 260,733 26% $ 270,532 37% $233,326 33%
Payment Services 115,929 11% 70,806 10% 78,994 11%
Insurance Information Services 171,904 17% 83,390 11% 84,423 12%
International Operations 293,318 29% 128,027 18% 119,964 17%
General Information Services 117,566 12% 75,284 10% 98,038 14%
Corporate 61,724 6% 103,162 14% 94,137 13%
---------- --- ---------- --- -------- ---
$1,021,174 100% $ 731,201 100% $ 708,882 100%
========== ==== ========== === ========= ===
* Includes a provision for lottery contract dispute and litigation of $48,438.
Description of Segments:
CREDIT INFORMATION SERVICES: Consumer credit reporting information; credit card
marketing services; risk management and collection services; locate services;
fraud detection and prevention services; and mortgage loan origination
information.
PAYMENT SERVICES: Check guarantee services; credit and debit card authorization
and processing; credit card marketing enhancement; and software products for
managing credit card operations.
INSURANCE INFORMATION SERVICES: Underwriting and claims reporting services;
inspection and loss control services; workers' compensation audits; software for
commercial insurers; specimen testing for life and health insurance applicants;
and employment evaluation services.
INTERNATIONAL OPERATIONS: In Canada, consumer and business credit reporting
information; accounts receivable and collection services; underwriting and
claims reporting services for insurance companies; and check guarantee services.
In Europe (primarily the United Kingdom), credit reporting and marketing
services; credit scoring and modeling services; check guarantee services; and
auto lien information. In
3
South America, credit information services and commercial, financial and medical
information.
GENERAL INFORMATION SERVICES: Healthcare Information Services includes
electronic claims processing; physician profiling; claims auditing; claims
analysis, administration and utilization management; electronic remittance;
hospital bill audits; and medical credentials verification. Marketing Services
includes research and analysis; custom opinion surveys; and PC-based marketing
systems, geodemographic systems and mapping tools.
Notes to Industry Segment Information:
(1) Operating revenue is to unaffiliated customers only.
(2) Operating income is operating revenue less operating costs and expenses,
excluding interest expense, other income and income taxes.
(3) Depreciation and amortization by industry segment are as follows:
(In thousands) 1994 1993 1992
- -----------------------------------------------------------
Credit Information Services $26,640 $25,478 $23,050
Payment Services 4,970 3,230 4,139
Insurance Information Services 10,389 8,077 9,178
International Operations 11,277 5,583 5,921
General Information Services 9,762 7,056 5,770
Corporate 3,458 5,500 5,765
------- ------- -------
$66,496 $54,924 $53,823
======= ======= =======
(4) Capital expenditures by industry segment, excluding property and equipment
acquired in acquisitions, are as follows:
(In thousands) 1994 1993 1992
- -----------------------------------------------------------
Credit Information Services $ 5,042 $ 6,082 $ 6,441
Payment Services 5,059 2,596 2,462
Insurance Information Services 2,095 6,755 3,452
International Operations 3,062 1,267 4,082
General Information Services 3,817 22,541 15,933
Corporate 1,098 516 2,270
------- ------- -------
$20,173 $39,757 $34,640
======= ======= =======
4
(5) Financial information by geographic area is as follows:
1994 1993 1992
----------------------- ------------------------- ------------------------
(Dollars in thousands) Amount % of Total Amount % of Total Amount % of Total
- ----------------------------------------------------------------------------------------------------------------
Operating revenue:
United States $1,277,196 90% $1,119,921 92% $1,030,348 91%
Canada 78,277 6% 76,285 6% 79,990 7%
Europe 66,523 5% 21,011 2% 23,995 2%
---------- ---- ---------- --- ---------- ---
$1,421,996 100% $1,217,217 100% $1,134,333 100%
========== ==== ========== === ========== ===
Operating contribution (loss):
United States $ 228,280 93% $ 130,995 88% $ 148,532 89%
Canada 15,476 6% 19,169 13% 19,257 12%
Europe (851) - (1,573) (1%) (1,553) (1%)
South America 408 - - - - -
---------- ---- ---------- --- ---------- ---
$ 243,313 100% $ 148,591 100% $ 166,236 100%
========== ==== ========== === ========== ===
Identifiable assets at
December 31:
United States $ 723,466 71% $ 603,174 82% $ 588,918 83%
Canada 109,004 11% 102,559 14% 95,242 13%
Europe 173,054 17% 25,468 3% 24,722 3%
South America 15,650 2% - - - -
---------- ---- ---------- --- ---------- ---
$1,021,174 100% $ 731,201 100% $ 708,882 100%
========== ==== ========== === ========== ===
A description of the products or services provided by each industry segment as
captioned in the aforementioned information, together with information regarding
the companies included within each segment, is as follows:
Credit Information Services Segment
This segment includes Equifax Credit Information Services, Inc. and its
wholly-owned subsidiary Credit Northwest Corporation.
The Company's principal class of service for this segment is informational and
administrative services for consumer and commercial credit report purposes,
including mortgage information services. Customers include retailers, banks,
financial institutions, utilities, petroleum companies, travel and entertainment
card companies, auto finance and leasing firms, educational institutions and
mortgage lenders. In 1994, this class of service accounted for 20.9% of the
Company's total operating revenue, as compared with 23.6% in 1993, and 22.8% in
1992.
Companies in this segment primarily furnish consumer credit services, but also
provide decision support and credit management services designed to meet
specific customer needs. This includes consumer credit reporting information,
risk management, collection services, locate services, fraud detection and
prevention, credit card marketing programs, mortgage loan origination
information, and modeling capabilities for domestic and international customers
and analytical services both domestically and internationally. These companies
distribute information to customers through automated delivery, utilizing
telephone transmission facilities.
5
The Company's consumer credit services operations, including non-owned
affiliate bureaus, compete with two other large automated credit reporting
organizations - TRW Credit Data, a division of TRW Inc., and Trans Union
Corporation. There are also numerous smaller local bureaus in this field.
Payment Services Segment
This segment includes Equifax Payment Services, Inc. and its wholly-owned
subsidiaries Equifax Check Services, Inc.; Equifax Card Services, Inc.; Light
Signatures, Inc.; Financial Insurance Marketing Group, Inc.; and First Bankcard
Systems, Inc.
Companies in this segment provide services to national and regional retail
chains, banks, credit unions, savings institutions, automobile dealers and
rental companies, hotel and motels, and others.
The Company's principal class of service for this segment is check guarantee
and check verification services. In 1994, this class of service accounted for
9.3% of the Company's total revenue, as compared with 10.1% in 1993 and 10.5% in
1992.
These companies provide check guarantee services as well as various credit and
debit card processing services to merchants and financial institutions. These
services include on-line guarantees or verification of checks written at the
point of sale, credit card and debit card processing for small to medium-size
banks, credit unions, and other financial institutions and flexible credit card
marketing enhancements.
Companies in this segment are leading providers of their products and services
in the U.S. although competition is considerable.
Business in this segment is seasonal to some extent. The volume of check
payment services is highest during the Christmas shopping season and during
other periods of increased consumer spending.
International Operations Segment
This segment consists of Acrofax Inc.; Equifax Canada Inc. and its wholly-
owned subsidiaries Equifax Canada (AFX) Inc. and Telecredit Canada, Inc.;
Equifax Europe (U.K.) Ltd.; Equifax Europe Ltd, UAPT-Infolink plc; and Equifax
South America, Inc. Also included in this segment are Transax (50.1% owned) and
Scorex (U.K.) Ltd. (49% owned); ASNEF-Equifax (49% owned); Organizacion Veraz
(33.3% owned); and DICOM (25% owned).
The Company's principal class of service for this segment is consumer credit
reporting. In 1994, this class of service accounted for 6.2% for the Company's
total operating revenue, as compared with 6.0% in 1993 and 6.7% in 1992.
The companies in this segment primarily provide consumer credit services, but
also provide other financial services. In Canada, financial services include
automated business and consumer credit information, accounts receivable and
collection and check guarantee services. As in the U.S., claims information
exchanges are offered in Canada and in the U.K. In Canada, other services
include life and health underwriting reports, motor vehicle records and
commercial property inspections. In the U.K., consumer and commercial credit
reporting, auto lien information, credit scoring, modeling services and check
guarantee and electronic authorization services are provided. In Spain and
Argentina, technology
6
and expertise are provided to enhance credit information services. In Chile,
commercial, financial and medical information services are provided.
Equifax Canada Inc. is clearly the market leader in providing consumer credit
and insurance information in Canada. Competition from a variety of sources is
strong in the insurance information market, but no other company provides a full
range of services. Telecredit Canada, Inc. faces strong competition. In the
U.K., CCN, a subsidiary of Great Universal Stores, PLC holds the majority share
of the market, while Transax is the check guarantee market share leader. ASNEF-
Equifax is a leader in providing credit information services in Spain. Veraz
and DICOM are the leading information providers in Argentina and Chile,
respectively.
Insurance Information Services Segment
This segment consists of various business units of Equifax Services Inc.;
Osborn Laboratories, Inc.; The Kit Factory, Inc.; Mid-American Technologies,
Inc.; and Programming Resources Company.
The Company's principal class of service for this segment is providing
information for insurance underwriting purposes. In 1994, this class of service
accounted for 25.8% of the Company's total operating revenue, as compared with
25.8% in 1993, and 27.8% in 1992.
Equifax Services Inc. provides most all major life and health insurance
companies with various informational services for help in determining the
classification of applicants as risks for life and health insurance and for
assistance in settling claims. Also, health data is provided to these companies
for their use in underwriting the health aspects of their risks. Osborn
Laboratories tests blood and urine for life and health insurance applicants.
The Company also provides similar informational services to major property and
casualty insurance companies including motor vehicle records, automated claim
information for automobile and property insurers, automobile reclassification
program management, workers' compensation audits and commercial inspections and
surveys. The Company also provides customized software rating applications for
commercial and personal line insurers. This information is used by insurance
companies in evaluating applicants as risks and as an aid in determining the
applicable rates. Automated information services are distributed through
telephone transmission facilities.
The Company currently ranks first and is the market leader providing insurance
related information services, while Osborn is the second largest laboratory of
its kind in the U.S. Many smaller organizations, which focus on a limited
number of services and which, in some cases, are concentrated in small
geographic areas, provide fragmented competition.
General Information Services Segment
This segment consists of Equifax Healthcare Information Services, Inc.;
Equifax Healthcare EDI Services, Inc.; HealthChex, Inc.; Equifax Marketing
Decision Systems, Inc.; Elrick & Lavidge, Inc.; Quick Test, Inc.; Health
Economics Corporation; and High Integrity Systems, Inc.
The Company's principal class of service for this segment is providing
marketing research services. In 1994, this class of service accounted for 5.5%
of the Company's total operating revenue, as compared with 6.1% in 1993, and
6.5% in 1992.
Companies in this segment providing health care services furnish a broad range
of informational and
7
administrative services which include electronic claim processing, on-line
eligibility verification and claim status, physician profiling, automatic claim
audits, national medical credentials verification, claims analysis,
administration and utilization management, pre-admission certification, managed
care plan services, electronic remittance and hospital bill audits. Information
services offered to business in general through Elrick & Lavidge, Inc., Quick
Test, Inc. and Equifax Marketing Decision Systems, Inc., include market research
and analysis, custom opinion surveys, PC-based marketing systems, geo-
demographic systems and accurate mapping tools.
Equifax Healthcare Information Services, Inc., HealthChex, Inc., Equifax
Healthcare EDI Services, Inc., and Health Economics Corporation provide services
to health care providers (hospitals and physicians), health plan managers,
insurers, purchasers and payers of group health coverage and governmental
agencies.
High Integrity Systems, Inc., was formed to provide a lottery management
system for the California State Lottery.
Competition is strong in all of the above areas. Companies offering health
care services possess relatively small shares or are competing in young and
growing markets. Market research companies, including Elrick & Lavidge, Inc.,
Quick Test, Inc., and Equifax Marketing Decision Systems, Inc., face
considerable competition. Other than stated above, competition in these areas
is difficult to describe and information concerning such conditions is not
material to a general understanding of the Company's business.
- -----------------------------------------------------------------------------
The principal methods of competition for the Company are price, scope, speed
and ease of service and reliability of the information furnished.
None of the Company's segments is dependent on any single customer, and the
Company's largest customer provides less than 6% of the Company's total
revenues.
The Company had approximately 14,200 employees, as of December 31, 1994.
ITEM 2. PROPERTIES
The Company is in a service industry and does not own any mines, extractive
properties or manufacturing plants. Thus, an understanding of the Company's
property holdings is not deemed to be material to an understanding of the
Company's business taken as a whole.
The Company owns a total of four office buildings, one of which is located in
La Habra, California and the other three located in England - one each in
London, Corsham and Salisbury. The Company also owns two office/laboratory
facilities, one of which with an adjoining 1.27 acres of vacant land, in a
suburb of Kansas City, Olathe, Kansas. These office/laboratory facilities are
utilized by the Company's new subsidiary, Osborn Laboratories, Inc.
The Company ordinarily leases office space of the general commercial type for
conducting its business and is obligated under approximately 375 lease and other
rental arrangements for its headquarters and field locations.
8
The Company's operating leases involve principally office space and office
equipment. Rental expense relating to these leases was $54,274,000 in 1994,
$40,798,000 in 1993 and $59,920,000 in 1992. In March 1994, the Company sold
and leased back under operating leases certain land and buildings. The net
sales price of $55,100,000 approximated the net book value of the related assets
and, accordingly, no gain or loss was recognized.
Future minimum payment obligations for noncancelable operating leases exceeding
one year are as follows as of December 31, 1994:
(In thousands) Amount
- --------------------------
1995 $ 44,846
1996 30,938
1997 22,323
1998 17,299
1999 11,857
Thereafter 80,966
--------
$208,229
========
ITEM 3. LEGAL PROCEEDINGS
High Integrity Systems, Inc. (HISI), a Company subsidiary, entered into a
contract in July 1992 to provide lottery services to the state of California.
Under this contract, HISI agreed to provide a system to automate the processing
of instant lottery tickets and a system to sell on-line game tickets through
10,000 low-volume terminals.
On April 26, 1993, the California State Lottery (CSL) filed suit against HISI
in Superior Court, Sacramento County, California, and on May 7, 1993, the CSL
filed its first amended complaint naming Equifax Inc., et al. and Federal
Insurance Company as additional defendants. The CSL is seeking unspecified
damages for alleged breach of contract and injunctive relief and is asserting a
claim against Federal Insurance Company for $18.5 million, which represents the
face amount of a performance bond delivered to the CSL in July 1992 on behalf of
HISI.
On May 7, 1993, HISI filed a cross-complaint against the CSL seeking
compensatory and general damages in an amount not less than $65 million and
special and consequential damages in an amount not less than $100 million.
The Company believes HISI has a meritorious cross-complaint against the CSL
for wrongfully terminating the contract. The Company further believes that it
has well-founded and solid defenses against the CSL's claims. However, there
can be no assurance that the Company will succeed in its defense and cross-
complaint against the CSL. A revised litigation schedule has been approved by
the Court, including a tentative trial date in October 1995. Substantial
discovery activity has been undertaken by the Company and is continuing.
In September 1993, the Company recorded a provision of $48,438,000
($30,939,000 after tax, or $.41 per share) related to the lottery contract to
write down data processing equipment and other assets to their estimated net
realizable value and to accrue for estimated costs related to litigation with
the CSL. In management's opinion, this provision is adequate and the ultimate
resolution of the CSL litigation will not have a materially adverse impact on
the Company's financial position or results of operations.
9
EXECUTIVE OFFICERS OF THE REGISTRANT
The Company's executive officers, as of March 15, 1995, are listed below, with
certain information relating to each of them:
Executive
Name and Position Officer
With Company Age Since
----------------- ----- -------
C. B. Rogers, Jr., Chairman
and Chief Executive Officer* 65 1987
D. W. McGlaughlin, President
and Chief Operating Officer* 58 1989
Thomas F. Chapman, Executive
Vice President* 51 1991
J. C. Chartrand, Executive
Vice President* 60 1986
D. V. Smith, Executive
Vice President 40 1990
D. U. Hallman, Senior Vice President
and Chief Financial Officer 53 1991
J. O. Perkins, Senior Vice
President 54 1988
Stewart A. Searle, III, Senior
Vice President 43 1991
D. F. Walsh, Senior Vice President 62 1987
T. H. Magis, Corporate Vice President,
Secretary and General Counsel 54 1991
R. F. Haygood, Corporate Vice President 47 1993
and Treasurer
*Also serves as a Director
10
There are no family relationships among the officers of the Company, nor are
there any arrangements or understandings between any of the officers and any
other persons pursuant to which they were selected as officers. The Board of
Directors may elect an officer or officers at any meeting of the Board. Each
elected officer is selected to serve until the date of the Annual Meeting of the
Shareholders in each year.
Messrs. Rogers, McGlaughlin, Chapman, Chartrand, Perkins and Walsh have each
served as an officer of the Company for at least five years. Messrs. Smith,
Magis, Hallman and Haygood have served in various executive capacities with the
Company or its subsidiaries for more than five years before becoming an officer.
Mr. Searle, prior to his election as Senior Vice President in October, 1991,
was President and Director of Fairwater Capital Corporation, a private
management holding company, with assets exceeding $250,000,000. From 1981 until
1988, he was a partner with McKinsey & Co., an international management
consulting firm.
PART II
-------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is listed and traded on the New York Stock
Exchange, which is the principal market on which said stock is traded.
DIVIDENDS PER SHARE
Quarter 1990 1991 1992 1993 1994
- ------------------------------------------------------------------
First $ 0.12 $ 0.13 $ 0.13 $ 0.14 $ 0.140
Second 0.12 0.13 0.13 0.14 0.155
Third 0.12 0.13 0.13 0.14 0.155
Fourth 0.12 0.13 0.13 0.14 0.155
- ------------------------------------------------------------------
Annual $ 0.48 $ 0.52 $ 0.52 $ 0.56 $ 0.605
- ------------------------------------------------------------------
STOCK PRICES
(IN DOLLARS) 1992 1993 1994
---------------- ---------------- ---------------
High Low High Low High Low
------- ------- ------- ------- ------- ------
First Quarter 18 3/4 15 22 3/8 19 1/8 27 3/8 21 7/8
Second Quarter 19 3/8 14 3/8 21 17 3/8 30 3/8 23 1/8
Third Quarter 17 1/8 14 3/8 26 1/8 19 3/4 30 1/4 26 3/4
Fourth Quarter 20 5/8 14 5/8 27 3/8 22 7/8 30 1/2 24
- --------------------- ------- ------- ------- ------- ------- ------
Year 20 5/8 14 3/8 27 3/8 17 3/8 30 1/2 21 7/8
- --------------------- ------- ------- ------- ------- ------- ------
As of March 7, 1995, there were approximately 8,815 holders of record of the
Company's common stock.
11
ITEM 6. SELECTED FINANCIAL DATA
SUMMARY OF SELECTED FINANCIAL DATA
(Dollars in thousands, except per share amounts)
- --------------------------------------------------------------------------------------------------------------------------------
Year ended December 31 1994 1993 1992 1991 1990 1989 1988
- ---------------------------------------------------------------------------------------------------------------------------------
Operating revenue $ 1,421,996 $ 1,217,217 $ 1,134,333 $ 1,093,827 $ 1,078,753 $ 1,001,617 $ 894,482
Operating costs and
expenses before
unusual items 1,207,889 1,049,750 992,995 969,136 941,976 881,806 801,785
----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating income
before unusual items 214,107 167,467 141,338 124,691 136,777 120,011 92,697
Unusual items - (48,438) - (32,044) (21,793) (14,656) (27,669)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating income 214,107 119,029 141,338 92,647 114,984 105,355 65,028
Other income 8,994 3,890 7,482 8,128 11,055 9,712 5,648
Interest expense (15,624) (10,923) (4,029) (7,253) (13,177) (10,365) (3,331)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before income
taxes and accounting
changes 207,477 111,996 144,791 93,522 112,862 104,702 67,345
Provision for income taxes 87,131 48,481 59,445 39,424 48,932 41,170 33,295
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before accounting
changes 120,346 63,515 85,346 54,098 63,930 63,532 34,050
Cumulative prior years'
effect of changes in
accounting principles - - - (48,991) - - 5,400
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income $ 120,346 $ 63,515 $ 85,346 $ 5,107 $ 63,930 $ 63,532 $ 39,450
=========== =========== =========== =========== =========== =========== ===========
Dividends paid $ 47,161 $ 42,041 $ 42,770 $ 42,623 $ 35,823 $ 32,003 $ 22,948
=========== =========== =========== =========== =========== =========== ===========
Per common share:
Before unusual items and
accounting changes $ 1.62 $ 1.26 $ 1.04 $ .90 $ 1.00 $ .90 $ .73
Unusual items - (.41) - (.24) (.21) (.11) (.29)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before
accounting changes 1.62 .85 1.04 .66 .79 .79 .44
Cumulative prior years'
effect of changes in
accounting principles - - - (.60) - - .07
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income $ 1.62 $ .85 $ 1.04 $ .06 $ .79 $ .79 $ .51
=========== =========== =========== =========== =========== =========== ===========
Dividends $ .605 $ .56 $ .52 $ .52 $ .48 $ .43 $ .39
=========== =========== =========== =========== =========== =========== ===========
Assets at December 31 $ 1,021,174 $ 731,201 $ 708,882 $ 716,103 $ 754,279 $ 685,188 $ 528,287
=========== =========== =========== =========== =========== =========== ===========
Long-term debt at
December 31 $ 211,967 $ 200,070 $ 191,749 $ 77,114 $ 143,050 $ 88,883 $ 30,169
=========== =========== =========== =========== =========== =========== ===========
12
Shareholders' equity at
December 31 $ 361,859 $ 254,031 $ 257,990 $ 350,314 $ 373,306 $ 339,918 $ 297,914
=========== =========== =========== =========== =========== =========== ===========
Common shares outstanding
at December 31 75,895,000 74,809,000 75,775,000 82,147,000 81,212,000 80,529,000 79,987,000
=========== =========== =========== =========== =========== =========== ===========
Weighted average common
shares outstanding 74,304,000 75,057,000 81,959,000 81,928,000 80,965,000 80,276,000 77,190,000
=========== =========== =========== =========== =========== =========== ===========
Number of employees at
December 31 14,200 12,800 12,400 13,400 14,200 13,900 13,500
=========== =========== =========== =========== =========== =========== ===========
Dividend payout ratio
before unusual items
and accounting changes 39.2% 44.5% 50.1% 57.6% 44.3% 44.2% 40.8%
=========== =========== =========== =========== =========== =========== ===========
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
This discussion and analysis should be read in conjunction with the consolidated
financial statements and accompanying notes.
RESULTS OF OPERATIONS
Consolidated revenue for the year was $1.4 billion, an increase of $204.8
million or 16.8 percent over 1993. This increase compares favorably with the
7.3 percent increase in 1993. Acquisition activity accounted for approximately
8.7 percentage points of the 1994 revenue increase and 3.1 percentage points of
the increase in 1993 (Note 2). During 1994, the higher margin credit reporting
businesses saw substantial revenue improvement as the Company gained market
share and benefitted from strong activity within the finance, banking,
automotive and national credit card industries.
Operating income increased $46.6 million before the 1993 unusual charge
(discussed below), or 27.9 percent, in 1994. In 1993, operating income
increased $26.1 million before the unusual charge. The improvements in both
years are the result of revenue increases in the higher margin businesses as
well as continuing expense controls throughout the organization. The operating
income margin in 1994 was 15.1 percent compared to 13.8 percent in 1993 before
the unusual charge. The gains in 1994 were achieved despite very competitive
conditions both domestically and internationally. The effects of acquisitions
on operating income, net income and earnings per share were immaterial in 1994
and 1993.
Earnings per share increased to $1.62 in 1994 from $1.26 in 1993 before the
unusual charge, a 29 percent increase. For the year, the average shares
outstanding decreased 1.0 percent due to open market share repurchases, offset
somewhat by the issuance of stock in connection with certain acquisitions.
Net income was $120.3 million in 1994, an increase of $25.9 million versus 1993
net income before the
13
unusual charge. During the third quarter of 1993, the Company recorded an
unusual charge of $48.4 million ($30.9 million after tax, or $.41 per share) to
write down the assets of its subsidiary, High Integrity Systems, Inc. (HISI),
and accrue for costs related to litigation with the California State Lottery.
The Company believes, however, that it has a strong legal position and
ultimately will prevail in the litigation. Before the unusual charge, 1993 net
income increased to $94.5 million from $85.3 million in 1992.
There are five reporting segments: Credit Information Services and Payment
Services (which comprise the Financial Information Services operating group),
Insurance Information Services, International Operations and General Information
Services. These segments generally follow the Company's internal management
organization and are based on similarities in product lines and industries
served (Note 10). The following discussion analyzes (1) revenue and operating
income by the five industry segments, (2) general corporate expense, (3)
consolidated other income, interest expense and effective income tax rates and
(4) financial condition. Reference can also be made to Note 9, which breaks out
the segment results by quarter for 1994 and 1993.
CREDIT INFORMATION SERVICES
(in millions) 1994 1993 1992
- ------------------------------------------------------------------------
Revenue $445.6 $399.1 $342.0
Operating income $147.1 $130.1 $93.2
Credit Information Services comprises Credit Reporting Services, Decision
Systems, Mortgage Information Services and Risk Management Services. Revenue
growth in Credit Information Services was 11.7 percent in 1994, compared to 16.7
percent in 1993. Acquisitions accounted for 6.0 percentage points of the 1994
revenue increase and 3.8 percentage points of the 1993 revenue increase.
The revenue increase in 1994 was driven by the Credit Reporting Services
business as a result of its prescreening business for credit card issuers as
well as volume growth in the finance, banking, national credit card and
automotive industries. Improved quality and turnaround time allowed Equifax to
gain market share in this competitive business of prescreening for credit card
applicants. Pricing pressure continues within Credit Reporting Services and,
as a result, unit prices declined. However, unit volume increases more than
offset the price declines. Pricing pressures are expected to persist, but
volume growth is expected to continue to more than offset the price declines.
Credit Reporting Services continues to provide new services and products to
other industries, such as utilities, which added to revenues in 1994 and is
expected to make an even greater contribution in 1995. Decision Power, a
sophisticated on-line, cross-selling and risk assessment decision support system
for multiple industries, which was introduced in 1994, will have a full year
revenue impact in 1995. Other new services are also expected to be introduced
with the help of the Decision Systems unit, which provides modeling and
analytical capabilities for our clients.
Revenue growth in the second, third and fourth quarters of 1994 was tempered by
declines in Mortgage Information Services revenue, as higher interest rates
adversely affect refinancing activity which directly impacts the mortgage
reporting industry. For the year, revenue in Mortgage Information Services was
down 37 percent. A significant shift in the type of products ordered by
customers is leading to increased sales of the fully automated Credit Hi-Lite
merged credit report and fewer of the traditional, labor-intensive mortgage
reports.
Areas of revenue growth in 1994 for the Risk Management Services business
included Government Student Loans, as well as the inclusion of a full year's
revenue from Integratec, which was acquired in
14
August 1993. The integration of the Accounts Receivable unit and Integratec was
completed during 1994 and should lead to cost savings in 1995, and therefore
improved margins and profits in this area.
Operating income increased 13.1 percent in 1994 following a 39.5 percent
increase in 1993. These increases were driven by revenue growth, operating
leverage, and ongoing expense management. This higher-margin segment reported
continued margin increases despite the significant downturn in Mortgage
Information Services. Efforts are underway to continue automating and reducing
fixed expenses associated with Mortgage Information Services. As a result, a
charge of $2.8 million was taken during the fourth quarter to consolidate the
number of offices from 23 to five and to reduce staffing levels.
PAYMENT SERVICES
(in millions) 1994 1993 1992
- ------------------------------------------------------------------------
Revenue $246.6 $210.4 $195.5
Operating income $ 57.5 $ 51.9 $ 49.4
Payment Services consists of Check Services, Card Services and FBS Software.
Revenue increased 17.2 percent in 1994, with 5.1 percentage points attributable
to the 1994 acquisitions of First Security Processing Services (FSPS) and FBS
Software. Check Services revenue increased 8 percent, while Card Services
revenue, excluding FSPS, increased 18 percent. In 1993, revenue increased 7.6
percent with Check Services revenue increasing 4 percent and Card Services
revenue increasing 14 percent.
The dollar amount of checks guaranteed by Check Services increased 7 percent in
1994 while the average price increased 1 percent. Growth within Card Services
is attributable to the higher number of cardholder accounts processed, due to
increased participation among IBAA Bancard member banks and significant
conversion activity within the credit unions as well as the FSPS acquisition.
During 1994, a contract with IBAA Bancard Inc. was renewed and a contract with
Card Services for Credit Unions, Inc. (CSCU) took effect, both for a five-year
term with incremental revenue due to increased service levels provided.
Payment Services operating income increased $5.6 million in 1994 versus a $2.5
million increase in 1993. Operating income in Check Services was down 5
percent, as a result of a higher number of returned checks and a lower
collection rate on returned checks. In 1994, Check Services also incurred
marketing and product development expenses as it expanded into the rapidly
growing check verification business with the new PathWays product.
Operating income for Card Services increased 36 percent in 1994, due to the
operating leverage achieved with the strong revenue growth, as well as the FSPS
acquisition. The increase in operating income for Payment Services in 1993
versus 1992 was driven primarily by higher profits resulting from higher revenue
from Card Services.
The entire check writing industry is experiencing increased fraud, which
adversely impacted Equifax's experience with returned checks and collection on
those checks. Within Check Services, enhanced models resulting from the
PathWays development are being added to improve the controls utilized in the
authorization process. It is expected that these tighter controls will improve
the returned check experience within this group. In 1995, we expect continued
strong growth in the Card Services area as a result of a growing customer base
with the addition of banks and credit unions who are members of the IBAA and
CSCU organizations.
15
INSURANCE INFORMATION SERVICES
(in millions) 1994 1993 1992
- --------------------------------------------------------
Revenue $453.4 $396.5 $402.3
Operating income $ 18.5 $ 5.5 $ 11.0
Revenue increased 14.3 percent in 1994 within Insurance Services versus a
decline of 1.5 percent in 1993, as a result of acquisitions, increased MVR
(Motor Vehicle Records) registry revenue and the improved performance of most
business groups. These results were achieved despite continuing difficult
conditions in the insurance industry which reduced overall market demand and
increased competition. Insurance Information Services consists of Field Service
operations, Data Services, Commercial Specialists, PRC, CUE UK and Osborn
Laboratories. Revenue from Field Service operations fell about $3 million in
1994 but was flat versus 1993 revenue in the fourth quarter. The revenue
decline in 1994 was a significant improvement over the $10 million decrease in
1993. The decline was the result of volume and price declines. Revenue from
Data Services products increased $7.9 million for 1994, despite competitive
pricing pressure which is expected to continue in 1995. The Data Services
revenue results were achieved through increased volume and higher market share.
MVR registry revenue was up $32 million in 1994 due to unit growth. Revenue in
Commercial Specialists was up 10 percent for the year in a flat market as a
result of automation of our product delivery, which resulted in a competitive
advantage and increased market share.
PRC, a commercial insurance software company acquired during the second quarter,
and Osborn Laboratories, a fourth quarter acquisition, specializing in risk
assessment testing for the life and health insurance industry, added $14.5
million to revenue and will be significant contributors in 1995 with a full year
of results.
In 1994, operating income was $18.5 million, an increase of $13 million. This
increase resulted from the strong performance of Data Services and Commercial
Specialists, the reduction in losses within Field Service operations and the
impact of acquisitions. Data Services posted an increase in operating income
due to the leverage inherent with increased market share. Commercial
Specialists posted a strong operating income increase as a result of the
automation of our product delivery yielding improved operating efficiencies. In
1993, operating income for Insurance Information Services decreased $5.5 million
versus 1992 due primarily to Field Service operations.
The focus on expense reduction and cost management within Field Service
operations yielded significantly improved results in 1994. Staffing levels are
down dramatically from January 1993, and where applicable, services have been
automated. The overall cost structure has been improved without experiencing a
significant decline in revenue. The results are substantially improved versus
1993, although this unit posted an operating loss for the year. The Company
believes that the continuation of these efforts will lead to further improved
performance in 1995.
CUE UK, a database product for the U.K. insurance industry, was developed
pursuant to a contract signed in November 1993. In 1993 and 1994, developmental
costs were incurred for this product, which became available to customers late
in the fourth quarter 1994. This business unit reported an operating loss in
1994 but is expected to be profitable in 1995.
INTERNATIONAL OPERATIONS
(in millions) 1994 1993 1992
- ----------------------------------------------------------------------
Revenue $143.4 $97.3 $104.0
Operating income $16.5 $18.1 $17.7
16
International Operations consists of Canadian Credit Information Services,
Canadian Insurance Information Services, Telecredit Canada check services,
Canadian Accounts Receivable Services, Equifax Europe, Infolink, Transax and
three joint ventures. Revenue for the year was up 47.4 percent in 1994. During
1994, Equifax acquired a majority interest (formerly a 20 percent equity
holding) in Transax, a U.K. check guarantee company; Infolink, the third largest
U.K. credit reporting company; Canadian Bonded Credits, the second largest debt
recovery operation in Canada, as well as entered into joint ventures in Spain,
Chile and Argentina. Acquisitions accounted for 46.1 percentage points of the
1994 revenue increase. Exclusive of acquisitions, Canadian revenue was down 6
percent in 1994, due to unfavorable exchange rates, while Equifax Europe's
revenue increased 27 percent. In 1993, this segment's revenue was down 6.4
percent primarily due to unfavorable exchange rates.
Canadian Credit Information Services continues to secure longer-term agreements
even though pricing pressure remains. Revenue losses as a result of the
Canadian expansion of TransUnion, a major U.S. competitor, were minimal in 1994.
Revenue within Canadian Insurance Information Services declined for the year
primarily due to continued weakness in the insurance industry. Efforts underway
to scale down this business, which resulted in a charge of $2.7 million taken
during the year, should lead to improved performance in 1995. Telecredit Canada
check services continues to significantly grow revenue and gain market share.
Equifax Europe's revenue gain in 1994 continued the trend of revenue growth due
to market share gains in Credit and Marketing Services.
Operating income for the International Operations segment declined 8.9 percent
in 1994 versus an increase of 2 percent in 1993. Canadian operations posted an
operating income decline in 1994 as a result of exchange rate declines,
integration costs associated with the third quarter acquisition of Canadian
Bonded Credits and the $2.7 million charge within Canadian Insurance Services.
Telecredit Canada check services posted its first profitable year with increased
revenue and market share and is expected to improve profits and margins in 1995.
Equifax Europe posted its first profitable year due to the significant revenue
growth and operating leverage inherent in the business. The acquisition of
Infolink during the fourth quarter will double the size of Equifax's U.K. credit
reporting business. The combination will enhance the value of our databases and
create substantial savings by eliminating duplicate costs. During the fourth
quarter of 1994 and into 1995, Equifax has incurred and will continue to incur
integration costs which, as stated earlier, will lead to the elimination of
duplicate costs between the two companies. The synergies from the combined
businesses should result in substantial growth and cost savings in future years.
GENERAL INFORMATION SERVICES
(in millions) 1994 1993 1992
- -------------------------------------------------------
Revenue $133.0 $113.9 $90.6
Operating income (loss)* $ 3.8 $ (8.5) $(5.1)
* Excludes unusual item of $48.4 million in 1993
This segment comprises recently acquired health care operations, development
projects and ongoing market research business operations. The revenue increase
in 1994 of $19.1 million is largely attributable to the 1994 acquisitions of
Cooperative Healthcare Networks (CHN), Healthchex and Electronic Tabulating
Services (ETS). In 1993, revenue was up $23.3 million, largely due to the
addition of Health Economics Corporation (HEC) revenue for a full year.
Operating income in 1994 was $3.8 million versus a loss before unusual charges
of $8.5 million in 1993.
17
In 1994, the segment realized a one-time $4.2 million gain on the fourth quarter
sale of its interest in FYI On-Line, a joint venture with MCI. The 1993 and
1992 results included operating losses recorded by HISI of $9.2 million and $4.7
million, respectively.
Health care is composed of HEC, Hospital Bill Audit, CHN, Healthchex, ETS,
Medical Credentials Verification Service (MCVS) and Government and Special
Systems. Marketing Services consists of Equifax National Decision Systems,
Elrick & Lavidge and Quick Test. CHN and ETS, both new acquisitions, recorded
losses in 1994 due to development costs and integration costs needed to combine
and grow the health care electronic claims processing business. These
businesses merged to form the Equifax Healthcare EDI Services business unit
which is in a very high growth area. The need to reduce health care
administrative costs drives the continued growth of electronically processed
health care claims on a national scale. MCVS is an internally developed service
that incurred development expenses in 1994. The product was released late in
the fourth quarter and is expected to generate significant revenue and post a
profit in 1995.
One of Equifax's strategic initiatives is to continue to grow its health care
information services business. This growth is expected to come through
acquisitions, joint ventures and internally developed products, all of which are
expected to increase expenses in 1995.
GENERAL CORPORATE EXPENSE
(in millions) 1994 1993 1992
- ------------------------------------------------------------------------
Expense $29.2 $29.6 $24.9
General corporate expense was essentially flat in 1994. In 1993, the increase
in general corporate expense over 1992 was principally due to severance and
facilities costs associated with cost structure changes in certain business
segments.
OTHER INCOME, INTEREST EXPENSE AND EFFECTIVE INCOME TAX RATES
(dollars in millions) 1994 1993 1992
- -----------------------------------------------------------------------
Other income $ 9.0 $ 3.9 $ 7.5
Interest expense $15.6 $10.9 $ 4.0
Effective income tax rate 42.0% 43.3% 41.1%
Several non-recurring items recorded in both 1994 and 1993, as well as lower
levels of interest income in 1993, accounted for the changes in other income
between years.
The increase in interest expense reflects the higher levels of short-term
borrowing (due to acquisitions) and the June 1993 public issuance of long-term
debt, which caused a change from short-term, floating rates to a higher, long-
term fixed interest rate.
The effective tax rate of 42 percent in 1994 was lower than 1993's tax rate due
to the limited state income tax benefits related to the HISI write-off and
operating losses in 1993. The effective tax rate in 1993 was higher than 1992
because of the higher federal statutory tax rate enacted in August 1993 and the
limited state tax benefits related to the HISI write-off and operating losses.
18
FINANCIAL CONDITION
Equifax's financial condition remained strong in 1994. Net cash provided by
operations was $162.6 million, $26.6 million higher than in 1993. Normal
capital expenditures, working capital needs and dividend payments were all met
with internally generated funds. Working capital declined $73.3 million during
the year due primarily to short-term borrowings related to acquisitions.
During 1994, the Company made acquisitions and equity investments totaling
$262.7 million, and also repurchased 2.4 million of its own common shares in
open market transactions totaling $58 million. These transactions were
principally financed by a combination of $61.6 million in short-term debt, $55.1
million proceeds from sale and leaseback transactions, $77.2 million from the
reissuance of treasury stock, and excess cash generated from operations.
Equifax plans to continue paying cash dividends and increase the per share
payout from time to time as earnings permit. The growth rate in dividends,
however, is expected to be lower than the growth in earnings, allowing the
Company to repurchase shares and reinvest a larger portion of internally
generated funds into the business. As of December 31, 1994, approximately $40
million remains authorized under the Company's share repurchase program.
Capital expenditures, exclusive of acquisitions, for 1994 were $32 million.
1995 capital expenditures are projected to total approximately $46 million, but
other expenditures are possible as new investment opportunities arise. Capital
expenditures are expected to be higher in 1995 due to investments in new
products and services and normal expenditures related to the acquisitions made
in 1994. Budgeted expenditures should be met with internally generated funds.
The $450 million revolving credit facility remains available to fund future
capital requirements, including the possible purchase of the CSC credit
reporting and collection operation (Note 8). Management feels Equifax has
sufficient unused debt capacity to finance all of these requirements, if
necessary.
19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED BALANCE SHEETS
EQUIFAX INC.
(In thousands)
- --------------------------------------------------------------------------
December 31 1994 1993
- --------------------------------------------------------------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 79,409 $ 85,604
Accounts receivable, net of allowance for doubtful
accounts of $6,516 in 1994 and $4,730 in 1993 242,645 191,825
Deferred income tax assets 26,472 9,870
Other current assets 27,353 15,569
---------- --------
Total current assets 375,879 302,868
---------- --------
Property and Equipment:
Land, buildings and improvements 13,841 76,216
Data processing equipment and furniture 203,189 178,152
---------- --------
217,030 254,368
Less-Accumulated depreciation 132,792 126,473
---------- --------
84,238 127,895
---------- --------
Goodwill 331,438 121,741
---------- --------
Purchased Data Files 85,621 78,081
---------- --------
Other 143,998 100,616
---------- --------
$1,021,174 $731,201
========== ========
The accompanying notes are an integral part of these balance sheets.
20
(In thousands, except par value)
- ------------------------------------------------------------------------------
December 31 1994 1993
- ------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term debt and current maturities of long-term debt $ 63,713 $ 1,637
Accounts payable 53,561 38,726
Accrued salaries and bonuses 29,410 26,571
Income taxes payable 21,204 9,087
Other current liabilities 132,158 77,763
-------- --------
Total current liabilities 300,046 153,784
-------- --------
Long-Term Debt, Less Current Maturities 211,967 200,070
------- -------
Postretirement Benefit Obligation 83,029 81,639
------ ------
Other Long-Term Liabilities 64,273 41,677
------ ------
Commitments and Contingencies (Notes 3 and 8)
Shareholders' Equity:
Common stock, $2.50 par value; shares
authorized - 125,000; issued - 83,389 in 1994
and 82,622 in 1993; outstanding - 75,895 in
1994 and 74,809 in 1993 208,471 206,554
Paid-in capital 145,859 108,807
Retained earnings 175,894 102,709
Cumulative foreign currency translation adjustment (13,386) (10,077)
Treasury stock, at cost, 4,094 shares in 1994
and 4,712 shares in 1993 (Note 6) (87,975) (92,870)
Stock held by employee benefits trusts, at cost,
3,400 shares in 1994 and 3,100 shares in 1993 (Note 6) (67,004) (61,092)
-------- -------
Total shareholders' equity 361,859 254,031
-------- -------
$1,021,174 $731,201
========== ========
21
CONSOLIDATED STATEMENTS OF INCOME
EQUIFAX INC.
(In thousands, except per share amounts)
- ----------------------------------------------------------------------------------
Year Ended December 31 1994 1993 1992
- ---------------------------------------------- ---------- ---------- ----------
Operating revenue $1,421,996 $1,217,217 $1,134,333
---------- ---------- ----------
Costs and expenses:
Costs of services 905,307 780,429 733,703
Selling, general and administrative expenses 302,582 269,321 259,292
Provision for lottery contract dispute and
litigation (Note 3) -- 48,438 --
---------- ---------- ----------
Total costs and expenses 1,207,889 1,098,188 992,995
---------- ---------- ----------
Operating income 214,107 119,029 141,338
Other income, net 8,994 3,890 7,482
Interest expense 15,624 10,923 4,029
---------- ---------- ----------
Income before income taxes 207,477 111,996 144,791
Provision for income taxes 87,131 48,481 59,445
---------- ---------- ----------
Net income $ 120,346 $ 63,515 $ 85,346
========== ========== ==========
Weighted average common shares outstanding 74,304 75,057 81,959
========== ========== ==========
Per common share:
Net income $1.62 $0.85 $1.04
========== ========== ==========
Dividends $0.605 $0.56 $0.52
========== ========== ==========
The accompanying notes are an integral part of these statements.
22
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
EQUIFAX INC.
(In thousands)
- -------------------------------------------------------------------------------------------
Year Ended December 31 1994 1993 1992
- --------------------------------------------------------------------------------------------
Common Stock:
Balance at beginning of year $206,554 $ 205,821 $ 205,367
Shares issued under stock plans 1,917 733 454
-------- --------- ---------
Balance at end of year $208,471 $ 206,554 $ 205,821
======== ========= =========
Paid-In Capital:
Balance at beginning of year $108,807 $ 104,262 $ 102,279
Shares issued under stock plans 12,930 4,545 1,983
Adjustment for treasury stock reissued for acquisitions 20,267 -- --
Other 3,855 -- --
-------- --------- ---------
Balance at end of year $145,859 $ 108,807 $ 104,262
======== ========= =========
Retained Earnings:
Balance at beginning of year $102,709 $ 81,235 $ 38,659
Net income 120,346 63,515 85,346
Cash dividends (47,161) (42,041) (42,770)
-------- --------- ---------
Balance at end of year $175,894 $ 102,709 $ 81,235
======== ========= =========
Cumulative Foreign Currency Translation Adjustment:
Balance at beginning of year $(10,077) $ (6,349) $ 4,009
Adjustment during year (3,309) (3,728) (10,358)
-------- --------- ---------
Balance at end of year $(13,386) $ (10,077) $ (6,349)
======== ========= =========
Treasury Stock:
Balance at beginning of year $(92,870) $(126,979) $ --
Cost of shares repurchased (57,985) (26,983) (126,979)
Cost of shares transferred to employee benefits trusts 5,912 61,092 --
Cost of shares reissued for acquisitions 56,968 -- --
-------- --------- ---------
Balance at end of year $(87,975) $ (92,870) $(126,979)
======== ========= =========
Stock Held By Employee Benefits Trusts:
Balance at beginning of year $(61,092) $ -- $ --
Cost of shares transferred from treasury stock (5,912) (61,092) --
-------- --------- ---------
Balance at end of year $(67,004) $ (61,092) $ --
======== ========= =========
The accompanying notes are an integral part of these statements.
23
CONSOLIDATED STATEMENTS OF CASH FLOWS
EQUIFAX INC.
(In thousands)
- ----------------------------------------------------------------------------------------------------------------
Year Ended December 31 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 120,346 $ 63,515 $ 85,346
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 66,496 54,924 53,823
Provision for lottery contract dispute and litigation -- 48,438 --
Changes in assets and liabilities, excluding effects of acquisitions:
Accounts receivable, net (28,018) (25,077) 9,331
Current liabilities, excluding debt 23,972 16,324 (8,628)
Other current assets (5,035) 1,847 (4,717)
Deferred income taxes (15,725) (24,361) (1,133)
Other long-term liabilities, excluding debt 569 445 (140)
--------- --------- ---------
Net cash provided by operating activities 162,605 136,055 133,882
--------- --------- ---------
Cash flows from investing activities:
Additions to property and equipment (20,173) (39,757) (34,640)
Acquisitions, net of cash acquired (144,528) (23,784) (22,927)
Additions to other assets, net (12,163) (14,616) (16,857)
Investments in unconsolidated affiliates (15,303) -- (4,919)
Proceeds from sale of land and buildings 57,079 -- --
Change in short-term investments -- 3,357 (3,357)
--------- --------- ---------
Net cash used by investing activities (135,088) (74,800) (82,700)
--------- --------- ---------
Cash flows from financing activities:
Net short-term borrowings 62,227 -- --
Proceeds from issuance of long-term debt -- 198,980 126,173
Payments on debt (2,375) (191,209) (26,234)
Treasury stock purchases (57,985) (26,983) (126,979)
Dividends paid (47,161) (42,041) (42,770)
Proceeds from exercise of stock options 11,786 3,481 1,558
Other 3,855 -- --
--------- --------- ---------
Net cash used by financing activities (29,653) (57,772) (68,252)
--------- --------- ---------
Effect of foreign currency exchange rates on cash (4,059) (1,865) (4,093)
--------- --------- ---------
Net cash provided (used) (6,195) 1,618 (21,163)
Cash and cash equivalents, beginning of year 85,604 83,986 105,149
--------- --------- ---------
Cash and cash equivalents, end of year $ 79,409 $ 85,604 $ 83,986
========= ========= =========
The accompanying notes are an integral part of these statements.
24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
accounts of the Company and its majority-owned subsidiaries. All significant
intercompany transactions and balances have been eliminated. Certain prior year
amounts have been reclassified to conform with the current year presentation.
PROPERTY AND EQUIPMENT. The cost of property and equipment is depreciated
primarily on the straight-line basis over estimated asset lives of 30 to 50
years for buildings; useful lives, not to exceed lease terms, for leasehold
improvements; three to five years for data processing equipment and eight to 20
years for furniture.
GOODWILL. Goodwill is amortized on a straight-line basis primarily over 40
years. Amortization expense was $7,380,000 in 1994, $3,113,000 in 1993 and
$2,807,000 in 1992. As of December 31, 1994 and 1993, accumulated amortization
was $23,750,000 and $16,570,000, respectively. The Company regularly evaluates
whether events and circumstances have occurred that indicate the carrying amount
of goodwill may warrant revision or may not be recoverable. When factors
indicate that goodwill should be evaluated for possible impairment, the Company
uses an estimate of the future undiscounted net cash flows of the related
business over the remaining life of the goodwill in measuring whether the
goodwill is recoverable.
PURCHASED DATA FILES. Purchased data files are amortized on a straight-line
basis primarily over 15 years. Amortization expense was $11,331,000 in 1994,
$9,674,000 in 1993, and $7,770,000 in 1992. As of December 31, 1994 and 1993,
accumulated amortization was $52,293,000 and $44,778,000, respectively.
OTHER ASSETS. Other assets at December 31, 1994 and 1993 consist of the
following:
(In thousands) 1994 1993
- --------------------------------------------------------------
Purchased software $ 39,355 $ 11,026
Deferred systems development costs 30,710 28,812
Investments in unconsolidated affiliates 26,876 16,107
CSC contract costs 10,439 13,328
Deferred income tax assets 9,286 15,781
Other 27,332 15,562
-------- --------
$143,998 $100,616
======== ========
Purchased software and deferred systems development costs are being amortized on
a straight-line basis over five to ten years. CSC contract costs are amortized
over ten years. Amortization expense was $18,138,000 in 1994, $13,593,000 in
1993, and $11,983,000 in 1992. As of December 31, 1994 and 1993, accumulated
amortization was $70,055,000 and $56,875,000, respectively.
FOREIGN CURRENCY TRANSLATION. The assets and liabilities of foreign
subsidiaries are translated at the year-end rate of exchange, and income
statement items are translated at the average rates prevailing during the year.
The resulting translation adjustment is recorded as a component of shareholders'
equity. Exchange gains and losses on intercompany balances of a long-term
investment nature are also recorded as a component of shareholders' equity.
Other foreign currency translation gains and losses, which are
25
not material, are recorded in the consolidated statements of income.
CONSOLIDATED STATEMENTS OF CASH FLOWS. The Company considers cash equivalents
to be short-term cash investments with original maturities of three months or
less.
Cash paid for income taxes and interest is as follows:
(In thousands) 1994 1993 1992
- ------------------------------------------------------------------
Income taxes, net of amounts refunded $91,643 $62,666 $66,597
Interest 14,604 10,846 3,692
In 1994, 1993 and 1992, the Company acquired various businesses that were
accounted for as purchases (Note 2). In conjunction with these transactions,
liabilities were assumed as follows:
(In thousands) 1994 1993 1992
- --------------------------------------------------------------------------------
Fair value of assets acquired $330,898 $32,484 $28,043
Cash paid for acquisitions 153,143 26,949 26,137
Value of treasury shares reissued for acquisitions 77,235 - -
Notes and deferred payments 16,974 400 -
-------- ------- -------
Liabilities assumed $ 83,546 $ 5,135 $ 1,906
======== ======= =======
FINANCIAL INSTRUMENTS. The Company's financial instruments consist primarily of
cash and cash equivalents, accounts receivable, accounts payable and short-term
and long-term debt. The carrying amounts of these items, other than long-term
debt, approximate their fair value due to their short maturity. As of December
31, 1994, the fair value of the Company's long-term debt (determined primarily
by broker quotes) was $192,094,000, compared to its carrying value of
$214,127,000. During 1994, the Company did not hold any derivative financial
instruments.
2. ACQUISITIONS AND INVESTMENTS IN UNCONSOLIDATED AFFILIATES
During 1994, 1993 and 1992, the Company acquired or made equity investments in
the following businesses:
Percentage
Business Date Acquired Industry Segment Ownership
- ------------------------------------------- -------------- ---------------- -----------
Osborn Laboratories, Inc. November 1994 Insurance 100.0%
UAPT - Infolink plc October 1994 International 100.0%
Electronic Tabulating Services September 1994 General 100.0%
DICOM S.A. (Chile) August 1994 International 25.0%
Canadian Bonded Credits August 1994 International 100.0%
FBS Software (First Bankcard
Systems, Inc.) July 1994 Payment Services 100.0%
First Security Processing Services July 1994 Payment Services 100.0%
Organizacion Veraz (Argentina) May 1994 International 33.3%
ASNEF - Equifax Servicios
de Informacion de Credito, S.L. (Spain) May 1994 International 49.0%
HealthChex May 1994 General 100.0%
Programming Resources Company April 1994 Insurance 100.0%
Transax plc April 1994 International 50.1%*
26
Charlotte Credit Bureau February 1994 Credit 100.0%
Cooperative Healthcare Networks January 1994 General 100.0%
Newbridge, Inc. Insurance Services October 1993 General 100.0%
Credit Bureau of Ocala Inc. September 1993 Credit 100.0%
Integratec, Inc. August 1993 Credit 100.0%
Transax plc November 1992 International 20.0%
Health Economics Corporation October 1992 General 100.0%
*Increased from the 20 percent ownership position acquired in 1992.
The 1994 acquisitions of greater than 50 percent ownership were accounted for as
purchases and had an aggregate purchase price of $247,352,000, with $212,765,000
allocated to goodwill, $19,987,000, to purchased data files, and $37,883,000 to
other assets (primarily purchased software). Their results of operation have
been included in the consolidated statements of income from the dates of
acquisition. They were purchased using a combination of cash totaling
$153,143,000, notes and deferred payments of $16,974,000, and the reissuance of
treasury shares with a market value of $77,235,000. Additional consideration
may be paid for certain acquisitions based on their future operating performance
and guarantees made by the Company related to the value to be realized by
certain sellers upon their disposition of treasury shares received.
The 1994 acquisitions of less than 50 percent ownership interests are accounted
for under the equity method and had an aggregate purchase price of $15,303,000.
They were purchased with cash and recorded as other assets.
The following unaudited pro forma information has been prepared as if the 1994
acquisitions had occurred on January 1, 1993. The information is based on
historical results of the separate companies and may not necessarily be
indicative of the results that could have been achieved or of results which may
occur in the future. The pro forma information includes the expense for
amortization of goodwill and other intangible assets resulting from these
transactions and interest expense related to financing costs, but does not
reflect significant synergies and operating cost reductions that are anticipated
to be achieved from the combined operations.
(In thousands, except per share amounts) 1994 1993
- ------------------------------------------------------------------
Revenue $1,514,186 $1,375,467
Net income 119,364 57,393
Net income per common share 1.57 .74
The 1993 acquisitions, which were accounted for as purchases, had an aggregate
purchase price of $27,349,000, of which $14,002,000 was allocated to goodwill
and $5,007,000 to purchased data files. Their results of operations have been
included in the consolidated statements of income from the dates of acquisition
and were not material to the results of operations of the Company.
In addition to Health Economics Corporation, the Company also acquired several
local credit bureaus during 1992. The aggregate purchase price of these
acquisitions, which were accounted for as purchases, was $26,137,000 and
resulted in $6,867,000 of goodwill. The November 1992 initial 20 percent
investment in Transax plc totaled $4,919,000 and was accounted for under the
equity method until April 1994, when an additional 30.1 percent interest was
acquired.
27
3. LOTTERY CONTRACT DISPUTE AND LITIGATION
High Integrity Systems, Inc. (HISI), a Company subsidiary, entered into a
contract in July 1992 to provide lottery services to the state of California.
Under this contract, HISI agreed to provide a system to automate the processing
of instant lottery tickets and a system to sell on-line game tickets through
10,000 low-volume terminals.
On April 26, 1993, the California State Lottery (CSL) filed suit against HISI in
Superior Court, Sacramento County, California, and on May 7, 1993, the CSL filed
its first amended complaint naming Equifax Inc., et al. and Federal Insurance
Company as additional defendants. The CSL is seeking unspecified damages for
alleged breach of contract and injunctive relief and is asserting a claim
against Federal Insurance Company for $18.5 million, which represents the face
amount of a performance bond delivered to the CSL in July 1992 on behalf of
HISI.
On May 7, 1993, HISI filed a cross-complaint against the CSL seeking
compensatory and general damages in an amount not less than $65 million and
special and consequential damages in an amount not less than $100 million.
The Company believes HISI has a meritorious cross-complaint against the CSL for
wrongfully terminating the contract. The Company further believes that it has
well-founded and solid defenses against the CSL's claims. However, there can be
no assurance that the Company will succeed in its defense and cross-complaint
against the CSL. A revised litigation schedule has been approved by the Court,
including a tentative trial date in October 1995. Substantial discovery
activity has been undertaken by the Company and is continuing.
In September 1993, the Company recorded a provision of $48,438,000 ($30,939,000
after tax, or $.41 per share) related to the lottery contract to write down data
processing equipment and other assets to their estimated net realizable value
and to accrue for estimated costs related to litigation with the CSL. In
management's opinion, this provision is adequate and the ultimate resolution of
the CSL litigation will not have a materially adverse impact on the Company's
financial position or results of operations.
4. LONG-TERM DEBT AND SHORT TERM BORROWINGS
Long-term debt at December 31, 1994 and 1993 is as follows:
(In thousands) 1994 1993
- ------------------------------------------------------------------------
Senior Notes, 6 1/2%, due 2003, net of unamortized
discount of $867 in 1994 and $969 in 1993 $199,133 $199,031
Other 14,994 2,676
-------- --------
214,127 201,707
Less current maturities 2,160 1,637
-------- --------
$211,967 $200,070
======== ========
The Company has available a committed $450 million revolving credit facility.
Under the agreement, interest on borrowings is based on the prime rate, federal
funds rate and LIBOR. The agreement also contains certain financial covenants
related to interest coverage, funded debt to cash flow, total liabilities to net
worth and tangible net worth.
28
Scheduled maturities of long-term debt during the five years subsequent to
December 31, 1994 are as follows: $2,160,000 in 1995, $12,583,000 in 1996,
$185,000 in 1997, and $66,000 in 1998.
Short-term borrowings at December 31, 1994 consist of $61,553,000 in notes
payable to banks and have a weighted average interest rate of 6.13%.
5. INCOME TAXES
The Company records deferred income taxes using enacted tax laws and rates for
the years in which the taxes are expected to be paid. Deferred income tax
assets and liabilities are recorded based on the differences between the
financial reporting and income tax bases of assets and liabilities.
The provision for income taxes consists of the following:
(In thousands) 1994 1993 1992
- ------------------------------------------------- --------- --------- ---------
Current:
Federal $ 75,736 $ 54,373 $ 37,048
State 13,904 9,193 7,594
Foreign 10,713 9,670 9,831
-------- -------- --------
100,353 73,236 54,473
======== ======== ========
Deferred:
Federal (10,774) (22,935) 4,335
State (1,437) (1,920) 1,073
Foreign (1,011) 100 (436)
(13,222) (24,755) 4,972
-------- -------- --------
Total $ 87,131 $ 48,481 $ 59,445
======== ======== ========
The provision for income taxes is based upon income before income taxes as
follows:
(In thousands) 1994 1993 1992
- ------------------------------------------------- --------- --------- ---------
United States $191,332 $ 92,593 $125,337
Foreign 16,145 19,403 19,454
-------- -------- --------
$207,477 $111,996 $144,791
======== ======== ========
The provision for income taxes is reconciled with the federal statutory rate as
follows:
(Dollars In thousands) 1994 1993 1992
- ------------------------------------------------- --------- --------- ---------
Federal statutory rate 35.0% 35.0% 34.0%
======== ======== ========
Provision computed at federal statutory rate $ 72,617 $ 39,199 $ 49,229
State and local taxes, net of federal tax
benefit 8,104 4,728 5,720
Other 6,410 4,554 4,496
-------- -------- --------
$ 87,131 $ 48,481 $ 59,445
======== ======== ========
29
Components of the Company's deferred income tax assets and liabilities at
December 31, 1994 and 1993 are as follows:
(In thousands) 1994 1993
- ---------------------------------------------------------- --------- ---------
Deferred income tax assets:
Postretirement benefits $ 34,082 $ 33,534
Reserves and accrued expenses 30,850 8,808
Provision for lottery contract dispute and litigation 17,499 17,499
Employee compensation programs 10,737 9,252
Other 8,615 5,279
-------- --------
101,783 74,372
-------- --------
Deferred income tax liabilities:
Data files and other assets (48,062) (33,013)
Depreciation (5,034) (7,409)
Pension expense (4,216) (1,511)
Safe harbor lease agreements (4,602) (5,545)
Other (11,156) (7,698)
-------- --------
(73,070) (55,176)
-------- --------
Net deferred income tax asset $ 28,713 $ 19,196
======== ========
The Company's deferred income tax assets and liabilities at December 31, 1994
and 1993 are included in the balance sheet as follows:
(In thousands) 1994 1993
- ------------------------------- -------- --------
Deferred income tax assets $26,472 $ 9,870
Other assets 9,286 15,781
Other long-term liabilities (7,045) (6,455)
------- -------
Net deferred income tax asset $28,713 $19,196
======= =======
Accumulated undistributed retained earnings of Canadian subsidiaries amounted to
approximately $91,832,000 at December 31, 1994. No provision for Canadian
withholding taxes or United States federal income taxes is made on foreign
earnings because they are considered by management to be permanently invested in
those subsidiaries and, under the tax laws, are not subject to such taxes until
distributed as dividends. If the earnings were not considered permanently
invested, approximately $9,183,000 of deferred income taxes would have been
provided. Such taxes, if ultimately paid, may be recoverable as foreign tax
credits in the United States.
6. SHAREHOLDER'S EQUITY
TREASURY SHARES. During 1994 and 1993, the Company repurchased 2,390,000 and
1,259,000 of its own common shares through open market transactions at an
aggregate cost of $57,985,000 and $26,983,000, respectively. In December 1992,
6,553,000 shares were repurchased under a self-tender offer at an aggregate cost
of $126,979,000. During 1994, the Company reissued 2,709,000 treasury shares in
connection with four acquisitions (Note 2).
In April 1993, the Company established the Equifax Inc. Employee Stock Benefits
Trust to fund various employee benefit plans and compensation programs. In
November 1993, the Company transferred
30
3,100,000 treasury shares to the Trust. During the first quarter of 1994, the
Company transferred 300,000 treasury shares to another employee benefits trust.
Shares held by the trusts are not considered outstanding for earnings per share
calculations until released to the employee benefit plans or programs. No
shares had been released from either trust as of December 31, 1994.
STOCK OPTIONS. The Company's shareholders have approved several stock option
plans which provide that qualified and nonqualified options may be granted to
officers and key employees at exercise prices not less than market value on the
date of grant. Grants in 1993 include 1,061,600 options awarded under the
EquiShares Employee Stock Option Grant, a program which included essentially all
full-time salaried employees. Options are generally exercisable for five to ten
years from grant date, subject to any vesting provisions. Certain of the plans
also provide for awards of restricted shares of the Company's common stock.
A summary of changes in outstanding options is as follows:
(In thousands) 1994 1993 1992
- ---------------------------- ------ ------ ------
Balance, beginning of year 3,135 1,805 1,372
Granted 688 1,851 710
Canceled (177) (276) (108)
Exercised (709) (245) (169)
----- -----
Balance, end of year 2,937 3,135 1,805
===== ===== =====
Exercisable, end of year 1,335 761 621
===== ===== =====
Other information related to stock options is as follows:
(In thousands) 1994 1993 1992
- ------------------------------------ ------------- ------------- -------------
Price range of outstanding options $ 9.87-$30.00 $ 9.87-$24.63 $ 9.87-$18.88
Price range of exercised options $11.48-$24.63 $11.44-$19.88 $10.38-$14.38
Average exercise price $18.49 $16.58 $11.24
Stock options outstanding at December 31, 1994 expire at various dates through
2004. At December 31, 1994, there were 3,769,393 shares available for future
option grants and restricted stock awards.
PERFORMANCE SHARE PLAN. The Company has a performance share plan for certain
key officers which provides for distribution of the Company's common stock at
the end of three-year measurement periods based upon the growth in earnings per
share and certain other criteria. Recipients may elect to receive up to 50
percent of their distribution in cash. The total expense under the plan was
$3,987,000 in 1994, $5,732,000 in 1993, and $5,233,000 in 1992. At December 31,
1994, 550,045 shares of common stock were available for future awards under the
plan.
7. EMPLOYEE BENEFITS
The Company and its subsidiaries have non-contributory qualified retirement
plans covering most salaried employees, including certain employees in Canada.
Under the plans, retirement benefits are primarily a function of years of
service and the level of compensation during the final years of employment.
Total pension expense for all qualified plans was $7,143,000 in 1994, $7,833,000
in 1993 and $6,190,000 in 1992.
31
U.S. RETIREMENT PLAN. The following table sets forth the U.S. plan's funded
status at December 31, 1994 and 1993:
(In thousands) 1994 1993
- -------------------------------------------------------------- --------- ---------
Accumulated plan benefits:
Vested benefits $281,468 $279,116
Nonvested benefits 11,302 8,950
-------- --------
292,770 288,066
Effect of projected future compensation levels 21,249 35,743
-------- --------
Projected benefit obligation 314,019 323,809
Plan assets at fair value 285,312 294,318
-------- --------
Projected benefit obligation in excess of plan assets (28,707) (29,491)
Unrecognized net losses 20,233 15,967
Prior service cost not yet recognized in period pension cost 8,125 9,762
Net asset at transition being amortized through 1996 (994) (1,461)
Adjustment to recognize minimum liability (6,115) -
-------- --------
Accrued pension liability $ (7,458) $ (5,223)
======== ========
The plan's assets consist primarily of listed common stocks, fixed income
obligations and guaranteed investment contracts. At December 31, 1994, the
plan's assets included 194,493 shares of the Company's common stock with a
market value of approximately $5,130,000.
Pension expense for the plan includes the following components:
(In thousands) 1994 1993 1992
- --------------------------------------------------------------------------------- --------- --------- ---------
Service cost $ 7,694 $ 6,048 $ 5,885
Interest cost on projected benefit obligation 24,058 24,096 22,629
Actual return on plan assets (2,064) (36,863) (11,904)
Net amortization and deferrals (23,168) 14,235 (10,687)
-------- -------- --------
Pension expense $ 6,520 $ 7,516 $ 5,923
======== ======== ========
Assumptions used in the accounting for the U.S. Retirement Plan are as follows:
1994 1993 1992
-------- -------- --------
Discount rate used to determine projected
benefit obligation at December 31 8.75% 7.5% 8.5%
Rate of increase in future compensation levels 5.0% 5.0% 5.0%
Expected long-term rate of return on plan assets 9.0% 9.0% 9.0%
CANADIAN RETIREMENT PLAN. The Company's Canadian subsidiaries also have a
retirement plan that covers approximately 1,000 employees. The plan's assets
consist primarily of fixed income obligations and equity securities, and their
aggregate fair market value approximates the projected benefit obligation at
December 31, 1994.
SUPPLEMENTAL RETIREMENT PLAN. The Company maintains a supplemental executive
retirement program for certain key employees. The plan, which is unfunded,
provides supplemental retirement payments based on salary and years of service.
The expense for this plan was $2,609,000 in 1994, $2,205,000 in 1993, $2,162,000
in 1992. The accrued liability for this plan at December 31, 1994 and 1993 was
$13,213,000 and $10,327,000, respectively, and is included in other long-term
liabilities in the
32
accompanying balance sheets.
EMPLOYEE THRIFT PLAN. The Company's thrift plan provides for annual
contributions, within specified ranges, determined at the discretion of the
Board of Directors for the benefit of eligible employees in the form of cash or
shares of the Company's common stock. Expense for this plan was $4,739,000 in
1994, $4,286,000 in 1993 and $4,343,000 in 1992.
POSTRETIREMENT BENEFITS. The Company provides certain health care and life
insurance benefits for eligible retired employees. Health care benefits are
provided through a trust, while life insurance benefits are provided through an
insurance company. Substantially all of the Company's U.S. employees may become
eligible for these benefits if they reach normal retirement age while working
for the Company and satisfy certain years of service requirements. The Company
accrues the cost of providing postretirement benefits for medical and life
insurance coverage over the active service period of the employee.
The following table presents a reconciliation of the plan's status at December
31, 1994 and 1993:
(In thousands) 1994 1993
- ------------------------------------------------------------------------------- --------- ---------
Accumulated postretirement benefit obligation:
Retirees $ 63,349 $ 66,159
Fully eligible active plan participants 6,467 7,855
Other active participants 6,856 7,765
-------- --------
76,672 81,779
Plan assets at fair value - -
-------- --------
Accumulated benefit obligation in excess of plan assets (76,672) (81,779)
Unrecognized prior service credit due to plan amendments (13,417) (17,256)
Unrecognized net losses 3,994 14,120
-------- --------
(86,095) (84,915)
Less: Current portion (3,066) (3,276)
-------- --------
Accrued postretirement benefit obligation $(83,029) $(81,639)
======== ========
Net periodic postretirement benefit expense includes the following components:
(In thousands) 1994 1993 1992
- ------------------------------------------------------------------- ------- -------- --------
Service cost $ 2,264 $ 1,770 $ 1,829
Interest cost on accumulated benefit obligation 5,908 5,724 5,526
Amortization of prior service credit (3,839) (4,337) (4,333)
Amortization of losses 656 - -
------- -------- --------
Net periodic postretirement benefit expense $ 4,989 $ 3,157 $ 3,022
======= ======== ========
Assumptions used in the computation of postretirement benefit expense and the
related obligation are as follows:
1994 1993 1992
------- -------- --------
Discount rate used to determine accumulated
postretirement benefit obligation at December 31 8.75% 7.5% 8.5%
Initial health care cost trend rate 11.0% 11.0% 12.0%
Ultimate health care cost trend rate 6.0% 6.0% 7.0%
Year ultimate health care cost trend rate reached 2005 2005 2005
If the health care cost trend rate were increased 1 percent for all future
years, the accumulated
33
postretirement benefit obligation as of December 31, 1994 would have increased
7.3 percent. The effect of such a change on the aggregate of service and
interest cost for 1994 would have been an increase of 7.2 percent.
The Company continues to evaluate ways in which it can better manage these
benefits and control costs. Any changes in the plan, revisions to assumptions,
or changes in the Medicare program that affect the amount of expected future
benefits may have a significant effect on the amount of the reported obligation
and future annual expense.
8. COMMITMENTS AND CONTINGENCIES
LEASES. The Company's operating leases involve principally office space and
office equipment. Rental expense relating to these leases was $54,274,000 in
1994, $40,798,000 in 1993 and $59,920,000 in 1992. In March 1994, the Company
sold and leased back under operating leases certain land and buildings. The net
sales price of $55,100,000 approximated the net book value of the related assets
and, accordingly, no gain or loss was recognized.
Future minimum payment obligations for noncancelable operating leases exceeding
one year are as follows as of December 31, 1994:
(In thousands) Amount
- ---------------- --------
1995 $ 44,846
1996 30,938
1997 22,323
1998 17,299
1999 11,857
Thereafter 80,966
--------
$208,229
========
AGREEMENT WITH COMPUTER SCIENCES CORPORATION. The Company has an agreement with
Computer Sciences Corporation (CSC) under which CSC-owned credit bureaus and
certain CSC affiliate bureaus utilize the Company's credit database service. CSC
and these affiliates retain ownership of their respective credit files and the
revenues generated by their credit reporting activity. The Company receives a
processing fee for maintaining the database and for each report supplied. The
agreement expires in 1998, is renewable at the option of CSC for successive ten-
year periods, and provides CSC with an option to sell its collection and credit
reporting businesses to the Company. The option is currently exercisable and
expires in 2013. In the event CSC does not exercise its option to sell and does
not renew the agreement, or if there is a change in control of CSC, the Company
has the option to purchase CSC's collection and credit reporting businesses.
The option price is determined, for all purposes, in accordance with the
following schedule: on or before July 31, 1995, at the higher of $365 million
or a price determined by certain financial formulas; after July 31, 1995 until
July 31, 1998, at the price determined by such financial formulas; and after
July 31, 1998, at appraised value.
DATA PROCESSING SERVICES AGREEMENT. In April 1993, the Company outsourced a
portion of its computer data processing operations and related functions to
Integrated Systems Solutions Corporation (ISSC), a subsidiary of IBM. Under the
terms of the agreement, the Company will pay ISSC an estimated $650 million over
the ten-year term of the agreement, although this amount could be more or less
depending upon various factors, such as the inflation rate, the introduction of
significant new technologies or
34
changes in the Company's data processing needs as a result of acquisitions or
divestitures. Under certain circumstances (e.g., a change in control of the
Company), the Company may cancel the ISSC agreement; however, the agreement
provides that the Company must pay a significant penalty in the event of such a
cancellation.
EMPLOYMENT AGREEMENTS. The Company has employment agreements with ten of its
officers which provide certain severance pay and benefits in the event of a
"change in control" of the Company, which is defined as the acquisition of more
than 50 percent of the Company's outstanding common stock by an entity or a
concerted group of entities. In the event of a "change in control," the
Company's performance share plan provides that all shares designated for future
distribution will become fully vested and payable, subject to the achievement of
certain levels of growth in earnings per share. At December 31, 1994, the
maximum contingent liability under the agreements and plan was approximately
$17,900,000.
LITIGATION. In addition to the CSL litigation (Note 3), a number of lawsuits
seeking damages are brought against the Company each year, largely as a result
of reports issued by the Company. The Company provides for estimated legal fees
and settlements relating to pending lawsuits. In the opinion of management, the
ultimate resolution of these matters will not have a materially adverse effect
on the Company's financial position, liquidity or results of operations.
35
9. QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarterly operating revenue and operating income by industry segment and other
summarized quarterly financial data for 1994 and 1993 are as follows (in
thousands, except per share amounts):
1994: First Second Third Fourth
- ----------------------------------------------- --------- --------- --------- ---------
Revenue:
Credit Information Services $110,185 $110,358 $112,878 $112,216
Payment Services 50,557 56,184 62,599 77,257
Insurance Information Services 106,978 114,142 113,603 118,686
International Operations 22,458 32,736 37,563 50,614
General Information Services 29,181 29,267 32,644 41,890
-------- -------- -------- --------
$319,359 $342,687 $359,287 $400,663
======== ======== ======== ========
Operating income (loss):
Credit Information Services $ 36,665 $ 36,320 $ 39,742 $ 34,372
Payment Services 9,844 13,631 13,913 20,072
Insurance Information Services 3,517 6,068 5,569 3,350
International Operations 3,349 5,362 4,169 3,578
General Information Services (1,220) (2,647) (1,174) 8,833
-------- -------- -------- --------
Operating Contribution 52,155 58,734 62,219 70,205
General Corporate Expense (8,214) (7,865) (6,640) (6,487)
-------- -------- -------- --------
$ 43,941 $ 50,869 $ 55,579 $ 63,718
======== ======== ======== ========
Income before income taxes $ 41,541 $ 49,088 $ 53,724 $ 63,124
======== ======== ======== ========
Net income $ 24,302 $ 28,716 $ 30,956 $ 36,372
======== ======== ======== ========
Net income per common share $0.33 $0.39 $0.42 $0.48
======== ======== ======== ========
1993: First Second Third Fourth
- ----------------------------------------------- -------- -------- -------- --------
Revenue:
Credit Information Services $ 86,685 $ 94,093 $107,787 $110,535
Payment Services 45,633 50,494 51,960 62,329
Insurance Information Services 96,763 100,751 100,023 98,982
International Operations 22,518 26,161 24,104 24,513
General Information Services 24,274 26,986 27,913 34,713
-------- -------- -------- --------
$275,873 $298,485 $311,787 $331,072
======== ======== ======== ========
Operating income (loss):
Credit Information Services $ 28,353 $ 31,384 $ 37,244 $ 33,072
Payment Services 9,777 12,368 12,180 17,585
Insurance Information Services 2,601 2,655 (280) 561
International Operations 3,123 5,497 4,163 5,273
General Information Services (4,219) (4,799) (49,621)* 1,674
-------- -------- -------- --------
Operating Contribution 39,635 47,105 3,686 58,165
General Corporate Expense (8,384) (6,282) (6,886) (8,010)
-------- -------- -------- --------
$ 31,251 $ 40,823 $ (3,200)* $ 50,155
======== ======== ======== ========
36
Income (loss) before income taxes $30,610 $ 39,278 $ (5,766)* $ 47,874
======= ======== ======== ========
Net income (loss) $18,118 $ 23,249 $ (6,458)* $ 28,606
======= ======== ======== ========
Net Income (loss) per common share $0.24 $0.31 $(0.09)* $ 0.38
======= ======== ======== ========
*Includes a provision for lottery contract dispute and litigation of $48,438
pretax, or $30,939 after tax ($.41 per share).
10. INDUSTRY SEGMENT INFORMATION
Industry segment information is as follows:
1994 1993 1992
------------------------ ----------------------------- ------------------------
(Dollars in thousands) Amount % of Total Amount % of Total Amount % of Total
- --------------------------------------------- ----------- ----------- ----------- ------------ ----------- ------------
Operating revenue:
Credit Information Services $ 445,637 31% $ 399,100 33% $ 341,989 30%
Payment Services 246,597 17% 210,416 17% 195,501 17%
Insurance Information Services 453,409 32% 396,519 33% 402,276 35%
International Operations 143,371 10% 97,296 8% 103,985 9%
General Information Services 132,982 9% 113,886 9% 90,582 8%
---------- ---- ---------- -------- ---------- ----------
$1,421,996 100% $1,217,217 100% $1,134,333 100%
========== ==== ========== ======== ========== ==========
Operating income (loss):
Credit Information Services $ 147,099 60% $ 130,053 88% $ 93,233 56%
Payment Services 57,460 24% 51,910 35% 49,408 30%
Insurance Information Services 18,504 8% 5,537 4% 10,990 7%
International Operations 16,458 7% 18,056 12% 17,704 11%
General Information Services 3,792 2% (56,965)* (38%) (5,099) (3%)
---------- ---- ---------- -------- ---------- ----------
Operating contribution 243,313 100% 148,591 100% 166,236 100%
==== ======== ==========
General corporate expense (29,206) (29,562) (24,898)
---------- ---------- ----------
$ 214,107 $ 119,029 $ 141,338
========== ========== ==========
Identifiable assets at
December 31:
Credit Information Services $ 260,733 26% $ 270,532 37% $233,326 33%
Payment Services 115,929 11% 70,806 10% 78,994 11%
Insurance Information Services 171,904 17% 83,390 11% 84,423 12%
International Operations 293,318 29% 128,027 18% 119,964 17%
General Information Services 117,566 12% 75,284 10% 98,038 14%
Corporate 61,724 6% 103,162 14% 94,137 13%
---------- ---- ---------- -------- ----------
$1,021,174 100% $ 731,201 100% $ 708,882 100%
========== ==== ========== ======== ========== ==========
* Includes a provision for lottery contract dispute and litigation of $48,438.
Description of Segments:
CREDIT INFORMATION SERVICES: Consumer credit reporting information; credit card
marketing services; risk management and collection services; locate services;
fraud detection and prevention services; and mortgage loan origination
information.
37
PAYMENT SERVICES: Check guarantee services; credit and debit card authorization
and processing; credit card marketing enhancement; and software products for
managing credit card operations.
INSURANCE INFORMATION SERVICES: Underwriting and claims reporting services;
inspection and loss control services; workers' compensation audits; software for
commercial insurers; specimen testing for life and health insurance applicants;
and employment evaluation services.
INTERNATIONAL OPERATIONS: In Canada, consumer and business credit reporting
information; accounts receivable and collection services; underwriting and
claims reporting services for insurance companies; and check guarantee services.
In Europe (primarily the United Kingdom), credit reporting and marketing
services; credit scoring and modeling services; check guarantee services; and
auto lien information. In South America, credit information services and
commercial, financial and medical information.
GENERAL INFORMATION SERVICES: Healthcare Information Services includes
electronic claims processing; physician profiling; claims auditing; claims
analysis, administration and utilization management; electronic remittance;
hospital bill audits; and medical credentials verification. Marketing Services
includes research and analysis; custom opinion surveys; and PC-based marketing
systems, geodemographic systems and mapping tools.
Notes to Industry Segment Information:
(1) Operating revenue is to unaffiliated customers only.
(2) Operating income is operating revenue less operating costs and expenses,
excluding interest expense, other income and income taxes.
(3) Depreciation and amortization by industry segment are as follows:
(In thousands) 1994 1993 1992
- -------------------------------- ------- ------- -------
Credit Information Services $26,640 $25,478 $23,050
Payment Services 4,970 3,230 4,139
Insurance Information Services 10,389 8,077 9,178
International Operations 11,277 5,583 5,921
General Information Services 9,762 7,056 5,770
Corporate 3,458 5,500 5,765
------- ------- -------
$66,496 $54,924 $53,823
======= ======= =======
(4) Capital expenditures by industry segment, excluding property and equipment
acquired in acquisitions, are as follows:
(In thousands) 1994 1993 1992
- -------------------------------- ------- ------- -------
Credit Information Services $ 5,042 $ 6,082 $ 6,441
Payment Services 5,059 2,596 2,462
Insurance Information Services 2,095 6,755 3,452
International Operations 3,062 1,267 4,082
General Information Services 3,817 22,541 15,933
Corporate 1,098 516 2,270
------- ------- -------
$20,173 $39,757 $34,640
======= ======= =======
38
(5) Financial information by geographic area is as follows:
1994 1993 1992
------------------------ ------------------------- -------------------------
(Dollars in thousands) Amount % of Total Amount % of Total Amount % of Total
- -------------------------------- ----------- ----------- ----------- ------------ ----------- ------------
Operating revenue:
United States $1,277,196 90% $1,119,921 92% $1,030,348 91%
Canada 78,277 6% 76,285 6% 79,990 7%
Europe 66,523 5% 21,011 2% 23,995 2%
---------- ---- ---------- --- ---------- ---
$1,421,996 100% $1,217,217 100% $1,134,333 100%
========== ==== ========== === ========== ===
Operating contribution (loss):
United States $ 228,280 93% $ 130,995 88% $ 148,532 89%
Canada 15,476 6% 19,169 13% 19,257 12%
Europe (851) - (1,573) (1%) (1,553) (1%)
South America 408 - - - - -
---------- ---- ---------- --- ---------- ---
$ 243,313 100% $ 148,591 100% $ 166,236 100%
========== ==== ========== === ========== ===
Identifiable assets at
December 31:
United States $ 723,466 71% $ 603,174 82% $ 588,918 83%
Canada 109,004 11% 102,559 14% 95,242 13%
Europe 173,054 17% 25,468 3% 24,722 3%
South America 15,650 2% - - - -
---------- ---- ---------- --- ---------- ---
$1,021,174 100% $ 731,201 100% $ 708,882 100%
========== ==== ========== === ========== ===
39
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Equifax Inc.:
We have audited the accompanying consolidated balance sheets of Equifax Inc. (a
Georgia corporation) and subsidiaries as of December 31, 1994 and 1993 and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Equifax Inc. and subsidiaries
as of December 31, 1994 and 1993 and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 17, 1995
40
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Company's Proxy Statement for the Annual Meeting of Shareholders to be
held on April 26, 1995, contains, on pages 2 through 5 and 20 thereof,
information relating to the Company's Officers, Directors and persons nominated
to become Directors. Said information is incorporated herein by reference and
made a part hereof. See also information concerning the Company's executive
officers in Part I, above.
ITEM 11. EXECUTIVE COMPENSATION
The Company's Proxy Statement for the Annual Meeting of Shareholders to be
held on April 26, 1995, contains, on pages 9 through 20 thereof, information
relating to executive compensation. Said information is incorporated herein by
reference and made a part hereof.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The Company's Proxy Statement for the Annual Meeting of Shareholders to be
held on April 26, 1995, contains, on pages 7 and 8, information relating to
security ownership of certain beneficial owners and management. Said
information is incorporated herein by reference and made a part hereof.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's Proxy Statement for the Annual Meeting of Shareholders to be held
on April 26, 1995, contains, on pages 5 and 13 thereof, information relating to
certain relationships and related transactions. Said information is
incorporated herein by reference and made a part hereof.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
The following documents are filed as part of this report:
(A)1. FINANCIAL STATEMENTS
. Consolidated Balance Sheets - December 31, 1994 and 1993
41
. Consolidated Statements of Income for the Years Ended December 31,
1994, 1993 and 1992
. Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 1994, 1993 and 1992
. Consolidated Statements of Cash Flows for the Years Ended December 31,
1994, 1993 and 1992
. Notes to Consolidated Financial Statements
(A)2. FINANCIAL STATEMENT SCHEDULES
All schedules have been omitted because they are not applicable or the
required information is included in the consolidated financial
statements or notes thereto.
(A)3. EXHIBITS
Articles of Incorporation and By-laws
. By-Laws (13 pages)
Instruments Defining the Rights of Security Holders, Including Indentures
. Loan Agreement, as amended (148 pages)/(1)/
. Loan Agreement, Second Amendment (4 pages)/(2)/
. Loan Agreement, Third Amendment (4 pages)/(2)/
. Loan Agreement, Fourth Amendment (20 pages)/(3)/
. Loan Agreement, Fifth Amendment (16 pages)/(5)/
. Portion of Prospectus and Trust Indenture (134 pages)/(4)/
Material Contracts and Compensation Plans
. Equifax Inc. 1988 Performance Share Plan for Officers, as amended (14
pages)/(6)/
. Equifax Inc. Incentive Compensation Plan - Executive Management Group
(4 pages)/(6)/
. Equifax Inc. Incentive Compensation Plan - Management Group (3
pages)/(6)/
. Deferred Bonus Compensation Plan (22 pages)/(6)/
. Change in Control Agreement (10 pages)/(5)(6)/
. Executive Employment Agreement, dated August 10, 1987 (13
pages)/(3)//(6)/
42
. Executive Employment Agreement, dated June 22, 1989 (7 pages)/(2)(6)/
. Executive Employment Agreement, dated July 1, 1991 (3 pages)/(2)(6)/
. Equifax Inc. Omnibus Stock Incentive Plan, as amended (19 pages)/(6)/
. Equifax Inc. Omnibus Stock Incentive Plan Incentive and Non-
Qualified Stock Option Agreements (8 pages)/(1)(6)/
. Equifax Inc. Omnibus Stock Incentive Plan 1994 Incentive and Non-
Qualified Stock Option Agreements (8 pages)/(5)(6)/
. Equifax Inc. Omnibus Stock Incentive Plan 1995 Incentive and Non-
Qualified Stock Option Agreements (8 pages)/(6)/
. Equifax Inc. Omnibus Stock Incentive Plan 1995 Non-Qualified Stock
Option Agreement (4 pages)/(6)/
. Equifax Inc. Omnibus Stock Incentive Plan Restricted Stock Award
Agreement (16 pages)/(2)//(6)/
. Equifax Inc. Omnibus Stock Incentive Plan 1994 Restricted Stock
Award Agreement (4 pages)/(5)(6)/
. Equifax Inc. Omnibus Stock Incentive Plan 1995 Restricted Stock
Award Agreement (3 pages)/(6)/
. Equifax Inc. Non-Employee Director Stock Option Plan and Agreement
(10 pages)/(6)/
. Equifax Inc. Supplemental Executive Retirement Plan (24 pages)/(6)/
. Equifax Inc. Supplemental Executive Retirement Plan Amendments (26
pages)/(5)//(6)/
. Equifax Inc. Severance Pay Plan for Salaried Employees (18
pages)/(5)(6)/
. Agreement For Computerized Credit Reporting Services (204 pages)/(5)/
. Amendments to Agreement for Computerized Credit Reporting Services
and related documents (66 pages)/(2)/
. Amendment to Agreement for Computerized Credit Reporting Services (8
pages)/(3)/
. Amendment to Agreement for Computerized Credit Reporting Services (9
pages)/(5)/
. Amendment to Agreement for Computerized Credit Reporting Services (14
pages)
. Computer and network operations agreement (31 pages)/(5)/
. Purchase and Lease Agreement (109 pages)/(5)/
. Headquarters Facility Lease (77 pages)/(5)/
43
. Participation Agreement (148 pages)/(5)/
. Lease Agreement (71 pages)/(5)/
. Compensation of Directors - The Company's by-laws, which are filed as
an exhibit to this Form 10-K Annual Report, describe, on page 4
thereof, under Section III, "Compensation of Directors," the fees
paid to Directors of the Company. Said information is hereby
incorporated by reference.
. Life Insurance - Messrs. C. B. Rogers, Jr. and L. A. Ault, III each
own a personal life insurance policy in the face amount of $1,000,000
and $2,000,000, respectively. The Company pays the annual premiums on
said policies.
Subsidiaries of the Registrant (3 pages)
Consent of Independent Public Accountants to incorporation by reference (1 page)
Financial Data Schedule (1 page)
/(1)/Previously filed as an exhibit on Form 10-K, filed March 29, 1991 and
hereby incorporated by reference.
/(2)/Previously filed as an exhibit on Form 10-K, filed March 27, 1992, and
hereby incorporated by reference.
/(3)/Previously filed as an exhibit on Form 10-K, filed March 30, 1993, and
hereby incorporated by reference.
/(4)/Previously filed as pages 8 through 16 and Exhibit 4.1 on Amendment No. 1
to Form S-3, Registration Statement No. 33-62820, filed June 17, 1993, and
hereby incorporated by reference.
/(5)/Previously filed as an exhibit on Form 10-K, filed March 31, 1994, as
amended on Form 10-K/A, filed October 14, 1994, and hereby incorporated by
reference.
/(6)/Management Contract or Compensatory Plan
Copies of the Company's Form 10-K which are furnished pursuant to the written
request of the Company's shareholders do not include the exhibits listed above.
Any shareholder desiring copies of one or more such exhibits should write the
Secretary of the Company at P.O. Box 4081, Atlanta, Georgia 30302, specifying
the exhibit or exhibits and enclosing a check for the amount resulting from
multiplying $.50 times the number of pages (as indicated above) of the
exhibit(s) requested.
(b) Reports on Form 8-K
The Company filed one report on Form 8-K during the fourth quarter of the
year ended December 31, 1994.
44
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
/s/ T.H. Magis
Date March 23, 1995 By ________________________________
T. H. Magis, Corporate Vice
President, Secretary and General
Counsel
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date March 24, 1995 /s/ C. B. Rogers, Jr.
__________________________________
C. B. Rogers, Jr., Chairman of the
Board and Chief Executive Officer
Date March 23, 1995 /s/ D. W. McGlaughlin
__________________________________
D. W. McGlaughlin, President, Chief
Operating Officer and Director
Date March 23, 1995 /s/ T. F. Chapman
__________________________________
Thomas F. Chapman, Executive Vice
President and Director
Date March 23, 1995 /s/ D. U. Hallman
__________________________________
D. U. Hallman, Senior Vice
President and Chief Financial
Officer
Date March 24, 1995 /s/ P. J. Mazzilli
___________________________________
P. J. Mazzilli, Corporate
Controller
(Principal Accounting Officer)
Date March 24, 1995 /s/ J. L. Clendenin
___________________________________
J. L. Clendenin, Director
45
Date March 24, 1995 /s/ Larry Prince
___________________________________
Larry Prince, Director
Date March 24, 1995 /s/ D. Raymond Riddle
___________________________________
D. Raymond Riddle, Director
Date March 24, 1995 /s/ A. W. Dahlberg
___________________________________
A. W. Dahlberg, Director
Date March , 1995 ___________________________________
L. Phillip Humann, Director
Date March , 1995 ___________________________________
Dr. L. W. Sullivan, Director
Date March , 1995 ___________________________________
Lee A. Ault, III, Director
Date March , 1995 ___________________________________
Dr. Betty L. Siegel, Director
Date March , 1995 ___________________________________
Ron D. Barbaro, Director
Date March , 1995 ___________________________________
J. C. Chartrand, Executive
Vice President and Director
Date March 24, 1995 /s/ Tinsley H. Irvin
___________________________________
Tinsley H. Irvin, Director
46
INDEX TO EXHIBITS
EXHIBIT
NUMBER
- -------
Articles of Incorporation and By-laws
3 . By-Laws
Instruments Defining the Rights of Security Holders, Including Indentures
4.1 . Loan Agreement, as amended/(1)/
4.2 . Loan Agreement, Second Amendment/(2)/
4.3 . Loan Agreement, Third Amendment/(2)/
4.4 . Loan Agreement, Fourth Amendment/(3)/
4.5 . Loan Agreement, Fifth Amendment/(5)/
4.6 . Portion of Prospectus and Trust Indenture /(4)/
Material Contracts and Compensation Plans
10.1 . Equifax Inc. 1988 Performance Share Plan for Officers, as amended/(6)/
10.2 . Equifax Inc. Incentive Compensation Plan - Executive Management Group/(6)/
10.3 . Equifax Inc. Incentive Compensation Plan - Management Group/(6)/
10.4 . Deferred Bonus Compensation Plan/(6)/
10.5 . Change in Control Agreement/(5)(6)/
10.6 . Executive Employment Agreement, dated August 10, 1987/(3)//(6)/
10.7 . Executive Employment Agreement, dated June 22, 1989/(2)(6)/
10.8 . Executive Employment Agreement, dated July 1, 1991/(2)(6)/
10.9 . Equifax Inc. Omnibus Stock Incentive Plan, as amended /(6)/
10.10 . Equifax Inc. Omnibus Stock Incentive Plan Incentive and Non-Qualified Stock Option
Agreements/(1)(6)/
10.11 . Equifax Inc. Omnibus Stock Incentive Plan 1994 Incentive and Non-Qualified Stock
Option Agreements/(5)(6)/
47
10.12 . Equifax Inc. Omnibus Stock Incentive Plan 1995 Incentive and Non-Qualified Stock
Option Agreements/(6)/
10.13 . Equifax Inc. Omnibus Stock Incentive Plan 1995 Non-Qualified Stock Option
Agreement/(6)/
10.14 . Equifax Inc. Omnibus Stock Incentive Plan Restricted Stock Award Agreement/(2)(6)/
10.15 . Equifax Inc. Omnibus Stock Incentive Plan 1994 Restricted Stock Award Agreement/(5)(6)/
10.16 . Equifax Inc. Omnibus Stock Incentive Plan 1995 Restricted Stock Award Agreement/(6)/
10.17 . Equifax Inc. Non-Employee Director Stock Option Plan and Agreement/(6)/
10.18 . Equifax Inc. Supplemental Executive Retirement Plan/(6)/
10.19 . Equifax Inc. Supplemental Executive Retirement Plan Amendments/(5)(6)/
10.20 . Equifax Inc. Severance Pay Plan for Salaried Employees/(5)(6)/
10.21 . Agreement For Computerized Credit Reporting Services/(5)/
10.22 . Amendments to Agreement for Computerized Credit Reporting Services and related
documents/(2)/
10.23 . Amendment to Agreement for Computerized Credit Reporting Services/(3)/
10.24 . Amendment to Agreement for Computerized Credit Reporting Services/(5)/
10.25 . Amendment to Agreement for Computerized Credit Reporting Services
10.26 . Computer and network operations agreement/(5)/
10.27 . Purchase and Lease Agreement/(5)/
10.28 . Headquarters Facility Lease/(5)/
10.29 . Participation Agreement/(5)/
10.30 . Lease Agreement/(5)/
. Compensation of Directors - The Company's by-laws, which are filed as an exhibit to this Form 10-K Annual Report,
describe, on page 4 thereof, under Section III, "Compensation of Directors," the fees paid to Directors of the
Company. Said information is hereby incorporated by reference.
48
. Life Insurance - Messrs. C. B. Rogers, Jr. and L. A. Ault, III
each own a personal life insurance policy in the face amount of
$1,000,000 and $2,000,000 respectively. The Company pays the
annual premiums on said policies.
21 Subsidiaries of the Registrant
23 Consent of Independent Public Accountants to incorporation by
reference
27 Financial Data Schedule
/(1)/Previously filed as an exhibit on Form 10-K, filed March 29, 1991 and
hereby incorporated by reference.
/(2)/Previously filed as an exhibit on Form 10-K, filed March 27, 1992, and
hereby incorporated by reference.
/(3)/Previously filed as an exhibit on Form 10-K, filed March 30, 1993, and
hereby incorporated by reference.
/(4)/Previously filed as pages 8 through 16 and Exhibit 4.1 on Amendment No. 1
to Form S-3, Registration Statement No. 33-62820, filed June 17, 1993, and
hereby incorporated by reference.
/(5)/Previously filed as an exhibit on Form 10-K, filed March 31, 1994, as
amended on Form 10-K/A, filed October 14, 1994, and hereby incorporated by
reference.
/(6)/Management Contract or Compensatory Plan
49