Edgar Filing: EQUIFAX INC

Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-06605

EQUIFAX INC.

(Exact name of registrant as specified in its charter)

Georgia (State or other jurisdiction of incorporation or organization)	58-0401110 (I.R.S. Employer Identification No.)

1550 Peachtree Street, N.W., Atlanta, Georgia (Address of principal executive offices)	30309 (Zip Code)

404-885-8000

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x

Accelerated filer ¨

Non-accelerated filer ¨

(Do not check if a smaller

reporting company)

Smaller reporting company ¨

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

On October 14, 2011, there were 121,081,365 shares of the registrant’s common stock outstanding.

EQUIFAX INC.

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED SEPTEMBER 30, 2011

INDEX

		Page
PART I.	Financial Information	4
Item 1.	Financial Statements (Unaudited)	4
	Consolidated Statements of Income—Three and Nine Months Ended September 30, 2011 and 2010	4
	Consolidated Balance Sheets—September 30, 2011 and December 31, 2010	6
	Consolidated Statements of Cash Flows—Nine Months Ended September 30, 2011 and 2010	7
	Consolidated Statements of Equity and Other Comprehensive Income—Nine Months Ended September 30, 2011 and 2010	8
	Notes to Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	38
PART II.	Other Information	39
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 6.	Exhibits	40
Signatures		41
Index to Exhibits		42

FORWARD-LOOKING STATEMENTS

This report contains information that may constitute “forward-looking statements.” Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “may” and similar expressions identify forward-looking statements, which generally are not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future, including statements relating to future operating results, are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our Company’s historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part II, “Item 1A. Risk Factors,” and elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2010, and those described from time to time in our future reports filed with the Securities and Exchange Commission. As a result of such risks and uncertainties, we urge you not to place undue reliance on any such forward-looking statements. Forward-looking statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended
	September 30,
	2011			2010
(In millions, except per share amounts)	(Unaudited)
Operating revenue	$	490.4		$	473.8
Operating expenses:
Cost of services (exclusive of depreciation and amortization below)		189.1			188.2
Selling, general and administrative expenses		139.2			134.0
Depreciation and amortization		40.5			41.4
Total operating expenses		368.8			363.6
Operating income		121.6			110.2
Interest expense		(13.7	)		(14.0	)
Other (expense) income, net		0.6			0.7
Consolidated income from continuing operations before income taxes		108.5			96.9
Provision for income taxes		(39.2	)		(33.3	)
Consolidated income from continuing operations		69.3			63.6
Discontinued operations, net of tax		-			15.2
Consolidated net income		69.3			78.8
Less: Net income attributable to noncontrolling interests		(2.6	)		(2.3	)
Net income attributable to Equifax	$	66.7		$	76.5
Amounts attributable to Equifax:
Net income from continuing operations attributable to Equifax	$	66.7		$	61.3
Discontinued operations, net of tax		-			15.2
Net income attributable to Equifax	$	66.7		$	76.5
Basic earnings per common share:
Net income from continuing operations attributable to Equifax	$	0.55		$	0.50
Discontinued operations attributable to Equifax		-			0.12
Net income attributable to Equifax	$	0.55		$	0.62
Weighted-average shares used in computing basic earnings per share		121.8			124.3
Diluted earnings per common share:
Net income from continuing operations attributable to Equifax	$	0.54		$	0.49
Discontinued operations attributable to Equifax		-			0.12
Net income attributable to Equifax	$	0.54		$	0.61
Weighted-average shares used in computing diluted earnings per share		123.3			125.8
Dividends per common share	$	0.16		$	0.04

See Notes to Consolidated Financial Statements.

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF INCOME

	Nine Months Ended
	September 30,
	2011			2010
(In millions, except per share amounts)	(Unaudited)
Operating revenue	$	1,450.1		$	1,377.5
Operating expenses:
Cost of services (exclusive of depreciation and amortization below)		574.3			566.6
Selling, general and administrative expenses		406.2			370.4
Depreciation and amortization		124.3			120.2
Total operating expenses		1,104.8			1,057.2
Operating income		345.3			320.3
Interest expense		(41.2	)		(42.3	)
Other (expense) income, net		(8.7	)		1.0
Consolidated income from continuing operations before income taxes		295.4			279.0
Provision for income taxes		(129.7	)		(99.7	)
Consolidated income from continuing operations		165.7			179.3
Discontinued operations, net of tax		-			31.5
Consolidated net income		165.7			210.8
Less: Net income attributable to noncontrolling interests		(7.2	)		(6.3	)
Net income attributable to Equifax	$	158.5		$	204.5
Amounts attributable to Equifax:
Net income from continuing operations attributable to Equifax	$	158.5		$	173.0
Discontinued operations, net of tax		-			31.5
Net income attributable to Equifax	$	158.5		$	204.5
Basic earnings per common share:
Net income from continuing operations attributable to Equifax	$	1.29		$	1.38
Discontinued operations attributable to Equifax		-			0.25
Net income attributable to Equifax	$	1.29		$	1.63
Weighted-average shares used in computing basic earnings per share		122.5			125.4
Diluted earnings per common share:
Net income from continuing operations attributable to Equifax	$	1.28		$	1.36
Discontinued operations attributable to Equifax		-			0.25
Net income attributable to Equifax	$	1.28		$	1.61
Weighted-average shares used in computing diluted earnings per share		124.2			127.1
Dividends per common share	$	0.48		$	0.12

See Notes to Consolidated Financial Statements.

EQUIFAX INC.

CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2011			2010

(In millions, except par values)	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	102.0		$	119.4
Trade accounts receivable, net of allowance for doubtful accounts of $6.2 and $7.5 at September 30, 2011 and December 31, 2010, respectively		275.8			262.6
Prepaid expenses		32.2			26.1
Other current assets		20.2			21.1
Total current assets		430.2			429.2
Property and equipment:
Capitalized internal-use software and system costs		326.5			315.9
Data processing equipment and furniture		180.3			181.0
Land, buildings and improvements		176.5			169.5
Total property and equipment		683.3			666.4
Less accumulated depreciation and amortization		(387.3	)		(368.0	)
Total property and equipment, net		296.0			298.4
Goodwill		1,953.9			1,914.7
Indefinite-lived intangible assets		95.6			95.6
Purchased intangible assets, net		567.4			593.9
Other assets, net		169.4			101.8
Total assets	$	3,512.5		$	3,433.6
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt and current maturities	$	67.7		$	20.7
Accounts payable		21.9			24.6
Accrued expenses		65.7			61.9
Accrued salaries and bonuses		53.4			71.9
Deferred revenue		50.5			58.7
Other current liabilities		85.0			81.7
Total current liabilities		344.2			319.5
Long-term debt		967.8			978.9
Deferred income tax liabilities, net		250.7			244.2
Long-term pension and other postretirement benefit liabilities		109.6			129.0
Other long-term liabilities		56.1			53.6
Total liabilities		1,728.4			1,725.2
Commitments and Contingencies (see Note 6)
Equifax shareholders' equity:
Preferred stock, $0.01 par value: Authorized shares - 10.0; Issued shares - none		-			-
Common stock, $1.25 par value: Authorized shares - 300.0; Issued shares - 189.3 at September 30, 2011 and December 31, 2010; Outstanding shares - 121.1 and 122.6 at September 30, 2011 and December 31, 2010, respectively		236.6			236.6
Paid-in capital		1,112.1			1,105.8
Retained earnings		2,824.5			2,725.7
Accumulated other comprehensive loss		(321.3	)		(344.5	)
Treasury stock, at cost, 66.1 shares and 64.6 shares at September 30, 2011 and December 31, 2010, respectively		(2,044.6	)		(1,991.0	)
Stock held by employee benefits trusts, at cost, 2.1 shares at both September 30, 2011 and December 31, 2010		(41.2	)		(41.2	)
Total Equifax shareholders' equity		1,766.1			1,691.4
Noncontrolling interests		18.0			17.0
Total equity		1,784.1			1,708.4
Total liabilities and equity	$	3,512.5		$	3,433.6

See Notes to Consolidated Financial Statements.

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	September 30,
	2011			2010
(In millions)	(Unaudited)
Operating activities:
Consolidated net income	$	165.7		$	210.8
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Loss (gain) on divestitures		27.8			(27.1	)
Depreciation and amortization		123.8			125.7
Stock-based compensation expense		17.3			15.0
Excess tax benefits from stock-based compensation plans		(0.6	)		(1.6	)
Deferred income taxes		7.0			3.2
Changes in assets and liabilities, excluding effects of acquisitions:
Accounts receivable, net		(18.7	)		(10.8	)
Prepaid expenses and other current assets		(6.8	)		(1.2	)
Other assets		10.4			(0.7	)
Current liabilities, excluding debt		(55.2	)		(55.5	)
Other long-term liabilities, excluding debt		(11.7	)		(50.4	)
Cash provided by operating activities		259.0			207.4
Investing activities:
Capital expenditures		(59.2	)		(82.4	)
Acquisitions, net of cash acquired		(112.2	)		(15.3	)
Cash received from divestitures		2.5			181.7
Investment in unconsolidated affiliates, net		(4.2	)		1.5
Cash (used in) provided by investing activities		(173.1	)		85.5
Financing activities:
Net short-term borrowings (repayments)		46.5			(134.0	)
Net repayments under long-term revolving credit facilities		-			(5.0	)
Payments on long-term debt		(16.7	)		(19.6	)
Treasury stock purchases		(75.2	)		(116.4	)
Dividends paid to Equifax shareholders		(58.7	)		(14.9	)
Dividends paid to noncontrolling interests		(5.6	)		(3.4	)
Proceeds from exercise of stock options		12.9			13.8
Excess tax benefits from stock-based compensation plans		0.6			1.6
Other		(2.7	)		(0.8	)
Cash used in financing activities		(98.9	)		(278.7	)
Effect of foreign currency exchange rates on cash and cash equivalents		(4.4	)		(1.7	)
Decrease in cash and cash equivalents		(17.4	)		12.5
Cash and cash equivalents, beginning of period		119.4			103.1
Cash and cash equivalents, end of period	$	102.0		$	115.6

See Notes to Consolidated Financial Statements.

EQUIFAX INC.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AND COMPREHENSIVE INCOME

For the Nine Months Ended September 30, 2011

(Unaudited)

	Equifax Shareholders
																		Stock
												Accumulated						Held By
	Common Stock											Other						Employee
	Shares					Paid-In			Retained			Comprehensive			Treasury			Benefits			Noncontrolling			Total
	Outstanding			Amount		Capital			Earnings			Loss			Stock			Trusts			Interests			Equity
	(In millions, except per share amounts)
Balance, December 31, 2010		122.6		$	236.6	$	1,105.8		$	2,725.7		$	(344.5	)	$	(1,991.0	)	$	(41.2	)	$	17.0		$	1,708.4
Net income		-			-		-			158.5			-			-			-			7.2			165.7
Other comprehensive income		-			-		-			-			23.2			-			-			(0.1	)		23.1
Shares issued under stock and benefit plans, net of minimum tax withholdings		0.7			-		(11.7	)		-			-			21.6			-			-			9.9
Treasury stock purchased under share repurchase program ($33.07 per share)*		(2.2	)		-		-			-			-			(75.2	)		-			-			(75.2	)
Cash dividends ($0.48 per share)		-			-		-			(59.7	)		-			-			-			-			(59.7	)
Dividends paid to employee benefits trusts		-			-		1.0			-			-			-			-			-			1.0
Stock-based compensation expense		-			-		17.3			-			-			-			-			-			17.3
Tax effects of stock-based compensation plans		-			-		1.2			-			-			-			-			-			1.2
Dividends paid to noncontrolling interests		-			-		-			-			-			-			-			(5.6	)		(5.6	)
Other		-			-		(1.5	)		-			-			-			-			(0.5	)		(2.0	)
Balance, September 30, 2011		121.1		$	236.6	$	1,112.1		$	2,824.5		$	(321.3	)	$	(2,044.6	)	$	(41.2	)	$	18.0		$	1,784.1

*	At September 30, 2011, $179.3 million was authorized for future purchases of common stock under our share repurchase authorization.

Accumulated Other Comprehensive Loss consists of the following components:

	September 30,			December 31,
	2011			2010
	(In millions)
Foreign currency translation	$	(84.3	)	$	(100.8	)
Unrecognized actuarial losses and prior service cost related to our pension and other postretirement benefit plans, net of accumulated tax of $134.7 and $138.6 at September 30, 2011 and December 31, 2010, respectively		(234.7	)		(241.3	)
Cash flow hedging transactions, net of accumulated tax of $1.5 and $1.6 at September 30, 2011 and December 31, 2010, respectively		(2.3	)		(2.4	)
Accumulated other comprehensive loss	$	(321.3	)	$	(344.5	)

See Notes to Consolidated Financial Statements.

EQUIFAX INC.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AND COMPREHENSIVE INCOME

For the Nine Months Ended September 30, 2011

(Unaudited)

Comprehensive Income is as follows:

	Three Months Ended September 30,
	2011									2010
	Equifax			Noncontrolling						Equifax		Noncontrolling
	Shareholders			Interests			Total			Shareholders		Interests		Total
	(In millions)
Net income	$	66.7		$	2.6		$	69.3		$	76.5	$	2.3	$	78.8
Other comprehensive income:
Foreign currency translation adjustment		(27.6	)		(0.4	)		(28.0	)		20.7		0.2		20.9
Change in unrecognized prior service cost and actuarial losses related to our pension and other postretirement benefit plans		2.2			-			2.2			1.8		-		1.8
Comprehensive income	$	41.3		$	2.2		$	43.5		$	99.0	$	2.5	$	101.5

	Nine Months Ended September 30,
	2011							2010
	Equifax		Noncontrolling					Equifax		Noncontrolling
	Shareholders		Interests			Total		Shareholders		Interests			Total
	(In millions)
Net income	$	158.5	$	7.2		$	165.7	$	204.5	$	6.3		$	210.8
Other comprehensive income:
Foreign currency translation adjustment		16.5		(0.1	)		16.4		3.7		(0.1	)		3.6
Change in unrecognized prior service cost and actuarial losses related to our pension and other postretirement benefit plans		6.6		-			6.6		5.2		-			5.2
Change in cumulative loss from cash flow hedging transactions		0.1		-			0.1		0.1		-			0.1
Comprehensive income	$	181.7	$	7.1		$	188.8	$	213.5	$	6.2		$	219.7

See Notes to Consolidated Financial Statements.

EQUIFAX INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2011

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

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations. We collect, organize and manage various types of financial, demographic, employment and marketing information. Our products and services enable businesses to make credit and service decisions, manage their portfolio risk, automate or outsource certain human resources, employment tax and payroll-related business processes, and develop marketing strategies concerning consumers and commercial enterprises. We serve customers across a wide range of industries, including the financial services, mortgage, retail, telecommunications, utilities, automotive, brokerage, healthcare and insurance industries, as well as government agencies. We also enable consumers to manage and protect their financial health through a portfolio of products offered directly to consumers. As of September 30, 2011, we operated in the following countries: Argentina, Canada, Chile, Costa Rica, Ecuador, El Salvador, Honduras, Paraguay, Peru, Portugal, Spain, Republic of Ireland, the United Kingdom, or U.K., Uruguay, and the United States of America, or U.S. We also maintain support operations in the Republic of Ireland. We have an investment in a consumer and commercial credit information company in Brazil and offer credit services in Russia and India through joint ventures.

We develop, maintain and enhance secured proprietary information databases through the compilation of actual consumer data, including credit, employment, asset, liquidity, net worth and spending activity, and business data, including credit and business demographics, that we obtain from a variety of sources, such as credit granting institutions, public record information (including bankruptcies, liens and judgments), income and tax information primarily from large to mid-sized companies in the U.S., and marketing information. We process this information utilizing our proprietary information management systems.

Basis of Presentation. The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, the instructions to Form 10-Q and applicable sections of Regulation S-X. To understand our complete financial position and results, as defined by GAAP, this Form 10-Q should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in our annual report on Form 10-K for the year ended December 31, 2010 (“2010 Form 10-K”).

Our unaudited Consolidated Financial Statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the periods presented and are of a normal recurring nature.

Earnings Per Share. Our basic earnings per share, or EPS, is calculated as net income attributable to Equifax divided by the weighted-average number of common shares outstanding during the period. Diluted EPS is calculated to reflect the potential dilution that would occur if stock options or other contracts to issue common stock were exercised and resulted in additional common shares outstanding. The net income amounts used in both our basic and diluted EPS calculations are the same. A reconciliation of the weighted-average outstanding shares used in the two calculations is as follows:

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(In millions)
Weighted-average shares outstanding (basic)		121.8		124.3		122.5		125.4
Effect of dilutive securities:
Stock options and restricted stock units		1.5		1.5		1.7		1.7
Weighted-average shares outstanding (diluted)		123.3		125.8		124.2		127.1

For the three and nine months ended September 30, 2011, 3.2 million and 2.1 million stock options, respectively, were anti-dilutive and therefore excluded from this calculation. For the three and nine months ended September 30, 2010, 3.3 million and 3.1 million stock options, respectively, were anti-dilutive and therefore excluded from this calculation.

Financial Instruments. Our financial instruments consist primarily of cash and cash equivalents, accounts and notes receivable, accounts payable and short- and long-term debt. The carrying amounts of these items, other than long-term debt, approximate their fair market values due to the short-term nature of these instruments. The fair value of our fixed-rate debt is determined using quoted market prices for publicly traded instruments, and for non-publicly traded instruments through valuation techniques depending on the specific characteristics of the debt instrument. As of September 30, 2011 and December 31, 2010, the fair value of our long-term debt was $1.07 billion and $1.05 billion, respectively, compared to its carrying value of $0.97 billion and $0.98 billion, respectively.

Derivatives and Hedging Activities. We use derivative financial instruments as a risk management tool to hedge the Company’s exposure to changes in interest rates, not for speculative purposes. We have used interest rate swaps and interest rate lock agreements to manage interest rate risk associated with our fixed and floating-rate borrowings. We recognize all derivatives on the balance sheet at fair value. Derivative valuations reflect the value of the instrument including material amounts associated with counterparty risk.

Fair Value Hedges. In conjunction with our November 2009 sale of five-year Senior Notes, we entered into five-year interest rate swaps, designated as fair value hedges, which convert the debt’s fixed interest rate to a variable rate. These swaps involve the receipt of fixed rate amounts for floating interest rate payments over the life of the swaps without exchange of the underlying principal amount. Changes in the fair value of the interest rate swaps offset changes in the fair value of the fixed-rate Senior Notes they hedge due to changes in the designated benchmark interest rate and are recorded in interest expense. The fair value of these interest rate swaps was an asset of $16.3 million and $9.7 million at September 30, 2011 and December 31, 2010, respectively, and was recorded in other long-term assets on our Consolidated Balance Sheet.

Fair Value Measurements. Fair value is determined based on the assumptions marketplace participants use in pricing the asset or liability. We use a three level fair value hierarchy to prioritize the inputs used in valuation techniques between observable inputs that reflect quoted prices in active markets, inputs other than quoted prices with observable market data and unobservable data (e.g., a company’s own data).

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The following table presents items measured at fair value on a recurring basis:

				Fair Value Measurements at Reporting Date Using:
Description	Fair Value of Assets (Liabilities) at September 30, 2011			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(In millions)
Fair Value Interest Rate Swaps(1)	$	16.3		$	-		$	16.3		$	-
Notes, due 2014(1)		(291.3	)		-			(291.3	)		-
Deferred Compensation Plan(2)		(13.4	)		(13.4	)		-			-
Total	$	(288.4	)	$	(13.4	)	$	(275.0	)	$	-

(1) The fair value of our interest rate swaps, which are designated as fair value hedges, and notes are based on the present value of expected future cash flows using zero coupon rates and are classified within Level 2 of the fair value hierarchy.

(2) We maintain a deferred compensation plan that allows for certain management employees to defer the receipt of compensation (such as salary, incentive compensation and commissions) until a later date based on the terms of the plan. The liability representing benefits accrued for plan participants is valued at the quoted market prices of the participants’ elections for investments. Identical instruments are traded in active markets as of September 30, 2011. As such, we have classified this liability as Level 1 within the fair value hierarchy.

Variable Interest Entities. We hold interests in certain entities, including credit data and information solutions ventures, that are considered variable interest entities, or VIEs. These variable interests relate to ownership interests that require financial support for these entities. Our investments related to these VIEs totaled $10.5 million at September 30, 2011, representing our maximum exposure to loss. We are not the primary beneficiary and are not required to consolidate any of these VIEs.

Recent Accounting Pronouncements. Revenue Arrangements with Multiple Deliverables. In October 2009, the FASB issued revenue guidance for multiple-deliverable arrangements which addresses how to separate deliverables and how to measure and allocate arrangement consideration. This guidance requires vendors to develop the best estimate of selling price for each deliverable and to allocate arrangement consideration using this selling price. The guidance is effective prospectively for revenue arrangements entered into or materially modified in annual periods beginning after June 15, 2010. The adoption of this guidance on January 1, 2011 did not have a material impact on our Consolidated Financial Statements.

Testing Goodwill for Impairment. In September 2011, the FASB issued Accounting Standards Update, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment (the revised standard). The revised standard is intended to reduce the cost and complexity of the annual goodwill impairment test by providing entities an option to perform a “qualitative” assessment to determine whether further impairment testing is necessary. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. The revised standard is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. We will implement the new standard in our 2012 annual goodwill impairment testing. This guidance is not expected to have a material effect on our financial condition or results of operations.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Comprehensive Income. In June 2011, the FASB issued guidance on the presentation of comprehensive income. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity, which is our current presentation, and also requires presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements. This guidance is effective for fiscal years and interim periods beginning after December 15, 2011, and is not expected to have a material effect on our financial condition or results of operations, though it will change our financial statement presentation.

For additional information about recent accounting pronouncements adopted or pending adoption, see Note 1 of the Notes to Consolidated Financial Statements in our 2010 Form 10-K.

2. MERGER OF BRAZILIAN BUSINESS

On May 31, 2011, we completed the merger of our Brazilian business with Boa Vista Serviços S.A. (“BVS”) in exchange for a 15% equity interest in BVS, which was accounted for as a sale and deconsolidated (the “Brazilian Transaction”). BVS, an unrelated third party whose results we do not consolidate, is the second largest consumer and commercial credit information company in Brazil. Our investment in BVS was valued at 130 million Brazilian Reais ($70.6 million and $82.3 million at September 30, 2011 and May 31, 2011, respectively) is recorded in Other assets, net on the Consolidated Balance Sheets and is accounted for using the cost method. The initial fair value was determined by a third-party using income and market approaches and would not have changed materially as of September 30, 2011. In accounting for the transaction, we wrote off $33.2 million of goodwill and $27.0 million of cumulative foreign currency translation adjustments. In addition, as part of the agreement with BVS, we have retained certain contingent liabilities. A pre-tax loss of $10.3 million was recognized during the second quarter of 2011 related to the Brazilian Transaction and is included in other expense in the Consolidated Statement of Income. Tax expense of $17.5 million was also recorded in conjunction with the Brazilian Transaction.

Equifax has committed to make certain additional funding available to BVS. Until May 31, 2015, BVS will have the right to borrow up to $55 million from Equifax for general corporate purposes; any borrowings would be due and payable on May 31, 2015. Payments for principal and interest on any borrowings will be convertible, at Equifax’s option, into additional shares of BVS nonvoting preferred stock. Preferred shares issued as a result of any borrowings will be convertible to common shares under specific conditions.

3. DISCONTINUED OPERATIONS

On April 23, 2010, we sold our APPRO loan origination software business (“APPRO”) for $72 million. On July 1, 2010, we sold substantially all the assets of our Direct Marketing Services division (“DMS”) for $117 million. Both of these businesses were reported in our U.S. Consumer Information Solutions segment. The historical results of these operations for the three and nine month periods ended September 30, 2010 are classified as discontinued operations in the Consolidated Statements of Income. Revenue for these businesses for the three and nine months ended September 30, 2010 was $0 and $42.1 million, respectively. Pretax income, excluding the gain on the sales of APPRO and DMS, was $0 and $6.3 million for the three and nine months ended September 30, 2010. We recorded a gain from the sale of APPRO in the second quarter of 2010 of $12.3 million, after tax, and a gain from the sale of DMS in the third quarter of 2010 of $14.9 million, both of which were classified as discontinued operations in the Consolidated Statements.

4. GOODWILL AND INTANGIBLE ASSETS

Goodwill. Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. Goodwill is tested for impairment at the reporting unit level on an annual basis and on an interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value. As a result of the merger of our Brazilian business during the second quarter, we performed an interim impairment test on the Latin America reporting unit excluding our Brazilian business. The interim test resulted in no impairment of goodwill. We perform our annual goodwill impairment tests as of September 30.

Our annual goodwill impairment testing was completed during the third quarter of 2011. The fair value estimates for our reporting units were determined using a combination of the income and market approaches in accordance with our methodology as discussed in the “Application of Critical Accounting Policies” section in the Form 10-Q. The estimated fair value for all reporting units exceeded the carrying value of these units as of September 30, 2011. As a result, no goodwill impairment was recorded. Changes in the amount of goodwill for the nine months ended September 30, 2011, are as follows:

	U.S. Consumer									North America		North America
	Information									Personal		Commercial
	Solutions			International			TALX			Solutions		Solutions			Total
	(In millions)
Balance, December 31, 2010	$	628.5		$	346.9		$	899.9		$	1.8	$	37.6		$	1,914.7
Acquisitions		10.1			30.9			26.8			-		-			67.8
Adjustments to initial purchase price allocation		(0.7	)		(0.1	)		-			-		-			(0.8	)
Foreign currency translation		-			5.8			-			-		(0.2	)		5.6
Tax benefits of stock options exercised		-			-			(0.2	)		-		-			(0.2	)
Business sold		-			(33.2	)		-			-		-			(33.2	)
Balance, September 30, 2011	$	637.9		$	350.3		$	926.5		$	1.8	$	37.4		$	1,953.9

4. GOODWILL AND INTANGIBLE ASSETS (Continued)

Indefinite-Lived Intangible Assets. Indefinite-lived intangible assets consist of contractual/territorial rights representing the estimated acquisition date fair value of rights to operate in certain territories acquired through the purchase of independent credit reporting agencies in the U.S. and Canada. Our contractual/territorial rights are perpetual in nature and, therefore, the useful lives are considered indefinite. Indefinite-lived intangible assets are not amortized. We are required to test indefinite-lived intangible assets for impairment annually and whenever events or circumstances indicate that there may be an impairment of the asset value. We perform our annual indefinite-lived intangible asset impairment test as of September 30. Our 2011 annual impairment test completed during the third quarter of 2011 resulted in no impairment of indefinite-lived intangible assets. Our contractual/territorial rights carrying amounts did not change materially during the nine months ended September 30, 2011.

Purchased Intangible Assets. Purchased intangible assets represent the estimated acquisition date fair value of acquired intangible assets used in our business. Purchased data files represent the estimated acquisition date fair value of consumer credit files acquired primarily through the purchase of independent credit reporting agencies in the U.S. and Canada. We expense the cost of modifying and updating credit files in the period such costs are incurred. We amortize purchased data files, which primarily consist of acquired consumer credit files, on a straight-line basis. Primarily all of our other purchased intangible assets are also amortized on a straight-line basis. For additional information about the useful lives related to our purchased intangible assets, see Note 1 of the Notes to Consolidated Financial Statements in our 2010 Form 10-K.

Purchased intangible assets at September 30, 2011 and December 31, 2010 consisted of the following:

	September 30, 2011							December 31, 2010
			Accumulated							Accumulated
	Gross		Amortization			Net		Gross		Amortization			Net
Definite-lived intangible assets:	(In millions)
Purchased data files	$	315.4	$	(234.8	)	$	80.6	$	339.2	$	(240.7	)	$	98.5
Acquired software and technology		64.2		(39.3	)		24.9		55.0		(33.3	)		21.7
Customer relationships		518.0		(121.8	)		396.2		489.2		(97.1	)		392.1
Proprietary database		125.0		(90.3	)		34.7		125.0		(74.4	)		50.6
Non-compete agreements		9.1		(3.0	)		6.1		7.2		(1.4	)		5.8
Trade names and other intangible assets		40.5		(15.6	)		24.9		37.4		(12.2	)		25.2
Total definite-lived intangible assets	$	1,072.2	$	(504.8	)	$	567.4	$	1,053.0	$	(459.1	)	$	593.9

Amortization expense from continuing operations related to purchased intangible assets was $21.9 million and $22.3 million during the three months ended September 30, 2011 and 2010, respectively. Amortization expense from continuing operations related to purchased intangible assets was $67.9 million and $66.8 million during the nine months ended September 30, 2011 and 2010, respectively.

5. DEBT

Debt outstanding at September 30, 2011 and December 31, 2010 was as follows:

	September 30,			December 31,
	2011			2010
	(In millions)
Commercial paper	$	50.1		$	-
Note, 4.25%, due in installments through March 2012		-			4.7
Notes, 7.34%, due in installments through May 2014		45.0			60.0
Notes, 4.45%, due December 2014		275.0			275.0
Notes, 6.30%, due July 2017		272.5			272.5
Debentures, 6.90%, due July 2028		125.0			125.0
Notes, 7.00%, due July 2037		250.0			250.0
Capitalized lease obligation		1.4			2.0
Other		0.9			1.0
Total debt		1,019.9			990.2
Less short-term debt and current maturities		(67.7	)		(20.7	)
Less unamortized discounts		(1.9	)		(2.1	)
Plus fair value adjustments		17.5			11.5
Total long-term debt, net	$	967.8		$	978.9

Senior Credit Facility. During the first quarter of 2011, we extended the maturity date and reduced the borrowing limits of our existing unsecured revolving credit facility, which we refer to as the Senior Credit Facility, by entering into a Second Amended and Restated Credit Agreement dated as of February 18, 2011 (the “Amended Agreement”). The Senior Credit Facility had been scheduled to expire on July 24, 2011, and provided $850.0 million of borrowing capacity. The Amended Agreement provides for a maturity date of February 18, 2015. We elected to reduce the size of the facility to $500.0 million in line with our liquidity needs and current credit market conditions, including higher upfront fees and fees for unused borrowing availability. The Amended Agreement also provides an accordion feature that allows us to request an increase in the total commitment to $750.0 million should we so choose. We added certain of our subsidiaries in Canada, the U.K. and Luxembourg as co-borrowers in addition to the Company to provide additional flexibility as to the place of borrowing. Borrowings may be used for general corporate purposes, including working capital, capital expenditures, acquisitions and share repurchase programs. Availability of the Senior Credit Facility for borrowings is reduced by the outstanding face amount of any letters of credit issued under the facility and, pursuant to our existing Board of Directors authorization, by the outstanding principal amount of our commercial paper notes. As of September 30, 2011, there were no outstanding borrowings under this facility and $448.5 million was available for borrowing.

Commercial Paper Program. During the first quarter of 2011, we reduced the size of our commercial paper program from $850.0 million to $500.0 million. Our commercial paper program has been established through the private placement of commercial paper notes from time-to-time. Maturities of commercial paper can range from overnight to 397 days. The commercial paper program is supported by our Senior Credit Facility and, pursuant to our existing Board of Directors authorization, the total amount of commercial paper which may be issued is reduced by the amount of any outstanding borrowings under our Senior Credit Facility. At September 30, 2011, $50.1 million in commercial paper notes was outstanding, all with maturities of less than 90 days.

Canadian Credit Facility. We were party to a credit agreement with a Canadian financial institution that provided for a C$10.0 million (denominated in Canadian dollars), 364-day revolving credit agreement. This agreement was scheduled to expire in June 2011. In connection with the Amended Agreement, we cancelled this agreement at the end of the first quarter and there were no outstanding borrowings under this agreement at the time of cancellation.

For additional information about our debt agreements, see Note 5 of the Notes to Consolidated Financial Statements in our 2010 Form 10-K.

6. COMMITMENTS AND CONTINGENCIES

Data Processing, Outsourcing Services and Other Agreements. We have separate agreements with IBM, Tata Consultancy Services and others to outsource portions of our computer data processing operations, applications development, maintenance and related functions and to provide certain other administrative and operational services. The agreements expire between 2011 and 2016. The estimated aggregate minimum contractual obligation remaining under these agreements was approximately $100 million at December 31, 2010, with no future year’s minimum contractual obligation expected to exceed approximately $40 million. Annual payment obligations related to these agreements vary due to factors such as the volume of data or transactions processed; changes in our servicing needs as a result of new product offerings, acquisitions or divestitures; the introduction of significant new technologies; foreign currency; or the general rate of inflation. In certain circumstances (e.g., a change in control or for our convenience), we may terminate these data processing and outsourcing agreements, and, in doing so, certain of these agreements require us to pay a significant penalty.

Agreement with Computer Sciences Corporation. We have an agreement with Computer Sciences Corporation, or CSC, and certain of its affiliates, collectively CSC, under which CSC-owned credit reporting agencies utilize our computerized credit database services. CSC retains ownership of its credit files and the revenues generated by its credit reporting activities. We receive a processing fee for maintaining the database and for each report supplied. The agreement will expire on July 31, 2018, and is renewable at the option of CSC for successive ten-year periods. The agreement provides us with an option to purchase CSC’s credit reporting business if it does not elect to renew the agreement or if there is a change in control of CSC while the agreement is in effect. Under the agreement CSC also has an option, exercisable at any time, to sell its credit reporting business to us. The option expires in 2013. The option exercise price will be determined by a third-party appraisal process and would be due in cash within 180 days after the exercise of the option. We estimate that if the option were exercised at December 31, 2010, the price range would be approximately $625 million to $700 million. This estimate is based solely on our internal analysis of the value of the business, current market conditions and other factors, all of which are subject to constant change. Therefore, the actual option exercise price could be materially higher or lower than our estimate.

Guarantees and General Indemnifications. We may issue standby letters of credit, performance bonds or other guarantees in the normal course of business. The aggregate notional amount of all performance bonds and standby letters of credit was not material at September 30, 2011, and all have a remaining maturity of one year or less. The maximum potential future payments we could be required to make under the guarantees is not material at September 30, 2011.

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

6. COMMITMENTS AND CONTINGENCIES (Continued)

We cannot reasonably estimate our potential future payments under the indemnities and related provisions described above because we cannot predict when and under what circumstances these provisions may be triggered. We had no accruals related to indemnifications on our Consolidated Balance Sheets at September 30, 2011 or December 31, 2010.

Contingencies. We are involved in legal proceedings, claims and litigation arising in the ordinary course of business. We periodically assess our exposure related to these matters based on the information which is available. We have recorded accruals in our Consolidated Financial Statements for those matters in which it is probable that we have incurred a loss and the amount of the loss, or range of loss, can be reasonably estimated.

For other legal proceedings, claims and litigation, we have recorded loss contingencies that are immaterial, or we cannot reasonably estimate the potential loss because of uncertainties about the outcome of the matter and the amount of the loss or range of loss. Although the final outcome of these other matters cannot be predicted with certainty, any possible adverse outcome arising from these matters is not expected to have a material impact on our Consolidated Financial Statements, either individually or in the aggregate. However, our evaluation of the likely impact of these matters may change in the future.

Tax Matters. In 2003, the Canada Revenue Agency, or CRA, issued Notices of Reassessment, asserting that Acrofax, Inc., a wholly-owned Canadian subsidiary of Equifax, was liable for additional tax for the 1995 through 2000 tax years, related to certain intercompany capital contributions and loans. Subsequently in 2003, we made a statutorily-required deposit for a portion of the claim. On May 31, 2011, we settled this CRA claim for $1.1 million (1.1 million in Canadian dollars) and received a net refund of the deposit and accrued interest in the amount of $9.9 million (9.7 million in Canadian dollars).

For additional information about these and other commitments and contingencies, see Note 6 of the Notes to Consolidated Financial Statements in our 2010 Form 10-K. For additional information about commitments related to the Brazilian Transaction, see Note 2 of the Notes to Consolidated Financial Statements in this 10-Q.

7. INCOME TAXES

We are subject to U.S. federal, state and international income taxes. We are generally no longer subject to federal, state, or international income tax examinations by tax authorities for years ending prior to December 31, 2002, with few exceptions. Due to the potential for resolution of state and foreign examinations, and the expiration of various statutes of limitations, it is reasonably possible that our gross unrecognized tax benefit balance may change within the next twelve months by a range of $0 to $8.3 million.

Effective Tax Rate. Our effective income tax rate was 36.2% for the three months ended September 30, 2011, up from 34.4% for the same period in 2010. The increase is due to federal and state tax benefits realized during the third quarter of 2010 that did not recur in the same period of 2011. The effective income tax rate was 43.9% for the nine months ended September 30, 2011, up from 35.7% for the same period in 2010 with the increase primarily due to the Brazilian Transaction that occurred during the second quarter of 2011. The impact of the Brazilian Transaction increased our effective rate 7.7% for the nine months ended September 30, 2011. The nine month effective income tax rate also increased due to federal and state tax benefits realized in 2010.

8. BENEFIT PLANS

We sponsor defined benefit pension plans and defined contribution plans.

On September 14, 2011, the Compensation Committee of the Board of Directors approved a redesign of our retirement plans for our currently active Canadian employees, effective January 1, 2013, and for our new hires hired on or after October 1, 2011. The changes to our retirement plan will freeze the Canadian Retirement Income Plan, or CRIP, a qualified defined benefit pension plan, for employees who do not meet retirement-eligibility status under the CRIP as of December 31, 2012 (“Non-Grandfathered” participants). Under the plan amendments, the service credit for Non-Grandfathered participants will freeze, but these participants will continue to receive credit for salary increases and vesting service. Additionally, Non-Grandfathered employees and certain other employees not eligible to participate in the CRIP (i.e., new hires on or after October 1, 2011) will be able to participate in an enhanced defined contribution component of the CRIP.

We assessed the plan amendment’s potential impact to our Consolidated Financial Statements in accordance with ASC 715 as of September 14, 2011. Factors considered during our assessment included the materiality of the CRIP’s assets and liabilities, the CRIP’s funded status and discussion with the plan’s actuaries regarding the range of possible fluctuation in valuation inputs from December 31, 2010 to September 14, 2011. Based on our assessment, we determined that a remeasurement was not necessary as the effect of the plan amendments was immaterial.

For additional information about our benefit plans, see Note 10 of the Notes to Consolidated Financial Statements in our 2010 Form 10-K.

The following table provides the components of net periodic benefit cost for the three and nine months ended September 30, 2011 and 2010:

	Pension Benefits						Other Benefits
	Three Months Ended September 30,
	2011			2010			2011			2010
	(In millions)
Service cost	$	1.6		$	1.8		$	0.1		$	0.1
Interest cost		8.6			8.7			0.4			0.4
Expected return on plan assets		(11.6	)		(11.1	)		(0.4	)		(0.3	)
Amortization of prior service cost		0.2			0.2			-			(0.1	)
Recognized actuarial loss		3.0			2.3			0.3			0.3
Total net periodic benefit cost	$	1.8		$	1.9		$	0.4		$	0.4

	Pension Benefits						Other Benefits
	Nine Months Ended September 30,
	2011			2010			2011			2010
	(In millions)
Service cost	$	4.8		$	4.7		$	0.4		$	0.3
Interest cost		25.8			26.1			1.2			1.3
Expected return on plan assets		(34.9	)		(33.3	)		(1.2	)		(1.1	)
Amortization of prior service cost		0.6			0.6			(0.1	)		(0.2	)
Recognized actuarial loss		9.0			6.8			0.9			0.9
Total net periodic benefit cost	$	5.3		$	4.9		$	1.2		$	1.2

9. SEGMENT INFORMATION

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

U.S. Consumer Information Solutions

International

TALX

North America Personal Solutions

North America Commercial Solutions

The accounting policies of the reportable segments are the same as those described in our summary of significant accounting policies in Note 1 of the Notes to Consolidated Financial Statements in our 2010 Form 10-K. We evaluate the performance of these reportable segments based on their operating revenues, operating income and operating margins, excluding unusual or infrequent items, if any. Inter-segment sales and transfers are not material for all periods presented. The measurement criteria for segment profit or loss and segment assets are substantially the same for each reportable segment. All transactions between segments are accounted for at cost, and no timing differences occur between segments.

A summary of segment products and services is as follows:

U.S. Consumer Information Solutions. This segment includes consumer information services (such as credit information and credit scoring, credit modeling services, locate services, fraud detection and prevention services, identity verification services and other consulting services); mortgage loan origination information, appraisal, title and closing services; consumer financial marketing services; and identity management.

International. This segment includes information services products, which includes consumer and commercial services (such as credit and financial information, credit scoring and credit modeling services), credit and other marketing products and services, and products and services sold directly to consumers similar to those sold by North America Personal Solutions.

TALX. This segment includes employment, income and social security number verification services as well as complementary payroll-based transaction services (known as The Work Number ®) and employment tax and talent management services.

North America Personal Solutions. This segment includes credit information, credit monitoring and identity theft protection products sold directly to consumers via the internet.

North America Commercial Solutions. This segment includes commercial products and services such as business credit and demographic information, credit scores and portfolio analytics (decisioning tools), which are derived from our databases of business credit and financial information.

9. SEGMENT INFORMATION (Continued)

Operating revenue and operating income from continuing operations by operating segment during the three and nine months ended September 30, 2011 and 2010 are as follows:

	Three Months Ended						Nine Months Ended
(In millions)	September 30,						September 30,
Operating revenue:	2011			2010			2011			2010
U.S. Consumer Information Solutions	$	202.0		$	194.0		$	577.0		$	551.7
International		118.6			122.5			376.6			356.9
TALX		102.8			99.1			298.5			293.4
North America Personal Solutions		45.5			39.9			135.1			119.9
North America Commercial Solutions		21.5			18.3			62.9			55.6
Total operating revenue	$	490.4		$	473.8		$	1,450.1		$	1,377.5

	Three Months Ended						Nine Months Ended
(In millions)	September 30,						September 30,
Operating income:	2011			2010			2011			2010
U.S. Consumer Information Solutions	$	74.0		$	72.2		$	206.5		$	200.5
International		34.7			30.8			98.7			89.6
TALX		23.6			22.7			66.1			67.2
North America Personal Solutions		15.0			12.7			40.2			33.0
North America Commercial Solutions		5.0			3.3			14.5			11.4
General Corporate Expense		(30.7	)		(31.5	)		(80.7	)		(81.4	)
Total operating income	$	121.6		$	110.2		$	345.3		$	320.3

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

All references to earnings per share data in Management’s Discussion and Analysis, or MD&A, are to diluted earnings per share, or EPS, unless otherwise noted. Diluted EPS is calculated to reflect the potential dilution that would occur if stock options or other contracts to issue common stock were exercised and resulted in additional common shares outstanding.

BUSINESS OVERVIEW

We are a leading global provider of information solutions, employment and income verifications and human resources business process outsourcing services. We leverage some of the largest sources of consumer and commercial data, along with advanced analytics and proprietary technology, to create customized insights which enable our business customers to grow faster, more efficiently and more profitably, and to inform and empower consumers.

Businesses rely on us for consumer and business credit intelligence, credit portfolio management, fraud detection, decisioning technology, marketing tools, and human resources and payroll-related services. We also offer a portfolio of products that enable individual consumers to manage their financial affairs and protect their identity. Our revenue stream is diversified among individual consumers and among businesses across a wide range of industries and international geographies.

Segment and Geographic Information

Segments. The U.S. Consumer Information Solutions, or USCIS, segment, the largest of our five segments, consists of three product and service lines: Online Consumer Information Solutions, or OCIS; Mortgage Solutions; and Consumer Financial Marketing Services. OCIS and Mortgage Solutions revenue is principally transaction-based and is derived from our sales of products such as consumer credit reporting and scoring, mortgage settlement services, identity management, fraud detection and modeling services. USCIS also markets certain of our decisioning products which facilitate and automate a variety of consumer credit-oriented decisions. Consumer Financial Marketing Services revenue is principally project- and subscription-based and is derived from our sales of batch credit and consumer wealth information such as those that assist clients in acquiring new customers, cross-selling to existing customers and managing portfolio risk.

The International segment consists of Canada Consumer, Europe and Latin America. Canada Consumer’s products and services are similar to our USCIS offerings, while Europe and Latin America are made up of varying mixes of product lines that are in our USCIS, North America Commercial Solutions and North America Personal Solutions reportable segments.

The TALX segment consists of The Work Number® and Tax and Talent Management business lines. The Work Number revenue is transaction-based and is derived primarily from employment, income and social security number verifications, as well as complementary payroll-based transaction services. Tax and Talent Management revenues are derived from our provision of certain human resources business process outsourcing services that include both transaction- and subscription-based product offerings. These services assist our customers with the administration of unemployment claims and employer-based tax credits and the assessment of new hires.

North America Personal Solutions revenue is both transaction- and subscription-based and is derived from the sale of credit monitoring, debt management and identity theft protection products, which we deliver to consumers electronically via the internet.

North America Commercial Solutions revenue is principally transaction-based, with the remainder project-based, and is derived from the sale of business information, credit scores and portfolio analytics that enable customers to utilize our reports to make financing, marketing and purchasing decisions related to businesses.

Geographic Information. We currently operate in the following countries: Argentina, Canada, Chile, Costa Rica, Ecuador, El Salvador, Honduras, Paraguay, Peru, Portugal, the Republic of Ireland, Spain, the U.K., Uruguay, and the U.S. Our operations in the Republic of Ireland focus on data handling and customer support activities. We have an investment in a consumer and commercial credit information company in Brazil and offer consumer credit services in India and Russia through joint ventures.

Key Performance Indicators. Management focuses on a variety of key indicators to monitor operating and financial performance. These performance indicators include operating revenue, change in operating revenue, operating income, operating margin, net income attributable to Equifax, diluted earnings per share, cash provided by operating activities and capital expenditures. The key performance indicators for the three and nine months ended September 30, 2011 and 2010 were as follows:

	Key Performance Indicators
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
	(Dollars in millions, except per share data)
Operating revenue	$	490.4		$	473.8		$	1,450.1		$	1,377.5
Operating revenue change		4	%		11	%		5	%		8	%
Operating income	$	121.6		$	110.2		$	345.3		$	320.3
Operating margin		24.8	%		23.3	%		23.8	%		23.3	%
Net income from continuing operations attributable to Equifax	$	66.7		$	61.3		$	158.5		$	173.0
Net income attributable to Equifax	$	66.7		$	76.5		$	158.5		$	204.5
Diluted earnings per share from continuing operations attributable to Equifax	$	0.54		$	0.49		$	1.28		$	1.36
Diluted earnings per share attributable to Equifax	$	0.54		$	0.61		$	1.28		$	1.61
Cash provided by operating activities	$	112.0		$	68.5		$	259.0		$	207.4
Capital expenditures	$	15.3		$	15.5		$	59.2		$	82.4

Business Environment and Company Strategy

Consumer and small business lending activity, which is one of the drivers of demand for our services, has stabilized in most markets around the world, but in most cases is not yet showing strong growth. We expect growth in consumer lending to continue to lag the general economic recovery, particularly in the more mature markets. In addition, new financial regulations are increasing the compliance requirements for many of our customers and introduce new challenges as well as opportunities in the marketing of our product and service offerings to our customers. In an effort to respond to these market conditions, we have focused on the following activities:

Further diversification of our revenues by pursuing and investing in key strategic initiatives including new product innovation, differentiated decisioning solutions and analytics, leveraging our diverse data assets and enhanced technology platforms.

Reorganizing our sales force with key customer teams dedicated to our largest accounts.

Acquiring new data assets and technologies in addition to international expansion.

Continuing our focus on managing our expenses through the use of LEAN, Work Out and other process improvement initiatives.

For the remainder of 2011, the operating environment will continue to present challenges for the marketing and growth of our traditional products and services, but will also create new opportunities for our more recently developed products. These newer product offerings leverage our diverse data assets, analytical capabilities and technology platforms to improve customers' decisioning capabilities and risk management activities. For the remainder of 2011, we do not expect conditions in the credit economy to contribute measurably to organic growth. However, we do expect to derive organic growth through our new product offerings and initiatives to penetrate new customer segments.

RESULTS OF OPERATIONS—THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

Consolidated Financial Results

Operating Revenue

	Three Months Ended September 30,										Nine Months Ended September 30,
					Change										Change
Consolidated Operating Revenue	2011		2010		$			%			2011		2010		$		%
	(Dollars in millions)										(Dollars in millions)

U.S. Consumer Information Solutions	$	202.0	$	194.0	$	8.0			4	%	$	577.0	$	551.7	$	25.3		5	%
International		118.6		122.5		(3.9	)		-3	%		376.6		356.9		19.7		6	%
TALX		102.8		99.1		3.7			4	%		298.5		293.4		5.1		2	%
North America Personal Solutions		45.5		39.9		5.6			14	%		135.1		119.9		15.2		13	%
North America Commercial Solutions		21.5		18.3		3.2			18	%		62.9		55.6		7.3		13	%
Consolidated operating revenue	$	490.4	$	473.8	$	16.6			4	%	$	1,450.1	$	1,377.5	$	72.6		5	%

Revenue from continuing operations increased by 4% in the third quarter and 5% in the first nine months of 2011 compared to the same periods in 2010. The deconsolidation of our Brazilian business, which resulted from the merger of our business into a larger entity during the second quarter of 2011, negatively impacted revenue by $20.9 million and $28.9 million for the third quarter and first nine months of 2011, respectively, compared to the prior year, while all other revenue increased by 8% in both the third quarter and first nine months of 2011 compared to the same periods in 2010, primarily driven by strong execution of key strategic initiatives. The favorable effect of foreign exchange rates, in locations other than Brazil, increased revenue by $4.9 million, or 1%, in the third quarter and $15.5 million, or 1%, year to date compared to the year ago periods.

Operating Expenses

	Three Months Ended September 30,										Nine Months Ended September 30,
					Change										Change
Consolidated Operating Expenses	2011		2010		$			%			2011		2010		$		%
	(Dollars in millions)										(Dollars in millions)

Consolidated cost of services	$	189.1	$	188.2	$	0.9			0	%	$	574.3	$	566.6	$	7.7		1	%
Consolidated selling, general and administrative expenses		139.2		134.0		5.2			4	%		406.2		370.4		35.8		10	%
Consolidated depreciation and amortization expense		40.5		41.4		(0.9	)		-2	%		124.3		120.2		4.1		3	%
Consolidated operating expenses	$	368.8	$	363.6	$	5.2			1	%	$	1,104.8	$	1,057.2	$	47.6		5	%

The slight increase in cost of services from continuing operations, when compared to the third quarter and first nine months of 2010, was due primarily to the impact of increased salary, benefits and incentives expense and contract services expenses of $10.7 million for the third quarter and $24.3 million for the first nine months, and by the impact of changes in foreign currency exchange rates of $1.7 million for the third quarter and $7.7 million for the first nine months of 2011, largely offset by decreases related to the deconsolidation of our Brazilian business.

Selling, general and administrative expense from continuing operations increased $5.2 million in the third quarter compared to the year ago quarter. The increase was primarily due to increased salary and incentive expense of $7.5 million and higher advertising expenses offset by decreases related to the deconsolidation of our Brazilian business. The increase for the first nine months of 2011 as compared to the prior year period was primarily due to increased salary and incentive expense of $21.6 million, higher advertising expenses of $6.1 million and higher professional fees offset by decreases in expenses related to the deconsolidation of our Brazilian business. The impact of changes in foreign currency exchange rates increased our selling, general and administrative expense by $1.7 million for the third quarter and $6.0 million for the first nine months of 2011.

Depreciation and amortization expense from continuing operations decreased slightly in 2011 over the same three month period in 2010, primarily due to the decline in amortization of certain purchased intangibles acquired as part of TALX in 2007 which fully amortized at the end of the second quarter of 2011 and the amortization and depreciation decrease resulting from the deconsolidation of our Brazilian business. This decrease was partially offset by our third quarter 2011 acquisition of DataVision Resources and fourth quarter 2010 acquisition of Anakam which together contributed $1.8 million of incremental depreciation and amortization expense. Depreciation and amortization expense from continuing operations increased in the first nine months of 2011 as compared to 2010 due to $3.5 million of incremental depreciation and amortization expense related to Anakam as well as the effect of recent investments in new products and technology infrastructure.

Operating Income and Operating Margin

	Three Months Ended September 30,												Nine Months Ended September 30,
							Change												Change
Consolidated Operating Income	2011			2010			$			%			2011			2010			$			%
	(Dollars in millions)												(Dollars in millions)

Consolidated operating revenue	$	490.4		$	473.8		$	16.6			4	%	$	1,450.1		$	1,377.5		$	72.6			5	%
Consolidated operating expenses		(368.8	)		(363.6	)		(5.2	)		1	%		(1,104.8	)		(1,057.2	)		(47.6	)		5	%
Consolidated operating income	$	121.6		$	110.2		$	11.4			10	%	$	345.3		$	320.3		$	25.0			8	%
Consolidated operating margin		24.8	%		23.3	%				1.5		% pts		23.8	%		23.3	%				0.5		% pts

Operating income from continuing operations for the third quarter and first nine months of 2011 increased faster than revenue due to the deconsolidation of Brazil, which reduced reported revenue, but which had little impact on operating profit because it had been operating near break-even. As a result, operating margins increased by 150 basis points to 24.8% in the third quarter compared to a year ago and widened by 50 basis points to 23.8% in the nine months year to date compared to a year ago.

Other Expense, Net

	Three Months Ended September 30,												Nine Months Ended September 30,
							Change											Change
Consolidated Other Expense, Net	2011			2010			$			%			2011		2010			$			%
	(Dollars in millions)												(Dollars in millions)

Consolidated interest expense	$	13.7		$	14.0		$	(0.3	)		-2	%	$	41.2	$	42.3		$	(1.1	)		-3	%
Consolidated other expense (income), net		(0.6	)		(0.7	)		0.1		nm				8.7		(1.0	)		9.7		nm
Consolidated other expense, net	$	13.1		$	13.3