Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



Index to Financial Statements
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting	60
Report of Independent Registered Public Accounting Firm	61
Consolidated Statements of Income for each of the three years in the period ended December 31, 2018	62
Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2018	63
Consolidated Balance Sheets at December 31, 2018 and 2017	64
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2018	65
Consolidated Statements of Shareholders’ Equity and Other Comprehensive Income for each of the three years in the period ended December 31, 2018	66
Notes to Consolidated Financial Statements	68

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Equifax Inc.

Opinion on Internal Control over Financial Reporting

We have audited Equifax Inc.’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“2013 framework”) (the COSO criteria). In our opinion, Equifax Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2018 and 2017, the related consolidated statements of income, comprehensive income (loss), cash flows, and shareholders’ equity and other comprehensive income(loss) for each of the three years in the period ended December 31, 2018, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”) and our report dated February 21, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Atlanta, Georgia

February 21, 2019

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Equifax Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Equifax Inc. (the Company) as of December 31, 2018 and 2017, the related consolidated statements of income, comprehensive income(loss), cash flows, and shareholders’ equity and other comprehensive income(loss) for each of the three years in the period ended December 31, 2018, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 21, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risk of material misstatements of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2002.

Atlanta, Georgia

February 21, 2019

CONSOLIDATED STATEMENTS OF INCOME



	Twelve Months Ended December 31,
	2018			2017			2016
(In millions, except per share amounts)
Operating revenue	$	3,412.1		$	3,362.2		$	3,144.9
Operating expenses:
Cost of services (exclusive of depreciation and amortization below)	1,440.4			1,210.7			1,113.4
Selling, general and administrative expenses	1,213.3			1,032.0			941.0
Depreciation and amortization	310.4			287.8			265.4
Total operating expenses	2,964.1			2,530.5			2,319.8
Operating income	448.0			831.7			825.1
Interest expense	(103.5		)	(92.8		)	(92.1		)
Other income (expense), net	11.8			7.7			(4.8		)
Consolidated income before income taxes	356.3			746.6			728.2
Provision for income taxes	(50.0		)	(148.6		)	(233.1		)
Consolidated net income	306.3			598.0			495.1
Less: Net income attributable to noncontrolling interests including redeemable noncontrolling interests	(6.5		)	(10.7		)	(6.3		)
Net income attributable to Equifax	$	299.8		$	587.3		$	488.8
Basic earnings per common share:
Net income attributable to Equifax	$	2.49		$	4.89		$	4.10
Weighted-average shares used in computing basic earnings per share	120.4			120.1			119.3
Diluted earnings per common share:
Net income attributable to Equifax	$	2.47		$	4.83		$	4.04
Weighted-average shares used in computing diluted earnings per share	121.4			121.5			121.1
Dividends per common share	$	1.56		$	1.56		$	1.32

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)



	Twelve Months Ended December 31,
	2018								2017								2016
	Equifax Shareholders			Noncontrolling Interests		Total			Equifax Shareholders			Noncontrolling Interests		Total			Equifax Shareholders			Noncontrolling Interests			Total
	(In millions)
Net income	$	299.8		$	6.5	$	306.3		$	587.3		$	10.7	$	598.0		$	488.8		$	6.3		$	495.1
Other comprehensive income (loss):
Foreign currency translation adjustment	(224.7		)	5.8		(218.9		)	158.7			3.3		162.0			(24.6		)	(3.0		)	(27.6		)
Change in unrecognized prior service cost and actuarial gains (losses) related to our pension and other postretirement benefit plans, net	10.4			—		10.4			8.4			—		8.4			(20.1		)	—			(20.1		)
Change in cumulative gain (loss) from cash flow hedging transactions, net	—			—		—			(0.2		)	—		(0.2		)	0.6			—			0.6
Comprehensive income (loss)	$	85.5		$	12.3	$	97.8		$	754.2		$	14.0	$	768.2		$	444.7		$	3.3		$	448.0

See Notes to Consolidated Financial Statements.

CONSOLIDATED BALANCE SHEETS



	December 31,
	2018			2017
(In millions, except par values)
ASSETS
Current assets:
Cash and cash equivalents	$	223.6		$	336.4
Trade accounts receivable, net of allowance for doubtful accounts of $10.9 and $9.1 at December 31, 2018 and 2017, respectively	469.1			444.8
Prepaid expenses	100.0			94.3
Other current assets	109.6			122.9
Total current assets	902.3			998.4
Property and equipment:
Capitalized internal-use software and system costs	684.1			427.9
Data processing equipment and furniture	344.6			306.6
Land, buildings and improvements	216.1			212.5
Total property and equipment	1,244.8			947.0
Less accumulated depreciation and amortization	(480.0		)	(380.0		)
Total property and equipment, net	764.8			567.0

Goodwill	4,129.7			4,184.0
Indefinite-lived intangible assets	94.8			95.0
Purchased intangible assets, net	1,099.2			1,247.0
Other assets, net	162.4			142.0
Total assets	$	7,153.2		$	7,233.4
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt and current maturities of long-term debt	$	4.9		$	965.3
Accounts payable	175.7			110.3
Accrued expenses	213.2			160.9
Accrued salaries and bonuses	131.0			119.4
Deferred revenue	98.0			108.4
Other current liabilities	204.0			209.2
Total current liabilities	826.8			1,673.5
Long-term debt	2,630.6			1,739.0
Deferred income tax liabilities, net	316.2			305.1
Long-term pension and other postretirement benefit liabilities	139.3			175.8
Other long-term liabilities	84.6			101.0
Total liabilities	3,997.5			3,994.4
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 December 31, 2018 and 2017; Outstanding shares - 120.6 and 120.1 at December 31, 2018 and 2017, respectively	236.6			236.6
Paid-in capital	1,356.6			1,332.7
Retained earnings	4,717.8			4,600.6
Accumulated other comprehensive loss	(626.3		)	(412.0		)
Treasury stock, at cost, 68.1 shares and 68.6 shares at December 31, 2018 and 2017, respectively	(2,571.0		)	(2,577.6		)
Stock held by employee benefits trusts, at cost, 0.6 shares at December 31, 2018 and 2017	(5.9		)	(5.9		)
Total Equifax shareholders’ equity	3,107.8			3,174.4
Noncontrolling interests including redeemable noncontrolling interests	47.9			64.6
Total shareholders’ equity	3,155.7			3,239.0
Total liabilities and equity	$	7,153.2		$	7,233.4

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS



	Twelve Months Ended December 31,
	2018			2017			2016
(In millions)
Operating activities:
Consolidated net income	$	306.3		$	598.0		$	495.1
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization	315.9			290.9			268.7
Stock-based compensation expense	42.5			38.3			37.1
Excess tax benefits from stock-based compensation plans	—			—			(35.9		)
Deferred income taxes	(2.3		)	(44.1		)	(13.0		)
Changes in assets and liabilities, excluding effects of acquisitions:
Accounts receivable, net	(37.4		)	(1.3		)	(55.7		)
Other assets, current and long-term	(15.4		)	(120.1		)	0.3
Current and long-term liabilities, excluding debt	62.6			54.3			126.4
Cash provided by operating activities	672.2			816.0			823.0
Investing activities:
Capital expenditures	(321.9		)	(218.2		)	(173.5		)
Acquisitions, net of cash acquired	(138.3		)	(139.9		)	(1,791.6		)
Cash received from sale of asset	5.6			8.6			—
Economic hedges	—			—			(10.8		)
Investment in unconsolidated affiliates, net	(6.9		)	—			—
Cash used in investing activities	(461.5		)	(349.5		)	(1,975.9		)
Financing activities:
Net short-term borrowings (repayments)	(959.2		)	252.4			73.0
Payments on long-term debt	(100.0		)	(322.5		)	(350.0		)
Proceeds from issuance of long-term debt	994.5			100.0			1,574.7
Treasury stock purchases	—			(77.1		)	—
Dividends paid to Equifax shareholders	(187.9		)	(187.4		)	(157.6		)
Dividends paid to noncontrolling interests	(10.3		)	(8.4		)	(5.8		)
Proceeds from exercise of stock options	11.8			19.2			31.5
Payment of taxes related to settlement of equity awards	(19.7		)	(33.5		)	(27.2		)
Excess tax benefits from stock-based compensation plans	—			—			35.9
Payment of contingent consideration	(1.5		)	(3.5		)	(4.4		)
Purchase of redeemable noncontrolling interests	(30.9		)	(2.6		)	(3.6		)
Debt issuance costs	(7.8		)	(0.3		)	(6.2		)
Cash (used in) provided by financing activities	(311.0		)	(263.7		)	1,160.3
Effect of foreign currency exchange rates on cash and cash equivalents	(12.5		)	4.3			28.6
Increase (decrease) in cash and cash equivalents	(112.8		)	207.1			36.0
Cash and cash equivalents, beginning of period	336.4			129.3			93.3
Cash and cash equivalents, end of period	$	223.6		$	336.4		$	129.3

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND OTHER COMPREHENSIVE INCOME(LOSS)



	Equifax Shareholders
	Common Stock				Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Stock Held By Employee Benefits Trusts			Noncontrolling Interests			Total Shareholders’ Equity
	Shares Outstanding		Amount
	(In millions, except per share values)
Balance, December 31, 2015	118.7		$	236.6	$	1,260.5		$	3,834.4		$	(484.8	)	$	(2,529.9	)	$	(5.9	)	$	39.5		$	2,350.4

Net income	—		—		—			488.8			—			—			—			6.3			495.1
Other comprehensive loss	—		—		—			—			(44.1		)	—			—			(3.0		)	(47.1		)
Shares issued under stock and benefit plans, net of minimum tax withholdings	1.2		—		(19.4		)	—			—			24.3			—			—			4.9
Cash dividends ($1.32 per share)	—		—		—			(158.4		)	—			—			—			—			(158.4		)
Dividends paid to employee benefits trusts	—		—		0.8			—			—			—			—			—			0.8
Stock-based compensation expense	—		—		37.1			—			—			—			—			—			37.1
Tax effects of stock-based compensation plans	—		—		35.9			—			—			—			—			—			35.9
Redeemable noncontrolling interest adjustment	—		—		—			(11.6		)	—			—			—			11.6			—
Dividends paid to noncontrolling interests	—		—		—			—			—			—			—			(5.8		)	(5.8		)
Purchase of noncontrolling interests	—		—		(1.6		)	—			—			—			—			3.3			1.7
Other	—		—		—			—			—			—			—			6.7			6.7
Balance, December 31, 2016	119.9		236.6		1,313.3			4,153.2			(528.9		)	(2,505.6		)	(5.9		)	58.6			2,721.3

Net income	—		—		—			587.3			—			—			—			10.7			598.0
Other comprehensive income	—		—		—			—			166.9			—			—			3.3			170.2
Shares issued under stock and benefit plans, net of minimum tax withholdings	0.7		—		(18.8		)	—			—			5.1			—			—			(13.7		)
Impact of Tax Cuts and Jobs Act of 2017	—		—		—			50.0			(50.0		)	—			—			—			—
Treasury stock purchased under share repurchase program ($143.88 per share)*	(0.5	)	—		—			—			—			(77.1		)	—			—			(77.1		)
Cash dividends ($1.56 per share)	—		—		—			(188.3		)	—			—			—			—			(188.3		)
Dividends paid to employee benefits trusts	—		—		0.9			—			—			—			—			—			0.9
Stock-based compensation expense	—		—		38.3			—			—			—			—			—			38.3
Redeemable noncontrolling interest adjustment	—		—		—			(1.5		)	—			—			—			1.5			—
Dividends paid to noncontrolling interests	—		—		—			—			—			—			—			(8.4		)	(8.4		)
Purchase of noncontrolling interests	—		—		(1.0		)	—			—			—			—			(1.6		)	(2.6		)
Other	—		—		—			(0.1		)	—			—			—			0.5			0.4
Balance, December 31, 2017	120.1		236.6		1,332.7			4,600.6			(412.0		)	(2,577.6		)	(5.9		)	64.6			3,239.0

Net income	—		—		—			299.8			—			—			—			6.5			306.3
Other comprehensive income (loss)	—		—		—			—			(207.3		)	—			—			5.8			(201.5		)
Shares issued under stock and benefit plans, net of minimum tax withholdings	0.5		—		(14.0		)	—			—			6.6			—			—			(7.4		)
Cash dividends ($1.56 per share)	—		—		—			(188.8		)	—			—			—			—			(188.8		)
Dividends paid to employee benefits trusts	—		—		0.9			—			—			—			—			—			0.9
Stock-based compensation expense	—		—		42.5			—			—			—			—			—			42.5
Cumulative adjustment from change in accounting principle (Note 2)	—		—		—			4.2			—			—			—			—			4.2
Redeemable noncontrolling interest adjustment	—		—		—			2.0			—			—			—			(2.0		)	—
Dividends paid to noncontrolling interests	—		—		—			—			—			—			—			(10.3		)	(10.3		)
Purchases of redeemable noncontrolling interests	—		—		(5.5		)	—			(7.0		)	—			—			(16.7		)	(29.2		)
Balance, December 31, 2018	120.6		$	236.6	$	1,356.6		$	4,717.8		$	(626.3	)	$	(2,571.0	)	$	(5.9	)	$	47.9		$	3,155.7


*	At December 31, 2018, $590.1 million was authorized for future repurchases of our common stock.

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND OTHER COMPREHENSIVE INCOME(LOSS)

Accumulated Other Comprehensive Loss consists of the following components:



	December 31,
	2018			2017			2016
	(In millions)
Foreign currency translation	$	(328.0	)	$	(103.3	)	$	(262.0	)
Unrecognized actuarial losses and prior service cost related to our pension and other postretirement benefit plans, net of accumulated tax of $93.1, $95.6 and $150.6 in 2018, 2017 and 2016, respectively	(297.1		)	(257.5		)	(265.9		)
Cash flow hedging transactions, net of tax of $0.7, $0.7 and $0.9 in 2018, 2017 and 2016, respectively	(1.2		)	(1.2		)	(1.0		)
Impact of Tax Cuts and Jobs Act of 2017	—			(50.0		)	—
Accumulated other comprehensive loss	$	(626.3	)	$	(412.0	)	$	(528.9	)

See Notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Nature of Operations. We collect, 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 payroll-related, tax and human resources business processes, and develop marketing strategies concerning consumers and commercial enterprises. We serve customers across a wide range of industries, including the financial services, mortgage, retail, telecommunications, utilities, automotive, brokerage, healthcare and insurance industries, as well as government agencies. We also enable consumers to manage and protect their financial health through a portfolio of products offered directly to consumers. As of December 31, 2018, we operated in the following countries: Argentina, Australia, Canada, Chile, Costa Rica, Ecuador, El Salvador, Honduras, India, Ireland, Mexico, New Zealand, Paraguay, Peru, Portugal, Spain, the United Kingdom, or U.K., Uruguay, and the United States of America, or U.S. We also offer Equifax branded credit services in India and Russia through joint ventures, we have investments in consumer and/or commercial credit information companies through joint ventures in Cambodia, Malaysia, Singapore and Dubai, and have an investment in a consumer and commercial credit information company in Brazil.

We develop, maintain and enhance secured proprietary information databases through the compilation of consumer specific data, including credit, income, employment, asset, liquidity, net worth and spending activity, and business data, including credit and business demographics, that we obtain from a variety of sources, such as credit granting institutions, and income and tax information primarily from large to mid-sized companies in the U.S. We process this information utilizing our proprietary information management systems. We also provide information, technology and services to support debt collections and recovery management.

Basis of Consolidation. Our Consolidated Financial Statements and the accompanying notes, which are prepared in accordance with U.S. generally accepted accounting principles, or GAAP, include Equifax and all its subsidiaries. We consolidate all majority-owned and controlled subsidiaries as well as variable interest entities in which we are the primary beneficiary. Other parties’ interests in consolidated entities are reported as noncontrolling interests. We use the equity method of accounting for investments in which we are able to exercise significant influence. Non-consolidated equity investments are recorded at fair value when readily determinable or at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions when the fair value of the investment is not readily determinable. All intercompany transactions and balances are eliminated.

Our Consolidated Financial Statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the periods presented therein.

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


•	U.S. Information Solutions, or USIS


•	International


•	Workforce Solutions


•	Global Consumer Solutions

USIS is our largest reportable segment, with 37% of total operating revenue for 2018. Our most significant foreign operations are located in Australia, the U.K. and Canada.

Use of Estimates. The preparation of our Consolidated Financial Statements requires us to make estimates and assumptions in accordance with GAAP. Accordingly, we make these estimates and assumptions after exercising judgment. We believe that the estimates and assumptions inherent in our Consolidated Financial Statements are reasonable, based upon information available to us at the time they are made including the consideration of events that have occurred up until the point these Consolidated Financial Statements have been filed. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities at the date of the financial

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

statements, as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from these estimates.

Revenue Recognition and Deferred Revenue. In accordance with ASC 606, “Revenue from Contracts with Customers,” we recognize revenue when a performance obligation has been satisfied by transferring a promised good or service to a customer and the customer obtains control of the good or service. In order to recognize revenue, we note that the two parties must have an agreement that creates enforceable rights, the performance obligations must be distinct and the transaction price can be determined. Our revenue is derived from the provision of information services to our customers on a transactional basis, in which distinct services are delivered over time as the customer simultaneously receives and consumes the benefits of the services delivered. To measure our performance over time, the output method is utilized to measure the value to the customer based on the transfer to date of the services promised, with no rights of return once consumed. In these cases, revenue on transactional contracts with a defined price but an undefined quantity is recognized utilizing the right to invoice expedient resulting in revenue being recognized when the service is provided and billed. Additionally, multi-year contracts with an defined price but an undefined quantity that utilize tier pricing would be defined as a series of distinct performance obligations satisfied over time utilizing the same method of measurement, the output method, with no rights of return once consumed. This measurement method is applied on a monthly basis resulting in revenue being recognized when the service is provided and billed.

Additionally, we recognize revenue from subscription-based contracts under which a customer pays a preset fee for a predetermined or unlimited number of transactions or services provided during the subscription period, generally one year. Revenue from subscription-based contracts having a preset number of transactions is recognized as the services are provided, using an effective transaction rate as the actual transactions are delivered. Any remaining revenue related to unfulfilled units is not recognized until the end of the related contract’s subscription period. Revenue from subscription-based contracts having an unlimited volume is recognized ratably during the contract term. Multi-year subscription contracts are analyzed to determine the full contract transaction price over the term of the contract and the subsequent price is ratably recognized over the full term of the contract.

Revenue is recorded net of sales taxes.

If at the outset of an arrangement, we determine that collectibility is not reasonably assured, revenue is deferred until the earlier of when collectibility becomes probable or the receipt of payment from the customer. If there is uncertainty as to the customer’s acceptance of the performance obligation, revenue is not recognized until the earlier of receipt of customer acceptance or expiration of the acceptance period.

We sell certain offerings that contain multiple performance obligations. These obligations may include consumer or commercial information, file updates for certain solutions, services provided by our decisioning technologies personnel, training services, statistical models and other services. In order to account for each of these obligations separately, the delivered promises within our contracts must meet the criterion to be considered distinct performance obligations to our customer. If we determine that the arrangement does not contain separate distinct obligations, the performance obligations are bundled together until a distinct obligation is achieved. This may lead to the arrangement consideration being recognized as the final contract obligation is delivered to our customer or ratably over the term of the contract.

Some of our arrangements with multiple performance obligations involve the delivery of services generated by a combination of services provided by one or more of our operating segments. No individual information service impacts the value or usage of other information services included in an arrangement and each service can be sold alone or, in most cases, purchased from another vendor without affecting the quality of use or value to the customer of the other information services included in the arrangement. Some of our products require the installation of interfaces or platforms by our technology personnel that allow our customers to interact with our proprietary information databases. These installation services do not meet the requirement for being distinct, thus any related installation fees are deferred when billed and are recognized over the expected period that the customer will benefit from the related services. Revenue from the delivery of one-time files and models is recognized as the service is provided and accepted, assuming all other revenue recognition criteria are met. The direct costs of installation of a customer are capitalized and amortized over the useful life of the identifiable asset.

We record revenue on a net basis for those sales in which we have in substance acted as an agent or broker in the transaction and therefore do not have control.

In certain instances within our debt collections and recovery management services in our International operating segment and within our Workforce Solutions operating segment, variable consideration is constrained due to the fact that the revenue is contingent on a particular outcome. Within our debt collections and recovery management businesses, revenue is calculated as a percentage of debt collected on behalf of the customer and, as such, is primarily recognized when the debt is

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

collected assuming all other revenue recognition criteria are met. Within our Workforce Solutions operating segment, the fees for certain of our tax credits and incentives revenue are based on a percentage of the credit delivered to our clients. Revenue for these arrangements is recognized based on the achievement of milestones, upon calculation of the credit, approval from a regulatory agency or when the credit is utilized by our client, depending on the provisions of the client contract.

Judgments and Uncertainties – Each performance obligation within a contract must be considered separately to ensure that appropriate accounting is performed for these distinct goods or services. These considerations include assessing the price at which the element is sold compared to its standalone selling price; concluding when the element will be delivered; evaluating collectability; and determining whether any contingencies exist in the related customer contract that impact the prices paid to us for the services.

Contract Balances – The contract balances are generated when revenue recognized varies from billing in a given period. A contract asset is created when an entity transfers a good or service to a customer and recognizes more revenue than what has been billed. As of December 31, 2018, the contract asset balance was $7.3 million. A contract liability is created when an entity transfers a good or service to a customer and recognizes less than what has been billed. Deferred revenue is recognized when we have an obligation to transfer goods or services to a customer and have already received consideration from the customer. We generally expect to recognize our deferred revenue as revenue within twelve months of being recorded based on the terms of the contracts.

Remaining Performance Obligation – We have elected to disclose only the remaining performance obligations for those contracts with an expected duration of greater than 1 year and do not disclose the value of remaining performance obligations for contracts in which we recognize revenue at the amount to which we have the right to invoice. We expect to recognize as revenue the following amounts related to our remaining performance obligations as of December 31, 2018, inclusive of the foreign exchange impact:



Performance Obligation	Balance
	(In millions)
Less than 1 year	$	44.4
1 to 3 years	63.4
3 to 5 years	24.0
Thereafter	58.1
Total remaining performance obligation	$	189.9

Cost of Services. Cost of services consist primarily of (1) data acquisition and royalty fees; (2) customer service costs, which include: personnel costs to collect, maintain and update our proprietary databases, to develop and maintain software application platforms and to provide consumer and customer call center support; (3) hardware and software expense associated with transaction processing systems; (4) telecommunication and computer network expense; and (5) occupancy costs associated with facilities where these functions are performed by Equifax employees.

Selling, General and Administrative Expenses. Selling, general and administrative expenses consist primarily of personnel-related costs, restructuring costs, corporate costs, fees for professional and consulting services, advertising costs, and other costs of administration.

Advertising. Advertising costs, which are expensed as incurred, totaled $43.1 million, $54.6 million and $63.6 million during 2018, 2017 and 2016, respectively.

Stock-Based Compensation. We recognize the cost of stock-based payment transactions in the financial statements over the period services are rendered according to the fair value of the stock-based awards issued. All of our stock-based awards, which are stock options and nonvested stock, are classified as equity instruments.

Income Taxes. We account for income taxes under the liability method. We record 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. We assess whether it is more likely than not that we will generate sufficient taxable income to realize our deferred tax assets. We record a valuation allowance, as necessary, to reduce our deferred tax assets to the amount of future tax benefit that we estimate is more likely than not to be realized.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We record tax benefits for positions that we believe are more likely than not of being sustained under audit examinations. We assess the potential outcome of such examinations to determine the adequacy of our income tax accruals. We recognize interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes on our Consolidated Statements of Income. We adjust our income tax provision during the period in which we determine that the actual results of the examinations may differ from our estimates or when statutory terms expire. Changes in tax laws and rates are reflected in our income tax provision in the period in which they are enacted.

Earnings Per Share. Our basic earnings per share, or EPS, is calculated as net income divided by the weighted-average number of common shares outstanding during the reporting 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:



	Twelve Months Ended December 31,
	2018	2017	2016
	(In millions)
Weighted-average shares outstanding (basic)	120.4	120.1	119.3
Effect of dilutive securities:
Stock options and restricted stock units	1.0	1.4	1.8
Weighted-average shares outstanding (diluted)	121.4	121.5	121.1

For the twelve months ended December 31, 2018, 2017 and 2016, 0.7 million, 0.3 million and 0.1 million stock options, respectively, were anti-dilutive and therefore excluded from this calculation.

Cash Equivalents. We consider all highly-liquid investments with an original maturity of three months or less to be cash equivalents.

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

The allowance for doubtful accounts for estimated losses on trade accounts receivable is based on historical write-off experience, an analysis of the aging of outstanding receivables, customer payment patterns and the establishment of specific reserves for customers in an adverse financial condition. We reassess the adequacy of the allowance for doubtful accounts each reporting period. Increases to the allowance for doubtful accounts are recorded as bad debt expense, which are included in selling, general and administrative expenses on the accompanying Consolidated Statements of Income. Bad debt expense was $5.6 million, $5.0 million and $2.2 million during the twelve months ended December 31, 2018, 2017, and 2016, respectively.

Other Current Assets. Other current assets on our Consolidated Balance Sheets include certain current tax receivable accounts. As of December 31, 2018 and 2017 these assets were approximately, $69.4 million and $54.2 million, respectively. Other current assets also includes an insurance receivable for costs incurred to date related to the 2017 cybersecurity incident that are reimbursable and probable of recovery under our insurance coverage. As of December 31, 2018 the Company had no receivable outstanding. As of December 31, 2017, the Company has recorded a receivable of $35.0 million. For additional information, see Note 6. Other current assets also include amounts in specifically designated accounts that hold the funds that are due to customers from our debt collection and recovery management services. As of December 31, 2018 and 2017 these assets were approximately $31.0 million and $21.4 million, respectively, with fully offsetting balances in other current liabilities. These amounts are restricted as to their current use and will be released according to the specific customer agreements.

Long-Lived Assets. Property and equipment are stated at cost less accumulated depreciation and amortization. The cost of additions is capitalized. Property and equipment are depreciated on a straight-line basis over the assets’ estimated useful lives, which are generally three to ten years for data processing equipment and capitalized internal-use software and systems costs. Leasehold improvements are depreciated over the shorter of their estimated useful lives or lease terms that are reasonably assured. Buildings are depreciated over a forty-year period. Other fixed assets are depreciated over three to seven years. Upon sale or retirement of an asset, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is recognized and included in income from operations on the Consolidated Statements of Income, with the classification of any gain or loss dependent on the characteristics of the asset sold or retired.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Certain internal-use software and system development costs are capitalized. Accordingly, the specifically identified costs incurred to develop or obtain software, which is intended for internal use, are not capitalized until the preliminary project stage is completed and management, with the relevant authority, authorizes and commits to funding a software project and it is probable that the project will be completed and the software will be used to perform the function intended. Costs incurred during a software development project’s preliminary stage and post-implementation stage are expensed as incurred. Application development activities that are eligible for capitalization include software design and configuration, development of interfaces, coding, testing, and installation. Capitalized internal-use software and systems costs are subsequently amortized on a straight-line basis over a three- to ten-year period after project completion and when the related software or system is ready for its intended use.

Depreciation and amortization expense related to property and equipment was $157.6 million, $115.6 million and $88.9 million during the twelve months ended December 31, 2018, 2017, and 2016, respectively.

Industrial Revenue Bonds. Pursuant to the terms of certain industrial revenue bonds, we have transferred title to certain of our fixed assets with total costs of $156.4 million as of December 31, 2018 and 2017 to a local governmental authority in the U.S. to receive a property tax abatement related to economic development. The title to these assets will revert back to us upon retirement or cancellation of the applicable bonds. These fixed assets are still recognized in the Company’s Consolidated Balance Sheets as all risks and rewards remain with the Company.

Impairment of Long-Lived Assets. We monitor the status of our long-lived assets in order to determine if conditions exist or events and circumstances indicate that an asset group may be impaired in that its carrying amount may not be recoverable. Significant factors that are considered that could be indicative of impairment include: changes in business strategy, market conditions or the manner in which an asset group is used; underperformance relative to historical or expected future operating results; and negative industry or economic trends. If potential indicators of impairment exist, we estimate recoverability based on the asset group’s ability to generate cash flows greater than the carrying value of the asset group. We estimate the undiscounted future cash flows arising from the use and eventual disposition of the related long-lived asset group. If the carrying value of the long-lived asset group exceeds the estimated future undiscounted cash flows, an impairment loss is recorded based on the amount by which the asset group’s carrying amount exceeds its fair value. We utilize estimates of discounted future cash flows to determine the asset group’s fair value. We did not record any material impairment losses of long-lived assets in any of the periods presented.

Goodwill and Indefinite-Lived Intangible Assets. Goodwill represents the cost in excess of the fair value of the net assets of acquired businesses. Goodwill is not amortized. We are required to test goodwill for impairment at the reporting unit level on an annual basis and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We perform our annual goodwill impairment test as of September 30 each year.

Under ASC 350, we have an option to perform a “qualitative” assessment of our reporting units 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. For reporting units that we determine meet these criteria, we perform a qualitative assessment. In this qualitative assessment, we consider the following items for each of the reporting units: macroeconomic conditions, industry and market conditions, overall financial performance and other entity specific events. In addition, for each of these reporting units, we assess whether the most recent fair value determination results in an amount that exceeds the carrying amount of the reporting units. Based on these assessments, we determine whether the likelihood that a current fair value determination would be less than the current carrying amount of the reporting unit is not more likely than not. If it is determined it is not more likely than not, no further testing is required. If further testing is required, we continue with the quantitative impairment test.

In analyzing goodwill for potential impairment in the quantitative impairment test, we use a combination of the income and market approaches to estimate the reporting unit’s fair value. Under the income approach, we calculate the fair value of a reporting unit based on estimated future discounted cash flows. The assumptions we use are based on what we believe a hypothetical marketplace participant would use in estimating fair value. Under the market approach, we estimate the fair value based on market multiples of revenue or earnings before interest, income taxes, depreciation and amortization for benchmark companies. If the fair value of a reporting unit exceeds its carrying value, then no further testing is required. However, if a reporting unit’s fair value were to be less than its carrying value, we would then determine the amount of the impairment charge, if any, which would be the amount that the carrying value of the reporting unit’s goodwill exceeded its implied value.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Indefinite-lived reacquired rights represent the value of rights which we had granted to various affiliate credit reporting agencies that were reacquired in the U.S. and Canada. A portion of our reacquired rights are perpetual in nature and, therefore, the useful lives are considered indefinite in accordance with the accounting guidance in place at the time of the acquisitions. Indefinite-lived intangible assets are not amortized. We are required to test indefinite-lived intangible assets for impairment annually and whenever events and circumstances indicate that there may be an impairment of the asset value. Our annual impairment test date is September 30. We perform the impairment test for our indefinite-lived intangible assets by first assessing qualitative factors to determine whether it is necessary to perform a quantitative impairment test. If the qualitative assessment indicates that we need to perform a quantitative impairment test, we compare the asset’s fair value to its carrying value. We estimate the fair value based on projected discounted future cash flows. An impairment charge is recognized if the asset’s estimated fair value is less than its carrying value.

We completed our annual impairment testing for goodwill and indefinite-lived intangible assets during the twelve months ended December 31, 2018, 2017 and 2016, and we determined that there was no impairment in any of these years.

Purchased Intangible Assets. Purchased intangible assets represent the estimated fair value of acquired intangible assets used in our business. Purchased data files represent the estimated fair value of consumer and commercial data files acquired primarily through the purchase of independent credit reporting agencies in the U.S., Australia, 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 credit files, on a straight-line basis. All of our other purchased intangible assets are also amortized on a straight-line basis.



Asset		Useful Life
		(In years)
Purchased data files		2 to 15
Acquired software and technology		1 to 10
Non-compete agreements		1 to 5
Proprietary database		6 to 10
Customer relationships		2 to 25
Trade names		1 to 15

Additionally, included in intangible assets are reacquired rights that represent the value of rights which we had granted to Computer Sciences Corporation that were reacquired in connection with the acquisition of CSC Credit Services in the fourth quarter of 2012 based on the accounting guidance in place at that time. These reacquired rights were amortized over the remaining term of the affiliation agreement on a straight-line basis and became fully amortized on August 1, 2018.

Other Assets. Other assets on our Consolidated Balance Sheets primarily represents our investment in unconsolidated affiliates, assets related to life insurance policies covering certain officers of the Company, and employee benefit trust assets.

Equity Investment. We record our equity investment in Brazil using the new measurement method of cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions as the fair value of the investment is not readily determinable. We monitor the status of our equity investment in order to determine if conditions exist or events and circumstances indicate that it may be impaired in that its carrying amount may exceed the fair value of the investment. Significant factors that are considered that could be indicative of an impairment include: changes in business strategy, market conditions, underperformance relative to historical or expected future operating results; and negative industry or economic trends. If potential indicators of impairment exist, we estimate the fair value of the investment using a combination of a discounted cash flow analysis and an evaluation of EBITDA and transaction multiples for comparable companies. If the carrying value of the investment exceeds the estimated fair value, an impairment loss is recorded based on the amount by which the investment’s carrying amount exceeds its fair value. There were no indicators of impairment for 2018, 2017, or 2016.

Other Current Liabilities. Other current liabilities on our Consolidated Balance Sheets consist of various accrued liabilities such as costs related to the 2017 cybersecurity incident as described more fully in Note 6, interest expense, accrued employee benefits, accrued taxes, accrued payroll, accrued severance and accrued legal expenses. Other current liabilities also include the offset to other current assets related to amounts in specifically designated accounts that hold the funds that are due to customers from our debt collection and recovery management services. These funds were approximately $31.0 million and $21.4 million as of December 31, 2018 and 2017, respectively. The associated assets are restricted as to their current use and will be released according to the specific customer agreements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Benefit Plans. We sponsor various pension and defined contribution plans. We also maintain certain healthcare and life insurance benefit plans for eligible retired U.S. employees. Benefits under the pension and other postretirement benefit plans are generally based on age at retirement and years of service and for some pension plans, benefits are also based on the employee’s annual earnings. The net periodic cost of our pension and other postretirement plans is determined using several actuarial assumptions, the most significant of which are the discount rate and the expected return on plan assets. The expected rate of return on plan assets is based on both our historical returns and forecasted future investment returns by asset class, as provided by our external investment advisor. Annual differences, if any, between the expected and actual returns on plan assets are included in unrecognized net actuarial gain or loss, a component of other comprehensive income. In calculating the annual amortization of the unrecognized net actuarial gain or loss, we use a market-related value of assets that smooths actual investment gains and losses on plan assets over a period up to five years. The resulting unrecognized net actuarial gain or loss amount is recognized in net periodic pension expense over the average remaining life expectancy of the participant group since almost all participants are inactive. Our Consolidated Balance Sheets reflect the funded status of the pension and other postretirement plans.

Foreign Currency Translation. The functional currency of each of our foreign operating subsidiaries is that subsidiary’s local currency except for Argentina. Argentina has experienced multiple periods of increasing inflation rates, devaluation of the peso, and increasing borrowing rates. As such, Argentina has been deemed a highly inflationary economy by accounting policymakers. Beginning in the third quarter of 2018, we accounted for Argentina as a highly inflationary economy by remeasuring the peso denominated monetary assets and liabilities which resulted in the recognition of a $1.8 million foreign currency loss that was recorded in other income, net in our consolidated statements of income for the twelve months ended December 31, 2018.

Other than Argentina, we translate the assets and liabilities of foreign subsidiaries at the year-end rate of exchange and revenue and expenses at the monthly average rates during the year. We record the resulting translation adjustment in other comprehensive loss, included in accumulated other comprehensive loss, a component of shareholders’ equity. We also record gains and losses resulting from the translation of intercompany balances of a long-term investment nature in foreign currency translation in other comprehensive loss and accumulated other comprehensive loss. In the years ended December 31, 2018, 2017, and 2016, we recorded $1.6 million, $0.5 million and $8.8 million of foreign currency transaction losses in our consolidated statements of income, respectively.

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 Level 2 inputs such as 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, taking into account credit risk. As of December 31, 2018 and 2017, the fair value of our long-term debt, including the current portion, based on observable inputs was $2.6 billion and $2.1 billion, respectively, compared to its carrying value of $2.6 billion and $2.1 billion, respectively.

Derivatives and Hedging Activities. Although derivative financial instruments are not utilized for speculative purposes or as the Company’s primary risk management tool, derivatives have been used as a risk management tool to hedge the Company’s exposure to changes in interest rates and foreign exchange rates. We have used interest rate swaps and interest rate lock agreements to manage interest rate risk associated with our fixed and floating-rate borrowings. Forward contracts on various foreign currencies have been used to manage the foreign currency exchange rate risk of certain firm commitments denominated in foreign currencies. We recognize all derivatives on the balance sheet at fair value. Derivative valuations reflect the value of the instrument including the value associated with any material counterparty risk.

Economic Hedges. In December 2015, in anticipation of the acquisition of Veda Group Limited (“Veda”), we purchased foreign currency options to buy Australian dollars with a weighted average strike price of $0.7225 and a notional value of 1.0 billion Australian dollars. These foreign currency options (“options”) were designed to act as economic hedges for the pending Veda acquisition and were marked to market. The options had an expiry date of February 18, 2016. We recorded a mark-to-market gain on the options of $4.7 million for the year ended December 31, 2016, which was recorded in other income (expense), net. In January 2016, we purchased additional options for a notional amount of 1.0 billion Australian dollars, with a weighted average strike price of $0.7091, with expiry dates of February 11, 2016 and February 16, 2016. We settled all of the options on the respective settlement dates in February 2016. We recognized a net loss of $15.4 million related to the options in the first quarter of 2016, which was recorded in other income (expense), net.

Cash Flow Hedges. Changes in the fair value of highly effective derivatives designated as cash flow hedges are initially recorded in accumulated other comprehensive income and are reclassified into the line item in the Consolidated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Statements of Income in which the hedged item is recorded in the same period the hedged item impacts earnings. Any ineffective portion is recorded in current period earnings. We did not have any unsettled cash flow hedges outstanding as of December 31, 2018, 2017 or 2016.

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

The following table presents assets and liabilities measured at fair value on a recurring basis:



					Fair Value Measurements at Reporting Date Using:
Description		Fair Value at December 31, 2018			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
		(In millions)
Assets and Liabilities:
Deferred Compensation Plan Assets	(1)	$	34.3		$	34.3	$	—		$	—
Deferred Compensation Plan Liability	(1)	(34.3		)	—		(34.3		)	—
Total assets and liabilities		$	—		$	34.3	$	(34.3	)	$	—


(1)	We maintain deferred compensation plans that allow 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 plans. The liability representing benefits accrued for plan participants is valued at the quoted market prices of the participants’ investment elections. The asset consists of mutual funds reflective of the participants investment selections and is valued at daily quoted market prices.

(1)

We maintain deferred compensation plans that allow 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 plans. The liability representing benefits accrued for plan participants is valued at the quoted market prices of the participants’ investment elections. The asset consists of mutual funds reflective of the participants investment selections and is valued at daily quoted market prices.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis. As disclosed in Note 3, we completed various acquisitions during the years ended December 31, 2018 and 2017. The values of net assets acquired and the resulting goodwill were recorded at fair value using Level 3 inputs. The majority of the related current assets acquired and liabilities assumed were recorded at their carrying values as of the date of acquisition, as their carrying values approximated their fair values due to their short-term nature. The fair values of goodwill and definite-lived intangible assets acquired in these acquisitions were internally estimated primarily based on the income approach. The income approach estimates fair value based on the present value of the cash flows that the assets are expected to generate in the future. We developed internal estimates for the expected cash flows and discount rates in the present value calculations. The fair value of the equity method investment assets acquired was internally estimated based on the market approach. Under the market approach, we estimated fair value based on market multiples of comparable companies.

Variable Interest Entities. We hold interests in certain entities, including credit data, information solutions and debt collections and recovery management ventures, that are considered variable interest entities, or VIEs. These variable interests relate to ownership interests that require financial support for these entities. Our investments related to these VIEs totaled $16.4 million at December 31, 2018, representing our maximum exposure to loss, with the exception of the guarantees referenced in Note 6. We are not the primary beneficiary and are not required to consolidate any of these VIEs, with the exception of a debt collections and recovery management venture, for which we meet the consolidation criteria under ASC 810. In regards to that consolidated VIE, we have a 75% equity ownership interest and control of the activities that most significantly impact the VIE’s economic performance. The assets and liabilities of the VIE for which we are the primary beneficiary were not significant to the Company’s consolidated financial statements.

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

In determining whether we have the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, we evaluate all of our economic interests in the entity, regardless of form (debt, equity, management and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity’s design, including: the entity’s capital structure, contractual rights to earnings (losses), subordination of our interests relative to those of other investors, contingent payments, as well as other contractual arrangements that have the potential to be economically significant. The evaluation of each of these factors in reaching a conclusion about the potential significance of our economic interests is a matter that requires the exercise of professional judgment.

Certain of our VIEs have redeemable noncontrolling interests that are subject to classification outside of permanent equity on the Company’s Consolidated Balance Sheet. The redeemable noncontrolling interests are reflected using the redemption method as of the balance sheet date. Redeemable noncontrolling interest adjustments to the redemption values are reflected in retained earnings. The adjustment of redemption value at the period end that reflects a redemption value in excess of fair value is included as an adjustment to net income attributable to Equifax stockholders for the purposes of the calculation of earnings per share. None of the current period adjustments reflect a redemption in excess of fair value. Additionally, due to the immaterial balance of the redeemable noncontrolling interest, we have elected to maintain the noncontrolling interest in permanent equity, rather than temporary equity, within our Consolidated Balance Sheet.

Change in Accounting Principle. In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220).” The guidance provides companies the option to eliminate the stranded tax effects associated with the change in the federal corporate income tax rate in the Tax Cuts and Jobs Act of 2017. The guidance is effective for annual periods beginning after December 31, 2018, with early adoption permitted for reporting periods for which financial statements have not been issued and can be applied retrospectively. As such, we adopted this guidance as of December 31, 2017 resulting in the reclassification of $50.0 million from accumulated other comprehensive income to retained earnings related to the change in tax rate, as proscribed in the guidance.

In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718) Scope of Modification Accounting.” The amendments in ASU 2017-09 require entities to apply modification accounting in Topic 718 only when changes to the terms or conditions of a share-based payment award result in changes to fair value, vesting conditions or the classification of the award as equity or liability. The adoption of this guidance did not have an impact on our financial position, results of operations or cash flows.

In March 2017, the FASB issued ASU 2017-07 “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715).” This new guidance changes how employers that sponsor defined benefit pension plans and other postretirement plans present the net periodic benefit cost in the income statement. An employer is required to report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. Other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The amendment also allows only the service cost component to be eligible for capitalization, when applicable. The retrospective adoption of this guidance resulted in the reclassification of $7.1 million and $7.2 million from selling, general and administrative expenses to other income, net in the Consolidated Statements of Income for the twelve months ended December 31, 2017 and 2016, respectively, and the recognition of $4.0 million in selling, general, and administrative expenses and $9.2 million in other income, net in the Consolidated Statements of Income for the twelve months ended December 31, 2018, respectively. We do not capitalize any components of pension costs.

In January 2017, the FASB issued ASU 2017-01 “Clarifying the Definition of a Business (Topic 805).” This standard provides criteria to determine when an asset acquired or group of assets acquired is not a business. When substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This reduces the number of transactions that need to be further evaluated to determine if what is being acquired meets the definition of a business. The prospective adoption of this guidance did not have an impact on our financial position, results of operations or cash flows.

In January 2016, the FASB issued ASU 2016-01 “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” This new guidance requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure the equity investments that do not have readily determinable fair values at a new measurement alternative. Entities may choose to measure those investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The amendments in this update also simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, eliminate the requirement for public business entities to disclose the method and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and require these entities to use the exit price notion when measuring fair value of financial instruments for disclosure purposes. This guidance also changes the presentation and disclosure requirements for financial instruments as well as clarifying the guidance related to valuation allowance assessments when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The adoption of this guidance did not have an impact on our financial position, results of operations, or cash flows.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 was originally effective for annual reporting periods, and interim periods within that period, beginning after December 15, 2016 and early adoption was not permitted. On July 9, 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 15, 2016. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09.

As of January 1, 2018, we adopted the standard using the modified retrospective method. The new standard impacted our contracts that have a known quantity over a defined term with price increases or decreases over the contract life. Under the standard applicable during the period ended December 31, 2017, revenue related to these contracts were limited by billings in a period. Under the new standard applicable for the period beginning January 1, 2018, the total contract value is recognized ratably over the defined term or by using a transactional standalone selling price resulting in the creation of a contract asset or contract liability as transactions are delivered. Additionally, the changes to the cost capitalization practices did not materially impact our Consolidated Financial Statements. See Note 2 for further details.

Recent Accounting Pronouncements. Derivatives and Hedging. In August 2017, the FASB issued ASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities (Topic 815).” The amendments in ASU 2017-12 provide targeted improvements to the accounting for hedging activities to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The adoption of ASU 2017-12 will become effective for annual periods beginning after December 15, 2018, although early adoption is permitted. This guidance must be applied on a prospective basis. We do not expect the adoption of this ASU will have a material impact on our financial position, results of operations or cash flows.

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

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

In July 2018, the FASB approved an additional optional transition method by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We will be adopting the standard using this optional transition method. At our current point in the adoption of the standard, we do not expect the adoption to have a material impact on our consolidated financial statements. While we are continuing to assess potential impacts of the standard, we currently expect the most significant impact will be the recognition of right-of-use assets and lease liabilities for operating leases. We expect our accounting for capital leases to remain substantially unchanged.

Credit Losses. In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019. We do not expect the adoption of the standard to have a material impact on our consolidated financial statements.

Fair Value Measurements. In August 2018, the FASB issued ASU No. 2018-13 “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement” which eliminates, adds, and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. ASU 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019, and interim periods therein, but entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. The adoption of this standard will have an impact on our disclosures and will not materially impact our consolidated financial statements.

Retirement Benefits. In August 2018, the FASB issued ASU No. 2018-14 “Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans” which requires minor changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other postretirement benefit plans. ASU 2018-14 is effective for fiscal years ending after December 15, 2020 and early adoption is permitted. The adoption of this standard will have an impact on our disclosures and will not materially impact our consolidated financial statements.

Cloud Computing Arrangements. In August 2018, the FASB issued ASU No. 2018-15 “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” ASU 2018-15 requires that issuers follow the internal-use software guidance in Accounting Standards Codification (ASC) 350-40 to determine which costs to capitalize as assets or expense as incurred. The ASC 350-40 guidance requires that certain costs incurred during the application development stage be capitalized and other costs incurred during the preliminary project and post-implementation stages be expensed as they are incurred. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, and interim periods therein. We are evaluating the impact of the adoption of the standard on our consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

REVENUE

On January 1, 2018 we adopted ASU 2014-09 using the modified retrospective approach. Comparative financial statements of prior periods have not been adjusted to apply the new method retrospectively. The new method of accounting was applied only to contracts that were not completed at the date of application as well as to the contracts entered into on or after January 1, 2018. Additionally, we reflected the aggregate effect of all modifications to these contracts when identifying the satisfied and unsatisfied performance obligations, as well as determining the transaction price and allocating the transaction price.

The effect of the adoption on key financial statement line items for the twelve months ended December 31, 2018 and as of December 31, 2018 is as follows:



	Twelve Months Ended December 31, 2018				Change
Income Statement	Prior to ASU 2014-09 adoption		As reported under ASU 2014-09		$		%
	(In millions, except per share data)
Operating revenue	$	3,410.3	$	3,412.1	$	1.8	—	%
Consolidated income from operations before income taxes	$	354.5	$	356.3	$	1.8	1	%
Consolidated net income	$	304.9	$	306.3	$	1.4	—	%
Net income attributable to Equifax	$	298.4	$	299.8	$	1.4	—	%
Basic earnings per common share:
Net income attributable to Equifax	$	2.48	$	2.49	$	0.01	—	%
Diluted earnings per common share:
Net income attributable to Equifax	$	2.46	$	2.47	$	0.01	—	%



	December 31, 2018				Change
Balance Sheet	Prior to ASU 2014-09 adoption		As reported under ASU 2014-09		$		%
	(In millions)
Other current assets	$	109.4	$	109.6	$	0.2	—	%
Other assets, net	$	155.3	$	162.4	$	7.1	5	%
Total assets	$	7,145.9	$	7,153.2	$	7.3	—	%
Deferred income tax liabilities, net	$	314.5	$	316.2	$	1.7	1	%
Total liabilities	$	3,995.8	$	3,997.5	$	1.7	—	%
Retained earnings	$	4,712.2	$	4,717.8	$	5.6	—	%
Total shareholders’ equity	$	3,150.1	$	3,155.7	$	5.6	—	%
Total liabilities and equity	$	7,145.9	$	7,153.2	$	7.3	—	%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue Recognition. Based on the information management reviews internally for evaluating operating segment performance and nature, amount, timing, and uncertainty of revenue and cash flows affected by economic factors, we disaggregate revenue as follows:



	Twelve Months Ended December 31,						Change					Change
							2018			2017		2017			2016
Consolidated Operating Revenue	2018		2017		2016		$			%		$			%
	(In millions)
Online Information Solutions	$	877.5	$	889.6	$	879.3	$	(12.1	)	(1	)%	$	10.3		1	%
Mortgage Solutions	153.6		148.9		$	142.2	$	4.7		3	%	$	6.7		5	%
Financial Marketing Services	216.2		224.2		$	215.0	$	(8.0	)	(4	)%	$	9.2		4	%
Total U.S. Information Solutions	1,247.3		1,262.7		$	1,236.5	$	(15.4	)	(1	)%	$	26.2		2	%
Asia Pacific	325.6		308.9		$	244.2	$	16.7		5	%	$	64.7		26	%
Europe	287.3		273.8		$	253.6	$	13.5		5	%	$	20.2		8	%
Latin America	206.6		213.6		$	183.9	$	(7.0	)	(3	)%	$	29.7		16	%
Canada	146.7		136.0		$	121.9	$	10.7		8	%	$	14.1		12	%
Total International	966.2		932.3		$	803.6	$	33.9		4	%	$	128.7		16	%
Verification Services	567.0		501.5		$	437.3	$	65.5		13	%	$	64.2		15	%
Employer Services	259.8		262.7		$	264.9	$	(2.9	)	(1	)%	$	(2.2	)	(1	)%
Total Workforce Solutions	826.8		764.2		$	702.2	$	62.6		8	%	$	62.0		9	%
Global Consumer Solutions	371.8		403.0		$	402.6	$	(31.2	)	(8	)%	$	0.4		—	%
Total operating revenue	$	3,412.1	$	3,362.2	$	3,144.9	$	49.9		1	%	$	217.3		7	%

ACQUISITIONS AND INVESTMENTS

2018 Acquisitions and Investments. In July 2018, the Company completed the acquisition of 100% of DataX Ltd., a national specialty finance credit agency and alternative data provider, in our USIS segment. In 2018, the Company completed various acquisitions in our Workforce Solutions and International segments to expand the Company’s product offerings. The primary areas of the purchase price that are not yet finalized are related to income taxes and working capital. Accordingly, adjustments may be made to the values of the assets acquired and liabilities assumed as additional information is obtained about the facts and circumstances that existed at the valuation date.

2017 Acquisitions and Investments. On August 10, 2017, the Company completed the acquisition of 100% of the outstanding stock of ID Watchdog, Inc., an identity theft protection and resolution company providing solutions to the employee benefits marketplace. On November 15, 2017, the Company completed the acquisition of 100% of the outstanding stock of Mercury Group of Companies Pty Ltd (“Mercury”), an Australian-owned workforce management company. We have completed the allocation of the purchase prices for the ID Watchdog and Mercury acquisitions.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Purchase Price Allocation. The following table summarizes the estimated fair value of the net assets acquired and the liabilities assumed at the acquisition dates during 2018 and 2017.



	December 31,
	2018			2017
	(In millions)
Cash	$	1.6		$	4.3
Accounts receivable and other current assets	4.4			3.2
Other assets	0.3			0.4
Identifiable intangible assets (1)	50.9			51.0
Goodwill (2)	89.3			92.4
Total assets acquired	146.5			151.3
Other current liabilities	(2.9		)	(5.1		)
Other liabilities	(3.8		)	(10.9		)
Non-controlling interest	(1.8		)	—
Net assets acquired	$	138.0		$	135.3


(1)	Identifiable intangible assets are further disaggregated in the following table.


(2)	The goodwill related to DataX Ltd. is included in the USIS operating segment and the goodwill related to the other 2018 acquisitions is included in the Workforce Solutions and International operating segments. The goodwill related to the 2018 acquisitions is not deductible for tax purposes. The 2017 goodwill related to ID Watchdog, Inc. and Mercury is included in the GCS and International operating segments, respectively, and is not deductible for tax purposes.

(2)

The goodwill related to DataX Ltd. is included in the USIS operating segment and the goodwill related to the other 2018 acquisitions is included in the Workforce Solutions and International operating segments. The goodwill related to the 2018 acquisitions is not deductible for tax purposes. The 2017 goodwill related to ID Watchdog, Inc. and Mercury is included in the GCS and International operating segments, respectively, and is not deductible for tax purposes.

The primary reasons the purchase price of these acquisitions exceeded the fair value of the net assets acquired, which resulted in the recognition of goodwill, were expanded growth opportunities from new or enhanced product offerings and geographies, cost savings from the elimination of duplicative activities, and the acquisition of an assembled workforce that are not recognized as assets apart from goodwill.



	December 31,
	2018			2017
Intangible asset category	Fair value		Weighted-average useful life	Fair value		Weighted-average useful life
	(in millions)		(in years)	(in millions)		(in years)
Customer relationships	$	16.5	9.0	$	42.7	10.2
Acquired software and technology	2.7		2.7	6.5		6.5
Purchased data files	30.2		11.3	—		n/a
Non-compete agreements	0.8		2.6	—		n/a
Trade names and other intangible assets	0.7		1.9	1.8		2.9
Total acquired intangibles	$	50.9	9.8	$	51.0	9.5

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill. Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. As discussed in Note 1, goodwill is tested for impairment at the reporting unit level on an annual basis and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We perform our annual goodwill impairment tests as of September 30 each year. The fair value estimates for our reporting units were determined using a combination of the income and market approaches in accordance with the Company’s methodology. Our annual impairment tests as of September 30, 2018, 2017 and 2016 resulted in no impairment of goodwill.

During 2018, we completed the acquisition of DataX Ltd. whose goodwill was allocated to the USIS operating segment and various other acquisitions for which the acquired goodwill was allocated to the Workforce Solutions and International operating segments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In the fourth quarter of 2017, we acquired Mercury, for which the acquired goodwill has been allocated to the Asia Pacific reporting unit within the International operating segment. In the third quarter of 2017, we acquired ID Watchdog, Inc., for which the acquired goodwill has been allocated to the Global Consumer Solutions reporting unit and operating segment.

Changes in the amount of goodwill for the twelve months ended December 31, 2018 and 2017, are as follows:



	U.S. Information Solutions			International			Workforce Solutions		Global Consumer Solutions			Total
	(In millions)
Balance, December 31, 2016	$	1,071.3		$	1,814.6		$	952.1	$	136.3		$	3,974.3
Acquisitions	—			43.9			—		48.5			92.4
Adjustments to initial purchase price allocation	—			1.0			—		—			1.0
Foreign currency translation	—			109.9			—		6.4			116.3
Balance, December 31, 2017	1,071.3			1,969.4			952.1		191.2			4,184.0
Acquisitions	57.7			14.5			17.1		—			89.3
Adjustments to initial purchase price allocation	(0.1		)	1.3			1.0		(1.0		)	1.2
Foreign currency translation	—			(140.5		)	—		(4.3		)	(144.8		)
Balance, December 31, 2018	$	1,128.9		$	1,844.7		$	970.2	$	185.9		$	4,129.7

Indefinite-Lived Intangible Assets. Indefinite-lived intangible assets consist of indefinite-lived reacquired rights representing the value of rights which we had granted to various affiliate credit reporting agencies that were reacquired in the U.S. and Canada. At the time we acquired these agreements, they were considered perpetual in nature under the accounting guidance in place at that time and, therefore, the useful lives are considered indefinite. Indefinite-lived intangible assets are not amortized. We are required to test indefinite-lived intangible assets for impairment annually and whenever events or circumstances indicate that there may be an impairment of the asset value. We perform our annual indefinite-lived intangible asset impairment test as of September 30. Our 2018 annual impairment test completed during the third quarter of 2018 resulted in no impairment of indefinite-lived intangible assets.



	Amount
	(In millions)
Balance, December 31, 2016	$	94.8
Foreign currency translation	0.2
Balance, December 31, 2017	95.0
Foreign currency translation	(0.2		)
Balance, December 31, 2018	$	94.8

Purchased Intangible Assets. Purchased intangible assets, net, recorded on our Consolidated Balance Sheets at December 31, 2018 and 2017, are as follows:



	December 31, 2018							December 31, 2017
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Definite-lived intangible assets:	(In millions)
Purchased data files	$	911.4	$	(298.7	)	$	612.7	$	955.7	$	(262.2	)	$	693.5
Acquired software and technology	130.3		(84.1		)	46.2		142.3		(66.6		)	75.7
Customer relationships	693.1		(295.2		)	397.9		772.4		(326.7		)	445.7
Reacquired rights	73.3		(73.3		)	—		73.3		(65.6		)	7.7
Proprietary database	46.3		(12.5		)	33.8		22.1		(8.7		)	13.4
Non-compete agreements	3.8		(2.2		)	1.6		14.1		(12.7		)	1.4
Trade names and other intangible assets	18.7		(11.7		)	7.0		20.2		(10.6		)	9.6
Total definite-lived intangible assets	$	1,876.9	$	(777.7	)	$	1,099.2	$	2,000.1	$	(753.1	)	$	1,247.0

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amortization expense related to purchased intangible assets was $152.8 million, $172.2 million, and $176.5 million during the twelve months ended December 31, 2018, 2017, and 2016, respectively.

Estimated future amortization expense related to definite-lived purchased intangible assets at December 31, 2018 is as follows:



Years ending December 31,	Amount
	(In millions)
2019	$	132.0
2020	124.6
2021	107.4
2022	103.0
2023	101.8
Thereafter	530.4
	$	1,099.2

DEBT

Debt outstanding at December 31, 2018 and 2017 was as follows:



	December 31,
	2018			2017
	(In millions)

Commercial paper (“CP”)	$	—		$	562.6
Revolver	—			100.0
Term loan, due Nov 2018	—			400.0
Notes, 2.30%, due June 2021	500.0			500.0
Notes, 3.60%, due Aug 2021	300.0			—
Notes, Floating Rate, due Aug 2021	300.0			—
Notes, 3.30%, due Dec 2022	500.0			500.0
Notes, 3.95%, due May 2023	400.0			—
Notes, 3.25%, due June 2026	275.0			275.0
Debentures, 6.90%, due July 2028	125.0			125.0
Notes, 7.00%, due July 2037	250.0			250.0
Other	4.9			2.7
Total debt	2,654.9			2,715.3
Less short-term debt and current maturities	(4.9		)	(965.3		)
Less unamortized discounts and debt issuance costs	(19.4		)	(11.0		)
Total long-term debt, net of discount	$	2,630.6		$	1,739.0

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Scheduled future maturities of debt at December 31, 2018, are as follows:



Years ending December 31,	Amount
	(In millions)
2019	$	4.9
2020	—
2021	1,100.0
2022	500.0
2023	400.0
Thereafter	650.0
Total debt	$	2,654.9

3.6%, 3.95%, and Floating Rate Senior Notes. In May 2018, we issued $300.0 million aggregate principal amount of 3.6% Senior Notes due 2021 (the “2021 Notes”), $400.0 million aggregate principal amount of 3.95% Senior Notes due 2023 (the “2023 Notes”), and $300.0 million aggregate principal amount Floating Rate Notes due 2021 (the “Floating Rate Notes”) in an underwritten public offering. Interest on the 2021 Notes will accrue from their date of issuance at a rate of 3.6% per year and will be payable in cash semi-annually in arrears on February 15 and August 15 of each year, beginning February 15, 2019. Interest on the 2023 Notes will accrue from their date of issuance at a rate of 3.95% per year and will be payable in cash semi-annually in arrears on June 15 and December 15 of each year and began on December 15, 2018. Interest on the Floating Rate Notes for a particular interest period will be a rate equal to three-month LIBOR on the interest determination date plus 0.87% per annum and will be payable in cash quarterly in arrears on February 15, May 15, August 15, and November 15 of each year and began on August 15, 2018. The net proceeds of the sale of the notes were used to repay borrowings under our Revolver, our prior $800.0 million three-year delayed draw term loan facility (“Term Loan”) and our commercial paper (“CP”) program. We must comply with various non-financial covenants, including certain limitations on mortgages, liens and sale-leaseback transactions, as well as mergers and sales of substantially all of our assets. The Senior Notes are unsecured and rank equally with all of our unsecured and unsubordinated indebtedness.

Senior Credit Facility. In September 2018, the Company entered into a $1.10 billion five-year unsecured revolving credit facility with a group of financial institutions, which will mature in September 2023 (the “Revolver”). The Revolver replaced the Company’s previous $900 million unsecured revolving credit facility that was scheduled to mature in November 2020. Borrowings under the Revolver may be used for general corporate purposes, including working capital, capital expenditures, acquisitions and share repurchase programs. The Revolver has an accordion feature that allows us to request an increase in the total commitment to $1.60 billion. The Revolver includes an option to request a maximum of two one-year extensions of the maturity date, any time after the first anniversary of the Revolver closing. Availability of the Revolver is reduced by the outstanding principal balance of our commercial paper notes and by any letters of credit issued under the facility. As of December 31, 2018, there were $15.50 million of letters of credit issued under the Revolver, no principal drawn amounts under the Revolver, and no commercial paper borrowings. Availability under the Revolver was $1.08 billion at December 31, 2018.

We were also a party to an $800.0 million 364-Day revolving credit facility. On May 16, 2016 we repaid all outstanding borrowings of $475.0 million and terminated the 364-Day Revolver using a portion of the net proceeds from the issuance of the senior notes discussed below.

Under the Revolver, the Company must comply with various financial and non-financial covenants. The financial covenants require the Company to maintain a maximum leverage ratio, defined as consolidated funded debt divided by consolidated EBITDA (as set forth in the Revolver Agreement) for the preceding four quarters, of not more than 3.5 to 1.0. The Company may, subject to the terms of the Revolver, increase the covenant by 0.5 (i.e. to 4.0 to 1.0) for a four consecutive fiscal quarter period following a material acquisition. Compliance with this financial covenant is tested quarterly. The non-financial covenants include limitations on liens, subsidiary debt, mergers, liquidations, asset dispositions, acquisitions, certain restricted payments, transactions with affiliates, certain accounting changes, restricting subsidiary dividends and distributions, hedging agreements, and certain government regulations. As of December 31, 2018, we were in compliance with our covenants under the Revolver. Our borrowings under these facilities, which have not been guaranteed by any of our subsidiaries, are unsecured and will rank on parity in right of payment with all of our other unsecured and unsubordinated indebtedness from time to time outstanding.

At December 31, 2018, interest was payable on borrowings under the Revolver at the base rate or London Interbank Offered Rate, or LIBOR, plus a specified margin. The Company is required to pay on a quarterly basis a commitment fee with

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

respect to our Revolver, which is calculated based upon the amount of daily usage of the Revolver over the available aggregate lender commitments thereunder during the applicable quarterly period. Both the applicable interest rate and the commitment fee are subject to adjustment based on the Company’s debt ratings.

Commercial Paper Program. The Company’s $900.0 million CP program has been established through the private placement of CP notes from time to time, in which borrowings bear interest at either a variable rate (based on LIBOR or other benchmarks) or a fixed rate, with the applicable rate and margin. Maturities of CP can range from overnight to 397 days. Because the CP program is backstopped by the Revolver, the amount of CP which may be issued under the program is reduced by the outstanding face amount of any letters of credit issued under the facility and, pursuant to our existing Board of Directors authorization, by the outstanding borrowings under our Revolver. At December 31, 2018, there were no CP notes outstanding.

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

There were no borrowings under the Receivables Facility at December 31, 2018. The Receivables Facility was supported by $209.8 million of accounts receivable as collateral at December 31, 2018 which, as a retained interest, is included in accounts receivable, net in our Consolidated Balance Sheets.

The outstanding amount the Company is allowed to maintain under the Receivables Facility, with a maximum of $225 million, may fluctuate based on the availability of eligible receivables and is directly affected by business volumes and credit risks, including receivables payment quality measures such as default and dilution ratios. If default or dilution ratios increase one percent, the allowable outstanding amount under the Receivables Facility would not materially change.

Interest is payable on borrowings under the Receivables Facility at the base rate or LIBOR plus a specified margin. The specified margin and the monthly unused fee, which we pay on the unused portion of the Receivables Facility, are subject to adjustment based on our debt ratings. The costs of the Receivables Facility are included in interest expense and were not material in 2018 and 2017.

2.3% and 3.25% Senior Notes. On May 12, 2016, we issued $500.0 million principal amount of 2.3%, five-year senior notes and $275.0 million principal amount of 3.25%, ten-year senior notes in an underwritten public offering. Interest is payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2016. The net proceeds of the sale of the notes were used to repay borrowings under our 364-Day Revolver and a portion of the borrowings under our commercial paper program incurred to finance the acquisition of Veda. We must comply with various non-financial covenants, including certain limitations on mortgages, liens and sale-leaseback transactions, as well as mergers and sales of substantially all of our assets. The senior notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness.

6.3% and 7.0% Senior Notes. On June 28, 2007, we issued $300.0 million principal amount of 6.3%, ten-year senior notes and $250.0 million principal amount of 7.0%, thirty-year senior notes in underwritten public offerings. Interest is payable semi-annually in arrears on January 1 and July 1 of each year. The net proceeds of the financing were used to repay short-term indebtedness, a substantial portion of which was incurred in connection with our acquisition of TALX. We must comply with various non-financial covenants, including certain limitations on liens, additional debt and mortgages, mergers, asset dispositions and sale-leaseback arrangements. The senior notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness. On July 3, 2017, we repaid our July 2017 Senior Notes using the proceeds of commercial paper.

3.3% Senior Notes. On December 17, 2012, we issued $500.0 million principal amount of 3.3%, ten-year senior notes in an underwritten public offering. Interest is payable semi-annually in arrears on December 15 and June 15 of each year. The net proceeds of the sale of the notes were used to partially finance the acquisition of CSC Credit Services in December 2012. We must comply with various non-financial covenants, including certain limitations on liens, additional debt and mortgages,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

mergers, asset dispositions and sale-leaseback arrangements. The senior notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness.

6.9% Debentures. We have $125.0 million of debentures outstanding with a maturity date of 2028. The debentures are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness.

Cash paid for interest was $88.2 million, $96.9 million and $85.0 million during the twelve months ended December 31, 2018, 2017 and 2016, respectively.

COMMITMENTS AND CONTINGENCIES

2017 Cybersecurity Incident.

In fiscal 2017, we experienced a cybersecurity incident following a criminal attack on our systems that involved the theft of certain personally identifiable information of U.S., Canadian and U.K. consumers. Criminals exploited a software vulnerability in a U.S. website application to gain unauthorized access to our network. In March 2017, the U.S. Department of Homeland Security distributed a notice concerning the software vulnerability. We undertook efforts to identify and remediate vulnerable systems; however, the vulnerability in the website application that was exploited was not identified by our security processes. We discovered unusual network activity in late-July 2017 and upon discovery promptly investigated the activity. Once the activity was identified as potential unauthorized access, we acted to stop the intrusion and engaged a leading, independent cybersecurity firm to conduct a forensic investigation to determine the scope of the unauthorized access, including the specific information potentially impacted. Based on our forensic investigation, the unauthorized access occurred from mid-May through July 2017.

Below is a rollforward of accrued liabilities and insurance receivable associated with the 2017 cybersecurity incident, beginning with the event date:



	Accrued Liabilities			Insurance Receivable
	(In millions)
Balance at September 7, 2017
(Expenses incurred) insurance receivable recorded	$	(164.0	)	$	50.0
Payments made (received)	88.4			(15.0		)
Balance at December 31, 2017	$	(75.6	)	$	35.0
(Expenses incurred) insurance receivable recorded	$	(20.4	)	$	75.0
Payments made (received)	83.3			(110.0		)
Balance at December 31, 2018	$	(12.7	)	$	—

Product Liability. As a result of the 2017 cybersecurity incident, we offered TrustedID® Premier, a credit file monitoring and identity theft protection product, for free to all eligible U.S. consumers who signed up through January 31, 2018. We also provided free credit reports and scores, credit monitoring and identity theft protection for twenty four months to impacted consumers in Canada and the U.K. We have recorded the expenses necessary to provide this service to those who signed up. Through December 31, 2017, we recorded $50.7 million of product costs in selling, general and administrative expenses in the accompanying Consolidated Statements of Income. In 2018, the Company extended the free credit monitoring services for an additional twelve months for eligible consumers impacted by the 2017 cybersecurity incident by providing them the opportunity to enroll in Experian® IDNotify™ at no cost. We recorded $20.4 million related to these services in selling, general, and administrative expenses in the accompanying Consolidated Statements of Income for the twelve months ended December 31, 2018.

Expenses Incurred. Through December 31, 2017, the Company recorded $113.3 million of pre-tax expenses related to the 2017 cybersecurity incident. Expenses include costs to investigate and remediate the 2017 cybersecurity incident and legal and other professional services related thereto, all of which were expensed as incurred. We have included these costs in the above table through December 31, 2017. Beginning in 2018, expenses included in the above table include only costs incurred as part of the delivery of the free product.

Future Costs. We are currently executing substantial initiatives in security and consumer support, and a company-wide transformation of our technology infrastructure, which we refer to as our technology transformation, and incurred substantial increased expenses and capital expenditures in 2018 related to these initiatives. We expect to again incur significant

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

expenses and capital expenditures in 2019 and 2020 related to these initiatives, although at levels slightly below those incurred in 2018.

We incurred significant legal and professional services expenses related to the lawsuits, claims and government investigations to which we are a party in 2018, and expect to continue to incur these expenses until these items are resolved. We will recognize the expenses and capital expenditures referenced herein as they are incurred. In 2018, we incurred elevated costs for insurance, finance and compliance activities, and expect to incur costs at these levels again in 2019.

Insurance Coverage. At the time of the 2017 cybersecurity incident, we had $125.0 million of cybersecurity insurance coverage, above a $7.5 million deductible, to limit our exposure to losses such as those related to this incident. During the twelve months ended December 31, 2018 and 2017, the Company recorded insurance recoveries of $75.0 million and $50.0 million, respectively, and received payments of $110.0 million and $15.0 million, respectively, for reimbursable costs incurred to date. Since the announcement of the 2017 cybersecurity incident in September 2017, we have received the maximum reimbursement under the insurance policy of $125.0 million.

Litigation, Claims and Government Investigations. As a result of the 2017 cybersecurity incident, we are subject to a significant number of proceedings and investigations. Since the 2017 cybersecurity incident, hundreds of class actions and other lawsuits have been filed against us typically alleging harm from the 2017 cybersecurity incident and seeking various remedies, including monetary and injunctive relief. We dispute the allegations in the complaints described below and intend to defend against such claims. In addition, numerous governmental agencies are investigating us in connection with the 2017 cybersecurity incident, which may result in fines, settlements or other relief. Set forth below are descriptions of the main categories of these lawsuits and investigations.

Other than as specifically stated below, while we believe it is reasonably possible that we will incur losses associated with such proceedings and investigations, it is not possible at this time to estimate the amount of loss or range of possible loss that might result from adverse judgments, settlements, penalties or other resolution of the proceedings and investigations described below based on the various stages of these proceedings and investigations, that alleged damages have not been specified or are uncertain, the uncertainty as to the certification of a class or classes and the size of any certified class, as applicable, and the lack of resolution on significant factual and legal issues. The Company will continue to evaluate information as it becomes known and will record an estimate for losses at the time or times when it is both probable that a loss has been incurred and the amount of the loss is reasonably estimable. The Company believes that the ultimate amount paid on these actions, claims and investigations could be material to the Company’s consolidated financial condition, results of operations, or cash flows in future periods.

Multidistrict Litigation. Hundreds of class actions were filed against us in federal and state courts relating to the 2017 cybersecurity incident. The plaintiffs in these cases, who purport to represent various classes of U.S. consumers and small businesses, generally claim to have been harmed by alleged actions and/or omissions by Equifax in connection with the 2017 cybersecurity incident and assert a variety of common law and statutory claims seeking monetary damages, injunctive relief and other related relief.

In addition, certain class actions have been filed by financial institutions that allege their businesses have been placed at risk due to the 2017 cybersecurity incident and generally assert various common law claims such as claims for negligence and breach of contract, as well as, in some cases, statutory claims. The financial institution class actions seek compensatory damages, injunctive relief and other related relief.

Furthermore, a lawsuit has been filed against us by the City of Chicago with respect to the 2017 cybersecurity incident alleging violations of state laws and local ordinances governing protection of personal data, consumer fraud, breach notice requirements and business practices and seeking declaratory and injunctive relief and the imposition of fines the aggregate amount of which the complaint does not specifically quantify. Three Indian Tribes filed suits in federal court asserting putative class actions relating to the 2017 cybersecurity incident brought on behalf of themselves and other similarly situated federally recognized Indian Tribes and Nations. Additionally, the Commonwealth of Puerto Rico filed an action on its own behalf and on behalf of the people of Puerto Rico arising out of the 2017 cybersecurity incident.

Beginning on December 6, 2017 and pursuant to multiple subsequent orders, the U.S. Judicial Panel on Multidistrict Litigation ordered the consolidation and transfer for pre-trial proceedings with respect to the U.S. cases pending in federal court discussed above, including the City of Chicago action, the Indian Tribal suits, and the Puerto Rico action, to the Northern District of Georgia as the single U.S. District Court for centralized pre-trial proceedings (the “MDL Court”). Based on these orders, consolidated proceedings with respect to U.S. consumer and financial institution federal class actions and other lawsuits related to the 2017 cybersecurity incident have been conducted in the MDL Court. The MDL Court has established separate

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

tracks for the consumer and financial institution class action cases and appointed lead counsel on behalf of plaintiffs in both tracks. Certain individual plaintiffs with cases pending in the MDL consolidated proceedings, including Puerto Rico and the City of Chicago, have sought the establishment of additional tracks and other related relief. The MDL Court has not yet ruled on those requests.

The Company moved to dismiss the consolidated class action complaints filed by the U.S. consumer, small business and financial institution plaintiffs in their entirety. On January 28, 2019, the MDL Court dismissed the small businesses’ consolidated class action complaint in its entirety. The MDL Court dismissed certain claims brought by the consumer and financial institution plaintiffs, while allowing other claims by those plaintiffs to proceed. Pursuant to case management orders issued by the MDL Court, consolidated pre-trial proceedings, including discovery between the parties, will proceed on the remaining claims of the U.S. consumer and financial institution plaintiffs.

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

Canadian Class Actions. Seven Canadian class actions, five of which are on behalf of a national class of approximately 19,000 Canadian consumers, have been filed against us in Ontario, Saskatchewan, Quebec and British Columbia. Each of the proposed Canadian class actions asserts a number of common law and statutory claims seeking monetary damages and other related relief in connection with the 2017 cybersecurity incident. The plaintiffs in each case seek class certification/authorization on behalf of Canadian consumers whose personal information was allegedly impacted by the 2017 cybersecurity incident. In some cases, plaintiffs also seek class certification on behalf of Canadian consumers who had contracts for subscription products with Equifax around the time of the incident. All purported class actions are at preliminary stages, and we are opposing class certification or authorization in cases where such motions are pending. In addition, one of the cases in Ontario as well as the Saskatchewan case have been stayed. The Court’s order staying the Saskatchewan case is on appeal.

TransUnion Litigation. On November 27, 2017, Trans Union LLC and TransUnion Interactive, Inc. (collectively, “TransUnion”) filed a lawsuit in the U.S. District Court for the Northern District of Illinois against Equifax Information Services LLC, Equifax Inc., and Equifax Consumer Services LLC f/k/a Equifax Consumer Services, Inc. In its lawsuit, TransUnion asserts claims for declaratory relief, breach of contract, and anticipatory repudiation of contract based on our Reciprocal Data Supply Agreement (the “Agreement”), which sets forth the pricing terms for credit monitoring supplied by the parties to each other. TransUnion seeks a declaration regarding its contractual rights under the Agreement and monetary damages. On January 26, 2018, we moved to dismiss TransUnion’s claims. On June 19, 2018, the court granted in part and denied in part our motion to dismiss, dismissing Equifax Inc. from the case. Discovery has now commenced and is scheduled to end in March 2019. We dispute the allegations by TransUnion and intend to defend against its claims.

Securities Class Action Litigation. A consolidated putative class action lawsuit alleging violations of various federal securities laws in connection with statements and alleged omissions regarding our cybersecurity systems and controls is pending against us and certain of our current and former executives, officers and directors in the U.S. District Court for the Northern District of Georgia. The consolidated complaint seeks certification of a class of all persons who purchased or otherwise acquired Equifax securities from February 25, 2016 through September 15, 2017 and unspecified monetary damages, costs and attorneys’ fees. The Company moved to dismiss the consolidated class action complaint in its entirety. On January 28, 2019, the court dismissed claims against certain individual defendants and claims challenging certain statements, but allowed other claims against Equifax and our former Chairman and Chief Executive Officer to proceed. Pursuant to scheduling and case management orders issued by the court, pre-trial proceedings, including discovery between the parties, will proceed on the remaining claims.

Shareholder Derivative Litigation. A consolidated putative shareholder derivative action naming certain of our current and former executives, officers and directors as defendants and naming us as a nominal defendant is pending in the U.S. District Court for the Northern District of Georgia. Among other things, the consolidated complaint alleges claims for breaches of fiduciary duties, unjust enrichment, corporate waste and insider selling by certain defendants, as well as certain claims under the federal securities laws. The complaint seeks unspecified damages on behalf of the Company, plus certain equitable relief. We have appointed a committee of independent directors empowered to evaluate and respond in our best interests to the claims and related litigation demands.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Government Lawsuits. In addition to the City of Chicago’s and Commonwealth of Puerto Rico’s lawsuits in the MDL Court, the City of San Francisco filed a lawsuit against us in Superior Court in the City of San Francisco on behalf of the People of the State of California alleging violations of California’s unfair competition law due to purported violations of statutory protections of personal data and statutory data breach requirements and seeking statutory penalties, injunctive relief, and restitution for California consumers, among other relief. The court has stayed the City of San Francisco action until March 29, 2019.

Civil enforcement actions have been filed against us by the Attorneys General of Massachusetts and West Virginia alleging violations of commonwealth/state consumer protection laws. The Massachusetts action is pending in Suffolk Superior Court and seeks permanent injunctive relief, civil penalties, restitution, disgorgement of profits, costs and attorneys’ fees. The Suffolk Superior Court denied the Company’s motions to stay and dismiss the case, and the case is in discovery. The West Virginia action is pending in the Circuit Court of Boone County and seeks civil penalties and attorneys’ fees. Equifax’s motion to stay proceedings was granted on a temporary basis on December 21, 2018, and then continued on January 24, 2019, with the court scheduling a further hearing for February 28, 2019. The lawsuit filed by the Attorney General of Puerto Rico was transferred to the MDL proceeding, as described above. The Puerto Rico Department of Consumer Affairs has issued Notices of Infraction related to the Company’s alleged failure to give timely notice of the data breach under Puerto Rico law to the Department and Puerto Rico consumers.

Individual Consumer Litigation. Over 1,000 individual consumer actions, including multi-plaintiff actions, have been filed against us in state (general jurisdiction and small claims) and federal courts across the U.S. related to the 2017 cybersecurity incident. These claims include more than 2,500 individual plaintiffs. In addition, there are approximately 50 individual arbitration claims. The plaintiffs/claimants in these cases generally claim to have been harmed by alleged actions and/or omissions by Equifax in connection with the 2017 cybersecurity incident and assert a variety of common law and statutory claims seeking primarily monetary damages. Where possible, actions filed in federal court or removed to federal court have been noticed for transfer to the MDL Court. Some of these matters have been finally resolved, and others are in various stages.

Government Investigations. We continue to cooperate with federal, state, city and foreign governmental agencies and officials investigating or otherwise seeking information, testimony and/or documents, including through Civil Investigative Demands and subpoenas, regarding the 2017 cybersecurity incident and related matters, including 48 state Attorneys General offices, the District of Columbia, the Federal Trade Commission (“FTC”), the Consumer Financial Protection Bureau (“CFPB”), the U.S. Securities and Exchange Commission (“SEC”), the U.S. Department of Justice, other U.S. state regulators, certain Congressional committees of both the U.S. Senate and House of Representatives, the Office of the Privacy Commissioner of Canada (“OPC”) and the U.K.’s Financial Conduct Authority (“FCA”). The Financial Industry Regulatory Authority, Inc. conducted an investigation that has now been concluded.

With respect to state Attorneys General investigations, the Company is cooperating with a consolidated multi-state investigation involving the Attorneys General of 46 states and the District of Columbia. As noted above, the Attorneys General of Massachusetts, West Virginia and Puerto Rico are not participating in the multi-state process and have filed suit. The Attorneys General of Indiana and Texas are each conducting separate investigations.

The staffs of the CFPB and FTC have informed us that their respective agencies intend to seek injunctive relief damages and, with respect to the CFPB, civil money penalties against us based on allegations related to the 2017 cybersecurity incident. We have submitted written responses to the CFPB and FTC addressing their allegations, and we continue to cooperate with the agencies in their investigations. On October 2, 2018, the Enforcement Staff of the NYDFS provided us with notice that it is considering recommending that the NYDFS take legal action against us, potentially seeking consumer relief and civil money penalties. We continue to cooperate with the NYDFS in its investigation.

The staff of the OPC has informed us that the OPC intends to make certain findings and recommendations in connection with its investigation of the 2017 cybersecurity incident. We have submitted written responses to the OPC and we continue to cooperate in its investigation.

The SEC issued a subpoena on May 14, 2018 regarding disclosure issues relating to the 2017 cybersecurity incident. We continue to cooperate with the SEC in its investigation. In addition, we continue to cooperate with the SEC and the U.S. Attorney’s Office for the Northern District of Georgia regarding investigations into the trading activities by certain of our current and former employees in relation to the 2017 cybersecurity incident.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The New York State Attorney General Investor Protection Bureau (“IPB”) issued a subpoena on September 20, 2017 relating to an investigation of whether there has been a violation of the Martin Act. We continue to cooperate with the IPB in its investigation.

The FCA served an Enforcement Notice and Information Requests. We have provided responses to these requests and continue to cooperate with the FCA.

Although we are actively cooperating with the above investigations and inquiries, an adverse outcome to any such investigations and inquiries could subject us to fines or other obligations, which may have an adverse effect on how we operate our business or our results of operations.

Public Records Litigation

Equifax has been named as a defendant in 19 putative class action lawsuits pending in federal courts across the country relating to its reporting of civil judgments and tax liens on consumers’ credit files. In October 2018, Equifax and the plaintiffs’ attorneys who filed the lawsuits reached an agreement in principle to settle the public records-related claims at issue on behalf of a nationwide class of consumers and we accrued an estimate of $18.5 million for our liability for these matters in the third quarter of 2018. The amount accrued represents our best estimate of the liability related to this matter. The parties have filed notices of settlement in the pending lawsuits and have begun drafting a settlement agreement and preliminary approval papers to file with the requisite court. If the final terms of a settlement agreement cannot be agreed upon, or if the settlement is not ultimately approved by the court, Equifax believes it has valid defenses to each of these actions and will continue to defend against them.

Leases

Our operating leases principally involve office space and office equipment. Rental expense for operating leases, which is recognized on a straight-line basis over the lease term, was $41.3 million, $34.5 million and $29.1 million for the twelve months ended December 31, 2018, 2017 and 2016, respectively. Our headquarters building ground lease has purchase options exercisable beginning in 2019, renewal options exercisable in 2048 and escalation clauses that began in 2009. Expected future minimum payment obligations for non-cancelable operating leases exceeding one year are as follows as of December 31, 2018:



Years ending December 31,	Amount
	(In millions)
2019	$	32.5
2020	29.8
2021	25.3
2022	22.8
2023	19.7
Thereafter	62.1
	$	192.2

We have no material sublease agreements and as a result, expected sublease income is not reflected as a reduction in the total minimum rental obligations under operating leases in the table above.

Data Processing, Outsourcing Services and Other Agreements

We have separate agreements with IBM, Tata Consultancy Services, Fidelity Information Services, and others to outsource portions of our computer data processing operations, applications development, business continuity and recovery services, help desk service and desktop support functions, operation of our voice and data networks, maintenance and related functions and to provide certain other administrative and operational services. The agreements expire between 2019 and 2024. The estimated aggregate minimum contractual obligation remaining under these agreements is approximately $134 million as of December 31, 2018, with no future year’s minimum contractual obligation expected to exceed approximately $102 million. Annual payment obligations in regard to these agreements vary due to factors such as the volume of data processed; changes in our servicing needs as a result of new product offerings, acquisitions or divestitures; the introduction of significant new technologies; foreign currency; or the general rate of inflation. In certain circumstances (e.g., a change in control or for our convenience), we may terminate these data processing and outsourcing agreements, and, in doing so, certain of these agreements require us to pay significant termination fees.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Under our agreement with IBM (which covers our operations in North America and Europe), we have outsourced certain of our mainframe and midrange operations, help desk service and desktop support functions, and the operation of our voice and data networks. The scope of services provided by IBM, and the term of our agreement with respect to such services, varies by geography and location. The estimated future minimum contractual obligation under the revised North America (US and Canada) and Europe (UK and Spain) agreements is approximately $30 million for the remaining term, with no individual year’s minimum expected to exceed approximately $26 million. We may terminate certain portions of this agreement without penalty in the event that IBM is in material breach of the terms of the agreement. During 2018, 2017 and 2016, we paid approximately $49 million, $40 million and $45 million, respectively, for these services.

Change in Control Agreements

We have entered into change in control severance agreements with certain key executives. The agreements provide for, among other things, certain payments and benefits in the event of a qualifying termination of employment (i.e., termination of employment by the executive for “good reason” or termination of employment by the Company without “cause,” each as defined in the agreements) following a change in control of the Company. In the event of a qualifying termination, the executive will become entitled to continuation of group health, dental, vision, life, disability, 401(k) and similar benefits for two or three years, depending on the eligibility, as well as a lump sum severance payment, all of which differs by executive.

The change in control agreements have a three-year term and automatically renew for another three years unless we elect not to renew the agreements. Change in control events potentially triggering benefits under the agreements would occur, subject to certain exceptions, if (1) any person acquires 20% or more of our voting stock; (2) upon a merger or other business combination, our shareholders receive less than two-thirds of the common stock and combined voting power of the new company; (3) we sell or otherwise dispose of all or substantially all of our assets; or (4) we liquidate or dissolve.

If these change in control agreements had been triggered as of December 31, 2018, payments of approximately $40.7 million would have been made (excluding tax gross-up amounts of $0.9 million). Under the Company’s existing director and employee stock benefit plans, a change in control generally would result in the immediate vesting of all outstanding stock options and satisfaction of the restrictions on any outstanding nonvested stock awards. With respect to unvested performance based share awards dependent upon the Company’s three-year relative total shareholder return, if at least one calendar year of performance during the performance period has been completed prior to the change in control event, the awards will be paid out based on the Company’s performance at that time; otherwise the payout of shares will be at 100% of the target award. For awards granted in 2018, the vesting described above occurs only if the awards are not assumed or continued in the change in control transaction or if the executive incurs a qualifying termination in connection with the change in control.

Guarantees

We will from time to time issue standby letters of credit, performance or surety bonds or other guarantees in the normal course of business. The aggregate notional amount of all performance bonds, surety bonds, and standby letters of credit is not material at December 31, 2018 and generally have a remaining maturity of one year or less. We may issue other guarantees in the ordinary course of business. The maximum potential future payments we could be required to make under the guarantees is not material at December 31, 2018. We have agreed to guarantee the liabilities and performance obligations (some of which have limitations) of a certain debt collections and recovery management VIE under its commercial agreements. We cannot reasonably estimate our potential future payments under the guarantees 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 guarantees on our Consolidated Balance Sheets at December 31, 2018.

General Indemnifications

Many of our commercial agreements contain commercially standard indemnification obligations related to tort, material breach or other liabilities that arise during the course of performance under the agreement. These indemnification obligations are typically mutual.

We are the lessee under many real estate leases. It is common in these commercial lease transactions for us, as the lessee, to agree to indemnify the lessor and other related third parties for tort, environmental and other liabilities that arise out of or relate to our use or occupancy of the leased premises. This type of indemnity would typically make us responsible to indemnified parties for liabilities arising out of the conduct of, among others, contractors, licensees and invitees at or in connection with the use or occupancy of the leased premises. This indemnity often extends to related liabilities arising from the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

negligence of the indemnified parties, but usually excludes any liabilities caused by either their sole or gross negligence and their willful misconduct.

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 certain of these credit agreements, we also bear the risk of certain changes in tax laws that would subject payments to non-U.S. lenders to withholding taxes.

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.

The Company has entered into indemnification agreements with its directors and executive officers. Under these agreements, the Company has agreed to indemnify such individuals to the fullest extent permitted by law against liabilities that arise by reason of their status as directors or officers and to advance expenses incurred by such individuals in connection with the related legal proceedings. The Company maintains directors and officers liability insurance coverage to reduce its exposure to such obligations.

We cannot reasonably estimate our potential future payments under the indemnities and related provisions described above because we cannot predict when and under what circumstances these provisions may be triggered. We have no accrual related to indemnifications on our Consolidated Balance Sheets at December 31, 2018 and 2017.

Subsidiary Dividend and Fund Transfer Limitations

The ability of some of our subsidiaries and associated companies to transfer funds to us is limited, in some cases, by certain restrictions imposed by foreign governments, which do not, individually or in the aggregate, materially limit our ability to service our indebtedness, meet our current obligations or pay dividends.

Contingencies

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

Although the final outcome of these 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. We accrue for unpaid legal fees for services performed to date.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

INCOME TAXES

The provision for income taxes consisted of the following:



	Twelve Months Ended December 31,
	2018			2017			2016
	(In millions)
Current:
Federal	$	9.4		$	107.8		$	154.8
State	11.4			13.2			24.3
Foreign	31.5			71.7			67.0
	52.3			192.7			246.1
Deferred:
Federal	22.6			(19.2		)	16.5
State	0.7			1.3			2.8
Foreign	(25.6		)	(26.2		)	(32.3		)
	(2.3		)	(44.1		)	(13.0		)
Provision for income taxes	$	50.0		$	148.6		$	233.1

Domestic and foreign income before income taxes was as follows:



	Twelve Months Ended December 31,
	2018		2017		2016
	(In millions)
U.S.	$	339.6	$	711.1	$	739.6
Foreign	16.7		35.5		(11.4		)
	$	356.3	$	746.6	$	728.2

The provision for income taxes reconciles with the U.S. federal statutory rate, as follows:



	Twelve Months Ended December 31,
	2018			2017			2016
	(In millions)
Federal statutory rate	21.0		%	35.0		%	35.0		%

Provision computed at federal statutory rate	$	74.8		$	261.3		$	254.9
State and local taxes, net of federal tax benefit	10.7			13.3			17.2
Foreign	0.1			(41.9		)	(40.3		)
Tax Cuts and Jobs Act of 2017	—			(48.3		)
Federal research & development credit	(13.0		)	(6.7		)	—
Equity compensation	(7.5		)	(26.7		)	—
Tax reserves	2.4			2.5			11.9
Equifax Australia settlement	(14.1		)	—			—
Other	(3.4		)	(4.9		)	(10.6		)
Provision for income taxes	$	50.0		$	148.6		$	233.1

Effective income tax rate	14.0		%	19.9		%	32.0		%

We record 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

income tax bases of assets and liabilities. For additional information about our income tax policy, see Note 1 of the Notes to Consolidated Financial Statements.

Components of the deferred income tax assets and liabilities at December 31, 2018 and 2017, were as follows:



	December 31,
	2018			2017
	(In millions)
Deferred income tax assets:
Net operating and capital loss carryforwards	$	326.8		$	279.9
Goodwill and intangible assets	119.4			129.3
Employee compensation programs	42.0			33.1
Foreign tax credits	16.8			17.6
Employee pension benefits	35.2			40.8
Reserves and accrued expenses	28.3			23.8
Research and development costs	30.3			26.7
Other	11.6			8.7
Gross deferred income tax assets	610.4			559.9
Valuation allowance	(431.9		)	(401.8		)
Total deferred income tax assets, net	178.5			158.1

Deferred income tax liabilities:
Goodwill and intangible assets	(431.0		)	(387.6		)
Undistributed earnings of foreign subsidiaries	(8.7		)	(7.6		)
Depreciation	(31.6		)	(41.5		)
Other	(12.3		)	(20.6		)
Total deferred income tax liability	(483.6		)	(457.3		)
Net deferred income tax liability	$	(305.1	)	$	(299.2	)

Our deferred income tax assets and deferred income tax liabilities at December 31, 2018 and 2017, are included in the accompanying Consolidated Balance Sheets as follows:



	December 31,
	2018			2017
	(In millions)
Long-term deferred income tax assets, included in other assets	$	11.1		$	5.9
Long-term deferred income tax liabilities	(316.2		)	(305.1		)
Net deferred income tax liability	$	(305.1	)	$	(299.2	)

We record deferred income taxes on the temporary differences of our foreign subsidiaries and branches, except for the temporary differences related to undistributed earnings of subsidiaries which we consider indefinitely invested. As of December 31, 2018, we have indefinitely invested $85.7 million attributable to pre-2004 undistributed earnings of our Canadian and Chilean subsidiaries. If the pre-2004 earnings were not considered indefinitely invested, $6.4 million of deferred withholding tax liability would have been provided. Further, we are permanently invested with respect to the original investment in foreign subsidiaries. Therefore, we have not provided the deferred tax assets on the outside basis of these subsidiaries as we have no intent to sell or divest of these subsidiaries. Cumulative undistributed earnings were subject to a transition tax as a result of the Tax Act which we estimated to be zero. However, the Company has provided for local country withholding taxes related to these earnings.

At December 31, 2018, we had U.S. federal and state net operating loss carryforwards of $134.5 million, of which $1.8 million related to state net operating losses that have indefinite carryforward periods and the remainder will expire at various times between 2021 and 2038. We also had foreign net operating loss carryforwards totaling $1,114.9 million of which

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$399.1 million will expire between 2019 and 2038 and the remaining $715.8 million will carryforward indefinitely. Foreign capital loss carryforwards of $15.7 million may be carried forward indefinitely, and state capital loss carryforwards of $2.5 million expired in 2018. We had foreign tax credit carryforwards of $16.8 million which will expire in the years 2025 through 2027. Additionally, we had state and foreign research and development credit carryforwards of $30.3 million. The U.S. credits expire between 2021 through 2029 and the foreign credits have an indefinite expiration period. The deferred tax asset related to the net operating loss, capital loss carryforwards, foreign tax credit carryforwards, and research and development credit is $373.9 million of which $310.2 million has been fully reserved in the deferred tax valuation allowance.

Cash paid for income taxes, net of amounts refunded, was $59.6 million, $215.7 million and $173.4 million during the twelve months ended December 31, 2018, 2017 and 2016, respectively.

We recognize interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes on our Consolidated Statements of Income.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



	2018			2017
	(In millions)
Beginning balance (January 1)	$	35.0		$	32.5
Increases related to prior year tax positions	2.0			0.6
Decreases related to prior year tax positions	(15.2		)	(5.6		)
Increases related to current year tax positions	5.0			13.1
Decreases related to settlements	(0.5		)	(0.3		)
Expiration of the statute of limitations for the assessment of taxes	(3.5		)	(5.8		)
Currency translation adjustment	(0.5		)	0.5
Ending balance (December 31)	$	22.3		$	35.0

We recorded liabilities of $24.9 million and $38.0 million for unrecognized tax benefits as of December 31, 2018 and 2017, respectively, which included interest and penalties of $2.6 million and $3.0 million, respectively. As of December 31, 2018 and 2017, the total amount of unrecognized benefits that, if recognized, would have affected the effective tax rate was $23.8 million and $35.7 million, respectively, which included interest and penalties of $2.3 million and $2.6 million, respectively. During 2018 and 2017, interest and penalties of $0.9 million and $1.4 million, respectively, were accrued.

Equifax and its subsidiaries are subject to U.S. federal, state and international income taxes. We are generally no longer subject to federal, state or international income tax examinations by tax authorities for years before 2014. Due to the potential for resolution of state and foreign examinations, and the expiration of various statutes of limitations, it is reasonably possible that Equifax’s gross unrecognized tax benefit balance may change within the next twelve months by a range of zero to $4.1 million.

The Tax Cuts and Jobs Act (“Tax Act”)

The Tax Cuts and Jobs Act (“Tax Act”) was enacted in the United States on December 22, 2017. The Tax Act reduced the U.S. federal corporate income tax rate to 21% from 35%, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign-sourced earnings. In 2017 and the first nine months of 2018, we recorded provisional amounts for certain enactment-date effects of the Tax Act by applying the guidance in Staff Accounting Bulletin 118 because we had not yet completed our enactment-date accounting for these effects. In 2017, the Company recorded tax expense related to the enactment-date effects of the Tax Act which consisted primarily of adjusting deferred tax assets and liabilities. During 2018, additional guidance was issued with respect to the Tax Act. The Company analyzed provisional amounts recorded for certain enactment-date accounting effects of the Tax Act. The result of this analysis was that no changes were required with respect to provisional amounts previously recorded at December 31, 2017. For provisional amounts recorded during 2018, adjustments were made in the fourth quarter of 2018 as a result of notices and regulations issued and proposed by the U.S. Department of the Treasury and the Internal Revenue Service (“Proposed Regulations”) that were issued in the quarter for the §163(j) interest limitation provisions and the foreign tax credits provisions.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SAB 118 Measurement Period

We applied the guidance in SAB 118 when accounting for the enactment-date effects of the Tax Act in 2017 and throughout 2018. At December 31, 2017, we had not completed our accounting for all of the enactment-date income tax effects of the Tax Act under ASC 740, Income Taxes, for the following aspects: re-measurement of deferred tax assets and liabilities, one-time transition tax and tax on global intangible low-taxed income. At December 31, 2018, we have now completed our accounting for all of the enactment-date income tax effects of the Tax Act. As mentioned above and further discussed below, during 2018, no adjustments were required to the provisional amounts recorded at December 31, 2017. For the provisional amounts recorded during 2018, adjustments were made in the fourth quarter of 2018 for §163(j) interest limitation and foreign tax credit provisions as a result of clarifying guidance included in the issuance of Proposed Regulations. There were no material adjustments to other provisions in which provisional amounts were estimated during 2018.

One-Time Transition Tax

The one-time transition tax is based on our total post-1986 earnings and profits (E&P), the tax on which we previously deferred from U.S. income taxes under U.S. law. The Company determined it was not subject to the one-time transition tax and therefore the provisional amount was zero.

During 2018, upon further analysis of the Tax Act and notices and Proposed Regulations, we finalized our calculations of the transition tax liability. The analysis confirmed the Company was not liable for the one-time transition tax and therefore no adjustment was required to the provisional amount recorded.

Deferred Tax Assets and Liabilities

As of December 31, 2017, we re-measured certain deferred tax assets and liabilities based on the rates at which they were expected to reverse in the future (which was generally 21%), by recording a provisional amount of $85.1 million. Further analysis of certain aspects of the Tax Act and refinement of our calculations during the twelve months ending December 31, 2018 resulted in no material adjustments to our provisional amounts.

Global Intangible Low-Taxed Income (“GILTI”)

We have elected to account for GILTI in the year the tax is incurred. This election did not impact the 2018 effective tax rate.

STOCK-BASED COMPENSATION

We have one active share-based award plan, the amended and restated 2008 Omnibus Incentive Plan. This plan was originally approved by our shareholders in 2008 and was amended and restated with shareholder approval in May 2013 to, among other things, increase the reserve for awards under the plan by 11 million shares. The plan provides our directors, officers and certain key employees with stock options, restricted stock units and performance share awards. The plan is described below. We expect to issue common shares held as either treasury stock or new issue shares upon the exercise of stock options or once shares vest pursuant to restricted stock units or performance share awards. Total stock-based compensation expense in our Consolidated Statements of Income during the twelve months ended December 31, 2018, 2017 and 2016, was as follows:



	Twelve Months Ended December 31,
	2018		2017		2016
	(In millions)
Cost of services	$	9.5	$	7.2	$	4.5
Selling, general and administrative expenses	33.0		31.1		32.6
Stock-based compensation expense, before income taxes	$	42.5	$	38.3	$	37.1

The total income tax benefit recognized for stock-based compensation expense was $9.7 million, $13.7 million and $13.3 million for the twelve months ended December 31, 2018, 2017 and 2016, respectively.

In conjunction with the adoption of ASU 2016-09, windfall tax benefits are to be presented as cash flows from operating activities on a prospective basis. As a result, we classified $7.5 million and $26.7 million as cash flows from operating activities for the years ended December 31, 2018 and 2017, respectively. Previous guidance required benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

flow. This requirement reduced operating cash flows and increased financing cash flows by $35.9 million for the twelve months ended December 31, 2016.

Stock Options. The 2008 Omnibus Incentive Plan provides that qualified and nonqualified stock options may be granted to officers and other employees. In conjunction with our acquisition of TALX, we assumed options outstanding under the legacy TALX stock option plan, which was approved by TALX shareholders. The 2008 Omnibus Incentive Plan requires that stock options be granted at exercise prices not less than market value on the date of grant. Generally, stock options are subject to graded vesting for periods of up to three years based on service, with 33% vesting for each year of completed service, and expire ten years from the grant date.

We use the binomial model to calculate the fair value of stock options granted on or after January 1, 2006. The binomial model incorporates assumptions regarding anticipated employee exercise behavior, expected stock price volatility, dividend yield and risk-free interest rate. Anticipated employee exercise behavior and expected post-vesting cancellations over the contractual term used in the binomial model were primarily based on historical exercise patterns. These historical exercise patterns indicated there was not significantly different exercise behavior between employee groups. For our expected stock price volatility assumption, we weighted historical volatility and implied volatility. We used daily observations for historical volatility, while our implied volatility assumption was based on actively traded options related to our common stock. The expected term is derived from the binomial model, based on assumptions incorporated into the binomial model as described above.

The fair value for stock options granted during the twelve months ended December 31, 2018, 2017 and 2016, was estimated at the date of grant, using the binomial model with the following weighted-average assumptions:



	Twelve Months Ended December 31,
	2018			2017			2016
Dividend yield	1.2		%	1.9		%	1.2		%
Expected volatility	21.8		%	22.8		%	19.4		%
Risk-free interest rate	2.7		%	1.1		%	1.2		%
Expected term (in years)	4.8			4.8			4.8
Weighted-average fair value of stock options granted	$	24.34		$	22.20		$	20.62

The following table summarizes changes in outstanding stock options during the twelve months ended December 31, 2018, as well as stock options that are vested and expected to vest and stock options exercisable at December 31, 2018:



	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
	(In thousands)				(In years)	(In millions)
Outstanding at December 31, 2017	1,184		$	87.64
Granted (all at market price)	553		$	122.35
Exercised	(212	)	$	60.55
Forfeited and canceled	(63	)	$	114.67
Outstanding at December 31, 2018	1,462		$	103.50	7.3	$	14.0
Vested and expected to vest at December 31, 2018	1,415		$	103.01	7.2	$	13.9
Exercisable at December 31, 2018	631		$	80.81	5.2	$	14.0

The aggregate intrinsic value amounts in the table above represent the difference between the closing price of Equifax’s common stock on December 31, 2018 and the exercise price, multiplied by the number of in-the-money stock options as of the same date. This represents the value that would have been received by the stock option holders if they had all exercised their stock options on December 31, 2018. In future periods, this amount will change depending on fluctuations in Equifax’s stock price. The total intrinsic value of stock options exercised during the twelve months ended December 31, 2018, 2017 and 2016, was $13.3 million, $31.4 million and $64.8 million, respectively. At December 31, 2018, our total unrecognized compensation cost related to stock options was $8.2 million with a weighted-average recognition period of 1.6 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes changes in outstanding options and the related weighted-average exercise price per share for the twelve months ended December 31, 2017 and 2016:



	December 31,
	2017				2016
	Shares		Weighted- Average Price		Shares		Weighted- Average Price
	(In thousands)				(In thousands)
Outstanding at the beginning of the year	1,228		$	66.81	1,866		$	49.54
Granted (all at market price)	401		$	114.66	181		$	131.41
Exercised	(398	)	$	48.23	(779	)	$	40.61
Forfeited and canceled	(47	)	$	103.13	(40	)	$	72.06
Outstanding at the end of the year	1,184		$	87.64	1,228		$	66.81
Exercisable at end of year	636		$	62.62	856		$	48.43

Other Stock Awards. Our 2008 Omnibus Incentive Plan also provides for awards of restricted stock units and performance shares or units that are settled in shares of our common stock that can be granted to executive officers, employees and directors. Such stock awards are generally subject to cliff vesting over a period between one to three years based on service and may also have vesting conditions based on meeting specified performance goals.

The fair value of these stock awards is based on the fair market value of our common stock on the date of grant. However, stock awards granted prior to February 16, 2017 did not accrue or pay dividends during the vesting period, so the fair value on the date of grant for the pre-2017 awards was reduced by the present value of the expected dividends over the requisite service period (discounted using the appropriate risk-free interest rate). Stock awards granted beginning in 2017 do include the right to dividends or dividend equivalents, which are accrued and payable only if and when the underlying stock vests and is payable.

Pursuant to our 2008 Omnibus Incentive Plan, certain executive officers have been granted performance shares in which the number of shares earned is dependent upon the Company’s three-year total shareholder return relative to the three-year total shareholder return of the companies in the S&P 500 stock index, as comprised on the grant date, subject to adjustment, and, in 2017, have also been granted performance shares in which the number of shares earned is dependent upon the Company’s three-year cumulative adjusted earnings per share. The number of shares which could potentially be issued under these performance share awards ranges from zero to 200% of the target award. The grants outstanding subject to market performance as of December 31, 2018 would result in 283,003 shares outstanding at 100% of target and 566,006 at 200% of target at the end of the vesting period. Compensation expense for shares earned based on the Company’s three-year total shareholder return is recognized on a straight-line basis over the measurement period and is based upon the fair market value of the shares estimated to be earned at the date of grant using a Monte-Carlo simulation. Compensation expense for shares earned based on the Company’s three-year cumulative adjusted earnings per share is recognized on a straight-line basis over the measurement period based on the grant date fair value of our common stock and the number of awards expected to vest at each reporting date.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes changes in these other stock awards during the twelve months ended December 31, 2018, 2017 and 2016 and the related weighted-average grant date fair value:



	Shares		Weighted-Average Grant Date Fair Value
	(In thousands)
Nonvested at December 31, 2015	1,431		$	72.64
Granted	460		$	84.07
Vested	(645	)	$	55.28
Forfeited	(59	)	$	73.54
Nonvested at December 31, 2016	1,187		$	87.54
Granted	498		$	89.45
Vested	(632	)	$	56.53
Forfeited	(42	)	$	104.24
Nonvested at December 31, 2017	1,011		$	109.48
Granted	563		$	109.71
Vested	(417	)	$	87.09
Forfeited	(82	)	$	115.40
Nonvested at December 31, 2018	1,075		$	120.11

The total fair value of stock awards that vested during the twelve months ended December 31, 2018, 2017 and 2016, was $50.2 million, $79.4 million and $71.7 million, respectively, based on the weighted-average fair value on the vesting date, and $40.4 million, $45.0 million and $38.8 million, respectively, based on the weighted-average fair value on the date of grant. At December 31, 2018, our total unrecognized compensation cost related to these nonvested stock awards was $51.6 million with a weighted-average recognition period of 2.1 years.

BENEFIT PLANS

We have defined benefit pension plans and defined contribution plans. We also maintain certain healthcare and life insurance benefit plans for eligible retired employees. The measurement date for our defined benefit pension plans and other postretirement benefit plans is December 31 of each year.

Pension Benefits. Pension benefits are provided through U.S. and Canadian defined benefit pension plans and two supplemental executive defined benefit pension plans.

U.S. and Canadian Retirement Plans. We sponsor a qualified defined benefit retirement plan (the U.S. Retirement Income Plan, or USRIP) that covers approximately 12% of current U.S. salaried employees who were hired on or before June 30, 2007, the last date on which an individual could be hired and enter the plan before the USRIP was closed to new participation at December 31, 2008. This plan also covers retirees as well as certain terminated but vested individuals not yet in retirement status. We also sponsor a retirement plan with both defined benefit and defined contribution components that cover most salaried and hourly employees in Canada (the Canadian Retirement Income Plan, or CRIP); the defined benefit component was also closed to new hires on October 1, 2011.

Effective December 31, 2014, the USRIP plan was frozen for all participants eligible to accrue benefits. Accordingly, pension plan participants earn no new benefits under the plan formula. Additionally, the CRIP, a registered defined benefit pension plan, was changed for employees who did not meet retirement-eligibility status under the CRIP as of December 31, 2012 (“Non-Grandfathered” participants). Under the plan amendment, the service credit for Non-Grandfathered participants froze, 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) are eligible to participate in the enhanced defined contribution component of the CRIP.

During the twelve months ended December 31, 2018, we made voluntary contributions of $30.0 million to the USRIP and made contributions of $0.4 million to the CRIP. During the twelve months ended December 31, 2017, we did not make any contributions to the USRIP and made contributions of $1.5 million to the CRIP. At December 31, 2018, the USRIP met or exceeded ERISA’s minimum funding requirements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The annual report produced by our consulting actuaries specifies the funding requirements for our plans, based on projected benefits for plan participants, historical investment results on plan assets, current discount rates for liabilities, assumptions for future demographic developments and recent changes in statutory requirements. We may elect to make additional discretionary contributions to our plans in excess of minimum funding requirements, subject to statutory limitations.

Supplemental Retirement Plans. We maintain two supplemental executive retirement programs for certain key employees. The plans, which are unfunded, provide supplemental retirement payments, based on salary and years of service.

Other Benefits. We maintain certain healthcare and life insurance benefit plans for eligible retired employees. Substantially all of our U.S. employees may become eligible for the retiree healthcare benefits if they reach retirement age while working for us and satisfy certain years of service requirements. Employees hired on or after January 1, 2009 are required to pay the full cost of coverage after retirement. The retiree life insurance program covers employees who retired on or before December 31, 2003. We accrue the cost of providing healthcare benefits over the active service period of the employee.

Obligations and Funded Status. A reconciliation of the projected benefit obligations, plan assets and funded status of the plans is as follows:



	Pension Benefits						Other Benefits
	2018			2017			2018			2017
	(In millions)
Change in projected benefit obligation
Benefit obligation at January 1,	$	731.6		$	693.6		$	24.2		$	22.5
Service cost	3.6			4.0			0.4			0.4
Interest cost	26.4			28.5			0.8			0.9
Plan participants’ contributions	—			—			0.7			0.5
Actuarial loss (gain)	(49.4		)	45.5			(1.5		)	2.5
Foreign currency exchange rate changes	(3.3		)	3.1			(0.1		)	0.1
Benefits paid	(42.9		)	(43.1		)	(2.6		)	(2.7		)
Projected benefit obligation at December 31,	666.0			731.6			21.9			24.2
Change in plan assets
Fair value of plan assets at January 1,	561.1			515.3			17.1			16.6
Actual return on plan assets	(18.7		)	81.2			(0.6		)	2.9
Employer contributions	36.3			5.9			1.9			2.2
Plan participants’ contributions	—			—			0.7			0.5
Foreign currency exchange rate changes	(2.0		)	1.8			—			—
Other disbursements	—			—			(2.6		)	(2.4		)
Benefits paid	(42.9		)	(43.1		)	(2.6		)	(2.7		)
Fair value of plan assets at December 31,	533.8			561.1			13.9			17.1
Funded status of plan	$	(132.2	)	$	(170.5	)	$	(8.0	)	$	(7.1	)

The accumulated benefit obligation for the USRIP, CRIP and Supplemental Retirement Plans was $659.8 million at December 31, 2018. The accumulated benefit obligation for the USRIP, CRIP and Supplemental Retirement Plans was $722.3 million at December 31, 2017.

At December 31, 2018, the USRIP and Supplemental Retirement Plans had projected benefit obligations and accumulated benefit obligations in excess of those plans’ respective assets. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for these plans in the aggregate were $615.7 million, $615.6 million and $488.8 million, respectively, at December 31, 2018. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the CRIP were $50.3 million, $44.3 million and $45.0 million, respectively, at December 31, 2018.

At December 31, 2017, the USRIP and Supplemental Retirement Plans had projected benefit obligations and accumulated benefit obligations in excess of those plans’ respective assets. The projected benefit obligation, accumulated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

benefit obligation and fair value of plan assets for these plans in the aggregate were $675.2 million, $673.1 million and $510.9 million, respectively, at December 31, 2017. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the CRIP were $56.4 million, $49.2 million and $50.2 million, respectively, at December 31, 2017.

The following table represents the net amounts recognized, or the funded status of our pension and other postretirement benefit plans, in our Consolidated Balance Sheets at December 31, 2018 and 2017:



	Pension Benefits						Other Benefits
	2018			2017			2018			2017
	(In millions)
Amounts recognized in the statements of financial position consist of:
Noncurrent assets	$	—		$	—		$	—		$	—
Current liabilities	(5.6		)	(5.4		)	(0.1		)	(0.2		)
Long-term liabilities	(126.6		)	(165.1		)	(7.9		)	(6.9		)
Net amount recognized	$	(132.2	)	$	(170.5	)	$	(8.0	)	$	(7.1	)

Included in accumulated other comprehensive loss at December 31, 2018 and 2017, were the following amounts that have not yet been recognized in net periodic pension cost:



	Pension Benefits				Other Benefits
	2018		2017		2018			2017
	(In millions)
Prior service cost, net of accumulated taxes of $1.9 and $2.0 in 2018 and 2017, respectively, for pension benefits and $(0.3) and $(0.5) in 2018 and 2017, respectively, for other benefits	$	5.9	$	6.3	$	(0.9	)	$	(1.8	)
Net actuarial loss, net of accumulated taxes of $88.7 and $91.0 in 2018 and 2017, respectively, for pension benefits and $2.8 and $3.1 in 2018 and 2017, respectively, for other benefits	283.4		243.2		8.7			9.8
Impact of Tax Cuts and Jobs Act of 2017	—		48.7		—			1.3
Accumulated other comprehensive loss	$	289.3	$	298.2	$	7.8		$	9.3

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following shows amounts recognized in other comprehensive income (loss) during the twelve months ended December 31, 2018 and 2017:

Changes in plan assets and benefit obligations recognized in other comprehensive income:



	Pension Benefits						Other Benefits
	2018			2017			2018			2017
	(In millions)
Amounts arising during the period:
Net actuarial loss (gain), net of taxes of $2.6 in 2018 and $0.0 in 2017, respectively, for pension benefits and $0.0 in 2018 and $0.1 in 2017, respectively, for other benefits	$	6.6		$	2.5		$	(1.5	)	$	0.9
Foreign currency exchange rate gain, net of taxes of ($0.1) in 2018 and $(1.2) in 2017, respectively, for pension benefits and $0.0 in 2018 and 2017, respectively, for other benefits	(0.2		)	(0.4		)	0.3			1.1

Amounts recognized in net periodic benefit cost during the period:
Recognized actuarial loss, net of taxes of $(4.8) and $(3.7) in 2018 and 2017, respectively, for pension benefits and $(0.3) in 2018 and 2017, respectively, for other benefits	(14.9		)	(11.8		)	(1.1		)	(1.0		)
Amortization of prior service cost, net of taxes of $(0.1) 2018 and 2017, for pension benefits and $0.2 in 2018 and 2017 for other benefits	(0.4		)	(0.5		)	0.8			0.8
Total recognized in other comprehensive income	$	(8.9	)	$	(10.2	)	$	(1.5	)	$	1.8

Components of Net Periodic Benefit Cost



	Pension Benefits									Other Benefits
	2018			2017			2016			2018			2017			2016
	(In millions)
Service cost	$	3.6		$	4.0		$	3.6		$	0.4		$	0.4		$	0.3
Interest cost	26.4			28.5			31.3			0.8			0.9			0.8
Expected return on plan assets	(37.5		)	(37.4		)	(37.6		)	(1.1		)	(1.2		)	(1.4		)
Amortization of prior service cost	0.5			0.6			0.8			(1.0		)	(1.0		)	(1.1		)
Recognized actuarial loss (gain)	19.7			15.5			13.6			1.4			1.3			0.8
Total net periodic benefit cost (income)	$	12.7		$	11.2		$	11.7		$	0.5		$	0.4		$	(0.6	)

The following represents the amount of prior service cost and actuarial loss included in accumulated other comprehensive loss that is expected to be recognized in net periodic benefit cost during the twelve months ending December 31, 2018:



	Pension Benefits		Other Benefits
	(In millions)
Actuarial loss, net of taxes of $3.7 for pension benefits and $0.3 for other benefits	$	11.5	$	1.0
Prior service cost, net of taxes of $0.1 for pension benefits and $(0.2) for other benefits	$	0.4	$	(0.8	)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Weighted-Average Assumptions



Weighted-average assumptions used to determine benefit obligations at December 31,		Pension Benefits						Other Benefits
	2018			2017			2018			2017
Discount rate		4.39	%		3.73	%		4.30	%		3.60	%
Rate of compensation increase		4.93	%		4.88	%		N/A			N/A



Weighted-average assumptions used to determine net periodic benefit cost at December 31,		Pension Benefits									Other Benefits
	2018			2017			2016			2018			2017			2016
Discount rate		3.73	%		4.23	%		4.86	%		3.60	%		3.98	%		4.39	%
Expected return on plan assets		7.14	%		7.14	%		7.14	%		7.25	%		7.25	%		7.25	%
Rate of compensation increase		4.88	%		4.88	%		4.80	%		N/A			N/A			N/A

During 2018, we adopted the new MP-2018 mortality improvement projection scale in determining the liability for the U.S. pension plan. This updated scale, along with the change in the discount rate, contributed to a decrease in the projected benefit obligation as of December 31, 2018.

During 2017, we adopted the new MP-2017 mortality improvement projection scale in determining the liability for the U.S. pension plan. This updated scale partially offset the decrease in the discount rate in 2017, the net of which resulted in the increase in the projected benefit obligation as of December 31, 2017.

During 2016, we adopted the new MP-2016 mortality improvement projection scale in determining the liability for the U.S. pension plan. This updated scale partially offset the decrease in the discount rate in 2016, the net of which resulted in the increase in the projected benefit obligation as of December 31, 2016.

Discount Rates. We determine our discount rates primarily based on high-quality, fixed-income investments and yield-to-maturity analyses specific to our estimated future benefit payments available as of the measurement date. Discount rates are reset annually on the measurement date to reflect current market conditions. To determine the discount rate for our U.S. pension and postretirement benefit plans, we use a bond matching approach to select specific bonds that would satisfy our projected benefit payments. We believe the bond matching approach reflects the process we would employ to settle our pension and postretirement benefit obligations. For our Canadian plans we use a third-party yield curve to develop our discount rates. The yield curve provides discount rates related to a dedicated high-quality bond portfolio whose cash flows extend beyond the current period, from which we choose a rate matched to the expected benefit payments required for each plan.

Expected Return on Plan Assets. The expected rate of return on plan assets is based on both our historical returns and forecasted future investment returns by asset class, as provided by our external investment advisor. In 2018, our U.S. pension plan investment loss of 3.2% was below the expected return of 7.25%. The expected return for the USRIP for 2019 is 6.70% following asset allocation changes that resulted in higher allocation to fixed income securities. The CRIP investment loss was 1.3% in 2018 versus the expected return of 6.0%. The expected return for the CRIP for 2019 is 6.0%.

The calculation of the net periodic benefit cost for the USRIP and CRIP utilizes a market-related value of assets. The market-related value of assets recognizes the difference between actual returns and expected returns over five years at a rate of 20% per year.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Healthcare Costs. For the U.S. plan, an initial 6.7% annual rate of increase in the per capita cost of covered healthcare benefits was assumed for 2019 for pre-Medicare coverage. The rate was assumed to decrease gradually to an ultimate rate of 5.0% by 2024. For the Canadian plan, a flat 5.0% annual rate of increase in the per capita cost of covered healthcare benefits was assumed for 2019 and thereafter. Assumed healthcare cost trend rates have a significant effect on the amounts reported for the healthcare plan. A one-percentage point change in assumed healthcare cost trend rates at December 31, 2018 would have had the following effects:



	1-Percentage Point Increase		1-Percentage Point Decrease
	(In millions)
Effect on total service and interest cost components	$	0.1	$	(0.1	)
Effect on accumulated postretirement benefit obligation	$	1.4	$	(1.2	)

We estimate that the future benefits payable for our retirement and postretirement plans are as follows at December 31, 2018:



Years ending December 31, 2018	U.S. Defined Benefit Plans		Non-U.S. Defined Benefit Plans		Other Benefit Plans
	(In millions)
2019	$	42.9	$	1.9	$	1.6
2020	$	43.1	$	1.9	$	1.8
2021	$	43.4	$	1.9	$	1.8
2022	$	43.3	$	2.0	$	1.8
2023	$	43.0	$	2.0	$	1.8
Next five fiscal years to December 31, 2028	$	204.8	$	11.7	$	9.6

Fair Value of Plan Assets. The fair value of the pension assets at December 31, 2018 and 2017, are as follows:



				Fair Value Measurements at Reporting Date Using:
		Fair Value at December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(In millions)
Large-Cap Equity	(1)	$	64.6	$	64.6	$	—	$	—
Small- and Mid-Cap Equity	(1)	18.3		18.3		—		—
International Equity	(1) (2)	90.4		10.0		80.4		—
Fixed Income	(2)	281.7		—		281.7		—
Private Equity	(3)	18.6		—		—		18.6
Hedge Funds	(4)	34.3		—		—		34.3
Real Assets	(5)	19.9		—		—		19.9
Cash	(1)	6.0		6.0		—		—
Total		$	533.8	$	98.9	$	362.1	$	72.8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



				Fair Value Measurements at Reporting Date Using:
		Fair Value at December 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(In millions)
Large-Cap Equity	(1)	$	125.5	$	125.5	$	—	$	—
Small- and Mid-Cap Equity	(1)	39.0		39.0		—		—
International Equity	(1) (2)	105.1		13.2		91.9		—
Fixed Income	(2)	204.0		—		204.0		—
Private Equity	(3)	24.1		—		—		24.1
Hedge Funds	(4)	35.0		—		—		35.0
Real Assets	(5)	18.7		—		—		18.7
Cash	(1)	9.7		9.7		—		—
Total		$	561.1	$	187.4	$	295.9	$	77.8


(1)	Fair value is based on observable market prices for the assets.


(2)	For the portion of this asset class categorized as Level 2, fair value is determined using dealer and broker quotations, certain pricing models, bid prices, quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.

(3)

Private equity investments are initially valued at cost. Fund managers periodically review the valuations utilizing subsequent company-specific transactions or deterioration in the company’s financial performance to determine if fair value adjustments are necessary. Private equity investments are typically viewed as long term, less liquid investments with return of capital coming via cash distributions from the sale of underlying fund assets. The Plan intends to hold these investments through each fund’s normal life cycle and wind down period. As of December 31, 2018 and 2017, we had $9.9 million and $10.7 million, respectively, of remaining commitments related to these private equity investments.


(4)	Fair value is reported by the fund manager based on observable market prices for actively traded assets within the funds, as well as financial models, comparable financial transactions or other factors relevant to the specific asset for assets with no observable market. These investments are redeemable quarterly with a range of 30 – 90 days notice.

(5)

The fair value of Real Assets are reported by the fund manager based on a combination of the following valuation approaches: current replacement cost less deterioration and obsolescence, a discounted cash flow model of income streams, and comparable market sales. As of December 31, 2018 and 2017, we had $0.1 million and $0.5 million, respectively, of remaining commitments related to the real asset investments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table shows a reconciliation of the beginning and ending balances for assets valued using significant unobservable inputs for the years ended December 31, 2018 and 2017:



	Private Equity			Hedge Funds			Real Assets
	(In millions)
Balance at December 31, 2016	$	33.5		$	33.7		$	19.3
Return on plan assets:
Unrealized	(1.8		)	1.8			0.1
Realized	1.0			—			(0.1		)
Purchases	1.0			—			0.5
Sales	(9.6		)	(0.5		)	(1.1		)
Balance at December 31, 2017	$	24.1		$	35.0		$	18.7
Return on plan assets:
Unrealized	$	1.3		$	(0.6	)	$	1.6
Realized	1.7			—			—
Purchases	1.1			—			0.3
Sales	(9.6		)	(0.1		)	(0.7		)
Balance at December 31, 2018	$	18.6		$	34.3		$	19.9

The fair value of the postretirement assets at December 31, 2018 and 2017, are as follows:



				Fair Value Measurements at Reporting Date Using:
Description		Fair Value at December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(In millions)
Large-Cap Equity	(1)	$	1.8	$	1.8	$	—	$	—
Small- and Mid-Cap Equity	(1)	0.5		0.5		—		—
International Equity	(1) (2)	1.9		0.3		1.6		—
Fixed Income	(2)	7.4		—		7.4		—
Private Equity	(3)	0.5		—		—		0.5
Hedge Funds	(4)	1.0		—		—		1.0
Real Assets	(5)	0.6		—		—		0.6
Cash	(1)	0.2		0.2		—		—
Total		$	13.9	$	2.8	$	9.0	$	2.1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



				Fair Value Measurements at Reporting Date Using:
Description		Fair Value at December 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(In millions)
Large-Cap Equity	(1)	$	4.2	$	4.2	$	—	$	—
Small- and Mid-Cap Equity	(1)	1.3		1.3		—		—
International Equity	(1) (2)	2.7		0.5		2.2		—
Fixed Income	(2)	6.0		—		6.0		—
Private Equity	(3)	0.8		—		—		0.8
Hedge Funds	(4)	1.2		—		—		1.2
Real Assets	(5)	0.6		—		—		0.6
Cash	(1)	0.3		0.3		—		—
Total		$	17.1	$	6.3	$	8.2	$	2.6


(1)	Fair value is based on observable market prices for the assets.


(2)	For the portion of this asset class categorized as Level 2, fair value is determined using dealer and broker quotations, certain pricing models, bid prices, quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.

(3)


(4)	Fair value is reported by the fund manager based on observable market prices for actively traded assets within the funds, as well as financial models, comparable financial transactions or other factors relevant to the specific asset for assets with no observable market. These investments are redeemable quarterly with a range of 30 – 90 days notice.


(5)	The fair value of Real Assets are reported by the fund manager based on a combination of the following valuation approaches: current replacement cost less deterioration and obsolescence, a discounted cash flow model of income streams and comparable market sales.

Gross realized and unrealized gains and losses, purchases and sales for Level 3 postretirement assets were not material for the twelve months ended December 31, 2018.

USRIP, or the Plan, Investment and Asset Allocation Strategies. The primary goal of the asset allocation strategy of the Plan is to produce a total investment return which will satisfy future annual cash benefit payments to participants and minimize future contributions from the Company. Additionally, this strategy will diversify the plan assets to minimize nonsystemic risk and provide reasonable assurance that no single security or class of security will have a disproportionate negative impact on the Plan. Investment managers are required to abide by the provisions of ERISA. Standards of performance for each manager include an expected return versus an assigned benchmark, a measure of volatility, and a time period of evaluation.

The asset allocation strategy and investment manager recommendations are determined by the Investment Committee, with the advice of our external advisor. The asset allocation and ranges are approved by our in-house Investment Committee and Plan Administrators, who are Named Fiduciaries under ERISA.

The Investment Committee made the decision in the fourth quarter of 2018, following the completion of an Asset Liability Management study by a third party, to reduce risk in the portfolio by (1) reducing the overall exposure to equities and (2) increasing exposure to fixed income assets that better track the movement in liability. These actions are designed to better

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

protect the funded status of the plan and reduce future funded status volatility. The Investment Committee may elect to make further changes to the asset allocation strategy as the funded status of the Plan improves.

In an effort to meet asset allocation and funded status objectives of the Plan, assets are categorized as Return-Seeking Assets and Liability-Hedging Assets. As of December 31, 2018, the approved allocation ranges were 35% to 65% for each asset category, with a 50/50 targeted allocation. Return-Seeking Assets include any asset class not intended to hedge the Plan’s liabilities. At December 31, 2018, these assets included domestic and international equities, private equity (including secondary private equity), real assets, and hedge funds. Alternative assets have become a smaller part of the asset allocation strategy, as the Plan seeks to maintain a high degree of liquidity. Liability-Hedging Assets represent investments which are meant to provide a hedge relative to the Plan’s liabilities and consist primarily of fixed income securities. Additionally, the Plan allows certain of their managers, subject to specific risk constraints, to utilize derivative instruments in order to enhance asset return, reduce volatility or both. Derivatives are primarily employed by the Plans in their fixed income portfolios and in the hedge fund-of-funds area. Derivatives can be used for hedging purposes to reduce risk.

No shares of Equifax common stock were directly owned by the Plan at December 31, 2018 or 2017. Not more than 5% of the portfolio (at cost), and 10% of the equity portfolio’s market value, shall be invested in the securities of any one issuer, except the U.S. Government and U.S. Government Agencies.

The following asset allocation ranges and actual allocations were in effect as of December 31, 2018 and 2017:



	Range		Actual
USRIP	2018	2017	2018		2017
Large-Cap Equity	5% - 20%	15% - 40%	13.2	%	24.7	%
Small- and Mid-Cap Equity	0% - 15%	0% - 15%	3.7	%	7.6	%
International Equity	5% - 20%	10% - 30%	13.8	%	15.6	%
Private Equity	0% - 10%	2% - 10%	3.8	%	4.7	%
Hedge Funds	0% - 10%	0% - 10%	7.0	%	6.8	%
Real Assets	0% - 10%	2% - 10%	4.1	%	3.7	%
Fixed Income	35% - 65%	20% - 55%	53.2	%	35.1	%
Cash	0% - 15%	0% - 15%	1.2	%	1.8	%

CRIP Investment and Asset Allocation Strategies. The primary goal of the asset allocation strategy of the Plan is to produce a total investment return which will satisfy future annual cash benefit payments to participants and minimize future contributions from the Company. Additionally, this strategy will diversify the plan assets to minimize nonsystemic risk and provide reasonable assurance that no single security or class of security will have a disproportionate impact on the Plan. Due to the high funded status of the Plan, the Investment Committee of the CRIP has adopted a conservative asset allocation of 50/50 in equities and fixed income. The Investment Committee maintains an investment policy for the CRIP, which imposes certain limitations and restrictions regarding allowable types of investments. The current investment policy imposes those restrictions on investments or transactions such as (1) Equifax common stock or securities, except as might be incidental to any pooled funds which the plan may have, (2) commodities or loans, (3) short sales and the use of margin accounts, (4) put and call options, (5) private placements, and (6) transactions which are “related-party” in nature as specified by the Canadian Pension Benefits Standards Act and its regulations.

The following specifies the asset allocation ranges and actual allocation as of December 31, 2018 and 2017:



		Actual
CRIP	Range	2018		2017
Canadian Equities	25% - 50%	35.7	%	35.2	%
International Equities (including U.S. Equities)	0% - 38%	15.6	%	14.9	%
Fixed Income	40% - 60%	48.2	%	49.1	%
Money Market	0% - 10%	0.5	%	0.8	%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Equifax Retirement Savings Plans. Equifax sponsors a tax qualified defined contribution plan, the Equifax Inc.

401(k) Plan, or the Plan. We provide a discretionary match of participants’ contributions, up to four or six percent of employees eligible pay depending on certain eligibility rules under the Plan. We also provide a discretionary direct contribution to certain eligible employees, the percentage of which is based upon an employee’s credited years of service. Company contributions for the Plan during the twelve months ended December 31, 2018, 2017 and 2016 were $30.7 million, $29.7 million and $27.1 million, respectively.

Foreign Retirement Plans. We also maintain defined contribution plans for certain employees in Australia, the U.K., Ireland and Canada. For the years ended December 31, 2018, 2017 and 2016, our contributions related to these plans were $14.1 million, $7.3 million, and $5.9 million, respectively.

Deferred Compensation Plans. We maintain deferred compensation plans that allow for certain management employees and the Board of Directors to defer the receipt of compensation (such as salary, incentive compensation, commissions or shares payable under vested restricted stock units) until a later date based on the terms of the plans. The Company also makes contributions to the accounts of certain executives who are not eligible to participate in either of the Supplemental Retirement Plans. The benefits under our deferred compensation plans are guaranteed by the assets of a grantor trust which, through our funding, make investments in certain mutual funds. The purpose of this trust is to ensure the distribution of benefits accrued by participants of the deferred compensation plans in case of a change in control, as defined in the trust agreement.

Annual Incentive Plan. We have a shareholder-approved Annual Incentive Plan, which is a component of our amended and restated 2008 Omnibus Incentive Plan, for certain key officers that provides for annual or long-term cash awards at the end of various measurement periods, based on the earnings per share, revenue and/or various other criteria over the measurement period. Our total accrued incentive compensation for all incentive plans included in accrued salaries and bonuses on our Consolidated Balance Sheets was $61.7 million and $44.9 million at December 31, 2018 and 2017, respectively.

Employee Benefit Trusts. We maintain employee benefit trusts for the purpose of satisfying obligations under certain benefit plans. These trusts held 0.6 million shares of Equifax stock with a value, at cost, of $5.9 million at December 31, 2018 and 2017, as well as cash, which was not material for both periods presented. The employee benefits trusts are as follows:


•	The Executive Life and Supplemental Retirement Benefit Plan Grantor Trust was used to ensure that the insurance premiums due under the Executive Life and Supplemental Retirement Benefit Plan were paid in case we fail to make scheduled payments following a change in control, as defined in this trust agreement. This trust was terminated in 2016 as the obligations noted above were satisfied.


•	The Supplemental Retirement Plan Grantor Trust’s assets are dedicated to ensure the payment of benefits accrued under our Supplemental Retirement Plan in case of a change in control, as defined in this trust agreement.

The assets in these plans which are recorded on our Consolidated Balance Sheets are subject to creditor’s claims in case of insolvency of Equifax Inc.

ACCUMULATED OTHER COMPREHENSIVE INCOME(LOSS)

Changes in accumulated other comprehensive income(loss) by component, after tax, for the twelve months ended December 31, 2018, are as follows:



	Foreign currency			Pension and other postretirement benefit plans			Cash flow hedging transactions			Total
	(In millions)
Balance, December 31, 2017	$	(103.3	)	$	(307.5	)	$	(1.2	)	$	(412.0	)
Other comprehensive income(loss) before reclassifications	(224.7		)	(5.2		)	—			(229.9		)
Amounts reclassified from accumulated other comprehensive income(loss)	—			15.6			—			15.6
Balance, December 31, 2018	$	(328.0	)	$	(297.1	)	$	(1.2	)	$	(626.3	)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reclassifications out of accumulated other comprehensive income(loss) for the twelve months ended December 31, 2018, are as follows:



Details about accumulated other comprehensive income components	Amount reclassified from accumulated other comprehensive income(loss)			Affected line item in the statement where net income is presented
	(In millions)
Amortization of pension and other postretirement plan items:
Prior service cost	$	0.5		(1)
Recognized actuarial loss	(21.1		)	(1)
	(20.6		)	Total before tax
	5.0			Tax benefit
	$	(15.6	)	Net of tax


(1)	These accumulated other comprehensive income(loss) components are included in the computation of net periodic pension cost (See Note 9 Benefit Plans for additional details).

Changes in accumulated other comprehensive income(loss) related to noncontrolling interests were not material as of December 31, 2018.

RESTRUCTURING CHARGES

In the fourth quarter of 2018 and the fourth quarter of 2016, we recorded $46.1 million ($35.0 million, net of tax) and $5.7 million ($3.7 million, net of tax) of restructuring charges, respectively, all of which were recorded in selling, general and administrative expenses on our Consolidated Statements of Income. These charges were recorded to general corporate expense and resulted from our continuing efforts to realign our internal resources to support the Company’s strategic objectives and increase the integration of our global operations. The 2018 restructuring charge primarily relates to a reduction in headcount. We paid $11.5 million of the 2018 restructuring charges in 2018 and the remaining payments will be completed in 2019.

The 2016 restructuring charge primarily relates to a reduction in headcount. Payments related to the 2016 restructuring charge were substantially completed in 2017.

SEGMENT INFORMATION

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


•	U.S. Information Solutions


•	International


•	Workforce Solutions


•	Global Consumer Solutions

The accounting policies of the reportable segments are the same as those described in our summary of significant accounting policies (see Note 1). We evaluate the performance of these reportable segments based on their operating revenue, operating income and operating margins, excluding any unusual or infrequent items, if any. The measurement criteria for segment profit or loss and segment assets are substantially the same for each reportable segment. Inter-segment sales are not material for all periods presented. All transactions between segments are accounted for at fair market value or cost depending on the nature of the transaction, and no timing differences occur between segments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of segment products and services is as follows:

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

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. In Asia Pacific, Europe, Latin America and Canada, we also provide information, technology and services to support debt collections and recovery management.

Workforce Solutions. This segment includes employment, income and social security number verification services as well as complementary payroll-based transaction services and employment tax management services.

Global Consumer Solutions. This segment includes credit information, credit monitoring and identity theft protection products sold directly to consumers primarily via the internet in the U.S., Canada, and the U.K. We also sell consumer and credit information to resellers who combine our information with other information to provide direct to consumer monitoring, reports and scores.

Segment information for the twelve months ended December 31, 2018, 2017 and 2016 and as of December 31, 2018 and 2017 is as follows:



	Twelve Months Ended December 31,
Operating revenue:	2018		2017		2016
	(In millions)
U.S. Information Solutions	$	1,247.3	$	1,262.7	$	1,236.5
International	966.2		932.3		803.6
Workforce Solutions	826.8		764.2		702.2
Global Consumer Solutions	371.8		403.0		402.6
Total operating revenue	$	3,412.1	$	3,362.2	$	3,144.9



	Twelve Months Ended December 31,
Operating income:	2018			2017			2016
	(In millions)
U.S. Information Solutions	$	441.7		$	539.1		$	537.0
International	108.6			169.3			111.5
Workforce Solutions	332.7			331.9			295.5
Global Consumer Solutions	68.6			106.2			112.4
General Corporate Expense	(503.6		)	(314.8		)	(231.3		)
Total operating income	$	448.0		$	831.7		$	825.1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



	December 31,
Total assets:	2018		2017
	(In millions)
U.S. Information Solutions	$	1,654.8	$	1,587.3
International	2,959.1		3,145.7
Workforce Solutions	1,249.5		1,227.4
Global Consumer Solutions	255.0		254.0
General Corporate	1,034.8		1,019.0
Total assets	$	7,153.2	$	7,233.4



	Twelve Months Ended December 31,
Depreciation and amortization expense:	2018		2017		2016
	(In millions)
U.S. Information Solutions	$	79.2	$	83.7	$	82.1
International	118.5		109.9		101.6
Workforce Solutions	45.8		42.1		42.7
Global Consumer Solutions	14.9		13.2		9.6
General Corporate	52.0		38.9		29.4
Total depreciation and amortization expense	$	310.4	$	287.8	$	265.4



	Twelve Months Ended December 31,
Capital expenditures:	2018		2017		2016
	(In millions)
U.S. Information Solutions	$	42.0	$	18.6	$	19.1
International	104.4		59.7		50.3
Workforce Solutions	44.0		28.9		22.2
Global Consumer Solutions	29.4		15.0		12.3
General Corporate	148.3		91.8		87.6
Total capital expenditures*	$	368.1	$	214.0	$	191.5

*Amounts above include accruals for capital expenditures.

Financial information by geographic area is as follows:



	Twelve Months Ended December 31,
	2018				2017				2016
					(In millions)
Operating revenue (based on location of customer):	Amount		%		Amount		%		Amount		%
U.S.	$	2,405.1	71	%	$	2,379.7	71	%	$	2,290.9	73	%
U.K.	316.4		9	%	311.2		9	%	232.1		7	%
Australia	321.2		9	%	304.0		9	%	214.3		7	%
Canada	158.5		5	%	148.9		4	%	134.3		4	%
Other	210.9		6	%	218.4		7	%	273.3		9	%
Total operating revenue	$	3,412.1	100	%	$	3,362.2	100	%	$	3,144.9	100	%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



	December 31,
	2018				2017
			(In millions)
Long-lived assets:	Amount		%		Amount		%
U.S.	$	3,457.0	55	%	$	3,274.5	53	%
U.K.	289.0		5	%	303.2		5	%
Australia	2,009.7		32	%	2,207.1		35	%
Canada	105.7		2	%	67.4		1	%
Other	389.5		6	%	382.8		6	%
Total long-lived assets	$	6,250.9	100	%	$	6,235.0	100	%

QUARTERLY FINANCIAL DATA (UNAUDITED)

Quarterly financial data for 2018 and 2017 was as follows:



	Three Months Ended
2018	March 31,		June 30,		September 30,		December 31,
	(In millions, except per share data)
Operating revenue	$	865.7	$	876.9	$	834.2	$	835.3
Operating income	$	144.2	$	193.6	$	64.1	$	46.1
Consolidated net income	$	93.8	$	146.1	$	39.6	$	26.7
Net income attributable to Equifax	$	90.9	$	144.8	$	38.4	$	25.6
Basic earnings per share*
Net income attributable to Equifax	$	0.76	$	1.20	$	0.32	$	0.21
Diluted earnings per share*
Net income attributable to Equifax	$	0.75	$	1.19	$	0.32	$	0.21



	Three Months Ended
2017	March 31,		June 30,		September 30,		December 31,
	(In millions, except per share data)
Operating revenue	$	832.2	$	856.7	$	834.8	$	838.5
Operating income	$	218.6	$	265.9	$	154.7	$	192.6
Consolidated net income	$	155.4	$	167.6	$	100.5	$	174.4
Net income attributable to Equifax	$	153.3	$	165.4	$	96.3	$	172.3
Basic earnings per share*
Net income attributable to Equifax	$	1.28	$	1.37	$	0.80	$	1.44
Diluted earnings per share*
Net income attributable to Equifax	$	1.26	$	1.36	$	0.79	$	1.42


*	The sum of the quarterly EPS does not equal the annual EPS due to changes in the weighted-average shares between periods. Other amounts may not equal the annual total due to rounding between periods.

The comparability of our quarterly financial results during 2018 and 2017 was impacted by certain events, as follows:


•	For the year ended December 31, 2018, we recorded $326.2 million in pre-tax expenses related to the 2017 cybersecurity incident. In addition, we recorded a charge for the realignment of resources and other costs of $46.1 million in the fourth quarter of 2018.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


•	For the year ended December 31, 2017, we recorded $114.0 million in pretax expenses related to the 2017 cybersecurity incident. In addition, as a result of the Tax Act the company recorded preliminary adjustments totaling a net tax benefit of $48.3 million in the fourth quarter of 2017.

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