What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-07-22 compared with 2021-04-22 · 192 added, 175 removed, 285 unchanged (56% of the section changed)

10 unchanged sentences

We also provide information, technology and services to support debt collections and recovery management.

Additionally, we are a leading provider of payroll-related and human resource management business process outsourcing services in the United States of America, or U.S.

Additionally, we are a leading provider of payroll-related and human resource management business process outsourcing services in the U.S.

For consumers, we provide products and services to help people understand, manage and protect their personal information and make more informed financial decisions.

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North America (U.S.

and Canada), Asia Pacific (Australia, New Zealand and India), Europe (the United Kingdom, or U.K., Spain and Portugal) and Latin America (Argentina, Chile, Costa Rica, Ecuador, El Salvador, Honduras, Mexico, Paraguay, Peru and Uruguay).

and Canada), Asia Pacific (Australia, New Zealand and India), Europe (the U.K., Spain and Portugal) and Latin America (Argentina, Chile, Costa Rica, Ecuador, El Salvador, Honduras, Mexico, Paraguay, Peru and Uruguay).

We maintain support operations in the Republic of Ireland, Chile, Costa Rica and India.

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Recent Events and Company Outlook

As further described in our 2020 Form 10-K, we operate in the United States, which represented 78% of our revenue in 2020, and internationally in 24 countries.

As further described in our 2020 Form 10-K, we operate in the U.S., which represented 78% of our revenue in 2020, and internationally in 24 countries.

Our products and services span a wide variety of vertical markets including financial services, mortgage, federal, state and local governments, automotive, telecommunications and many others.

On March 11, 2020, the World Health Organization designated the novel coronavirus disease (“COVID-19”) as a global pandemic.

In March 2020, the World Health Organization designated the novel coronavirus disease (“COVID-19”) as a global pandemic.

The impact of COVID-19 and related actions to attempt to control its spread began to impact our consolidated operating results in the first quarter of 2020.

During 2020, the impact on the operating results in each country in which we operate differed based on the conditions and the vertical markets we serve in that country with the impact of the pandemic experienced most severely by our International business.

In the first quarter of 2021, as efforts to minimize the spread of COVID-19 have been more successful and access to vaccinations has increased, our consolidated revenue grew when compared to 2020, reflecting strong U.S.

mortgage market demand, recovering country economies, Equifax-led initiative growth and, to a lesser extent, revenue from acquired companies.

A more thorough discussion of our business unit results are included under the heading “Segment Results” in the Management’s Discussion and Analysis of Financial Condition and Results of Operation section of this Form 10-Q.

Details of the impact of COVID-19 to our 2020 results can be found under the heading “Segment Financial Results” in the Management’s Discussion and Analysis of Financial Condition and Results of Operation section of the 2020 Form 10-K.

In the second quarter and first six months of 2021, as efforts to minimize the spread of COVID-19 have been more successful and access to vaccinations has increased, our consolidated revenue grew when compared to 2020, reflecting the continuing strong U.S.

mortgage market demand, recovering country economies, Equifax-initiative growth and, to a lesser extent, revenue from acquired companies.

A more thorough discussion of our business unit results are included under the heading “Segment Financial Results” in the Management’s Discussion and Analysis of Financial Condition and Results of Operation section of this Form 10-Q.

We are unable to determine the severity or duration of the impact of the COVID-19 pandemic on the individual markets in the countries we serve or how this impact will change with time.

Although consolidated revenue has grown during the first quarter of 2021 when compared to 2020, due to the uncertain effects on the global economy caused by the impact of COVID-19, the impact on our future results of operations related to the COVID-19 pandemic are unclear.

Although consolidated revenue has grown during the second quarter and first six months of 2021 when compared to 2020, due to the uncertain effects on the global economy caused by the impact of COVID-19, the impact on our future results of operations related to the COVID-19 pandemic are unclear.

We expect that the global COVID-19 pandemic will continue to impact our business and results of operations.

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(iv) executing on our cloud technology, data and security transformation per our previously stated plans.

In jurisdictions where local restrictions were implemented to prevent the further spread of the virus allow, our employees can work from their assigned offices, with limits placed on the number of employees on site at one time.

For employees working at our offices and facilities, we have instituted social distancing protocols, increased the level of cleaning and sanitizing in those facilities and undertaken other actions to make these sites safer.

We have also substantially reduced employee travel to only essential business needs.

As part of our business continuity plans, we are generally following the requirements and protocols published by the U.S.

We are generally following the requirements and protocols published by the U.S.

Centers for Disease Control and the World Health Organization, and state and local governments.

If public health authorities dictate further measures to limit further spread of the virus, we may need to

reinstate our business continuity plans in certain countries or regions in which we operate.

As of the date of this filing, we do not believe our work from home and return to office protocol have materially adversely impacted our internal controls, financial reporting systems or our operations.

In jurisdictions where local restrictions have been lifted, as is the case at our major U.S.

locations, our employees are returning to work to their assigned offices in conjunction with jurisdictional guidance.

In jurisdictions where the local restrictions that were implemented to prevent the further spread of the virus allow, our employees can work from their assigned offices or from home, with limits placed on the number of employees on site at one

Generally across our facilities, we have increased the level of cleaning and sanitizing and undertaken other actions to make these sites safer, including social distancing protocols.

We have also substantially reduced employee travel.

If public health authorities dictate further measures to limit further spread of the virus, we may need to reinstate our business continuity plans in certain countries or regions in which we operate.

As of the date of this filing, we do not believe our work from home and return to office protocols have materially adversely impacted our internal controls, financial reporting systems or our operations.

Our data and analytics, product and sales teams are focused on how to refine existing products and services, as well as generate new products and services, to meet the changing needs of our customers in this environment.

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To date, the change to our working environment has not caused material disruptions in the execution of these plans.

As a response to the ongoing COVID-19 pandemic, we have implemented plans to manage our costs.

We have significantly limited the addition of new employees and third party contracted services, eliminated all travel except where necessary to meet customer or regulatory needs, and acted to limit discretionary spending.

As a response to the ongoing COVID-19 pandemic, we implemented plans to manage our costs.

We limited the addition of new employees and third party contracted services, limited most travel except where necessary to meet customer or regulatory needs, and acted to limit discretionary spending.

The pace of recovery of the global economy from the COVID-19 induced recession remains uncertain and may affect certain markets or regions we serve differently.

Any future asset impairment charges, increase in allowance for doubtful accounts, or restructuring charges could be more likely and will be dependent on the severity and duration of this crisis.

In light of the evolving health, social, economic and business environment, governmental regulations or mandates, and business disruptions that could occur, the potential impact that COVID-19 could have on our financial condition and operating results remains highly uncertain.

For more information, see “Item 1A.

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Legal Proceedings” in this Form 10-Q.

We did not record any settlement expenses related to the resolution of these proceedings and investigations for the three months ended March 31, 2021 and 2020.

We did not record any settlement expenses related to the resolution of these proceedings and investigations for the three or six months ended June 30, 2021 and 2020.

To date, we have recorded legal settlement expenses, net of insurance recoveries, of $800.9 million in selling, general, and administrative expenses in our Consolidated Statements of Income (Loss).

As of March 31, 2021, $345.0 million is outstanding on the Consolidated Balance Sheet within other current liabilities related to the U.S.

As of June 30, 2021, $345.0 million is outstanding on the Consolidated Balance Sheet within other current liabilities related to the U.S.

Consumer MDL Litigation.

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We are currently executing substantial initiatives in security and consumer support, and a company-wide transformation of our technology platforms to cloud based technologies, which we refer to as our technology transformation, and incurred substantially increased expenses and capital expenditures in 2018, 2019 and 2020 related to these initiatives.

We expect to continue to continue to incur additional expenses and capital expenditures in the remainder of 2021 related to these initiatives, although at reduced levels compared to those incurred in 2020.

We expect to continue to incur additional expenses and capital expenditures in the remainder of 2021 related to these initiatives, although at reduced levels compared to those incurred in 2020.

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

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We also provide information and technology services to support lenders and other creditors in the collections and recovery management process.

Global Consumer Solutions revenue is both transaction and subscription based and is derived from the sale of credit monitoring and identity theft protection products, which we deliver electronically to consumers primarily via the internet in the U.S., Canada, and the U.K.

GCS revenue is both transaction and subscription based and is derived from the sale of credit monitoring and identity theft protection products, which we deliver electronically to consumers primarily via the internet in the U.S., Canada, and the U.K.

We also sell consumer and credit information to resellers who combine our information with other information to provide direct-to-consumer monitoring, reports and scores.

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Approximately 79% and 80% of our revenue was generated in the U.S.

during the three months ended March 31, 2021 and 2020, respectively.

during the three months ended June 30, 2021 and 2020, respectively.

Approximately 79% and 78% of our revenue was generated in the U.S.

during the six months ended June 30, 2021 and 2020, respectively.

Key Performance Indicators.

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These performance indicators include measurements of operating revenue, change in operating revenue, operating income, operating margin, net income, diluted earnings per share, cash provided by operating activities and capital expenditures.

The key performance indicators for the three months ended March 31, 2021 and 2020 were as follows:

The key performance indicators for the three and six months ended June 30, 2021 and 2020 were as follows:

Key Performance Indicators

Three Months Ended March 31,

(In millions, except per share data)

Three Months Ended June 30, Six months ended June 30,

2021 2020 2021 2020

(In millions, except per share data) (In millions, except per share data)

Operating revenue $ 1,234.8 $ 982.8 $ 2,447.8 $ 1,940.8

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Operational and Financial Highlights

• We repurchased 0.2 million shares of our common stock on the open market for $34.1 million during the first three months of 2021.

At March 31, 2021, $556.0 million was available for future purchases of common stock under our share repurchase authorization.

• We paid out $47.5 million or $0.39 per share in dividends to our shareholders during the first three months of 2021.

RESULTS OF OPERATIONS—THREE MONTHS ENDED MARCH 31, 2021 AND 2020

• We repurchased 0.4 million shares of our common stock on the open market for $69.9 million during the first six months of 2021.

At June 30, 2021, $520.2 million was available for future purchases of common stock under our share repurchase authorization.

• We paid out $95.0 million or $0.78 per share in dividends to our shareholders during the first six months of 2021.

RESULTS OF OPERATIONS—THREE MONTHS ENDED JUNE 30, 2021 AND 2020

Consolidated Financial Results

Operating Revenue

Three Months Ended March 31, Change

Three Months Ended June 30, Change Six Months Ended June 30, Change

Consolidated Operating Revenue 2021 2020 $ % 2021 2020 $ %

(In millions)

(In millions) (In millions)

Workforce Solutions $ 495.7 $ 352.9 $ 142.8 40 % $ 976.5 $ 654.6 $ 321.9 49 %

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Consolidated operating revenue $ 1,234.8 $ 982.8 $ 252.0 26 % $ 2,447.8 $ 1,940.8 $ 507.0 26 %

Revenue increased by $255.1 million, or 27%, for the first quarter of 2021 compared to the same period in 2020.

Total revenue was positively impacted by foreign exchange rates, which increased revenue by $19.3 million, or 2%, in the first quarter of 2021, compared to the same period in 2020.

Revenue in the first quarter of 2021 increased primarily due to growth in our Workforce Solutions and USIS businesses, due to strong U.S.

mortgage related revenue and a return to growth in non-mortgage related revenue.

Our International business also returned to growth in the quarter.

These increases were partially offset by declines in GCS.

Revenue increased by $252.0 million, or 26%, and by $507.0 million, or 26%, for the second quarter and first six months of 2021, respectively, compared to the same periods in 2020.

Total revenue was positively impacted by foreign exchange rates, which increased revenue by $26.2 million and $45.4 million, or 3% and 2%, for the second quarter and first six months of 2021, respectively, compared to the same periods in 2020.

Revenue in the second quarter and first six months of 2021 increased primarily due to growth in Workforce Solutions, USIS and International businesses, partially offset by a decline in GCS.

Operating Expenses

Three Months Ended March 31, Change

Three Months Ended June 30, Change Six Months Ended June 30, Change

Consolidated Operating Expenses 2021 2020 $ % 2021 2020 $ %

(In millions)

(In millions) (In millions)

Consolidated cost of services $ 483.0 $ 409.3 $ 73.7 18 % $ 966.2 $ 823.4 $ 142.8 17 %

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Consolidated operating expenses $ 928.8 $ 816.0 $ 112.8 14 % $ 1,835.2 $ 1,638.1 $ 197.1 12 %

Cost of services increased $69.2 million for the first quarter of 2021, compared to the same period in 2020.

The increase was primarily due to higher royalty and production costs, which includes third party cloud usage fees.

The impact of changes in foreign exchange rates on costs of services led to an increase of $10.6 million in the first quarter of 2021, compared to the same period in 2020.

Selling, general and administrative expenses decreased $7.2 million for the first quarter of 2021, compared to the same period in 2020.

The decrease was due to lower incremental technology and data security costs as well as lower business travel costs, partially offset by higher people costs.

The impact of changes in foreign currency exchange rates increased selling, general and administrative expenses by $3.9 million for the first quarter of 2021, compared to the same period in 2020.

Depreciation and amortization expense increased $22.4 million for the first quarter of 2021, compared to the same period in 2020.

Cost of services increased $73.7 million and $142.8 million in the second quarter and first six months of 2021, respectively, compared to the same periods in 2020.

The increases for both periods were primarily due to higher royalty costs, production costs, which include third party cloud usage fees, and people costs, partially offset by lower incremental technology and data security costs.

The impact of changes in foreign exchange rates on costs of services led to an increase of $13.7 million and $24.3 million in the second quarter and first six months of 2021, respectively, compared to the same periods in 2020.

Selling, general and administrative expenses increased $18.5 million and $11.3 million for the second quarter and first six months of 2021, respectively, compared to the same periods in 2020.

The increases for both periods were due to increases in people and advertising costs, partially offset by lower incremental technology and data security costs, as well as lower business travel costs for the first six months of 2021.

The impact of changes in foreign currency exchange rates increased selling, general and administrative expenses by $5.8 million and $9.7 million in the second quarter and first six months of 2021, respectively, compared to the same periods in 2020.

Depreciation and amortization expense increased $20.6 million and $43.0 million in the second quarter and first six months of 2021, respectively, compared to the same periods in 2020.

The increases are due to the higher amortization of capitalized internal-use software and system costs from technology transformation capital spending incurred in prior years, as well as higher amortization of acquisition costs.

Operating Income and Operating Margin

Three Months Ended March 31, Change

Three Months Ended June 30, Change Six Months Ended June 30, Change

Consolidated Operating Income 2021 2020 $ % 2021 2020 $ %

(In millions)

(In millions) (In millions)

Consolidated operating revenue $ 1,234.8 $ 982.8 $ 252.0 26 % $ 2,447.8 $ 1,940.8 $ 507.0 26 %

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Consolidated operating income $ 306.0 $ 166.8 $ 139.2 83 % $ 612.6 $ 302.7 $ 309.9 102 %

Consolidated operating margin 25.3 % 14.2 % 11.1 pts

Total company operating margin increased by 11.1 percentage points for the first quarter of 2021, compared to the same period in 2020.

The margin increase is due to increased revenue and a decrease in incremental technology and data security costs, partially offset by increased royalty and production costs, as well as depreciation expense.

Interest Expense and Other (Expense) Income, net

Three Months Ended March 31, Change

Consolidated Interest Expense and Other Income, net 2021 2020 $ %

(In millions)

Consolidated operating margin 24.8 % 17.0 % 7.8 pts 25.0 % 15.6 % 9.4 pts

Total company operating margin increased by 7.8 percentage points and 9.4 percentage points in the second quarter and first six months of 2021, respectively, compared to the same periods in 2020.

The margin increase is due to increased revenue and decreased incremental technology and data security costs, partially offset by increased royalty and production costs, people costs, and depreciation expense.

Interest Expense and Other Income (Expense), net

Three Months Ended June 30, Change Six Months Ended June 30, Change

Consolidated Interest Expense and Other Income (Expense), net 2021 2020 $ % 2021 2020 $ %

(In millions) (In millions)

Consolidated interest expense $ (34.9) $ (36.6) $ 1.7 (5) % $ (72.1) $ (67.3) $ (4.8) 7 %

Consolidated other (expense) income, net (0.9) 51.1 (52.0) nm

Consolidated other income (expense), net 6.0 (1.8) 7.8 nm 5.1 49.3 (44.2) nm

Average cost of debt 3.4 % 3.5 % 3.4 % 3.5 %

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nm - not meaningful

Interest expense increased by $6.5 million for the first quarter of 2021, compared to the same period in 2020.

The increase is due to the issuance of $1.0 billion senior notes in April 2020.

Other (expense) income, net, decreased by $52.0 million for the first quarter of 2021, compared to the same period in 2020.

The decrease is due to a $32.9 million gain recorded in the first quarter of 2020 related to a fair value adjustment resulting from the acquisition of the remaining minority interest of our India joint venture, and in the first quarter of 2021 a loss of $11.9 million due to an unrealized fair value adjustment of our investment in Brazil, as well as foreign currency impacts of certain intercompany loans.

Three Months Ended March 31, Change

Interest expense decreased by $1.7 million and increased by $4.8 million in the second quarter and first six months of 2021, respectively, compared to the same periods in 2020.

The decrease for the second quarter of 2021 is due to the retirement of the 2.3% senior notes during the period.

The increase for the first six months of 2021 is due to the issuance of $1.0 billion senior notes in April 2020, partially offset by the retirement of the 2.3% senior notes.

Other income (expense), net, increased by $7.8 million and decreased by $44.2 million in the second quarter and first six months of 2021, respectively, compared to the same periods in 2020.

The increase for the second quarter is due to the change in foreign currency impacts of certain intercompany loans year over year, partially offset by the unrealized loss in 2021 related to the fair value adjustment of our investment in Brazil.

The decrease for the first six months of 2021 is due to a $32.9 million gain recorded in the first quarter of 2020 related to a fair value adjustment resulting from the acquisition of the remaining minority interest of our India joint venture.

The first six months of 2021 was also impacted by the unrealized loss resulting from the fair value adjustment of our investment in Brazil in 2021, partially offset by the change in foreign currency impacts of certain intercompany loans year over year.

Three Months Ended June 30, Change Six Months Ended June 30, Change

Consolidated Provision for Income Taxes 2021 2020 $ % 2021 2020 $ %

(In millions)

(In millions) (In millions)

Consolidated provision for income taxes $ (61.2) $ (28.0) $ (33.2) 119 % $ (126.8) $ (65.5) $ (61.3) 94 %

Effective income tax rate 22.1 % 21.8 % 23.2 % 23.0 %

Our effective income tax rate was 24.4% for the three months ended March 31, 2021, compared to 24.0% f or the three months ended March 31, 2020.

Our effective tax rate was slightly higher during the first quarter of 2021 as compared to 2020 due to a slightly greater foreign income tax rate differential and lower forecasted research and development credits in 2021.

Three Months Ended March 31, Change

Our effective income tax rate was 22.1% for the three months ended June 30, 2021, compared to 21.8% for the three months ended June 30, 2020.

Our effective income tax rate was 23.2% for the six months ended June 30, 2021, compared to 23.0% for the six months ended June 30, 2020.

Our effective tax rate was slightly higher for the second quarter and first six months of 2021 as compared to 2020 due to a greater foreign income tax rate differential.

Three Months Ended June 30, Change Six Months Ended June 30, Change

Consolidated Net Income 2021 2020 $ % 2021 2020 $ %

(In millions, except per share amounts)

(In millions, except per share amounts) (In millions, except per share amounts)

Consolidated operating income $ 306.0 $ 166.8 $ 139.2 83 % $ 612.6 $ 302.7 $ 309.9 102 %

Consolidated other (expense) income, net (38.1) 20.4 (58.5) (287) %

Consolidated interest expense and other income (expense), net (28.9) (38.4) 9.5 (25) % (67.0) (18.0) (49.0) 272 %

Consolidated provision for income taxes (61.2) (28.0) (33.2) 119 % (126.8) (65.5) (61.3) 94 %

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Weighted-average shares used in computing diluted earnings per share 123.5 122.7 123.4 122.7

Consolidated net income increased by $84.1 million for the first quarter of 2021, compared to the same period in 2020.

The increase for the first quarter of 2021 is due to increased operating income resulting from the increase in revenue, partially offset by the reduction in other (expense) income, net, as well as higher tax expense.

Consolidated net income increased by $115.5 million and $199.6 million for the second quarter and the first six months of 2021, respectively, compared to the same periods in 2020.

The increase for both periods is due to increased operating income resulting from the increase in revenue from three of our operating segments, partially offset by higher tax expense, as well as the reduction in other income (expense) for the first six months of 2021.

Segment Financial Results

Workforce Solutions

Three Months Ended March 31, Change

Three Months Ended June 30, Change Six Months Ended June 30, Change

Workforce Solutions 2021 2020 $ % 2021 2020 $ %

(In millions)

(In millions) (In millions)

Operating revenue:

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Total operating income $ 265.2 $ 174.2 $ 91.0 52 % $ 529.9 $ 307.7 $ 222.2 72 %

Operating margin 55.1 % 44.3 % 10.8 pts

Workforce Solutions revenue increased by 59% for the first quarter of 2021, compared to the same period in 2020.

The increase was due to strong growth in Verification Services driven by growth in mortgage.

There was also growth in Employer Services due to increases in unemployment claims management during the first quarter of 2021 as compared to the prior year period.

Operating margin 53.5 % 49.4 % 4.1 pts 54.3 % 47.0 % 7.3 pts

Workforce Solutions revenue increased by 40% and 49% in the second quarter and the first six months of 2021, respectively, compared to the same periods in 2020.

The increases were due to strong growth in Verification Services driven by growth in both mortgage and non-mortgage verticals.

Employer Services revenue increased for the first six months of 2021 as growth across our onboarding and tax services businesses, as well as acquisition related growth were partially offset by a decline in our unemployment claims business.

Employer Services revenue was flat in the second quarter of 2021 as a decline in our unemployment claims business as compared to the prior year period was offset by growth across our onboarding and tax services businesses, as well as acquisition related growth.

Verification Services

Revenue increased by 75% for the first quarter of 2021, compared to the same period in 2020, due to strong growth in the mortgage vertical and, to a lesser extent, talent solutions vertical both supported by continued addition of new records to The Work Number database.

Revenue increased by 57% and 65% in the second quarter and the first six months of 2021, respectively, compared to the same periods in 2020.

The increase for both periods is due to strong growth in the mortgage vertical and, to a lesser extent, the talent solutions vertical despite the reduction in mortgage inquiries beginning during the second quarter of 2021.

Revenue growth for both mortgage and non-mortgage verticals are supported by continued addition of new records to The Work Number database.

Employer Services

Revenue increased by 17% for the first quarter of 2021, compared to the same period in 2020, due to increases in our unemployment claims management services, as U.S.

unemployment claims increased due to the economic impact of COVID-19 on the U.S.

Revenue was flat for the second quarter of 2021 and increased by 8% in the first six months of 2021, compared to the same periods in 2020.

Revenue in the second quarter of 2021 was flat, as acquisition revenue and the increase in employee services was offset by a decrease in unemployment claims revenue as the number of claims greatly increased in 2020 due to the economic impact of COVID-19 on the U.S.

The increase in the first six months of 2021 is due to acquisition revenue and growth in employee services, partially offset by the decrease in unemployment claims management revenue due to the reduction in unemployment claims compared to the prior year period.

Workforce Solutions Operating Margin

Operating margin increased to 55.1% for the first quarter of 2021 from 44.3% for the first quarter of 2020.

The increased margin was due to an increase in revenue, partially offset by increases in royalty and production costs.

Three Months Ended March 31, Change

Operating margin increased to 53.5% for the second quarter of 2021 from 49.4% for the second quarter of 2020 and to 54.3% for the first six months of 2021 from 47.0% for the first six months of 2020.

The increased margins were due to the increase in revenue, partially offset by increases in royalty costs, production costs and depreciation expense.

Three Months Ended June 30, Change Six Months Ended June 30, Change

Information Solutions 2021 2020 $ % 2021 2020 $ %

(In millions)

(In millions) (In millions)

Operating revenue:

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Total operating income $ 126.1 $ 113.1 $ 13.0 11 % $ 265.8 $ 220.7 $ 45.1 20 %

Operating margin 34.1 % 31.4 % 2.7 pts

USIS revenue increased by 19% for the first quarter 2021, compared to the same period in 2020, due to improvements in our core credit decisioning services and mortgage solutions volumes related to the continued strength of the U.S.

mortgage market in 2021.

Operating margin 31.1 % 30.9 % 0.2 pts 32.6 % 31.1 % 1.5 pts

USIS revenue increased by 11% and 15% in the second quarter and the first six months of 2021, respectively, compared to the same periods in 2020.

The increase in the second quarter of 2021 is due to improvements in our core credit decisioning services, acquisition revenue and financial marketing services, partially offset by a slight decrease in mortgage solutions due to declining mortgage inquiry volumes.

The increase for the first six months of 2021 is due to improvements in our core credit decisioning services, acquisition revenue, financial marketing services, as well as mortgage solutions related to the overall strength of the U.S.

mortgage market as compared to the prior year.

Online Information Solutions

Revenue increased by 19% for the first quarter of 2021, compared to the same period in 2020.

The increase was due to improved core credit decisioning services volumes related to improvements in the mortgage market as well as revenue related to the Kount acquisition.

Also, we are beginning to see growth year over year related to non-mortgage online revenue, which started to decline in the second quarter of 2020 due to the economic impact of COVID-19.

Revenue increased by 13% and 16% in the second quarter and the first six months of 2021, respectively, compared to the same periods in 2020.

The increases were due to improved core credit decisioning services volumes as well as revenue related to the Kount acquisition.

Mortgage Solutions

Revenue increased by 27% for the first quarter of 2021, compared to the same period in 2020, due to increased mortgage market transaction volumes.

Revenue decreased by 4% in the second quarter of 2021 and increased by 10% in the first six months of 2021, compared to the same periods in 2020.

Mortgage origination transaction volumes are up for the first six months of 2021 but have started to decline in the second quarter, as compared to the prior year.

Financial Marketing Services

Revenue increased by 12% for the first quarter of 2021, compared to the same period in 2020, as customers have increased marketing activities as the U.S.

economy continues its recovery from the economic impact of COVID-19, which began in the second half of March 2020.

Revenue increased by 14% and 13% in the second quarter and the first six months of 2021, respectively, compared to the same periods in 2020.

The increase in both periods is due to increased marketing activities by customers as the U.S.

economy continues its recovery from the economic impact of COVID-19.

USIS Operating Margin

USIS operating margin increased to 34.1% in the first quarter of 2021 from 31.4% in the first quarter of 2020.

The margin increase during the first quarter of 2021 was due to an increase of revenue and a decrease in incremental technology and data security costs, partially offset by an increase in royalty, depreciation and production costs.

USIS operating margin increased to 31.1% for the second quarter of 2021 from 30.9% for the second quarter of 2020 and to 32.6% for the first six months of 2021 from 31.1% for the first six months of 2020.

The slight margin increases for the second quarter and, to a greater extent, the first six months of 2021, were due to the increase in revenue and decrease in incremental technology and data security costs, partially offset by the increase in royalty, depreciation and production costs.

International

Three Months Ended March 31, Change

Three Months Ended June 30, Change Six Months Ended June 30, Change

International 2021 2020 $ % 2021 2020 $ %

(In millions)

(In millions) (In millions)

Operating revenue:

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Total operating income $ 29.3 $ (6.2) $ 35.5 573 % $ 57.2 $ 9.1 $ 48.1 529 %

Operating margin 11.5 % 7.1 % 4.4 pts

International revenue increased by 12% for the first quarter of 2021, compared to the same period in 2020.

On a local currency basis, revenue increased by 3% for the first quarter of 2021, driven by increases in Asia Pacific, Canada and Latin America, partially offset by declines in Europe.

Operating margin 11.7 % (3.4) % 15.1 pts 11.6 % 2.3 % 9.3 pts

International revenue increased by 39% and 24% in the second quarter and the first six months of 2021, respectively, compared to the same periods in 2020.

On a local currency basis, revenue increased by 25% and 13% in the second quarter and the first six months of 2021, respectively, driven by increases in all geographies as local economies continue to recover from negative impacts of COVID-19.

Local currency fluctuations against the U.S.

dollar positively impacted revenue by $18.5 million, or 9%, for the first quarter of 2021.

On a local currency basis, revenue increased by 7% for the first quarter of 2021, compared to the same period in 2020.

The increase in revenue for the first quarter of 2021 was driven by growth in our commercial business in Australia.

dollar positively impacted revenue by $24.9 million, or 14%, for the second quarter of 2021 and by $43.4 million, or 11%, for the first six months of 2021.

On a local currency basis, revenue increased by 21% and 13% in the second quarter and the first six months of 2021, respectively, compared to the same periods in 2020.

The increases in both periods were driven by growth in our commercial and identity and fraud businesses in Australia, as well as growth in our Australian consumer business mainly for the second quarter of 2021.

Additionally, the increase in revenue for the second quarter is also attributable to growth in India due to higher consumer volumes related to economic recovery from the impacts of COVID-19.

Local currency fluctuations against the U.S.

dollar positively impacted revenue by $12.6 million, or 18%, for the first quarter of 2021.

Reported revenue increased by 25% for the first quarter of 2021, compared to the same period in 2020.

On a local currency basis, revenue decreased by 5% for the first quarter of 2021, compared to the same period in 2020.

The decrease was mainly in the consumer vertical driven by the lower economic activity in the U.K.

Our debt management vertical was also negatively affected as government agencies temporarily halted placing debt amidst the COVID-19 pandemic.

dollar positively impacted revenue by $12.8 million, or 19%, and $25.3 million, or 19% for the second quarter and the first six months of 2021, respectively.

Reported revenue increased by 40% and 32% in the second quarter and the first six months of 2021, respectively, compared to the same periods in 2020.

On a local currency basis, revenue increased by 27% and 9% in the second quarter and the first six months of 2021, respectively, compared to the same periods in 2020.

The increases in both periods were driven by growth in the consumer and commercial verticals for the U.K.

and Spain due to improving economic conditions in the second quarter of 2021, as well as growth in the debt management vertical driven by higher volumes within the private sector.

Local currency fluctuations against the U.S.

dollar negatively impacted revenue by $5.3 million, or 8%, for the first quarter 2021.

Reported revenue increased by 3% for the first quarter of 2021, compared to the same period in 2020.

dollar positively impacted revenue by $7.2 million, or 15%, and $12.5 million, or 11% for the second quarter and the first six months of 2021, respectively.

Reported revenue increased by 42% and 20% in the second quarter and the first six months of 2021, respectively, compared to the same periods in 2020.

Latin America

On a local currency basis, revenue increased by 1% for the first quarter of 2021, compared to the same period in 2020.

The increase was driven by price increases in Argentina, partially offset by continued negative impacts of COVID-19 across the entire region.

On a local currency basis, revenue increased by 30% and 14% in the second quarter and the first six months of 2021, respectively, compared to the same periods in 2020.

The increases in both periods were driven by price increases in Argentina and growth in the consumer vertical primarily for Argentina, Ecuador and Peru during the second quarter due to economic recovery from the impacts of COVID-19 across the region.

Local currency fluctuations against the U.S.

dollar negatively impacted revenue by $2.0 million, or 5%, for the first quarter of 2021, primarily from Argentina and partially offset by Chile.

Reported revenue decreased by 4% for the first quarter of 2021, compared to the same period in 2020.

On a local currency basis, revenue increased by 13% for the first quarter of 2021, compared to the same period in 2020.

The increase for the first quarter of 2021 is primarily due to growth in the consumer, commercial and analytics verticals, as Canada continues to recover from the negative impacts of COVID-19.

dollar negatively impacted revenue by $0.5 million, or 1%, and $2.5 million, or 3% for the second quarter and the first six months of 2021, respectively.

The negative foreign currency impacts in both periods were driven by negative impacts from Argentina, partially offset by positive impacts from Chile.

Reported revenue increased by 29% and 11% in the second quarter and the first six months of 2021, respectively, compared to the same periods in 2020.

On a local currency basis, revenue increased by 26% and 19% in the second quarter and the first six months of 2021, respectively, compared to the same periods in 2020.

The increases in both periods were driven by growth in the consumer, commercial, identity and fraud, and analytics businesses, mainly within the mortgage and fintech verticals, as Canada continues to recover from the negative impacts of COVID-19.

Local currency fluctuations against the U.S.

dollar positively impacted revenue by $2.7 million, or 7%, for the first quarter of 2021.

Reported revenue increased by 20% for the first quarter of 2021, compared to the same period in 2020.

dollar positively impacted revenue by $5.4 million, or 16%, and $8.0 million, or 12% for the second quarter and the first six months of 2021, respectively.

Reported revenue increased by 42% and 31% in the second quarter and the first six months of 2021, respectively, compared to the same periods in 2020.

International Operating Margin

Operating margin increased to 11.5% for the first quarter of 2021 from 7.1% in the first quarter of 2020.

The increased margin for the first quarter of 2021 is due to the increased revenue mentioned above, lower level of technology and data security costs and discretionary expense control across all geographies, partially offset by increased people costs, depreciation expense and production costs.

Global Consumer Solutions

Three Months Ended March 31, Change

Operating margin increased to 11.7% for the second quarter of 2021 from a 3.4% loss for the second quarter of 2020 and to 11.6% for the first six months of 2021 from 2.3% for the first six months of 2020.

The increased margin for both periods is due to the increased revenue mentioned above, lower technology and data security costs and discretionary expense control, partially offset by increased people costs, royalty and production costs and depreciation expense.

Three Months Ended June 30, Change Six Months Ended June 30, Change

Global Consumer Solutions 2021 2020 $ % 2021 2020 $ %

(In millions)

(In millions) (In millions)

Total operating revenue $ 82.4 $ 83.8 $ (1.4) (2) % $ 163.8 $ 180.9 $ (17.1) (9) %

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Total operating income $ 11.9 $ 7.8 $ 4.1 53 % $ 25.9 $ 20.9 $ 5.0 24 %

Operating margin 17.2 % 13.5 % 3.7 pts

Revenue decreased by 16% for the first quarter of 2021, compared to the same period in 2020.

On a local currency basis, revenue decreased by 17% for the first quarter of 2021.

The reduction in revenue was driven by decreases in partner revenue, partially offset by growth in the direct to consumer business due to strong consumer subscription performance in North America.

Operating margin 14.5 % 9.3 % 5.2 pts 15.8 % 11.5 % 4.3 pts

Revenue decreased by 2% and 9% in the second quarter and the first six months of 2021, respectively, compared to the same periods in 2020.

On a local currency basis, revenue decreased by 3% and 11% for the second quarter and the first six months of 2021, respectively.

The reduction in revenue for both periods was driven by decreases in partner revenue, partially offset by growth in the direct to consumer business due to strong consumer subscription performance in North America.

Local currency fluctuations against the U.S.

dollar negatively impacted revenue by $0.8 million, or 1%, for the first quarter results for 2021.

Global Consumer Solutions Operating Margin

Operating margin increased to 17.2% for the first quarter of 2021 from 13.5% in the first quarter of 2020.

The increased margin in the first quarter of 2021 was due to a reduction in partner royalty costs and decrease in technology development costs, partially offset by increased depreciation expense and production costs.

dollar positively impacted revenue by $1.3 million, or 1%, and $2.0 million, or 2% for the second quarter and the first six months of 2021, respectively.

GCS Operating Margin

Operating margin increased to 14.5% for the second quarter of 2021 from 9.3% for the second quarter of 2020 and to 15.8% for the first six months of 2021 from 11.5% for the first six months of 2020.

The increased margins for both periods were due to a reduction in partner royalty costs and decrease in technology development costs, partially offset by increased depreciation expense and advertising costs.

General Corporate Expense

Three Months Ended March 31, Change

Three Months Ended June 30, Change Six Months Ended June 30, Change

General Corporate Expense 2021 2020 $ % 2021 2020 $ %

(In millions)

(In millions) (In millions)

General corporate expense $ 126.5 $ 122.1 $ 4.4 4 % $ 266.2 $ 255.7 $ 10.5 4 %

Our general corporate expenses are unallocated costs that are incurred at the corporate level and include those expenses impacted by corporate direction, including shared services, technology, security, data and analytics, administrative, legal, restructuring, and the portion of management incentive compensation determined by total company-wide performance.

General corporate expense increased by $6.1 million for the first quarter of 2021, compared to the same period in 2020.

The increase in the first quarter is due to an increase in people costs and depreciation expense, partially offset by a decrease in incremental technology and data security costs.

General corporate expense increased by $4.4 million and $10.5 million for the second quarter and the first six months of 2021, respectively, compared to the same periods in 2020.

The increase in both periods was due to an increase in people costs and depreciation expense, partially offset by a decrease in incremental technology and data security costs.

LIQUIDITY AND FINANCIAL CONDITION

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Funds generated by operating activities, our Revolver and related commercial paper program, more fully described below, are our most significant sources of liquidity.

At March 31, 2021, we had $0.8 billion in cash balances, as well as $1.1 billion available to borrow under our Revolver.

At June 30, 2021, we had $0.5 billion in cash balances, as well as $1.1 billion available to borrow under our Revolver.

The Company has and expects to make payments to resolve certain legal proceedings and investigations related to the 2017 cybersecurity incident, described more fully in Part II, “Item 1.

Legal Proceedings” in this Form 10-Q.

Through March 31, 2021, the Company has made payments of $443.3 million for legal settlements related to the 2017 cybersecurity incident.

Through June 30, 2021, the Company has made payments of $443.6 million for legal settlements related to the 2017 cybersecurity incident.

The remaining $345.0 million to be paid to the Consumer Restitution Fund will be made after a final adjudication affirming the U.S.

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Although we expect this payment and the remaining settlement payments to be made later in 2021, we can give no assurance that these payments will occur in 2021 due to pending approvals or appeals.

funds generated by operating activities may not be sufficient to fund working capital and other cash requirements, including for acquisitions and share repurchases, throughout 2021.

As a result of the possible payments that could be made in 2021 related to the losses associated with certain legal proceedings and government investigations related to the 2017 cybersecurity incident and other requirements, funds generated by operating activities may not be sufficient to fund working capital and other cash requirements, including for acquisitions and share repurchases, throughout 2021.

Our plan is to finance the payments with existing cash balances and borrowing capacity, as necessary.

In the event that additional financing is needed, we would finance using the public and private corporate bond markets and/or syndicated loan markets, if available.

Fund Transfer Limitations.

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These restrictions do not, individually or in the aggregate, materially limit our ability to service our indebtedness, meet our current obligations or pay dividends.

As of March 31, 2021, we held $250.8 million of cash in our foreign subsidiaries.

As of June 30, 2021, we held $290.4 million of cash in our foreign subsidiaries.

Information about our cash flows, by category, is presented in the Consolidated Statements of Cash Flows.

The following table summarizes our cash flows for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31, Change

The following table summarizes our cash flows for the six months ended June 30, 2021 and 2020:

Six Months Ended June 30, Change

Net cash provided by (used in):

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Operating Activities

Cash provided by operating activities in the three months ended March 31, 2021 increased by $112.6 million compared the prior year period due to increased net income.

Cash provided by operating activities in the six months ended June 30, 2021 increased by $269.1 million compared the prior year period due to increased net income.

Investing Activities

Capital Expenditures

Three Months Ended March 31, Change

Six Months Ended June 30, Change

Net cash used in:

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

Capital expenditures paid in the first three months of 2021 increased by $25.0 million from the same period in 2020.

Capital expenditures paid in the first six months of 2021 increased by $42.7 million from the same period in 2020.

We are continuing to invest in enhanced technology systems and infrastructure as part of our technology transformation.

Acquisitions, Divestitures and Investments

Three Months Ended March 31, Change

Six Months Ended June 30, Change

Net cash used in:

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Cash received from divestiture $ 1.5 $ — $ 1.5

During the first three months of 2021 we acquired Kount within our USIS segment, HIRETech and i2Verify within our Workforce Solutions segment and a small tuck-in acquisition within our International segment.

Investment in unconsolidated affiliates, net $ — $ (10.0) $ 10.0

During the first six months of 2021 we acquired Kount within our USIS segment, HIREtech and i2Verify within our Workforce Solutions segment and a small tuck-in acquisition within our International segment.

In addition, we also sold a small business within our International segment.

During the first three months of 2020, we acquired the remaining interest in our India joint venture within the International segment.

During the first six months of 2020, we acquired the remaining interest in our India joint venture within the International segment.

Financing Activities

Borrowings and Credit Facility Availability

Three Months Ended March 31, Change

Six Months Ended June 30, Change

Net cash provided by (used in):

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(In millions)

Net short-term borrowings $ (0.7) $ 0.2 $ (0.9)

Net short-term (repayments) borrowings $ (0.6) $ 0.8 $ (1.4)

Payments on long-term debt $ (500.1) $ (125.0) $ (375.1)

Borrowings on long-term debt $ — $ 1,123.3 $ (1,123.3)

Credit Facility Availability

In September 2018, the Company entered into a $1.1 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 $900.0 million unsecured revolving credit facility that was scheduled to mature in November 2020.

In September 2018, the Company entered into the Revolver, which is a $1.1 billion five-year unsecured revolving credit facility with a group of financial institutions, that will mature in September 2023.

Borrowings under the Revolver may be used for general corporate purposes, including working capital, capital expenditures, acquisitions and share repurchase programs.

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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.

On April 10, 2020, we amended our existing revolving credit facility to increase the maximum leverage ratio to provide additional financial flexibility as described further below.

In April 2020, we amended our existing revolving credit facility to increase the maximum leverage ratio to provide additional financial flexibility as described further below.

Our $1.1 billion commercial paper (“CP”) program has been established to allow for borrowing through the private placement of CP with maturities ranging from overnight to 397 days.

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The CP program is supported by our Revolver and the total amount of CP which may be issued is reduced by the amount of any outstanding borrowings under our Revolver.

As of March 31, 2021, there were $0.7 million of letters of credit issued under the Revolver, no principal drawn amounts under the Revolver, and no commercial paper borrowings.

Availability under the Revolver was $1.1 billion at March 31, 2021.

At March 31, 2021, 93% of our debt was fixed-rate debt and 7% was effectively variable debt.

As of June 30, 2021, there were $0.7 million of letters of credit issued under the Revolver, no principal drawn amounts under the Revolver, and no commercial paper borrowings.

Availability under the Revolver was $1.1 billion at June 30, 2021.

At June 30, 2021, 92% of our debt was fixed-rate debt and 8% was effectively variable debt.

Our variable-rate debt consists of our floating rate notes due in 2021.

The interest rates reset periodically, depending on the terms of the respective financing agreements.

At March 31, 2021, the interest rate on our variable-rate debt was 1.06%.

At June 30, 2021, the interest rate on our variable-rate debt was 1.03%.

Borrowing and Repayment Activity

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Net short-term borrowings primarily represent borrowings or repayments of outstanding amounts under our CP program.

Borrowings on long-term debt represent the net proceeds received from draw downs on the Receivables Facility in the first three months of 2020.

Payments on long-term debt reflect $500 million payments related to senior notes in the first six months of 2021 and $125 million payments made related to the now-terminated Receivables Facility in the first six months of 2020.

Borrowings on long-term debt represent the net proceeds received from issuance of the 2025 and 2030 senior notes, as well as the net proceeds received from draw downs on the now-terminated Receivables Facility during the first six months of 2020.

Debt Covenants.

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

As of March 31, 2021, we were in compliance with all of our debt covenants.

As of June 30, 2021, we were in compliance with all of our debt covenants.

We do not have any credit rating triggers that would accelerate the maturity of a material amount of the outstanding debt;

however, our 2.3% senior notes due 2021, 3.6% senior notes due 2021, floating rate notes due 2021, 3.3% senior notes due 2022, 3.95% senior notes due 2023, 2.6% senior notes due 2024, 2.6% senior notes due 2025, 3.25% senior notes due 2026, 3.1% senior notes due 2030 and 7.0% senior notes due 2037 (together, the “Senior Notes”) contain change in control provisions.

however, our 3.6% senior notes due 2021, floating rate notes due 2021, 3.3% senior notes due 2022, 3.95% senior notes due 2023, 2.6% senior notes due 2024, 2.6% senior notes due 2025, 3.25% senior notes due 2026, 3.1% senior notes due 2030 and 7.0% senior notes due 2037 (collectively, the “Senior Notes”) contain change in control provisions.

If the Company experiences a change of control or publicly announces the Company’s intention to effect a change of control and the rating on the Senior Notes is lowered by Standard & Poor’s (“S&P”) and Moody’s Investors Service (“Moody’s”) below an investment grade rating within 60 days of such change of control or notice thereof, then the Company will be required to offer to repurchase the Senior Notes at a price equal to 101% of the aggregate principal amount of the Senior Notes plus accrued and unpaid interest.

As of March 31, 2021, our S&P credit rating was BBB with a stable outlook and our Moody’s credit rating was Baa2 with a stable outlook.

As of June 30, 2021, our S&P credit rating was BBB with a stable outlook and our Moody’s credit rating was Baa2 with a stable outlook.

These ratings are subject to change as events and circumstances change.

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Equity Transactions

Three Months Ended March 31, Change

Six Months Ended June 30, Change

Net cash provided by (used in):

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Proceeds from exercise of stock options and employee stock purchase plan $ 25.1 $ 22.9 $ 2.2

Sources and uses of cash related to equity during the three months ended March 31, 2021 and 2020 were as follows:

- During the first three months of 2021, we repurchased 0.2 million shares of our common stock on the open market for $34.1 million.

During the first three months of 2020, we did not repurchase any shares of our stock.

- We maintained our quarterly dividend of $0.39 per share in the first quarter of 2021.

We paid cash dividends to Equifax shareholders of $47.5 million and $47.3 million, or $0.39 per share, during the three months ended March 31, 2021 and 2020, respectively.

- We received cash of $6.6 million and $16.7 million during the first three months of 2021 and 2020, respectively, from the exercise of stock options and the employee stock purchase plan.

At March 31, 2021, the Company had $556.0 million remaining for stock repurchases under the existing authorization from the board of directors.

Payment of taxes related to settlement of equity awards $ (30.4) $ — $ (30.4)

Purchase of redeemable noncontrolling interests $ (3.6) $ — $ (3.6)

Sources and uses of cash related to equity during the six months ended June 30, 2021 and 2020 were as follows:

- During the first six months of 2021, we repurchased 0.4 shares of our common stock on the open market for $69.9 million.

During the first six months of 2020, we did not repurchase any shares of our stock.

- We maintained our quarterly dividend of $0.39 per share in the second quarter of 2021.

We paid cash dividends to Equifax shareholders of $95.0 million and $94.6 million, or $0.78 per share, during the six months ended June 30, 2021 and 2020, respectively.

- We received cash of $25.1 million and $22.9 million during the first six months of 2021 and 2020, respectively, from the exercise of stock options and the employee stock purchase plan.

At June 30, 2021, the Company had $520.2 million remaining for stock repurchases under the existing authorization from the board of directors.

Contractual Obligations, Commercial Commitments and Other Contingencies

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At December 31, 2020, our U.S.

Retirement Income Plan, or USRIP, met or exceeded ERISA’s minimum funding requirements.

Retirement Income Plan met or exceeded ERISA’s minimum funding requirements.

In the future, we expect to make minimum funding contributions as required and may make discretionary contributions, depending on certain circumstances, including market conditions and our liquidity needs.

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For our non-U.S., tax-qualified retirement plans, we fund an amount sufficient to meet minimum funding requirements but no more than allowed as a tax deduction pursuant to applicable tax regulations.

For our non-qualified supplementary retirement plans, we fund the benefits as they are paid to retired participants, but accrue the associated expense and liabilities in accordance with GAAP.

For our non-qualified supplementary retirement plans, we fund the benefits as they are paid to retired participants, but accrue the associated expense and liabilities in accordance with U.S.

For additional information about our benefit plans, see Note 9 of the Notes to Consolidated Financial Statements in our 2020 Form 10-K.

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Foreign Currency

Argentina has experienced multiple periods of increasing inflation rates, devaluation of the peso, and increasing borrowing rates.

As such, Argentina has been deemed a highly inflationary economy by accounting policymakers.

Beginning in the third quarter of 2018, we have accounted for Argentina as highly inflationary which resulted in the recognition of a $1.1 million foreign currency gain that was recorded in other income, net in our Consolidated Statements of Income during the three months ended March 31, 2021.

Argentina experienced multiple periods of increasing inflation rates, devaluation of the peso, and increasing borrowing rates.

As such, Argentina was deemed a highly inflationary economy by accounting policymakers.

Beginning in the third quarter of 2018, we have accounted for Argentina as highly inflationary which resulted in the recognition of a $0.1 million foreign currency loss that was recorded in other income (expense), net in our Consolidated Statements of Income during the three and six months ended June 30, 2021.

RECENT ACCOUNTING PRONOUNCEMENTS

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The Company’s Consolidated Financial Statements are prepared in conformity with U.S.

generally accepted accounting principles, or GAAP.

This requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in our Consolidated Financial Statements and the Notes to Consolidated Financial Statements.

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For information regarding our exposure to certain market risks, see “Quantitative and Qualitative Disclosures about Market Risk,” in Part II, Item 7A of our 2020 Form 10-K.

There were no material changes to our market risk exposure during the three months ended March 31, 2021.

There were no material changes to our market risk exposure during the three and six months ended June 30, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis