What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-23 compared with 2022-02-24 · 188 added, 232 removed, 523 unchanged (45% of the section changed)

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We use advanced statistical techniques, machine learning and proprietary software tools to analyze available data to create customized insights, decision-making and process automation solutions and processing services for our clients.

We are a leading provider of information and solutions used in payroll-related and human resource management business process services in the U.S.

We are a leading provider of e-commerce fraud and charge back protection services in North America as well as information and solutions used in payroll-related and human resource management business process 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 United Kingdom (“U.K.”), Spain and Portugal) and Latin America (Argentina, Chile, Costa Rica, Dominican Republic, Ecuador, El Salvador, Honduras, Mexico, Paraguay, Peru and Uruguay).

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

We also offer Equifax-branded credit services in Russia through a joint venture, have investments in consumer and/or commercial credit information companies through joint ventures in Cambodia, Malaysia and Singapore and have an investment in a consumer and commercial credit information company in Brazil.

We also have investments in consumer and/or commercial credit information companies through joint ventures in Cambodia, Malaysia and Singapore and have an investment in a consumer and commercial credit information company in Brazil.

We previously had a joint venture in Russia that offered consumer credit services;

however, during the third quarter of 2022, we completed the sale of this equity method investment.

Recent Events and Company Outlook

As further described above, we operate in the U.S., which represented 78% of our revenue in 2022, 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.

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

During 2020 and 2021, we followed applicable requirements and protocols published by the U.S.

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

We have relied on our business continuity plans at various times, which has periodically resulted in a portion of our employee population working remotely, depending on their role.

To date, the change to our working environment has not caused material disruptions in the execution of our strategic plans and has not impacted our internal controls, financial reporting systems or operations.

The impact of COVID-19 pandemic remains uncertain and may affect certain markets or regions we serve differently.

Demand for our services tends to be correlated to general levels of economic activity and to consumer credit activity, small commercial credit and marketing activity and employee hiring and onboarding activity.

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

Demand for our services tends to be correlated to general levels of economic activity and to consumer credit activity, small commercial credit and marketing activity, identity and fraud, and employee hiring and onboarding activity.

Demand is also enhanced by our initiatives to expand our products, capabilities and markets served.

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, overall revenue grew reflecting strong U.S.

mortgage market demand in 2020 compared to 2019 and growth across our Workforce Solutions business.

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 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 recovering country economies, growth from Equifax initiatives 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-K.

For 2022, our planning assumes economies in which we operate to continue to show growth relative to 2021.

In the U.S., 2022 economic activity, as measured by GDP, is expected to grow but not at the same rate of growth experienced in 2021.

We expect modest growth in consumer credit, excluding mortgage, over the course of 2022.

For 2023, our planning assumes that U.S.

economic activity, as measured by GDP, is expected to grow but at a slower rate of growth than experienced in 2022.

Our plan assumes the U.S.

mortgage market as measured by credit inquiries is expected to decline by greater than 20 percent in 2022 versus 2021.

mortgage market, as measured by originations, is expected to decline by about 30% in 2023 versus 2022.

mortgage market, particularly the mortgage refinance portion of the U.S.

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interest rates and therefore mortgage rates.

In the International markets in which we operate, we expect 2022 economic activity, as measured by GDP, to improve but less than the rates of growth experienced in 2021.

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 unclear.

For more information, see “Item 1A.

Risk Factors— Our business has been and may continue to be negatively impacted by the COVID-19 pandemic, ” in this Form 10-K.

In the International markets in which we operate, in particular in Australia, the U.K.

and Canada, our planning also assumes economic activity, as measured by GDP, to grow in 2023 but at slower rates than in 2022.

The slowdown in economic activity in the U.K.

is expected to be more significant than in Australia or Canada.

Segment and Geographic Information

In the fourth quarter of 2021, we integrated our Global Consumer Solutions business into our USIS, Workforce Solutions and International operating segments.

consumer credit monitoring solutions businesses have been moved into the Online Information Solutions business of USIS with the U.S.

consumer identity theft protection business moved to the Employer Services business of Workforce Solutions.

All international consumer credit monitoring solutions businesses in Canada and Europe have been moved into the respective country operations within the International operating segment.

These changes in operating segments align with how we manage our business as of the fourth quarter of 2021.

Segment financial results and related discussion and analysis have been restated retrospectively to reflect these changes.

The Workforce Solutions segment consists of the Verification Services and Employer Services business lines.

Verification Services revenue is transaction-based and is derived primarily from employment and income verification.

Verification Services revenue is transaction-based and is derived primarily from employment and income verification, as well as criminal justice data.

Employer Services revenue is derived from our provision of certain human resources business process outsourcing services that include both transaction and subscription based product offerings.

These services include unemployment claims management, employment-based tax credit services and other complementary employment-based transaction services.

These include services that assist employers in complying with and automating certain payroll-related and human resource management processes throughout the entire cycle of the employment relationship, including unemployment cost management, employee screening, employee onboarding, tax credits and incentives, I-9 management and compliance, immigration case management, tax form management services and Affordable Care Act management services.

Workforce Solutions has established operations in Canada, Australia and most recently in the U.K.

The USIS segment consists of three service lines:

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consumer credit monitoring solutions business previously part of the Global Consumer Services segment.

Financial Marketing Services revenue is principally project and subscription based and is derived from our sales of batch credit and consumer wealth information such as those that assist clients in acquiring new customers, cross-selling to existing customers and managing portfolio risk.

Financial Marketing Services revenue is principally project and subscription based and is derived from our sales of batch credit, identity and consumer wealth information such as those that assist clients in acquiring new customers, cross-selling to existing customers and managing portfolio risk.

USIS operates in the United States.

The International segment consists of Asia Pacific, Europe, Latin America and Canada.

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We currently have operations in the following countries:

Argentina, Australia, Canada, Chile, Costa Rica, Ecuador, El Salvador, Honduras, India, Mexico, New Zealand, Paraguay, Peru, Portugal, the Republic of Ireland, Spain, the U.K., Uruguay and the U.S.

Approximately

78% and 77% of our revenue was generated in the U.S.

during the twelve months ended December 31, 2021 and 2020, respectively.

Argentina, Australia, Canada, Chile, Costa Rica, Dominican Republic, Ecuador, El Salvador, Honduras, India, Mexico, New Zealand, Paraguay, Peru, Portugal, the Republic of Ireland, Spain, the U.K., Uruguay and the U.S.

We previously had a joint venture in Russia that offered consumer credit services;

however, during the third quarter of 2022, we completed the sale of this equity method investment.

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

during both the twelve months ended December 31, 2022 and 2021.

We experience seasonality in certain of our revenue streams.

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mortgage market could have a corresponding impact on revenue and operating profit for our business, primarily within the Workforce Solutions and USIS operating segments.

Although in recent years activity has been directly related to changes in interest rates, and this trend has been less observed.

Key Performance Indicators.

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Operating revenue change 4 % 19 % 18 %

Operating income (loss) $ 1,138.0 $ 676.6 $ (335.4)

Operating income $ 1,056.0 $ 1,138.0 $ 676.6

Operating margin 20.6 % 23.1 % 16.4 %

Net income (loss) attributable to Equifax $ 744.2 $ 520.1 $ (384.1)

Net income attributable to Equifax $ 696.2 $ 744.2 $ 520.1

Diluted earnings per share $ 5.65 $ 6.02 $ 4.24

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Revenue for 2022 increased by 4% compared to 2021.

The growth was driven by increases in our Workforce Solutions segment, across mortgage and non-mortgage related revenue, growth in our International segment and growth in non-

mortgage related revenue in the USIS segment.

The effect of foreign exchange rates increased revenue by $50.4 million, or 1%, in 2021 compared to 2020.

The increase was primarily due to growth in Workforce Solutions and International, partially offset by a decline in USIS.

The significant decline in U.S.

mortgage originations negatively impacted the growth in Workforce Solutions and caused the decline in USIS revenue.

The effect of foreign exchange rates decreased revenue by $94.9 million, or 2%, in 2022 compared to 2021.

Revenue for 2021 increased by 19% compared to 2020.

The growth was driven by our Workforce Solutions and USIS segments, primarily due to strong U.S.

mortgage volume benefiting both Workforce Solutions and USIS, as well as in Workforce Solutions growth across non-mortgage related businesses including our unemployment claims business.

This growth was partially offset by declines beginning in the second half of March 2020 across the International segment due to the economic impact of the COVID-19 pandemic.

The growth was driven by increases in our Workforce Solutions segment, across mortgage and non-mortgage related revenue, growth in our International segment and growth in non-mortgage related revenue in the USIS segment.

The effect of foreign exchange rates reduced revenue by $50.4 million, or 1%, in 2021 compared to 2020.

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Cost of services increased $196.3 million in 2022 compared to 2021.

The increase is due to increased royalty costs, production costs, which include third party cloud usage fees, and people costs, partially offset by a decrease in incremental technology and data security costs related to our ongoing technology transformation.

The effect of changes in foreign exchange rates increased cost of services by $27.5 million.

The increase is due to higher royalty costs, production costs, which include third party cloud usage fees, and people costs.

The effect of changes in foreign exchange rates decreased cost of services by $50.5 million.

Cost of services increased $243.5 million in 2021 compared to 2020.

The increase is due to increased royalty and production costs, as well as incremental technology and data security costs related to our ongoing technology transformation.

The effect of changes in foreign exchange rates reduced cost of services by $10.4 million.

The effect of changes in foreign exchange rates increased cost of services by $27.5 million.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses increased $4.3 million in 2022 compared to 2021.

The increase in 2022 is primarily driven by companies acquired in 2022 and 2021, with the total increase in expenses partially offset by a decrease in incentive plan costs.

The impact of changes in foreign currency exchange rates decreased our selling, general and administrative expenses by $25.6 million.

Selling, general and administrative expenses increased $2.1 million in 2021 compared to 2020.

The slight increase in 2021 is due to an increase in people costs, offset by a decrease in incremental technology and data security costs related to our ongoing technology transformation.

The impact of changes in foreign currency exchange rates increased our selling, general and administrative expenses by $9.7 million.

Selling, general and administrative expenses decreased $667.7 million in 2020 compared to 2019.

The decrease in 2020 is primarily due to losses, net of insurance recoveries, of $800.9 million associated with certain legal proceedings and government investigations related to the 2017 cybersecurity incident that were recorded in 2019 but did not recur in 2020, partially offset by increased people costs and a restructuring charge taken in the fourth quarter of 2020.

The impact of changes in foreign currency exchange rates decreased our selling, general and administrative expenses by $10.2 million.

Depreciation and Amortization.

Depreciation and amortization expense for 2022 and 2021 increased by $79.7 million and $89.4 million, respectively.

The increase is due to amortization of capitalized internal-use software and systems costs, as well as higher amortization of purchased intangible assets related to recent acquisitions.

These increases are due to higher amortization of purchased intangible assets related to recent acquisitions, as well as amortization of capitalized internal-use software and systems costs from technology transformation capital spending incurred previously.

The impact of changes in foreign currency exchange rates led to a decrease in depreciation and amortization expense of $11.6 million and an increase of $10.6 million in 2022 and 2021, respectively.

Operating Income and Operating Margin

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December 31, Change

Operating Income (Loss) and Operating Margin 2021 vs.

Operating Income and Operating Margin 2022 vs.

2021 2021 vs.

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Consolidated operating expenses 4,066.2 3,785.9 3,450.9 280.3 7 % 335.0 10 %

Consolidated operating income (loss) $ 1,138.0 $ 676.6 $ (335.4) $ 461.4 68 % $ 1,012.0 (302) %

Consolidated operating income $ 1,056.0 $ 1,138.0 $ 676.6 $ (82.0) (7) % $ 461.4 68 %

Consolidated operating margin 20.6 % 23.1 % 16.4 % (2.5) pts 6.7 pts

Total company operating margin increased by 6.7 percentage points in 2021 versus 2020.

The margin increase is due to higher operating income generated by the increased revenue and decreased incremental technology and data security costs, partially offset by the increased people costs and aforementioned increase in depreciation and amortization expense.

Total company operating margin increased in 2020 versus 2019, primarily due to increased revenue in 2020 and losses, net of insurance recoveries in 2019, of $800.9 million associated with certain legal proceedings and government investigations related to the 2017 cybersecurity incident which are reflected in selling, general, and administrative expenses in our Consolidated Statements of Income (Loss), that did not recur in 2020.

Total company operating margin decreased by 2.5 percentage points in 2022 versus 2021.

The margin decrease was due to the aforementioned increased operating expenses and amortization expense that outpaced revenue growth during the period.

Total company operating margin increased by 6.7 percentage points in 2021 versus 2020, due to higher operating income generated by the increased revenue and decreased incremental technology and data security costs, partially offset by the increased people costs and aforementioned increase in depreciation and amortization expense.

Interest Expense and Other Income (Expense), net

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Consolidated interest expense $ (183.0) $ (145.6) $ (141.6) $ (37.4) 26 % $ (4.0) 3 %

Consolidated other (expense) income, net (43.2) 150.2 33.3 (193.4) (129) % 116.9 351 %

Consolidated other income (expense), net 56.7 (43.2) 150.2 99.9 (231) % (193.4) (129) %

Average cost of debt 3.2 % 3.2 % 3.5 %

Total consolidated debt, net, at year end $ 5,787.3 $ 5,294.9 $ 4,378.4 $ 492.4 9 % $ 916.5 21 %

Interest expense increased in 2022, when compared to 2021, due to a higher weighted average outstanding amount of debt and higher interest costs attributable to debt agreements entered into during 2022.

Interest expense increased in 2021, when compared to 2020, due to a higher weighted average outstanding amount of debt in 2021 when compared to 2020, offset by a slightly lower cost of debt.

Interest expense increased in 2020, when compared to 2019, due to the issuance of $1.0 billion in senior notes in April 2020 and $750.0 million senior notes issued in November 2019.

This increase was partially offset by interest related to outstanding commercial paper and Receivables Funding Facility balances in 2019.

The decrease in other income, net in 2021 is driven by the changes in our fair value adjustments of our investments and mark-to-market adjustments for our pension assets.

The increase in other income (expense), net in 2022 is driven by changes in our fair value adjustments of our investments, gains on the sale of multiple equity investments and mark-to-market adjustments for our pension assets.

We recorded a $13.3 million gain on the fair value adjustment of our Brazil investment in 2022, compared to a $64.0 million loss in 2021.

During 2022, we recorded a gain of $19.1 million as a result of the sale of multiple equity investments, including the sale of our equity method investment in Russia during the third quarter of 2022.

For 2022 and 2021, we recorded a $1.4 million gain and $20.2 million loss, respectively, on the mark-to-market adjustment of our pension plan assets.

The decrease in other income (expense), net in 2021 is driven by the changes in our fair value adjustments of our investments and mark-to-market adjustments for our pension assets.

We recorded a $64.0 million loss on the fair value adjustment of our Brazil investment in 2021, compared to a $149.5 million gain on the fair value adjustment of our Brazil and India investments in 2020.

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These impacts were partially offset by positive impacts of foreign currency exchange in 2021.

The increase in other income, net in 2020 is primarily due to gains recorded related to the fair value adjustment of our investment in Brazil of $116.6 million due to its initial public offering in the third quarter of 2020, as well as the $32.9 million gain recorded related to a fair value adjustment of the equity investment in India, for which we completed the acquisition of the remaining shareholder interest in the first quarter of 2020.

This was partially offset by the $32.2 million mark-to-market fair value adjustment of pension assets which resulted in a loss during the fourth quarter of 2020.

Twelve Months Ended

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(In millions)

Consolidated (provision for) benefit from income taxes $ (200.7) $ (159.0) $ 35.7 $ (41.7) 26 % $ (194.7) (545) %

Consolidated provision for income taxes $ (229.5) $ (200.7) $ (159.0) $ (28.8) 14 % $ (41.7) 26 %

Effective income tax rate 24.7 % 21.2 % 23.2 %

Our effective tax rate was 21.2% for 2021, down from 23.2% for the same period in 2020.

Our effective tax rate is lower for the year ended December 31, 2021 compared to 2020 due to a lower foreign rate differential due to the changes in the fair value of our investment in Brazil.

Our effective tax rate was 24.7% for 2022, up from 21.2% for the same period in 2021.

Our effective tax rate was higher for the year ended December 31, 2020 compared to 2019 due to the operating loss of the Company in 2019 and permanent tax differences resulting from certain non-deductible amounts related to the accrual for losses associated with certain legal proceedings and government investigations related to the 2017 cybersecurity incident.

Net Income (Loss)

Our effective tax rate is higher for the year ended December 31, 2022 compared to 2021 due to a higher foreign rate differential, primarily due to the changes in the fair value of our investment in Brazil.

Our effective tax rate was 21.2% for 2021, down from 23.2% for the same period in 2020.

Our effective tax rate was lower for the year ended December 31, 2021 compared to 2020 due to a lower foreign rate differential due to the changes in the fair value of our investment in Brazil.

Twelve Months Ended

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2021 2021 vs.

Net Income (Loss) 2021 2020 2019 $ % $ %

Net Income 2022 2021 2020 $ % $ %

(In millions, except per share amounts)

Consolidated operating income (loss) $ 1,138.0 $ 676.6 $ (335.4) $ 461.4 68 % $ 1,012.0 302 %

Consolidated other income (expense), net (188.8) 8.6 (78.4) (197.4) (2,295) % 87.0 111 %

Consolidated (provision for) benefit from income taxes (200.7) (159.0) 35.7 (41.7) 26 % (194.7) (545) %

Consolidated net income (loss) 748.5 526.2 (378.1) 222.3 42 % 904.3 239 %

Consolidated operating income $ 1,056.0 $ 1,138.0 $ 676.6 $ (82.0) (7) % $ 461.4 68 %

Consolidated interest and other income (expense), net (126.3) (188.8) 8.6 62.5 (33) % (197.4) (2,295) %

Consolidated provision for income taxes (229.5) (200.7) (159.0) (28.8) 14 % (41.7) 26 %

Consolidated net income 700.2 748.5 526.2 (48.3) (6) % 222.3 42 %

Net income attributable to noncontrolling interests (4.0) (4.3) (6.1) 0.3 (7) % 1.8 (30) %

Net income (loss) attributable to Equifax $ 744.2 $ 520.1 $ (384.1) $ 224.1 43 % $ 904.2 235 %

Net income attributable to Equifax $ 696.2 $ 744.2 $ 520.1 $ (48.0) (6) % $ 224.1 43 %

Diluted earnings per share:

Net income (loss) attributable to Equifax $ 6.02 $ 4.24 $ (3.15) $ 1.78 42 % $ 7.39 235 %

Net income attributable to Equifax $ 5.65 $ 6.02 $ 4.24 $ (0.37) (6) % $ 1.78 42 %

Weighted-average shares used in computing diluted earnings per share 123.3 123.6 122.8

Consolidated net income decreased by $48.3 million in 2022 compared to 2021 due to a decrease in operating income and an increase income tax expense, partially offset by the increase in other income, net.

Consolidated net income increased by $222.3 million in 2021 compared to 2020 due to increased operating income, partially offset by the decrease in other income, net and increase in income tax expense.

Consolidated net income (loss) increased by $904.3 million in 2020 compared to 2019 due to increased revenue, the 2019 accrual for losses associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident that did not recur in 2020 and an increase in Other Income resulting from the fair value adjustments of the Brazil and India investments.

The current year increase is partially offset by higher tax expense, people costs, royalty costs, technology costs, depreciation of capitalized projects and interest expense.

Segment Financial Results

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Operating margin 43.3 % 49.2 % 48.2 % (5.9) pts 1.0 pts

Workforce Solutions revenue increased by 14% in 2022 compared to 2021, due to growth in Verification Services driven by growth in non-mortgage verticals, including government, talent, consumer finance and Employer Services verticals, as well as acquisition revenue in both Verification Services and Employer Services.

Workforce Solutions revenue increased by 39% in 2021 compared to 2020, due to strong growth in Verification Services driven by growth in mortgage, talent solutions, government and other verticals.

Employer Services revenue also increased due to acquisition related growth and employee services, partially offset by a decline in our unemployment claims business.

Workforce Solutions revenue increased by 51% in 2020 compared to 2019 due to strong growth in both Verification Services and Employer Services.

Verification Services growth was due to strong growth in mortgage related revenue.

Employer Services growth was due to growth in unemployment claims management revenue.

Verification Services.

Revenue increased 16% in 2022 compared to 2021.

Verification Services revenue experienced growth in the mortgage, talent solutions and government verticals as well as from the acquisition of Appriss Insights, which took place in the fourth quarter of 2021.

The increase in revenue was due to growth in government, talent solutions, and consumer finance verticals, along with growth from the full year impact of the Insights

acquisition, offset by a decline in the mortgage vertical due to significantly slower U.S.

mortgage origination activity in 2022 due to higher interest rates.

Verification Services benefited across all verticals from the continued growth of employment and income records in The Work Number database.

Revenue increased 58% in 2020 compared to 2019, due to strong growth in the mortgage vertical.

Revenue from the commercial non-mortgage verticals of Verification Services have experienced declines versus 2019 due to the economic impact of COVID-19.

Revenue increased 46% in 2021 compared to 2020.

Verification Services benefited across all verticals from the continued growth of employment and income records in The Work Number database.

Employer Services.

Revenue increased 19% in 2021, compared to 2020 due to growth in employee services, partially offset by a decrease in unemployment claims revenue as the number of claims has greatly reduced in 2021 after having been significantly higher in 2020 due to the economic impact of COVID-19 on the U.S.

Revenue increased 7% in 2022, compared to 2021 due to growth in employee services, partially offset by a decrease in unemployment claims management revenue as the number of unemployment claims returned to pre-COVID-19 levels in 2022 after having been significantly higher in 2021 due to the economic impact of COVID-19 on the U.S.

Employer Services also benefited from acquisition revenue in 2022.

Revenue increased 32% in 2020 compared to 2019, due to increases in our unemployment claims management services as U.S.

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

This was partially offset principally by declines in our tax management services and Affordable Care Act compliance services.

Revenue increased 19% in 2021 compared to 2020 due to growth in employee services, partially offset by a decrease in unemployment claims revenue as the number of claims greatly reduced in 2021 after having been significantly higher in 2020 due to the economic impact of COVID-19 on the U.S.

Employer Services also benefited from acquisition revenue in 2021.

Workforce Solutions Operating Margin.

Operating margin decreased to 43.3% in 2022 compared to 49.2% in 2021 due to increased royalty costs, people costs, purchased intangible asset amortization and production costs, which altogether grew faster than the increase in revenue.

Operating margin increased to 49.2% in 2021 compared to 48.2% in 2020 primarily due to the increase in revenue, partially offset by increases in royalty, production and people costs.

Operating margin increased to 48.2% in 2020 compared to 40.3% in 2019 primarily due to the increase in revenue, partially offset by increases in royalty, people, technology and depreciation costs, as well as incremental technology and data security costs associated with our ongoing technology transformation.

Information Solutions

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Operating margin 24.3 % 30.9 % 30.1 % (6.6) pts 0.8 pts

Information Solutions revenue decreased 7% in 2022 compared to 2021 due to the negative impact of declining mortgage inquiry volumes on both online services and mortgage solutions, as well as a decline in marketing solutions, partially offset by growth in non-mortgage online services and acquisition-related revenue.

The decline in mortgage related online revenue and mortgage solutions revenue in 2022 is due to declining mortgage credit inquiry volumes caused by declines in mortgage industry originations reflecting higher interest rates during 2022.

Information Solutions revenue increased 4% in 2021 compared to 2020 due to overall improvements in our core credit decisioning services, acquisition-related revenue and financial marketing services, partially offset by decreases in Mortgage Solutions.

Information Solutions revenue increased 12% in 2020 compared to 2019 due to improvements in our core credit decisioning services and mortgage solutions volumes related to the strength of the U.S.

mortgage market in 2020.

Online Information Solutions.

Revenue for 2022 decreased 4% compared to 2021, due to declining mortgage inquiry volumes compared to the prior year, partially offset by continued growth of non-mortgage online services and revenue from acquisitions.

Revenue for 2021 increased 4% compared to 2020, due to continued growth in non-mortgage online services and revenue related to acquisitions, partially offset by a decrease in U.S.

consumer and mortgage online services.

Revenue for 2020 increased 10% compared to 2019, due to improved core credit decisioning services volumes related to improvements in the U.S.

mortgage market.

This is partially offset by a reduction in non-mortgage online revenue due to the economic impact of COVID-19, which began in the latter half of March 2020, and a decline in our U.S.

consumer online services.

Mortgage Solutions.

Revenue decreased 5% in 2021 compared to 2020, due to decreased mortgage origination transaction volumes as compared to the prior year.

Revenue increased 46% in 2020 compared to 2019, due to increased mortgage market transaction volumes.

Revenue decreased 27% and 5% in 2022 and 2021, respectively, due to declining mortgage inquiry volumes, as compared to the prior year.

Financial Marketing Services.

Revenue decreased 9% in 2022 compared to 2021, driven by lower fraud, risk management and other data services revenue.

Revenue increased 15% in 2021 compared to 2020, due to increased marketing activities by customers as the U.S.

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

Revenue decreased 1% in 2020 compared to 2019, due the economic impact of COVID-19 on project related revenue.

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

Information Solutions Operating Margin.

USIS operating margin decreased to 24.3% in 2022 compared to 30.9% in 2021, due to the decrease in revenue and increases in depreciation expense related to increased capitalized software development spending and cloud production costs, partially offset by lower production costs.

USIS operating margin increased to 30.9% in 2021 compared to 30.1% in 2020, due to increased revenue and lower selling, general and administrative expenses, partially offset by increased depreciation expense, royalty costs and production costs.

USIS operating margin decreased to 30.1% in 2020 compared to 32.3% in 2019, due to increased royalty, people, technology and depreciation costs, as well as incremental technology and data security costs associated with our ongoing technology transformation, partially offset by the increase in revenue.

International

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International revenue increased by 3% in 2022 as compared to 2021.

Local currency revenue increased 10% in 2021, driven by increases in all geographies as local economies continue to recover from negative impacts of COVID-19 despite the impact of measures to limit its spread in many regions during the year.

Local currency revenue increased 12% in 2022, driven by increases in Latin America, Europe, Canada and Asia Pacific.

Local currency fluctuations against the U.S.

dollar negatively impacted revenue by $94.8 million, or 9%.

International revenue increased by 15% in 2021 as compared to 2020.

Local currency revenue increased 10% in 2021, driven by increases in all geographies as local economies continued to recover from negative impacts of COVID-19 despite the impact of measures to limit its spread in many regions during the year.

Local currency fluctuations against the U.S.

dollar positively impacted revenue by $50.4 million, or 5%.

International revenue decreased by 5% in 2020 compared to 2019.

Local currency revenue decreased 3% in 2020, driven by declines across all geographies due to the negative impacts of COVID-19 on transaction volumes beginning in the second half of March.

Asia Pacific.

Local currency revenue increased 6% in 2022 as compared to 2021 driven by stronger volumes within consumer, commercial and identity and fraud, as well as growth in India due to higher consumer volumes, partially offset by a consumer direct business decline in Australia.

Local currency fluctuations against the U.S.

dollar negatively impacted revenue by $29.2 million, or 8%.

Asia Pacific.

Local currency revenue increased 11% in 2021 as compared to 2020 driven by growth in our commercial, consumer, background check verifications and identity and fraud businesses in Australia, partially offset by recovery management offline projects from 2020 that did not recur in 2021.

Additionally, the increase in revenue for 2021 is also attributable to organic growth in India due to higher consumer volumes related to economic recovery from the impacts of COVID-19.

Reported revenue decreased 2% in 2022 as compared to 2021.

Additionally, the increase in revenue for 2021 was also attributable to organic 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.

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Reported revenue increased 20% in 2021 as compared to 2020.

Local currency revenue decreased 1% in 2020 as compared to 2019 due to decreases in our consumer and commercial businesses, marketing services and personal solutions related revenue, primarily driven by the economic recession in Australia and New Zealand caused by the COVID-19 pandemic, partly offset by growth in India, an increase in offline transactions within recovery management and stronger online ID validation.

Local currency revenue increased 14% in 2022 as compared to 2021, driven by growth in the debt services business and core credit decisioning, identity and fraud, partially offset by a decline in the consumer direct business.

Local currency fluctuations against the U.S.

dollar did not have a significant impact in 2020.

Reported revenue decreased 1% in 2020 as compared to 2019.

dollar negatively impacted revenue by $37.4 million, or 12%, for 2022.

Reported revenue increased 2% in 2022 as compared to 2021.

Local currency revenue increased 6% in 2021 as compared to 2020, driven by growth in the consumer vertical for the U.K.

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Reported revenue increased 12% in 2021 as compared to 2020.

Local currency revenue decreased 7% in 2020 as compared to 2019 due to declines in the U.K.

and Spain consumer and commercial businesses and debt services brought on by the impact of the COVID-19 pandemic on local economies.

Local currency fluctuations against the U.S.

dollar positively impacted revenue by $3.1 million, or 1%, for 2020.

Reported revenue decreased 6% in 2020 as compared to 2019.

Latin America.

Local currency revenue increased 15% in 2021 as compared to 2020 reflecting growth broadly across the region as it experiences recovery from the impacts of COVID-19.

Local currency growth rates were strongest in our Argentina, Central America, Mexico and Peru, with growth also in Chile and other countries.

Local currency fluctuations against the U.S.

dollar negatively impacted revenue by $8.4 million, or 5%, in 2021, primarily from Argentina.

Reported revenue increased 10% in 2021 as compared to 2020.

Local currency revenue decreased 3% in 2020 as compared to 2019 caused by the COVID-19 pandemic, which negatively impacted consumer credit operations in all Latin America countries in which Equifax operates.

Local currency revenue increased 29% in 2022 as compared to 2021 reflecting local currency growth across most countries driven by price increases mainly in Argentina and Chile, stronger online consumer growth, as well as growth due to acquisition revenue.

Local currency fluctuations against the U.S.

dollar negatively impacted revenue by $20.3 million, or 11%, in 2021, primarily from Argentina and Chile.

Reported revenue decreased 16% in 2020 as compared to 2019.

Local currency revenue increased 12% in 2021 as compared to 2020 primarily due to growth in the consumer, commercial, identity and fraud, and analytics businesses, mainly within the mortgage and fintech verticals, as Canada recovers from the negative impacts of COVID-19 despite continued lockdown measures during the year in several Canadian provinces.

Reported revenue increased 18% in 2022 as compared to 2021.

Local currency revenue increased 15% in 2021 as compared to 2020 reflecting growth broadly across the region as it recovered from the impacts of COVID-19.

Local currency growth rates were strongest in Argentina, Central America, Mexico and Peru, with growth also in Chile and other countries.

Local currency fluctuations against the U.S.

dollar positively impacted revenue by $12.7 million, or 6%, in 2021.

dollar negatively impacted revenue by $8.4 million, or 5%, in 2021, primarily from Argentina.

Reported revenue increased 10% in 2021 as compared to 2020.

Local currency revenue increased 2% in 2020 as compared to 2019 primarily due to declines in consumer and commercial online volumes and offline analytics revenue, driven by the COVID-19 pandemic.

Local currency revenue increased 6% in 2022 as compared to 2021 primarily driven by strong identity and fraud revenue and higher analytical batch credit services and decisioning online volumes, partially offset by declines in consumer direct services volumes and mortgage related products due to interest rate increases.

Local currency fluctuations against the U.S.

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Reported revenue increased 2% in 2022 as compared to 2021.

Local currency revenue increased 12% in 2021 as compared to 2020 primarily due to growth in the consumer, commercial, identity and fraud, and analytics businesses, mainly within the mortgage and fintech verticals, as Canada recovered from the negative impacts of COVID-19 despite continued lockdown measures during the year in several Canadian provinces.

Local currency fluctuations against the U.S.

dollar positively impacted revenue by $12.7 million, or 6%, in 2021.

Reported revenue increased 18% in 2021 as compared to 2020.

International Operating Margin.

Operating margin was 12.9% in both 2022 and 2021.

The 2022 margin is driven by higher revenue, lower purchased intangible asset amortization costs, and lower incentives, partially offset by higher cloud production costs and depreciation expense related to technology transformation project spending.

Operating margin increased to 12.9% in 2021 as compared to 7.9% in 2020.

The increase in margin is due to increased revenue, lower purchased intangible asset amortization costs and discretionary expense control, partially offset by increased people costs, royalty costs, production costs and depreciation of capitalized internal-use software and systems costs.

Operating margin decreased to 7.9% in 2020 as compared to 10.9% in 2019.

The reduced margin is due to the negative effects of COVID-19 on revenue, as well as an increase in depreciation and incremental technology costs related to the ongoing technology transformation, partially offset by reduced operating costs from discretionary expense control across the regions in 2020.

General Corporate Expense

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General corporate expense decreased $57.3 million in 2022.

The decrease in 2021 as compared to 2020 is due to a decrease in incremental technology and data security costs associated with our technology transformation, partially offset by increased people costs and amortization expense.

The decrease in 2022 as compared to 2021 is due to reduced people costs, primarily incentive plans, and professional fees.

General corporate expense decreased $61.9 million in 2021.

The decrease in 2020 as compared to 2019 is due to the legal accruals for losses associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident of $800.9 million that were recorded in 2019 and did not recur in 2020 and lower technology costs, partially offset by increased people costs and a restructuring charge taken in the fourth quarter of 2020.

The restructuring charge in the fourth quarter of 2020 resulted from our continuing efforts to realign our internal resources to support our strategic objectives.

LIQUIDITY AND FINANCIAL CONDITION

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Sources and Uses of Cash

Our financing activities in 2021, more fully described below, were designed to create additional liquidity through the increase in the size of our Revolver and related CP program.

While we had lower cash balances in 2021 versus 2020, we intend to use this additional capacity, together with cash from operating activities, to meet our current obligations, including the $345 million consumer class action settlement payment.

We plan to pay off the $500 million Senior Notes due December 2022 with a combination of operating cash flow, available capacity under our Revolver and related CP program, or borrowings in the public or private debt markets.

Our financing activities in 2022, more fully described below, were designed to create additional liquidity through the issuance of senior notes and the pay down of our CP program to increase future borrowing capacity which was used to fund 2022 acquisitions.

We had higher cash balances in 2022 versus 2021 and we intend to use this additional capacity, together with cash from operating activities, to meet our current obligations.

This included the $345.0 million consumer class action settlement payment that was made in January 2022 related to the U.S.

Consumer MDL Litigation settlement that became effective on January 11, 2022.

In addition, during October 2022, we paid off the $500.0 million Senior Notes due December 2022 with the proceeds from the $750.0 million 5.1% Senior Notes issued in September 2022 and commercial paper borrowings.

In December 2019, the Compensation Committee of our Board of Directors approved the termination of the Canadian Retirement Income Plan (“CRIP”), the defined benefit pension plan offered to certain employees in Canada, as more fully described in Note 9 of the Notes to Consolidated Financial Statements in Item 8 of this report.

As of December 31, 2021, the difference in the fair value of plan assets and the projected benefit obligation was a deficit of $17 million.

We anticipate that the deficit will be funded from current cash holdings when the liabilities are settled in late 2022.

As such, during the third quarter of 2022, we settled the liabilities under the CRIP.

Fund Transfer Limitations.

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Operating Activities

Cash provided by operating activities for 2022 decreased by $577.7 million compared to 2021 due to decreased net income and the $345.0 million consumer class action settlement payment that was made in January 2022 related to the U.S.

Consumer MDL Litigation settlement that became effective on January 11, 2022.

Cash provided by operating activities for 2021 increased by $388.6 million compared to 2020 due to increased net income.

Cash provided by operating activities for 2020 increased by $632.4 million compared to 2019.

The increase in cash from operations is due to increased net income in 2020 and payments made in 2019 associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident.

Investing Activities

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Twelve Months Ended December 31, Change

Net cash used in:

Net cash (used in) provided by:

2022 2021 2020 2022 vs.

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2022 Acquisitions and Investments.

During 2022, we acquired Efficient Hire and LawLogix within the Workforce Solutions operating segment.

We acquired Midigator within the USIS operating segment.

We acquired Data Crédito within the International operating segment.

During 2022, we sold multiple equity investments.

2021 Acquisitions and Investments.

During 2021, we acquired Appriss Insights, HIREtech, i2Verify and Health e(fx) within the Workforce Solutions operating segment.

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During 2020, we acquired the remaining interest in our India joint venture in our International operating segment and completed an additional acquisition in our USIS operating segment.

2019 Acquisitions and Investments.

During 2019, we completed the acquisition of PayNet in our USIS and International operating segments and completed additional acquisitions in our Workforce Solutions segment.

For additional information about our acquisitions, see Note 3 of the Notes to Consolidated Financial Statements in Item 8 of this report.

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We primarily borrow under our CP program as needed and as availability allows.

Increase in short-term borrowings in 2021 is due to net short-term borrowings of our CP notes.

The decrease in net short-term repayments in 2020 and 2019 primarily relates to the net repayments of our CP notes.

The decrease in short-term borrowings in 2022 is due to lower net short-term borrowings on our CP notes during the year as compared to 2021.

The increase in short-term borrowings in 2021 is due to net short-term borrowings of our CP notes.

The decrease in net short-term repayments in 2020 primarily relates to the net repayments of our CP notes.

In September 2022, we issued $750.0 million aggregate principal amount of 5.1% five-year Senior Notes due 2027 (the "2027 Notes") in an underwritten public offering.

Interest on the 2027 Notes accrues at a rate of 5.1% per year and is payable semi-annually in arrears on June 15 and December 15 of each year.

The net proceeds of the sale of the 2027 Notes were ultimately used to repay, in October 2022, our then-outstanding $500.0 million 3.30% Senior Notes due December 2022.

The remaining proceeds were used for general corporate purposes, including the repayment of borrowings under our commercial paper 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 2027 Notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness.

In August 2021, we issued $1.0 billion aggregate principal amount of 2.35% ten-year Senior Notes due 2031 (the “2031 Notes”) in an underwritten public offering.

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The net proceeds of the sale of the notes were used to repay borrowings under our Receivables Facility and Revolver, while the remaining funds were used for general corporate purposes.

In November 2019, we issued $750.0 million aggregate principal amount of 2.6% five-year Senior Notes due 2024 (the “2024 Notes”) in an underwritten public offering.

Interest on the 2024 Notes accrues at a rate of 2.6% per year and is payable semi-annually in arrears on June 1 and December 1 of each year.

The net proceeds of the sale of the notes were used to repay borrowings under our Receivables Facility and our CP program and for general corporate purposes.

Payments on long-term debt in 2022 reflect the October 2022 repayment of the $500.0 million Senior Notes due December 2022 with the proceeds from the $750.0 million 5.1% Senior Notes issued in September 2022 and commercial paper borrowings.

Payments on long-term debt in 2021 reflect payments on the 2.3% Senior Notes, 3.6% Senior Notes and Floating Rate Notes that were due in 2021 using proceeds from the issuance of Senior Notes and the new term loan.

Payments on long-term debt in 2020 and 2019 reflect payments on our Receivable Facility using proceeds from the issuance of the senior notes.

Payments on long-term debt in 2020 reflect payments on our Receivable Facility using proceeds from the issuance of the senior notes.

Credit Facility Availability.

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In August 2021, we entered into our new Senior Credit Facilities as noted above in anticipation of the Appriss Insights acquisition.

after the consummation of the Company’s acquisition of Appriss Insights on October 1, 2021 (the “Appriss Closing Date”), until the fourth fiscal quarter ending after the Appriss Closing Date, (iii) 4.0 to 1.0 for the fifth fiscal quarter ending after the Appriss Closing Date until the sixth fiscal quarter ending after the Appriss Closing Date and (iv) 3.75 to 1.0 for the seventh fiscal quarter ending after the Appriss Closing Date and through the remaining term of the Revolver.

The Senior Credit Facilities include a maximum leverage ratio, defined as consolidated funded debt divided by consolidated EBITDA for the preceding four quarters, of (i) 3.75 to 1.0 initially, (ii) 4.25 to 1.0 for the first fiscal quarter ending after the consummation of the Appriss Insights acquisition on October 1, 2021, through the third quarter of 2022, (iii) 4.0 to 1.0 for the fourth quarter of 2022 through the first quarter of 2023 and (iv) 3.75 to 1.0 for the second quarter of 2023 through the remaining term of the Revolver.

We may also elect to increase the maximum leverage ratio by 0.5 to 1.0 (subject to a maximum leverage ratio of 4.75 to 1.0) in connection with certain material acquisitions if we satisfy certain requirements.

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None of these covenants are considered restrictive to our operations.

As of December 31, 2021, the Company was in compliance with all of our debt covenants.

The Company does not have any credit rating triggers that would accelerate the maturity of a material amount of the outstanding debt;

As of December 31, 2022, 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 3.95% senior notes due 2023, 2.6% senior notes due 2024, 2.6% senior notes due 2025, 3.25% senior notes due 2026, 5.1% senior notes due 2027, 3.1% senior notes due 2030, 2.35% senior notes due 2031 and 7.0% senior notes due 2037 (together, 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.

If we experience a change of control or publicly announces our 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 we will be required to offer to repurchase the Senior Notes at a price equal to 101% of the aggregate principal amount of the Senior Notes plus accrued and unpaid interest.

Credit Ratings.

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The ratings reflect many considerations, such as the nature of the borrower’s industry and its competitive position, the size of the company, its liquidity and access to capital and the sensitivity of a company’s cash flows to changes in the economy.

The two largest rating agencies, S&P and Moody’s, use alphanumeric codes to designate their ratings.

The highest quality rating for long-term credit obligations is AAA and Aaa for S&P and Moody’s, respectively.

A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency.

Long-term ratings of BBB- and Baa3 or better by S&P and Moody’s, respectively, reflect ratings on debt obligations that fall within a band of credit quality considered to be “investment grade.” At December 31, 2021, the long-term ratings for our obligations were BBB with a stable outlook for S&P and Baa2 with a stable outlook for Moody’s.

A downgrade in our credit rating would increase the cost of borrowings under our CP program, Revolver and Term Loan, and could limit, or in the case of a significant downgrade, preclude our ability to issue CP.

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Twelve Months Ended December 31, Change

Net cash provided by (used in):

Net cash (used in) provided by:

2022 2021 2020 2022 vs.

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Sources and uses of cash related to equity during the twelve months ended December 31, 2022, 2021 and 2020 were as follows:

• We did not repurchase any shares from public market transactions in 2022.

We repurchased 0.4 million of common shares from public market transactions in 2021.

We did not repurchase any shares from public market transactions in 2020 or 2019.

We did not repurchase any shares from public market transactions in 2020.

As of December 31, 2022, under the existing board authorization, the Company is approved for additional stock repurchases of $520.2 million.

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The following sections provide details of material cash requirements from known contractual and other obligations as of December 31, 2022.

As of December 31, 2021, we had outstanding variable and fixed rate notes with varying maturities for an aggregate principal amount of $5.0 billion, with $502.9 million payable within the next 12 months, as detailed further in Note 5 of the Notes to Consolidated Financial Statements in Item 8 of this report.

As of December 31, 2022, we had outstanding variable and fixed rate notes with varying maturities for an aggregate principal amount of $5.3 billion, with $400.4 million payable within the next twelve months, as detailed further in Note 5 of the Notes to Consolidated Financial Statements in Item 8 of this report.

Future interest payments associated with the outstanding variable and fixed rate notes totals $1,078.8 million, with $219.6 million payable within the next twelve months.

We also issue unsecured short-term promissory notes through our revolving credit facility and CP program, which is set to expire in August 2026.

As of December 31, 2021, we had nothing outstanding under our unsecured revolving credit facility and $321.9 million outstanding under our CP program.

As of December 31, 2022, we had no amount outstanding under our unsecured revolving credit facility and $566.8 million outstanding under our CP program.

Data Processing, Outsourcing Agreements and Other Purchase Obligations

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As detailed further in Note 9 of the Notes to Consolidated Financial Statements in Item 8 of this report, we have several pension, post-retirement benefit and deferred compensation plans.

and Canadian Retirement Plans are frozen and are supported by plan assets to fund future payments.

The obligation related to the CRIP is expected to be settled in 2022 with lump sum distributions and an annuity purchase.

Future payments to participants are expected to be made from the existing plan assets.

Retirement Plan is frozen and is supported by plan assets to fund future payments.

During the third quarter of 2022, we settled the liabilities under our Canadian Retirement Income Plan.

We have three supplemental retirement plans for certain key employees which are unfunded.

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As of December 31, 2022, the total obligation for the deferred compensation plans was $39.9 million, with $3.8 million expected to be paid within the next twelve months.

These obligations exclude those under our deferred stock compensation plans.

Payments to Resolve Certain Legal Proceedings and Investigations

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 “Item 3.

The Company has made and expects to make payments to resolve certain legal proceedings and investigations related to the 2017 cybersecurity incident, described more fully in “Item 3.

Legal Proceedings” in this Form 10-K.

Through 2021, the Company has made payments of $443.6 million for legal settlements related to the 2017 cybersecurity incident, with $345.0 million remaining to be paid to the Consumer Restitution Fund as of December 31, 2021.

On January 11, 2022, the

Consumer Settlement became effective, and on January 24, 2022, we deposited the remaining amount of $345.0 million into the Consumer Settlement Fund.

Through 2022, the Company has made payments of $788.6 million for legal settlements related to the 2017 cybersecurity incident.

On January 11, 2022, the Consumer Settlement became effective, and on January 24, 2022, we deposited the $345.0 million remaining to be paid to the Consumer Restitution Fund.

As detailed further in Note 12 of the Notes to Consolidated Financial Statements in Item 8 of this report, our lease arrangements principally involve office space.

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We will continue to invest in sales, marketing, new product development, security and our technology, as well as continue to make strategic acquisitions that align with our business strategy.

Additions to property and equipment will continue in order to support growth in our technology transformation and new product development, although we expect spending related to capital expenditures for the next twelve months to be down slightly from current levels.

Off-Balance Sheet Transactions

We do not engage in off-balance sheet financing activities.

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, 2021 and 2020 to a local governmental authority in the U.S.

Pursuant to the terms of certain industrial revenue bonds, we previously transferred title to certain of our fixed assets with total costs of $156.4 million as of December 31, 2021 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 on the Company’s Consolidated Balance Sheets as all risks and rewards related to the assets remain with the Company.

As of December 31, 2022, the title to these assets had reverted back to us upon the retirement of the applicable bonds.

These fixed assets are recognized in the Company’s Consolidated Balance Sheets as all risks and rewards remain with the Company.

Letters of Credit and Guarantees

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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 CRIP;

also covers retirees as well as certain terminated but vested individuals not yet in retirement status.

We also sponsored a retirement plan with both defined benefit and defined contribution components that covered most salaried and hourly employees in Canada, the Canadian Retirement Income Plan (“CRIP”);

the defined benefit component was also closed to new hires on October 1, 2011.

During the twelve months ended December 31, 2022, we made no voluntary contributions to the USRIP and made contributions of $15.5 million to the CRIP.

During the twelve months ended December 31, 2020, we made no voluntary contributions to the USRIP or the CRIP.

During the twelve months ended December 31, 2021, we made no voluntary contributions to the USRIP and made contributions of $2.8 million to the CRIP.

At December 31, 2022, the USRIP met or exceeded ERISA’s minimum funding requirements.

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

We anticipate the settlement of our CRIP liabilities during 2022 and have taken steps to adopt a more conservative asset allocation to decrease equity exposure and increase cash.

We believe additional funding contributions would not prevent us from continuing to meet our liquidity needs, which are primarily funded from cash flows generated by operating activities, available cash and cash equivalents, and our credit facilities.

During the third quarter of 2022, we settled the liabilities under the CRIP.

For our non-U.S.

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The following accounting policies involve critical accounting estimates because they are particularly dependent on estimates and assumptions made by management about matters that are uncertain at the time the accounting estimates are made.

In addition, while we have used our best estimates based on facts and circumstances available to us at the time, different estimates reasonably could have been used in the current period, or changes in the accounting estimates that we used are reasonably likely to occur from period to period, either of which may have a material impact on the presentation of our Consolidated Balance Sheets, Statements of Income (Loss), and Statements of Comprehensive Income (Loss).

We also have other significant accounting policies which involve the use of estimates, judgments and assumptions that are relevant to understanding our results.

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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.

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 at the outset of an arrangement, we determine that collectability is not reasonably assured, revenue is deferred until the earlier of when collectability 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 certain tax management services 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 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.

Certain costs incurred prior to the satisfaction of a performance obligation are deferred as contract costs and are amortized on a systematic basis consistent with the pattern of transfer of the related goods and services.

These costs generally consist of labor costs directly relating to the implementation and setup of the 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.

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Workforce Solutions, USIS, Asia Pacific, Europe, Latin America and Canada.

In the fourth quarter of 2021, we integrated our Global Consumer Solutions business into our USIS, Workforce Solutions and International operating segments.

consumer credit monitoring solutions businesses were moved to USIS with the U.S.

consumer identity theft protection business moved to Workforce Solutions.

All international consumer credit marketing solutions businesses have been moved into the Canada and Europe reporting units based on the geographical location of customers.

These changes in reporting units align with how we plan to manage our business going forward.

To reflect this new organizational structure, we have reallocated goodwill from the legacy Global Consumer Solutions reporting unit to the USIS, Workforce Solutions, Canada and Europe reporting units based on relative fair value.

A change in reporting units requires that goodwill be tested for impairment.

During 2021, we performed a goodwill impairment test prior to and following the reallocation of goodwill, which resulted in no impairment for all reporting units.

We performed a qualitative assessment to determine whether further impairment testing was necessary for our Workforce Solutions, USIS, Europe and Canada reporting units.

We performed a qualitative assessment to determine whether further impairment testing was necessary for our Workforce Solutions, USIS, Latin America, Europe and Canada reporting units.

In this qualitative assessment, we considered the following items for each of the reporting units:

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In addition, for each of these reporting units, the most recent fair value determination resulted in an amount that significantly exceeded the carrying amount of the reporting units.

Based on these assessments, we determined the likelihood that a current fair value determination would be less than the current carrying amount of the reporting unit is not more likely than not.

Based on these assessments, we determined the likelihood that a current fair value determination would be less than the current carrying

amount of the reporting unit is not more likely than not.

As a result of our conclusions, no further testing was required for these reporting units.

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Valuation Techniques

We performed a quantitative assessment for our Asia Pacific and Latin America reporting units to determine whether impairment exists from the most recent valuation dates due to the size of the cushion and overall uncertainty in these reporting units due to the negative impacts of COVID-19.

We performed a quantitative assessment for our Asia Pacific reporting unit to determine whether impairment exists from the most recent valuation date due to the size of the cushion and overall uncertainty in the reporting unit due to the negative impacts of the COVID-19 pandemic on the region.

In determining the fair value of the reporting unit, we used a combination of the income and market approaches to estimate the reporting unit’s business enterprise value.

Under the income approach, we calculate the fair value of a reporting unit based on estimated future discounted cash flows which require assumptions about short and long-term revenue growth rates, operating margins for each reporting unit, discount rates, foreign currency exchange rates and estimates of capital expenditures.

Under the income approach, we calculate the fair value of a reporting unit based on estimated future discounted cash flows which require assumptions about short and long-term revenue growth rates, operating margins for the reporting unit, discount rates, foreign currency exchange rates and estimates of capital expenditures.

The assumptions we use are based on what we believe a hypothetical marketplace participant would use in estimating fair value.

Under the market approach, we estimate the fair value based on market multiples of revenue or earnings before income taxes, depreciation and amortization, for benchmark companies or guideline transactions.

We believe the benchmark companies used for our Asia Pacific and Latin America reporting units serve as an appropriate input for calculating a fair value for the reporting unit as those benchmark companies have similar risks, participate in similar markets, provide similar services for their customers and compete with us directly.

We believe the benchmark companies used for our Asia Pacific reporting unit serves as an appropriate input for calculating a fair value for the reporting unit as those benchmark companies have similar risks, participate in similar markets, provide similar services for their customers and compete with us directly.

The companies we use as benchmarks are principally outlined in our discussion of Competition in Item 1 of this Form 10-K and have not significantly changed since the date of our last annual impairment test.

Competition for our Asia Pacific and Latin America reporting units generally includes global consumer credit reporting companies, such as Experian, which offer a product suite similar to the reporting unit's credit reporting solutions.

Competition for our Asia Pacific reporting unit generally includes global consumer credit reporting companies, such as Experian, which offer a product suite similar to the reporting unit's credit reporting solutions.

The values separately derived from each of the income and market approach valuation techniques were used to develop an overall estimate of a reporting unit’s fair value.

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The assumptions for our future cash flows begin with our historical operating performance, the details of which are described in our Management’s Discussion & Analysis of operating performance.

Additionally, we consider the impact that known economic, industry and market trends, including the impact and anticipated recovery related to the COVID-19 global pandemic, will have on our future forecasts, as well as the impact that we expect from planned business initiatives including new product initiatives, client service and retention standards, and cost management programs.

At the end of the forecast period, the long-term growth rate we used to determine the terminal value of our Asia Pacific and Latin American reporting units were between 3.0% and 4.0% based on management’s assessment of the minimum expected terminal growth rate of the reporting unit, as well as broader economic considerations such as GDP, inflation and the maturity of the markets we serve.

We projected revenue growth in 2022 for our Asia Pacific and Latin America reporting units in completing our 2021 impairment testing based on expected economic recovery from the negative impact the COVID-19 pandemic has had on these regions in 2021 and planned business initiatives and prevailing trends exhibited by these reporting units.

The anticipated revenue growth in these reporting units, however, is partially offset by assumed increases in expenses and capital expenditures for the reporting unit which reflects the additional level of investment needed in order to achieve the planned revenue growth and completion of our technology transformation initiatives.

Additionally, we consider the impact that known economic, industry and market trends, including the impact of rising interest rates and inflation, will have on our future forecasts, as well as the impact that we expect from planned business initiatives including new product initiatives, client service and retention standards, and cost management programs.

At the end of the forecast period, the long-term growth rate we used to determine the terminal value of our Asia Pacific reporting unit was between 3.0% and 4.0% based on management’s assessment of the minimum expected terminal growth rate of the reporting unit, as well as broader economic considerations such as GDP, inflation and the maturity of the markets we serve.

We projected revenue growth in 2023 for our Asia Pacific reporting unit in completing our 2022 impairment testing based on expected continued economic recovery from the negative impact the COVID-19 pandemic had on these regions in previous years and planned business initiatives and prevailing trends exhibited by this reporting unit.

The anticipated revenue growth in this reporting unit, however, is partially offset by assumed increases in expenses and capital expenditures for the reporting unit which reflects the additional level of investment needed in order to achieve the planned revenue growth and completion of our technology transformation initiatives.

Discount Rate Assumptions

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The cost of debt was computed using a benchmark rate and the Company’s tax rate.

For the 2021 annual goodwill impairment evaluation, the discount rates used to develop the estimated fair value of the Asia Pacific and Latin America reporting units were between 9.0% and 13.0%.

For the 2022 annual goodwill impairment evaluation, the discount rate used to develop the estimated fair value of the Asia Pacific reporting unit was between 9.5% and 11.0%.

Estimated Fair Value and Sensitivities

The estimated fair value of the reporting units is derived from the valuation techniques described above incorporating the related projections and assumptions.

The estimated fair value of the reporting unit is derived from the valuation techniques described above incorporating the related projections and assumptions.

Impairment occurs when the estimated fair value of the reporting unit is below the carrying value of its equity.

The estimated fair value for our Asia Pacific and Latin America reporting units exceeded their related carrying values as of September 30, 2021.

The estimated fair value for our Asia Pacific reporting unit exceeded its related carrying value as of September 30, 2022.

As a result, no goodwill impairment was recorded.

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Ultimately, future potential changes in these assumptions may impact the estimated fair value of a reporting unit and cause the fair value of the reporting unit to be below its carrying value.

Due to the lower cushions when compared to other reporting units, Asia Pacific and Latin America are more sensitive to changes in the assumptions noted above that could result in a fair value that is less than its carrying value.

The excess of fair value over carrying value for the Asia Pacific reporting unit was greater than 10%

and the excess fair value over carrying value for the Latin America reporting unit was greater than 50% as of September 30, 2021.

Due to the lower cushion when compared to other reporting units, Asia Pacific is more sensitive to changes in the assumptions noted above that could result in a fair value that is less than its carrying value.

The excess of fair value over carrying value for the Asia Pacific reporting unit was greater than 5% and 10% as of September 30, 2022 and September 30, 2021, respectively.

Given the relatively smaller excess of fair value over carrying value for the Asia Pacific reporting unit, we believe that it is at risk of a possible future goodwill impairment.

Although we experienced growth in this reporting unit for the twelve months ended December 31, 2021 in comparison to the estimates used in the 2021 goodwill impairment testing, the COVID-19 pandemic has had a substantial negative impact on our results.

Avoidance of a future impairment will be dependent on continued economic recovery from the negative impact caused by COVID-19 and our ability to execute on initiatives to grow revenue and manage expenses prudently.

The excess of fair value for the Asia Pacific reporting unit is lower in 2022 than in 2021 primarily due to higher observed risk free interest rates and the loss of income from our joint venture in Russia which was formerly included in this reporting unit.

The future impact of changes in economic conditions, including rising interest rates and inflation, remains uncertain.

Avoidance of a future impairment will be dependent on continued growth during current economic conditions and our ability to execute on initiatives to grow revenue and manage expenses prudently.

We will continue to monitor the performance of this reporting unit to ensure no interim indications of possible impairment have occurred before our next annual goodwill impairment assessment in September 2023.

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We determine whether to disclose and/or accrue for loss contingencies based on our assessment of whether the potential loss is estimable, probable, reasonably possible or remote.

In the third quarter of 2017, we announced a cybersecurity incident potentially impacting U.S., Canadian and U.K.

As a result of the 2017 cybersecurity incident, we were subject to a significant number of proceedings and investigations as described in “Item 3.

In 2017, we experienced a cybersecurity incident following a criminal attack on our systems that involved the theft of personal information of consumers.

As a result of the 2017 cybersecurity incident, we were subject to proceedings and investigations as described in “Item 3.

Legal Proceedings” in this Form 10-K.

We recorded expenses, net of insurance recoveries, of $800.9 million in other current liabilities and selling, general, and administrative expenses in our Consolidated Statements of Income (Loss) for the twelve months ended December 31, 2019, exclusive of our legal and professional services expenses.

We recorded estimated expenses, net of insurance recoveries, of $800.9 million in other current liabilities and selling, general, and administrative expenses in our Consolidated Statements of Income (Loss) for the twelve months ended December 31, 2019, exclusive of our legal and professional services expenses.

The amount accrued represents our best estimate of the liability related to these matters.

The Company will continue to evaluate information as it becomes known and adjust accruals for new information and further developments in accordance with ASC 450-20-25.

The Company will continue

to evaluate information as it becomes known and adjust accruals for new information and further developments in accordance with ASC 450-20-25.

While it is reasonably possible that losses exceeding the amount accrued may be incurred, it is not possible at this time to estimate the additional possible loss in excess of the amount already accrued that might result from adverse judgments, settlements, penalties or other resolution of the proceedings and investigations described in “Item 3.

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Our assumptions related to loss contingencies are inherently subjective.

Effect if actual results differ from assumptions — With the exception of the 2017 cybersecurity incident, we do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to determine loss contingencies.

Effect if actual results differ from assumptions — We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to determine loss contingencies.

However, if facts and circumstances change in the future that change our belief regarding assumptions used to determine our estimates, we may be exposed to a loss that could be material.

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Settlement of uncertain tax positions may require use of our cash.

At December 31, 2021, $34.5 million was recorded for unrecognized tax benefits, including interest and penalties, of which it is reasonably possible that up to $7.1 million of our unrecognized tax benefit may change within the next twelve months.

At December 31, 2022, $42.7 million was recorded for uncertain tax benefits, including interest and penalties, of which it is reasonably possible that up to $3.9 million of our unrecognized tax benefit may change within the next twelve months.

Effect if actual results differ from assumptions — Although management believes that the judgments and estimates discussed herein are reasonable, actual results could differ, and we may be exposed to increases or decreases in income tax expense that could be material.

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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-K

Item 7. Management’s Discussion and Analysis