Equifax 2002 Annual Report Download - page 53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
minority interest, or $0.07 per share. Prior year results were not
material and have not been reclassified to discontinued operations.
On July 7, 2001, we completed the spin-off of our Payment
Services business segment (Certegy Inc. or Certegy) through a
tax-free dividend of all of our Certegy stock to our shareholders.
Shareholders received a dividend of one share of Certegy stock for
each two shares of Equifax stock owned. This non-cash dividend
totaled $233.9 million. Also in connection with the spin-off, we
reduced debt by $275.0 million in July 2001 following Certegy’s
cash dividend of that amount to us.
As a result of the spin-off, our financial statements have been
prepared with Certegy’s net assets, results of operations, and cash
flows classified as “discontinued operations.” All historical state-
ments have been restated to conform with this presentation. Also
as a result of the spin-off, during the second quarter of 2001 we
recorded an expense of $36.5 million ($28.4 million after tax, or
$0.21 per share) to accrue the costs associated with effecting the
spin-off. These costs include fees for investment bankers, legal
and accounting services, duplicate software licenses, and various
other directly related expenses. This expense has been included as
a component of discontinued operations in the accompanying
statements of income and cash flows. In 2002, charges to this
reserve totaled $2.3 million, and the remaining reserve of $0.7 mil-
lion at December 31, 2002, which represents known costs we expect
to incur within the foreseeable future, is included in other current
liabilities in the accompanying consolidated balance sheets.
Summarized financial information for the discontinued Certegy
operation is as follows:
(In millions) 2001 2000
Revenue $398.3 $776.7
Income before income taxes 56.0 137.1
Net Income $ 33.6 $ 86.9
3.
ACQUISITIONS
In 2002, we acquired the credit files, contractual right to territories
(generally states of integration areas), and customer relationships
and related businesses of eight independent credit reporting
agencies that house their consumer information on our system
(“Affiliates”) located in the United States and three Affiliates in
Canada to continue to grow our credit data franchise. The con-
sumer credit files, contractual right to territories (generally states
of integration areas), and customer relationships of the largest of
these Affiliates, CBC Companies, Inc., were acquired in November
2002 for $95.0 million. In April 2002, in conjunction with a put
arrangement with the original owners, we completed the purchase
of the remaining 20% minority interest in our Brazilian operation,
making us the sole owners, and in June 2002 completed the pur-
chase of a small technology development company. In August
2002, to accelerate growth in our marketing services business,
we purchased Naviant, Inc., a provider of precision marketing
services, for approximately $135.0 million. At the closing of the
Naviant, Inc. acquisition, the sellers deposited $10.0 million of the
transaction consideration into escrow. The escrow fund will be
held for 24 months following the closing date of August 15, 2002.
The escrow arrangement provides for payment to us in the event
any indemnified loss arises and is settled during the period. At the
end of the 24 months, all escrow funds will be returned to the sell-
ers with holdback for any unresolved claims. In October 2002, we
acquired outstanding shares and increased our ownership to
79.4%, from 60.0%, of our information Spanish subsidiary. These
acquisitions were accounted for as purchases and had a total
purchase price of $333.6 million. They were acquired for cash of
$328.4 million and notes payable of $5.2 million. The following
table summarizes the estimated fair value of the net assets
acquired and the liabilities assumed at the acquisition dates.
(In millions)
Current Assets $ 17.6
Property and Equipment 3.1
Other Assets 59.0
Purchased Data Files 88.8
Goodwill 175.7
Total Acquired Assets 344.2
Total Liabilities 10.6
Net Assets Acquired $333.6
The results of operations from these acquisitions have been
included in the consolidated statements of income from the dates of
acquisition. The following unaudited pro forma information has been
prepared as if these acquisitions had occurred on January 1, 2001.
The information is based on the historical results of the separate
companies, and may not necessarily be indicative of the results that
could have been achieved, or of results that may occur in the future.
(In millions, except per share amounts) 2002 2001
Revenue $1,148.0 $1,178.2
Net income 182.4 98.4
Net earnings per common share (diluted) 1.32 0.72
In 2001, we acquired the credit files, customer contracts and
related businesses of five Affiliates located in the United States
and 13 Affiliates in Canada, as well as an information services
business in Uruguay. These acquisitions were accounted for
as purchases and had a purchase price of $48.9 million. They
were acquired for cash of $44.4 million and notes payable
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