Equifax 2003 Annual Report Download - page 26

M ANAGEM ENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EQUIFAX. INFORMATION THAT EMPOWERS. 23
CASH AND CASH EQUIVALENTS
Our cash and cash equivalents balance was $39.3 million and
$30.5 million at December 31, 2003 and 2002, respectively.
REVOLVING CREDIT FACILITIES
Our $465.0 million revolving credit facility, which we entered into
with Bank of America, N.A. and certain other lenders on October 4,
2001, provides for a variable interest rate tied to Base Rate, and
the London InterBank Offered Rate, or LIBOR, and competitive bid
options. The weighted average interest rate of borrowings out-
standing under this facility was approximately 1.6% as of Decem-
ber 31, 2003. The credit facility consists of a $160.0 million 364-day
portion and a $305.0 million multi-year portion which expire on
September 30, 2004 and October 4, 2004, respectively. The agree-
ment governing this facility contains various covenants and restric-
tions, including, among other things, limitations on liens, subsidiary
debt, mergers, liquidation, asset dispositions, acquisitions, and
maintenance of certain financial covenants. Our borrowings under
this facility, which have not been guaranteed by any of our subsid-
iaries, are unsecured and will rank on parity in right of payment with
all of our other unsecured and unsubordinated indebtedness from
time to time outstanding. As of December 31, 2003, we had
$327.9 million of borrowing capacity available under our $465.0 million
revolving credit facility. Our intention is to renegotiate this facility
in the second quarter of 2004. Barring any material changes in the
banking environment we are confident that we will secure terms
equal to or better than our current arrangement.
One of our Canadian subsidiaries has an unsecured, 364-day
C$100.0 million revolving credit facility that will expire on Septem-
ber 30, 2004. The agreement provides for borrowings tied to Prime,
Base Rate, LIBOR and Canadian Banker’s Acceptances, and con-
tains financial covenants related to interest coverage, funded debt
to cash flow, and limitations on subsidiary indebtedness. We have
guaranteed the indebtedness of our Canadian subsidiary under this
facility. As of December 31, 2003, $61.7 million of borrowing
capacity was available under this credit facility, from which no
amount was outstanding. We will determine during the first half
of 2004 our intentions regarding this facility.
CONTRACTUAL OBLIGATIONS AND COM MERCIAL COM M ITM ENTS
The following table summarizes our significant contractual obligations and commitments as of December 31, 2003:
Payments due by
Less than 1 to 3 3 to 5
(in millions) Total 1 Year Years Years Thereafter
Long-term debt (Note 7) $ 787.1 $139.0 $249.7 $249.6 $148.8
Operating leases (Note 11) 96.2 17.4 15.1 11.9 51.8
Data processing agreement
obligations (Note 11) 325.0 56.3 91.2 57.5 120.0
Other long-term liabilities 99.1 – 2.0 – 97.1
$1,307.4 $212.7 $358.0 $319.0 $417.7
We believe that future cash flows provided by our operating activ-
ities, together with current cash and cash equivalent balances,
will be sufficient to meet our projected cash requirements for the
next 12 months, and the foreseeable future thereafter, although
any projections of future cash needs and cash flows are subject to
substantial uncertainty. A potential extraordinary use of cash would
be the exercise by Computer Science Corporation (“CSC”) of its
option to require us to buy its credit reporting business at any time
prior to 2013. The option exercise price will be determined by a
third-party appraisal process and would be due in cash within 180
days after the exercise of the option. We estimate that if CSC were
to exercise the option today, the option price would be approxi-
mately $650.0 to $700.0 million. This estimate is based solely on
our internal analysis of the value of the business, current market
conditions, and other factors, all of which are subject to constant
change. If CSC were to exercise its option, we would have to obtain
additional sources of funding. We believe that this funding would
be available from sources such as additional bank credit and the
issuance of public debt and/or equity. However, the availability
and terms of any such financing would be subject to a number of
factors, including credit market conditions, the condition of the
equity markets, general economic conditions, and our financial
performance and condition. Because we do not control the timing
of CSC’s exercise of its option, we could be required to seek such
financing and increase our indebtedness at a time when market or
other conditions are unfavorable.
We continually evaluate opportunities to sell additional equity or
debt securities, obtain credit facilities from lenders, and restructure
our long-term debt for strategic reasons, or to further strengthen
our financial position. The sale of additional equity or convertible
debt securities could result in additional dilution to our sharehold-
ers. In addition, we will, from time to time, consider the acquisition
of, or investment in, complementary businesses, products, services