Equifax 2002 Annual Report Download - page 32

Download and view the complete annual report

Please find page 32 of the 2002 Equifax annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 72

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
The following table summarizes our significant contractual obligations and commitments as of December 31, 2002:
Payments due by
Less than 1 to 3 4 to 5
(In millions) Total 1 Year Years Years Thereafter
Long-term debt (Note 6) $ 891.9 $201.3 $273.4 $249.8 $167.4
Operating leases (Note 10) 156.0 23.3 34.4 24.3 74.0
Data processing agreement
obligations (Note 10) 486.0 97.4 181.1 174.8 32.7
Outsourcing agreements (Note 10) 92.5 17.5 25.3 24.0 25.7
$1,626.4 $339.5 $514.2 $472.9 $299.8
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
28
We believe that future cash flows provided by our operating activi-
ties, 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. For instance, Computer Sciences Corpora-
tion has an option, exercisable at any time prior to 2013, to sell its
credit reporting business to us. 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 approximately $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 sub-
ject 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 addi-
tional bank lines of 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 state of the equity markets, general economic con-
ditions, 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. See
“Forward-Looking Statements,” below.
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
shareholders. In addition, we will, from time to time, consider the
acquisition of, or investment in, complementary businesses, prod-
ucts, services and technologies, and the repurchase and retire-
ment of debt, which might affect our liquidity requirements or
cause us to issue additional equity or debt securities. There can
be no assurance that financing will be available in amounts or on
terms acceptable to us, if at all.
OFF-BALANCE SHEET TRANSACTIONS
Other than facility leasing arrangements, we do not engage in
off-balance sheet financing activities. We have entered into a
synthetic lease on our Atlanta corporate headquarters building in
order to provide us with favorable financing terms with regard to
this facility. This $29.0 million lease was entered into in 1998 and
expires in 2010. Total lease payments for the remaining term total
$13.5 million. Under this synthetic lease arrangement, we have
also guaranteed the residual value of the leased property to a les-
sor. In the event that the property were to be sold by the lessor at
the end of the lease term, we would be responsible for any short-
fall of the sales proceeds, up to a maximum amount of $23.2 mil-
lion, which equals 80 percent of the value of the property at the
beginning of the lease term. We believe that the fair market value
of this property exceeds the amount of the guarantee.
LETTERS OF CREDIT AND GUARANTEES
We will, from time to time, issue standby letters of credit, perform-
ance bonds or other guarantees in the normal course of our busi-
ness. The aggregate notional amount of all performance bonds and
standby letters of credit is less than $15.0 million and they all have
a maturity of one year or less. We provide these guarantees from
time to time to support the needs of our operating units. Except for
our guarantee of the synthetic lease referred to above, our only
outstanding guarantee that is not reflected as a liability on our
balance sheet was extended in connection with the sale of our risk
management collections business to RMA Holdings, LLC, or RMA,
in October 2000, at which time we guaranteed the operating lease
payments of a partnership affiliated with RMA to a lender of the part-
nership pursuant to a term loan. The term loan, which had $7.9 mil-
lion outstanding as of December 31, 2002, expires December 1,
2011. Our obligations under the RMA guarantee are not secured.