Equifax 2007 Annual Report Download - page 43

EQUIFAX | 2007 ANNUAL REPORT 41
we acquired BeNow to enhance our USCIS business and add to
our enabling technology capabilities. During the twelve months
ended December 31, 2005, in order to continue to grow our credit
data franchise, we also acquired the credit fi les, contractual rights
to territories and customer relationships and related businesses
of two independent credit reporting agencies in the U.S. and one
in Canada that housed consumer information on our system. We
acquired all of these businesses for $121.8 million in cash, net of
cash acquired, and the issuance of 0.4 million shares of Equifax
treasury stock.
For additional information about our acquisitions, see Note 2 of
the Notes to Consolidated Financial Statements in this Form 10-K.
Borrowings and Credit Facility Availability
Net cash provided by (used in): Twelve Months Ended December 31, Change
(Dollars in millions) 2007 2006 2005 2007 vs. 2006 2006 vs. 2005
Net short-term borrowings (repayments) $ 139.7 $(12.2) $ 92.3 $ 151.9 $(104.5)
Net borrowings (repayments) under
long-term revolving credit facilities $ 253.4 $(40.0) $ 65.0 $ 293.4 $(105.0)
Payments on long-term debt $(250.0) $ – $(250.0) $(250.0) $ 250.0
Proceeds from issuance of long-term debt $ 545.7 $ – $ – $ 545.7 $ –
Net short-term borrowings during 2007 represents activity
under our $850.0 million commercial paper program, which is
backstopped by our Senior Credit Facility, partially offset by net
repayments under our trade receivables-backed revolving credit
facility, which expired on November 29, 2007. We elected not to
renew this credit facility upon its expiration. At December 31, 2007,
$219.5 million in commercial paper notes was outstanding, at a
weighted-average interest rate of 5.5% per annum, all with maturities
of less than 90 days. The 2006 and 2005 net short-term (repayments)
borrowings represent activity under our trade receivables-backed
revolving credit facility.
Net borrowings (repayments) under long-term revolving credit
facilities during 2007, 2006 and 2005 relate to activity on our
Senior Credit Facility. Borrowings may be used for general corporate
purposes, including working capital, capital expenditures, acqui-
sitions and share repurchase programs. The Senior Credit Facility
expires in July 2011. During the second quarter of 2007, we amended
our Senior Credit Facility to increase the borrowing limit from
$500.0 million to $850.0 million. Among other provisions, the
applicable margin for borrowings and the annual facility fee were
lowered, the maximum leverage ratio (as defi ned in the amended
credit agreement) was increased from 3.0 to 1 to 3.5 to 1, the mini-
mum interest coverage ratio covenant was deleted, and the limit
on restricted payments was amended.
At December 31, 2007, interest was payable on borrowings
under our Senior Credit Facility at the base rate or London Interbank
Offered Rate, or LIBOR, plus a specifi ed margin or competitive
bid option as selected by us from time to time. The annual facility
fee and interest rate are subject to adjustment based on our debt
ratings. As of December 31, 2007, $255.5 million was available for
borrowings and there were outstanding borrowings of $375.0 million
under this facility, which is included in long-term debt on our
Consolidated Balance Sheet.
On June 28, 2007, we issued $300.0 million principal amount of
6.3%, ten-year senior notes and $250.0 million principal amount
of 7.0%, thirty-year senior notes, which we refer to collectively
as the Notes, in underwritten public offerings. We used a portion
of the net proceeds from the sale of the Notes to reduce the amount
outstanding in our commercial paper program. In conjunction
with the sale of the Notes, we entered into cash fl ow hedges on
$200.0 million and $250.0 million notional amount, respectively,
of ten-year and thirty-year Treasury notes. These hedges were
settled in cash on June 25 and 26, 2007, respectively, the date the
Notes were sold, requiring a cash payment by us of $1.9 million
and $3.0 million, respectively.
We refi nanced the $250.0 million principal amount relating to
our 4.95% notes in November 2007 using our Senior Credit Facility.
There were no material payments on long-term debt during 2006.
We redeemed the $250.0 million principal amount relating to our
6.3% senior unsecured notes in 2005 by utilizing borrowings under
certain revolving credit facilities.
We are a party to a credit agreement with a Canadian bank that
provides for a 10.0 million Canadian dollar, 364-day revolving credit
agreement. During the fourth quarter, we elected to reduce the bor-
rowing amount from 25.0 million Canadian dollars to 10.0 million
Canadian dollars and extend the maturity date to November 2008.
At December 31, 2007, there were no outstanding borrowings
under this facility.
At December 31, 2007, 57% of our debt was fi xed-rate debt
and 43% was variable-rate debt. Our variable-rate debt consists
of the Senior Credit Facility and commercial paper program and
generally bears interest based on a specifi ed margin plus a base
rate, LIBOR or commercial paper rate. The interest rates reset
periodically, depending on the terms of the respective fi nancing
arrangements. At December 31, 2007, interest rates on substantially
all of our variable-rate debt ranged from 5.1% to 5.2%. We were
in compliance with all of our fi nancial and non-fi nancial debt
covenants at December 31, 2007.
On February 15, 2007, Standard & Poor’s Corporation, or S&P,
downgraded our senior unsecured long-term fi xed debt rating from
A- to BBB+ in reaction to our public announcement of the agreement
to acquire TALX and an additional $400.0 million share repurchase
program, due to its stated belief that the acquisition refl ects a
somewhat more aggressive fi nancial policy and more leveraged