Equifax 2008 Annual Report Download - page 26

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MANAGEMENT’S DISCUSSION AND ANALYSIS continued
On June 28, 2007, we issued $300.0 million principal aggregate principal amount of the Senior Notes plus
amount of 6.3%, ten-year senior notes and $250.0 million accrued and unpaid interest.
principal amount of 7.0%, thirty-year senior notes, which Credit Ratings. Credit ratings reflect an independent
we refer to collectively as the Senior Notes, in underwritten agency’s judgment on the likelihood that a borrower will
public offerings. We used a portion of the net proceeds repay a debt obligation at maturity. The ratings reflect many
from the sale of the Senior Notes to reduce the amount considerations, such as the nature of the borrower’s indus-
outstanding in our commercial paper program. In conjunc- try and its competitive position, the size of the company, its
tion with the sale of the Senior Notes, we entered into liquidity and access to capital and the sensitivity of a com-
cash flow hedges on $200.0 million and $250.0 million pany’s cash flows to changes in the economy. The two
notional amount, respectively, of ten-year and thirty-year largest rating agencies, S&P and Moody’s, use alphanu-
treasury notes. These hedges were settled in cash on meric codes to designate their ratings. The highest quality
June 25 and 26, 2007, respectively, the date the Senior rating for long-term credit obligations is AAA and Aaa for
Notes were sold, requiring a cash payment by us of S&P and Moody’s, respectively. A security rating is not a
$1.9 million and $3.0 million, respectively. There were no recommendation to buy, sell or hold securities and may be
material proceeds from the issuance of long-term debt dur- subject to revision or withdrawal at any time by the
ing 2008 and 2006. assigning rating agency.
Debt Covenants. Our outstanding indentures and compa- Long-term ratings of BBB- and Baa3 or better by S&P and
rable instruments contain customary covenants including Moody’s, respectively, reflect ratings on debt obligations
for example limits on the incurrence of secured debt and that fall within a band of credit quality considered to be
sale/leaseback transactions. In addition, our Senior Credit ‘‘investment grade’’. At December 31, 2008, the long-term
Facility and Canadian Credit Facility each require us to ratings for our obligations were BBB+ and Baa1, which are
maintain a maximum leverage ratio of not more than 3.5 to consistent with the ratings and outlooks which existed at
1.0. Our leverage ratio was 1.98 to 1.0 at December 31, December 31, 2007. A downgrade in our credit rating
2008. None of these covenants are considered restrictive would increase the cost of borrowings under our commer-
to our operations and, as of December 31, 2008, we were cial paper program and credit facilities, and could limit, or
in compliance with all of our debt covenants. in the case of a significant downgrade, preclude our ability
We do not have any credit rating triggers that would accel- to issue commercial paper. If our credit ratings were to
erate the maturity of a material amount of our outstanding decline to lower levels, we could experience increases in
debt; however, our Senior Notes, discussed above, contain the interest cost for any new debt. In addition, the market’s
change in control provisions. If we experience a change of demand for, and thus our ability to readily issue, new debt
control or publicly announce our intention to effect a could become further influenced by the economic and
change of control and the rating on the Senior Notes is credit market environment.
lowered by each of Standard & Poor’s, or S&P, and
For additional information about our debt, including the
Moody’s Investors Service, or Moody’s, below an invest-
terms of our financing arrangements, basis for variable
ment grade rating within 60 days of such change of control
interest rates and debt covenants, see Note 4 of the Notes
or notice thereof, then we will be required to offer to repur-
to Consolidated Financial Statements in this Annual Report.
chase the Senior Notes at a price equal to 101% of the
Equity Transactions
Net cash provided by (used in): Twelve Months Ended December 31, Change
(Dollars in millions) 2008 2007 2006 2008 vs. 2007 2007 vs. 2006
Treasury stock repurchases $ (155.7) $ (718.7) $ (215.2) $ 563.0 $ (503.5)
Dividends paid $ (20.5) $ (20.7) $ (20.3) $ 0.2 $ (0.4)
Proceeds from exercise of stock options $ 14.7 $ 31.6 $ 26.1 $ (16.9) $ 5.5
Excess tax benefits from stock-based
compensation plans $ 2.1 $ 7.0 $ 7.2 $ (4.9) $ (0.2)
Sources and uses of cash related to equity during the and 2006, respectively, for $155.7 million, $718.7 million
twelve months ended December 31, 2008, 2007 and 2006 and $212.7 million, respectively, at an average price per
were as follows: common share of $34.41, $40.12 and $35.64, respec-
• Under share repurchase programs authorized by our tively. At December 31, 2008, the Company had
Board of Directors, we purchased 4.5 million, 17.9 million $158.2 million remaining for stock repurchases under the
and 6.0 million common shares on the open market dur- existing Board authorization.
ing the twelve months ended December 31, 2008, 2007
24 EQUIFAX INC.