ALEX FLOREAMICHAEL LAVIN

ANDREW LEECATHERINE LIENAKRATI JOHARI

Equifax, Inc. (EFX)April 20, 2010, (concluded April 22, 2010)

Presentation Overview

Company OverviewIndustry OverviewMacroeconomic AnalysisCompetitor AnalysisMultiples ValuationPro-forma AssumptionsDCF and WACC CalculationRecommendation

Company Overview

Equifax is the second largest credit reporting agency in the United States.

Provides information services to businesses that enable them to make sound decisions about extending credit or service, mitigate fraud, manage portfolio risk. The company also develops marketing strategies for its clients.

Located in 15 countries across North America, Latin America, and Europe, the company primarily operates in the US. It is headquartered in Atlanta, Georgia and employs about 6,500 people.

Business Description

The products and services of the company include consumer credit information, information database management, marketing information, business credit information and analytical tools. The company also offers identity verification services.

Equifax operates through five reportable segments: U.S. Consumer Information Solutions

Consumer information services, mortgage loan origination information services, credit card marketing services, and consumer demographic and lifestyle information services.

TALX Employment and income verification services, employment tax and talent

management services. International

Information services products. North America Personal Solutions

Credit information, credit monitoring and identity theft protection products sold directly to consumers

North America Commercial Solutions Commercial products and services such as business credit and demographic

information, credit scores and portfolio analytics (decisioning tools).

5 Point DuPont

2005 2006 2007 2008 2009

EBIT/Sales (operating profit margin) 29.24% 28.78% 26.38% 25.52% 23.70%

Sales/Assets (asset turnover) 78.81x 86.36x 52.30x 59.37x 51.39x

Interest/Assets (interest expense rate) 1.94% 1.78% 1.66% 2.19% 1.61%

Assets/Equity (equity multiplier) 2.23 2.14 2.52 2.48 2.22

1-tax (tax retention rate) 63.55% 65.53% 64.73% 66.82% 67.00%

ROE 20.28% 22.36% 11.09% 11.52% 9.79%

DuPont Chart

Historical ROE

Competitive Landscape

Industry is categorized into two separate groups, credit bureaus and credit rating agencies (CRA).

The credit bureau sector is dominated by three major players: Experian, Equifax, and TransUnion. These entities make up 61.8% of industry revenue.

Operates in a highly competitive environment, facing competition in geographic, product and service markets. Industry participants also compete with investment banks, brokerage firms and institutional investors.

Compete on price, quality, innovation, responsiveness, and user-friendliness.

Market Share Experian Group 25.9% Equifax, Inc. 16.7% The McGraw-Hill Companies, Inc. 11.1% Moody’s Corporation 10.7% Trans Union, LLC. 10.5%

Competitors

Direct competitors include: Other credit bureaus (Experian & TransUnion): Very similar

product mix, same targeted customer base Fair Isaac Co. (FICO): Provides similar analytic tools; FICO

score that credit analysis is based on Dun & Bradstreet: Provides business level credit scores and

analysis

Rating vary and often multiple agencies are used when a credit report is requested.

Credit Rating Agencies face same macro conditions and are very closely correlated, but not direct competitors. (Distinction between competitor and comparable company)

Stock Performance

Industry Structure

Life Cycle Stage Mature

Revenue Volatility Medium

Investment Requirements Medium

Industry Assistance None

Concentration Level High

Regulation Level Medium

Technology Change Medium

Barriers to Entry High

Industry Globalization Medium

Competition Level High

Industry Overview

In the five years to 2010, the US Credit Bureaus and Rating Agencies industry revenue increased by an average annual rate of 3.4% to $8.4 billion; driven by increased lending activity by banks and increased popularity of structured debt instruments.

As a result of the recent recession, industry revenue declined by an average annual rate of 1.8% in the two years to 2009.

Industry Outlook

In the five years to 2015, the US Credit Bureaus and Rating Agencies industry revenue is expected to increase by an average annual rate of 8.8% to $12.8 billion.

As the economy recovers and the financial sector stabilizes, banks and other lending institutions will begin to increase lending activity. As lending improves the need for credit bureau services such as consumer reports and credit card marketing will rise.

Credit bureaus are expected to continue to diversify operations in an attempt to increase business and utilize data (possible through acquisitions; consolidation).

Firms will also continue to build partnerships with banks and other consumer lenders in an attempt to target individual borrows.

Key External Drivers

Household credit market debt

10-year bond rate

Real GDP growth

Per capita disposable income

Legislative compliance requirements

Household Credit Market Debt

The industry’s revenue is largely comprised of income that is generated from rating services related to consumer debt.

Credit bureaus benefit from a rise in credit applications associated with the credit cards, mortgages or home equity loans.

While credit rating agencies benefit from the repacking and sale of consumer loans on the secondary market

10-Year Bond Rate

Industry revenue is driven by credit reporting and rating activity related to consumer and business debt.

The industry also benefits from the issuance of debt securities within the capital markets.

Interest rates generally affect the rate at which debt is issued.

Higher interest rates negatively impact the level of borrowing and debt issuance, resulting in lower income for credit bureaus.

Source: IBISWorld.com

Real GDP Growth

An increase in economic activity is generally associated with a rise in borrowing by consumers and businesses.

As borrowing increases, credit applications rise and the demand for credit rating services increases.

Conversely, in poor economic times, borrowing decreases as consumers and businesses cut spending and management costs.

Adversity within the secondary market also affects the issuance of debt, decreasing the demand for credit rating services.

According to Consensus Economics, US Real GDP growth expected to grow (YOY) by 3.1% in 2011, 3.0% in 2012-2016, and 2.6% in 2017-2021.

Source: http://www.consensusforecasts.com/special_data.htm

Per Capita Disposable Income

An increase in real disposable income generally leads to a rise in borrowing activity, which is beneficial to the US Credit Bureaus industry.

Access to capital increases as disposable income rises.

Individuals with higher levels of disposable income, generally have stronger credit records, allowing them to borrow money.

For example, individuals with strong credit records, income and savings are approved for mortgages at higher rates then poorer people.

Legislative Compliance Requirements

The legislative compliance requirements are government policies relating to credit rating methodologies, practices and accountability.

Any rise in legislative compliances on credit rating activity increases the cost of providing services.

Increased Regulation

Since the start of the recession, the industry has been scrutinized for its involvement in the rating and structuring of complex debt products.

Critics blame the industry for not identifying the systematic risks associated with packaging low quality subprime mortgages into securities that were sold as high quality investment grade products.

Larger CRAs also faced scrutiny for not maintaining objectivity when assessing debt instruments.

As a result, the industry has begun to face tougher regulation from the SEC and other government agencies.

SWOT Analysis

Strengths: Diversified business mix helps

reduce earnings volatility. Consistent industry recognition. Strong and growing

international franchise offsetting slowdown in the US.

Opportunities: Increase penetration of

customers’ information solution needs

Deploy decisioning technologies and analytics globally

Investing in unique data sets likely to increase competitive edge.

Pursue new vertical markets and expand into emerging markets.

Weaknesses: Increased leverage on

balance sheet, resulting from acquisitions, could affect Equifax’s margins.

Weak presence in online mortgage market gives Experian a competitive edge.

Threats: Competition intensifying due

to acquisitions and organic growth initiatives of peers.

Economic weakness and uncertainty could materially affect the company

Growing popularity of search engines may affect demand for Equifax’s products.

Comparables Analysis

Values as of: 4/4/2004

Market Cap Shares Out Revenue EBITDA EBITDA Margin EPS Trailing P/E Forward P/E P/S TEV/EBITDA

Alliance Data Systems Corporation ADS 3,379

53 1,964

487 25%

2.69 24.7 12.5 1.7 13.2

Dun & Bradstreet Corp. DNB 3,751

50 1,687

546 32%

5.34 14.1 13.5 2.2 8.2

Experian plc EXPN 6,690

1,026 3,730 1,108 30%

0.45 23.6 17.2 2.9 11.1

FactSet Research Systems Inc. FDS 3,468

47

622

252 40%

2.88 26.5 25.5 5.6 13.0

Fair Isaac Corp. FICO 1,185

46

619

168 27%

1.44 17.8 18.4 1.9 8.4

Fiserv Inc. FISV 7,788

152 4,077 1,234 30%

3.02 17.0 14.0 1.9 8.9

Moody's Corp. MCO 6,950

237 1,797

769 43%

1.76 16.8 17.5 3.9 9.9

The McGraw-Hill Companies, Inc. MHP 11,216

315 5,952 1,440 24%

2.40 14.9 15.8 1.9 7.8

Equifax Inc. EFX 4,511

126 1,825

591 32%

1.88 19.3 19.5 2.5 9.5

Minimum 14.1 12.5 1.7 7.8 Spread Median 17.4 16.5 2.1 9.4 Analysis Average 19.4 16.8 2.7 10.1

Maximum 26.5 25.5 5.6 13.2

Implied Enterprise Value 5,008.31

5,946.72

Implied Per Share Value 36.44

31.49

39.67

47.10

Management Assessment

Based on the uncertainty in the global economy,, we expect revenue in the first quarter of 2009 to be similar to the fourth quarter of 2008 (Annual Report 2008) 4th Quarter 2008 revenues = $464.2 million 1st Quarter 2009 revenues = $452.9 million

Based on current rates of economic and credit activity in the U.S., we currently expect revenue in the OCIS and Credit Marketing Services lines and in the overall USCIS segment in 2009 to be below levels achieved in 2008. (Annual Report 2008)

Management Assessment

Realizing cost savings from 2009 restructuring LEAN & Work – Out 14.4MM charge recorded related to headcount reduction and contractual costs

Potential Liability Entered into put contract with Computer Science Corporation for credit

reporting business $675MM in 2013

Share Repurchase 122MM reserved for 2009

Revenue Assumptions

ASSUMPTIONS 2010 2011 2012 2013 2014

Sales growth rate:          

U.S. Consumer Information Solutions 0% 2% 3% 2% 4%

International 0% 4% 4% 3% 8%

TALX 3% 4% 5% 3% 8%

North America Personal Solutions 0% 5% 8% 6% 11%

North America Commercial Solutions 0% 5% 6% 5% 9%

COGS/Sales 41.13% 41.13% 41.13% 41.13% 41.13%

SG&A/Sales 25.75% 25.75% 25.75% 25.75% 25.75%

Depreciation as % of PPE 23% 23% 23% 23% 23%

Income Tax 35% 35% 35% 35% 35%

DCF

DCF Valuation

  FCF Multiple AveragePerpetuity

GrowthPV of Firm 5,145.86 4,989.82 4,833.79 Less Net Debt 1,189.59 1,189.59 1,189.59 Equity Value of Firm 3,956.26 3,800.23 3,644.20 Shares Outstanding 126.36 126.36 126.36    Value per Share $31.31 $30.07 $28.84

Value Triangulation   

Method Value Weight Value   DCF - Perpetuity $28.84 25% 7.21DCF - FCF Multiple $31.31 25% 7.832014 P/E Multiple $30.94 25% 7.742014 P/S Multiple $39.67 10% 3.972014 TEV/EBITDA Multiple $43.98 15% 6.60   Weighted Per Share Value     $33.34

WACC

ROE 8.62% Equity Weighting 79.4%

Debt Weighting 20.6%

Tax Rate 35.00%

5 Year Beta 0.93

Risk Free 3.890%

Equity Premium 7.500% CAPM 10.84%

CAPM 10.841% ROE 15.00%

Cost of Debt 6.09% Goalpost WACC 11.67%

CAPM 80%

Market Cap 4.54B ROE 20%

Debt 1.18B

Total Capital 5.72B WACC 10.08%

Correlation

  MOS MCD WFR AEO JKHY DO WAG EFX

MOS 1.00             

MCD 0.68 1.00           

WFR 0.50 0.08 1.00         

AEO -0.21 -0.30 0.53 1.00       

JKHY 0.47 0.47 0.65 0.43 1.00     

DO 0.86 0.74 0.55 -0.02 0.73 1.00   

WAG -0.43 -0.69 0.22 0.69 0.12 -0.30 1.00 

EFX -0.01 -0.36 0.65 0.73 0.46 0.10 0.70 1.00

Recommendation

Triangulated intrinsic value for EFX is $ 33.34 DCF Valuation ranges between $28.84 and $31.31 Comparables Valuation ranges between $31.31 and

$43.98

EFX is currently trading at $35.37 as of 4/21Negative correlation with MOS & MCD, but

high correlation with AEO & WAGPursue new vertical markets and expand into

emerging markets.Recommendation: Put it on the watch list