Equifax Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill. Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. As discussed in Note 1, goodwill is tested for impairment at the reporting unit level on an annual basis and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We perform our annual goodwill impairment tests as of September 30 each year. The fair value estimates for our reporting units were determined using a combination of the income and market approaches in accordance with the Company’s methodology. Our annual impairment tests as of September 30, 2014, 2013 and 2012 resulted in no impairment of goodwill.

On July 1, 2014 the North America Commercial Solutions operating segment was consolidated into the U.S. Consumer Information Solutions and International operating segments. The change was driven by an enterprise wide distribution marketing strategy to maximize the penetration of our products and services in our targeted markets. In an effort to accelerate our penetration and simplify how our commercial information customers interact with us, we have reorganized our operating segments. The U.S. portion of the North America Commercial Solutions (“NACS”) operating segment was consolidated into the U.S. Consumer Information Solutions operating segment. The combined operating segment was renamed U.S. Information Solutions. The Canadian portion of the NACS operating segment was consolidated into the Canada operations of the International operating segment. To reflect this new organizational structure, we have reallocated goodwill from NACS reporting unit to U.S. Information Solutions and Canada reporting units based on the relative fair values of the respective

portions of NACS, in accordance with ASC 350. When reporting units are changed, ASC 350 requires that goodwill be tested for impairment. During the third quarter of 2014, we performed our goodwill impairment test prior to and following the reallocation of goodwill, which resulted in no impairment.

Changes in the amount of goodwill for the twelve months ended December 31, 2014 and 2013, are as follows:



	U.S. Information Solutions			International			Workforce Solutions			North America Personal Solutions		Total
	(In millions)
Balance, December 31, 2012 ⁽¹⁾	$	969.4		$	385.2		$	934.0		$	1.8	$	2,290.4
Acquisitions	—			40.8			—			14.5		55.3
Adjustments to initial purchase price allocation	87.5			(0.1		)	—			0.4		87.8
Foreign currency translation	—			(8.0		)	—			—		(8.0		)
Tax benefits of options exercised	—			—			(0.2		)	—		(0.2		)
Businesses sold	(2.7		)	(1.4		)	(26.1		)	—		(30.2		)
Balance, December 31, 2013⁽¹⁾	1,054.2			416.5			907.7			16.7		2,395.1
Acquisitions	66.4			173.8			—			—		240.2
Adjustments to initial purchase price allocation	—			2.1			—			—		2.1
Foreign currency translation	—			(30.5		)	—			—		(30.5		)
Tax benefits of options exercised	—			—			(0.1		)	—		(0.1		)
Balance, December 31, 2014	$	1,120.6		$	561.9		$	907.6		$	16.7	$	2,606.8

(1) The December 31, 2013 and 2012 balances have been recast to reflect the new organizational structure. As of December 31, 2013, the USIS and International goodwill include $21.7 million and $15.5 million of goodwill, respectively, from the legacy NACS segment. As of December 31, 2012, the USIS and International goodwill include $21.7 million and $15.9 million of goodwill, respectively, from the legacy NACS segment.

Indefinite-Lived Intangible Assets. Indefinite-lived intangible assets consist of indefinite-lived reacquired rights representing the value of rights which we had granted to various affiliate credit reporting agencies that were reacquired in the U.S. and Canada. At the time we acquired these agreements, they were considered perpetual in nature under the accounting guidance in place at that time and, therefore, the useful lives are considered indefinite. Indefinite-lived intangible assets are not amortized. We are required to test indefinite-lived intangible assets for impairment annually and whenever events or circumstances indicate that there may be an impairment of the asset value. We perform our annual indefinite-lived intangible asset impairment test as of September 30. Our 2014 annual impairment test completed during the third quarter of 2014 resulted in no impairment of indefinite-lived intangible assets.



	Amount
	(In millions)
Balance, December 31, 2012	$	254.5
Purchase price adjustment	(158.8		)
Foreign currency translation	(0.2		)
Balance, December 31, 2013	95.5
Foreign currency translation	(0.3		)
Balance, December 31, 2014	$	95.2

During the third quarter of 2013, we recorded adjustments to the purchased intangible assets and related accumulated amortization previously recorded in connection with our December 28, 2012 acquisition of certain credit services business assets and operations of Computer Sciences Corporation. This correction resulted in the establishment of $73.3 million of finite-lived reacquired rights which will be amortized over 5.6 years, an increase in goodwill of $85.5 million and a reduction of our indefinite-lived intangible assets of $158.8 million.

Purchased Intangible Assets. Purchased intangible assets net, recorded on our Consolidated Balance Sheets at December 31, 2014 and 2013, are as follows:



	December 31, 2014							December 31, 2013
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Definite-lived intangible assets:	(In millions)
Purchased data files	$	692.0	$	(218.8	)	$	473.2	$	709.5	$	(187.4	)	$	522.1
Acquired software and technology	53.9		(26.4		)	27.5		38.4		(20.2		)	18.2
Customer relationships	570.7		(204.3		)	366.4		506.7		(166.5		)	340.2
Reacquired rights	73.3		(26.3		)	47.0		73.3		(13.1		)	60.2
Proprietary database	7.4		(5.4		)	2.0		7.4		(5.0		)	2.4
Non-compete agreements	27.0		(11.8		)	15.2		20.2		(7.8		)	12.4
Trade names and other intangible assets	51.1		(28.5		)	22.6		41.7		(24.0		)	17.7
Total definite-lived intangible assets	$	1,475.4	$	(521.5	)	$	953.9	$	1,397.2	$	(424.0	)	$	973.2

Amortization expense related to purchased intangible assets was $129.9 million, $118.4 million, and $86.1 million during the twelve months ended December 31, 2014, 2013, and 2012, respectively.

Estimated future amortization expense related to definite-lived purchased intangible assets at December 31, 2014 is as follows:



Years ending December 31,	Amount
	(In millions)
2015	$	123.0
2016	114.8
2017	102.8
2018	84.3
2019	65.1
Thereafter	463.9
	$	953.9

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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