SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
9 Months Ended |
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Sep. 30, 2011 | |
| Basis of Presentation |
Basis of Presentation. The accompanying
unaudited Consolidated Financial Statements have been prepared in
accordance with U.S. generally accepted accounting principles, or
GAAP, the instructions to Form 10-Q and applicable sections of
Regulation S-X. To understand our complete financial position and
results, as defined by GAAP, this Form 10-Q should be read in
conjunction with the Consolidated Financial Statements and the
notes thereto included in our annual report on Form 10-K for the
year ended December 31, 2010 (“2010 Form
10-K”).
Our
unaudited Consolidated Financial Statements reflect all adjustments
which are, in the opinion of management, necessary for a fair
presentation of the periods presented and are of a normal recurring
nature.
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| Earnings Per Share |
Earnings Per Share. Our basic earnings per
share, or EPS, is calculated as net income attributable to Equifax
divided by the weighted-average number of common shares outstanding
during the period. Diluted EPS is calculated to reflect the
potential dilution that would occur if stock options or other
contracts to issue common stock were exercised and resulted in
additional common shares outstanding. The net income amounts used
in both our basic and diluted EPS calculations are the
same.
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| Financial Instruments |
Financial Instruments. Our financial instruments
consist primarily of cash and cash equivalents, accounts and notes
receivable, accounts payable and short- and long-term debt. The
carrying amounts of these items, other than long-term debt,
approximate their fair market values due to the short-term nature
of these instruments. The fair value of our fixed-rate debt is
determined using quoted market prices for publicly traded
instruments, and for non-publicly traded instruments through
valuation techniques depending on the specific characteristics of
the debt instrument. As of September 30, 2011 and December 31,
2010, the fair value of our long-term debt was $1.07 billion and
$1.05 billion, respectively, compared to its carrying value of
$0.97 billion and $0.98 billion, respectively.
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| Derivatives and Hedging Activities |
Derivatives and Hedging Activities. We use
derivative financial instruments as a risk management tool to hedge
the Company’s exposure to changes in interest rates, not for
speculative purposes. We have used interest rate swaps and interest
rate lock agreements to manage interest rate risk associated with
our fixed and floating-rate borrowings. We recognize all
derivatives on the balance sheet at fair value. Derivative
valuations reflect the value of the instrument including material
amounts associated with counterparty risk.
Fair Value Hedges. In conjunction with our
November 2009 sale of five-year Senior Notes, we entered into
five-year interest rate swaps, designated as fair value hedges,
which convert the debt’s fixed interest rate to a variable
rate. These swaps involve the receipt of fixed rate amounts for
floating interest rate payments over the life of the swaps without
exchange of the underlying principal amount. Changes in the fair
value of the interest rate swaps offset changes in the fair value
of the fixed-rate Senior Notes they hedge due to changes in the
designated benchmark interest rate and are recorded in interest
expense. The fair value of these interest rate swaps was an asset
of $16.3 million and $9.7 million at September 30, 2011 and
December 31, 2010, respectively, and was recorded in other
long-term assets on our Consolidated Balance Sheet.
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| Fair Value Measurements |
Fair Value Measurements. Fair value is
determined based on the assumptions marketplace participants use in
pricing the asset or liability. We use a three level fair value
hierarchy to prioritize the inputs used in valuation techniques
between observable inputs that reflect quoted prices in active
markets, inputs other than quoted prices with observable market
data and unobservable data (e.g., a company’s own
data).
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| Variable Interest Entities |
Variable Interest Entities. We hold interests in
certain entities, including credit data and information solutions
ventures, that are considered variable interest entities, or
VIEs. These variable interests relate to ownership interests
that require financial support for these entities. Our
investments related to these VIEs totaled $10.5 million at
September 30, 2011, representing our maximum exposure to
loss. We are not the primary beneficiary and are not required
to consolidate any of these VIEs.
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| Recent Accounting Pronouncements |
Recent Accounting Pronouncements.
Revenue
Arrangements with Multiple Deliverables. In October
2009, the FASB issued revenue guidance for multiple-deliverable
arrangements which addresses how to separate deliverables and how
to measure and allocate arrangement consideration. This
guidance requires vendors to develop the best estimate of selling
price for each deliverable and to allocate arrangement
consideration using this selling price. The guidance is
effective prospectively for revenue arrangements entered into or
materially modified in annual periods beginning after June 15,
2010. The adoption of this guidance on January 1, 2011 did
not have a material impact on our Consolidated Financial
Statements.
Testing Goodwill for Impairment. In September
2011, the FASB issued Accounting Standards Update, Intangibles – Goodwill
and Other (Topic 350): Testing Goodwill for
Impairment (the revised standard). The revised standard is
intended to reduce the cost and complexity of the annual goodwill
impairment test by providing entities an option to perform a
“qualitative” assessment to determine whether further
impairment testing is necessary. If an entity believes, as a result
of its qualitative assessment, that it is more-likely-than-not that
the fair value of a reporting unit is less than its carrying
amount, the quantitative impairment test is required. Otherwise, no
further testing is required. The revised standard is effective for
annual and interim goodwill impairment tests performed for fiscal
years beginning after December 15, 2011. We will
implement the new standard in our 2012 annual goodwill impairment
testing. This guidance is not expected to have a
material effect on our financial condition or results of
operations.
Comprehensive Income. In June 2011, the FASB issued guidance
on the presentation of comprehensive income. This guidance
eliminates the option to present the components of other
comprehensive income as part of the statement of changes in
stockholders’ equity, which is our current presentation, and
also requires presentation of reclassification adjustments from
other comprehensive income to net income on the face of the
financial statements. This guidance is effective for fiscal years
and interim periods beginning after December 15, 2011, and is
not expected to have a material effect on our financial condition
or results of operations, though it will change our financial
statement presentation.
For
additional information about recent accounting pronouncements
adopted or pending adoption, see Note 1 of the Notes to
Consolidated Financial Statements in our 2010 Form
10-K.
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