Equifax 2002 Annual Report Download - page 50

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Purchased Data Files Purchased data files are amortized on a
straight-line basis primarily over 15 years. Amortization expense
was $26.3 million in 2002, $21.8 million in 2001, and $20.2 million
in 2000. As of December 31, 2002 and 2001, accumulated amortiza-
tion balances were $147.5 million and $136.6 million, respectively.
Impairment of Long-Lived Assets We test long-lived assets
for impairment annually, and more frequently if events and circum-
stances indicate that the carrying amounts of such assets may not
be recoverable. If potential indicators of impairment exist, we
estimate recoverability using undiscounted future cash flows
resulting from the use of the assets and their eventual disposition.
If the carrying value of the assets exceeds the estimated future
undiscounted cash flows, an impairment loss is recorded for the
excess of the assets’ carrying value over the fair value.
Other Assets Other assets at December 31, 2002 and 2001
consist of the following:
(In millions) 2002 2001
Systems development and other deferred costs $102.8 $81.5
Purchased software 22.1 28.6
Prepaid pension cost 13.3 97.3
Risk management purchased paper (Note 4) 1.7 31.2
Investments in unconsolidated companies 27.4 26.3
Indefinite lived intangible and other 80.0 21.0
$247.3 $285.9
Purchased software and systems development and other deferred
costs are being amortized on a straight-line basis over five to ten
years. Amortization expense for other assets was $39.7 million
in 2002, $38.7 million in 2001, and $36.7 million in 2000. As of
December 31, 2002 and 2001, accumulated amortization balances
were $123.9 million and $117.6 million, respectively. For intangible
assets subject to amortization, the estimated aggregate amor-
tization expense is $70.7 million for 2003, $69.7 million for 2004,
$57.3 million for 2005, $40.9 million for 2006 and $35.2 million for
2007. We have entered into strategic investments in privately held
companies totaling $27.4 million and $26.3 million at December 31,
2002 and 2001, respectively. These investments are accounted for
under the cost method as we do not exercise significant influence
over the investment entities or hold significant levels of owner-
ship. Investments in unconsolidated companies also include a
notes receivable from a company of $20.0 million which is due
November 2006. We regularly review these investments for
impairment issues, and in the fourth quarter 2001, we wrote off
investments totaling $6.9 million (Note 5). We believe that these
investments are appropriately valued at December 31, 2002.
Foreign Currency Translation The functional currency of our
foreign subsidiaries are those subsidiaries’ local currencies. We
translate the assets and liabilities of foreign subsidiaries at the
year-end rate of exchange, and income statement items at the
average rates prevailing during the year. We record the resulting
translation adjustment as a component of shareholders’ equity.
We also record gains and losses resulting from the translation of
intercompany balances of a long-term investment nature as a com-
ponent of shareholders’ equity. We record other foreign currency
translation gains and losses, which are not material, in the con-
solidated statements of income.
Consolidated Statements of Cash Flows We consider cash
equivalents to be short-term cash investments with original
maturities of three months or less.
Cash paid for income taxes and interest from continuing
operations is as follows:
(In millions) 2002 2001 2000
Income taxes, net of amounts refunded $92.6 $78.4 $81.7
Interest 41.8 49.7 56.0
In 2002, 2001, and 2000, we acquired various businesses that
were accounted for as purchases (Note 3). In conjunction with
these transactions, liabilities were recorded as follows:
(In millions) 2002 2001 2000
Fair value of assets acquired $344.2 $50.4 $368.2
Cash paid for acquisitions 328.4 44.4 334.8
Value of treasury stock reissued
for acquisitions – – 10.6
Liabilities recorded $15.8 $6.0 $ 22.8
Financial Instruments Our financial instruments consist pri-
marily of cash and cash equivalents, accounts and notes receivable,
accounts payable, and short-term and long-term debt. The carrying
amounts of these items, other than long-term debt, approximate
their fair market values due to their short maturity. As of Decem-
ber 31, 2002, the fair value of our long-term debt (determined
primarily by broker quotes) was $720.5 million compared to its
carrying value of $690.6 million.
Accounting for Stock-Based Compensation In accordance
with the provisions of Statement of Financial Accounting
Standards No. 123, “Accounting for Stock-Based Compensation”
(SFAS No. 123), we have elected to apply APB Opinion No. 25 and
related interpretations in accounting for our stock option and per-
formance share plans. Accordingly, we do not recognize compen-
sation cost in connection with our stock option plans and record
compensation expense related to our performance share plan
based on the current market price of the our common stock and
the extent to which performance criteria are being met.
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