Equifax 2003 Annual Report Download - page 29

M ANAGEM ENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
26 EQUIFAX. INFORMATION THAT EMPOWERS.
In M ay 2003, the FASB issued SFAS No. 150, “Accounting for Certain
Instruments with Characteristics of both Liabilities and Equity.”
SFAS 150 establishes standards for how an issuer classifies and
measures certain financial instruments with the characteristics of
liabilities and equity. It requires that an issuer classify a financial
instrument that is within the scope of SFAS 150 as a liability, or in
some cases, as an asset. In the past, many of these types of instru-
ments were classified as equity. SFAS 150 is effective for financial
instruments entered into or modified after May 31, 2003, and is
otherwise effective at the beginning of the first interim period after
June 15, 2003. It is to be implemented by reporting the cumulative
effect of the change in the accounting principles applied to financial
instruments created before May 2003 and still existing at the begin-
ning of the interim period in which SFAS 150 is adopted. Restatement
is not permitted. We have adopted SFAS 150 and the application of
its provisions has not had a material impact on our financial position
or results of operations.
In December 2003, the FASB issued a revision to SFAS No. 132,
“Employers Disclosures about Pensions and Other Postretirement
Benefits.” The purpose of the revision is to require additional
disclosures about the assets, obligations, cash flows, and net
periodic benefit cost of defined benefit pension plans and other
defined benefit postretirement plans. These additional disclosures
include information describing the types of plan assets, investment
strategy, measurements date(s), plan obligations, cash flows, and
components of net periodic benefit cost recognized during interim
periods. As revised, SFAS 132 now enhances disclosures of rele-
vant accounting information by providing more information about
the plan assets available to finance benefit payments, the obliga-
tion to pay benefits, and an entity’s obligation to fund the plan. This
revised version of SFAS 132 is effective for fiscal years ending after
December 15, 2003. We have adopted the revisions to SFAS 132
and have included the revised disclosures in our “Notes to
Consolidated Financial Statements.”
In December 2003, the FASB issued its revision to FASB Interpretation
No. 46, “Consolidation of Variable Interest Entities, an Interpretation
of ARB No. 51,” or FIN 46. FIN 46 addresses the consolidation by a
reporting entity of variable interest entities with certain characteris-
tics. This Interpretation was effective in January 2003 for variable
interest entities created after January 31, 2003 and in the first fiscal
year or interim period beginning after June 15, 2003. The FASB has
issued FASB Staff Positions (“FSP’s”), which have deferred the
effective date for applying the provisions of Interpretation No. 46
for interests in certain variable interest entities or potential variable
interest entities created before February 1, 2003 until the end of the
first interim period ending after March 15, 2004. These FSP’s also
require certain disclosures about variable interest entities and
potential variable interest entities. We are still assessing the
impact of FIN 46 on arrangements that we have with certain enti-
ties and are still in the process of identifying our potential variable
interest entities. Therefore, we are deferring the application of the
provisions of FIN 46 until the first quarter of fiscal year 2004.
On December 17, 2003, the Staff of the Securities and Exchange
Commission, or SEC, issued Staff Accounting Bulletin No. 104, or
SAB 104, “Revenue Recognition,” which supersedes SAB 101,
“Revenue Recognition in Financial Statements.” SAB 104’s primary
purpose is to rescind the accounting guidance contained in SAB 101
related to multiple-element revenue arrangements that was super-
seded as a result of the issuance of EITF 00-21, “Accounting for
Revenue Arrangements with M ultiple Deliverables.” Additionally,
SAB 104 rescinds the SEC’s related “ Revenue Recognition in
Financial Statements Frequently Asked Questions and Answers”
issued with SAB 101 that had been codified in SEC Topic 13, “Rev-
enue Recognition.” While the wording of SAB 104 has changed to
reflect the issuance of EITF 00-21, the revenue recognition principles
of SAB 101 remain largely unchanged by the issuance of SAB 104,
which was effective upon issuance. The implementation of SAB 104
did not have a material effect on our financial position or results
of operations.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
AND ESTIM ATES
The preparation of financial statements in conformity with GAAP
requires our management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, revenues and
expenses, and related disclosures of contingent assets and liabilities
in our consolidated financial statements and accompanying notes.
The following accounting policies involve a “critical accounting
estimate” because they are particularly dependent on estimates
and assumptions made by management about matters that are
highly uncertain at the time the accounting estimates are made. In
addition, while we have used our best estimates based on facts and
circumstances available to us at the time, different estimates rea-
sonably could have been used in the current period, or changes in
the accounting estimates that we used are reasonably likely to
occur from period to period, which may have a material impact on
the presentation of our financial condition and results of opera-
tions. We also have other key accounting policies, which involve
the use of estimates, judgments, and assumptions that are signifi-
cant to understanding our results. For additional information, see
“Notes to Consolidated Financial Statements,” “Note 1– Significant
Accounting and Reporting Policies.” Although we believe that our
estimates, assumptions and judgments are reasonable, they are
based upon information presently available. Actual results may
differ significantly from these estimates under different assump-
tions, judgments or conditions.