Equifax 2007 Annual Report Download - page 27

EQUIFAX | 2007 ANNUAL REPORT 25
will be determined by an appraisal process and would be due in
cash within 180 days after the exercise of the option. We estimate
that if CSC were to exercise the option today, the option price would
be approximately $650.0 million to $725.0 million. This estimate
is based solely on our internal analysis of the value of the business,
current market conditions and other factors, all of which are subject
to constant change. Therefore, the actual option exercise price
could be materially higher or lower than the estimated amount. If
CSC were to exercise its option, we would have to obtain additional
sources of funding. We believe that this funding would be available
from sources such as additional bank lines of credit and the issuance
of public debt and/or equity. However, the availability and terms of
any such capital fi nancing would be subject to a number of factors,
including credit market conditions, the state of the equity markets,
general economic conditions and our fi nancial performance and
condition. Because we do not control the timing of CSC’s exercise
of its option, we could be required to seek such fi nancing and
increase our debt levels at a time when market or other conditions
are unfavorable.
Our international operations subject us to additional business risks
and related costs that may reduce our profitability or revenues.
During 2007, we generated approximately 27% of our revenues
from business outside the U.S. As part of our growth strategy, we
plan to continue to pursue opportunities outside the U.S. As a result,
our future operating results could be negatively affected by a
variety of factors, many of which are beyond our control. Risks
that could give rise to incremental costs in our international
operations include: political and economic instability; changes
in regulatory requirements and policy and the adoption of laws
detrimental to our operations, such as legislation relating to the
collection and use of personal data; negative impact of currency
exchange rate fl uctuations; potentially adverse tax consequences;
increased restrictions on the repatriation of earnings; and general
economic conditions in international markets. We may not be able
to avoid signifi cant expenditures should one or more of these risk
factors occur.
Security is critically important to our business, and breaches of
security, or the perception that e-commerce is not secure, could
harm our business and reputation.
Business-to-business and business-to-consumer electronic
commerce, including that which is Internet-based, requires the
secure transmission of confi dential information over public networks.
Several of our products are accessed through the Internet, including
our consumer and commercial information services that are
delivered via ePORT, our Internet delivery channel, and our
Personal Solutions services accessible through the www.equifax.com
website. Security breaches in connection with the delivery of our
products and services via ePORT, our Personal Solutions website,
or well-publicized security breaches not involving the Internet
that may affect us or our industry, such as database intrusion, could
be detrimental to our business, operating results and fi nancial
condition. We cannot be certain that advances in criminal capabilities,
new discoveries in the fi eld of cryptography or other developments
will not compromise or breach the technology protecting the
networks that access our products, consumer services and proprietary
database information.
If we experience system failures, the delivery of our products
and services to our customers could be delayed or interrupted,
which could harm our business and reputation and result in the
loss of customers.
Our ability to provide reliable service largely depends on the effi cient
and uninterrupted operation of our computer network systems
and data centers. Some of these systems have been outsourced to
third-party providers. Any signifi cant interruptions could severely
harm our business and reputation and result in a loss of customers.
Our systems and operations could be exposed to damage or inter-
ruption from fi re, natural disaster, power loss, war, terrorist act,
telecommunications failure, unauthorized entry and computer
viruses. The steps we have taken and are taking to prevent a system
failure, including backup disaster recovery systems, may not be
successful, and our property and business interruption insurance
may not be adequate to compensate us for all losses or failures
that may occur.
The loss of key personnel, or the inability to attract and retain
highly skilled personnel, could make it more difficult to run our
business and reduce our likelihood of success.
We are dependent on our ability to attract and retain experienced
sales, consulting, research and development, marketing, technical
support and management personnel. The loss of our key employees
and management might slow the achievement of important
business goals. We may not be able to attract and retain skilled
and experienced technical personnel on acceptable terms because
of intense competition.
If our outside service providers and key vendors are not able to
fulfill their service obligations, our business and operations
could be disrupted, and our operating results could be harmed.
Outside service providers and vendors perform critical functions
for us. While we have implemented service level agreements and
have established monitoring controls, our operations could be
disrupted if we do not successfully manage our service providers
or if the service providers do not perform satisfactorily to agreed
upon service levels. In addition, our business, reputation and
operating results could be adversely affected.
If we fail to adequately protect our intellectual property rights,
our ability to compete effectively could be diminished.
Our ability to compete effectively depends in part on the protection
of our technology, products, services and brands through intellectual
property right protections, including patents, copyrights, database
rights, trade secrets and trademarks. The extent to which such rights
can be protected and enforced varies in different jurisdictions.