Equifax 2007 Annual Report Download - page 45

EQUIFAX | 2007 ANNUAL REPORT 43
A potential signifi cant future use of cash would be the payment
to Computer Sciences Corporation, or CSC, if it were to exercise
its option to sell its credit reporting business to us at any time prior
to 2013. The option exercise price would be determined by agree-
ment or by an appraisal process and would be due in cash within
180 days after the exercise of the option. We estimate that if the
option had been exercised at December 31, 2007, the price range
would have been 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 our estimate.
Our agreement with CSC, which expires on July 31, 2018, also
provides us with an option to purchase its credit reporting business
if it does not elect to renew the agreement or if there is a change
in control of CSC while the agreement is in effect. If CSC were
to exercise its option, or if we were able to and decided to exercise
our option, then 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 capital markets
for debt and/or equity fi nancing. 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, our credit ratings and our
fi nancial performance and condition.
Off-Balance Sheet Transactions
Other than facility leasing arrangements, we do not engage in
off-balance sheet fi nancing activities. In 1998, we entered into a
synthetic lease on our Atlanta corporate headquarters building in
order to obtain favorable fi nancing terms with regard to this facility.
This $29.0 million lease expires in 2010. Lease payments for the
remaining term totaled $4.1 million at December 31, 2007. Under
this synthetic lease arrangement, we have guaranteed the residual
value of the leased property to the lessor. In the event that the
property were to be sold by the lessor at the end of the lease term,
we would be responsible for any shortfall of the sales proceeds,
up to a maximum amount of $23.2 million, which equals 80% of
the value of the property at the beginning of the lease term. The
liability for this shortfall, which was $1.9 million and $1.4 million
at December 31, 2007 and 2006, respectively, is recorded in other
long-term liabilities on our Consolidated Balance Sheets.
Letters of Credit and Guarantees
We will from time to time issue standby letters of credit, performance
bonds or other guarantees in the normal course of business. The
aggregate notional amount of all performance bonds and standby
letters of credit was not material at December 31, 2007, and all
have a maturity of one year or less. Guarantees are issued from
time to time to support the needs of our operating units.
In connection with the sale of our risk management collections
business to RMA Holdings, LLC, or RMA, in October 2000, we
guaranteed the operating lease payments of a partnership affi liated
with RMA to a lender of the partnership pursuant to a term loan.
The operating lease, which expires December 31, 2011, has a
remaining balance of $5.3 million, based on the undiscounted value
of remaining lease payments, including real estate taxes, at
December 31, 2007. On September 12, 2005, RMA sold substantially
all of its assets to NCO Group, Inc., or NCO. In conjunction with
this sale, NCO agreed to assume the operating lease obligations
discussed above, which we will continue to guarantee. We believe
that the likelihood of demand for payment by us is minimal and
expect no material losses to occur related to this guarantee.
Accordingly, we do not have a liability on our Consolidated Balance
Sheets at December 31, 2007 or 2006 related to this guarantee.
Other Contingencies
There are other matters which we are involved in, such as legal
proceedings, claims and litigation, for which the fi nal outcome
and impact to our Consolidated Financial Statements is uncertain
at December 31, 2007.
Pension Plans
At December 31, 2007, our U.S. Retirement Income Plan, or USRIP,
and the Equifax Inc. Pension Plan, or EIPP, met or exceeded
ERISA’s minimum funding requirements. We do not expect to
have to make any minimum funding contributions under ERISA
for 2008 with respect to the USRIP or the EIPP, based on applicable
law. In January 2006 and 2007, we made discretionary contributions
of $20.0 million and $12.0 million, respectively, to the EIPP. We
also made a $2.0 million discretionary contribution in 2006 to fund
certain other post-retirement benefi t plans. In the future, we will
make minimum funding contributions as required and may make
discretionary contributions, depending on certain circumstances,
including market conditions and liquidity needs.
For our non-U.S., tax-qualifi ed retirement plans, we fund an
amount suffi cient to meet minimum funding requirements but
no more than allowed as a tax deduction pursuant to applicable
tax regulations. For the non-qualifi ed supplementary retirement
plans, we fund the benefi ts as they are paid to retired participants,
but accrue the associated expense and liabilities in accordance
with GAAP.
Related Party Transactions
We engage in various transactions and arrangements with related
parties. We believe the terms of the transactions and arrangements
do not differ from those that would have been negotiated with an
independent party.