Equifax 2007 Annual Report Download - page 46

44 EQUIFAX | 2007 ANNUAL REPORT
Seasonality
We experience seasonalities in certain of our revenue streams.
Revenue generated from The Work Number and Tax and Talent
Management business units within the TALX operating segment
is generally higher in the fi rst quarter due primarily to the provision
of Form W-2 preparation services which occur in the fi rst quarter
each year. Revenue from our OCIS and Mortgage Reporting
Solutions business units tends to increase in periods of the year in
which our customers have higher volumes of credit granting
decisions, most commonly the second and third calendar quarters.
Inflation
We do not believe that the rate of infl ation has had a material effect
on our operating results. However, infl ation could adversely affect
our future operating results.
RECENT ACCOUNTING PRONOUNCEMENTS
For information about new accounting pronouncements and the
potential impact on our Consolidated Financial Statements, see
Note 1 of the Notes to Consolidated Financial Statements in this
Form 10-K.
APPLICATION OF CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
The preparation of fi nancial 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 the Notes to Consoli-
dated Financial Statements. 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 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 reasonably 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, either of which may have a
material impact on the presentation of our Consolidated Balance
Sheets and Statements of Income. We also have other signifi cant
accounting policies, which involve the use of estimates, judgments
and assumptions that are relevant to understanding our results.
For additional information about these policies, see Note 1 of the
Notes to Consolidated Financial Statements in this Form 10-K.
Although we believe that our estimates, assumptions and judgments
are reasonable, they are based upon information available at the
time. Actual results may differ signifi cantly from these estimates
under different assumptions, judgments or conditions.
Revenue Recognition
Revenue is recognized when persuasive evidence of an arrangement
exists, collectibility of arrangement consideration is reasonably
assured, the arrangement fees are fi xed or determinable and delivery
of the product or service has been completed.
If at the outset of an arrangement, we determine that collectibility
is not reasonably assured, revenue is deferred until the earlier of
when collectibility becomes probable or the receipt of payment. If
there is uncertainty as to the customer’s acceptance of our deliv-
erables, revenue is not recognized until the earlier of receipt of
customer acceptance or expiration of the acceptance period. If at
the outset of an arrangement, we determine that the arrangement
fee is not fixed or determinable, revenue is deferred until the
arrangement fee becomes estimable, assuming all other revenue
recognition criteria have been met.
We have certain information solution offerings that are sold as
multiple element arrangements. To account for each of these
elements separately, the delivered elements must have stand-alone
value to our customer, and there must exist objective and reliable
evidence of the fair value for any undelivered elements.
Judgments and uncertainties. Each element of a multiple element
arrangement must be considered separately to ensure that appropriate
accounting is performed for these deliverables. These considerations
include assessing the price at which the element is sold compared
to its relative fair value; concluding when the element will be
delivered; and determining whether any contingencies exist in the
related customer contract that impact the prices paid to us for
the services.
In addition, the determination of certain of our marketing
information services revenue requires the use of estimates, prin-
cipally related to transaction volumes in instances where these
volumes are reported to us by our clients on a monthly basis in
arrears. In these instances, we estimate transaction volumes based
on average actual volumes reported by our customers in the past.
Differences between our estimates and actual fi nal volumes reported
are recorded in the period in which actual volumes are reported.
Effects if actual results differ from assumptions. For certain contracts
containing multiple elements, the total arrangement fee is allocated
to the undelivered elements based on their relative fair values and
to the initial delivered elements using the residual method. If we
are unable to unbundle the arrangement into separate elements
for accounting or fair value is not known for any undelivered
elements, arrangement consideration may only be recognized as
the fi nal contract element is delivered to our customer.