Equifax 2007 Annual Report Download - page 48

46 EQUIFAX | 2007 ANNUAL REPORT
Judgments and uncertainties. We periodically review claims and
legal proceedings and assess whether we have potential fi nancial
exposure based on consultation with internal and outside legal
counsel and other advisors. If the likelihood of an adverse outcome
from any claim or legal proceeding is probable and the amount can
be reasonably estimated, we record a liability in our Consolidated
Balance Sheet for the estimated settlement costs. If the likelihood
of an adverse outcome is reasonably possible, but not probable, we
provide disclosures related to the potential loss contingency. Our
assumptions related to loss contingencies are inherently subjective.
Effect if actual results differ from assumptions. We do not believe
there is a reasonable likelihood that there will be a material change
in the future estimates or assumptions we use to determine loss
contingencies. However, if facts and circumstances change in
the future that change our belief regarding assumptions used to
determine our estimates, we may be exposed to a loss that could
be material.
Income Taxes
We account for income taxes in accordance with SFAS No. 109,
“Accounting for Income Taxes,” and FASB Interpretation No. 48,
“Accounting for Uncertainty in Income Taxes – an interpretation
of FASB Statement No. 109.” We record deferred income taxes
using enacted tax laws and rates for the years in which the taxes are
expected to be paid. We periodically assess the likelihood that
our net deferred tax assets will be recovered from future taxable
income or other tax planning strategies. To the extent that we believe
that recovery is not likely, we must establish a valuation allowance
to reduce the deferred tax asset to the amount we estimate will
be recoverable.
Our income tax provisions are based on assumptions and
calculations which will be subject to examination by various tax
authorities. We record tax benefi ts for positions in which we believe
are probable of being sustained under such examinations. Regularly,
we assess the potential outcome of such examinations to determine
the adequacy of our income tax accruals.
Judgments and uncertainties. We consider accounting for income
taxes critical because management is required to make signifi cant
judgments in determining our provision for income taxes, our
deferred tax assets and liabilities, and our future taxable income
for purposes of assessing our ability to realize any future benefi t
from our deferred tax assets. These judgments and estimates are
affected by our expectations of future taxable income, mix of
earnings among different taxing jurisdictions, and timing of the
reversal of deferred tax assets and liabilities.
Effect if actual results differ from assumptions. Although
management believes that the judgments and estimates discussed
herein are reasonable, actual results could differ, and we may be
exposed to increases or decreases in income tax expense that could
be material.
Pension and Other Postretirement Plans
Our pension and other postretirement plans are accounted for using
actuarial valuations required by SFAS No. 158, “Employers’
Accounting for Defi ned Benefi t Pension and Other Postretirement
Plans – an Amendment of FASB Statements No. 87, 88, 106 and
132(R),” for the years ended December 31, 2007 and 2006. We
consider accounting for our U.S. and Canadian pension and other
postretirement plans critical because management is required to
make signifi cant subjective judgments about a number of actuarial
assumptions, which include discount rates, salary growth, expected
return on plan assets, interest cost and mortality rates.
Judgments and uncertainties. We believe that the most
signifi cant assumptions related to our net periodic benefi t cost
are (1) the expected return on plan assets and (2) the discount
rate. The expected rate of return on plan assets is primarily based
on (1) the expected equity returns based on assumptions such as
dividend yield and growth rate, and (2) estimated risk premium
for various asset categories. These assumptions are projected using
an asset/liability forecasting model, which produces a range and
distribution of values for the assumed rate of return. We determine
our discount rates primarily based on high-quality, fi xed-income
investments and yield-to-maturity analysis specifi c to our estimated
future benefi t payments.