Equifax 2007 Annual Report Download - page 59

EQUIFAX | 2007 ANNUAL REPORT 57 EQUIFAX | 2007 ANNUAL REPORT 57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
As used herein, the terms Equifax, the Company, we, our and us
refer to Equifax Inc., a Georgia corporation, and its consolidated
subsidiaries as a combined entity, except where it is clear that the
terms mean only Equifax Inc.
Nature of Operations. We collect, organize and manage various
types of financial, demographic, employment and marketing
information. Our products and services enable businesses to make
credit and service decisions, manage their portfolio risk, automate
or outsource certain payroll, tax and human resources business
processes, and develop marketing strategies concerning consumers
and commercial enterprises. We serve customers across a wide range
of industries, including the fi nancial services, mortgage, retail,
telecommunications, utilities, automotive, brokerage, healthcare
and insurance industries, as well as government agencies. We also
enable consumers to manage and protect their fi nancial health
through a portfolio of products offered directly to consumers. As
of December 31, 2007, we operated in 14 countries: Argentina,
Brazil, Canada, Chile, Costa Rica, El Salvador, Honduras, Peru,
Portugal, the Republic of Ireland, Spain, the United Kingdom, or
U.K., Uruguay, and the United States of America, or U.S.
We develop, maintain and enhance secured proprietary
information databases through the compilation of credit and
employment information about consumers and businesses that we
obtain from a variety of sources, such as credit granting institutions,
public record information (including bankruptcies, liens and
judgments), income and tax information primarily from large to
mid-sized companies in the U.S., and marketing information from
surveys and warranty cards. We process this information utilizing
our proprietary information management systems.
Basis of Consolidation. Our Consolidated Financial Statements and
the accompanying notes, which are prepared in accordance with
U.S. generally accepted accounting principles, or GAAP, include
Equifax and all its subsidiaries. We consolidate all majority-owned
and controlled subsidiaries as well as variable interest entities in
which we are the primary benefi ciary as defi ned by Financial
Accounting Standards Board, or FASB, Interpretation, or FIN,
No. 46R, “Consolidation of Variable Interest Entities, an Interpre-
tation of ARB No. 51.” Other parties’ interests in consolidated
entities are reported as minority interests. We use the equity method
of accounting for investments in which we are able to exercise
signifi cant infl uence and use the cost method for all other invest-
ments. All signifi cant intercompany transactions and balances
are eliminated.
Our Consolidated Financial Statements refl ect all adjustments
which are, in the opinion of management, necessary for a fair
presentation of the periods presented therein. All adjustments made
have been of a normal recurring nature. We have reclassifi ed certain
prior period amounts in our Consolidated Financial Statements to
conform to the current period presentation.
Segments. Effective with our organizational realignment on
January 1, 2007 and the acquisition of TALX Corporation, or
TALX, on May 15, 2007, we manage our business and report our
fi nancial results through the following fi ve reportable segments,
which are the same as operating segments:
• U.S. Consumer Information Solutions, or USCIS
• International
• TALX
• North America Personal Solutions
• North America Commercial Solutions
USCIS is our largest reportable segment, with 53% of total
operating revenue during 2007. Our foreign operations are
principally located in Canada, the U.K. and Brazil.
Use of Estimates. The preparation of our Consolidated Financial
Statements requires us to make estimates and assumptions in
accordance with GAAP. Accordingly, we make these estimates
and assumptions after exercising judgment. We believe that the
estimates and assumptions inherent in our Consolidated Financial
Statements are reasonable, based upon information available to
us at the time they are made including the consideration of events
that have occurred up until the point these Statements have been
fi led. These estimates and assumptions affect the reported amounts
of assets, liabilities, revenues and expenses, and disclosure of
contingent assets and liabilities at the date of the fi nancial state-
ments, as well as reported amounts of revenues and expenses
during the reporting period. Actual results could differ materially
from these estimates.
Revenue Recognition and Deferred Revenue. 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. A signifi cant portion of our revenue is derived
from our processing of transactions related to the provision of
information services to our customers, in which case revenue is
recognized, assuming all other revenue recognition criteria are
met, when the services are provided. A smaller portion of our
revenues relate to subscription-based contracts under which a
customer pays a preset fee for a predetermined or unlimited number
of transactions or services provided during the subscription period,
generally one year. Revenue related to subscription-based contracts
having a preset number of transactions is recognized as the services
are provided, using an effective transaction rate as the actual
transactions are completed. Any remaining revenue related to
unfulfi lled units is not recognized until the end of the related
contract’s subscription period. Revenue related to subscription-
based contracts having an unlimited volume is recognized ratably
during the contract term.
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
deliverables, revenue is not recognized until the earlier of receipt
of customer acceptance or expiration of the acceptance period. If