Equifax 2007 Annual Report Download - page 62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
60 EQUIFAX | 2007 ANNUAL REPORT
from the accounts and any gain or loss is recognized and included
in income from continuing operations on the Consolidated State-
ments of Income, with the classification of any gain or loss
dependent on the characteristics of the asset sold or retired.
Certain internal-use software and system development costs
are deferred and capitalized in accordance with American Institute
of Certified Public Accountants Statement of Position 98-1,
“Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use.” Accordingly, the specifi cally identifi ed
costs incurred to develop or obtain software which is intended for
internal use are not capitalized until the determination is made
as to the availability of a technically feasible solution to solve
the predefi ned user and operating performance requirements as
established during the preliminary stage of an internal-use software
development project. Costs incurred during a software development
project’s preliminary stage and post-implementation stage are
expensed. Application development activities which are eligible
for capitalization include software design and configuration,
development of interfaces, coding, testing, and installation.
Capitalized internal-use software and systems costs are subsequently
amortized on a straight-line basis over a three- to ten-year period
after project completion and when the related software or system
is ready for its intended use.
Depreciation and amortization expense related to property and
equipment was $62.0 million, $51.5 million and $50.4 million in
2007, 2006 and 2005, respectively.
Impairment of Long-Lived Assets. In accordance with SFAS
No. 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets to be Disposed Of,” or SFAS 144, we monitor the status
of our long-lived assets in order to determine if conditions exist or
events and circumstances indicate that an asset group may be
impaired in that its carrying amount may not be recoverable.
Signifi cant factors that are considered that could be indicative
of an impairment include: changes in business strategy, market
conditions or the manner in which an asset group is used; under-
performance relative to historical or expected future operating
results; and negative industry or economic trends. If potential
indicators of impairment exist, we estimate recoverability based
on the asset group’s ability to generate cash fl ows greater than the
carrying value of the asset group. We estimate the undiscounted
future cash fl ows arising from the use and eventual disposition
of the related long-lived asset group. If the carrying value of the
long-lived asset group exceeds the estimated future undiscounted
cash fl ows, an impairment loss is recorded based on the amount
by which the asset group’s carrying amount exceeds its fair value.
We utilize estimates of discounted future cash fl ows to determine
the asset group’s fair value.
Goodwill and Indefinite-Lived Intangible Assets. Goodwill
represents the cost in excess of the fair value of the net assets of
acquired businesses. In accordance with SFAS No. 142, “Goodwill
and Other Intangible Assets,” or SFAS 142, goodwill is not
amortized. We are required to test goodwill for impairment at the
reporting unit level on an annual basis or on an interim basis if an
event occurs or circumstances change that would reduce the fair
value of a reporting unit below its carrying value. We perform our
annual goodwill impairment test as of September 30th each year.
In analyzing goodwill for potential impairment, we use projections
of future discounted cash fl ows from our reporting units to determine
whether the reporting unit’s estimated fair value exceeds its carrying
value. Our estimates of fair value for each reporting unit are corrob-
orated by market multiple comparables. If the fair value of a reporting
unit exceeds its carrying value, then no further testing is required.
However, if a reporting unit’s fair value were to be less than its
carrying value, we would then determine the amount of the impair-
ment charge, if any, which would be the amount that the carrying
value of the reporting unit’s goodwill exceeded its implied value.
Contractual/territorial rights represent the estimated fair
value of rights to operate in certain territories acquired through
the purchase of independent credit reporting agencies in the U.S.
and Canada. Our contractual/territorial rights are perpetual in
nature and, therefore, the useful lives are considered indefi nite.
Indefi nite-lived intangible assets are not amortized. In accordance
with SFAS 142, we are required to test indefi nite-lived intangible
assets for impairment annually or whenever events and circumstances
indicate that there may be an impairment of the asset value. Our
annual impairment test date is September 30th. We perform the
impairment test for our indefinite-lived intangible assets by
comparing the asset’s fair value to its carrying value. We estimate
the fair value based on projected discounted future cash fl ows.
An impairment charge is recognized if the asset’s estimated fair
value is less than its carrying value.
We completed our annual impairment testing for goodwill
and indefinite-lived intangible assets during 2007, 2006 and
2005, and we determined that there was no impairment in any of
these years.
Purchased Intangible Assets. Purchased intangible assets represent
the estimated fair value of acquired intangible assets used in our
business. Purchased data fi les represent the estimated fair value of
consumer credit fi les acquired primarily through the purchase
of independent credit reporting agencies in the U.S. and Canada.
We expense the cost of modifying and updating credit fi les in the
period such costs are incurred. We amortize purchased data fi les,
which primarily consist of acquired credit fi les, on a straight-line
basis. All of our other purchased intangible assets are also amortized
on a straight-line basis.
Useful Life
Asset (in years)
Purchased data files 15
Acquired software and technology 2 to 10
Non-compete agreements 2 to 10
Proprietary database 6
Customer relationships 5 to 25
Trade names 1 to 10