Equifax 2007 Annual Report Download - page 70

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
68 EQUIFAX | 2007 ANNUAL REPORT
to continuation of group health, dental, vision, life, disability, 401(k)
and similar benefi ts for three years, as well as a lump sum severance
payment, all of which differs by executive.
The change in control agreements have a fi ve-year term and
automatically renew for another fi ve years unless we elect not to
renew the agreements. Change in control events potentially triggering
benefi ts under the agreements would occur, subject to certain
exceptions, if (1) any person acquires 20% or more of our voting
stock; (2) upon a merger or other business combination, our
shareholders receive less than two-thirds of the common stock and
combined voting power of the new company; (3) we sell or otherwise
dispose of all or substantially all of our assets; or (4) we liquidate
or dissolve.
If these change in control agreements had been triggered as
of December 31, 2007, payments of approximately $32.8 million
would have been made (excluding tax gross-up amounts of
$14.9 million). Under the Company’s existing director and employee
stock benefi t plans, a change in control generally would result in the
immediate vesting of all outstanding stock options and satisfaction
of the restrictions on any outstanding nonvested stock awards.
Guarantees and Indemnifi cations. We account for guarantees
in accordance with FIN No. 45, “Guarantor’s Accounting and
Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others,” which required the
prospective recognition and measurement of certain guarantees
and indemnifi cations upon adoption. Accordingly, any contractual
guarantees or indemnifications we have issued or modified
subsequent to December 31, 2002 are subject to evaluation. If
required, a liability for the fair value of the obligation undertaken
will be recognized.
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 is 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.
General Indemnifi cations. We are the lessee under many real estate
leases. It is common in these commercial lease transactions for us,
as the lessee, to agree to indemnify the lessor and other related
third parties for tort, environmental and other liabilities that arise
out of or relate to our use or occupancy of the leased premises.
This type of indemnity would typically make us responsible to
indemnifi ed parties for liabilities arising out of the conduct of,
among others, contractors, licensees and invitees at or in connection
with the use or occupancy of the leased premises. This indemnity
often extends to related liabilities arising from the negligence of
the indemnifi ed parties, but usually excludes any liabilities caused
by either their sole or gross negligence and their willful misconduct.
Certain of our credit agreements include provisions which require
us to make payments to preserve an expected economic return to
the lenders if that economic return is diminished due to certain
changes in law or regulations. In certain of these credit agreements,
we also bear the risk of certain changes in tax laws that would
subject payments to non-U.S. lenders to withholding taxes.
In conjunction with certain transactions, such as sales or
purchases of operating assets or services in the ordinary course
of business, or the disposition of certain assets or businesses, we
sometimes provide routine indemnifi cations, the terms of which
range in duration and sometimes are not limited.
We cannot reasonably estimate our potential future payments
under the indemnities and related provisions described above
because we cannot predict when and under what circumstances
these provisions may be triggered. We have no accrual related
to indemnifications on our Consolidated Balance Sheets at
December 31, 2007 and 2006.
Subsidiary Dividend and Fund Transfer Limitations. The ability
of some of our subsidiaries and associated companies to transfer
funds to us is limited, in some cases, by certain restrictions imposed
by foreign governments, which do not, individually or in the
aggregate, materially limit our ability to service our indebtedness,
meet our current obligations or pay dividends.
Contingencies. We are involved in legal proceedings, claims and
litigation arising in the ordinary course of business. We periodically
assess our exposure related to these matters based on the information
which is available. In accordance with SFAS No. 5, “Accounting
for Contingencies,” we have recorded accruals in our Consolidated
Financial Statements for those matters in which it is probable that
we have incurred a loss and the amount of the loss, or range of loss,
can be reasonably estimated.
During 2006, we recorded a $5.0 million loss contingency
($3.0 million, net of tax) related to certain legal matters in our
Personal Solutions operating segment. Of this $5.0 million,
pretax, loss, $4.0 million was recognized in selling, general
and administrative expenses and $1.0 million was recognized
in cost of services on our Consolidated Statement of Income. In
February 2007, we entered into a tentative settlement related to
these litigation matters. The remaining accrual at December 31,
2007 was less than $1.0 million.