Equifax 2010 Annual Report Download - page 46

Selling, General and Administrative Expenses. Selling, general and
administrative expenses consist primarily of personnel-related costs,
restructuring costs, corporate costs, fees for professional and
consulting services, advertising costs, and other costs of
administration.
Advertising. Advertising costs from continuing operations, which are
expensed as incurred, totaled $32.6 million, $31.9 million and
$28.4 million during 2010, 2009 and 2008, respectively.
Stock-Based Compensation. We recognize the cost of stock-based
payment transactions in the financial statements over the period
services are rendered according to the fair value of the stock-based
awards issued. All of our stock- based awards, which are stock
options and nonvested stock, are classified as equity instruments.
Income Taxes. We account for income taxes under the liability
method. Deferred income tax assets and liabilities are determined
based on the estimated future tax effects of temporary differences
between the financial statement and tax bases of assets and
liabilities, as measured by current enacted tax rates. We assess
whether it is more likely than not that we will generate sufficient tax-
able income to realize our deferred tax assets. We record a valuation
allowance, as necessary, to reduce our deferred tax assets to the
amount of future tax benefit that we estimate is more likely than not
to be realized.
We record tax benefits for positions that we believe are more likely
than not of being sustained under audit examinations. We assess the
potential outcome of such examinations to determine the adequacy
of our income tax accruals. We adjust our income tax provision dur-
ing the period in which we determine that the actual results of the
examinations may differ from our estimates or when statutory terms
expire. Changes in tax laws and rates are reflected in our income tax
provision in the period in which they occur.
Earnings Per Share. Our basic earnings per share, or EPS, is
calculated as net income divided by the weighted-average number of
common shares outstanding during the reporting period. Diluted EPS
is calculated to reflect the potential dilution that would occur if stock
options or other contracts to issue common stock were exercised
and resulted in additional common shares outstanding. The net
income amounts used in both our basic and diluted EPS calculations
are the same. A reconciliation of the weighted-average outstanding
shares used in the two calculations is as follows:
Twelve Months Ended
December 31,
(In millions) 2010 2009 2008
Weighted-average shares
outstanding (basic) 124.8 126.3 128.1
Effect of dilutive securities:
Stock options and restricted
stock units 1.5 1.4 2.2
Long-term incentive plans 0.2 0.2 0.1
Weighted-average shares
outstanding (diluted) 126.5 127.9 130.4
For the twelve months ended December 31, 2010, 2009 and 2008,
3.3 million, 3.3 million and 2.1 million stock options, respectively,
were anti-dilutive and therefore excluded from this calculation.
Cash Equivalents. We consider all highly liquid investments with an
original maturity of three months or less to be cash equivalents.
Trade Accounts Receivable and Allowance for Doubtful
Accounts. We do not recognize interest income on our trade
accounts receivable. Additionally, we generally do not require col-
lateral from our customers related to our trade accounts receivable.
The allowance for doubtful accounts for estimated losses on trade
accounts receivable is based on historical write-off experience, an
analysis of the aging of outstanding receivables, customer payment
patterns and the establishment of specific reserves for customers in
an adverse financial condition. We reassess the adequacy of the
allowance for doubtful accounts each reporting period. Increases to
the allowance for doubtful accounts are recorded as bad debt
expense, which are included in selling, general and administrative
expenses on the accompanying Consolidated Statements of Income.
Bad debt expense from continuing operations was $0.8 million,
$6.6 million and $10.0 million during the twelve months ended
December 31, 2010, 2009, and 2008, respectively.
Long-Lived Assets. Property and equipment are stated at cost less
accumulated depreciation and amortization. The cost of additions is
capitalized. Property and equipment are depreciated primarily on a
straight-line basis over assets’ estimated useful lives, which are
generally three to five years for data processing equipment and
capitalized internal-use software and systems costs. Leasehold
improvements are depreciated over the shorter of their estimated
useful lives or lease terms that are reasonably assured. Buildings are
depreciated over a forty-year period. Other fixed assets are depreci-
ated over three to seven years. Upon sale or retirement of an asset,
the related costs and accumulated depreciation are removed from
the accounts and any gain or loss is recognized and included in
income from operations on the Consolidated Statements of Income,
with the classification of any gain or loss dependent on the
characteristics of the asset sold or retired.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
EQUIFAX 2010 ANNUAL REPORT
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