Equifax 2010 Annual Report Download - page 54

from $850.0 million to $500 million. For additional information about
the Amended Agreement, see Note 15 of the Notes to Consolidated
Financial Statements.
4.25% Note. Upon our July 26, 2007 acquisition of our Atlanta,
Georgia, data center, we assumed a $12.5 million mortgage obliga-
tion from the prior owner of the building. The mortgage obligation has
afixed rate of interest of 4.25% per annum and is payable in annual
installments until March 1, 2012.
TALX Debt. At the closing of the TALX acquisition in May 2007, we
assumed $75.0 million in 7.34% Senior Guaranteed Notes, or TALX
Notes, privately placed by TALX with several institutional investors in
May 2006 and $96.6 million outstanding under TALX’s revolving
credit facility. Subsequent to the TALX acquisition, we repaid and
terminated the TALX revolving credit facility with borrowings under
our Senior Credit Facility. We are required to repay the principal
amount of the TALX Notes in five equal annual installments com-
mencing on May 25, 2010 with a final maturity date of May 25, 2014.
We may prepay the TALX Notes subject to certain restrictions and
the payment of a make-whole amount. Under certain circumstances,
we may be required to use proceeds of certain asset dispositions to
prepay a portion of the TALX Notes. Interest on the TALX Notes is
payable semi-annually until the principal becomes due and payable.
We identified a fair value adjustment related to the TALX Notes in
applying purchase accounting; this amount is being amortized
against interest expense over the remainder of the term of the TALX
Notes. At December 31, 2010, the remaining balance of this adjust-
ment is $1.8 million and is included in long-term debt on the
Consolidated Balance Sheet.
4.45% Senior Notes. On November 4, 2009, we issued
$275.0 million principal amount of 4.45%, five-year senior notes in an
underwritten public offering. Interest is payable semi-annually in
arrears on December 1 and June 1 of each year. We used the net
proceeds from the sale of the senior notes to repay outstanding bor-
rowings under our CP program, a portion of which was used to
finance our fourth quarter 2009 acquisitions. The senior notes are
unsecured and rank equally with all of our other unsecured and
unsubordinated indebtedness. In conjunction with the senior notes,
we entered into five-year interest rate swaps, designated as fair value
hedges, which convert the fixed interest rate to a variable rate. The
long-term debt fair value adjustment related to these interest rate
swaps was an increase of $9.7 million at December 31, 2010.
6.3% and 7.0% Senior Notes. On June 28, 2007, we issued
$300.0 million principal amount of 6.3%, ten-year senior notes and
$250.0 million principal amount of 7.0%, thirty-year senior notes in
underwritten public offerings. Interest is payable semi-annually in
arrears on January 1 and July 1 of each year. The net proceeds of
the financing were used to repay short-term indebtedness, a
substantial portion of which was incurred in connection with our
acquisition of TALX. We must comply with various non-financial
covenants, including certain limitations on liens, additional debt and
mortgages, mergers, asset dispositions and sale-leaseback arrange-
ments. The senior notes are unsecured and rank equally with all of
our other unsecured and unsubordinated indebtedness. During 2009,
we purchased $7.5 million principal amount of the ten-year senior
notes for $6.3 million.
6.9% Debentures. We have $125 million of debentures outstanding
with a maturity date of 2028. The debentures are unsecured and rank
equally with all of our other unsecured and unsubordinated indebted-
ness. During 2009, we purchased $25.0 million principal amount of
the debentures for $25.1 million.
Canadian Credit Facility. We are a party to a credit agreement with
a Canadian financial institution that provides for a C$10.0 million
(denominated in Canadian dollars), 364-day revolving credit agree-
ment. We reduced the borrowing limit from C$20.0 million to
C$10.0 million during the second quarter of 2010 and extended the
maturity date until June 2011. As of December 31, 2010, there were
no outstanding borrowings under this facility.
Cash paid for interest, net of capitalized interest, was $55.6 million,
$56.7 million and $71.7 million during the twelve months ended
December 31, 2010, 2009 and 2008, respectively.
6. COMMITMENTS AND CONTINGENCIES
Leases. On February 27, 2009, we notified the lessor of our
headquarters building in Atlanta, Georgia, that we intended to
exercise our purchase option in accordance with the lease terms.
Under the terms of the $29.0 million synthetic lease for this facility,
which commenced in 1998 and expired in March 2010, we
guaranteed the residual value of the building at the end of the lease.
We were responsible for any shortfall of sales proceeds, up to a
maximum amount of $23.2 million, which equaled 80% of the value
of the property at the beginning of the lease term. A residual
guarantee value of $1.9 million was recorded related to this
contingency.
By making notification of our intent to purchase, we committed to
purchase the building for $29.0 million on February 26, 2010. The
exercise of our purchase option caused us to account for this lease
obligation as a capital lease. We recorded the building and the
related obligation on our Consolidated Balance Sheets at
December 31, 2009, based on the difference between the purchase
price and our residual guarantee of fair value, or $27.1 million.
Our operating leases principally involve office space and office equip-
ment. Rental expense for operating leases, which is recognized on a
straight-line basis over the lease term, was $20.5 million,
$20.9 million and $20.6 million for the twelve months ended
December 31, 2010, 2009 and 2008, respectively. Our headquarters
building ground lease has purchase options exercisable beginning in
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
EQUIFAX 2010 ANNUAL REPORT
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