Equifax 2012 Annual Report Download - page 29

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Equifax 2012 Annual Report
USRIP. During the year ended December 31, 2011, we made
contributions of $40.0 million to the USRIP. We also contributed
$3.7 million and $2.6 million to the CRIP during the twelve months
ended December 31, 2012 and 2011, respectively. In the future, we
will make minimum funding contributions as required and may make
discretionary contributions, depending on certain circumstances,
including market conditions and liquidity needs. We believe additional
funding contributions, if any, would not prevent us from continuing to
meet our liquidity needs, which are primarily funded from cash flows
generated by operating activities, available cash and cash
equivalents, and our credit facilities.
For our non-U.S., tax-qualified retirement plans, we fund an amount
sufficient to meet minimum funding requirements but no more than
allowed as a tax deduction pursuant to applicable tax regulations. For
the non-qualified supplementary retirement plans, we fund the
benefits as they are paid to retired participants, but accrue the
associated expense and liabilities in accordance with GAAP.
For additional information about our benefit plans, see Note 11 of the
Notes to Consolidated Financial Statements in this report.
Seasonality
We experience seasonality in certain of our revenue streams.
Revenue generated from the Employer Services business unit within
the Workforce Solutions operating segment is generally higher in the
first quarter due primarily to the provision of Form W-2 preparation
services which occur in the first quarter each year. Revenue from our
OCIS and Mortgage Solutions business units tends to increase in
periods of the year in which our customers have higher volumes of
credit granting decisions, most commonly the second and
third calendar quarters. Revenues in our North America Commercial
business and the Consumer Financial Marketing Services business
line within USCIS are typically highest in the fourth quarter each year
due to the timing of certain significant annual renewals of project-
based agreements. On a consolidated basis, combining all of these
businesses, and assuming normal economic conditions, first quarter
revenue is normally the lowest quarterly revenue of the year, and the
fourth quarter is the highest.
Effects of Inflation and Changes in Foreign Currency
Exchange Rates
Equifax’s operating results are not materially affected by inflation,
although inflation may result in increases in the Company’s expenses,
which may not be readily recoverable in the price of services offered.
To the extent inflation results in rising interest rates and has other
adverse effects upon the securities markets and upon the value of
financial instruments, it may adversely affect the Company’s financial
position and profitability.
A portion of the Company’s business is conducted in currencies
other than the U.S. dollar, and changes in foreign exchange rates
relative to the U.S. dollar can therefore affect the value of non-U.S.
dollar net assets, revenues and expenses. Potential exposures as a
result of these fluctuations in currencies are closely monitored. We
generally do not mitigate the risks associated with fluctuating
exchange rates, although we may from time to time through forward
contracts or other derivative instruments hedge a portion of our
translational foreign currency exposure or exchange rate risks associ-
ated with material transactions which are denominated in a
foreign currency.
RECENT ACCOUNTING PRONOUNCEMENTS
For information about new accounting pronouncements and the
potential impact on our Consolidated Financial Statements, see
Note 1 of the Notes to Consolidated Financial Statements in this
report.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
AND ESTIMATES
The Company’s Consolidated Financial Statements are prepared in
conformity with U.S. generally accepted accounting principles, or
GAAP. This requires our management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
revenues and expenses and related disclosures of contingent assets
and liabilities in our Consolidated Financial Statements and the Notes
to Consolidated Financial Statements. The following accounting poli-
cies involve critical accounting estimates because they are particularly
dependent on estimates and assumptions made by management
about matters that are uncertain at the time the accounting estimates
are made. In addition, while we have used our best estimates based
on facts and circumstances available to us at the time, different
estimates reasonably could have been used in the current period, or
changes in the accounting estimates that we used are reasonably
likely to occur from period to period, either of which may have a
material impact on the presentation of our Consolidated Balance
Sheets and Statements of Income. We also have other significant
accounting policies which involve the use of estimates, judgments
and assumptions that are relevant to understanding our results. For
additional information about these policies, see Note 1 of the Notes
to Consolidated Financial Statements in this report. Although we
believe that our estimates, assumptions and judgments are reason-
able, they are based upon information available at the time. Actual
results may differ significantly from these estimates under different
assumptions, judgments or conditions.
Revenue Recognition
Revenue is recognized when persuasive evidence of an arrangement
exists, collectibility of arrangement consideration is reasonably
assured, the arrangement fees are fixed or determinable and delivery
of the product or service has been completed. A significant portion of
our revenue is derived from the provision of information services to
our customers on a transaction basis, 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