Equifax 2012 Annual Report Download - page 51

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Equifax 2012 Annual Report
2. MERGER OF BRAZILIAN BUSINESS
On May 31, 2011, we completed the merger of our Brazilian business
with Boa Vista Serviços S.A. (‘‘BVS’’) in exchange for a 15% equity
interest in BVS (the ‘‘Brazilian Transaction’’). The transaction was
accounted for as a sale of our Brazilian business, which was decon-
solidated. BVS, an unrelated third party whose results we do not
consolidate, is the second largest consumer and commercial credit
information company in Brazil. Our investment in BVS was valued at
130 million Brazilian Reais ($63.6 million and $69.4 million at
December 31, 2012 and December 31, 2011, respectively) is
recorded in other assets, net on the Consolidated Balance Sheets
and is accounted for using the cost method. The initial fair value was
determined by a third-party using income and market approaches.
We estimate the fair value of the investment at December 31, 2012 in
local currency approximates the initial fair value of the investment
recorded. In accounting for the transaction, we wrote off $33.2 million
of goodwill and $27.0 million of cumulative foreign currency transla-
tion adjustments. In addition, as part of the agreement with BVS, we
have retained certain contingent liabilities. A pre-tax loss of
$10.3 million was recognized during the second quarter of 2011
related to the Brazilian Transaction and is included in other income
(expense) in the Consolidated Statements of Income. Tax expense of
$17.5 million was also recorded in conjunction with the Brazilian
Transaction.
Equifax has committed to make certain additional funding available to
BVS. Until May 31, 2015, BVS will have the right to borrow up to
$55 million from Equifax for general corporate purposes; any borrow-
ings would be due and payable on May 31, 2015. Payments for
principal and interest on any borrowings can be convertible, at
Equifax’s option, into additional shares of BVS nonvoting preferred
stock. Preferred shares issued as a result of any borrowings will be
convertible to common shares under specific conditions. There were
no borrowings outstanding as of December 31, 2012.
3. DISCONTINUED OPERATIONS
On April 23, 2010, we sold our APPRO loan origination software
business (‘‘APPRO’’), for approximately $72 million. On July 1, 2010,
we sold substantially all the assets of our Direct Marketing Services
division (‘‘DMS’’) for approximately $117 million. Both of these busi-
nesses had previously been reported in our U.S. Consumer
Information Solutions segment. The historical results of these opera-
tions for the year ended December 31, 2010 are classified as
discontinued operations in the Consolidated Statements of Income.
Revenue for these businesses for the year ended December 31, 2010
was $42.1 million. Pretax income was $65.4 million for the year
ended December 31, 2010. We recorded a gain from the sale of
APPRO in the second quarter of 2010 of $12.3 million, after tax, and
a gain from the sale of DMS in the third quarter of 2010 of
$14.9 million, after tax, both of which were classified as discontinued
operations in the Consolidated Statements of Income.
During 2011, we settled various contingencies related to past
divestitures that resulted in $1.5 million of income from discontinued
operations, net of tax.
4. ACQUISITIONS AND INVESTMENTS
2012 Acquisitions and Investments. On December 28, 2012, as a
part of our long-term growth strategy of expanding our USCIS busi-
ness, we acquired certain credit services business assets and
operations of Computer Sciences Corporation for $1.0 billion. The
results of this acquisition have been included in our USCIS operating
segment subsequent to the acquisition and are not material for 2012.
We financed this purchase with available cash, borrowings under our
CP Program, and the issuance in December 2012 of 3.30%, ten-year
unsecured Senior Notes. The 3.30% Senior Notes are further
described in Note 6 of the Notes to the Consolidated Financial
Statements.
To further broaden our product offerings, during the twelve months
ended December 31, 2012, we completed smaller acquisitions of
information services businesses in the European and Latin American
regions of our International segment totaling $16.5 million. The results
of these acquisitions have been included in our operating results
subsequent to the date of acquisition and are not material.
2011 Acquisitions and Investments. On August 1, 2011, to further
enhance our market position, we acquired DataVision Resources,
which provides data and business solutions to the mortgage, insur-
ance and financial services industries, for $50.0 million. The results of
this acquisition have been included in our Workforce Solutions seg-
ment subsequent to the date of acquisition.
To further broaden our product offerings, during the twelve months
ended December 31, 2011, we completed smaller acquisitions of
information services businesses in the European and Latin American
regions of our International segment as well as our U.S. Consumer
Information Solutions and Workforce Solutions segments for
$82.4 million. The results of these acquisitions have been included in
our operating results subsequent to the date of acquisition and are
not material.
2010 Acquisitions and Investments. On October 1, 2010, to
broaden our portfolio of solutions, we acquired Anakam, Inc., a
provider of large-scale, software-based, multi-factor authentication
solutions, for $64.3 million. The results of this acquisition have been
included in our U.S. Consumer Information Solutions segment
subsequent to the date of acquisition.
To further enhance our market share, during the twelve months
ended December 31, 2010, we completed four additional acquisi-
tions totaling $12.3 million. These transactions were in our