Equifax 2002 Annual Report Download - page 57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Components of the deferred income tax assets and liabilities at
December 31, 2002 and 2001 are as follows:
(In millions) 2002 2001
Deferred income tax assets:
Reserves and accrued expenses $–$30.0
Postretirement benefits 70.2 10.0
Employee compensation programs 11.5 9.9
Deferred revenue 6.9 4.7
Depreciation 6.2 –
Net operating loss carryforwards
of subsidiaries 42.3 9.9
Foreign tax credits 22.2 41.5
Valuation allowance (52.7) (21.6)
Other 5.0 4.6
111.6 89.0
Deferred income tax liabilities:
Reserves and accrued expenses (2.4) –
Data files and other assets (44.6) (54.4)
Depreciation –(0.5)
Pension expense (47.2) (40.8)
Undistributed earnings of
foreign subsidiaries (11.7) (36.3)
Other (10.7) (19.2)
(116.6) (151.2)
Net deferred income tax liability $(5.0) $(62.2)
Our deferred income tax assets and liabilities at December 31,
2002 and 2001, are included in the accompanying consolidated
balance sheets as follows:
(In millions) 2002 2001
Deferred income tax assets $20.9 $26.4
Deferred income tax liabilities (25.9) (88.6)
Net deferred income tax liability $ (5.0) $(62.2)
Accumulated undistributed retained earnings of Canadian sub-
sidiaries amounted to approximately $51.9 million at December 31,
2002. No provision for Canadian withholding taxes or United States
federal income taxes is made on these earnings, because they are
considered by management to be permanently invested in those
subsidiaries and, under the tax laws, are not subject to such taxes
until distributed as dividends. If the earnings were not considered
permanently invested, approximately $2.6 million of deferred
income taxes would have been provided. Such taxes, if ultimately
paid, may be recoverable as foreign tax credits in the United States.
As of December 31, 2002, we have a deferred tax asset of
$78.6 million related to accumulated foreign currency translation
loss for foreign locations, excluding Canada. A full valuation
allowance, included in accumulated other comprehensive loss,
has been provided due to uncertainty of future realization of this
deferred tax asset.
At December 31, 2002, we had net operating loss and capital loss
carryforwards of approximately $125.7 million of which $61.2 mil-
lion related to U.S. federal and $64.5 million to foreign jurisdic-
tions. Of the total net operating loss and capital loss carryforwards,
$39.1 million has no expiration date, $32.7 million will expire in
2006 and $53.9 million will begin to expire at various times begin-
ning in 2012. The U.S. federal loss carryforward may be subject to
certain limitations under Section 382 of the Internal Revenue Code
of 1986, as amended. Additionally, we had foreign tax credit carry-
forwards of approximately $22.2 million of which $13 million will
begin to expire in 2005 and the remaining $9.2 million will be uti-
lized upon repatriation of foreign earnings. Tax effected net oper-
ating loss, capital loss and foreign tax credit carryforwards of
$52.7 million have been fully reserved in the deferred tax valuation
allowance due to the uncertainty resulting from a lack of previous
foreign taxable income within certain foreign tax jurisdictions,
uncertainty that sufficient capital gains will be generated and
U.S. federal limitations under Section 382.
A valuation allowance is provided when it is more likely than not
that some portion or all of a deferred tax asset will not be realized.
We increased the valuation allowance by $31.1 million in 2002 for
capital loss carryovers and net operating loss carryforwards relat-
ing to Naviant, Spain, the United Kingdom and other entities.
8.
SHAREHOLDERS’ EQUITY
Rights Plan In 1995, our Board of Directors adopted a Shareholders
Rights Plan. Our Rights Plan contains provisions to protect our share-
holders in the event of an unsolicited offer to acquire us, including
offers that do not treat all shareholders equally, the acquisition in
the open market of shares constituting control without offering fair
value to all shareholders, and other coercive, unfair or inadequate
takeover bids and practices that could impair the ability of our
Board to represent shareholders’ interests fully. Pursuant to the
Rights Plan, our Board declared a dividend of one Share Purchase
Right for each outstanding share of our common stock, with distri-
bution to be made to shareholders of record as of November 24,
1995. The Rights, which will expire in November 2005, initially will
be represented by, and traded together with, our common stock.
The Rights are not currently exercisable and do not become exer-
cisable unless certain triggering events occur.
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