Equifax 2002 Annual Report Download - page 61

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
57
Assumed health care cost trend rates have an effect on the
amounts reported for the health care plan. A one-percentage-point
change in assumed health care cost trend rates would have the
following effects:
1-Percentage-Point 1-Percentage-Point
Increase Decrease
Effect on total of service
cost and interest cost
components $0.1 $(0.1)
Effect on postretirement
benefit obligation $0.7 (0.7)
The discount rate used to calculate the U.S. Retirement Plan
funded status was decreased from 7.25% for year-end 2001
to 6.75% for year-end 2002. The effect of this change was an
increase in year-end 2002 benefit obligation (and reduction in
funded status) of $22.3 million.
The discount rate used to calculate U.S. Retirement Plan pension
income was decreased from 8.00% for 2001 to 7.25% for 2002.
The effect of this change was a decrease in 2002 income of
$0.1 million.
For calculating pension income, a market-related value of assets is
used. The market-related value of assets recognizes the difference
between actual returns and expected returns over five years at a
rate of 20% per year.
The net pension income shown above includes income amounts
allocated to discontinued operations of $0, $2.1 million, and
$3.3 million in 2002, 2001, and 2000, respectively. The 2000 cur-
tailment gains of $1.3 million (pension benefits) and $0.8 million
(other benefits) related to the sale of the U.S. risk management
collections business (Note 4), and was included as a component
of the loss on sale of businesses recorded in other income.
The U.S. Retirement Plan and the Supplemental Retirement Plan
both have accumulated benefit obligations in excess of plan assets
as of December 31, 2002. The aggregate projected benefit obliga-
tion, accumulated benefit obligation, and fair value of plan assets
(in millions) for these two plans are $451.2, $436.4, and $344.8,
respectively, as of December 31, 2002, and $419.0, $408.1, and
$413.1, respectively, as of December 31, 2001.
During 2002, actual asset returns for the pension plans were
adversely impacted by further deterioration in the equity markets.
The S&P 500 has declined 22% and 12% in 2002 and 2001, respec-
tively. Our actual return on pension plan assets in 2002 was a neg-
ative 12.8%. Also in 2002, corporate bond yields, which we use
in determining our discount rate for future pension obligations,
continued to decline. The 2002 asset returns and lower discount
rates negatively impacted the funded status of our pension plans
requiring us to recognize a minimum pension liability. The liability
was recorded as a non-cash $112.4 million after-tax reduction to
Shareholder’s equity as part of accumulated other comprehensive
income (loss). This equity reduction did not impact our net income
or cash flow in 2002 and has no impact on compliance with
debt covenants.
While the asset return and interest rate environment have nega-
tively impacted the funded status of our plans, we do not currently
have minimum funding requirements, as set forth in the Employment
Retirement Income Security Act and federal tax laws. Although
no minimum funding was required, we voluntarily contributed
$20.0 million to our U.S. retirement plan in 2002.
At December 31, 2002 and 2001, the plan’s assets included 1.76 mil-
lion shares of the Company’s common stock with a market value of
approximately $40.9 million and $42.6 million, respectively.
Foreign Retirement Plans We also maintain defined contri-
bution plans for certain employees in the United Kingdom. For the
year ended December 31, 2002 our expenses related to these
plans were $1.2 million.
Employee Retirement Savings Plans Our retirement savings
plans provide for annual contributions, within specified ranges,
determined at the discretion of the Board of Directors for the bene-
fit of eligible employees in the form of cash or shares of common
stock. Employees may sell their stock, including shares contributed
as the Company match, at any time. Expense for these plans was
$3.0 million in 2002, $2.5 million in 2001, and $2.4 million in 2000.