Equifax 2003 Annual Report Download - page 43

NOTES TO CONSOLIDATED FINANCIAL STATEM ENTS
40 EQUIFAX. INFORMATION THAT EMPOWERS.
1. SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
Accounting Principles Our financial statements and accompa-
nying notes are prepared in accordance with accounting principles
generally accepted in the United States of America.
Principles of Consolidation Our Consolidated Financial State-
ments include the accounts of Equifax Inc. and its majority-owned
and controlled subsidiaries. All significant inter-company transac-
tions and balances have been eliminated. Certain prior year amounts
have been reclassified to conform to the current year presentation.
Nature of Operations We collect, organize and manage various
types of financial, demographic, and marketing information. Our
products and services enable businesses to make credit and ser-
vice decisions, manage their portfolio risk, and develop marketing
strategies concerning consumers and commercial enterprises. We
serve customers across a wide range of industries, including the
financial services, mortgage, retail, telecommunications, utilities,
automotive, brokerage, healthcare and insurance industries, as
well as state and federal governments. We also enable consumers
to manage and protect their financial health through a portfolio of
products offered directly to individuals. We have approximately
4,600 employees worldwide, and manage our business globally
through the following three operating segments: Equifax North
America, Equifax Europe, and Equifax Latin America. Our opera-
tions are predominately located within the United States, with
foreign operations principally located in Canada, the United
Kingdom, and Brazil.
Our products and services are categorized as follows: Information
Services, Marketing Services, and Consumer Direct. Our Informa-
tion Services products and services allow customers to make
credit decisions about consumers and commercial enterprises. Our
Marketing Services information products and databases enable
customers to identify a target audience for marketing purposes,
and our Consumer Direct products and services provide information
to consumers which enables them to reduce their exposure to
identity fraud and to monitor their credit health.
We develop, maintain, and enhance secured proprietary informa-
tion databases through compilation of accounts receivable infor-
mation about consumers and businesses that we obtain from a
variety of sources, such as credit granting institutions, public
record information, including bankruptcies, liens, and judgments,
and marketing information from surveys and warranty cards.
We process this information utilizing our proprietary information
management systems and make it available to our customers in
virtually any medium or format they choose.
Use of Estimates Our financial statements are prepared in
conformity with accounting principles generally accepted in the
United States. Those principles require us to make estimates and
assumptions. We believe that these estimates and assumptions
are reasonable, based upon information available to us at the time
they are made. These estimates and assumptions affect the
reported amounts of assets and liabilities and disclosure of contin-
gent assets and liabilities at the date of the financial statements,
as well as reported amounts of revenues and expenses during the
reporting period. Estimates and assumptions are used for, but not
limited to, the accounting for the allowance for doubtful accounts,
goodwill impairments, contingencies, restructuring costs, pre-
liminary allocation of purchase price of acquisitions, and valuation
of pension assets. Actual results could differ materially from
these estimates.
Revenue Recognition and Deferred Revenue We recognize
revenue when persuasive evidence of an arrangement exists,
delivery has occurred or services have been rendered, the price is
fixed or determinable, and collectibility of the selling price is
reasonably assured.
For sales contracts having multiple elements that can be divided
into separate units of accounting, we allocate revenue to these
separate units based on their relative fair values. If relative fair
values cannot be established, revenue recognition is deferred until
all elements under the contract have been delivered. Multiple
deliverable arrangements generally involve delivery of multiple
product lines. These product lines are distinct enough to be sepa-
rated into separate units of accounting. Each product line does not
impact the value or usage of other deliverables in the arrangement,
and each can be sold alone or purchased from another vendor
without affecting the quality of use or value to the customer of the
remaining deliverables. Delivery of product lines generally occurs
consistently over the contract period.
In conjunction with certain products and services, we charge non-
refundable set-up and membership fees which are recognized on a
straight-line basis over the term of the contract. Revenue from the
sale of decision or statistical models is recognized upon customer
installation and acceptance. For certain products and services sold
on a subscription basis, we recognize revenue pro rata over the
term of the contract.
Deferred revenue represents the liability for amounts billed in
advance of service delivery, and is classified as either current or
long-term deferred revenue, with the current portion representing
services expected to be provided within the next twelve months.
Current deferred revenue is included with other current liabilities