Equifax 2004 Annual Report Download - page 57

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N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
the asset’s carrying amount exceeds its fair value. We uti-
lize the discounted present value of the associated future
estimated cash fl ows to determine the asset’s fair value.
During 2004, 2003 and 2002, we recognized a $2.4 mil-
lion, $30.6 million and $0.0 million impairment charge,
respectively. See Note 6 for further details.
Other Assets.
Other assets at December 31, 2004 and
2003 consist of the following:
(in millions)
2004
2003
Purchased software
$20.4
$14.8
Prepaid pension cost
18.2
17.0
Investments in unconsolidated companies
0.4
28.5
Data purchases
5.6
2.7
Other
42.4
28.4
$87.0
$91.4
As discussed above under “Impairment of Long-Lived
Assets,” we regularly review these assets to determine if
conditions or circumstances exist or events have occurred
that would indicate that an asset could be impaired, and,
if appropriate, we recognize impairments by recording
a charge against income. We believe that the long-lived
assets, as refl ected in the above table and the accompany-
ing Consolidated Balance Sheets, were appropriately valued
at December 31, 2004 and 2003. Amortization expense
for other assets was $8.0 million in 2004, $17.6 million in
2003 and $6.6 million in 2002. As of December 31, 2004
and 2003, related accumulated amortization balances were
$23.2 million and $28.3 million, respectively.
Foreign Currency Translation.
The functional cur-
rency of our foreign subsidiaries is those subsidiaries’ local
currencies. We translate the assets and liabilities of foreign
subsidiaries at the year-end rate of exchange, and revenue
and expenses at the average rates prevailing during the
year. We record the resulting translation adjustment as a
component of shareholders’ equity. We also record gains
and losses resulting from the translation of inter-company
balances of a long-term investment nature as a compo-
nent of shareholders’ equity. We record foreign currency
transaction gains and losses, which are not material, in the
Consolidated Statements of Income.
Financial Instruments.
Our fi nancial instruments con-
sist primarily of cash and cash equivalents, accounts and
notes receivable, accounts payable and short-term and
long-term debt. The carrying amounts of these items, other
than long-term debt, approximate their fair market values
due to their short maturity. As of December 31, 2004, the
fair value of our long-term debt (determined primarily by
broker quotes) was $426.3 million compared to its carrying
value of $398.5 million.
Accounting for Stock-Based Compensation.
In
accordance with the accounting and disclosure provisions
of Statement of Financial Accounting Standards (“SFAS”)
No. 123, “Accounting for Stock-Based Compensation” and
SFAS No. 148, “Accounting for Stock-Based Compensation
– Transition and Disclosure,” we have elected to apply
Accounting Principles Board (“APB”) Opinion No. 25 and
related interpretations in accounting for our stock option
and performance share plans. Accordingly, by our use of the
intrinsic value method to account for stock-based employee
compensation, we do not recognize compensation cost in
connection with our stock option plans.
We have computed the pro forma disclosures required
under SFAS No. 123 and SFAS No. 148 using the Black-
Scholes option pricing model. The fair value of options
granted in 2004, 2003 and 2002 is estimated on the date of
grant using the Black-Scholes option pricing model based
on the following weighted average assumptions:
2004
2003 2002
Dividend yield
0.5%
0.4% 0.3%
Expected volatility
36.3%
40.7% 40.8%
Risk-free interest rate
3.6%
1.1% 3.5%
Expected life in years
4.5
2.8 2.9
The weighted-average grant date fair value per share of op-
tions granted in 2004, 2003 and 2002 is as follows:
2004
2003 2002
Grants (all at market price)
$8.75
$5.59 $7.51