Equifax 2004 Annual Report Download - page 62

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
60
2004
2003
Accumulated
Accumulated
(in millions)
Gross amortization Net
Gross amortization Net
Purchased data fi les
$405.4 $(171.7) $233.7
$424.9 $(181.6) $243.3
Acquired software
10.4 (8.2) 2.2
26.1 (21.9) 4.2
Non-compete agreements
11.7 (7.3) 4.4
14.1 (6.4) 7.7
Contractual/territorial rights
41.0
–
41.0
41.0 – 41.0
Total purchased intangible assets
$468.5 $(187.2) $281.3
$506.1 $(209.9) $296.2
We amortize purchased data fi les over a 15-year period on
a straight-line basis. Acquired software is amortized over a
period of three to ten years; and non-compete agreements
are amortized over a period of two to three years. Our con-
tractual/territorial rights are perpetual in nature and, there-
fore, the useful lives are considered indefi nite. Amortization
expense related to purchased intangible assets was approxi-
mately $36.2 million, $51.8 million and $33.6 million for
2004, 2003 and 2002, respectively.
Estimated future amortization expense related to fi nite-lived
purchased intangible assets at December 31, 2004 is as follows:
(in millions)
Amount
2005 $ 28.5
2006 24.8
2007 23.4
2008 23.1
2009 21.8
Thereafter 118.7
$240.3
We perform annual impairment tests for our purchased
intangible assets with indefi nite lives. Based on the results of
our impairment tests, we determined that no impairment
of the contractual/territorial rights existed at December 31,
2004 or December 31, 2003. However, future impairment
tests could result in a charge to earnings. We will continue to
evaluate our purchased intangible assets annually or when-
ever events and circumstances indicate that there may be an
impairment of the asset value.
5.฀ACQUISITIONS
During 2004, we acquired two independent credit reporting
agencies located in the U.S. (also referred to as “Affi liates”)
and one Affi liate located in Canada, that house their con-
sumer information on our system. We acquired all of these
businesses for $17.4 million in cash, allocating $11.7 million
of the purchase price to purchased data fi les, $4.1 million to
goodwill and $1.6 million to non-compete agreements. See
Note 4 for a discussion of our purchased intangible assets.
The results of operations for these acquisitions have been
included in the accompanying Consolidated Statements of
Income from the date of acquisition, and are not material.
During 2003, we acquired three Affi liates located in the
U.S. and one Affi liate located in Canada, that house their
consumer information on our system. Additionally, in April
2003, we completed the purchase of a small eMarketing
business for $10.0 million. We acquired all of these busi-
nesses for $41.0 million in cash and $1.9 million in liabilities,
allocating $15.5 million of the purchase price to purchased
data fi les, $19.6 million to goodwill and $5.9 million to non-
compete agreements. In the case of the eMarketing business,
the preliminary purchase price allocation did not include
the involuntary termination of certain employees of the
acquired company during 2004. The results of operations for
these acquisitions have been included in the accompanying
Consolidated Statements of Income from the date of acquisi-
tion, and are not material.
The above acquisitions were accounted for as purchases
and had a total cash purchase price of $58.4 million. The
following table summarizes the estimated fair value of the
net assets acquired and the liabilities assumed at the acqui-
sition dates.
(in millions)
2004
2003
Other assets
$ 1.6
$ 5.9
Purchased data fi les
11.7
15.5
Goodwill
4.1
19.6
Total acquired assets
17.4
41.0
Total liabilities
–
1.9
Net assets acquired
$17.4
$39.1