Equifax 2006 Annual Report Download - page 60

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
58 EQUIFAX 2006 ANNUAL REPORT
Financial Instruments. Our fi nancial instruments consist
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 the
short-term nature of these instruments. As of December 31,
2006 and 2005, the fair value of our fi xed-rate debt (deter-
mined internally through the use of related public fi nancial
information) was $414.2 million and $412.4 million, respec-
tively, compared to its carrying value, net of discount, of
$398.8 million and $398.8 million, respectively.
Recent Accounting Pronouncements. In July 2006, the
FASB issued FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes—an interpretation of FASB
Statement No. 109” (“FIN 48”), which provides clarifi cation
related to the process associated with accounting for uncer-
tain tax positions recognized in the Company’s Consolidated
Financial Statements. FIN 48 prescribes a more likely than
not threshold for fi nancial statement recognition and mea-
surement of a tax position taken, or expected to be taken,
in a tax return. FIN 48 also provides guidance related to,
among other things, classifi cation, accounting for interest
and penalties associated with tax positions, and disclosure
requirements. We adopted FIN 48 on January 1, 2007. For
transition purposes, we adopted FIN 48 as a change in
accounting principle through a cumulative effect adjustment
to retained earnings. The impact of our reassessment of our
tax positions in accordance with the requirements of FIN 48
is expected to be immaterial; however, we are awaiting
additional guidance expected to be issued in March 2007.
In September 2006, the FASB issued SFAS No. 157, “Fair
Value Measurements” (“SFAS 157”), which provides guidance
for measuring the fair value of assets and liabilities, as
well as requires expanded disclosures about fair value mea-
surements. SFAS 157 indicates that fair value should be
determined based on the assumptions marketplace partici-
pants would use in pricing the asset or liability, and provides
additional guidelines to consider in determining the market-
based measurement. We will be required to adopt SFAS 157
on January 1, 2008, although early adoption is permitted.
We are currently evaluating the impact of adopting SFAS 157
on our Consolidated Financial Statements.
In September 2006, the FASB issued SFAS No. 158,
“Employers’ Accounting for Defi ned Benefi t Pension and
Other Postretirement Plans, an amendment of FASB
Statements No. 87, 88, 106 and 132R” (“SFAS 158”), which is
effective for us as of December 31, 2006. SFAS 158 requires
us to recognize (1) the overfunded or underfunded status of
our defi ned benefi t pension and other postretirement benefi t
plans as an asset or liability in our Consolidated Balance
Sheet, and (2) changes in the funded status in the year in
which the changes occur through other comprehensive
income, a component of shareholders’ equity. For a pension
plan, the benefi t obligation is the projected benefi t obliga-
tion; for any other postretirement plan, the benefit
obligation is the accumulated postretirement benefi t obli-
gation. This statement also requires us to measure the
funded status of our plans as of the date of our year-end
Consolidated Balance Sheet, December 31, which is consis-
tent with our current measurement date. SFAS 158 also
provides additional disclosure requirements and guidance
related to balance sheet classifi cation. This guidance did
not impact our Consolidated Statements of Income, nor did
it impact our debt covenant compliance upon adoption. If
this guidance had been effective as of December 31, 2005,
the impact on our Consolidated Balance Sheet at such date
would have been a $95.2 million decrease in total assets
(including the impact to the long-term deferred tax asset),
a $26.1 million increase to total liabilities and a $121.3 mil-
lion decrease to shareholders’ equity. See Note 9 for
information about the impact on our Consolidated Balance
Sheet as of December 31, 2006.
In September 2006, the Securities and Exchange
Commission (“SEC”) issued Staff Accounting Bulletin
(“SAB”) Topic 1N, “Financial Statements—Considering the
Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements” (“SAB
108”), which expresses the Staff’s views regarding the process
of quantifying fi nancial statement misstatements due to the
current diversity in practice. SAB 108 will require companies
to use two approaches, the rollover and iron curtain meth-
ods, when quantifying fi nancial statement misstatements.
We were required to adopt SAB 108 for the year ended
December 31, 2006. The adoption of SAB 108 did not
impact our Consolidated Financial Statements.
In September 2006, the FASB ratifi ed the consensus
reached by the Emerging Issues Task Force (“EITF”) related
to EITF Issue No. 06-04, “Accounting for Deferred
Compensation and Postretirement Benefit Aspects of
Endorsement Split-Dollar Life Insurance Arrangements”
(“EITF 06-04”), which requires the recognition of a liability
related to postretirement benefi ts covered by endorsement
split-dollar life insurance arrangements since the employer
has the obligation to provide the benefi t to the employee.
We have endorsement split-dollar life insurance arrange-
ments for certain offi cers of the Company. The liability is
required to be recognized in accordance with SFAS No.
106, “Employers’ Accounting for Postretirement Benefi ts,
Other Than Pensions,” or Accounting Principles Board
(“APB”) Opinion No. 12, “Omnibus Opinion – 1967,” as
appropriate. For transition purposes, we may adopt EITF
06-04 as a change in accounting principle through either
(1) retrospective application to all periods presented or (2)
a cumulative-effect adjustment to retained earnings. We
will be required to adopt EITF 06-04 on January 1, 2008.
We are currently evaluating the impact of adopting EITF
06-04 on our Consolidated Financial Statements.
In September 2006, the FASB ratifi ed the consensus
reached by the EITF related to EITF Issue No. 06-05,
“Accounting for Purchases of Life Insurance – Determining
the Amount That Could Be Realized in Accordance with
FASB Technical Bulletin No. 85-4, Accounting for Purchases
of Life Insurance” (“EITF 06-05”), which requires that a
policyholder consider additional amounts included in the
contractual terms of the policy in determining the amount