Equifax 2007 Annual Report Download - page 47

EQUIFAX | 2007 ANNUAL REPORT 45
We have not experienced signifi cant variances between our
estimates of marketing information services revenues reported to
us by our customers and actual reported volumes in the past. We
monitor actual volumes to ensure that we will continue to make
reasonable estimates in the future. If we determine that we are unable
to make reasonable future estimates, revenue may be deferred
until actual customer data is obtained. However, if actual results
are not consistent with our estimates and assumptions, or if our
customer arrangements become more complex or include more
bundled offerings in the future, we may be required to recognize
revenue differently in the future to account for these changes. We
do not believe there is a reasonable likelihood that there will be a
material change in the future estimates or assumptions we use to
recognize revenue.
Goodwill
In accordance with SFAS No. 142, “Goodwill and Other Intangible
Assets,” or SFAS 142, goodwill is tested for impairment at the
reporting unit level on an annual basis or on an interim basis if an
event occurs or circumstances change that would reduce the fair
value of a reporting unit below its carrying value.
Judgments and uncertainties. In analyzing goodwill for potential
impairment, we use projections of future discounted cash fl ows
from our reporting units to determine whether the reporting unit’s
estimated fair value exceeds its carrying value. These projections
of cash fl ows are based on our views of growth rates, anticipated
future economic conditions and the appropriate discount rates
relative to risk and estimates of residual values. Our estimates of
fair value for each reporting unit are corroborated by market multiple
comparables. The use of different estimates or assumptions within
our projected discounted cash fl ows could result in different values
and could result in a goodwill impairment charge. Additionally, a
change in our reporting unit structure would result in the requirement
to test goodwill for impairment at different reporting units.
Effect if actual results differ from assumptions. We believe that
our estimates are consistent with assumptions that marketplace
participants would use in their estimates of fair value. Additionally,
we do not believe there is a reasonable likelihood that there will
be a material change in the future estimates or assumptions we use
to test for goodwill impairment. However, if actual results are not
consistent with our estimates and assumptions, we may be exposed
to an impairment charge that could be material.
Indefinite-Lived Intangible Assets
Indefi nite-lived intangible assets consist of contractual/territorial
rights representing the estimated fair value of rights to operate in
certain territories acquired through the purchase of independent
credit reporting agencies in the U.S. and Canada. Our contractual/
territorial rights are perpetual in nature and, therefore, the useful
lives are considered indefi nite. In accordance with SFAS 142, we
are required to test indefi nite-lived intangible assets for impairment
annually or whenever events and circumstances change that would
indicate the asset might be impaired.
Judgments and uncertainties. We perform the impairment test for
our indefi nite-lived intangible assets by comparing the asset’s
fair value to its carrying value. We estimate the fair value of our
contractual/territorial rights based on projected discounted future
cash fl ows. The use of different estimates or assumptions within
our discounted cash fl ow model when determining the fair value
of our contractual/territorial rights, or using a methodology other
than a discounted cash fl ow model, could result in different values
for our contractual/territorial rights and could result in an impairment
charge. The most signifi cant assumptions within our discounted
cash fl ow model are the discount rate, growth rate and charge for
contributory assets.
Effect if actual results differ from assumptions. We believe that
our estimates are consistent with assumptions that marketplace
participants would use in their estimates of fair value. Additionally,
we do not believe there is a reasonable likelihood that there will
be a material change in the future estimates or assumptions we use
to test for indefi nite-lived intangible asset impairment. However, if
actual results are not consistent with our estimates and assumptions,
we may be exposed to an impairment charge that could be material.
Loss Contingencies
We are subject to various proceedings, lawsuits and claims arising
in the normal course of our business. In accordance with SFAS No. 5,
“Accounting for Contingencies,” we determine whether to disclose
and/or accrue for loss contingencies based on our assessment of
whether the potential loss is probable, reasonably possible or remote.