Equifax 2008 Annual Report Download - page 28

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MANAGEMENT’S DISCUSSION AND ANALYSIS continued
terms of any such capital financing would be subject to a continue to guarantee. We believe that the likelihood of
number of factors, including credit market conditions, the demand for payment by us is minimal and expect no mate-
state of the equity markets, general economic conditions, rial losses to occur related to this guarantee. Accordingly,
our credit ratings and our financial performance and we do not have a liability on our Consolidated Balance
condition. Sheets at December 31, 2008 or 2007 related to this
guarantee.
Off-Balance Sheet Transactions
Benefit Plans
Other than facility leasing arrangements and limited foreign
currency hedge activity, we do not engage in off-balance At December 31, 2008, our U.S. Retirement Income Plan,
sheet financing activities. In 1998, we entered into a syn- or USRIP, and the Equifax Inc. Pension Plan, or EIPP, met
thetic lease on our Atlanta corporate headquarters building or exceeded ERISA’s minimum funding requirements. In
in order to obtain favorable financing terms with regard to January 2009, 2007 and 2006, we made contributions of
this facility. This $29.0 million lease expires in March 2010. $15.0 million, $12.0 million and $20.0 million, respectively,
Lease payments for the remaining term totaled $2.2 million to the EIPP. We also made a $2.0 million discretionary con-
at December 31, 2008. Under this synthetic lease arrange- tribution in 2006 to fund certain other post-retirement ben-
ment, we have guaranteed the residual value of the leased efit plans. In the future, we will make minimum funding
property to the lessor. In the event that the property were contributions as required and may make discretionary con-
to be sold by the lessor at the end of the lease term, we tributions, depending on certain circumstances, including
would be responsible for any shortfall of the sales pro- market conditions and liquidity needs. We believe additional
ceeds, up to a maximum amount of $23.2 million, which funding contributions, if any, would not prevent us from
equals 80% of the value of the property at the beginning of continuing to meet our liquidity needs, which are primarily
the lease term. The liability for this shortfall, which was funded from cash flows generated by operating activities,
$1.9 million at December 31, 2008, is recorded in other available cash and cash equivalents, and our credit
long-term liabilities on our Consolidated Balance Sheets. facilities.
Pursuant to the terms of the industrial revenue bonds, we For our non-U.S., tax-qualified retirement plans, we fund an
transferred title of certain fixed assets with a cost of amount sufficient to meet minimum funding requirements
$28.4 million, as of December 31, 2008, to a local govern- but no more than allowed as a tax deduction pursuant to
mental authority in the U.S. to receive a property tax abate- applicable tax regulations. For the non-qualified supplemen-
ment related to economic development. The title to these tary retirement plans, we fund the benefits as they are paid
assets will revert back to us upon retirement or cancellation to retired participants, but accrue the associated expense
of the applicable bonds. These fixed assets are still recog- and liabilities in accordance with GAAP.
nized in the Company’s Consolidated Balance Sheet as all For additional information about our benefit plans, see
risks and rewards remain with the Company. Note 9 of the Notes to Consolidated Financial Statements
in this Annual Report.
Letters of Credit and Guarantees
We will from time to time issue standby letters of credit, Seasonality
performance bonds or other guarantees in the normal We experience seasonality in certain of our revenue
course of business. The aggregate notional amount of all streams. Revenue generated from The Work Number and
performance bonds and standby letters of credit was not Tax and Talent Management business units within the TALX
material at December 31, 2008, and all have a maturity of operating segment is generally higher in the first quarter
two years or less. Guarantees are issued from time to time due primarily to the provision of Form W-2 preparation ser-
to support the needs of our operating units. vices which occur in the first quarter each year. Revenue
In connection with the sale of our risk management collec- from our OCIS and Mortgage Solutions business units
tions business to RMA Holdings, LLC, or RMA, in October tends to increase in periods of the year in which our cus-
2000, we guaranteed the operating lease payments of a tomers have higher volumes of credit granting decisions,
partnership affiliated with RMA to a lender of the partner- most commonly the second and third calendar quarters.
ship pursuant to a term loan. The operating lease, which
expires December 31, 2011, has a remaining balance of Effects of Inflation and Changes
$4.0 million, based on the undiscounted value of remaining in Foreign Currency Exchange Rates
lease payments, including real estate taxes, at Decem- Equifax’s operating results are not materially affected by
ber 31, 2008. On September 12, 2005, RMA sold substan- inflation, although inflation may result in increases in the
tially all of its assets to NCO Group, Inc., or NCO. In con- Company’s expenses, which may not be readily recover-
junction with this sale, NCO agreed to assume the able in the price of services offered. To the extent inflation
operating lease obligations discussed above, which we will results in rising interest rates and has other adverse effects
26 EQUIFAX INC.