Equifax 2008 Annual Report Download - page 46

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
goodwill exceeded its implied value. Due to the impact that employee benefit trust assets, a statutorily-required tax
the fourth quarter decline in the global economy had on deposit and data purchases, net of related amortization.
our business subsequent to our 2008 annual impairment Benefit Plans. We sponsor various pension and defined
testing, we updated our analysis of goodwill impairment at contribution plans covering substantially all our employees
December 31, 2008. No impairment of goodwill was indi- in the U.S., Canada and U.K. We also maintain certain
cated based on the updated analysis. healthcare and life insurance benefit plans for eligible retired
Contractual/territorial rights represent the estimated fair U.S. employees. Benefits under the pension and other pos-
value of rights to operate in certain territories acquired tretirement benefit plans are generally based on age at
through the purchase of independent credit reporting agen- retirement and years of service and for some pension
cies in the U.S. and Canada. Our contractual/territorial plans, benefits are also based on the employee’s annual
rights are perpetual in nature and, therefore, the useful lives earnings. The net periodic cost of our pension and other
are considered indefinite. Indefinite-lived intangible assets postretirement plans is determined using several actuarial
are not amortized. In accordance with SFAS 142, we are assumptions, the most significant of which are the discount
required to test indefinite-lived intangible assets for impair- rate, the long-term rate of asset return, and medical trend
ment annually or whenever events and circumstances indi- data.
cate that there may be an impairment of the asset value. Effective January 1, 2007, we adopted SFAS No. 158,
Our annual impairment test date is September 30. We per- ‘‘Employers’ Accounting for Defined Benefit Pension and
form the impairment test for our indefinite-lived intangible Other Postretirement Plans — an amendment of FASB
assets by comparing the asset’s fair value to its carrying Statements No. 87, 88, 106 and 132R,’’ which requires
value. We estimate the fair value based on projected dis- that our Consolidated Balance Sheets reflect the funded
counted future cash flows. An impairment charge is recog- status of the pension and postretirement plans.
nized if the asset’s estimated fair value is less than its car-
rying value. Foreign Currency Translation. The functional currency of
each of our foreign subsidiaries is that subsidiary’s local
We completed our annual impairment testing for goodwill currency. We translate the assets and liabilities of foreign
and indefinite-lived intangible assets during the twelve subsidiaries at the year-end rate of exchange and revenue
months ended December 31, 2008, 2007, and 2006, and and expenses at the monthly average rates during the year.
we determined that there was no impairment in any of We record the resulting translation adjustment in other
these years. comprehensive income, a component of shareholders’
Purchased Intangible Assets. Purchased intangible equity. We also record gains and losses resulting from the
assets represent the estimated fair value of acquired intan- translation of intercompany balances of a long-term invest-
gible assets used in our business. Purchased data files ment nature in accumulated other comprehensive loss.
represent the estimated fair value of consumer credit files Financial Instruments. Our financial instruments consist
acquired primarily through the purchase of independent primarily of cash and cash equivalents, accounts and notes
credit reporting agencies in the U.S. and Canada. We receivable, accounts payable and short-term and long-term
expense the cost of modifying and updating credit files in debt. The carrying amounts of these items, other than
the period such costs are incurred. We amortize purchased long-term debt, approximate their fair market values due to
data files, which primarily consist of acquired credit files, on the short-term nature of these instruments. As of Decem-
a straight-line basis. All of our other purchased intangible ber 31, 2008 and 2007, the fair value of our fixed-rate debt
assets are also amortized on a straight-line basis. (determined internally through the use of related public
financial information) was $597.7 million and $776.0 million,
Useful Life respectively, compared to its carrying value of $767.1 mil-
Asset (in years) lion and $790.6 million, respectively.
Purchased data files 2 to 15 Fair Value Measurements. In September 2006, the FASB
Acquired software and technology 1 to 15 issued SFAS No. 157, ‘‘Fair Value Measurements’’, or
Non-compete agreements 1 to 10 SFAS 157, which provides guidance for measuring the fair
value of assets and liabilities and requires expanded disclo-
Proprietary database 6
sures about fair value measurements. SFAS 157 indicates
Customer relationships 2 to 25 that fair value should be determined based on the assump-
Trade names 1 to 15 tions marketplace participants would use in pricing the
Other Assets. Other assets on our Consolidated Balance asset or liability and provides additional guidelines to con-
Sheets primarily represents the cash surrender value of life sider in determining the market-based measurement. We
insurance policies covering certain officers of the Company, adopted SFAS 157 on January 1, 2008 for financial assets
and financial liabilities. In February 2008, the FASB issued
44 EQUIFAX INC.