Equifax 2008 Annual Report Download - page 59

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A reconciliation of the beginning and ending amount of options and nonvested stock. These plans are described
unrecognized tax benefits is as follows: below. Total stock-based compensation expense in our
Consolidated Statements of Income during the twelve
months ended December 31, 2008, 2007 and 2006, was
December 31,
as follows:
(In millions) 2008 2007
Beginning balance (January 1) $ 29.4 $ 26.7 Twelve Months Ended
December 31,
Increases related to prior year tax
positions 1.7 1.5 (in millions) 2008 2007 2006
Decreases related to prior year tax Cost of services $ 2.4 $ 1.9 $ 1.3
positions (1.8) (0.8) Selling, general and
Increases related to current year tax administrative expenses 17.5 15.7 16.1
positions 2.0 2.3
Stock-based
Decreases related to settlements (0.4) (1.3) compensation expense,
Expiration of the statute of before income taxes $ 19.9 $ 17.6 $ 17.4
limitations for the assessment of
taxes (13.3) (0.6) The total income tax benefit recognized for stock-based
Purchase accounting 0.9 0.4 compensation expense was $7.1 million, $6.3 million and
Currency translation adjustment (2.7) 1.2 $6.0 million for the twelve months ended December 31,
2008, 2007 and 2006, respectively.
Ending balance (December 31) $ 15.8 $ 29.4
SFAS 123R requires that benefits of tax deductions in
We recorded liabilities of $22.3 million and $37.6 million for excess of recognized compensation cost be reported as a
unrecognized tax benefits as of December 31, 2008 and financing cash flow, rather than as an operating cash flow.
2007, respectively, which included interest and penalties of This requirement reduced operating cash flows and
$6.5 million and $8.2 million, respectively. As of Decem- increased financing cash flows by $2.1 million, $7.0 million
ber 31, 2008 and 2007, the total amount of unrecognized and $7.2 million during the twelve months ended Decem-
benefits that, if recognized, would have affected the effec- ber 31, 2008, 2007 and 2006, respectively.
tive tax rate was $17.8 million and $30.0 million, respec-
Stock Options. Our shareholders approved in May 2008 a
tively, which included interest and penalties of $5.0 million stock option plan, the 2008 Omnibus Incentive Plan, which
and $5.6 million, respectively. The accruals for potential provides that qualified and nonqualified stock options may
interest and penalties during 2008 and 2007 were be granted to officers and other employees. In conjunction
immaterial. with our acquisition of TALX, we assumed options out-
Equifax and its subsidiaries are subject to U.S. federal, standing under the legacy TALX stock option plan, which
state and international income taxes. We are generally no was approved by TALX shareholders. In addition, stock
longer subject to federal, state or international income tax options remain outstanding under three shareholder-
examinations by tax authorities for years before 2002, with approved plans and three non-shareholder-approved plans
few exceptions including those discussed below for from which no new grants may be made. The 2008 Omni-
Canada and the U.K. In Canada, we are under audit by the bus Incentive Plan requires that stock options be granted
Canada Revenue Agency for the 1995 through 2002 tax at exercise prices not less than market value on the date of
years (see Note 5 of the Notes to Consolidated Financial grant. Generally, stock options are subject to graded vest-
Statements). For the U.K., tax years after 1999 are open ing for periods of up to three years based on service, with
for examination. Due to the potential for resolution of state 33% vesting for each year of completed service, and expire
and foreign examinations, and the expiration of various ten years from the grant date.
statutes of limitations, it is reasonably possible that We use the binomial model to calculate the fair value of
Equifax’s gross unrecognized tax benefit balance may stock options granted on or after January 1, 2006. The
change within the next twelve months by a range of zero binomial model incorporates assumptions regarding antici-
to $6.0 million, related primarily to issues involving U.K. pated employee exercise behavior, expected stock price
operations. volatility, dividend yield and risk-free interest rate. Antici-
pated employee exercise behavior and expected
post-vesting cancellations over the contractual term used in
7. STOCK-BASED COMPENSATION the binomial model were primarily based on historical exer-
We have two active share-based award plans that provide cise patterns. These historical exercise patterns indicated
our directors, officers and certain employees with stock
2008 ANNUAL REPORT 57