Equifax 2009 Annual Report Download - page 46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
revenue is derived from our processing of transactions related to the services provided by our decisioning technologies personnel, train-
provision of information services to our customers, in which case ing services, statistical models and other services. To account for
revenue is recognized, assuming all other revenue recognition crite- each of these elements separately, the delivered elements must
ria are met, when the services are provided. A smaller portion of our have stand-alone value to our customer, and there must exist objec-
revenues relate to subscription-based contracts under which a cus- tive and reliable evidence of the fair value for any undelivered ele-
tomer pays a preset fee for a predetermined or unlimited number of ments. For certain customer contracts, the total arrangement fee is
transactions or services provided during the subscription period, allocated to the undelivered elements based on their fair values and
generally one year. Revenue related to subscription-based contracts to the initial delivered elements using the residual method. If we are
having a preset number of transactions is recognized as the ser- unable to unbundle the arrangement into separate units of account-
vices are provided, using an effective transaction rate as the actual ing, we apply one of the accounting policies described above. This
transactions are completed. Any remaining revenue related to unful- may lead to the arrangement consideration being recognized as the
filled units is not recognized until the end of the related contract’s final contract element is delivered to our customer.
subscription period. Revenue related to subscription-based con-
tracts having an unlimited volume is recognized ratably during the Many of our multiple element arrangements involve the delivery of
contract term. Revenue is recorded net of sales taxes. services generated by a combination of services provided by one or
more of our operating segments. No individual information service
If at the outset of an arrangement, we determine that collectibility is impacts the value or usage of other information services included in
not reasonably assured, revenue is deferred until the earlier of when an arrangement and each service can be sold alone or, in most
collectibility becomes probable or the receipt of payment. If there is cases, purchased from another vendor without affecting the quality
uncertainty as to the customer’s acceptance of our deliverables, of use or value to the customer of the other information services
revenue is not recognized until the earlier of receipt of customer included in the arrangement. Some of our products require the
acceptance or expiration of the acceptance period. If at the outset development of interfaces or platforms by our decisioning technolo-
of an arrangement, we determine that the arrangement fee is not gies personnel that allow our customers to interact with our proprie-
fixed or determinable, revenue is deferred until the arrangement fee tary information databases. These development services do not
becomes estimable, assuming all other revenue recognition criteria meet the requirement for having stand-alone value, thus any related
have been met. development fees are deferred when billed and are recognized over
the expected period that the customer will benefit from the related
decisioning technologies service. Revenue from the provision of sta-
The determination of certain of our marketing information services
tistical models is recognized as the service is provided and
and tax management services revenue requires the use of esti-
accepted, assuming all other revenue recognition criteria are met.
mates, principally related to transaction volumes in instances where
these volumes are reported to us by our clients on a monthly basis
in arrears. In these instances, we estimate transaction volumes We record revenue on a net basis for those sales in which we have
based on average actual reported volumes reported in the past. in substance acted as an agent or broker in the transaction. The
Differences between our estimates and actual final volumes reported direct costs of set up of a customer are capitalized and amortized
are recorded in the period in which actual volumes are reported. We as a cost of service during the term of the related customer
have not experienced significant variances between our estimates contract.
and actual reported volumes in the past. We monitor actual volumes
to ensure that we will continue to make reasonable estimates in the Deferred revenue consists of amounts billed in excess of revenue
future. If we determine that we are unable to make reasonable recognized on sales of our information services relating generally to
future estimates, revenue may be deferred until actual customer the deferral of subscription fees and arrangement consideration
data is obtained. Also within our TALX operating segment, the fees from elements not meeting the criteria for having stand-alone value
for certain of our tax credits and incentives revenue are based on a discussed above. Deferred revenues are subsequently recognized
portion of the credit delivered to our clients. Revenue for these as revenue in accordance with our revenue recognition policies.
arrangements is recognized based on the achievement of mile-
stones, upon calculation of the credit, or when the credit is utilized
by our client, depending on the provisions of the client contract.
We have certain information solution offerings that are sold as multi-
ple element arrangements. The multiple elements may include con-
sumer or commercial information, file updates for certain solutions,
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