Equifax 2009 Annual Report Download - page 47

Cost of Services. Cost of services consist primarily of (1) data common shares outstanding during the reporting period. Diluted
acquisition and royalty fees; (2) customer service costs, which EPS is calculated to reflect the potential dilution that would occur if
include: personnel costs to collect, maintain and update our propri- stock options or other contracts to issue common stock were exer-
etary databases, to develop and maintain software application plat- cised and resulted in additional common shares outstanding. The
forms and to provide consumer and customer call center support; net income amounts used in both our basic and diluted EPS calcu-
(3) hardware and software expense associated with transaction lations are the same. A reconciliation of the weighted-average out-
processing systems; (4) telecommunication and computer network standing shares used in the two calculations is as follows:
expense; and (5) occupancy costs associated with facilities where
these functions are performed by Equifax employees. Twelve Months Ended
December 31,
Selling, General and Administrative Expenses. Selling, general (In millions) 2009 2008 2007
and administrative expenses consist primarily of personnel-related Weighted-average shares outstanding
costs, restructuring costs, corporate costs, fees for professional and (basic) 126.3 128.1 132.0
consulting services, advertising costs, and other costs of
Effect of dilutive securities:
administration.
Stock options and restricted stock
Advertising. Advertising costs, which are expensed as incurred, units 1.4 2.2 2.9
totaled $32.1 million, $28.5 million and $27.5 million during 2009, Long-term incentive plans 0.2 0.1 0.2
2008 and 2007, respectively. Weighted-average shares outstanding
(diluted) 127.9 130.4 135.1
Stock-Based Compensation. We recognize the cost of stock-
based payment transactions in the financial statements over the
For the twelve months ended December 31, 2009, 2008 and 2007,
period services are rendered according to the fair value of the
3.3 million, 2.1 million and 0.6 million stock options, respectively,
stock-based awards issued. All of our stock-based awards, which
were anti-dilutive and therefore excluded from this calculation.
are stock options and nonvested stock, are classified as equity
instruments.
Cash Equivalents. We consider all highly liquid investments with an
original maturity of three months or less to be cash equivalents.
Income Taxes. We account for income taxes under the liability
method. Deferred income tax assets and liabilities are determined
based on the estimated future tax effects of temporary differences Trade Accounts Receivable and Allowance for Doubtful
between the financial statement and tax bases of assets and liabili- Accounts. We do not recognize interest income on our trade
ties, as measured by current enacted tax rates. We periodically accounts receivable. Additionally, we generally do not require collat-
assess whether it is more likely than not that we will generate suffi- eral from our customers related to our trade accounts receivable.
cient taxable income to realize our deferred tax assets. We record a
valuation allowance, as necessary, to reduce our deferred tax assets The allowance for doubtful accounts for estimated losses on trade
to the amount of future tax benefit that we estimate is more likely accounts receivable is based on historical write-off experience, an
than not to be realized. analysis of the aging of outstanding receivables, customer payment
patterns and the establishment of specific reserves for customers in
We record tax benefits for positions that we believe are more likely an adverse financial condition. We reassess the adequacy of the
than not of being sustained under audit examinations. Regularly, we allowance for doubtful accounts each reporting period. Increases to
assess the potential outcome of such examinations to determine the the allowance for doubtful accounts are recorded as bad debt
adequacy of our income tax accruals. We adjust our income tax expense, which are included in selling, general and administrative
provision during the period in which we determine that the actual expenses on the accompanying Consolidated Statements of
results of the examinations may differ from our estimates or when Income. Bad debt expense was $7.6 million, $11.0 million and
statutory terms expire. Changes in tax laws and rates are reflected $7.3 million during the twelve months ended December 31, 2009,
in our income tax provision in the period in which they occur. 2008, and 2007, respectively.
Earnings Per Share. Our basic earnings per share, or EPS, is cal-
culated as net income divided by the weighted-average number of
EQUIFAX 2009 ANNUAL REPORT 45
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