Equifax 2009 Annual Report Download - page 50

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
Fair Value Hedges. In conjunction with our fourth quarter 2009 sale The following table presents liabilities measured at fair value on a
of five-year Senior Notes, we entered into five-year interest rate recurring basis:
swaps, designated as fair value hedges, which convert the debt’s
Fair Value Measurements at Reporting
fixed interest rate to a variable rate. These swaps involve the receipt
Date Using:
of fixed rate amounts for floating interest rate payments over the life
Quoted
of the swaps without exchange of the underlying principal amount.
Prices
Changes in the fair value of the interest rate swaps offset changes
in Active Significant
in the fair value of the fixed-rate Senior Notes they hedge due to Markets for Other Significant
changes in the designated benchmark interest rate and are Fair Value at Identical Observable Unobservable
recorded in interest expense. The fair value liability of these interest December 31, Assets Inputs Inputs
rate swaps at December 31, 2009, was $3.3 million and was Description 2009 (Level 1) (Level 2) (Level 3)
recorded in other long-term liabilities on our Consolidated Balance (In millions)
Sheets. Liabilities:
Deferred Compensation
Plan(1) $ 11.5 $ 11.5 $ — $ —
Cash Flow Hedges. Changes in the fair value of highly effective Fair Value Interest Rate
derivatives designated as cash flow hedges are initially recorded in Swaps(2) 3.3 — 3.3 —
accumulated other comprehensive income and are reclassified into
Total liabilities $ 14.8 $ 11.5 $ 3.3 $ —
the line item in the Consolidated Statements of Income in which the
(1) We maintain deferred compensation plans that allow for certain man-
hedged item is recorded in the same period the hedged item
agement employees to defer the receipt of compensation (such as sal-
impacts earnings. Any ineffective portion is recorded in current ary, incentive compensation and commissions) until a later date based
period earnings. on the terms of the plans. The liability representing benefits accrued for
plan participants is valued at the quoted market prices of the partici-
Our inventory of cash flow hedges at December 31, 2009, con- pants’ elections for investments in variable life insurance policies. Identi-
cal instruments are traded in active markets that we have access to as
sisted of an interest rate swap that expires February 2010 and for-
of December 31, 2009. As such, we have classified this liability as
ward purchase contracts, with an aggregate notional amount of
Level 1 within the fair value hierarchy.
0.8 million euros, to hedge the exposure of certain firm commit- (2) The fair value of our interest rate swaps, designated as fair value
ments of our U.K. subsidiary that are denominated in euros. The fair hedges, is based on the present value of expected future cash flows
value liability of our unsettled cash flow hedges was not material at using zero coupon rates and is classified within Level 2 of the fair value
December 31, 2009. hierarchy.
We entered into interest rate lock agreements in conjunction with Recent Accounting Pronouncements. Noncontrolling Interests. In
our 2007 sale of 6.3% senior notes due 2017 and 7.0% senior December 2007, the FASB issued guidance which established
notes due 2037. These cash flow hedges were settled on June 25 accounting and reporting standards for noncontrolling interests and
and June 26, 2007, the respective dates the ten- and thirty-year for the deconsolidation of a subsidiary. This guidance was effective
senior notes were sold, requiring payment of $1.9 million and prospectively, except for certain retrospective disclosure require-
$3.0 million, respectively. The impact of these settlements has been ments. Our adoption of this guidance on January 1, 2009, did not
recorded in other comprehensive income and is amortized with have a material impact on our Consolidated Financial Statements.
interest expense over the respective terms of the senior notes.
Fair Value Disclosures. In December 2008, the FASB issued guid-
Fair Value Measurements. Fair value is determined based on the ance requiring entities to disclose more information about pension
assumptions marketplace participants use in pricing the asset or asset valuations, investment allocation decisions, and major catego-
liability. We use a three level fair value hierarchy to prioritize the ries of plan assets. These disclosure requirements are effective for
inputs used in valuation techniques between observable inputs that years ending after December 15, 2009. Our adoption did not have
reflect quoted prices in active markets, inputs other than quoted a material impact on our Consolidated Financial Statements.
prices with observable market data and unobservable data (e.g., a
company’s own data). The adoption of fair value guidance for nonfi-
nancial assets and nonfinancial liabilities on January 1, 2009 did not
have a material impact on our Consolidated Financial Statements.
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