Equifax 2009 Annual Report Download - page 60

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
Certain of our credit agreements include provisions which require us reached a settlement on another class action litigation matter within
to make payments to preserve an expected economic return to the our USCIS operating segment during 2009 and recorded a loss
lenders if that economic return is diminished due to certain changes contingency in selling, general and administrative expense on our
in law or regulations. In certain of these credit agreements, we also Consolidated Balance Sheet for the estimated amount of our liability.
bear the risk of certain changes in tax laws that would subject The combined impact of these matters was a net reversal of
payments to non-U.S. lenders to withholding taxes. $0.8 million of expense in 2009. The remaining accrual related to
these matters at December 31, 2009, was not material. The liability
at December 31, 2008, was $4.0 million.
In conjunction with certain transactions, such as sales or purchases
of operating assets or services in the ordinary course of business,
or the disposition of certain assets or businesses, we sometimes For other legal proceedings, claims and litigation, we have recorded
provide routine indemnifications, the terms of which range in dura- loss contingencies that are immaterial, or we cannot reasonably
tion and sometimes are not limited. estimate the potential loss because of uncertainties about the out-
come of the matter and the amount of the loss or range of loss. We
also accrue for unpaid legal fees for services performed to date.
The Company has entered into indemnification agreements with its Although the final outcome of these other matters cannot be pre-
directors and executive officers. Under these agreements, the Com- dicted with certainty, any possible adverse outcome arising from
pany has agreed to indemnify such individuals to the fullest extent these matters is not expected to have a material impact on our
permitted by law against liabilities that arise by reason of their status Consolidated Financial Statements, either individually or in the
as directors or officers and to advance expenses incurred by such aggregate. However, our evaluation of the likely impact of these
individuals in connection with the related legal proceedings. The matters may change in the future.
Company maintains directors and officers liability insurance cover-
age to reduce its exposure to such obligations.
Tax Matters. In 2003, the Canada Revenue Agency, or CRA, issued
Notices of Reassessment asserting that Acrofax, Inc., our wholly-
We cannot reasonably estimate our potential future payments under owned Canadian subsidiary, is liable for additional tax for the 1995
the indemnities and related provisions described above because we through 2000 tax years, related to certain intercompany capital con-
cannot predict when and under what circumstances these provi- tributions and loans. The additional tax sought by the CRA for these
sions may be triggered. We have no accrual related to indemnifica- periods ranges, based on alternative theories, from $8.2 million
tions on our Consolidated Balance Sheets at December 31, 2009 (8.5 million in Canadian dollars) to $18.2 million (19.0 million in
and 2008. Canadian dollars) plus interest and penalties. Subsequently in 2003,
we made a statutorily-required deposit for a portion of the claim.
Subsidiary Dividend and Fund Transfer Limitations. The ability of We intend to vigorously contest these reassessments and do not
some of our subsidiaries and associated companies to transfer believe we have violated any statutory provision or rule. While we
funds to us is limited, in some cases, by certain restrictions believe our potential exposure is less than the asserted claims and
imposed by foreign governments, which do not, individually or in the not material to our Consolidated Financial Statements, if the final
aggregate, materially limit our ability to service our indebtedness, outcome of this matter was unfavorable to us, an additional claim
meet our current obligations or pay dividends. may be filed by the local province. The likelihood and potential
amount of such claim is unknown at this time. We cannot predict
Contingencies. We are involved in legal proceedings, claims and when this tax matter will be resolved.
litigation arising in the ordinary course of business. We periodically
assess our exposure related to these matters based on the informa-
tion which is available. We have recorded accruals in our Consoli- 6. INCOME TAXES
dated Financial Statements for those matters in which it is probable We record deferred income taxes using enacted tax laws and rates
that we have incurred a loss and the amount of the loss, or range for the years in which the taxes are expected to be paid. Deferred
of loss, can be reasonably estimated. income tax assets and liabilities are recorded based on the differ-
ences between the financial reporting and income tax bases of
During 2006, we recorded a $4.0 million, pretax, loss contingency assets and liabilities. For additional information about our income tax
($2.5 million, net of tax) associated with certain litigation matters policy, see Note 1 of the Notes to Consolidated Financial
within our USCIS operating segment on our Consolidated Balance Statements.
Sheet. In 2009, we entered into a preliminary settlement which, net
of insurance, required less than the full amount reserved. We also
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