Equifax 2010 Annual Report Download - page 55

2019, renewal options exercisable in 2048 and escalation clauses
that began in 2009. Expected future minimum payment obligations
for non-cancelable operating leases exceeding one year are as fol-
lows as of December 31, 2010:
Years ending December 31,
(In millions) Amount
2011 $17.9
2012 14.8
2013 11.5
2014 7.4
2015 5.7
Thereafter 38.0
$95.3
We have no material sublease agreements and as a result, expected
sublease income is not reflected as a reduction in the total minimum
rental obligations under operating leases in the table above.
Data Processing, Outsourcing Services and Other Agreements.
We have separate agreements with IBM, Acxiom, TCS and others to
outsource portions of our computer data processing operations,
applications development, maintenance and related functions and to
provide certain other administrative and operational services. The
agreements expire between 2011 and 2016. The estimated
aggregate minimum contractual obligation remaining under these
agreements is approximately $100 million as of December 31, 2010,
with no future year’s minimum contractual obligation expected to
exceed approximately $40 million. Annual payment obligations in
regard to these agreements vary due to factors such as the volume
of data processed; changes in our servicing needs as a result of new
product offerings, acquisitions or divestitures; the introduction of
significant new technologies; foreign currency; or the general rate of
inflation. In certain circumstances (e.g., a change in control or for our
convenience), we may terminate these data processing and out-
sourcing agreements, and, in doing so, certain of these agreements
require us to pay a significant penalty.
During 2010, we amended our data processing outsourcing agree-
ment with IBM in the U.K. The amended agreement extends the term
three years through December 2016 and allows for a reduction in the
scope of services provided by IBM, as well as financial savings to the
Company. Under our agreement with IBM (which also covers our
operations in North America, Europe, Brazil and Chile), we have out-
sourced our mainframe and midrange operations, help desk service
and desktop support functions, and the operation of our voice and
data networks. The scope of such services varies by location. The
estimated future minimum contractual obligation under the revised
agreement is approximately $76 million for the remaining term, with
no individual year’s minimum expected to exceed approximately
$36 million. We may terminate certain portions of this agreement
without penalty in the event that IBM is in material breach of the
terms of the agreement. During 2010, 2009 and 2008, we paid
$61.1 million, $87.3 million and $124.0 million, respectively, for these
services.
Agreement with Computer Sciences Corporation. We have an
agreement with Computer Sciences Corporation, or CSC, and certain
of its affiliates, collectively CSC, under which CSC-owned credit
reporting agencies utilize our computerized credit database services.
CSC retains ownership of its credit files and the revenues generated
by its credit reporting activities. We receive a processing fee for
maintaining the database and for each report supplied. The agree-
ment will expire on July 31, 2018 and is renewable at the option of
CSC for successive ten-year periods. The agreement provides us
with an option to purchase CSC’s credit reporting business if it does
not elect to renew the agreement or if there is a change in control of
CSC while the agreement is in effect. Under the agreement CSC also
has an option, exercisable at any time, to sell its credit reporting busi-
ness to us. The option expires in 2013. The option exercise price will
be determined by a third-party appraisal process and would be due
in cash within 180 days after the exercise of the option. We estimate
that if the option were exercised at December 31, 2010, the price
range would approximate $625 million to $700 million. This estimate
is based solely on our internal analysis of the value of the business,
current market conditions and other factors, all of which are subject
to constant change. Therefore, the actual option exercise price could
be materially higher or lower than the estimated amount.
Change in Control Agreements. We have entered into change in
control severance agreements with certain key executives. The
agreements provide for, among other things, certain payments and
benefits in the event of a qualifying termination of employment
(i.e., termination of employment by the executive for ‘‘good reason’’
or termination of employment by the Company without ‘‘cause,’’
each as defined in the agreements) following a change in control of
the Company. In the event of a qualifying termination, the executive
will become entitled to continuation of group health, dental, vision,
life, disability, 401(k) and similar benefits for three years, as well as a
lump sum severance payment, all of which differs by executive.
The change in control agreements have a five-year term and
automatically renew for another five years unless we elect not to
renew the agreements. Change in control events potentially trigger-
ing benefits under the agreements would occur, subject to certain
exceptions, if (1) any person acquires 20% or more of our voting
stock; (2) upon a merger or other business combination, our
shareholders receive less than two-thirds of the common stock and
combined voting power of the new company; (3) we sell or
otherwise dispose of all or substantially all of our assets; or
(4) we liquidate or dissolve.
If these change in control agreements had been triggered as of
December 31, 2010, payments of approximately $39.6 million would
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