Equifax 2011 Annual Report Download - page 32

related 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 statistical models is recognized as the service is provided
and accepted, assuming all other revenue recognition criteria are
met. The direct costs of set up of a customer are capitalized and
amortized as a cost of service during the term of the related
customer contract.
We have some multiple element arrangements that include software.
We recognize the elements for which we have established vendor
specific objective evidence at fair value upon delivery, in accordance
with the applicable guidance.
We record revenue on a net basis for those sales in which we have in
substance acted as an agent or broker in the transaction.
Deferred revenue consists of amounts billed in excess of revenue
recognized on sales relating generally to the deferral of subscription
fees and arrangement consideration from elements not meeting the
criteria for having stand-alone value discussed above. Deferred
revenues are subsequently recognized as revenue in accordance with
our revenue recognition policies.
Judgments and uncertainties — Each element of a multiple element
arrangement must be considered separately to ensure that appropri-
ate accounting is performed for these deliverables. These
considerations include assessing the price at which the element is
sold compared to its relative fair value; concluding when the element
will be delivered; evaluating collectability; and determining whether
any contingencies exist in the related customer contract that impact
the prices paid to us for the services.
In addition, the determination of certain of our marketing information
services and tax management services revenue requires the use of
estimates, 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
based on average actual volumes reported in the past. Differences
between our estimates and actual final volumes reported are
recorded in the period in which actual volumes are reported.
Effects if actual results differ from assumptions — We have not
experienced significant variances between our estimates of marketing
information services and tax management services revenues reported
to us by our customers and actual reported volumes in the past. We
monitor actual volumes to ensure that we will continue to make
reasonable estimates in the future. If we determine that we are unable
to make reasonable future estimates, revenue may be deferred until
actual customer data is obtained. However, if actual results are not
consistent with our estimates and assumptions, or if our customer
arrangements become more complex or include more bundled offer-
ings in the future, we may be required to recognize revenue differently
in the future to account for these changes. We do not believe there is
a reasonable likelihood that there will be a material change in the
future estimates or assumptions we use to recognize revenue.
Goodwill and Indefinite-Lived Intangible Assets
We review goodwill and indefinite lived intangible assets for impair-
ment annually (as of September 30) and whenever events or changes
in circumstances indicate the carrying value of an asset may not be
recoverable. These events or circumstances could include a
significant change in the business climate, legal factors, operating
performance or trends, competition, or sale or disposition of a
significant portion of a reporting unit. We have ten reporting units
comprised of Consumer Information Solutions (which includes part of
Online Consumer Information Solutions, Mortgage Solutions and
Consumer Financial Marketing Services), Identity Management (part
of Online Consumer Information Solutions), Europe, Latin America,
Canada Consumer, North America Personal Solutions, North America
Commercial Solutions, Verification Services, Tax Management
Services (part of Employer Services) and Talent Management
Services (part of Employer Services).
The goodwill balance at December 31, 2011, for our ten reporting
units was as follows:
December 31,
(In millions) 2011
Consumer Information Solutions $ 583.9
ID Management 54.5
Europe 114.3
Latin America 204.0
Canada Consumer 30.2
North America Personal Solutions 1.8
North America Commercial Solutions 37.4
Verification Services 740.1
Tax Management Services 168.9
Talent Management Services 26.1
Total goodwill $1,961.2
As permitted by applicable accounting rules, the fair values of
Consumer Information Solutions, Latin America, Europe, Canada
Consumer, North America Personal Solutions, and North America
Commercial Solutions were not calculated at September 30, 2011 as
(a) the assets and liabilities that make up the reporting unit have not
changed significantly since their most recent fair value determination,
(b) the most recent fair value determination resulted in an amount that
exceeded the carrying amount of the reporting unit by a substantial
margin and (c) based on an analysis of events that have occurred and
circumstances that have changed since the most recent fair value
determination, the likelihood that a current fair value determination
would be less than the current carrying amount of the reporting unit
is remote.
Judgments and Uncertainties — In determining the fair value of our
reporting units, we used a combination of the income and market
approaches to estimate the reporting unit’s business enterprise value.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued
EQUIFAX 2011 ANNUAL REPORT
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