Equifax 2012 Annual Report Download - page 47

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Equifax 2012 Annual Report
Stock-Based Compensation. We recognize the cost of stock-based
payment transactions in the financial statements over the period
services are rendered according to the fair value of the stock-based
awards issued. All of our stock-based awards, which are stock
options and nonvested stock, are classified as equity instruments.
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
between the financial statement and tax bases of assets and
liabilities, as measured by current enacted tax rates. We assess
whether it is more likely than not that we will generate sufficient tax-
able income to realize our deferred tax assets. We record a valuation
allowance, as necessary, to reduce our deferred tax assets to the
amount of future tax benefit that we estimate is more likely than not
to be realized.
We record tax benefits for positions that we believe are more likely
than not of being sustained under audit examinations. We assess the
potential outcome of such examinations to determine the adequacy
of our income tax accruals. We recognize interest and penalties
accrued related to unrecognized tax benefits in the provision for
income taxes on our Consolidated Statements of Income. We adjust
our income tax provision during the period in which we determine
that the actual results of the examinations may differ from our
estimates or when statutory terms expire. Changes in tax laws and
rates are reflected in our income tax provision in the period in which
they occur.
Earnings Per Share. Our basic earnings per share, or EPS, is
calculated as net income divided by the weighted-average number of
common shares outstanding during the reporting period. Diluted EPS
is calculated to reflect the potential dilution that would occur if stock
options or other contracts to issue common stock were exercised
and resulted in additional common shares outstanding. The net
income amounts used in both our basic and diluted EPS calculations
are the same. A reconciliation of the weighted-average outstanding
shares used in the two calculations is as follows:
Twelve Months Ended
December 31,
(In millions) 2012 2011 2010
Weighted-average shares
outstanding (basic) 119.9 121.9 124.8
Effect of dilutive securities:
Stock options and restricted
stock units 2.6 1.8 1.7
Weighted-average shares
outstanding (diluted) 122.5 123.7 126.5
For the twelve months ended December 31, 2012, 2011 and 2010,
0.1 million, 2.3 million and 3.3 million stock options, respectively,
were anti-dilutive and therefore excluded from this calculation.
Cash Equivalents. We consider all highly-liquid investments with an
original maturity of three months or less to be cash equivalents.
Trade Accounts Receivable and Allowance for Doubtful
Accounts. We do not recognize interest income on our trade
accounts receivable. Additionally, we generally do not require col-
lateral from our customers related to our trade accounts receivable.
The allowance for doubtful accounts for estimated losses on trade
accounts receivable is based on historical write-off experience, an
analysis of the aging of outstanding receivables, customer payment
patterns and the establishment of specific reserves for customers in
an adverse financial condition. We reassess the adequacy of the
allowance for doubtful accounts each reporting period. Increases to
the allowance for doubtful accounts are recorded as bad debt
expense, which are included in selling, general and administrative
expenses on the accompanying Consolidated Statements of Income.
Bad debt expense from continuing operations was $2.1 million,
$2.8 million and $0.8 million during the twelve months ended
December 31, 2012, 2011, and 2010, respectively.
Long-Lived Assets. Property and equipment are stated at cost less
accumulated depreciation and amortization. The cost of additions is
capitalized. Property and equipment are depreciated on a straight-
line basis over the assets’ estimated useful lives, which are generally
three to ten years for data processing equipment and capitalized
internal-use software and systems costs. Leasehold improvements
are depreciated over the shorter of their estimated useful lives or
lease terms that are reasonably assured. Buildings are depreciated
over a forty-year period. Other fixed assets are depreciated over three
to seven years. Upon sale or retirement of an asset, the related costs
and accumulated depreciation are removed from the accounts and
any gain or loss is recognized and included in income from opera-
tions on the Consolidated Statements of Income, with the
classification of any gain or loss dependent on the characteristics of
the asset sold or retired.
Certain internal-use software and system development costs are
capitalized. Accordingly, the specifically identified costs incurred to
develop or obtain software, which is intended for internal use are not
capitalized until the determination is made as to the availability of a
technically feasible solution to solve the predefined user and operat-
ing performance requirements as established during the preliminary
stage of an internal-use software development project. Costs
incurred during a software development project’s preliminary stage
and post-implementation stage are expensed as incurred. Application
development activities that are eligible for capitalization include
software design and configuration, development of interfaces, coding,
testing, and installation. Capitalized internal-use software and
systems costs are subsequently amortized on a straight-line basis
over a three- to ten-year period after project completion and when
the related software or system is ready for its intended use.