Equifax 2012 Annual Report Download - page 56

54 Equifax 2012 Annual Report
6.9% Debentures. We have $125 million of debentures outstanding
with a maturity date of 2028. The debentures are unsecured and rank
equally with all of our other unsecured and unsubordinated
indebtedness.
Cash paid for interest was $53.0 million, $54.0 million and
$55.6 million during the twelve months ended December 31, 2012,
2011 and 2010, respectively.
7. COMMITMENTS AND CONTINGENCIES
Leases. Our operating leases principally involve office space and
office equipment. Rental expense for operating leases, which is
recognized on a straight-line basis over the lease term, was
$22.3 million, $22.0 million and $20.5 million for the twelve months
ended December 31, 2012, 2011 and 2010, respectively. Our
headquarters building ground lease has purchase options exercisable
beginning in 2019, renewal options exercisable in 2048 and escala-
tion clauses that began in 2009. Expected future minimum payment
obligations for non-cancelable operating leases exceeding one year
are as follows as of December 31, 2012:
Years ending December 31,
(In millions) Amount
2013 $20.7
2014 15.0
2015 11.7
2016 8.0
2017 6.1
Thereafter 32.8
$94.3
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, TCS and others to out-
source 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 2013 and 2018. The estimated
aggregate minimum contractual obligation remaining under these
agreements is approximately $70 million as of December 31, 2012,
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 2012, we amended certain portions and terminated certain
other portions of our operations support services agreement for
North America with IBM. The amended agreement extends certain
terms two years through December 2016 and changes certain vari-
able cost to fixed cost intended to provide financial savings to the
Company. During 2011, we amended our operations support
services agreement in North America with IBM. The amended agree-
ment extended the term one year through December 2014 and
changed certain variable cost to fixed cost intended to provide
financial savings to the Company. During 2010, we amended our
data processing outsourcing agreement with IBM in the U.K. The
amended agreement extended 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 covers our operations in North
America, Europe, Peru and Chile), we have outsourced certain of 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 $60 million for the remaining term, with no individual
year’s minimum expected to exceed approximately $30 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 agree-
ment. During 2012, 2011 and 2010, we paid $70.5 million,
$79.7 million and $61.1 million, respectively, for these services.
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 three-year term and
automatically renew for another three years unless we elect not to
renew the agreements. Change in control events potentially triggering
benefits under the agreements would occur, subject to certain excep-
tions, 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 vot-
ing 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued