Equifax 2013 Annual Report Download - page 25

45 EQUIFAX 2013 ANNUAL REPORT
We financed this purchase with available cash, borrowings under our
CP Program, and the issuance in December 2012 of 3.30%, ten-year
unsecured Senior Notes. The 3.30% Senior Notes are further
described in Note 6 of the Notes to the Consolidated Financial
Statements.
To further broaden our product offerings, during the twelve months
ended December 31, 2012, we completed smaller acquisitions of
information services businesses in the European and Latin American
regions of our International segment totaling $16.5 million. The results
of these acquisitions have been included in our operating results
subsequent to the date of acquisition and are not material.
2011 Acquisitions and Investments. On August 1, 2011, to further
enhance our market position, we acquired DataVision Resources,
which provides data and business solutions to the mortgage, insur-
ance and financial services industries, for $50.0 million. The results of
this acquisition have been included in our Workforce Solutions seg-
ment subsequent to the date of acquisition.
To further broaden our product offerings, during the twelve months
ended December 31, 2011, we completed smaller acquisitions of
information services businesses in the European and Latin American
regions of our International segment as well as our U.S. Consumer
Information Solutions and Workforce Solutions segments for $82.4
million. The results of these acquisitions have been included in our
operating results subsequent to the date of acquisition and are not
material.
Purchase Price Allocation. The following table summarizes the
estimated fair value of the net assets acquired and the liabilities
assumed at the acquisition dates. The 2013 allocations are
considered final, except for the resolution of certain contingencies all
of which existed at the acquisition date, primarily related to working
capital settlement, sales tax exposures and income tax accounts,
which will be resolved when final returns are filed related to the
acquired entities. Estimates for these items have been included in the
purchase price allocations and will be finalized prior to the one year
anniversary date of the acquisitions.
December 31,
(In millions) 2013 2012
Current assets $ 12.9 $ 21.3
Property and equipment 1.4 1.2
Other assets 5.9 0.1
Identifiable intangible assets
(1)
46.4 524.7
Indefinite lived intangible assets —158.8
Goodwill
(2)
55.3 321.3
Total assets acquired 121.9 1,027.4
Total liabilities assumed (19.9) (7.4)
Non-controlling interest (3.2) (2.7)
Net assets acquired $ 98.8 $1,017.3
(1) Identifiable intangible assets are further disaggregated in the
following table.
(2) Of the goodwill resulting from 2013 and 2012 acquisitions, $1.2
million and $309.3 million, respectively, is tax deductible.
The primary reasons the purchase price of these acquisitions
exceeded the fair value of the net assets acquired, which resulted in
the recognition of goodwill, were future tax savings which are not
recorded apart from goodwill, expanded growth opportunities from
new or enhanced product offerings, cost savings from the elimination
of duplicative activities, and the acquisition of an assembled work-
force that are not recognized as assets apart from goodwill.
December 31,
2013 2012
Intangible asset category Fair value
Weighted-average
useful life Fair value
Weighted-average
useful life
(in millions) (in years) (in millions) (in years)
Customer relationships $27.6 8.3 $ 4.5 8.7
Acquired software and technology 4.2 4.3 0.7 5.7
Purchased data files 8.4 5.0 508.8 15.0
Non-compete agreements 3.1 4.0 10.3 4.9
Trade names and other intangible assets 3.1 6.3 0.4 5.0
Total acquired intangibles $46.4 6.9 $524.7 14.7
The 2013 acquisitions did not have a material impact in the Company’s Consolidated Statements of Income. The impact of the 2013 acquisi-
tions would not have significantly changed our Consolidated Statements of Income if they had occurred at the beginning of the earliest year
presented.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
46 EQUIFAX 2013 ANNUAL REPORT
5. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill. Goodwill represents the cost in excess of the fair value of
the net assets acquired in a business combination. As discussed in
Note 1, goodwill is tested for impairment at the reporting unit level on
an annual basis and on an interim basis if an event occurs or
circumstances change that would more likely than not reduce the fair
value of a reporting unit below its carrying value. We perform our
annual goodwill impairment tests as of September 30 each year. As a
result of the merger of our Brazilian business in the second quarter of
2011, we performed an interim impairment test on the Latin America
reporting unit excluding our Brazilian business which resulted in no
impairment. The fair value estimates for our reporting units were
determined using a combination of the income and market
approaches in accordance with the Company’s methodology. Our
annual impairment tests as of September 30, 2013, 2012 and 2011
resulted in no impairment of goodwill.
Changes in the amount of goodwill for the twelve months ended December 31, 2013 and 2012, are as follows:
(In millions)
U.S. Consumer
Information
Solutions International
Workforce
Solutions
North America
Personal
Solutions
North America
Commercial
Solutions Total
Balance, December 31, 2011 $ 638.4 $348.5 $935.0 $ 1.8 $37.5 $1,961.2
Acquisitions 309.3 12.0 — — — 321.3
Adjustments to initial purchase price
allocation — — (1.0) — — (1.0)
Foreign currency translation — 8.8 — — 0.1 8.9
Balance, December 31, 2012 947.7 369.3 934.0 1.8 37.6 2,290.4
Acquisitions — 40.8 — 14.5 — 55.3
Adjustments to initial purchase price
allocation 87.5 (0.1) — 0.4 — 87.8
Foreign currency translation — (7.6) — — (0.4) (8.0)
Tax benefits of options exercised — — (0.2) — — (0.2)
Businesses sold (2.7) (1.4) (26.1) — — (30.2)
Balance, December 31, 2013 $1,032.5 $401.0 $907.7 $16.7 $37.2 $2,395.1
Indefinite-Lived Intangible Assets. Indefinite-lived intangible assets
consist of indefinite-lived reacquired rights representing the value of
rights which we had granted to various affiliate credit reporting agen-
cies that were reacquired in the U.S. and Canada. At the time we
acquired these agreements, they were considered perpetual in nature
under the accounting guidance in place at that time and, therefore,
the useful lives are considered indefinite. Indefinite-lived intangible
assets are not amortized. We are required to test indefinite-lived
intangible assets for impairment annually and whenever events or
circumstances indicate that there may be an impairment of the asset
value. We perform our annual indefinite-lived intangible asset impair-
ment test as of September 30. Our 2013 annual impairment test
completed during the third quarter of 2013 resulted in no impairment
of indefinite-lived intangible assets.
(In millions) Amount
Balance, December 31, 2011 $ 95.6
Acquisitions $ 158.8
Foreign currency translation 0.1
Balance, December 31, 2012 254.5
Purchase price adjustment (158.8)
Foreign currency translation (0.2)
Balance, December 31, 2013 $ 95.5
During the third quarter of 2013, we recorded adjustments to the
purchased intangible assets and related accumulated amortization
previously recorded in connection with our December 28, 2012
acquisition of certain credit services business assets and operations
of Computer Sciences Corporation. This correction resulted in the
establishment of $73.3 million of finite-lived reacquired rights which
will be amortized over 5.6 years, an increase in goodwill of $85.5 mil-
lion and a reduction of our indefinite-lived intangible assets of
$158.8 million.