Equifax 2015 Annual Report Download - page 47

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– 46 –
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.
The debt collections and recovery management revenue is calculated as a percentage of debt collected on behalf of the
customer and, as such, is primarily recognized when the cash is collected assuming all other revenue recognition criteria are
met.
Deferred revenue consists of amounts billed in excess of revenue recognized on sales of our information services
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.
Cost of Services. Cost of services consist primarily of (1) data acquisition and royalty fees; (2) customer service
costs, which include: personnel costs to collect, maintain and update our proprietary databases, to develop and maintain
software application platforms and to provide consumer and customer call center support; (3) hardware and software expense
associated with transaction processing systems; (4) telecommunication and computer network expense; and (5) occupancy
costs associated with facilities where these functions are performed by Equifax employees.
Selling, General and Administrative Expenses. Selling, general and administrative expenses consist primarily of
personnel-related costs, restructuring costs, corporate costs, fees for professional and consulting services, advertising costs, and
other costs of administration.
Advertising. Advertising costs from continuing operations, which are expensed as incurred, totaled $65.1 million,
$57.1 million and $57.5 million during 2015, 2014 and 2013, respectively.
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 taxable 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,
2015 2014 2013
(Inmillions)
Weighted-average shares outstanding (basic) 118.7 121.2 121.2
Effect of dilutive securities:
Stock options and restricted stock units 2.2 2.3 2.5
Weighted-average shares outstanding (diluted) 120.9 123.5 123.7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
63
CONTENTS