SecProbe.io

CORRESP
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filename1.htm

June 3, 2009

Mr. Larry
Spirgel

Assistant
Director

Division
of Corporation Finance

United
States Securities and Exchange Commission

100
F Street, N.E.

Mail
Stop 3720

Washington,
D.C.  20549

  RE:

  Equifax Inc.

  Form 10-K for Fiscal Year Ended December 31, 2008

  Filed February 26, 2009

  Form 10-Q for the Quarterly Period Ended
  March 31, 2009

  Filed April 28, 2009

  File No. 001-06605

Dear
Mr. Spirgel:

We
have reviewed the comment letter dated May 8, 2009 from the staff (“Staff”)
of the Securities and Exchange Commission related to the above-mentioned
filings by Equifax Inc. (the “Company” or “Equifax”).  With respect to each of the items in that
letter, we are providing the following responses. To assist your review, we
have included the text of the Staff’s comments below in italicized type.

Form 10-K for the fiscal year ended December 31,
2008

Item 7.
Management’s Discussion and Analysis of Financial Condition and Results
of Operations

Liquidity and Financial Condition

2008 Acquisitions and Investments, page 38

1.              We note
that you have the option to acquire up to an additional 22 percent interest in
GPCS between 2011 and 2013 for cash consideration based on a formula for
determining equity value of the business and the assumption of certain debt.  Tell us how you accounted for the option and
how you determined its fair value, if any.

Company Response:  The
accounting for our contractual “call option” to acquire an additional
22 percent equity interest in GPCS, a credit bureau operating in Russia, was
determined as follows.  First, we
considered whether the call option, which is exercisable between 2011 and 2013,
should be accounted for as a derivative instrument under SFAS 133. If the
Company elects to exercise the call option, it must deliver cash to obtain the
additional percentage interest to be acquired from our two partners in
GPCS.  Since the contractual terms for
the call option do not permit “net settlement” within the meaning of paragraph
6c of SFAS 133, we concluded that the call option was not required to be accounted
for as a derivative security.

We
next considered whether to allocate to the call option any portion of our $4.4
million initial investment in GPCS.  Our call
option only becomes exercisable when GPCS’ operating revenue reaches certain
thresholds.  Further, the purchase price
is determined by applying a specified revenue multiple, derived using Equifax’s
multiple of consolidated revenues.  Our
internal discounted cash

flow
(DCF) analysis supported the 28% investment in GPCS for approximately $4.4
million.  In determining the fair value
of the call option, we compared (1) the value of the additional 22%
investment using the projected revenue multiple implicit in the DCF analysis to
(2) the value of the additional 22% investment using the contract
formula.  We concluded the contractual
call option price is less favorable than the multiple of revenues implicit in
our DCF model.  For that reason, we
concluded the call option has negligible fair value and therefore did not allocate
to it any of the initial investment.  We
account for our investment in GPCS under the equity method of accounting
prescribed by APB 18.

Application of Critical Accounting Policies and
Estimates

Goodwill and Indefinite-Lived Intangible Assets, page 44

2.              We note
that goodwill accounted for 54% of total assets as of December 31,
2008.  We note that revenues, operating
income and segment income have declined in recent quarters due to the negative
impact of the current economic environment.
As a result of your impairment test of your reporting units as of December 31,
2008, you determined that your goodwill balance was not impaired.  In light of the significance of your goodwill
balance, we expect robust and comprehensive disclosure in your critical accounting
policies regarding your impairment testing policy.  This disclosure should provide investors with
sufficient information about management’s insights and assumptions with regard
to the recoverability of goodwill.
Specifically, we believe you should provide the following information:

·                  Disclose
a breakdown of your goodwill balance as of December 31, 2008 by reporting
unit.

·                  Disclose
any changes to your reporting units or allocations of goodwill by reporting
unit and the reasons for such changes.

·                  Describe
the nature of the valuation techniques and the significant estimates and
assumptions you employed to determine the fair value of your reporting units in
your impairment analysis.  For example,
if you utilize the discounted cash flow approach, you should disclose the
discount rates for each reporting unit and how those discount rates were
determined, including your consideration of any market risk premiums.  In addition, we believe your disclosure
should address your estimates of future cash flows, as follows:

·                  Provide
a discussion of your historical cash flow growth rates and explain how your
historical growth rates were considered when determining the growth rate to be
utilized in your cash flow projections.

·                  Disclose
the growth rate you need to achieve in your cash flow projections in order to
avoid having a goodwill impairment charge.

·                  In view
of the current economic environment, discuss how you considered the
uncertainties inherent in your estimated future growth rates.  For example, you should explain if and when
you anticipated a recovery of the economy in your growth rates used in your
cash flows analysis.

·                  Describe
changes to the assumptions and methodologies, if any, since your last annual
impairment test.

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For further guidance, refer to Release No. 33-8350 “Interpretation:  Commission Guidance Regarding Management’s
Discussion and Analysis of Financial Condition and Results of Operations”.

Company Response:  In
response to the Staff’s comments, the Company intends to  expand the Results of Operations discussion
in future filings to provide more disclosure regarding the Company’s goodwill
impairment testing policy within our critical accounting policies.  Following is the expanded disclosure that the
Company would propose to include in future filings, beginning with the June 30,
2009 Form 10-Q, subject to any further changes that may become necessary
or advisable due to changes in the current economy or with respect to our
financial outlook:

“Goodwill and Indefinite-Lived Intangible Assets

We review goodwill and indefinite-lived intangible assets for
impairment annually (as of September 30) and whenever events or changes in
circumstances indicate the carrying value of an asset may not be recoverable in
accordance with SFAS 142. 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.  Since the
completion of our acquisition of TALX in May 2007, we have eleven
reporting units comprised of Consumer Information Solutions (which includes
Mortgage Solutions), Credit Marketing Services, Direct Marketing Services,
Europe, Latin America, Canada Consumer, North America Personal Solutions, North
America Commercial Solutions, The Work Number, Tax Management Services and
Talent Management Services.

The goodwill balance at December 31, 2008, for our eleven
reporting units was as follows:

  December 31,

  2008

  (In
  millions)

  Consumer Information Solutions (including Mortgage Solutions)

  $

  292.5

  Credit Marketing Services

  233.4

  Direct Marketing Services

  64.0

  Europe

  91.6

  Latin America

  158.3

  Canada Consumer

  25.4

  North America Personal Solutions

  1.8

  North America Commercial Solutions

  36.5

  The Work Number

  708.9

  Tax Management Services

  121.6

  Talent Management Services

  26.0

  Total goodwill

  $

  1,760.0

Valuation Techniques

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.

Under the income approach, we calculate the fair value of a reporting
unit based on estimated future discounted cash flows which require assumptions
about short- and long-term revenue growth rates, operating margins for each
reporting unit, discount rates, foreign currency exchange rates and estimates
of capital charges.  The assumptions we
use are based on what we believe a hypothetical

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marketplace participant would use in estimating fair value.  Under the market approach, we estimate the
fair value based on market multiples of revenue or earnings for benchmark
companies.  Data for the benchmark
companies was obtained from publicly available information.  A valuation multiple was selected based on a
financial benchmarking analysis that compared the reporting unit’s operating
result with the comparable companies’ information.  In addition to these financial
considerations, qualitative factors such as variations in growth opportunities
and overall risk among the benchmark companies were considered in the ultimate
selection of the multiple.  The values
separately derived from each valuation technique were used to develop an
overall estimate of a reporting unit’s fair value.  We applied a weighting that relies more
heavily on the income approach than on the market approach for determining the
fair value of each of the reporting units.
We believe this weighting is appropriate because it is consistent with
how we value prospective purchase business combinations and because of the variations
in the business and operating characteristics of the companies available as
comparables when compared to our reporting units.  The selection and weighting of the various
fair value techniques may result in a higher or lower fair value.  Judgment is applied in determining the
weightings that are most representative of fair value.

We have not made any material changes to the accounting methodology we
use to assess goodwill impairment since the date of the last annual impairment
test.

Growth Assumptions

The assumptions about future cash flows and growth rates used in the
income approach to valuation are based on each reporting unit’s long-term business
plan and forecast prepared annually and are subject to review and approval of
our senior management.  These plans and forecasts
were derived by considering key business drivers including new business
initiatives, client service and retention standards, market share changes,
historical performance and industry and economic trends, among other
considerations.  The long-term growth
rate used in determining the terminal value of each reporting unit at the end
of the forecast period was generally 3% in 2008 based on management’s
assessment of the minimum expected terminal growth rate of each reporting unit,
as well as broader economic considerations such as GDP, inflation and the
maturity of the markets we serve.

As a result of the economic downturn experienced in 2008, and the
resultant decline in revenue experienced in certain of our business units, the
revenue projections we used to complete our 2008 annual impairment testing at September 30,
2008, projected 2009 revenue to be lower than 2008 revenue levels for the
majority of our reporting units.  Our
2008 long-term forecast was also significantly lower in the aggregate than the
long-term forecast that was developed in 2007.  Our 2008 long-term forecast did not anticipate
meaningful recovery of the global economy until 2010.  Although we do not expect consolidated
revenue to improve meaningfully until 2010, we have taken cost containment actions
to help maintain operating margins for our reporting units during 2008 and
2009.

Discount Rate Assumptions

The basis for discount rates is the Company’s weighted-average cost of
capital, or WACC, calibrated for the assessment of risks related to the
projected cash flows of each reporting unit.
The WACC represents an implied rate of return which we believe an independent
investor or market participant would require for an investment in a company
with similar risk and business characteristics to the reporting unit.  To calculate the WACC, the cost of equity and
cost of debt are multiplied by the assumed capital structure of the reporting
unit as compared to industry trends and benchmark company structures.  The cost of equity was computed using the
Capital Asset Pricing Model which considers the risk-free interest rate, beta, equity
risk premium and specific company risk premium

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related to a particular reporting unit.
The cost of debt was computed using a benchmark rate, incremental interest
spread for a company of our risk and credit rating, and the Company’s tax
rate.  For the 2008 annual goodwill
impairment evaluation, the discount rates used to develop the estimated fair
value of the reporting units ranged from 9% to 17%.

Estimated Fair Value and Sensitivities

The
estimated fair value of each reporting unit is derived from the valuation
techniques described above, incorporating the related projections and
assumptions.  An indication of possible
impairment occurs when the estimated fair value of the reporting unit is below
the carrying value of its equity.  As of September 30,
2008, the estimated fair value of each reporting unit exceeded its carrying
value.

The
estimated fair value of the reporting unit is highly sensitive to changes in
these projections and assumptions; therefore, in some instances minor changes
in these assumptions could impact whether the fair value of a reporting unit is
greater than its carrying value.  For
example, an increase in the discount rate and decline in the cumulative cash
flow projections of a reporting unit could cause the fair value of certain
reporting units to be below its carrying value.
We perform sensitivity analyses around these assumptions in order to
assess the reasonableness of the assumptions and the resulting estimated fair
values.  Ultimately, future potential
changes in these assumptions may impact the estimated fair value of a reporting
unit and cause the fair value of the reporting unit to be below its carrying
value.  The excess of fair value over
carrying value for each of the Company’s reporting units as of September 30,
2008, ranged from approximately $34 million to approximately $2 billion.  In order to evaluate the sensitivity of the
fair value calculations on the goodwill impairment test, we applied a
hypothetical 10% decrease to the fair values of each reporting unit.  This hypothetical 10% decrease would result
in excess fair value over carrying value ranging from approximately $28 million
to approximately $2 billion for each of the Company’s reporting units.

As a result of the significant deterioration
of the U.S. economy during the fourth quarter of 2008 and the finalization of
our 2009 annual budget, which was finalized in January 2009, we reviewed
the assumptions used to conduct the 2008 annual impairment testing as of September 30
to ensure that our assumptions were consistent with our future
expectations.  As a result, we concluded
that the significant deterioration in the U.S. economy caused a triggering
event, as defined by SFAS 142, and we updated our analysis of goodwill impairment
at December 31, 2008.  We concluded
and disclosed in our 2008 Form 10-K that the estimated fair value of each
reporting unit exceeded its carrying value at December 31, 2008.”

Item
8.  Financial Statements and
Supplementary Data

1.  Summary of Significant Accounting Policies

Revenue
Recognition and Deferred Revenue, page 59

3.              We note
that development fees are deferred when billed and are recognized over the
expected period of benefit of the related customer contract.  Please tell us why you believe it is
appropr