SEC Company Response from EQUIFAX INC (EFX) (CIK 0000033185) (EFX) — Nov 6, 2013
EQUIFAX INC (EFX) (CIK 0000033185)
Date: Nov. 6, 2013 · CIK: 0000033185 · Accession: 0001144204-13-059320
AI Filing Summary & Sentiment
File numbers found in text: 001-06605
Referenced dates: October 1, 2013
Letter
Division of Corporation Finance United States Securities and Exchange Commission Form 10-K for the Year Ended December 31, 2012 Filed February 22, 2013 Response dated September 26, 2013 File No. 001-06605
Dear Mr. Spirgel:
We have reviewed the comment letter dated October 1, 2013 from the staff (“Staff”) of the Securities and Exchange Commission related to the above-mentioned filing by Equifax Inc. (the “Company” or “Equifax”). With respect the item in that letter, we are providing the following response. To assist your review, we have included the text of the Staff’s comment below in italicized type.
Form 10-K for the Year Ended December 31, 2012
Goodwill and Other Intangible Assets, page 73
Indefinite-Lived Intangible Assets, page 74
1. We note your response to comment two. It appears that the reacquired territorial rights should have been valued and amortized over the remaining contractual term, regardless of potential renewals, in accordance with ASC 805-20-30-20 and 35-2. Please revise or advise us.
Company Response: In connection with Equifax’s December 28, 2012 acquisition of certain credit services business assets and operations of CSC Credit Services Inc. (the Acquisition), we initially recorded an indefinite lived intangible asset disclosed as contractual/territorial rights valued at $159 million. We have now concluded that this asset represents a reacquired right as defined in ASC 805-20-25-14. In accordance with ASC 805-20-30-20 the asset should have been valued, and amortized, over the remaining term of the contractual agreement between Equifax and CSC Credit Services Inc. that was terminated as part of the Acquisition. Because the territorial right was valued based on an indefinite life, we have had our third-party valuation expert update the valuation of the intangibles we acquired in the Acquisition and we determined the estimated fair value of the reacquired rights to be $73 million. The updated valuation resulted in an $86 million increase to goodwill.
Mr. Larry Spirgel
Securities and Exchange Commission
November 6, 2013
Page 2 of 3
We have modified the description of the remaining $96 million of what was previously disclosed as contractual/territorial rights to acquired operating agreements in specific territories. These indefinite lived intangible assets were not adjusted as the accounting guidance requiring reacquired rights to be valued and amortized over the remaining contractual term of the related contract was not effective at the time when substantially all of those acquisitions occurred. The CSC transaction was the first affiliate acquisition in almost a decade.
Equifax has concluded that the adjustment to the accounting for the business combination, and the related adjustments to amortization expense, which should have been recorded at December 31, 2012 and in subsequent periods, do not require restatement of previously issued financial statements. The conclusion is based on both the materiality of the adjustments as well as an evaluation of all of the qualitative factors in Staff Accounting Bulletin 99. Net income attributable to Equifax for the three months ended September 30, 2013 is understated by less than 5% as a result of recording the increased amortization expense in the third quarter of 2013. Net income attributable to Equifax for the three months ended March 31, 2013 and June 30, 2013 was overstated in each period by 2% as a result of not recording the additional amortization expense in previous periods. Overall intangible assets changed by less than 1% and purchased intangible assets, net was understated by 7% as of December 31, 2012, March 31, 2013 and June 30, 2013.
Equifax has adjusted our accounting for the CSC business combination to reflect the revised intangible asset values including any related accumulated amortization. This revision is reflected in the Balance Sheet, Income Statement and Footnote 3 of our September 30, 2013 Quarterly Report on Form 10-Q.
* * *
As requested by the Commission, the Company acknowledges that:
· The Company is responsible for the adequacy and accuracy of the disclosure in its filings;
· Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filings; and
· The Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
Mr. Larry Spirgel
Securities and Exchange Commission
November 6, 2013
Page 3 of 3
We sincerely hope that we have thoroughly addressed your comment on our 2012 Form 10-K. Please direct any questions or comments to me at (404) 885-8440 or nuala.king@equifax.com.
Sincerely,
/s/ Nuala M. King
Show Raw Text
CORRESP
1
filename1.htm
Nuala M. King
SVP & Corporate Controller
1550 Peachtree St, N.W.
Atlanta, GA 30309
(404) 885-8440
Fax (404)
885-8087
nuala.king@equifax.com
November 6, 2013
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 the Year Ended December 31, 2012
Filed February 22, 2013
Response dated September 26, 2013
File No. 001-06605
Dear Mr. Spirgel:
We have reviewed the comment letter dated October 1, 2013 from
the staff (“Staff”) of the Securities and Exchange Commission related to the above-mentioned filing by Equifax Inc.
(the “Company” or “Equifax”). With respect the item in that letter, we are providing the following response.
To assist your review, we have included the text of the Staff’s comment below in italicized type.
Form 10-K for the Year Ended December
31, 2012
Goodwill and Other Intangible
Assets, page 73
Indefinite-Lived Intangible
Assets, page 74
1. We note your response to comment two. It appears that the reacquired territorial rights should have been valued and amortized
over the remaining contractual term, regardless of potential renewals, in accordance with ASC 805-20-30-20 and 35-2. Please revise
or advise us.
Company
Response: In connection with Equifax’s December 28, 2012 acquisition of certain credit services business assets
and operations of CSC Credit Services Inc. (the Acquisition), we initially recorded an indefinite lived intangible asset disclosed
as contractual/territorial rights valued at $159 million. We have now concluded that this asset represents a reacquired right as
defined in ASC 805-20-25-14. In accordance with ASC 805-20-30-20 the asset should have been valued, and amortized, over the remaining
term of the contractual agreement between Equifax and CSC Credit Services Inc. that was terminated as part of the Acquisition.
Because the territorial right was valued based on an indefinite life, we have had our third-party valuation expert update the valuation
of the intangibles we acquired in the Acquisition and we determined the estimated fair value of the reacquired rights to be $73
million. The updated valuation resulted in an $86 million increase to goodwill.
Mr. Larry Spirgel
Securities and Exchange Commission
November 6, 2013
Page 2 of 3
We have modified the description of the
remaining $96 million of what was previously disclosed as contractual/territorial rights to acquired operating agreements in specific
territories. These indefinite lived intangible assets were not adjusted as the accounting guidance requiring reacquired rights
to be valued and amortized over the remaining contractual term of the related contract was not effective at the time when substantially
all of those acquisitions occurred. The CSC transaction was the first affiliate acquisition in almost a decade.
Equifax has concluded that the adjustment
to the accounting for the business combination, and the related adjustments to amortization expense, which should have been recorded
at December 31, 2012 and in subsequent periods, do not require restatement of previously issued financial statements. The conclusion
is based on both the materiality of the adjustments as well as an evaluation of all of the qualitative factors in Staff Accounting
Bulletin 99. Net income attributable to Equifax for the three months ended September 30, 2013 is understated by less than 5% as
a result of recording the increased amortization expense in the third quarter of 2013. Net income attributable to Equifax for the
three months ended March 31, 2013 and June 30, 2013 was overstated in each period by 2% as a result of not recording the additional
amortization expense in previous periods. Overall intangible assets changed by less than 1% and purchased intangible assets, net
was understated by 7% as of December 31, 2012, March 31, 2013 and June 30, 2013.
Equifax has adjusted our accounting for
the CSC business combination to reflect the revised intangible asset values including any related accumulated amortization. This
revision is reflected in the Balance Sheet, Income Statement and Footnote 3 of our September 30, 2013 Quarterly Report on Form
10-Q.
* * *
As requested by the Commission, the Company acknowledges that:
· The Company is responsible for the adequacy and accuracy of the disclosure in its filings;
· Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action
with respect to the filings; and
· The Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
2
Mr. Larry Spirgel
Securities and Exchange Commission
November 6, 2013
Page 3 of 3
We sincerely hope that we have thoroughly addressed your comment
on our 2012 Form 10-K. Please direct any questions or comments to me at (404) 885-8440 or nuala.king@equifax.com.
Sincerely,
/s/ Nuala M. King
Nuala M. King
Senior Vice President and Corporate Controller
cc: Richard F. Smith, Chairman and Chief Executive Officer
Lee Adrean, Corporate Vice President and
Chief Financial Officer
John J. Kelley III, Corporate Vice President
and Chief Legal Officer
Joseph A. King, Ernst & Young LLP
3