Western Union 2009 Annual Report Download - page 104

The Company recorded the assets and liabilities of Custom House at fair value, excluding the deferred
tax liability. The following table summarizes the preliminary allocation of purchase price:
Assets:
Cash acquired ................................................... $ 2.5
Settlement assets ................................................. 152.5
Property and equipment ............................................ 6.7
Goodwill....................................................... 272.2
Other intangible assets ............................................. 118.1
Other assets..................................................... 78.1
Total assets ..................................................... $630.1
Liabilities:
Accounts payable and accrued liabilities................................ $ 23.5
Settlement obligations ............................................. 152.5
Deferred tax liability, net ........................................... 31.9
Other liabilities .................................................. 51.2
Total liabilities .................................................. 259.1
Total consideration, including cash acquired ............................. $371.0
The valuation of assets acquired resulted in $118.1 million of identifiable intangible assets, $99.8 million
of which were attributable to customer and other contractual relationships and were valued using an income
approach and $18.3 million of other intangibles, which were valued using both income and cost approaches.
These fair values were derived using primarily unobservable Level 3 inputs which require significant
management judgment and estimation. For the remaining assets and liabilities, fair value approximated
carrying value. The intangible assets related to customer and other contractual relationships are being
amortized over 10 to 12 years. The remaining intangibles are being amortized over three to five years. The
goodwill recognized of $272.2 million is attributable to the projected long-term business growth in current and
new markets and an assembled workforce. All goodwill relates entirely to the global business payments
segment. The preliminary assessment of goodwill expected to be deductible for United States income tax
purposes is approximately $225.1 million. The net deferred tax liability of $31.9 million and the resulting
impacts on goodwill are preliminary and will be completed once the Company finalizes its tax review for this
acquisition. In addition, the Company is finalizing its analysis of the accounts associated with working capital
and settlement, which may also result in an adjustment to goodwill.
FEXCO
On February 24, 2009, the Company acquired the money transfer business of European-based FEXCO,
one of the Company’s largest agents providing services in a number of European countries, primarily the
United Kingdom, Spain, Sweden and Ireland. The acquisition of FEXCO’s money transfer business has
assisted the Company in the implementation of the Payment Services Directive (“PSD”) in the European
Union by providing an initial operating infrastructure. The PSD has allowed the Company to operate under a
single license in the 27 European Union countries and, in those European Union countries where the Company
has been limited to working with banks, post-banks and foreign exchange houses, to expand its network to
additional types of businesses. The acquisition does not impact the Company’s revenue, because the Company
was already recording 100% of the revenue arising from money transfers originating at FEXCO’s locations. As
of the acquisition date, the Company no longer incurs commission costs for transactions related to FEXCO;
rather, the Company now pays commissions directly to former FEXCO subagents, resulting in lower overall
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THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)