Western Union 2010 Annual Report Download - page 96

value of $86.2 million on the acquisition date, and paid A123.1 million ($157.4 million) as additional consideration
for all of the common shares of the money transfer business, resulting in a total purchase price of $243.6 million.
The Company recognized no gain or loss in connection with the disposition of its equity interest in the FEXCO
Group, because its estimated fair value approximated its carrying value. The Company recorded the assets and
liabilities of FEXCO at fair value, excluding the deferred tax liability. The valuation of assets acquired resulted in
$74.9 million of identifiable intangible assets, $64.8 million of which were attributable to the network of subagents,
with $10.1 million relating to other intangibles. The subagent network intangible assets are being amortized over 10
to 15 years, and the remaining intangibles are being amortized over two to three years. Goodwill of $190.6 million
was recognized, of which $91.1 million is expected to be deductible for United States income tax purposes.
In December 2008, the Company acquired 80% of its existing money transfer agent in Peru for a purchase price
of $35.0 million. The aggregate consideration paid was $29.7 million, net of a holdback reserve of $3.0 million. The
Company acquired cash of $2.3 million as part of the acquisition. $1.0 million holdback reserve payments were
made in both 2009 and 2010, and the remaining $1.0 million is scheduled to be paid in December 2011, subject to
the terms of the agreement. The results of operations of the acquiree have been included in the Company’s
consolidated financial statements since the acquisition date. The purchase price allocation resulted in $10.1 million
of identifiable intangible assets, a significant portion of which were attributable to the network of subagents
acquired by the Company. The identifiable intangible assets are being amortized over three to 10 years and goodwill
of $27.1 million was recorded, most of which is expected to be deductible for income tax purposes. In addition, the
Company has the option to acquire the remaining 20% of the money transfer agent and the money transfer agent has
the option to sell the remaining 20% to the Company within 12 months after December 2013 at fair value.
In August 2008, the Company acquired the money transfer assets from its then-existing money transfer agent in
Panama for a purchase price of $18.3 million. The consideration paid was $14.3 million, net of a holdback reserve of
$4.0 million. In 2009 and 2010, the Company paid $1.7 million and $1.2 million, respectively, of the holdback
reserve, with the remainder scheduled to be paid in August 2011, subject to the terms of the agreement. The results
of operations of the acquiree have been included in the Company’s consolidated financial statements since the
acquisition date. The purchase price allocation resulted in $5.6 million of identifiable intangible assets, a significant
portion of which were attributable to the network of subagents acquired by the Company. The identifiable intangible
assets are being amortized over three to seven years and goodwill of $14.2 million was recorded, which is not
expected to be deductible for income tax purposes.
The following table presents changes to goodwill for the years ended December 31, 2010 and 2009 (in millions):
Consumer-to-
Consumer
Global Business
Payments Other Total
January 1, 2009 balance ........................................... $ 1,427.0 $ 232.7 $ 14.5 $ 1,674.2
Acquisitions ............................................................ 190.6 272.2 — 462.8
Purchase price adjustments ....................................... 2.3 — — 2.3
Currency translation ................................................. — 4.3 (0.2) 4.1
December 31, 2009 balance ...................................... $ 1,619.9 $ 509.2 $ 14.3 $ 2,143.4
Purchase price adjustments ....................................... — (7.9) — (7.9)
Currency translation ................................................. — 16.3 (0.1) 16.2
December 31, 2010 balance ...................................... $ 1,619.9 $ 517.6 $ 14.2 $ 2,151.7
5. Related Party Transactions
The Company has ownership interests in certain of its agents accounted for under the equity method of
accounting. The Company pays these agents, as it does its other agents, commissions for money transfer and other
services provided on the Company’s behalf. Commission expense recognized for these agents for the years ended
December 31, 2010, 2009 and 2008 totaled $183.5 million, $203.2 million and $305.9 million, respectively.
Commission expense recognized for FEXCO prior to February 24, 2009, the date of the acquisition (see Note 4),
was considered a related party transaction.
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